Bloomberg:
- Hollande Tiptoes Toward Raid on Pensions Under Pressure From EU. President Francois Hollande is preparing to take on a French sacred cow: pensions. Facing European Union pressure to reach budget targets, the Socialist president is risking the wrath of his core supporters to shrink the pension system, which had a deficit of 14 billion euros ($19 billion) in 2011. While leaving the issue of fixing the retirement age to talks between representatives of employees and employers, Hollande may propose separating pension increases from inflation, government officials said. He’s venturing upon a pension overhaul -- which few of his predecessors have managed without drawing millions into the streets -- as his government says it’s unlikely to meet this year’s budget-deficit target.
- Asian Stocks Retreat on Earnings. Rio Tinto declined 2.5 percent in Sydney after the miner reported its biggest loss in at least 15 years. Trend Micro tumbled 7.8 percent after the Japanese anti-virus software maker’s net income fell 23 percent. Auckland International Airport Ltd. slumped the most in four years after a New Zealand pension fund reduced its stake in the nation’s busiest terminal. The MSCI Asia Pacific Index slid 0.5 percent to 133.23 as of 12:56 p.m. in Hong Kong. Japan’s Nikkei 225 Stock Average slid 1.9 percent, led by banks and exporters, after Russia’s finance minister said Group of 20 nations should take a stronger stance against currency manipulation.
- Park May Face Prolonged Korea Growth Underperformance: Economy. South Korea’s incoming President Park Geun Hye may be saddled with an economy that underperforms for a prolonged period, increasing the allure of stimulus spending that could undermine the nation’s fiscal strength. Growth may stay below potential for a “considerable time,” the Bank of Korea said yesterday after officials voted to keep interest rates on hold. Policy makers are concerned about the need to regain momentum after last year’s 2 percent expansion, the weakest since 2009.
- Fed’s Bullard Says Balance-Sheet Growth Lifts Exit Concern. Federal Reserve Bank of St. Louis President James Bullard said central bank stimulus has been ramped up this year with the decision to increase outright bond purchases to $85 billion a month and that a growing balance sheet could be complicated to unwind. “The current stance of U.S. monetary policy is considerably easier than it was in 2012,” Bullard said in a speech prepared for delivery today in Starkville, Mississippi. “The size of the balance sheet could inhibit” the Fed’s “ability to exit appropriately from the current very expansive monetary policy.”
- China, Iran Boost Cyber Attacks on U.S., Lawmaker Says. China and Iran are intensifying cyber assaults against the U.S., the head of the House Intelligence Committee said as he pressed for legislation to encourage companies to share information on hacker threats. China’s cyber espionage effort targeting U.S. industrial secrets “has grown exponentially both in terms of its volume and damage it’s doing to our economic future,” the intelligence panel’s chairman, Mike Rogers, said at a hearing yesterday. “We have no practical deterrents in place today.”
- Libya Braces for Unrest on Anniversary of Qaddafi Revolt. Long lines of foreigners massed over the past couple of weeks at Tripoli International Airport looking to secure a flight out. Across town, Libya’s parliament meets in a tent.
- Oil Heads for Ninth Gain in 10 Weeks as OPEC Seen Cutting Supply. West Texas Intermediate oil headed for its ninth weekly gain in 10 weeks after a report signaled OPEC will cut crude shipments this month. Open interest for the U.S. benchmark contract rose to a record. Futures were little changed in New York after climbing 0.3 percent yesterday, and are up 1.7 percent this week. The number of contracts outstanding climbed to 1,665,014, the highest level since the futures began trading on the New York Mercantile Exchange in March 1983, the exchange’s owner said. The Organization of Petroleum Exporting Countries will cut crude shipments by 0.9 percent this month amid lower production by Saudi Arabia, according to Oil Movements, a tanker tracker. Crude for March delivery was at $97.33 a barrel, up 2 cents, in electronic trading in New York at 9:15 a.m. in Tokyo. The volume of all futures traded was 40 percent above the 100- day average.
- Drone Tests Must Adhere to Privacy Rules, U.S. FAA Says. U.S. aviation regulators will require test facilities for unmanned aircraft to comply with federal and state privacy laws, as the government develops the first rules for operating drones in U.S. skies. “Each site operator and its team members will be required to operate in accordance with federal, state and other laws regarding the protection of an individual’s right to privacy,” the Federal Aviation Administration said in an e-mailed statement today. The agency is opening a contest to create six drone test sites to be run by government agencies or universities, it said in the statement.
- Heinz(HNZ) Turnaround CEO May Reap $100 Million After Buyout. Having turned around H.J. Heinz Co., Chief Executive Officer Bill Johnson may reap about $100 million from the company’s buyout. Warren Buffett’s Berkshire Hathaway Inc. and Jorge Paulo Lemann’s 3G Capital Inc. agreed to buy the iconic ketchup maker for about $23 billion. The billionaire buyers will pay $72.50 a share, compared with yesterday’s closing price of $60.48, according to a statement today. Johnson, 64, held 1.38 million Heinz shares as of Dec. 17, according to data compiled by Bloomberg News. His total compensation in the fiscal year ended in March was $16.2 million, including $1.3 million of salary.
- SEC Investigators Review Surge in Heinz(HNZ) Trades Before Merger. U.S. Securities and Exchange Commission investigators are reviewing whether a surge in bullish bets on H.J. Heinz Co. was fueled by inside information about Berkshire Hathaway Inc. and 3G Capital’s plan to buy the ketchup maker, a person familiar with the matter said.
- Sharp Joins Panasonic in Surge of China Air-Purifier Sales. Sharp Corp. and Panasonic Corp., the Japanese electronics makers struggling to recover from record losses, are boosting sales of air purifiers in China as pollution worsens in the world’s most populous country.
- Abe Nears Decision on BOJ Governor. Japanese Prime Minister Shinzo Abe is facing a rift with his finance minister, longtime ally Taro Aso, over who to pick as the next Bank of Japan governor, a division that epitomizes the difficulty of the selection process. Government officials said Mr. Abe may make his final decision in a few days and order his aides to begin private talks with the opposition parties to win their support.
- Icahn Reports Big Stake in Herbalife(HLF); Shares Jump. Carl Icahn is officially long Herbalife Ltd. The billionaire investor disclosed late Thursday that he has built a 12.98% stake in the nutrition company.
- Deferred Pay Draws Fed's Scrutiny. U.S. banks and securities firms would have to step up their compensation disclosures under rules being considered by the Federal Reserve, said a person familiar with the central bank's regulatory efforts. The rules are in the formative stages and wouldn't take effect for some time. But an early draft has circulated internally at the Fed, this person said, marking a step on the path toward a public proposal.
- GOP Stalls Vote on Pick for Pentagon. Senate Republicans on Thursday blocked, at least temporarily, Chuck Hagel's nomination to be defense secretary, leaving him damaged and offering the latest example of how fierce the partisan divide has become in Congress.
- Shifting Blame Muddles S&P Suit. Like many other collateralized debt obligations, Delphinus CDO 2007-1 got a triple-A rating and then defaulted within months, causing painful losses to investors. Who is responsible for the mess? Last year, the Securities and Exchange Commission blamed Mizuho Financial Group Inc., 8411.TO -8.17% and the Japanese bank paid $127.5 million to settle a lawsuit filed by the U.S. agency.
- Generational Theft Needs to Be Arrested by Geoffrey Canada, Stanley Druckenmiller and Kevin Warsh. A Democrat, an independent and a Republican agree: Government spending levels are unsustainable. We come from different backgrounds, parties and pursuits but are bound by a common belief in the promise and purpose of America. After all, each of us has been the beneficiary of the choices made—and opportunities created—by previous generations of Americans.
- Currency Wars Come to Moscow as G-20 Meets. It won't quite be hand-to-hand combat, but 'currency wars' will come to Moscow on Friday as finance officials from the Group of 20 nations spar over Japan's expansive policies that have driven down the value of the yen.
- The Unending British Deleveraging Cycle. (graphs)
- Bullish? (graphs)
- Mexican Drug Kingpin Named Chicago's First Public Enemy No. 1 Since Al Capone. Guzman has been on the Forbes' list of billionaires since 2009, and Washington has a $5 million reward for his capture. However, there are allegations that Guzman works with the U.S. government. In court documents, a high-ranking member of Sinaloa currently in U.S. custody asserted that Guzman is a U.S. informant, Sinaloa was "given carte blanche to continue to smuggle tons of illicit drugs into Chicago," and Operation Fast and Furious was part of an agreement to finance and arm the cartel in exchange for information used to take down its rivals. The claims were corroborated by a Mexican foreign service officer who doubled as a confidential source for the U.S. security firm Stratfor when he alleged that the U.S. government works with Mexican cartels to traffic drugs into the U.S., adding that in 2010 the U.S. sided with Sinaloa in an attempt to limit the violence in Mexico.
- JP Morgan(JPM) star trader Gulati quits to set up hedge fund: FT. JPMorgan Chase & Co's global head of equity proprietary trading has quit the investment bank to set up a hedge fund in Switzerland, the Financial Times reported on Thursday. Deepak Gulati, one of the bank's star traders, will launch Argentière Capital sometime in the second or third quarter of this year, the financial daily quoted two people familiar with the plans.
- US residential securities make a comeback. You might have thought that credit market investors would be glad to see the back of all those suburban McMansions that homebuilders flung up across the American sunbelt, back when lenders barely checked a borrower’s pulse, let alone their credit score. After all, it was the collapse in the value of those homes, used as collateral in trillions of dollars of mortgage-backed securities, that triggered a credit crisis from which the US has still not fully recovered. But if bankers have their way, the very same McMansions may find their way back into credit market investors’ portfolios, and soon, as the collateral behind a whole new kind of security.
- None of note
- Asian equity indices are -1.25% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 110.75 -.25 basis point.
- Asia Pacific Sovereign CDS Index 85.0 -.5 basis point.
- FTSE-100 futures -.22%.
- S&P 500 futures -.22%.
- NASDAQ 100 futures -.13%.
Earnings of Note
Company/Estimate
- (AEP)/.45
- (BKW)/.15
- (CPB)/.66
- (ENB)/.44
- (SJM)/1.39
- (KRFT)/.66
- (LPNT)/.66
- (TRW)/1.33
- (VFC)/3.04
8:30 am EST
- The Empire Manufacturing Index for February is estimated to rise to -2.0 versus -7.78 in January.
- Net Long-Term TIC Flows for December are estimated to fall to $35.0B versus $52.3B in November.
- Industrial Production for January is estimated to rise +.2% versus a +.3% gain in December.
- Capacity Utilization for January is estimated to rise to 78.9% versus 78.8% in December.
- Manufacturing Production for January is estimated unch. versus a +.8% gain in December.
- Preliminary Univ. of Mich. Consumer Confidence for February is estimated to rise to 74.8 versus 73.8 in January.
- None of note
- The Fed's Pianalto speaking, Eurozone Trade Data and the (ONNN) Analyst Day could also impact trading today.
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