Today's Headlines

Bloomberg:   

• Emerging-Market Shakeout Putting Reserves Into Focus: Currencies. Foreign-exchange reserves are emerging as the latest battleground between traders and developing nations trying to stem the worst rout in their currencies since 2008. Nations with the smallest reserves to fend off currency speculators will continue to see their exchange rates under pressure, options prices show. Of the 31 major currencies tracked by Bloomberg, traders are most bearish on Argentina’s peso, Turkey’s lira, Hungary’s forint, Indonesia’s rupiah and South Africa’s rand, while the forwards market signals that Ukraine’s hryvnia will fall 20 percent in a year. “If you start to burn too quickly through your foreign reserves, it’s an ominous sign -- and of course in the forex market, they smell blood,” Robbert Van Batenburg, the director of market strategy at broker Newedge Group SA in New York, said Feb. 5 by phone. “It creates this domino effect.”

• PBOC Singling Out Industries Fuels Nomura Anxiety: China Credit. The singling out of three debt types most at risk by the People’s Bank of China has prompted Nomura Holdings Inc. to warn that rising borrowing costs will make it even harder to avoid a default by these issuers. The PBOC will enhance monitoring of local government financing vehicles, industries with overcapacity and property developers to prevent default risks from spreading, according to its fourth-quarter policy report issued on Feb. 8. Jinzhou Economic Technology Zone Development Group Co., an LGFV in Liaoning province, sold new seven-year bonds at 9.1 percent in January, while Guangxi Nonferrous Metal Group Co. issued nine-month bills at 8.5 percent. That’s almost twice as high as the yield on 2021 government debt. 

• RBS May Be Cut by Moody’s on Weaker Capital Position. Royal Bank of Scotland Group Plc’s credit rating may be downgraded by Moody’s Investors Service after the bank said last month that full-year results would be hurt by provisions and conduct-related costs. “As a result, the bank will report a weaker than previously anticipated regulatory capital position at end-December 2013, weakening its standalone credit profile,” Moody’s said in a statement today.

• Draghi Said to Face Backlash in Dispute Over Italian Colleague. Mario Draghi is facing resistance from euro-area central bank chiefs on his choice for a senior position in the currency bloc’s new bank supervisor, said three people with knowledge of the matter. Ignazio Angeloni, an Italian who is Director General of the institution’s financial-stability wing, is the European Central Bank president’s pick for one of four seats the Governing Council will appoint to the Supervisory Board that starts oversight of the region’s biggest lenders in November, the people said. Draghi encountered heated opposition at a council dinner on Feb. 5, said two of the people, who asked not to be identified as the issue is private. 

• European Stocks Rise for Sixth Day on ING, SocGen Profit. European stocks rose for a sixth day, their longest winning streak this year, as companies from ING Groep NV (INGA) to Societe Generale SA (GLE) posted profit that beat estimates, and a report showed Chinese exports surged. ING and Societe Generale each gained more than 3.5 percent. Norsk Hydro ASA (NHY) added 3.6 percent after reporting quarterly sales that exceeded estimates. Telenor ASA (TEL) dropped the most since May 2012 after the Norwegian telecommunications operator reported earnings that trailed analysts’ predictions. The Stoxx Europe 600 Index advanced 0.8 percent to 332 at the close of trading. 

• Gold Futures Climb to Three-Month High on Fed Stimulus Outlook. Gold futures for April delivery gained 0.3 percent to $1,293.90 at 10:49 a.m. on the Comex in New York, after reaching $1,296, the highest since Nov. 8. Prices are heading for a sixth session of gains, the longest rally since June 2012. 

• WTI Crude Rises to 4-Month High as Cushing Supply Drops. WTI for March delivery advanced 37 cents, or 0.4 percent, to $100.31 a barrel at 12:29 p.m. on the New York Mercantile Exchange after climbing to $101.38, the highest level since Oct. 18. Oil traded at $101.21 a barrel before the report. The volume of all futures was 49 percent above the 100-day average.

• Fed Makes ‘Fool’s Paradise’ on Low Rates, AIG’s Miller Says. Record-low borrowing costs that helped fuel the stock market rebound are insufficient to sustain a U.S. economic recovery, said Steve Miller, the chairman of American International Group Inc. “It’s a fool’s paradise,” Miller said on Bloomberg Television today. “We’re basically printing money to keep everybody happy in the short term.” “Janet is going to keep rates low for a while,” Miller said in an interview with Tom Keene and Scarlet Fu. “But you can’t keep that going forever. So we need to get real on government spending.”

• Obamacare Raises Medicaid Cost as Insurers Shift Tax Bill. Health insurers told to pay $150 billion in taxes over a decade to help fund Obamacare are now shifting at least part of that cost back to taxpayers. Congress passed the insurer tax four years ago to help cover the uninsured under the Patient Protection and Affordable Care Act. Now, the industry is pushing to include some of the cost in contracts with Medicaid programs for the poor that are jointly funded by state and federal governments. 

• ‘Historic’ Storm Ices Atlanta as Northeast Faces Snow. A potentially historic winter storm threatens to coat Georgia with ice, knocking out power and grounding thousands of planes, before bringing snow to Northeastern cities including Washington and New York. New York may get 1-3 inches (3-8 centimeters) of snow tonight, and Washington as much as 4 inches, according to the latest update by the National Weather Service at 6:51 a.m. in New York. Atlanta is forecast to receive as much as half an inch of ice today.

• Apple(AAPL) Said to Plan New Set-Top Box Amid Time Warner Cable Talks.

• Obama Sued by Rand Paul Over Phone Surveillance Program. President Barack Obama was sued by Senator Rand Paul over U.S. electronic surveillance he claims is illegal, adding to challenges that may land post-Sept. 11 government data collection in the U.S. Supreme Court.

Wall Street Journal: 

• Former New Orleans Mayor Ray Nagin Convicted. Case Caps Widespread Probe into City Corruption After Hurricane Katrina.

CNBC:

• Fund closure signals trouble in emerging markets.\

• If investors bail on housing, what then? (video)

• Seesaw economy: Nearly one in three dipped into poverty.

ZeroHedge: 

• Italian Government On Verge Of Collapse (Again).

• Deutsche Bank Explains How, And Why, Germany Opened The OMT Pandora's Box.

• Mortgage Applications Drop - Hover Near 19 Year Lows. (graph)

• Doomed If We Do, Doomed If We Don't. (graph)

• Jeff Gundlach Sells Apple(AAPL); Warns High Yield Bonds "Most Over-Valued In History".

• Another JPMorgan Banker Dies, 37 Year Old Executive Director Of Program Trading.

Business Insider:

• High-Frequency Traders Are Upgrading To Lasers.

• Corporate America Is Finally Getting Nervous About Record-High Profit Margins.

• The Surge In Chinese Exports Has Some Worried That Over-Invoicing Has Made A Comeback.

Rolling Stone:

• The Vampire Squid Strikes Again: The Mega Banks' Most Devious Scam Yet. Banks are no longer just financing heavy industry. They are actually buying it up and inventing bigger, bolder and scarier scams than ever.

Forbes:

• When It Comes To Real Estate Bubbles, China's Got Nothing On Brazil. World investors may be worried about China’s real estate bubble. But only one country surpasses that market’s housing boom, and that’s Brazil.

Reuters:

• Ice storm cuts power to over 330,000 customers in U.S. Southeast. 

• Soft data not enough to derail QE cuts -Fed's Bullard.

• Asset bubbles risk grows with better U.S. economy -Fed's Bullard.