Bloomberg:
- Draghi Counts Cost of Euro’s Salvation as Currency Rebound Bites. Mario Draghi is discovering that confidence in the euro area comes at a cost. Since the European Central Bank president talked up the economic outlook last month and signaled that the worst of the debt crisis is over, the euro has surged to a 14-month high against the dollar. Banks have fueled the euro’s rally by paying back more emergency loans than forecast, shrinking the ECB’s balance sheet just as the Federal Reserve and the Bank of Japan expand theirs. That’s threatening to stymie Europe’s recovery before it has begun, highlighting the tightrope Draghi is walking as he seeks to boost confidence without encouraging euphoria. With looser monetary policy in the U.S. and Japan weakening the dollar and the yen, the ECB may soon come under pressure to enter the so-called “currency war” and rein in the euro, economists said. “The euro-zone economy needs a rising euro like it needs a hole in the head,” said Nick Kounis, head of macro research at ABN Amro in Amsterdam. “If verbal intervention does not stem the euro’s upward trend, the central bank may eventually once again consider rate cuts.”
- Libor Accords Leave Banks Facing ‘Massive’ State Claims. A multistate probe of alleged manipulation of interest rates threatens to leave banks liable for billions of dollars in estimated state and local losses from the scandal, even as they settle with national regulators. New York Attorney General Eric Schneiderman is helping lead a probe into claims that banks rigged global benchmarks for borrowing, adding to investigations by other authorities, including the U.S. Justice Department. Royal Bank of Scotland Group Plc agreed yesterday to pay about $612 million to U.S. and U.K. regulators to resolve their claims. “The damage to public entities is a matter of great concern to state and local governments,” Schneiderman said in an interview. “These were allegations of really despicable conduct.” More than 12 states are participating in the probe, according to a person familiar with the matter who requested anonymity because he isn’t authorized to speak publicly.
- Monte Paschi Hidden Deals Will Have EU730 Million Impact. Banca Monte dei Paschi di Siena SpA, engulfed by criminal probes into the conduct of its former management, said 2012 net assets will take a 730 million-euro ($987 million) hit after accounting for structured deals that hid earlier losses. Monte Paschi, the subject of investigations spanning from allegations of market manipulation to false bookkeeping, said the gross impact on net assets of the trade dubbed Santorini will be 305.2 million euros, while Alexandria will lead to a restatement of 272.5 million euros, according to a stock- exchange statement.
- ECB Dashes Irish Hopes of Quick Decision on Banking Debt Plan. European Central Bank policy makers sought more time to weigh a proposal presented by Ireland today to restructure the cost of bailing out former Anglo Irish Bank Corp., prolonging a saga that began four years ago with the near-collapse of the lender. A decision is unlikely within the next 24 hours as some members of the ECB’s governing council want to discuss the blueprint with their own central banks first, according to a person familiar with the situation, who asked not to be identified, as the matter is private.
- Hollande Draws French Industry Ire as Nuclear-Energy Edge Fades. French industrial groups are up in arms as their once-celebrated nuclear-energy edge evaporates. After decades when their factories churned out everything from steel, glass and chemicals with one of the cheapest power prices in Europe thanks to the country’s 58 nuclear reactors, French companies’ competitive advantage is being whittled away as the U.S. embrace of shale gas cuts energy prices there and as Germany gives businesses fiscal breaks against higher electricity costs.
- Euro Near One-Week Low Before ECB Meet, Spanish Auctions. The euro fell to within 0.4 percent of a one-week low versus the dollar before European Central Bank policy makers meet today amid political turmoil that threatens to renew the region’s sovereign-debt crisis.
- Top Forecaster Westpac Leads Yen Bulls in BOJ Doubts. Westpac Banking Corp., the most accurate foreign-exchange forecaster in the fourth quarter is betting against the consensus trade that made the yen the biggest loser versus the dollar in the past six months. Westpac, HSBC Holdings Plc and Royal Bank of Canada are the most bullish of 61 firms surveyed by Bloomberg, forecasting 80 yen against the dollar by the end of the year, from 93.64 yesterday.
- PBOC Signals Inflation Concern as Economy Rebounds. China’s central bank signaled concern that inflation risks will increase and said that monetary easing by nations, including the U.S. and Japan, may push up commodity prices and make global capital flows more volatile. China must be alert to changes in price-gain expectations and to imported inflation, the People’s Bank of China said yesterday in its fourth-quarter monetary policy report. The costs of labor-intensive products, services and agricultural goods may rise persistently on slowing labor-supply growth, the PBOC said. “An economic recovery and demand expansion may pass into CPI in a relatively fast manner,” the central bank said.
- China Stocks Drop; Developers Fall. China Vanke Co. and Poly Real Estate Group Co., the two biggest developers, slid at least 1 percent after the China Securities Journal said some cities may slow approvals of new home sales. China Minsheng Banking Corp. slumped 5.6 percent after surging 77 percent since Dec. 3 with valuations reaching the highest level since December 2010. Tsingtao Brewery Co. led gains for consumer-staples producers. The Shanghai Composite Index fell 0.8 percent to 2,414.30 as of 11:01 a.m. local time, the steepest loss since Jan. 17.
- Japan Radar Targeting Protest Is War Signal, Global Times Says. Japan is exploiting an incident in which a Chinese ship used weapons-targeting radar on a Japanese naval vessel and helicopter to prepare the people of both countries for war, China’s state-run Global Times said. “We believe in doing this Japan is at the same time also sounding a combat alarm among the Chinese and Japanese public,” the Chinese-language editorial said today. Ordinary people who don’t understand naval affairs will believe the two countries are very close to war, it said.
- IMF Says India Should Hold Rates Until Inflation Curbed. India’s central bank should refrain from cutting interest rates until inflation is contained even as the nation faces a subdued economic recovery, according to the International Monetary Fund. “With policy space strictly circumscribed because of high fiscal deficit and elevated inflation, the economy is in a weaker position than before the global financial crisis,” the IMF said in a statement released yesterday. “It is advisable to maintain the current level of policy rates until inflation is clearly on a downward trend.”
- Goldman Sachs’s(GS) Dreyfus, Margiotta Said to Leave Hedge-Fund Unit. Daniel A. Dreyfus and Paul W. Margiotta are leaving the Goldman Sachs Investment Partners hedge-fund unit that was established to allow clients to invest with some of the firm’s top proprietary traders. Dreyfus, 37, a managing director who ran investments in natural resources, left last month, according to a person familiar with the matter who declined to be identified because the information isn’t public. Margiotta, 41, a vice president who specialized in credit, will leave the New York-based company later this month, the person said.
- Dell(DELL) Directors Sued Over $24.44 Billion Management Buyout. Dell Inc. Chief Executive Officer Michael Dell and other company directors were sued by an investor who contends the computer maker’s board is shortchanging shareholders in a $24.4 billion management-led buyout.
- Obama Relents on Secret Drone Memo. On the eve of a battle to confirm his pick for America's CIA chief, President Barack Obama agreed Wednesday to let a small group of lawmakers look at a long-sought, classified Justice Department opinion explaining his administration's legal justification for targeting killings of American terror suspects in other countries. The secret legal memo has became a flash point in the nomination of White House counterterrorism chief John Brennan to become director of the Central Intelligence Agency. Lawmakers this week wrote to Mr. Obama demanding the release of Justice Department documents that they first began seeking soon after a U.S. missile struck the vehicle carrying the radical, American-born cleric Anwar al-Awlaki in September 2011, killing him.
- Prosecutors Reach Deal to Resolve Criminal Cases Against 5 in 'Squawk Box' Case. Prosecutors have reached tentative agreements with five former stock brokers and day traders who were facing a criminal trial for the third time on allegations they misused brokerage-firm "squawk boxes" to gain an improper advantage in trading, according to people familiar with the negotiations.
- Wave of Large Buyouts Unlikely to Follow Dell. The $24.4 billion deal to take Dell Inc. DELL +0.75% private shows what is possible in the leveraged-buyout market but doesn't necessarily portend a return of the megadeals popular before the financial crisis. By far the largest private-equity transaction since financial markets crashed in 2008, the Dell deal has components that are unusual and will make its size difficult to replicate, bankers, private-equity executives and analysts said.
- Vote on Gay Ban Threatened to Split Scouts. The Boy Scouts of America on Wednesday delayed until May a decision on whether to end the group's ban on gay members, after a planned vote exposed rifts that threatened to break apart the nearly 103-year-old group.
- U.S. Coal Finds Warm Embrace Overseas. For all the troubles of the U.S. coal industry at home, its business with the rest of the world is brisk. Last year, the U.S. set a record for coal exports, with the final tally estimated to top 120 million tons, double what it exported as recently as 2009.
- GE(GE) Bring Engine Work Back. As Boeing Co. pays a price for having farmed out crucial parts on its new Dreamliner, General Electric Co.'s aviation division is busy bringing work on its engines back in-house.
- Sex Attacks Fuel Outrage in Egypt. Rash of Assaults Prompts Advocacy Groups to Publicize Grisly Accounts in an Often Indifferent Society. Public testimonies from several women who allege to have been the victims of sexual assault during recent antigovernment demonstrations in Cairo have suddenly brought a long-festering issue to the fore of Egypt's conservative society. On Wednesday, the issue drew fresh attention as hundreds of Egyptian activists marched in Cairo to demand an end to sexual violence against women and Amnesty International issued a report urging President Mohammed Morsi to take action against what the group says is a rampant and growing problem. Gang rapes and mob attacks against women—particularly in crowded public spaces—aren't new to Egypt. But several advocacy groups are for the first time urging women to reveal their allegations to an often skeptical and indifferent public.
- The Unscary Sequester. Washington is in a fit of collective terror over the "sequester," aka the impending across-the-board spending cuts. Trying to explain the zero economic growth at the end of 2012, White House spokesman Jay Carney blamed Republicans for "talk about letting the sequester kick in as though that were an acceptable thing." He left out that President Obama proposed the sequester in 2011.
- Henninger: Obama's Colossal Politics. His laws are so big there are parts no one has ever seen.
CNBC:
- Bond Frenzy Stokes Bubble Fears in China's Real Estate. Chinese property companies are rushing to the dollar bond market, almost matching last year's sales in the first month of 2013 alone, in a frenzy that could inflate the sector's gearing and the broader risk of a housing price bubble.
- Euphoria. (graph) Presented with little comment aside from noting that the only time stocks have been this 'euphoric' was right before the collapse in 2000 and right before the collapse in 2008.
- Tale Of Two Markets (Again). (graphs)
Reuters:
- Visa(V) profit beats as card payments accelerate. Visa Inc's(V) quarterly profit beat analysts' estimates for the ninth consecutive quarter as credit, debit and transactions grew at the world's largest payments network.
- Akamai(AKAM) forecasts revenue below estimates; shares fall. Internet content delivery company Akamai Technologies Inc forecast current-quarter revenue below analysts' expectations as the company plans to wind down some media contracts, sending its shares down 16 percent.
- Green Mountain(GMCR) shares fall on weak sales outlook. Green Mountain Coffee Roasters Inc forecast current-quarter sales below Wall Street expectations and said growth would slow in its coffee and espresso maker business, sending its shares down 10 percent in after-market trade.
- Iran's Ahmadinejad seeks strategic axis with Egypt. President Mahmoud Ahmadinejad, on the first visit to Cairo by an Iranian leader in more than three decades, called for a strategic alliance with Egypt and said he had offered the cash-strapped Arab state a loan. In a step by Iran to advance ties that were broken in 1979, the Iranian foreign minister said Egyptian tourists and merchants would no longer require visas to visit, Egypt's state news agency reported.
- Commodity hedge fund investors seek exit. Some pension funds, therefore, have begun to lose enthusiasm for the hedge fund sector, fund managers report. “There’s some frustration,” one says. A veteran commodity hedge fund manager adds: “The industry is not what it once was. It’s a contracting industry. Every dollar is hard won.” The disillusionment with the commodity hedge funds, which typically charge fees of 2 per cent plus 20 per cent of profits, has made itself felt in the past six months. Pension funds, insurers, and other hedge fund investors have pulled a large chunk of their money out of the sector.
- George Osborne has one effective growth tool left: cutting taxes. 'Where’s the fiscal austerity?” many have asked, with data on the public finances showing an apparently very different story from the one the Government likes to project.
- None of note
- Asian equity indices are -1.0% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 115.0 -1.5 basis points.
- Asia Pacific Sovereign CDS Index 88.75 -1.75 basis points.
- FTSE-100 futures -.04%.
- S&P 500 futures -.09%.
- NASDAQ 100 futures unch.
Earnings of Note
Company/Estimate
- (PM)/1.22
- (MWW)/.07
- (AAP)/.75
- (HOT)/.65
- (BG)/2.35
- (CI)/1.48
- (RVBD)/.29
- (HAS)/1.16
- (CSTR)/.76
- (LNKD)/.19
- (OPEN)/.43
- (MCHP)/.39
- (BLMN)/.19
- (CBE)/1.12
8:30 am EST
- Preliminary 4Q Non-farm Productivity is estimated to fall -1.4% versus a +2.9% gain in 3Q.
- Preliminary 4Q Unit Labor Costs are estimated to rise +3.0% versus a -1.9% decline in 3Q.
- Initial Jobless Claims are estimated to fall to 360K versus 368K the prior week.
- Continuing Claims are estimated at 3197K versus 3197K prior.
- Consumer Credit for December is estimated to fall to $14.0B versus $16.045K in November.
- None of ntoe
- The Fed's Stein speaking, Fed's Evans speaking, ECB's Draghi speaking, EU Finance Leaders Summit, Eurozone Industrial Production data, Spain/France 10Y bond auction, BoE rate decision, ECB rate decision, Japan trade data, weekly Bloomberg Consumer Comfort Index and the weekly EIA natural gas inventory data could also impact trading today.
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