Bloomberg:
- South Korea Says Likely North Korea Conducted a Nuclear Test. North Korea likely conducted its third nuclear test today, a South Korean government official said, escalating tensions with an international community that has sought to curb the totalitarian state’s atomic ambitions. “Artificial quake tremors from North Korea are likely to be a nuclear test but we will need to take a closer look at the details to be sure,” South Korean Defense Ministry spokesman Kim Min Seok said by phone. Japanese Prime Minister Shinzo Abe called a meeting of his security council.
- Euro-Skeptic Grillo Pushes for Italy Debt Renegotiation in Vote. Beppe Grillo, the Italian comic poised to play a spoiler in this month’s national elections, is gaining ground in opinion polls as he campaigns for sovereign debt relief to revive the country’s stagnant economy. “The debt must be renegotiated and the interest on the debt must be renegotiated,” Grillo said yesterday in a Bloomberg Television interview in Trento. “We won’t have growth in this country for 10 years if the climate stays as it is.” Grillo, a self-described populist, has rallied to nearly 20 percent in some polls with a call to reconsider euro membership and to drive established politicians from parliament.
- Egyptians Rally Against Mursi on Anniversary of Mubarak Ouster. Egyptians rallied against President Mohamed Mursi to mark the second anniversary of his predecessor’s ouster, in a show of force that could precipitate more violence. Security forces beefed up their presence outside the presidential complex in anticipation of marches descending on the area on the second anniversary of Hosni Mubarak’s departure, the state-run Middle East News agency said. Dozens of protesters temporarily blocked the 6th of October bridge spanning the Nile in central Cairo, chanting slogans against Mursi and his Muslim Brotherhood, it said.
- Copper Trades Near One-Week Low on China Holiday, Europe Concern. Copper traded near a one-week low as markets in China, the biggest buyer of the metal, are closed this week for the Lunar New Year holiday and data this week may show a contraction in euro-zone economies.
- Rubio Gains GOP Influence. Sen. Marco Rubio plans to follow his prime-time response to the president's State of the Union address with his own legislative push on education funding and help for small businesses—all part of a larger effort to build his image as a conservative leader with a bipartisan bent. The Florida senator's star turn as GOP spokesman Tuesday night, when he will give his party's official response to the president, comes as Republicans increasingly look to the 41-year-old lawmaker to be a flag-carrier for the party after its election setbacks last year.
- More Stable Airlines Fly Out of Mergers. Fliers Poised to Benefit From Greater Investments, Stability. The U.S. airline industry is starting to fly high again. An expected merger agreement this week between AMR Corp.'s American Airlines and US Airways Group Inc. could end the latest chapter on consolidation that has helped to stabilize an industry troubled for decades.
- New Rules for Credit-Default Swaps Targeted for April. The credit-default-swap market is set to get its second major overhaul or “big bang” this year as the industry looks to fix structural problems some traders say have been stifling the market. A panel of representatives from banks and investment firms plan to finish new rules for CDS by April, said a person briefed on their discussions. The International Swaps and Derivatives Association and its legal counsel, Allen & Overy, are leading the effort. If supported by enough market participants, the changes would likely be implemented in the second quarter, the person said. The proposals include changes to the effective dates of the protection CDS offer and the assets that can be delivered for settlement in cash. The new rules have the potential to affect trillions of dollars of financial contracts tied to the debt of companies and governments around the world.
- Push to Gauge Value of College Gains Steam. U.S. and state officials are intensifying efforts to hold colleges accountable for what happens after graduation, a sign of frustration with sky-high tuition costs and student-loan debt. Sens. Ron Wyden (D., Ore.) and Marco Rubio (R., Fla.) are expected to reintroduce this week legislation that would require states to make more accessible the average salaries of colleges' graduates. The figures could help prospective students compare salaries by college and major to assess the best return on their investment.
- Moody's Cuts Outlook On Advanced Economies Even as Risks Ease. Moody's Investors Service lowered its outlook Tuesday for the world's advanced economies, even as risks to the global economic recovery continue to diminish. The rating company predicts that real gross domestic product growth for the eight countries in the G-20 of advanced economies, including the U.S., Japan, Germany and the U.K., will be around 1.4% in 2013, 0.2 percentage points lower than Moody's previous forecast in November, reflecting recent weak data. "While business confidence should strengthen as the economic situation improves, fiscal consolidation and high unemployment will continue to impede recovery," Moody's said in its latest Global Macro Outlook report, published Tuesday.
CNBC:
- State of the Union May Well Set Tone for Budget Talks. President Barack Obama's State of the Union speech Tuesday could drive market focus straight to the next skirmish in the budget and deficit battle with Congress, depending on his tone. Traders are watching to see how the president addresses the "sequester," or the automatic spending cuts that would kick in after March 1, if there is no action by Congress to stop them. "I think we're going to see more of a line drawn in the sand on sequestration," said David Gilmore of FX Analytics. "It will be interesting to see where he is on reducing the deficit. I think we've learned about the fiscal cliff is stuff happens at the last minute. Can kicks should be expected. There's no reason for suicide watch when it comes to fiscal policy."
Business Insider:
CNN:
- Drones become big business. Companies benefiting from this spending include Northrop Grumman (NOC), General Atomics, Lockheed Martin (LMT), Boeing (BA), Israel Aerospace, and Textron (TXT).
Real Clear Politics:
- In Health Care, One Law Is Working Like a Charm. “We have to pass the bill so you can find out what’s in it,” said Nancy Pelosi during the debate over Obamacare. The Affordable Care Act passed, and Americans are now finding out. It’s not a pretty picture. Take employment. “Medical device makers in Massachusetts and elsewhere are warning of potential job losses,” reports The Boston Globe, because of a 2.3-percent tax on medical devices imposed by law. Even liberal-heartthrob-turned-Massachusetts-Senator Elizabeth Warren, a supporter of the law, says repealing that tax is “essential.”
- BNY Mellon(BK) loses U.S. tax case, to take $850 mln profit hit. BNY Mellon Corp said on Monday it will take an $850 million charge against first-quarter profit after losing a high-stakes tax case to the U.S. Internal Revenue Service, a move that will also erode some of its capital. The BNY Mellon case was the first to go to trial since the IRS accused several U.S. banks of generating artificial foreign tax credits through loans with London-based Barclays Plc .
- PIMCO flagship fund decreases mortgage holdings in Jan. The PIMCO Total Return Fund, the world's largest bond fund run by Bill Gross, decreased its mortgage holdings to its lowest level since mid-2011, ahead of the prospect of higher interest rates and emerging inflationary pressures.
- Venezuela Devaluation Hits US, European Companies. Venezuela's latest currency devaluation will hurt a range of U.S. and European companies that sell to consumers in the country, as state-imposed price controls make it more difficult for those companies to protect their profits.
- ECB executive warns on Cyprus aid delays. European Central Bank executive board member Joerg Asmussen is pressing for agreement over Cypriot aid within weeks, in a move which will agitate a German government keen to delay any action.
Bernstein:
- Downgraded Facebook(FB) to Market Perform, lowered target to $27 from $33.
- Asian equity indices are -.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 114.0 unch.
- Asia Pacific Sovereign CDS Index 88.0 unch.
- FTSE-100 futures -.07%.
- S&P 500 futures -.16%.
- NASDAQ 100 futures -.11%.
Earnings of Note
Company/Estimate
- (FOSL)/2.27
- (KO)/.44
- (CPLA)/.74
- (AB)/.33
- (DBD)/.45
- (GT)/.20
- (AVP)/.27
- (MMC)/.52
- (HUN)/.23
- (OMC)/1.10
- (MHP)/.72
- (BWLD)/.96
- (CLF)/.52
- (RAX)/.21
7:30 am EST
- The NFIB Small Business Optimism Index for January is estimated to rise to 89.0 versus 88.0 in December.
- JOLTs Job Openings for December are estimated at 3700 versus 3676 in November.
- The Monthly Budget Deficit for January is estimated at -$2.00B versus -$27.41B in December.
- None of note
- The Fed's Plosser speaking, Fed's Lacker speaking, Fed's George speaking, ECB's Draghi speaking, BoE's Carney speaking, 3Y T-Note auction, Germany inflation data, Iran/IAEA Hearings, EU's transaction tax decision, weekly retail sales reports, CSFB Financial Services Forum, Goldman Tech/Internet Conference(AAPL presentation), Stifel Nicolaus Transports Conference and the (BSX) investor day could also impact trading today.
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