- Only time will define Bernanke’s crisis-era legacy at Fed (Reuters)
- Record Cash Leaves Emerging Market ETFs (BBG)
- Investors Look Toward Safer Options as Ground Shifts (WSJ)
- Fed Policy Makers Rally Behind Tapering QE as Yellen Era Begins (BBG)
- Rating agencies criticise China’s bailout of failed $500m trust (FT)
- Russia to await new Ukraine government before fully implementing rescue (Reuters)
- U.S. readies financial sanctions against Ukraine: congressional aides (Reuters)
- Companies resist president’s call for minimum wage rise (FT)
- Secret Swiss Funds at Risk as Italy’s Saccomanni Visits Bern (BBG)
- Top Democrat puts Obama trade deals in doubt (FT)
- Erdogan to Give Rate Increase Time Before Trying Other Plans (BBG)
- Bernanke Memorable Moments From AIG Anger to Dimon Encounter (BBG)
- Capital controls not on agenda in Turkey: senior government official (Reuters) – translation – the opposite
- Wall Street Attracts Chop Shops 20 Years After ‘Wolf’ (BBG)
- Deutsche Bank suspends currency trader (DB)
- Deadly ice storm turns Atlanta into parking lot (Reuters)
Overnight Media Digest
* Just one month into 2014, investors from Illinois to Istanbul are finding the tide going out fast for stocks and other riskier investments.
* U.S. stocks have started the year with a thud. What’s interesting, though, isn’t that stocks are down but that the declines are coming so grudgingly.
* Google’s experiment making Motorola phones has ended after just 22 months, with the company unloading the handset business to China’s Lenovo Group for $2.91 billion but keeping a valuable trove of patents.
* The hackers who stole 40 million credit and debit card numbers from Target Corp appear to have breached the discounter’s systems by using electronic credentials stolen from a vendor.
* Amazon.com plans to offer brick-and-mortar retailers a checkout system that uses Kindle tablets as soon as this summer.
* Blackstone Group’s chairman has made clear to senior executives that 43-year-old real-estate specialist Jonathan Gray is the front-runner should the current president depart within the next few years.
* How do the details of a family tragedy land on a piece of junk mail? Most likely from a customer service representative who feeds data to information brokers electronically compiling and selling information.
* Federal regulators are set to take a step Thursday toward retiring the existing landline telephone system in favor of a new, digital-based network.
* Bill Gross, the biggest and one of the most influential fixed-income managers in the world, is ceding some of his power to six new deputies at Pacific Investment Management Co (Pimco) as part of the biggest change in its leadership in more than five years. The move follows last week’s announcement that Pimco’s high-profile chief executive and co-chief investment officer, Mohamed El-Erian, would leave in mid-March.
* Starbucks Corp said Chief Executive Howard Schultz will expand his role in product innovation and digital retailing as part of a shuffling of senior executives aimed largely at adjusting to technology-driven shifts in its industry.
* Outgoing Federal Reserve Chairman Ben Bernanke will provide testimony after he leaves office in a lawsuit filed against the federal government over the 2008 bailout of American International Group Inc, according to a person involved in the case.
The International Energy Agency has warned that escalated gas and electricity prices in Europe would slash its global market share of energy-related exports to two-thirds for at least the next 20 years.
The British Prime Minister may not receive the support of French President Francois Hollande on any renegotiation talks of the EU founding treaty before a referendum on UK’s membership in the European Union.
The helicopter unit of Finmeccanica, AgustaWestland, has won two contracts from Britain’s Ministry of Defence worth a total of 760 million pounds ($1.26 billion) in a move that will protect around 1,000 jobs south of England.
The biggest UK businesses paid more in national insurance than corporation taxes, which fell one-fourth to 6 billion pounds last year.
Deutsche Bank cut pay in its corporate banking and securities division to 5.3 billion euros last year, down 14.4 percent from 2012, the bank’s two chief executives said on Wednesday.
* Though not a total financial loss, the announced sale of the Motorola Mobility unit for $2.91 billion to Lenovo Group Ltd , less than two years after Google paid $12.5 billion for it, is a sign of fits and starts at the company in the mobile age.
* Banks have begun selling bonds backed by foreclosed homes turned into rentals in the United States, bringing calls for Congress to look into the deals.
* In a unanimous decision, the Federal Reserve said it would pull back on its stimulus program by another $10 billion, pointing to an improving economy that had “picked up in recent quarters.”
* The House of Representatives on Wednesday passed a bill authorizing nearly $1 trillion in spending on farm subsidies and nutrition programs, setting the stage for final passage of a new five-year farm bill that has been stalled for more than two years.
* China’s role as the largest buyer of a long list of commodities means that emerging markets are heavily exposed to any economic slowdown, but the most vulnerable producers may be the mines and farms in China itself.
* In the fourth quarter of 2013, 53 percent of Facebook’s advertising revenue came from pitches delivered to iPads, smartphones and other mobile devices, with many of those ads highly targeted by gender, age and other demographics.
* The Washington Post has significantly increased its budget and plans to make dozens of newsroom hires under its new owner, the Amazon founder Jeffrey P. Bezos, the paper’s executive editor, Marty Baron, said in an interview on Wednesday.
* Law enforcement officials testified on Wednesday that virtual currencies like Bitcoin have opened up new avenues for crime that government has not been able to keep up with.
* The European Union on Wednesday revealed a long-awaited proposal to reduce the systemic risk posed by big banks, a measure that would bring the bloc’s regulations more closely into line with those of the United States. But it is unlikely to become law anytime soon.
* Faced with growing criticism and lawsuits, an oil industry task force representing hundreds of companies in North Dakota pledged on Wednesday to make an all-out effort to capture almost all the natural gas that is being flared in the Bakken shale oil field by the end of the decade.
* Attorney General Eric Holder said Wednesday that the Justice Department was committed to finding the hackers behind the holiday season theft of credit card data from millions of Target customers. The same day, Target said that hackers were able to get into the company’s system using a vendor’s credentials.
* After doubling over the last year, Boeing’s stock dropped 5.3 percent on Wednesday when the plane maker projected flattening profits in 2014.
* Making good on a State of the Union address promise, President Obama on Wednesday ordered the creation of new employer-sponsored savings accounts intended to help more people get started saving for retirement.
* Axa Equitable is taking an ax to its name, trimming it to Axa so it will conform in the United States with the France-based company’s brand elsewhere. The new name is on display in a campaign that Axa is ready to introduce to American consumers.
* Billionaire investor Steven Cohen kept one of his closest associates at SAC Capital Advisors in the dark about the hedge fund’s rapid selling of a substantial stock position in two drug companies – Elan and Wyeth, just days before the companies reported disappointing results of a clinical trial for an Alzheimer’s drug.
* Citigroup said internally on Wednesday that it was making an effort to improve the lives of the analysts and associates in its investment bank, the two lowest employee levels in that division. Those junior bankers are now encouraged to stay out of the office from 10 pm on Friday through 10 am on Sunday. Citigroup also said on Wednesday that junior bankers were expected to take all of their annual vacation days.
* The Brazilian bank Itaú Unibanco has acquired a controlling stake in the Chilean bank CorpBanca, a move that follows its growing ambitions to expand in Latin America.
THE GLOBE AND MAIL
* Several prisoners shattered the teeth and broke the leg of Rob Ford’s estranged brother-in-law in a jailhouse beating that was intended to keep him quiet about the Toronto mayor’s abuse of alcohol and illegal drugs, it has been alleged in a lawsuit. (link.reuters.com/guc56v)
* On Wednesday night, 19-year-old Justin Bieber turned himself in at a Toronto police station and was charged with assault in connection with an attack on a local limousine driver. (link.reuters.com/huc56v)
Reports in the business section:
* Hunter Harrison’s first full year in charge of Canadian Pacific Railway Ltd brought a record annual profit, and the aggressive CEO has set a goal of boosting earnings by 30 percent in 2014. (link.reuters.com/juc56v)
* The Federal Reserve opted to stick with its plan to slowly wind down its stimulus program, a move that added anxiety to investors already rattled by turmoil in emerging markets. (link.reuters.com/muc56v)
* Meredith Borowiec, a resident of Calgary who left three of her children in a dumpster, killing two, was sentenced to 18 months in jail on Wednesday. The mother of four left her first born in a dumpster next to her Calgary home. A second baby born a year later was similarly discarded. Neither body was ever found. Her third child was born in October, 2010. Borowiec, again, hid the child in the trash. But this time, the infant was rescued after its cries were overheard. (link.reuters.com/cuc56v)
* Sears Canada is laying off 624 employees, the second time in as many weeks the struggling retailer has announced cost-saving cuts to its workforce. (link.reuters.com/duc56v)
* After burning through his last set of aggressive objectives about two years ahead of schedule, Hunter Harrison said Canadian Pacific Railway Ltd needs a new five-year plan. The pace of change implemented at the railway is a victory over Harrison’s detractors, who said his plans for CP were unrealistic, and a vindication for Bill Ackman, whose Pershing Square Capital Management waged a messy battle to see Harrison instated as CEO nearly two years ago. (link.reuters.com/tuc56v)
RBS FACES 1,000 COMPLAINTS ABOUT ITS ‘MORALLY WRONG’ RESTRUCTURING DIVISION
Lawrence Tomlinson told the Treasury Select Committee that his “dossier” of complaints against RBS’s restructuring division has vastly expanded since he published his report last year. More than 1,000 companies have come forward with allegations of “morally wrong” treatment at the hands of the Royal Bank of Scotland’s restructuring division, MPs have been told.
BANK OF ENGLAND BLOCKS SANTANDER’S CHOICE FOR RISK ROLE
The Bank of England has blocked Santander UK’s plans to hand its incoming deputy chief executive responsibility for risk management. The British arm of the Spanish lender has been forced to rethink its appointment of Nathan Bostock, currently finance director of Royal Bank of Scotland, to the joint role of deputy chief executive and chief risk officer.
VINCE CABLE CONFRONTS LLOYDS OVER STAFF CUTS IN COMMERCIAL BANKING
Vince Cable is demanding an urgent meeting with the boss of Lloyds Banking Group after the bailed-out bank made deep cuts to the number of its small business experts. The business secretary wrote to António Horta-Osório on Wednesday night after Lloyds said half the relationship managers handling small business queries that their roles were being made redundant as part of a long-running strategic review.
UK HOUSE PRICES START YEAR WITH A BANG, FUELLED BY FIRST-TIME BUYERS
The return of first time buyers to Britain’s housing market helped push prices almost 9 percent higher in the year to January, according to the country’s biggest building society Nationwide, adding more than 14,000 pounds to the price of a typical home.
JUSTIN KING STANDS DOWN AFTER DECADE OF SUCCESS AS SAINSBURY’S CHIEF
Justin King put an end to months of speculation over his future at J Sainsbury and announced his departure, marking the end of a decade that has transformed the fortunes of Britain’s second-biggest grocer.
ANGLO AMERICAN STRENGTHENED BY IRON ORE BOUNCE
A surprise bounce in iron ore production at Anglo American has raised hopes for a turnaround under its new chief executive. The FTSE 100 miner was also buoyed by copper production hitting a quarterly record, which helped to send shares up 77 pence, or 5.7 per cent, to 14.20½ pounds.
REGULATOR THREATENS RBS CHIEF’S ROLE AT RIVAL
The appointment of Royal Bank of Scotland’s finance director to a dual role at rival Santander UK was in jeopardy on Wednesday after banking regulators raised concerns about the move. Sky News can reveal that the Prudential Regulation Authority has expressed serious doubts about Nathan Bostock’s appointment to the Spanish-owned bank as deputy chief executive and chief risk officer.
CARNEY WARNS OF RISKS OF SCOTS INDEPENDENCE
Bank of England Governor Mark Carney warned of “clear risks” associated with the economics of Scottish independence, adding that the country would have to surrender some of its sovereignty if it were to retain the pound.
Fly On The Wall 7:00 AM Market Snapshot
Domestic economic reports scheduled for today include:
Jobless claims for the week of Jan. 25 will be reported at 8:30–consensus 327K
Q4 GDP will be reported at 8:30–consensus 3.0% growth for the quarter
Pending home sales index for December will be reported at 10:00—consensus down 0.5%
Amdocs (DOX) upgraded to Outperform from Perform at Oppenheimer
Autodesk (ADSK) upgraded to Overweight from Neutral at JPMorgan
Canadian Pacific (CP) upgraded to Outperform from Market Perform at Cowen
Cathay General (CATY) upgraded to Outperform from Market Perform at BMO Capital
Citrix (CTXS) upgraded to Buy from Hold at Drexel Hamilton
Enduro Royalty Trust (NDRO) upgraded to Outperform from Sector Perform at RBC Capital
Enersis (ENI) upgraded to Buy from Neutral at BofA/Merrill
JetBlue (JBLU) upgraded to Buy from Hold at Deutsche Bank
Modine Manufacturing (MOD) upgraded to Neutral from Underweight at JPMorgan
PTC Inc. (PTC) upgraded to Overweight from Neutral at JPMorgan
Sequans (SQNS) upgraded to Outperform from Neutral at RW Baird
ServiceNow (NOW) upgraded to Outperform from Neutral at RW Baird
Spectra Energy (SE) upgraded to Outperform from Market Perform at BMO Capital
StanCorp Financial (SFG) upgraded to Neutral from Underperform at BofA/Merrill
Union Pacific (UNP) upgraded to Overweight from Neutral at Atlantic Equities
WellPoint (WLP) upgraded to Buy from Neutral at UBS
WesBanco (WSBC) upgraded to Buy from Neutral at Guggenheim
Blackbaud (BLKB) downgraded to Underweight from Neutral at JPMorgan
Citrix (CTXS) downgraded to Hold from Buy at Needham
Citrix (CTXS) downgraded to Neutral from Buy at Citigroup
Citrix (CTXS) downgraded to Neutral from Outperform at RW Baird
Citrix (CTXS) downgraded to Sector Perform from Outperform at Pacific Crest
Citrix (CTXS) downgraded to Underperform from Market Perform at JMP Securities
Denbury Resources (DNR) downgraded to Sell from Neutral at Goldman
EMC (EMC) downgraded to Neutral from Buy at Mizuho
El Paso Pipeline (EPB) downgraded to Neutral from Buy at Goldman
McCormick (MKC) downgraded to Hold from Buy at Deutsche Bank
NeuStar (NSR) downgraded to Neutral from Outperform at RW Baird
New York Community Bancorp (NYCB) downgraded to Market Perform at Keefe Bruyette
Praxair (PX) downgraded to Neutral from Overweight at JPMorgan
SS&C Technologies (SSNC) downgraded to Neutral from Overweight at JPMorgan
Synopsys (SNPS) downgraded to Neutral from Overweight at JPMorgan
Tractor Supply (TSCO) downgraded to Hold from Buy at Deutsche Bank
Tractor Supply (TSCO) downgraded to Market Perform from Outperform at Raymond James
Triumph Group (TGI) downgraded to Neutral from Buy at Sterne Agee
W. R. Berkley (WRB) downgraded to Sell from Hold at Deutsche Bank
Energy XXI (EXXI) initiated with a Neutral at Goldman
Kosmos (KOS) initiated with a Buy at Goldman
Spansion (CODE) initiated with an Overweight at Morgan Stanley
W&T Offshore (WTI) initiated with a Neutral at Goldman
inContact (SAAS) initiated with a Perform at Oppenheimer
Lenovo Group (LNVGY) to acquire Motorola Mobility from Google (GOOG) for $2.91B
Potash (POT) CEO said Q4 was “difficult,” challenging fertilizer market conditions impacted Q4 performance
Starbucks (SBUX) CFO Troy Alstead promoted to COO
Oramed (ORMP) said Phase 2a ORMD-0801 study met all primary, secondary endpoints
Dassault to acquire Accelrys (ACCL) for $12.50 per share in merger valued at $750M
Time Warner Cable (TWC) increased quarterly dividend by 15% to 75c
Companies that beat consensus earnings expectations last night and today include:
Helmerich & Payne (HP), Ball Corp. (BLL), Enterprise Products (EPD), MEDNAX (MD), Time Warner Cable (TWC), Thermo Fisher (TMO), Arkansas Best (ABFS), Cabot (CBT), QLogic (QLGC), Las Vegas Sands (LVS), Facebook (FB), Allegiant Travel (ALGT), Hanesbrands (HBI), QIAGEN (QGEN), Silicon Graphics (SGI), Spectrum Brands (SPB), Symantec (SYMC), Qualcomm (QCOM)
Companies that missed consensus earnings expectations include:
WESCO (WCC), Whirlpool (WHR), Potash (POT), Murphy Oil (MUR), Callaway Golf (ELY), Vertex (VRTX)
Companies that matched consensus earnings expectations include:
Destination Maternity (DEST), Kirby (KEX), Quantum (QTM), Fortune Brands (FBHS), ServiceNow (NOW)
DOJ says BP (BP) should remain barred from U.S. contracts, Telegraph reports
Microsoft (MSFT) could announce new CEO by end of the week, Re/code reports
For Google (GOOG), keeping patents key to Motorola (LNVGY), Samsung (SSNLF) deals, Bloomberg reports
EU court adviser: MasterCard (MA) should lose card fees appeal, Bloomberg reports
Deutsche Bank (DB) said to suspend NY EM forex desk head, Reuters reports
UBS (UBS) hired by Bright House as adviser amid TWC (TWC) deal speculation, WSJ reports
Oracle (ORCL) CEO says database not breached, Reuters reports
Amazon (AMZN) planning to offer retailers a Kindle checkout system, WSJ reports
Shell (RDS.A) to suspend drilling in U.S. Arctic, WSJ reports
Stolen vendor credentials led to Target (TGT) hacking, WSJ reports
Celladon (CLDN) 5.5M share IPO priced at $8.00
Dicerna (DRNA) 6M share IPO priced at $15.00
Geron (GERN) files to sell common stock
Media General (MEG) files to sell 58.54M shares of voting stock for holders
Puma Biotechnology (PBYI) files to sell $115M of common stock
Southcross Energy Partners (SXE) files to sell 8M common units
TESARO (TSRO) 3.2M share Secondary priced at $31.50