Evening Headlines
Bloomberg:
- ECB May Hold Out on Greek Swap Until Investor Deal Reached on Debt Burden. The European Central Bank is likely to refuse to show its hand on how it will help cut Greece’s debt burden until investors and the government have agreed to a deal, said economists from ING Group to Deutsche Bank. While Greece’s creditors are increasing pressure on the ECB to join the bond swap being negotiated with the country, central bankers have remained silent on their intentions. Economists say the ECB wants to see the private-sector agreement concluded before indicating its strategy, which may include forgoing profits from its Greek bonds or a transfer to one of the region’s rescue funds. The Greek government needs to reach a deal and secure a second European Union-led bailout by March 20, when it faces a 14.5 billion-euro ($19.1 billion) bond payment. Charles Dallara, who as managing director of the Institute of International Finance leads a group negotiating on behalf of creditors, says involvement of public institutions is needed as bondholders hold only about 60 percent of Greek debt. “Politicians will bang their heads against the wall trying to get the ECB to be involved at this stage,” said Carsten Brzeski, senior economist at ING in Brussels. “The ECB will stay out of this as long as it can. While they won’t take a haircut, not booking profits would be a realistic option.”
- North Sea Oil Exports to Asia at 8-Year High: Energy Markets. More North Sea oil is being shipped to Asia than at any time in the past eight years as prices fall to their cheapest levels in 15 months compared with Middle East alternatives. Brent traded at $2.41 a barrel more than Dubai crude on Jan. 13, the smallest difference since October 2010, PVM Oil Associates Ltd. data show. Companies led by BP Plc (BP/) and Vitol Group have sent at least 8 million barrels of North Sea oil to Asian ports since mid-December, equivalent to six days of U.K. production, according to ship-tracking data from AISLive Ltd. That’s the most for any month since 2004, data from Galbraith’s Ltd., a London-based shipbroker, show. Rising production in Libya, refinery closures from the U.K. to Switzerland and a drop in U.S. gasoline demand have created a surplus that’s weighing on the price of low-sulfur, or sweet, crude produced in the North Sea (EUCSFORT) and West Africa. “There’s a glut of light-sweet crude,” said Leo Drollas, chief economist at the Centre for Global Energy Studies, the London-based researcher founded by former Saudi Arabia Oil Minister Sheikh Ahmad Yamani. “It’s a demand-and-supply story. The return of Libya is part of it. Then there’s weak demand for gasoline in the U.S. It’s negative.”
- Oil Futures Decline a Fifth Day as U.S. Stockpiles Rise, Fuel Demand Slips. Oil declined for a fifth day in New York, matching the longest losing streak since August, as U.S. crude stockpiles increased more-than-estimated and gasoline consumption fell to a 10-year low. Futures were down as much as 0.6 percent after settling yesterday at the lowest close in six weeks. Crude supplies rose by 4.2 million barrels last week, figures from the Energy Department showed. They were projected to increase 2.6 million barrels, according to a Bloomberg News survey. Gasoline consumption decreased to 7.97 million barrels a day, the lowest since September 2001, according to Energy Department data. Stockpiles of the fuel increased 3.02 million barrels last week, the report showed. They were projected to rise 500,000 barrels, according to the median of 12 analyst estimates in the Bloomberg News survey.
- Facebook(FB) Cites Google+(GOOG), Mobile Shift Among Potential Risks. Facebook Inc., the social-networking giant that filed for an initial public offering today, cited Google+ competition, regulatory scrutiny, hacker attacks and the shift to mobile technology among the stock’s potential risks. Facebook is vying with Google+ and other Google Inc. sites in the social-networking market, along with regional rivals, the company said in the risk-factors section of its filing. Facebook also said it would face competition in China if it manages to gain access to that market, where it’s currently restricted. “Certain competitors, including Google, could use strong or dominant positions in one or more markets to gain competitive advantage against us in areas where we operate,” Facebook said. Their tactics may include “integrating competing social- networking platforms or features into products they control.”
- Zuckerberg Stake Worth Up to $28.4 Billion in Facebook’s IPO. Facebook Inc.’s initial public offering is poised to make Mark Zuckerberg worth $28.4 billion -- wealthier than Google Inc.’s co-founders and almost on par with Larry Ellison, who started Oracle Corp. 35 years ago. The 27-year-old founder and chief executive officer of Facebook is the company’s top stakeholder as it prepares to go public, with 533.8 million shares, or 28.4 percent, according to a regulatory filing today. Investment firms Accel Partners and Digital Sky Technologies own a combined 16.8 percent.
- China Economy Heading for 'Hard Landing' in 2012, Shilling Says. China’s economy is headed for a “hard landing” this year as weaker demand overseas chokes off exports, said Gary Shilling, who correctly forecast the U.S. recession that began in December 2007.
- China Home Prices May Decline as Much as 15%, GreenOak's Kalsi Says. Chinese home prices may fall as economic growth decelerates and income gains lag development, said panelists at the Bloomberg Link China conference. China’s real estate market is caught between diverging goals of the central government and province heads and local mayors, according to the panelists. The central government has been trying to restrain speculation in housing, while local officials encourage development, they said. Reconciling those goals may influence whether a property crash can be avoided. “Every mayor wants their own Gucci store,” said Bhaskar Chakravorti, senior associate dean of the Fletcher School at Tufts University. “You create jobs at the local level when you give away land, motivate developers." Local Chinese officials want to build more high-rise residential housing than the population can support, according to Michael Klibaner, head of China research for Jones Lang LaSalle Inc. “They’re vanity projects,” he said. While local officials favor building offices and shopping centers because of the tax income they produce, the policy may lead to oversupply, Klibaner said. Commercial real estate in China has shown signs of a bubble, according to Kalsi. “You’ve got tremendous commercial building, poorly conceived shopping centers, offices where there’s no demand,” he said. “We’re not investing right now.”
- German-IMF Rift Stalls Greece Deal. A long-awaited agreement to restructure more than €200 billion ($262 billion) of Greek government bonds in private hands is being held up in large part by big differences between two of Greece's official creditors: the International Monetary Fund and Germany. Several people close to the negotiations say a deal between Greece and private bondholders could be concluded in hours, as only small differences remain between the two sides. But the rift between the IMF and Germany—on top of a desire among all official creditors to secure a solid commitment from Greek politicians across the political spectrum to big changes in the economy's structure—has delayed final completion of the accord. The gap between Germany and the IMF, central players in the decision on a new bailout for Greece, reveals a fundamental divergence in their approach to reducing Greece's huge debt burden.
- Complete Facebook(FB) Coverage.
- Dozens Killed at Egypt Soccer Match. Clashes between soccer fans killed at least 74 people Wednesday night in the deadliest single incident since Egypt's revolution last year, and one of the worst sports-related tragedies in decades. The violent outbreak also was seen as reflecting broader tensions in the country—pitting aggressive soccer fans known as "Ultras" against their nemesis, the security forces, who protesters say have continued the harsh crackdowns of the deposed Mubarak regime.
- Corzine Is The Invisible Man. MF Global Hearing to Focus on Ex-CEO, but He Isn't Expected to Be There. Former MF Global Holdings Ltd. Chief Executive Jon S. Corzine won't be attending Thursday's congressional hearing on the demise of the securities firm, but the onetime New Jersey governor's management style and outsize bet on European bonds still will come under the spotlight. Lawmakers are expected to press a pair of former MF Global risk-management executives in the subcommittee hearing about the role played by Mr. Corzine in the decisions leading to its collapse.
- Economy Slows Applications to Europe's Business Schools. The European currency crisis is claiming another victim: the M.B.A student. Having spent decades building up globally competitive business schools, the Continent is finding that tough economic times are cutting into their yields. Applications at two-thirds of Europe's business schools fell last year after rising steadily for years, according to the Graduate Management Admission Council, which administers the common entrance exam for business schools.
Barron's:
- Qualcomm(QCOM) Up 5%: FYQ1 Beats, Q2 View Beats, Raises Year View. Wireless chip maker Qualcomm (QCOM) this afternoon reported fiscal Q1 revenue and profit ahead of analysts’ estimates, forecast this quarter’s results above expectations, and raised its outlook for the year above consensus. Revenue in the three months ended in December rose to $4.7 billion, yielding EPS of 97 cents a share. Analysts had been expecting $4.58 billion and 90 cents. An additional deck of slides providing color on the quarter is available here.
Zero Hedge:
- Facebook(FB) Files IPO Prospectus. The most eagerly awaited IPO of the decade has just filed its S-1 statement (link). Some real time observations:
- US Adds $120 Billion In Debt Since Debt Ceiling Hike On Friday, $310 Billion More On Deck In Next Two Months.
- Strong Keurig Demand Lifts Green Mountain Coffee(GMCR) Q1. Green Mountain Coffee Roasters reported quarterly results that sailed past analysts' expectations on strong sales of its Keurig coffee machines, sending its shares up 8 percent in after-market trading.
- As Greece Nears a Big Debt Deal, Investors Now Fret That Portugal Will Ask for the Same. Despite the best efforts of European politicians to place a quarantine fence around the Greek economy, the crisis there continues to plague Portugal. The authorities in Lisbon insist otherwise, but investors are predicting that Portugal will be next in line to impose losses on bondholders as it struggles to meet the terms of a 78 billion-euro, or $103 billion, bailout agreement struck with international creditors last May. While a short-term debt auction on Wednesday went off comfortably, Portugal’s long-term borrowing costs remain unsustainably high, and spending cuts that are cleaning up public finances are also helping to plunge Portugal into one of the deepest recessions in the Western world. Its economy is predicted to contract 3 percent this year, and the unemployment rate, at 13.6 percent, is one of the highest in the euro zone. Whatever deal with creditors is reached in Athens in the coming days, “it’s most likely that Portugal will say that it wants one of those, too,” said Edward Hugh, an economist in Barcelona who has been tracking the euro zone’s debt crisis. Portugal “literally has nothing further to lose, except some of its debt burden,” he said.
- We Hear Little About Warren Buffett's Dark Side by Charles Gasparino.
- Insiders: No DOJ Case Vs. Goldman(GS). Goldman Sachs is ready to turn over a new gold-plated leaf. Nearly nine months after the Justice Department launched a probe into whether the Wall Street firm misled clients and lied to lawmakers, executives are increasingly optimistic that the bank will avoid criminal charges and focus on what it does best: minting money.
- Major New Leak at Japan's Nuclear Plant - Kyodo. More than 8 tonnes of water have leaked from Japan's stricken nuclear power plant after a frozen pipe burst inside a reactor buiding, but none of the water is thought to have escaped the complex, Kyodo news agency said on Thursday.
- Russia Says Will Veto "Unacceptable" Syria Resolution. Russia said on Wednesday it would veto any U.N. resolution on Syria that it finds unacceptable, after demanding any measure rule out military intervention to halt the bloodshed touched off by protests against President Bashar al-Assad's rule. The political violence in Syria has killed at least 5,000 people in the past 10 months and activists say Assad's forces have stepped up operations this week on opposition strongholds, from Damascus suburbs to the cities of Hama, Homs and the border provinces of Deraa and Idlib.
- Greece's Karatzaferis Asks EU to Relax Bailout Terms. George Karatzaferis, head of Greece's Laos party, wrote to European Commission President Jose Barroso, European Council President Herman Van Rompuy and party leaders in the European Parliament to ask them to loosen the terms of Greece's second bailout or risk seeing a "social explosion," citing the letter. The next wave of reforms would trigger economic collapse and social unrest "of a kind that Europe has not seen for decades," Karatzaferis wrote.
- Bundesbank sinks deeper into debt saving Europe. Germany's Bundesbank has entirely exhausted its stock of private assets and run up a quarter of a trillion euros in liabilities propping up the eurozone system, testing the political limits of EMU solidarity in Germany. The operations are part of the European Central Bank's 'TARGET2' network of automatic payments between the national central banks of the Euroland club. The Bundesbank has already provided €496bn (£413bn) to countries in trouble, chiefly Greece, Ireland, Italy and Spain. "This is reaching the danger point. It is already one and a half times the total budget of the German government," said Professor Frank Westermann of Osnabrück University. "If any of the crisis countries exits the euro or if there is an EMU break-up, the Bundesbank bears extreme risks."
- 60,000 Greek Shops to Close. About 160,000 jobs will be lost this year in the commerce sector, according to the National Confederation of Greek Commerce (ESEE) as the constant decline in disposable income has led to a sharp drop in turnover and a steep rise in the number of enterprises shutting down.The jobs to be lost concern 60,000 employers and 100,000 employees in the sector, ESEE expects. Given the data for a 6.2 percent fall in household consumption in 2011 and the Eurostat forecast for a further decline by 4.3 percent this year, ESEE warns that soon Greece will be in a condition of absolute poverty. With 60,000 enterprises having shut down since the start of the crisis to date, their number is set to double by the end of this year, ESEE estimates.
- None of note
- Asian equity indices are .50% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 174.50 -8.0 basis points.
- Asia Pacific Sovereign CDS Index 143.75 -5.25 basis points.
- FTSE-100 futures -.10%.
- S&P 500 futures +.12%.
- NASDAQ 100 futures +.11%.
Earnings of Note
Company/Estimate
- (ATK)/2.03
- (RGLD)/.48
- (TDW)/.43
- (HOT)/.57
- (PHM)/.07
- (GR)/1.57
- (IP)/.61
- (CAM)/.76
- (CAH)/.76
- (R)/.97
- (BZH)/-.33
- (MRK)/.95
- (LEA)/1.18
- (CME)/3.64
- (CI)/1.19
- (ADS)/1.49
- (K)/.62
- (IRF)/-.06
- (CYMI)/.20
- (APKT)/.28
- (N)/.04
- (RCL)/.15
- (CMI)/2.24
- (VMC)/-.37
- (BX)/.40
- (NVLS)/.45
- (MA)/3.91
- (WYNN)/1.29
- (DO)/.98
- (AGN)/1.00
8:30 am EST
- Preliminary 4Q Non-farm Productivity is estimated to rise +.8% versus a +2.3% gain in 3Q.
- Preliminary 4Q Unit Labor Costs are estimated to rise +.8% versus a +2.3% gain in 3Q.
- Initial Jobless Claims are estimated to fall to 371K versus 377K the prior week.
- Continuing Claims are estimated to fall to 3535K versus 3554K prior.
Upcoming Splits
- (TJX) 2-for-1
- The Fed's Bernanke testifying before Congress, Fed's Fisher speaking, Fed's Evans speaking, Challenger Job Cuts report for January, ICSC Chain Store Sales for January, RBC Consumer Outlook Index for February, ISM New York for January, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, Raymond James Airline Conference and the (AMD) analyst day could also impact trading today.