Peter Schiff: US Will Win Currency War; Economy Will ‘Implode’

“The United States will win the global currency war, and the economy will “implode” as a result, says Peter Schiff, CEO of Euro Pacific Capital.

Central banks around the world are easing monetary policy, which often pushes a currency lower.

“There is a currency war going on. The irony of a currency war, which makes it different from other wars, is the object is to kill itself,” Schiff said at a conference Monday, CNBC reports.

“Unfortunately, I think the U.S. is going to win the currency war.”

A currency war kills by sparking inflation in countries that depress their currencies. “Anybody who believes there is no inflation [in the United States] isn’t shopping,” Schiff said.

The consumer price index rose 1.7 percent last year, but official inflation numbers are “a total fraud,” Schiff said. “Consumer prices in the U.S. are moving up much faster than indicated by the CPI. It is manipulated. It is deliberately designed to mask inflation, not report it.”

Schiff has been a consistent critic of the Federal Reserve’s massive easing program.

“The Fed knows that the U.S. economy is not recovering,” he noted. “It simply is being kept from collapse by artificially low interest rates and quantitative easing. As that support goes, the economy will implode.”

Gross domestic product (GDP) shrank 0.1 percent in the fourth quarter….”

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“Yahoo’s search deal with Microsoft is underperforming, CEO Marissa Mayer saidduring an appearance at the Goldman Sachs Technology and Internet Conference in San Francisco on Tuesday.

The deal has not delivered the market share gains or revenue boost that was expected, Mayer said. Yahoo and Microsoft inked the 10-year search partnership in 2010 as part of an effort to challenge Google. But Google retained a 66.7 percent share of the U.S. market as of December, almost the same as its 66.6 percent share two years ago, according to ComScore. Microsoft lagged behind with a 16.3 percent share and Yahoo had 12.2 percent.

“We need to see monetization working better because we know that it can and we’ve seen other competitors in the space illustrate how well it can work,” Mayer said of the partnership….”

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“Thanks to its complicated regulatory structure and the continuing popularity of web-enabled feature phones, Japan’s mobile market is difficult for foreign companies to penetrate. But Apple has finally managed to work its way to the top, according to a report by Counterpoint Research (h/t TNW).

Apple took a 16 percent market share in Q4 2012 and 15 percent for the full year of 2012, taking the top slot for the first time in annual terms and displacing Sharp’s six-year reign as champion. Sharp and Fujitsu each took 14 percent of the market in 2012. The research report notes that Apple had temporarily displaced Sharp in Q4 2011, but that the Japanese company climbed back to the top for the first half of 2012.

The Cupertino-based company has been in the No. 1 spot since November, says Counterpoint Research. Other foreign brands, including Samsung and LG, also increased their shares in Q4 2012, and their combined share of the market exceeded 50 percent for the first time in Japan’s history….”

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“Global mobile phone sales declined by 1.7% in 2012, hit by tough economic conditions, shifting consumer preferences and intense market competition, industry research firm Gartner said Wednesday.

World-wide sales to end users totaled 1.75 billion units in 2012, a 1.7% decline from 2011 sales, Gartner said, adding that fourth-quarter 2012 smartphone sales reached 207.7 million units, 38.3% higher than the same period last year.

Gartner expects sales of world-wide smartphone sales to end users to be close to 1 billion units in 2013, while it estimates overall mobile phone sales to end users to reach 1.9 billion units.

Apple Inc. AAPL -2.57% and South Korea’s Samsung Electronics Co.005930.SE +1.29% dominated the smartphone segment with a combined market share of 52% in the fourth quarter, up from 46.4% in the third quarter of 2012, Gartner said….”

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• “….The company’s evolution beyond its core push email business to pull (search engine, direct site traffic) will ultimately prove successful
• Management’s renewed focus on the international segment will yield positive results in the coming quarters
• Competition is easing a bit and we believe underscores how GRPN’s scale is a real advantage in a business with low barriers to entry
• GRPN’s valuation seems compelling on a relative and absolute basis. GRPN is trading at 0.8x EV to Sales (2014E), which is an 80% discount to its peer group trading at 3.7x. In fact, GRPN has the lowest valuation among its peer group.”

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:Merck, known as MSD outside the United States and Canada, said today that it has completed a preliminary assessment of the impact of the Venezuelan government’s intention to devalue its currency effective Feb. 13, 2013.

As a result of the devaluation, the company will incur a one-time, after-tax loss due to exchange of approximately $0.05 per share in the first quarter of 2013 related to the remeasurement of the local balance sheet at the date of the devaluation. Also, the company expects the impact of the devaluation on ongoing operations to be approximately $0.02 per share spread over the balance of 2013.

Since Jan. 1, 2010, Venezuela has been designated hyperinflationary and, as a result, local foreign operations are remeasured in U.S. dollars with the impact recorded in income. On Feb. 8, 2013, the Venezuelan government declared its intention to devalue its currency (bolívar fuerte). The official exchange rate is expected to move from 4.30 VEF/$ to 6.30 VEF/$….”

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NYSE

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AVP, BBVA, RATE, BPL, CLWR, CLF, CMCSA, CXO, DELL, FOSL, GE, GRPN, PM, PXD, SD, ZMH,

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“Duke Energy Corp. reported profit rose 51 percent in the fourth quarter, the second period after its $17.8 billion takeover of Progress Energy Inc. made it the largest U.S. utility owner as cooler temperatures boosted earnings from its regulated units.

Net income was $435 million, or 62 cents a share, compared with $288 million, or 65 cents, a year earlier, Charlotte, North Carolina-based Duke said in a statement today. Excluding costs associated with the merger, charges for a coal gasification plant in Indiana, discontinued operations and financial contracts, per-share profit was 70 cents. That was more than the average of 16 analysts’ estimates compiled by Bloomberg.

The Progress purchase expanded Duke’s regulated sales of power to customers, a segment in which revenue almost doubled to $4.87 billion. Duke sees power demand increasing by less than 1 percent annually.

“It was a good start for the franchised electric and gas business,” Chief Financial Officer Lynn Good said today in a telephone interview. “We continue to have a very cautious outlook about load growth. For 2012, our load grew at slightly less than 1 percent and we think that’s a reasonable planning assumption.”

Rate Increases….”

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“U.S. motorists searching for someone to blame for the highest gasoline prices ever at this time of year have an easy target: hedge funds who have been quietly amassing winning bets on hundreds of millions of barrels of oil.

At a filling station in Midtown New York last week, several people were prepared to blame traders on Wall Street as they paid more than $4 per gallon to fill up their cars.

“It really is not supply and demand. It’s definitely speculation,” said John Keegan, an exterminator with pest control company Terminate Control, who was filling up his van. A cab driver said he was convinced the price would be just $1 a gallon if the government “stopped Wall Street trading oil.”

It is all very reminiscent of the anger in 2008 when gasoline prices were sent surging by a massive oil spike – also a time when there was a lot of speculative interest from investors.

And yet five years on, there is still no consensus among traders, analysts, and regulators over how big of an impact speculators have on the market – and what, if anything, should be done to limit their participation in oil trading.

Stories about booming U.S. oil production help create expectations among consumers for lower prices. But it remains a global market and the United States is still reliant on around 8 million barrels of crude imports every day.

Hedge funds say they are just an easy target and blaming them ignores global reasons for higher oil prices and the benefits they have brought to the U.S. economy….”

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“Applications for U.S. home mortgages fell last week, with purchase and refinance demand drying up as interest rates rose for the fourth week in a row, 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 down 6.4 percent in the week ended Jan 8….”

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“Veteran trader Art Cashin has been more concerned about the threat of inflation in the U.S. than most.

In a recent interview with Eric King of King World News, he notes that the once dormant threat of inflation could be waking up.

From King World News:

…That having been said, the Federal Reserve Bank of St. Louis puts out what is called the ‘Monetary Stock.’  It is the ‘raw material’ of the money supply, and it has been dormant throughout the year.

The report for the first part of this year suddenly spiked higher, and it’s something that I’m going to keep a very close look at.  It may be, and there is some seasonality, but I think people need to begin watching the money supply, particularly the M2, and see if that starts to accelerate…”

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“MOLINE, Ill. (AP) — Farm and construction equipment maker Deere & Co. said Wednesday that its first-quarter net income leaped 22 percent on growing sales of farm machinery at higher prices.

The Moline, Ill, company’s earnings soundly beat Wall Street expectations.

In the quarter ending Jan. 31, Deere said it earned $649.7 million, or $1.65 per share, compared with $532.9 million, or $1.30 per share, a year earlier. Revenue rose almost 10 percent to $7.42 billion. Analysts surveyed by data provider FactSet expected earnings of $1.39 per share on revenue of $6.73 billion.

Deere is executing its marketing plans, expanding its global presence and keeping a tight grip on costs, Chairman and CEO Samuel Allen said in a statement.

The company predicted that sales would rise about 4 percent in the second quarter and 6 percent for the full year. It expects 2013 net income of about $3.3 billion, slightly more than its earlier forecasts and the predictions of analysts….”

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Retail x auto +0.2%..

“….The output data “continues to show that the euro zone is still growing and doing OK,” Sireen Harajli, a foreign-exchange strategist in New York at Credit Agricole SA, said in a telephone interview. “Financial conditions in the euro zone have improved, and these are all factors that are supporting growth in the euro zone in the near-term, although we do expect to see an economic slowdown later on in the first quarter.”

The shared currency gained 0.2 percent to $1.3480 as of 8:15 a.m. in New York after touching $1.3520. The euro appreciated 0.1 percent to 125.95 yen. The yen was little change versus the dollar at 93.49 after sliding to 94.46 on Feb. 11, the weakest level since May 5, 2010….”

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“The European Union aims to complete trade talks with the U.S. within two years now that leaders on both sides of the Atlantic have pledged to move ahead, EU Trade CommissionerKarel De Gucht said.

A transatlantic trade deal is progressing after President Barack Obama promised to pursue an agreement to expand the world’s largest economic relationship in his State of the Union speech yesterday. The 27-nation EU says the accord will seek to lower tariffs, ease regulatory barriers and expand access in investment, services and public procurement.

“We are committed to making this relationship an even stronger driver of our prosperity,” Obama, EU President Herman Van Rompuy and European Commission President Jose Barroso said today in a joint statement. The EU may complete its preliminary work by mid-year, Barroso told a Brussels news conference.

The EU plans to present draft negotiating plans in March to kick-start the talks, which it says may lead to an accord that will add 86 billion euros ($116 billion) a year to the bloc’s economy. While trade and investment between the U.S. and the EU was valued at $4.5 trillion in 2011, the two governments have been at odds over issues including farm subsidies, health protections and regulatory standards.

Sensitive Issues….”

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“Tata Steel Ltd., India’s biggest producer, posted a third-quarter loss almost four times greater than analysts estimated as the economic slowdown in its biggest market spurred a decline in demand and prices.

The loss, including that of unit Tata Steel Europe Ltd., widened to 7.63 billion rupees ($142 million) in the three months ended Dec. 31 from 6.03 billion rupees a year earlier, the Mumbai-based company said today in a statement. The median loss estimate of 25 analysts in a Bloomberg survey was 1.99 billion rupees. Sales fell 3.5 percent to 318.2 billion rupees.

Steel-industry earnings have slumped as Europe’s economic crisis saps demand and slower Chinese growth weighs on commodity prices. Steelmakers in Europe, where Tata makes two-thirds of its production, are grappling with excess capacity, falling prices and rising operating costs. The region has a capacity to make about 210 million metric tons of steel a year, while demand in a “normal market” is 150 million to 160 million tons, according to industry lobby group Eurofer.

Total costs were 313.3 billion rupees, compared with 323.5 billion rupees. Mumbai-based Tata Steel earned 558.6 million rupees from sources other than its main business, while finance expenses were little changed at 10.3 billion rupees.

Tata Steel’s global depositary receipts in London fell as much as 6.7 percent to $6.795 and traded at $6.845 as of 11:06 a.m. local time. The Mumbai-traded shares closed down 2.3 percent to 376 rupees before the earnings were announced. The benchmark Sensitive Index gained 0.2 percent today.

Falling Prices…”

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“Societe Generale SA, France’s second-largest bank, posted a fourth-quarter loss after writing down its stake in derivatives broker Newedge Group and setting aside 300 million euros ($403 million) for legal expenses.

The shares fell after the Paris-based lender said today it had a net loss of 476 million euros, compared with a 100 million-euro profit a year earlier. That missed the average estimate for a loss of 203 million euros by 10 analysts surveyed by Bloomberg. The bank had goodwill writedowns of 392 million euros in the quarter, mostly on Newedge.

Societe Generale cut jobs and sold assets last year to cope with stricter international capital and liquidity rules after French banks had their access blocked to U.S. dollar funding and European debt markets. The writedowns and litigation costs in the quarter offset a rebound in earnings at the corporate- and investment-banking unit, where the firm trimmed about 1,600 jobs in 2012 after shuffling management at the business.

“Clearly the beginning of the year was good” for capital markets even if for the economic outlook “no one is expecting an upside” this year, Chief Executive Frederic Oudea, 49, said in an interview with Bloomberg Television. “We know that 2013 will be a year of transition for Europe.”

Societe Generale dropped 3.6 percent to 31.49 euros at 9:16 a.m. in Paris, cutting its gain this year to 11 percent and giving it a market value of 24.7 billion euros. BNP Paribas SA, France’s biggest bank, has added 7.3 percent in the period….”

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“Vodafone Group Plc is considering a bid for Kabel Deutschland Holding AG, Germany’s largest cable provider, to expand in the country’s pay-TV and Internet market, according to a person with knowledge of the matter.

Vodafone hasn’t yet contacted Kabel Deutschland about its intention, said the person, who asked not to be identified because the plan is private. Kabel Deutschland, which is based near Munich, rose as much as 14 percent in Frankfurt. Manager Magazin reported the takeover plan earlier today.

Buying Kabel Deutschland, whose market value tops 6 billion euros ($8 billion), would be another step for Newbury, England- based Vodafone, the world’s second-largest wireless carrier, to expand into fixed-line operations as it seeks to fuel sales growth. The company acquired Cable & Wireless Worldwide last year to boost its fixed-line system in the U.K.

Vodafone has been discussing the Kabel Deutschland acquisition internally among its management and with investment banking advisers, the person said. Vodafone was planning to contact Kabel Deutschland regarding a potential bid next week, the person said.

Matt Morgan, a Vodafone spokesman, and Insa Calsow, a spokeswoman for Kabel Deutschland, declined to comment….”

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