Austerity Kills Bulgarian Government

“SOFIA, Bulgaria—The European economic crisis felled its latest political victim on Wednesday as Bulgaria’s government resigned from office after days of nationwide protests against austerity, high electricity prices and official corruption.

“We have dignity and honor. It is the people who put us in power and we give it back to them today,” Prime Minister Boyko Borisov told parliament in an announcement that shocked Bulgarians even after days of swelling protests.

Mr. Borisov said the threat of protests turning violent spurred his decision. “I cannot stand looking at a bloody Eagles’ Bridge,” he said, referring to the iconic intersection in downtown Sofia that was the scene of clashes between police and protesters on Tuesday. “Every drop of blood is a shame for us.” …”

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“Carl DelPrete, chief executive of suburban New York supermarket chain Uncle Giuseppe’s Inc., couldn’t be happier with the current lending environment. To fund a recent expansion, he got bids from three banks and calls the terms on the $14 million loan “the best we’re ever going to see in our lifetime.”

The episode reflects a renewed willingness by some banks to lend cheaply and on flexible terms.

But with banks not far removed from persistent criticism that they were slow to make business loans that would kick-start an economic recovery, a new concern is emerging: Is the pendulum swinging too far the other way?

The surge in loans to businesses is raising worries that lenders are competing so aggressively that some will pay for their largess down the road.

So-called commercial and industrial loans were up 4.4% in the fourth quarter and 16% for all of 2012, according to data compiled by research firm SNL Financial of Charlottesville, Va.

The push comes at a time when many banks have been flooded with deposits as slow economic growth and low interest rates crimp investment. Domestic deposits since mid-2008 have surged 29% to $9.06 trillion, according to Federal Deposit Insurance Corp. data.

“Banks are loaded with liquidity and starving for growth,” said Paul Miller, an analyst with FBR Capital Markets.

Banks of all sizes are fueling the lending trend. Business loans outstanding at Wells Fargo WFC +0.03% & Co., the country’s fourth-largest bank, jumped 12% to $187 billion in 2012. The State Bank of Southern Utah, a community lender based in Cedar City, Utah with $715 million in assets, saw a 9% jump for the year to $38 million. The bank is a unit of Southern Utah Bancorp.

Yet the profitability of the loans that banks are making is under pressure….”

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CNBC is reporting that the two companies have not reached a deal and that the news was leaked early….the companies have retracted the news

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Didn’t i just tell you about this last week?

“Warning: Banks in the U.S. are bigger than they appear.

That label, like a similar one on automobile side-view mirrors, might be required of the four largest U.S. lenders if Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corp., has his way. Applying stricter accounting standards for derivatives and off-balance-sheet assets would make the banks twice as big as they say they are — or about the size of the U.S. economy — according to data compiled by Bloomberg….”

“Derivatives, like loans, carry risk,” Hoenig said in an interview. “To recognize those bets on the balance sheet would give a better picture of the risk exposures that are there.”

U.S. accounting rules allow banks to record a smaller portion of their derivatives than European peers and keep most mortgage-linked bonds off their books. That can underestimate the risks firms face and affect how much capital they need.

Using international standards for derivatives and consolidating mortgage securitizations, JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. would double in assets, while Citigroup Inc. would jump 60 percent, third- quarter data show. JPMorgan would swell to $4.5 trillion from $2.3 trillion, leapfrogging London-based HSBC Holdings Plc and Deutsche Bank AG, each with about $2.7 trillion.

World’s Largest…”

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NYSE

NASDAQ

AMEX 

ACMP, ALXN, ADI, BIDU, BCS, ESRX, GMCR, LOW, MM, NTSP, RDN, SEE, SPLS, HOT, WIN,

Full report 

In Play ,

On the Wires 

“New York City is continuing to make its mark in the startup community.

In the last year, big-name companies spent $8.3 billion on mergers and acquisition deals in 100 New York-based startups, according to a recent report by PrivCo. 

That tally put New York right behind the heart of the tech industry, Silicon Valley, where 226 deals totaled $21.5 billion.

After speaking with VCs and entrepreneurs, and scoping out AngelList, we selected 25 early stage startups that are generating a lot of buzz in the tech community.”
Full article and look at the newest startups

Apple was down 2%, but seems to be paring losses only down 0.9%…

“Chinese iPhone-maker Foxconn is putting a hold on hiring and cutting production of the iPhone 5, the Financial Times reports.

Foxconn is China’s largest private sector employer.

There are all kinds of reasons this could be happening.

Some possibilities…”

Read more

“Boeing (BA) shipped 50 of its roughly half-a-million pound, $207 million retail-price 787 Dreamliners to airlines. But since January 16th, they’ve been grounded thanks to lithium-ion batteries that burned up at a much faster rate than expected. For example, there was a fire on board a parked plane at Boston’s Logan airport and an in-flight problem on another jet in Japan.

But Boeing is keeping the 787 production lines running — and the grounded planes are taking up space on nearby runways.

Meanwhile two reports have surfaced about possible fixes for the 787 battery problems. If MIT professor, Donald R. Sadoway, is right, those reported fixes are at best partial solutions.

The New York Times reports that Boeing is producing a Dreamliner a week at its production facilities in Everett, Wash. and Charleston, S.C.. But since the 787 is grounded, those planes are piling up. The Times quotes aviation magazine editor, Mary Kirby, who drove by Paine Field in Everett during the second week of February and was shocked to see: “Parked Boeing 787s are everywhere.” …”

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Source

“NEW YORK (AP) — Office Depot Inc. and OfficeMax have agreed to merge in an all-stock deal that would transform the $21.2 billion office supply retail sector.

Boca Raton, Fla.-based Office Depot Inc. and Naperville, Ill.-based OfficeMax say holders of OfficeMax shares will receive 2.69 shares of Office Depot for every OfficeMax share they own.

That’s equal to about $13.50 per share, giving the deal a total value of about $1.2 billion.

Analyst say if the deal closes it would likely benefit the largest office supply player Staples Inc.because the combined entity will likely close stores.”

 Source

“NEW YORK (Reuters) – Applications for U.S. home mortgages fell for a second straight week as bothrefinancing and loan requests for new mortgages eased last week, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, was 1.7 percent lower in the week ended February 15.

The MBA’s seasonally adjusted index of refinancing applications fell 1.6 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, dropped 1.7 percent.

The refinance share of total mortgage activity fell to 77 percent of applications, the lowest level since May 2012, from 78 percent the week before.

Fixed 30-year mortgage rates averaged 3.78 percent in the week, up 3 basis points from 3.75 percent the week before.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.”

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Housing Starts: Prior 954k, Market Expects 914k, Actual 890k

PPI: Prior -0.2%, Market Expects 0.3%, Actual 0.2%….yoy up 1.4%, Core comes in at 1.8%

“Gold futures slid to a six-month low in the worst losing streak in more than a year as signs of economic improvement curbed demand for a protection of wealth. Silver fell to the lowest since August and platinum dropped.

Gold declined for a fifth session as global equities reached the highest since June 2008. The Federal Reserve will publish minutes of its Jan. 29-30 policy meeting today and Labor Department data on producer prices today and on consumer costs tomorrow will show inflation is in check, economists surveyed by Bloomberg said.

“Bullion’s safe-haven properties as well as its traditional use in inflation hedges are irrelevant at this point,” Andrey Kryuchenkov, an analyst at VTB Capital in London, wrote in a report. “The market’s attention is set to turn to the Federal Open Market Committee’s January minutes.”

Gold futures for April delivery fell as much as 1 percent to $1,588 an ounce, the lowest since Aug. 2, and were at $1,592.60 by 7:50 a.m. on the Comex in New York. A fifth straight drop would be the longest run since December 2011. U.S. markets were shut Feb. 18 for the Presidents’ Day holiday.

Futures trading volume was 53 percent above the average in the past 100 days for this time of day. Gold for immediate delivery was down 0.7 percent at $1,593.30 in London….”

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“The pound slumped to a 15-month low against the euro after the Bank of England minutes showed more officials voted to expand asset purchases at this month’s meeting, a policy that that typically debases a currency.

Sterling dropped to the lowest level since June versus the dollar after minutes of the central bank’s Feb. 7 meeting showed policy makers also considered an interest-rate cut. GovernorMervyn King and Paul Fisher joined David Miles in voting to increase the target for bond purchases by 25 billion pounds ($38.3 billion) to 400 billion pounds, though they were outvoted by the remaining six members of the Monetary Policy Committee. U.K. government bonds declined.

“The market clearly has sterling in the cross hairs,” said Gavin Friend, a foreign-exchange strategist at National Australia Bank Ltd. in London. “King and Fisher have joined Miles in voting for more quantitative easing and the market has thumped sterling on the back of that.”

The pound depreciated 0.8 percent to 87.50 pence per euro at 11:21 a.m. London time, and reached 87.65 pence, the weakest level since October 2011. Sterling fell 0.8 percent to $1.5308, after sliding to $1.5295, the lowest since June 1.

The vote marks the fourth time King, who is retiring in June and will be replaced by Mark Carney, has been outvoted as governor of the London-based central bank….”

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“German Chancellor Angela Merkel dismissed attempts to manipulate exchange rates, saying the present value of the euro against the dollar is within the currency’s normal range.

Merkel, speaking in Berlin today, acknowledged concerns over the euro’s strength in southern European countries which have been “at pains to lower their labor unit costs in a fixed exchange rate regime” only to see the gains “melt away like the snow in the sun under certain conditions.”

“On the other hand, we have to say that euro exchange rates between $1.30 and $1.40 are part of the normality of the history of the euro,” she told an event marking 50 years of the German government’s council of economic advisers.

The euro bought $1.3375 as of 12:57 p.m. in Berlin.

Merkel expressed concern last month over Japanese moves toward monetary easing. Officials from the Group of 20 nations meeting in Moscow last week pledged not “to target our exchange rates for competitive purposes,” without singling out Japan for allowing the yen to decline….”

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“Credit Agricole SA, France’s third- largest bank by market value, reported a record fourth-quarter loss after writing down goodwill at its Italian and investment- banking businesses.

The net loss widened 30 percent from a year earlier to 3.98 billion euros ($5.3 billion), the bank, based outside Paris, said in a statement today. The loss exceeded the 3.69 billion- euro average estimate of five analysts surveyed by Bloomberg.

Credit Agricole took 2.67 billion euros in goodwill writedowns in the quarter to reflect stricter accounting rules and a worsening economy, and booked a 706 million-euro additional loss on the sale of its Greek unit Emporiki, a deal completed this month. The French bank has plans for job cuts at its Italian consumer-banking unit and cost-cutting at the investment bank.

“We’ve deeply transformed our group,” Chief Executive OfficerJean-Paul Chifflet, 63, said on a call with journalists. “We will reinforce our financial solidity in 2013 without making a capital increase.” …”

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“Bank of England Governor Mervyn King was defeated in a push for more stimulus this month as officials considered options including a rate cut and expanding the range of assets purchased as ways to help the economy.

King, Paul Fisher and David Miles wanted to increase the target for bond purchases by 25 billion pounds ($38 billion) to 400 billion pounds on Feb. 7, though they were outvoted by the remaining six members of the Monetary Policy Committee. The pound fell after the release of the minutes in London today….”

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“Bank of America Merrill Lynch said investors should buy emerging market bonds and equities as the so-called BRIC nations of Brazil, Russia, India and China post the biggest improvement in growth this year.

“What we’re saying about emerging markets is that the BRICs are back,” David Hauner, head of fixed-income strategy for emerging Europe, the Middle East and Africa, told reporters in Abu Dhabi yesterday. “Last year a lot of people were saying that the BRICs are finished and of course we had disappointing growth in all of them. Now this year we see a recovery.”

Emerging markets are expected to record economic growth of 5.2 percent this year compared with 4.9 percent last year. The best growth will come from the BRICs as concern over China’s political transition, Indian currency weakness, and currency appreciation in Brazil wane, Hauner said. The best fixed-income opportunities this year will be in Asia because of its superior growth and links to the U.S. dollar, he said.

“People are getting out of bonds and buying more emerging markets, more high yield but they are selling some Treasuries, we think this makes a lot of sense,” Hauner said. “Our own global asset allocation suggests that you should be overweight equities, overweight emerging market bonds, should be overweight high yield.”

BRIC Growth…”

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“BHP Billiton Ltd., the world’s biggest mining company, named copper unit head Andrew Mackenzie as chief executive officer to succeed Marius Kloppers, who failed to deliver on about $200 billion of potential takeovers.

Mackenzie, 56, will take over on May 10, the Melbourne- based company said today in a statement when reporting a 58 percent decline in first-half profit. Under Kloppers, who became CEO in 2007, the aborted or rejected deals included hostile bids for Rio Tinto Group and Potash Corp. of Saskatchewan Inc.

Kloppers, 50, is the third head of a global mining company to step down since October as producers struggle with project writedowns, escalating costs and the aftermath of failed deals. The appointment of Mackenzie, a former 22-year veteran of BP Plc who speaks five languages and joined BHP from Rio Tinto Group in 2007, won’t change BHP’s strategy, Chairman Jac Nasser said today at a media conference in Sydney.

“Mackenzie is pretty well regarded, quite an experienced executive, but perhaps he’s going to be a little bit more focused on running the operations and expecting the best out of the operations, not that Marius wasn’t previously,” said Paul Xiradis, chief executive officer at fund manager Ausbil Dexia Ltd., which holds BHP stock. “That’s going to be the focus rather than expanding so it’s a new era.”

BHP slipped 2.2 percent to 2,188 pence by 9:15 a.m. in London. The shares fell 0.9 percent to A$38.65 at the close of trading in Sydney, trimming the gain for the past six months to 17 percent. Rio Tinto lost 1.6 percent in Sydney today and Fortescue Metals Group Ltd. declined 5 percent.

Petroleum ‘Fundamental’…”

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