Obama to Press GOP on Averting Sequester

“WASHINGTON (AP) — Facing yet another fiscal deadline, President Barack Obama is urgingcongressional Republicans to accept more tax revenue in order to avert looming, across-the-board budget cuts due to take effect in less than two weeks.

Obama, fresh off a three-day Florida golfing trip, was to press his case during an event at the White House on Tuesday morning. Emergency responders, a group of workers the White House says could be affected if state and local governments lose federal money as a result of the cuts, were joining him.

The $85 billion in cuts, known as the sequester, will start taking effect on March 1 unless Congress acts. The White House says the sequester could derail an economy still suffering from high unemployment and sluggish growth.

Obama wants to offset the sequester through a combination of targeted spending cuts and increased tax revenue. The White House is backing a proposal unveiled last week by Senate Democrats that is in line with the president’s principles.

But that plan was met with an icy reception by Republicans, who oppose raising more tax revenue in order to offset the cuts. GOP leaders say the president got the tax increases he wanted at the beginning of the year when Congress agreed to raise taxes on family income above $450,000 a year.

The White House said Obama on Tuesday would call on congressional Republicans to compromise and accept the Senate Democrats’ proposal.

The Democrats propose to generate revenue by plugging some tax loopholes. Those include tax breaks for the oil and natural gas industry and businesses that have sent jobs overseas, and by taxing millionaires at a rate of at least 30 percent.

Meanwhile, a bipartisan proposal Tuesday by co-chairs of an influential deficit-reduction commission called for reducing the deficit by $2.4 trillion over the next 10 years, with much of the savings coming through health care reform, closing tax loopholes, a stingier adjustment of Social Security’s cost of living increases and other measures….”

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“West Texas Intermediate fell, extending the biggest drop in two weeks, while Brent was little changed. The North Sea crude may be capped at $140 a barrel this year, according to Bank of America Merrill Lynch.

Futures lost as much as 0.6 percent, after sliding 1.5 percent Feb. 15, the most since Feb. 4. Floor trading in New York was closed yesterday because of a holiday in the U.S. Brent will trade in a range of $100 to $130 a barrel through to 2015, according to Francisco Blanch, head of commodities research at Bank of America Merrill Lynch. A technical indicator signaled price declines may accelerate.

“The market is trying to decide whether we are just testing support or whether we are facing what many are saying is a long-overdue correction,” Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen, said today in a telephone interview.

WTI for March delivery, which expires tomorrow, slid as much as 61 cents to $95.25 a barrel in electronic trading on the New York Mercantile Exchange and was at $95.40 at 4:04 p.m. Dubai time. The more-active April contract dropped 54 cents to $95.87. Yesterday’s transactions will be booked with today’s trades for settlement.

Brent Premium…”

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“Gold gained for the first time in a week in London on speculation that prices near a six-month low will increase purchases.

Gold is down 3.7 percent this year and global equities are up 4.8 percent as speculation grew that economies are improving. About $1.2 trillion in automatic spending cuts stemming from a 2011 agreement are scheduled to take effect in the U.S. in March. Morgan Stanley said in a report yesterday it expects “bargain hunting” in gold this week.

“It’s very cheap,” said David Lennox, a resource analyst at Fat Prophets in Sydney, referring to gold. “The U.S. has still got to deal with budgetary and debt constraints, they’re not going to go away. While that’s still there, we think there’s opportunity for gold to rally robustly.”

Gold for immediate delivery added 0.2 percent to $1,612.90 an ounce by 11:26 a.m. in London. Prices reached $1,598.23 on Feb. 15, the lowest since Aug. 15. Futures for April delivery were 0.2 percent higher at $1,612.60 on the Comex in New York.

U.S. markets were shut yesterday for the Presidents’ Day holiday. Futures trading volume was almost triple the average in the past 100 days for this time of day. Bullion at the morning “fixing,” used by some mining companies to sell output, was at $1,613.50 in London, up from $1,610.75 yesterday afternoon.

Silver for immediate delivery rose 0.5 percent to $30.045 an ounce. It reached a six-week low of $29.6912 on Feb. 15. Palladium gained 0.6 percent to $766.83 an ounce. Platinum was up 0.1 percent at $1,694.97 an ounce….”

“BERLIN (AP) — The world’s biggest food and drinks maker Nestle SA has become the latest company to pull some of its products off European shelves after they were found to contain undeclared horse meat.

The company, based in Vevey, Switzerland, said in a statement late Monday that it withdrew some of its beef pasta ready meals from sale after tests conducted two days earlier detected horse DNA.Nestle said it increased its surveillance after reports emerged last month of mislabeled products being sold in Britain.

“Our tests have found traces of horse DNA in two products made from beef supplied by H.J. Schypke,” Nestle said in a statement. “The levels found are above the one percent threshold the U.K.’s Food Safety Agency uses to indicate likely adulteration or gross negligence.” …”

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“ATHENS (Reuters) – Greece’s current account deficit narrowed last year to its lowest level since the country joined the euro, adding to evidence that the economy is slowly responding to harsh austerity measures.

The gap narrowed by 73 percent in 2012 to 5.58 billion euros ($7.45 billion), helped by falling imports and lower interest payments after a sovereign debt cut, the country’s central bank said on Tuesday.

The bank gave no breakdown on the extent to which import cuts reflected less purchases of machinery by Greek firms, a bad sign for crumbling investment levels and chances of a much needed revival in exports such machines could produce.

However, one telltale statistic showed how showy lifestyles are out of fashion in bailed-out Greece. Only one new Ferrari sports car was registered nationally in the whole of 2012. That, plus one used Ferrari sold, contrasted with 21 new and 37 used ones in 2007, the last year before Greece’s recession started.

The current account deficit shrank to 2.9 percent of gross domestic product (GDP) in 2012 from 9.9 percent the previous year – its lowest level since at least 1999, according to available data.

“The pace of the adjustment was impressive last year,” said Nikos Magginas, an economist at the country’s biggest lender National Bank.

The current account balance is a key measure of how competitive a nation’s economy is and of whether it is living within its means. The reading had deteriorated during a debt-fuelled economic boom to a record deficit of 14.7 percent of GDP in 2008.

But a severe economic contraction, partly due to austerity measures as part of the country’s international bailout, has narrowed the gap and may eliminate it in 2014, according to government estimates.

In a further sign of economic adjustment announced last week, consumer prices stopped rising in January for the first time since at least 1996, reflecting a plunge of almost a third in households’ real disposable income….”

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“European stocks rose fore the first time in four days as German economic sentiment improved more than forecast and Danone SA rallied after reporting earnings. U.S. index futures and Asian shares increased.

Danone, the world’s largest yogurt maker, surged the most since May 2010 after also announcing job cuts. Drax Group Plc climbed to a four-year high as the operator of Britain’s biggest coal-fired power station reported profit that topped projections. Bayer AG added 3.4 percent after beginning a new drug trial. Vodafone Group Plc sank to a three-week low as Sanford C. Bernstein & Co. downgraded the shares.

The Stoxx Europe 600 Index advanced 0.9 percent to 289.31 at 12:30 p.m. in London, erasing a 0.5 percent loss over the previous three days. The benchmark gauge has gained 3.5 percent this year as U.S. lawmakers agreed on a compromise federal budget. The index is trading at 12.4 times estimated earnings, up from a multiple of 9 in September 2011, according to data compiled by Bloomberg.

Danone “was a mainly positive report,” said Espen Furnes, who helps oversee $75 billion as fund manager at Storebrand Asset Management in Oslo. “We expect the European economy to pick up somewhat during 2013 which, combined with decent growth from other regions, means there still is material upside in European stocks in the longer term.”

Standard & Poor’s 500 Index futures expiring next month added 0.2 percent today, with U.S. markets set to reopen after the Presidents’ Day holiday. The MSCI Asia Pacific Index also gained 0.2 percent.

German Confidence

German investor confidence increased to the highest level in almost three years in February. The index of investor and analyst expectations climbed to 48.2 from 31.5 in January, the ZEW Center for European Economic Research said. That exceeded the median estimate of economists in a Bloomberg survey calling for an increase to 35…..”

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“Russian retail sales grew at the slowest pace in almost three years in January as unemployment surged and inflation sapped household purchasing power.

Retail sales advanced 3.5 percent from a year earlier, down from 5 percent in December, the Federal Statistics Service in Moscow said in a report today. Economists forecast a 4.8 percent increase, according to the median of 19 estimates in a Bloomberg survey. Unemployment jumped to 6 percent, the highest in 10 months, from 5.3 percent.

The world’s largest energy exporter is counting on the household spending that accounts for about half the economy to maintain growth as the euro area’s slump hurts demand for commodities. The government forecasts consumer-price growth will accelerate again this month, threatening consumer optimism and spending power and keeping pressure on the central bank not to use lower borrowing costs to spur growth.

“We expect consumption to continue steadily trending down,” Elina Ribakova, an economist at Citigroup Inc. in Moscow, said by e-mail before the release. “In the first half of 2012, consumption was boosted by pre-election spending, but since then growth has been slowing.” …”

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“The Reserve Bank of Australia said there are indications that lower interest rates are starting to spur the economy and reiterated that tame prices provide scope to ease further if needed.

“Interest rate sensitive parts of the economy had shown some signs of responding to these lower rates, which were well below their longer-run averages, and further effects could be expected over time,” minutes of the Feb. 5 meeting released today in Sydney showed. The inflation outlook gives “scope to ease policy further, should that be necessary,” it said….”

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“China’s stocks fell the most in five weeks after valuations for the benchmark index climbed to the highest level in 17 months and on concern the government may introduce measures to curb property prices in March.

China Vanke Co. and Poly Real Estate Group Co. slumped more than 4 percent, sending a gauge of developers to its biggest loss in six months after China Business News said the government may impose real-estate curbs around the time of an annual legislative meeting. Anhui Conch Cement Co. slid the most since September 2011 after the government forecast slowing cement output growth. SAIC Motor Corp. dropped 4.5 percent, leading losses for consumer companies reliant on economic growth.

The Shanghai Composite Index fell 1.6 percent to 2,382.91 at the close, the biggest loss since Jan. 11 and the worst two- day start to the Lunar New Year since 2007. The CSI 300 Indexretreated 1.9 percent to 2,685.61. The Hang Seng China Enterprises Index slumped 1.4 percent.

“There’s been speculation that there will be more property tightening as home prices have not fallen,” Zhang Lei, an analyst with Minsheng Securities Co., said by phone from Beijing. “This talk is still making the rounds and there are expectations more measures will be announced. Stocks are also down after rallying a lot.”

The Shanghai index has risen 22 percent from a three-year low on Dec. 3 on signs economic growth is accelerating. The gauge traded at 13.4 times reported profit yesterday, the highest level since September 2011, data compiled by Bloomberg show. It’s now valued at 13.2 times.

RSI Signal….”

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“The yen strengthened for the first time in three days against the dollar and euro as Japanese finance minister Taro Aso said the government doesn’t intend to buy foreign bonds to end deflation by weakening the currency.

The yen rose from near the weakest since May 2010 versus the U.S. currency as his comments countered those of Prime Minister Shinzo Abe who said yesterday purchasing overseas bonds “exists as one idea” for monetary policy. South Africa’s rand fell for a third day as clashes between labor unions at a mine spurred concern of a repeat of violence that curbed production last year. Australia’s dollar strengthened as the central bank said an improved global outlook boosted commodity prices.

“The market is paring back more aggressive expectations in terms of Bank of Japan policy easing going forward,” said Lee Hardman, a foreign-exchange strategist at Band of Tokyo- Mitsubishi UFJ Ltd. in London. “Further easing from the BOJ is likely to come in the form of domestic instruments. We could be moving to a period of more stability for the yen after a sharp adjustment lower in the past three months.”

The yen gained 0.5 percent to 93.52 per dollar at 7:44 a.m. in New York after sliding to 94.46 on Feb. 11, the weakest level since May 5, 2010. Japan’s currency advanced 0.6 percent to 124.73 per euro. The euro fell 0.1 percent to $1.3337.

Japanese officials have toned down calls for a weaker yen to help exporters after trade partners complained the nation risked setting off a currency war. Since Abe called for unlimited money printing by the central bank when he was opposition leader on Nov. 15, the yen has slid 13 percent against the dollar, the biggest drop among the major currencies.

End Deflation…”

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From ‘the resurgence of religion’ to ‘food price volatility’, cyber-viruses, urbanization, quantum computing, and peak water, Richard Watson’s table highlights societal, technological, economic, and political trends that the world faces in the next decade…..”

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“WASHINGTON—New details of a White House immigration plan have been released, upsetting Senate Republicans working on a bipartisan bill and threatening to complicate the delicate legislative process now under way.

President Barack Obama had already outlined his principles for an immigration overhaul and had said he would offer a bill if the Senate negotiations stall. Many Republicans and some Democrats have cautioned him to keep his distance from the process for fear of driving away potential GOP support.

But on Saturday, USA Today reported new details of the fallback legislation the White House is preparing, including details of an eight-year path for the 11 million people who are in the country illegally to qualify for citizenship and a four-year transition period for employers to implement systems to verify the legal status of new hires.

The new details, which were confirmed by a person familiar with the legislation, weren’t surprising or particularly controversial, people from both parties said Sunday, and the major differences between the White House and Senate approaches were already well known. But key Republicans said they feared the leak could jeopardize the delicate talks by making it appear Mr. Obama was trying to influence the legislation….”

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“M&A activity could be up some 50 percent this year, and analysts point to energy, tech, consumer goods and chemicals as sectors to watch.

A week full of mega-deals — America Airlines and US Airways, Comcast and NBC Universal, Berkshire Hathaway and Heinz, Michael Dell and his namesake company — got everyone’s attention. And already, M&A activity has hit the $182 billion mark, compared with $58 billion at this time last year.

“I do think the dam is finally breaking,” said Bob Profusek, lead M&A adviser at Jones Day, citing “just fabulous” financing terms, low equity prices, not-terribly-strict transaction regulation, and “more capital available than at any time in my lifetime.”

At the same time, Profusek noted that this week’s big deals each had unique characteristics that may mitigate their relevance to the broader market: The airline deal was in the works for years; Warren Buffett’s Berkshire Hathaway slays an “elephant” like Heinz every 12 to 18 months; and Dell is a founder wresting control of the company he founded. The Comcast-NBCUniversal deal, he said, is a movie we’ve seen before — one that hasn’t ended well (Viacom–CBS and AOL–Time Warner come to mind), so perhaps an unlikely model for others…..”

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“Many people became rightfully upset about bailouts given to big banks during the mortgage crisis. But it turns out that they are still going on, if more quietly, through the back door.

The existence of one such secret deal, struck in July between the Federal Reserve Bank of New York and Bank of America, came to light just last week in court filings.

That the New York Fed would shower favors on a big financial institution may not surprise. It has long shielded large banks from assertive regulation and increased capital requirements.

(Read More: The World’s Safest Banks)

Still, last week’s details of the undisclosed settlement between the New York Fed and Bank of America are remarkable. Not only do the filings show the New York Fed helping to thwart another institution’s fraud case against the bank, they also reveal that the New York Fed agreed to give away what may be billions of dollars in potential legal claims.

Here’s the skinny: Late last Wednesday, the New York Fed said in a court filing that in July it had released Bank of America from all legal claims arising from losses in some mortgage-backed securities the Fed received when the government bailed out the American International Group in 2008. One surprise in the filing, which was part of a case brought by A.I.G., was that the New York Fed let Bank of America off the hook even as A.I.G. was seeking to recover $7 billion in losses on those very mortgage securities.

It gets better…..”

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“Incomes rose more than 11 percent for the top 1 percent of earners during the economic recovery, but not at all for everybody else, according to new data.

The numbers, produced by Emmanuel Saez, an economist at the University of California, Berkeley, show overall income growing by just 1.7 percent over the period. But there was a wide gap between the top 1 percent, whose earnings rose by 11.2 percent, and the other 99 percent, whose earnings declined by 0.4 percent.

Mr. Saez, a winner of the John Bates Clark Medal, an economic laurel considered second only to the Nobel, concluded that “the Great Recession has only depressed top income shares temporarily and will not undo any of the dramatic increase in top income shares that has taken place since the 1970s.” …”

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“Oscar-winning actor Forest Whitaker was accused of shoplifting and then publicly frisked inside a Manhattan deli yesterday morning.

The movie star, in town filming “Black Nativity” with Jennifer Hudson, was about to leave the Milano Market on Broadway when one of the workers there claimed to have seen him snag an item from a store shelf, his spokesperson said.

The worker stopped Whitaker and allegedly gave him a humiliating pat down in full view of everyone in the Morningside Heights store….”

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