Month: February 2014

• Goldman to Fidelity Call for Calm After Global Stock Wipeout (BBG)
• Turnabout on Global Outlook Darkens Investor Mood (Hilsenrath)
• EU Said to Weigh Extending Greek Loans to 50 Years (BBG)
• Second Storm Hitting Northeast Halts Planes, Schools (BBG)
• Small Banks Face TARP Hit (WSJ)
• As Sony prepares PCs exit, pressure mounts for reboot on TVs (Reuters)
• IBM Uses Dutch Tax Haven to Boost Profits as Sales Slide (BBG)
• ECB faces dilemma with inflation drop (FT)
• London Subway Strike Snarls Traffic as Union Opposes Cuts  (BBG)
• Ukraine Aid Limbo Deepens Reserves Squeeze: East Europe Credit (BBG)
• US says China ‘acting professionally’ in air defence zone (FT)
• Europe’s Investment Bankers Mark Worst January in Decade (BBG)
• Deutsche Bank Fires Traders Amid Currencies Probe (WSJ)

 

Overnight Media Digest

WSJ

* Satya Nadella is Microsoft Corp’s new CEO. But he ascends as co-founder Bill Gates returns to a more central role at a company struggling to catch up in mobile and other fast-moving technologies.

* The new health law is projected to reduce the total number of hours Americans work by the equivalent of 2.3 million full-time jobs in 2021, a bigger impact on the workforce than previously expected, according to a nonpartisan congressional report. The analysis, by the Congressional Budget Office, says a key factor is people scaling back how much they work and instead getting health coverage through the Affordable Care Act.

* Small banks across the United States are facing a crunch-time decision over federal aid received during the financial crisis: repay the funds soon or face a steeper interest-rate bill.

* Morgan Stanley agreed to pay the top U.S. housing regulator $1.25 billion, the largest legal expense for the Wall Street firm relating to the financial crisis, to settle a lawsuit that it sold mortgage bonds to Fannie Mae and Freddie Mac without adequately disclosing their risks.

* Target Corp’s chief financial officer told Congress that software on another 25 checkout machines continued to steal payment-card data three days after the discounter had said the malware was removed.

* RadioShack Corp plans to close about 500 stores in the coming months as the electronics retailer continues to work with advisers on its restructuring.

* J.C. Penney Co Inc’s sales rose just 2 percent in its latest quarter, renewing fears about the retailer and sending its stock down sharply.

* The United States is lagging behind other developed nations in the international race to place more women on corporate boards. While the ranks of female directors at big public companies are growing faster in several countries, thanks to legal mandates or extensive voluntary efforts.

* The United States’ budding commercial space industry has sparked an intense debate over the extent to which the federal government should regulate private space flights for tourists and orbital-vehicle operations.

* Sony Corp is in talks to sell its unprofitable Vaio personal computer operations to a Japanese investment fund.

* Bristol-Myers Squibb threatened to cut jobs at two French plants after the government said it planned to seek wider use of cheaper generics.

* Time Warner Inc plans to lay off just under 500 employees, or about 6 percent of its global staff, as part of a broader effort to simplify the operating structure of its magazines, a person close to the company said.

* Adidas AG sued rival Under Armour Inc on Tuesday, alleging it infringed on 10 Adidas patents used in the German company’s fitness tracking system called miCoach.

* Medical researchers around the world are embracing genetic-sequencing technologies. Among the most eager are scientists in Saudi Arabia, which is plagued with diseases that have genetic roots.

* Toyota Motor Corp said solid vehicle sales and a sharply weaker yen pushed its net profit up more than fivefold in the latest quarter, prompting it to forecast a record profit for the full fiscal year.

* Google Inc has awarded $100 million in restricted stock to Executive Chairman and former CEO Eric Schmidt, as well as a cash bonus of $6 million tied to the search giant’s 2013 performance.

* BP Plc’s fourth-quarter profit fell 25 percent, hit by lower refining margins and lost income from asset sales, as the company continued to try to recover from the Deepwater Horizon explosion and oil spill.

* Michael Kors Holdings Ltd reported a big jump in profit for its fiscal third quarter and said it planned to expand men’s clothing and accessories into a $1 billion business, a move that could further dent rival Coach Inc .

* Chrysler Group said its Ram 1500 EcoDiesel truck has earned a U.S. Environmental Protection Agency-estimated rating of 28 miles a gallon in highway driving, setting a new bar to top for truck brands, and especially Ford Motor Co’s lightweight, aluminum-bodied F-150, due out later this year.

* Panasonic Corp saw a double-digit rise in profit for the third quarter, as stellar growth in a string of lesser-known niche businesses offset the decline of its vaunted television business.

* Christie’s has withdrawn 85 artworks by Spanish surrealist Joan Miro from its auctions in London this week, after an uproar in Portugal over the government’s move to sell the works in an attempt to cut its debt.

* Both sides declared victory after jurors delivered a mixed verdict on a civil lawsuit brought by the Securities and Exchange Commission against Life Partners Holdings Inc a Texas seller of life-insurance investments.

* A small group of investors are pressuring Yahoo Inc to revise its approach to hiring and compensation following Chief Executive Marissa Mayer’s expensive firing of her No. 2 executive.

 

FT

The chief executive of Britain’s financial watchdog warned on Tuesday that the global investigation into the manipulation of the foreign exchange market was proving as serious as the Libor rigging probe, which has resulted in more than $6 billion of fines for banks.

Morgan Stanley has been forced to restate its fourth-quarter earnings after saying it would pay $1.3 billion to the U.S. regulator for Fannie Mae and Freddie Mac to settle a lawsuit related to the sale of mortgage-backed securities.

Microsoft has named 46-year-old India native Satya Nadella as its third chief executive in the company’s 39-year history, ending a long-running search that had brought calls for an outsider who could revive the aging technology pioneer.

Stephen Hester, a former Royal Bank of Scotland boss, has been appointed chief executive of scandal-hit insurer RSA with immediate effect.

Shares in Michael Kors rose nearly 21 percent after the retailer raised its sales and profit forecasts for the year as it reported third-quarter sales in Europe had more than doubled.

 

NYT

* Bill Gates, who co-founded Microsoft but has spent his time on other pursuits, will return part-time to the company after the new Chief Executive, Satya Nadella, asked him to be his adviser.

* Insurer WellPoint Inc has captured a large portion of the government money being spent on Medicaid, the federal-state health care program for the poor, and can gamble on the new insurance marketplace because of protections offered by the federal government in the early days of the law’s introduction.

* JPMorgan Chase & Co can write off $1.5 billion in debt relief, but it will be treated as taxable income for homeowners, resulting in burdensome costs for many families.

* Morgan Stanley has agreed to pay $1.25 billion to the Federal Housing Finance Agency to resolve claims that it sold shoddy mortgage securities to Fannie Mae and Freddie Mac.

* Texting has become such a fundamental way to communicate that crisis groups have begun to adopt it as an alternative way of providing emergency services and counseling.

* A Congressional Budget Office analysis released Tuesday predicted that the Affordable Care Act would shrink the work force by the equivalent of more than two million full-time positions and recharged the political debate over the health care law, providing Republican opponents fresh lines of attack and putting Democrats on the defensive.

* Standard & Poor’s downgraded the debt of Puerto Rico to junk status on Tuesday, intensifying a cash squeeze for the commonwealth, whose financial condition is of outsize importance to the rest of the United States because its debt is widely held by individual investors through mutual funds.

* A top executive of Target told a Senate committee on Tuesday that the company was accelerating plans to adopt a technology widely used in Europe but rare in the United States that reduces potential for credit card fraud, and lawmakers from both parties called on other businesses to do the same.

* After enduring huge recalls, a tsunami in Japan and a steep drop in sales because of slowing demand, Toyota Motor Corp on Tuesday hit a milestone in its comeback, saying it was on pace to earn its biggest-ever annual profit in its fiscal year that ends in March.

* The first quarterly increase in two years for comparable-store sales at J.C. Penney was not enough to win over Wall Street. The company’s stock plunged more than 10 percent on Tuesday.

* Without clear information on Herbalife’s business model, the speculation in its stock creates extreme volatility as investors trade on rumor.

* A strong earnings report by Michael Kors Holdings Ltd not only drove up the stock on Tuesday, but also increased Kors’s net worth by about $34 million.

* Sachem Head Capital Management, a $1 billion activist hedge fund led by a protege of William Ackman, sent a public letter to Helen of Troy Ltd board on Tuesday, demanding that the consumer company explore strategic alternatives including a sale of some of its assets.

* Stephen Hester, who took the top job at Royal Bank of Scotland Group Plc after a government bailout in 2008, replaces Stephen Lee, who resigned as chief of the RSA Group after a profit warning and a 200 million pound shortfall in the reserves related to its Irish business.

* More than a year ago, UBS AG pledged to overhaul its investment bank after a prominent trading loss and a rate-rigging scandal. Those efforts appeared to be bearing fruit, based on the bank’s latest earnings report released Tuesday.

* After taking off for the Chinese New Year holiday, shareholders in Lenovo Group Ltd appear to be having some cold feet about the computer maker’s recent deal spree. Shares in the company tumbled more than 16 percent in trading on the Hong Kong Stock Exchange on Tuesday.

* James Bardrick, a veteran banker in London, has been named head of Citigroup’s business in Britain.

 

Canada

THE GLOBE AND MAIL

* The Conservative government is overhauling the rules that govern how Canadians vote and run for office by cracking down on rogue robocalls that have embarrassed the Tories and increasing by 25 percent the maximum allowable contributions to parties.

* The Royal Canadian Mounted Police has laid criminal charges as part of its probe into senators’ expenses, ensuring the controversy over the conduct of Canada’s unappointed legislators will continue for months to come.

Reports in the business section:

* Air Canada and WestJet Airlines Ltd, Canada’s two largest airlines, are raising fares to make up for a lower Canadian dollar, in one of the first tangible signs that a falling currency is adding costs to business.

* Wal-Mart Stores Inc’s Canadian venture is racing to add more low-cost items, especially fresh produce and meat, to even more outlets. In the process, the company is stealing business from incumbents, forcing them to lower their costs.

NATIONAL POST

* A Tunisian scientist awaiting trial for allegedly plotting a terrorist attack on a passenger train near Toronto lashed out at the Canadian government in an interview, accusing it of “colonizing” Afghanistan. Chiheb Esseghaier did not directly admit he had conspired to derail the train but neither did he deny it.

* The Manitoba Teachers’ Society says Ottawa should appoint a third-party manager to address chronic financial problems at the Sandy Bay reserve, where teachers say their paycheques have bounced, retirees can’t get access to their pensions and those who are ill can’t get disability benefits.

FINANCIAL POST

* Suncor Energy Inc is tapping U.S. Gulf Coast crudes and bringing more oil to its Montreal refinery by rail as it waits for pipelines to connect Eastern Canada with Western Canadian oil fields.

* BlackBerry Ltd should be cash flow positive by the fourth quarter of fiscal 2015 and spending may end up below previously announced plans, CIBC World Markets analyst Todd Coupland said after meeting with the company’s CFO, James Yersh.

 

Britain

The Telegraph

FCA WIDENS RIGGING PROBE TO OTHER BENCHMARK RATES

Regulators are investigating allegations that several London-based benchmarks used to price financial products could have been rigged, according to Martin Wheatley, the chief executive Britain’s Financial Conduct Authority.

PUNCH TAVERNS IN LAST MINUTE PLEA TO LENDERS OVER DEBT DEAL

Punch Taverns, Britain’s second biggest pubs group, will warn its lenders on Wednesday that failure to pass a controversial debt restructuring deal could lead to at least five years of “mess” and “uncertainty”.

CANDY BROTHERS PLAN MAJOR DUBAI DEVELOPMENT

Billionaire property developer brothers Nick and Christian Candy have plans to partner a development of 3 million square feet in Dubai that, if completed, would be about three times the size of the London Shard.

The Guardian

UK SHOP PRICES FALL FOR NINTH CONSECUTIVE MONTH

Prices in Britain’s shops fell at the fastest rate in more than seven years in January as retailers resorted to aggressive discounting on clothing, furniture and electrical goods to encourage consumers back into stores after the festive period.

HOUSING CRISIS WILL CONTINUE FOR 10 YEARS, GEORGE OSBORNE WARNS

British Finance Minister George Osborne has warned that the country’s housing shortage is likely to persist for at least 10 more years. He insisted the coalition’s controversial planning shakeup was having a positive effect, and played down fears of a property bubble.

The Times

BP COULD CUT INVESTMENT IN INDEPENDENT SCOTLAND

The chief executive of BP has waded into the row over Scottish independence by warning that the British oil group could cut investment in the North Sea if Scots vote “yes”in September’s referendum.

LLOYDS PLANS FOR SHARE SALE DESPITE DIVIDEND SETBACK

Ministers are pushing ahead with plans for a 5 billion pound ($8 billion) sale of shares in Lloyds Banking Group by Easter, in spite of a tough stance from regulators that have dashed the bank’s hopes it could resume dividend payments next month.

The Independent

TALKTALK UP TO 436 MLN STG AS MORE TUNE INTO VALUE DEALS

Telecom company TalkTalk’s strategy of dodging the costly pay-TV wars between BSkyB and BT and offering “value” deals for customers who only want “a little bit” of premium TV content looks to be working.

MICROCHIP MAKER ARM HOLDINGS HIT BY SMARTPHONE SALES SLOWDOWN

Microchip-designer ARM added to fears of a slowdown in the smartphone market today, as it revealed flagging shipments of high-end smartphone chips in the fourth quarter.

 

 

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
ADP employment report for January will be reported at 8:15–consensus 170,000
ISM non-manufacturing index for January will be reported at 10:00–consensus 53.9

ANALYST RESEARCH

Upgrades

American Capital Agency (AGNC) upgraded to Overweight from Neutral at JPMorgan
Archer Daniels (ADM) upgraded to Buy from Neutral at Citigroup
Archer Daniels (ADM) upgraded to Outperform from Sector Perform at Scotia Capital
Banco Bilbao (BBVA) upgraded to Overweight from Neutral at HSBC
Becton Dickinson (BDX) upgraded to Market Perform from Underperform at Raymond James
BlackRock (BLK) upgraded to Positive from Neutral at Susquehanna
Centene (CNC) upgraded to Neutral from Sell at Citigroup
Church & Dwight (CHD) upgraded to Outperform from Market Perform at BMO Capital
First Niagara (FNFG) upgraded to Neutral from Sell at Citigroup
Gray Television (GTN) upgraded to Outperform from Market Perform at Wells Fargo
Hartford Financial (HIG) upgraded to Outperform from Market Perform at Keefe Bruyette
JD Wetherspoon (JDWPY) upgraded to Overweight from Equal Weight at Barclays
Lamar Advertising (LAMR) upgraded to Buy from Neutral at Citigroup
Mobile TeleSystems (MBT) upgraded to Neutral from Underperform at Credit Suisse
Myriad Genetics (MYGN) upgraded to Market Perform from Underperform at JMP Securities
Northfield Bancorp (NFBK) upgraded to Outperform from Market Perform at Keefe Bruyette
PACCAR (PCAR) upgraded to Outperform from Neutral at RW Baird
Silver Standard (SSRI) upgraded to Hold from Sell at Deutsche Bank
Steel Dynamics (STLD) upgraded to Buy from Hold at Jefferies
Tortoise Energy (TYG) upgraded to Buy from Hold at Stifel
Vale (VALE) upgraded to Overweight from Equal Weight at Morgan Stanley
Waddell & Reed (WDR) upgraded to Buy from Neutral at Citigroup
Wesco Aircraft (WAIR) upgraded to Neutral from Sell at UBS
Wynn Macau (WYNMF) upgraded to Buy from Hold at Deutsche Bank
Zillow (Z) upgraded to Buy from Fair Value at CRT Capital

Downgrades

AGCO (AGCO) downgraded to Market Perform from Outperform at BMO Capital
Actuate (BIRT) downgraded to Hold from Buy at Drexel Hamilton
Angie’s List (ANGI) downgraded to Neutral from Buy at BofA/Merrill
CSG Systems (CSGS) downgraded to Underweight from Neutral at JPMorgan
Century Aluminum (CENX) downgraded to Market Perform from Outperform at Cowen
ITC Holdings (ITC) downgraded to Neutral from Buy at ISI Group
Oasis Petroleum (OAS) downgraded to Buy from Conviction Buy at Goldman
Sirius XM (SIRI) downgraded to Hold from Buy at Wunderlich
Triumph Group (TGI) downgraded to Neutral from Buy at BofA/Merrill

Initiations

Fossil (FOSL) initiated with a Neutral at Sterne Agee
TRW Automotive (TRW) initiated with a Neutral at UBS

HOT STOCKS

Morgan Stanley (MS) in $1.25B settlement with FHFA on MBS
JPMorgan (JPM) to pay $614M for False Claims Act violations
Google (GOOG) made additional guarantee to settle EC antitrust probe
3M (MMM) authorized $12B share repurchase program
Amazon (AMZN) announced new licensing agreements with Hasbro (HAS), Warner Bros. (TWX)
Time Warner (TWX) board authorized a total of $5B in share repurchases beginning January 1
Myriad Genetics (MYGN) to acquire Crescendo Bioscience for $270M cash
Oshkosh (OSK) increased share repurchase authorization by 10M shares

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
M.D.C. Holdings (MDC), W.R. Grace (GRA), Time Warner (TWX), HNI Corporation (HNI), Mueller Water (MWA), Atmos Energy (ATO), Genworth (GNW), Hillenbrand (HI), Atwood Oceanics (ATW), Aflac (AFL), Horace Mann (HMN), Ameriprise (AMP), Gilead (GILD), Buffalo Wild Wings (BWLD)

Companies that missed consensus earnings expectations include:
Humana (HUM), Heartland Express (HTLD), Eagle Materials (EXP), C.H. Robinson (CHRW), Electro Scientific (ESIO), Thoratec (THOR), Genomic Health (GHDX)

Companies that matched consensus earnings expectations include:
NICE Systems (NICE), Cerner (CERN), Spansion (CODE), Axcelis (ACLS), Hain Celestial (HAIN)

NEWSPAPERS/WEBSITES

Target (TGT) says data breach continued when it thought it ended, WSJ reports
Yahoo (YHOO) sites experienced outages yesterday, Re/code reports
Autonomy hits back at fraud allegations from HP (HPQ), FT reports
Volkswagen (VLKAY) mulls increasing Scania stake, Bloomberg reports
Deutsche Bank (DB) fired three New York-based forex traders, Reuters reports
Adidas (ADDYY) sues Under Armour (UA) over alleged patent infringement, Reuters reports
Judge delays BofA’s (BAC) $8.5B mortgage settlement, Reuters reports
Michael Kors (KORS) renews focus on menswear, WSJ reports
Casinos (LVS, GEBHY) take on Disney (DIS) over Florida growth, Bloomberg reports

SYNDICATE

Athlon Energy (ATHL) files to sell 12M shares of common stock for holders
Auspex Systems (ASPX) 7M share IPO priced at $12.00
Biocept (BIOC) 1.9M share IPO priced at $10.00
Continental Building Products (CBPX) 11.8M share IPO priced at $14.00
Idera Pharmaceuticals (IDRA) files to sell common stock and pre-funded warrants
YRC Worldwide (YRCW) files to sell 20.06M shares of common stock for

via Zero Hedge http://ift.tt/1fHboJo Tyler Durden

Because Americans obviously can not be trusted with making the right, or any, decisions, without parental supervision, the CVS Caremark pharmacy chain has decided to do it for them. “CVS Caremark announced today that it will stop selling cigarettes and other tobacco products at its more than 7,600 CVS/pharmacy stores across the U.S. by October 1, 2014, making CVS/pharmacy the first national pharmacy chain to take this step in support of the health and well-being of its patients and customers. “Ending the sale of cigarettes and tobacco products at CVS/pharmacy is the right thing for us to do for our customers and our company to help people on their path to better health,” said Larry J. Merlo, President and CEO, CVS Caremark. “Put simply, the sale of tobacco products is inconsistent with our purpose.” Well, unless all other major retail chains decide to pull the Bloomberg stunt and follow suit, that only means more money for CVS’ competitors. And now we begin the countdown of how long before CVS also pulls all the other “evil”, cheap high-calorie, zero nutrient junk foods that dominate its shelves and whose consumption is responsible for the bulk of cardiovascular diseases and premature deaths in the US.

From the press release:

CVS Caremark (NYSE: CVS) announced today that it will stop selling cigarettes and other tobacco products at its more than 7,600 CVS/pharmacy stores across the U.S. by October 1, 2014, making CVS/pharmacy the first national pharmacy chain to take this step in support of the health and well-being of its patients and customers.

“Ending the sale of cigarettes and tobacco products at CVS/pharmacy is the right thing for us to do for our customers and our company to help people on their path to better health,” said Larry J. Merlo, President and CEO, CVS Caremark. “Put simply, the sale of tobacco products is inconsistent with our purpose.”

Merlo continued, “As the delivery of health care evolves with an emphasis on better health outcomes, reducing chronic disease and controlling costs, CVS Caremark is playing an expanded role in providing care through our pharmacists and nurse practitioners. The significant action we’re taking today by removing tobacco products from our retail shelves further distinguishes us in how we are serving our patients, clients and health care providers and better positions us for continued growth in the evolving health care marketplace.”

Smoking is the leading cause of premature disease and death in the United States with more than 480,000 deaths annually. While the prevalence of cigarette smoking has decreased from approximately 42 percent of adults in 1965 to 18 percent today, the rate of reduction in smoking prevalence has stalled in the past decade. More interventions, such as reducing the availability of cigarettes, are needed.

“CVS Caremark is continually looking for ways to promote health and reduce the burden of disease,” said CVS Caremark Chief Medical Officer Troyen A. Brennan, M.D., M.P.H. “Stopping the sale of cigarettes and tobacco will make a significant difference in reducing the chronic illnesses associated with tobacco use.”

In a Journal of the American Medical Association (JAMA) Viewpoint published online this morning, Brennan and co-author Steven A. Schroeder, Director, Smoking Cessation Leadership Center, University of California, San Francisco, wrote, “The paradox of cigarette sales in pharmacies has become even more relevant recently, in large part because of changes in the pharmacy industryMost pharmacy chains are retooling themselves as an integral part of the health care system. They are offering more counseling by pharmacists, an array of wellness products and outreach to clinicians and health care centers.Perhaps more important, pharmacies are moving into the treatment arena, with the advent of retail health clinics. These retail clinics, originally designed to address common acute infections, are gearing up to work with primary care clinicians to assist in treating hypertension, hyperlipidemia and diabetes all conditions exacerbated by smoking.”

CVS Caremark’s decision to stop selling tobacco products is consistent with the positions taken by the American Medical Association, American Heart Association, American Cancer Society, American Lung Association and American Pharmacists Association that have all publicly opposed tobacco sales in retail outlets with pharmacies.

“As a leader of the health care community focused on improving health outcomes, we are pledging to help millions of Americans quit smoking,” said Merlo. “In addition to removing cigarettes and tobacco products for sale, we will undertake a robust national smoking cessation program.”

The program, to be launched this Spring, is expected to include information and treatment on smoking cessation at CVS/pharmacy and MinuteClinic along with online resources. The program will be available broadly across all CVS/pharmacy and MinuteClinic locations and will offer additional comprehensive programs for CVS Caremark pharmacy benefit management plan members to help them to quit smoking. Approximately seven in ten smokers say they want to quit and about half attempt to quit each year.

“Every day, all across the country, customers and patients place their trust in our 26,000 pharmacists and nurse practitioners to serve their health care needs,” commented Helena B. Foulkes, President, CVS/pharmacy. “Removing tobacco products from our stores is an important step in helping Americans to quit smoking and get healthy.”

The decision to exit the tobacco category does not affect the company’s 2014 segment operating profit guidance, 2014 EPS guidance, or the company’s five-year financial projections provided at its December 18th Analyst Day.The company estimates that it will lose approximately $2 billion in revenues on an annual basis from the tobacco shopper, equating to approximately 17 cents per share. Given the anticipated timing for implementation of this change, the impact to 2014 earnings per share is expected to be in the range of 6 to 9 cents per share. The company has identified incremental opportunities that are expected to offset the profitability impact. This decision more closely aligns the company with its patients, clients and health care providers to improve health outcomes while controlling costs and positions the company for continued growth.

via Zero Hedge http://ift.tt/1g1p53W Tyler Durden

It’s snowing in New York so the market must be down. Just kidding – everyone know the only thing that matters for the state of global risk is the level of USDJPY and it is this that nearly caused a bump in the night after pushing the Nikkei as low as 13,995, before the Japanese PPT intervened and rammed the carry trade higher, and thus the Japanese index higher by 1.23% before the close of Japan trading. However, since then the USDJPY has failed to levitate as it usually does overnight and at last check was fluctuating within dangerous territory of 101.000, below which there be tigers. The earlier report of European retail sales tumbling by 1.6% on expectations of a modest 0.6% drop from a downward revised 0.9% only confirmed that the last traces of last year’s illusionary European recovery have long gone. Then again, it’s all the cold weather’s fault. In Europe, not in the US that is.

Elsewhere, while US futures found a lift with the European open, in addition to weak retail sales, the January Euro area Final Composite PMI also disappointed, coming in at 52.9, down 0.3pt from the preliminary estimate as a downward revision to services outweighed the small upward revision in manufacturing. Relative to December, the index rose 0.8pt. There was a significant improvement in the Spanish PMI, which reached its highest level since July 2007, offset by a drop in the German Services PMI which slid from 53.6 to 53.1, while France remained in contraction territory. And while the PMI in Europe was not as disappointing as in the US  – it must not have snowed on the continent? -a result of some weaker than expected prints, more firms (BNP) have joined Deutsche Bank in expecting the ECB to cut rates at its meeting tomorrow, with the deposit rate going negative – because there is nothing like paying a bank for the privilege of funding it.

In other news, credit spreads tightened and financials outperformed on the sector break down as market participants positioned for what is widely expected to be a very dovish press conference by Draghi tomorrow. London listed RSA Insurance Group was the notable outperformer, gaining 5%, after the company announced that it hired ex-RBS boss Hester as CEO and was also raised to equal-weight from under-weight by analysts at Barclays. At the same time, health care related stocks fared well, with Bunds also better bid as sentiment remained cautious amid a slew of major risk events over the coming two days.

Looking elsewhere, the release of weaker than expected UK Services PMI data, which follows on from the release of weaker than expected Manufacturing PMI earlier this week meant that GBP has underperformed its major counterpart EUR, with the pair testing the 100DMA level to the downside. In terms of EU related data, Spanish Services PMI data came in at its highest since July 2007 and the employment index rose above the key 50 level for the first time since February 2008. However, in spite of broadly positive macroeconomic data releases, expectations of more policy easing by the ECB also ensured that EUR/USD failed to move into positive territory.

In the US we will have ADP employment change which will be watched closely with Friday’s payrolls figure fast approaching. Consensus is expecting a +187k  number. Today will also see the US ISM non-manufacturing composite number which will likely be more closely watched this week coming as it does after Monday’s disappointing manufacturing number. Consensus is expecting 53.7, a slight rise from December’s 53. In terms of Fed speak we will have Fed President’s Plosser and Lockhart talking today on the economic outlook whilst Governor Tarullo will testify on the Volker Rule before the House Financial Services Committee.

Headline bulletin from RanSquawk and Bloomberg

• Cautious sentiment continues to play a crucial role across markets ahead of upcoming key risk events.
• Despite posting a reading of 58.3, the UK Services PMI fell short of expectations and consequently put further pressure on GBP after this week’s equally disappointing Manufacturing PMI.
• Going forward, market participants will get to digest the release of the latest ADP Employment Change and ISM Non-Manufacturing Composite reports, as well as the weekly DoE data
• Treasuries steady, 10Y yields holding near early Nov. lows, before report from ADP forecast to show U.S. economy added 185k jobs in Jan.; focus on Friday’s nonfarm payrolls, est. +184k, unemployment rate at 6.7%.
• The next handout to Greece may include extending the maturity on rescue loans to 50 years and cutting the interest rate on some previous aid by 50 basis points, according to two officials with knowledge of discussions
• Obamacare will reduce the hours Americans work by the equivalent of 2 million full-time jobs in 2017, the CBO said, with the reduction, about twice the agency’s estimates in 2010, due “almost entirely” to low-wage employees who may choose to give up extra hours of work
• Euro zone retail sales fell 1.6% in Dec., more than -0.7% median estimate in Bloomberg survey
• U.K. services grew at the slowest pace in seven months in January as new business cooled and wet weather soaked the country
• Japan’s base wages adjusted for inflation last year matched a 16-year low in 2009 when the world was gripped by recession, posing a risk to consumer spending as the nation girds for a higher consumption tax
• Pimco’s  Bill Gross said the pace of economic growth in China is among the biggest questions in developing nations and the largest risks for markets
• A second winter storm this week swept into the U.S. Northeast, grounding more than 2,000 planes, closing schools and threatening power lines. A third system is expected in about four days
• Sovereign yields lower. EU peripheral spreads tighten. Asian and European stocks higher, U.S. stock-index futures decline. WTI crude, gold and copper higher

Asian Headlines

JPY swaps bull-flattened marginally as JGBs ended firmer extending yesterday’s gains amid lack of sellers even ahead of tomorrow’s 30yr auction, in spite of the fact that the Nikkei 225 closed with gains of 1.23% at 14180.38. (IFR/ RANsquawk)

EU & UK Headlines

UK Services PMI (Jan) M/M 58.3 vs. Exp. 59.0 (Prev. 58.8)
Eurozone PMI Service (Jan F) M/M 51.6 vs. Exp. 51.9 (Prev. 51.9)
– EU PMI Composite (Jan F) M/M 52.9 vs. Exp. 53.2 (Prev. 53.2)

Eurozone Retail Sales (Dec) M/M -1.6% vs Exp. -0.7% (Prev. 1.4%, Rev. 0.9%)
– Eurozone Retail Sales (Dec) Y/Y -1.0% vs Exp. 1.5% (Prev. 1.6%, Rev. 1.3%)

ECB sources said the central bank shows varying concerns over deflation. They went on to say that unanimity of the governing council was no longer required for approval of policy changes and indicated that ECB’s Draghi’s position would be key to whether or not the ECB makes any policy decision move this week or next month. (MNI)

Of note, disruptions to London underground travel is expected to result in lower than usual trade volumes. The strike is expected to last for 48 hours.

US Headlines

Fitch has said the US debt limit deadline is back in focus and will be a key driver for resolving the RWN assigned by Fitch to the ‘AAA’ US sovereign rating on 15th October 2013. Fitch expects the debt ceiling will be raised, or suspended, before the Treasury exhausts it borrowing capacity and says if the debt ceiling is not raised or suspended again from the 8th February then the Treasury would have to deploy extraordinary measures to access new funding. However, these would only buy limited time before the borrowing capacity would run out again.

Elsewhere, Newsflow remains light from the US ahead of key risk events, with market participants today being presented with the ADP Employment Change figure.

Equities

The OMX in Sweden has been the notable outperformer for European equities after being led by positive earnings reports with Alfa Laval shares up 6.0%. Elsewhere, Hargreaves Lansdown shares are seen lower by over 6% and Sygenta trade with losses of over 3.5% following their disappointing pre-market earnings reports.

FX

As already mentioned GBP is the notable underperformer for the session after the underwhelming UK Services PMI release from the UK. Looking elsewhere, JPY is firmer across the board and leading both USD/JPY and EUR/JPY lower, with EUR failing to halt the downward momentum despite positive macroeconomic release from the area, as caution continues to dictate the state of play across markets.

RBA’s Edwards said the AUD fall is not necessarily over and an abrupt AUD fall would be serious for economy. Furthermore, the Impact of AUD fall on inflation is swifter than expected and marked AUD fall risks more inflation pressure to come. (DJN)

Commodities

US API Crude Oil Inventories (Jan 31) W/W 384k vs. Prev. 4750k
– Cushing Crude Inventories (Jan 31) W/W -1600k vs. Prev. 221k
– Gasoline Inventories (Jan 31) W/W -1200k vs. Prev. 363k
– Distillate Inventories (Jan 31) W/W -1500k vs. Prev. -1790k

BofA sees Brent crude dropping towards WTI price for 2020 futures and sees long-term oil prices faltering on stronger USD and slow demand. (BBG)

Gazprom says gas output to grow 5% this year vs. 4.3% in 2013.

CME raised NYMEX speculator natural gas margin by 9.9% to USD 5,500. (BBG)

* * *

Finally, here is Jim Reid’s overnight recap

A little bit of calm has broken out ahead of the key US employment data today and Friday, the global services PMIs today and the ECB meeting tomorrow. The bounce though has been relatively shallow so far with markets seemingly waiting for a bit more confidence. Asian markets have been stronger overnight with the Nikkei rising off its YTD lows and gaining +1.6% and the KOSPI up +0.5%. The Hang Seng though is slightly lower perhaps in sympathy with the Hang Seng China Enterprises Index which after opening higher has fallen by around -0.9% as we type. It’ll be interesting to see how China trades when it fully returns from the New Year celebrations after what have been a busy couple of weeks of newsflow. The fairly quiet Asian session follows on from DM calm yesterday with European equity markets flat to slightly negative whilst US markets posted solid gains. The Eurostoxx ended the day basically flat as Core European market losses were offset by Periphery gains. In the US the S&P rose 0.76% after Monday’s large drops. This came on the back of some positive economic news coming out of the US with the New York ISM rising to 64.4 from 63.8 and Factory Orders for December declining less than expected (-1.5% vs. -1.8% consensus expectation). The CBO’s budget deficit forecasts were also lower than expected. DM credit performed with indices tightening across the board with Main and IG CDX tightening by 2.6bps and 1.8bps respectively whilst Xover and CDX HY tightened by 7bps and 8bps respectively.

EM showed some signs of improvement yesterday with USDTRY and USDZAR down –2.2% and –1.7% respectively. DM government bond yields drifted up over the course of the day, with the US 10Y finishing 4bps higher. Whilst EM market’s did show some positive signs yesterday, it was interesting to see that Russia cancelled a bond auction for the second week in a row as the past weeks EM troubles have seen the nation’s bond yields rise to recent era highs, possibly giving a window into some of the real difficulties EM economies may face if interest rates continue to rise.

Turning from our current crisis to a previous one – Alexis Tsipras, head of the Greek radical-left Syriza party which is currently leading in polls for this year’s European elections as well as in opinion polls for any Greek legislative election, said yesterday that Greece would seek to negotiate an international write off of one third of its debt if his party won a general election. He stated that, “Greek creditors want at least part of their money back. That’s not possible in the current situation.” Whilst clearly not the story of the moment and one that may include some political grandstanding it is a reminder that politics can get in the way of a recovery story. As we talked about in our 2014 Outlook: The Bubble-Taper Tightrope, May’s European Elections may provide a worrying window into the steady rise of alternative parties in Europe after years of weak growth and austerity. This is probably not a story that will be too problematic for 2014 but one that is bubbling under the surface for future years. With European Sovereigns now in much better shape funding wise the systemic risks now mostly move on to political ones which are much slower moving than funding ones that can bite immediately.

Looking to the day ahead we have European January Services PMI’s with readings for Spain, Italy, France, Germany, the UK and Euro zone. Consensus expectation is for PMI’s to broadly continue at their December levels but with Italy and the UK set to improve slightly. In the US we will have ADP employment change which will be watched closely with Friday’s payrolls figure fast approaching. Looking at the ADP employment surveys past forecasts for private payrolls DB’s Joe LaVorgna thinks there is a chance that today’s ADP may under-estimate the BLS private payrolls figure. So certainly a release to watch for surprises. Consensus is expecting a +187k  number whilst Joe is forecasting a 200k number. Today will also see the US ISM non-manufacturing composite number which will likely be more closely watched this week coming as it does after Monday’s disappointing manufacturing number. Consensus is expecting 53.7, a slight rise from December’s 53. In terms of Fed speak we will have Fed President’s Plosser and Lockhart talking today on the economic outlook whilst Governor Tarullo will testify on the Volker Rule before the House Financial Services Committee.

via Zero Hedge http://ift.tt/1g1p6F8 Tyler Durden

Bitcoin Is Going Mainstream

Reddit, Virgin Galactic, and Overstock.com now accept Bitcoin.

So do dating site OKCupid and travel site CheapAir.com. Game giant Zynga is now in the testing phase.

Two big Las Vegas hotels accept Bitcoin.

Congressman Steve Stockman (R-Texas) accepts Bitcoin for 2014 campaign contributions. As does a law firm in Australia.

Reuters notes:

Already, 21,000 merchants are using Coinbase to accept Bitcoin from customers.

Indeed, there are websites listing scores of businesses which now accept bitcoin.

(And you can use Bitcoin at Amazon, Barnes and Noble, Crate & Barrel, Target, Sears, CVS, Hyatt Hotels, Kohl’s, Burger King, Applebees, Victoria’s Secret, Land’s End, Facebook, Groupon, Banana Republic, the Gap, AMC and Fandango movie theaters, Whole Foods, Wine.com, Wine Enthusiast, Papa John’s, Nike, Adidas, Sephora, Sports Authority, Staples, Zales jewelry, Game Stop, FTD flowers, Zappos and hundreds of other stores if you use Bitcoin to buy gift cards at Gyft.)

But is Bitcoin going mainstream a good thing or a bad thing?

People Power … Challenging the Status Quo?

Andy Haldane – Executive Director for Financial Stability at the Bank of England – believes that peer-to-peer internet technology will lead to the break up of the big banks.

Bank of America said “We believe Bitcoin could become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money-transfer providers”

Visa has attacked Bitcoin as being less trustworthy than its well-established payment system.

So it sounds like Bitcoin is shaking up the status quo …

Backed by … the Big Banks?

On the other hand, a lot of major mainstream players are backing Bitcoin and other digital payment systems.

Wells Fargo wants to get into Bitcoin in a big way.

JP Morgan Chase has filed a patent for a Bitcoin-like payment system. And Russia’s largest bank is working on a Bitcoin alternative as well.

Ben Bernanke and the Department of Justice have both cautiously blessed Bitcoin.

François R. Velde, senior economist at the Federal Reserve in Bank of Chicago, labeled it as “an elegant solution to the problem of creating a digital currency.” John Browne theorizes:

While crypto-currencies remain insulated from central bank manipulation, governments have thus far been tolerant, perhaps because their capability to track transactions is more advanced than Bitcoin believers admit.

Indeed, Bitcoin is not really that anonymous, as the NSA can track Bitcoin trades.

The NSA can apparently also hack Bitcoin. And see this. Given that the NSA may be changing the amount in people’s accounts, it would be child’s play for them to change the amount in your Bitcoin wallet.

And Yves Smith argues that Bitcoin actually plays into the hands of the central bankers:

Many [Bitcoin enthusiasts] clearly relish the idea of launching a currency outside the control of central banks (plus this beats Cryptonomicon in geekery).

 

If you believe the hype, you’ve been had. As Izabella Kaminska of the Financial Times tells us, you all are really just doing free/underpaid R&D for central banks, since you are debugging and building legitimacy for one of their fond projects, making currencies digital and getting rid of cash altogether.

 

I had wondered about the complacency of Fed and SEC officials in Senate Banking Committee hearings on Bitcoin last year.

 

***

 

As Kaminska explains (boldface mine):

Central bankers, after all, have had an explicit interest in introducing e-money from the moment the global financial crisis began…

 

Bitcoin has helped to de-stigmatise the concept of a cashless society by generating the perception that digital cash can be as private and anonymous as good old fashioned banknotes. It’s also provided a useful test-run of a digital system that can now be adopted universally by almost any pre-existing value system.

 

This is important because, in the current economic climate, the introduction of a cashless society empowers central banks greatly. A cashless society, after all, not only makes things like negative interest rates possible [background here, here, here and here], it transfers absolute control of the money supply to the central bank, mostly by turning it into a universal banker that competes directly with private banks for public deposits. All digital deposits become base money.

 

Consequently, anyone who believes Bitcoin is a threat to fiat currency misunderstands the economic context. Above all, they fail to understand that had central banks had the means to deploy e-money earlier on, the crisis could have been much more successfully dealt with.

 

Among the key factors that prevented them from doing so were very probable public hostility to any attempt to ban outright cash, the difficulty of implementing and explaining such a transition to the public, the inability to test-run the system before it was deployed.

 

Last and not least, they would have been concerned about displacing conventional banks from their traditional deposit-taking role, and in so doing inadvertently worsening the liquidity crisis and financial panic before improving it…

 

Almost of all of these prohibitive factors have, however, by now been overcome:

 

1) Digital currency now follows in the footsteps of a “disruptive” anti-establishment digital movement perceived to be highly accommodating to the black market and all those who would ordinarily have feared an outright cash ban. This makes it exponentially easier to roll out. Bitcoin has done the bulk of the educating.

 

2) What was once viewed as a potentially oppressive government conspiracy to rid the public of its privacy can be communicated as being progressive and innovative as a result.

 

3) Banks have been given more than five years to prove their economic worth and have failed to do so. If they haven’t done so by now, they probably never will, meaning there’s unlikely to be a huge economic penalty associated with undermining them on the deposit front or in transforming them slowly into fully-funded fund managers.

 

4) The open-ledger system which solves the digital double-spending problem has been robustly tested. Flaws, weaknesses and bugs have been understood, accounted for, and resolved.

The balance of the article describes how the central bank digital currency would be launched, and Kazmina finds a plan developed by Miles Kimball of the University of Michigan to be thorough and viable.

 

Oh, and why would Bitcoin, um, central bank digital currency make it viable to implement negative interest rates? Kaminska tells us:

…the greater the negative interest rate, the greater the incentive to hold alternative coins. The greater the incentive to hold alternative coins ,the greater the incentive to produce them. The greater the incentive to produce them, the greater the chances of oversupply and collapse. The more sizeable the collapse, the more desirable the managed official e-money system ultimately becomes in comparison.

 

Either way, the key point with official e-money is that the hoarding incentives which would be generated by a negative interest rate policy can in this way be directed to private asset markets (which are not state guaranteed, and thus not safe for investors) rather than to state-guaranteed banknotes, which are guaranteed and preferable to anything negative yielding or risky (in a way that undermines the stimulative effects of negative interest rate policy).

So all these tales … of how liberating and democratic Bitcoin will be are almost certain to prove to be precisely the reverse. Hang onto your real world wallet.

The head of Signature Bank – Scott Shay – raised these same issues last month on CNBC:

 

Bottom Line: Too Early To Tell

It’s not yet clear whether Bitcoin will be a force for good or a backdoor way for big banks – and central banks – to get people to accept a cashless society.

Note: Yes, we accept Bitcoin:

13fANEP7h6huhjYw5P7hfognjtgKdD9dUC

via Zero Hedge http://ift.tt/1kQuqyb George Washington

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

The vision of ‘talking’ cars that avoid crashes is well on the way to becoming a reality. And we’re not just talking about cars talking to cars, but about cars talking to bikes, trucks talking to motorcycles, and even buses talking to pedestrians. This promises to significantly reduce the number of deaths and injuries on our nation’s roads while unleashing a new wave of innovation from advanced traffic management systems and smart mobility apps to real-time traffic, transit and parking information.

 

– Scott Belcher, President and CEO of the Intelligent Transportation Society of America

Worried about “pre-crime?” What about “pre-crash?”

The geniuses at the National Highway Traffic Safety Administration (NHTS) are so concerned about your “safety,” they have decided to take it into their own hands and make it mandatory that your car wirelessly communicate with other vehicles on the road. Transportation Secretary Anthony Foxx went so far as to say the technology could save “thousands of lives and even prevent accidents in the first place.” The concept of “pre-crash” has been born.

As in so many other aspects of life, there is a top down push to remove all control from the individual to the collective (recall the MSNBC host who proclaimed children don’t belong to their parents), typically justified within the content of the “war on terror,” and always justified with “it’s for your own good.” Apparently, we aren’t capable of making our own choices in anything any more, including something as simple as driving a car.

This push to exert control within individual vehicles is nothing new and appears to be a global phenomenon.  For instance, just last week I posted an article titled: The EU May Mandate a “Remote Stopping Device” in All Cars for Police Use.

Now we learn from The Detroit News that:

Washington— The U.S. Transportation Department said Monday it plans to propose requiring all new cars and trucks to eventually communicate with one another, which could one day help reduce up to 80 percent of crash deaths.

 

But under the tentative timetable laid out, automakers aren’t likely to be required to install the in-vehicle communication devices until around 2020 — and even then, the devices will be phased in.

 

Transportation Secretary Anthony Foxx said the National Highway Traffic Safety Administration will begin working on a proposal to require vehicle-to-vehicle communication in future cars and trucks. He said he hopes to propose the regulation by the time the Obama administration leaves office in January 2017. NHTSA gives automakers at least 18 months of lead time before mandating new technology.

 

Foxx said at a news conference the technology could save “thousands of lives and even prevent accidents in the first place.”

 

Acting NHTSA chief David Friedman said the technology is a “game changer” and “nothing short of revolutionary.”

Um, sorry but if this is such a “gamer changer” and “revolutionary” why not just put it out there and see if the market adopts it. If it is as wonderful as Mr. Friedman claims, why does it need to be mandatory. No one made Bitcoin mandatory, yet it is being adopted because it genuinely is revolutionary. This guy’s statement is completely idiotic.

But major challenges need to be addressed: including ensuring that the devices would be secure — to prevent hackers couldn’t take control of the signals.

Hahaha, ok good luck with that. Just ask Target for some tips.

NHTSA also expects to decide soon whether to require future cars to have active collision avoidance systems — like automatic braking that halts a vehicle about to strike a stopped vehicle in front of it. Those systems are currently on many luxury cars.

Yeah, what could go wrong…

Greg Winfree, assistant secretary for Research and Technology, said some automakers are already researching how they could tie together vehicle-to-vehicle systems and automatic braking. Future systems would also include cars talking to sensors embedded in highways. A car could alert a highway sign that the roads were icy — and the sign could flash a warning to drivers, Winfree said. “This a technological first step,” Winfree said.

Kill me.

Scott Belcher, president and CEO of the Intelligent Transportation Society of America, the nation’s largest association representing the transportation and technology communities including major automakers and suppliers, praised the announcement.

 

“The vision of ‘talking’ cars that avoid crashes is well on the way to becoming a reality. And we’re not just talking about cars talking to cars, but about cars talking to bikes, trucks talking to motorcycles, and even buses talking to pedestrians. This promises to significantly reduce the number of deaths and injuries on our nation’s roads while unleashing a new wave of innovation from advanced traffic management systems and smart mobility apps to real-time traffic, transit and parking information,” he said.

Of course he praises it, he is probably set to make a fortune from this mandatory gulag car network.

Full article here.

via Zero Hedge http://ift.tt/1imRral Tyler Durden