Tim Geithner to Join Council on Foreign Relations

“February 6, 2013—Timothy F. Geithner, the 75th Secretary of the U.S. Department of the Treasury, will join the Council on Foreign Relations (CFR) later this month as a distinguished fellow. Geithner, who was previously a senior fellow at CFR in 2001, will be based at the organization’s headquarters in New York.

“We are thrilled to welcome Tim back to the Council on Foreign Relations,” said CFR President Richard N. Haass. “Both at Treasury and at the New York Federal Reserve, Tim was a tireless, creative, and responsible custodian of the public trust. His coming to CFR only strengthens our capacity to produce thoughtful analysis of issues at the intersection of economic, political, and strategic developments.”  …”

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“Google has acquired Channel Intelligence for $125 million in cash.

According to its blog, Channel Intelligence tracks online retail sales for a number of categories ranging from computing to consumer packaged goods.

We’re unfamiliar with Channel Intelligence, but we assume it will be a part of Google’s efforts to ramp up display and shopping.

The more information Google has on your shopping habits, the better it can target what you want to buy.

More to come, but here’s the release in the meanwhile:

RADNOR, Pa., Feb. 6, 2013 (GLOBE NEWSWIRE) — ICG Group, Inc. (ICGE) (“ICG”) is pleased to announce that one of its consolidated companies, Channel Intelligence, Inc. (“CI”), has entered into a definitive agreement to be acquired by Google Inc. (GOOG) for $125 million in cash. The transaction, which is subject to customary closing conditions, is expected to be completed in the first quarter of 2013.

ICG is expected to realize approximately $60.5 million in connection with the transaction. A portion of ICG’s proceeds will be held in escrow and will be subject to potential identification claims. ICG does not expect to owe any income taxes in connection with the transaction….”

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“WASHINGTON (AP) — The U.S. Postal Service will stop delivering mail on Saturdays but continue to deliver packages six days a week under a plan aimed at saving about $2 billion annually, the financially struggling agency says.

In an announcement scheduled for later Wednesday, the service is expected to say the Saturday mail cutback would begin in August.

The move accentuates one of the agency’s strong points — package delivery has increased by 14 percent since 2010, officials say, while the delivery of letters and other mail has declined with the increasing use of email and other Internet services.

Under the new plan, mail would be delivered to homes and businesses only from Monday through Friday, but would still be delivered to post office boxes on Saturdays. Post offices now open on Saturdays would remain open on Saturdays….”

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“CVS Caremark’s fourth-quarter earnings climbed 6 percent, as new customers and Medicare prescription drug plans helped its pharmacy benefits management business, and revenue from the chain’s established drugstores grew.

The Woonsocket, R.I., company said Wednesday it earned $1.13 billion, or 90 cents per share, in the three months that ended Dec. 31. That compares with earnings of $1.06 billion, or 81 cents per share, in the same period in 2011.

Adjusted earnings totaled $1.14 per share, while revenue climbed nearly 11 percent to $31.39 billion.

Analysts expected, on average, earnings of $1.10 per share on $31.14 billion in revenue, according to FactSet.

CVS Caremark Corp. runs the second-largest chain of drugstores in the United States, after Walgreen Co., and also is one of the nation’s largest pharmacy benefits managers.

Revenue grew more than 17 percent from its pharmacy benefits management side, as the number of pharmacy network claims processed in the quarter rose 6.5 percent to 205.5 million….”

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“NEW YORK (AP) — Time Warner is reporting a 51 percent increase in fourth-quarter earnings even as revenue was largely unchanged. Rising fees from cable and satellite companies and higher ad revenue at the TV networks offset revenue declines at its movie studio and magazine businesses.

Net income was $1.17 billion, or $1.21 a share, for the final three months of 2012. That’s up from $773 million, or 76 cents a share, a year earlier.

Adjusted for one-time items, earnings came to $1.17 per share. That beat the $1.10 per share that analysts expected.

Revenue was almost steady at $8.16 billion. Analysts surveyed by FactSet expected revenue of $8.22 billion.

The company expects 2013 adjusted earnings to be up in the low double-digit percentage.

Time Warner Inc. is raising its quarterly dividend by 11 percent to 28.75 cents per share.”

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“(Reuters) – Home Depot Inc said it will hire 10,000 additional seasonal workers for its key spring selling season as it sees higher sales growth during the period.

The home-improvement retailer said it will hire 80,000 seasonal workers this year, 14 percent more than it hired last year.

Home improvement chains such as Home Depot and Lowe’s Cos Inc and retailers selling home goods and furnishings see higher sales during the spring season as people start to rebuild their homes after the cold winter.

The uptick in the U.S. housing market is also benefiting home improvement chains.

Shares of Home Depot closed at $66.39 on the New York Stock Exchange on Tuesday.”

“Oil fell to its lowest in 13 days in New York, widening its discount to Brent crude to the most this year. U.S. crude and gasoline stockpiles rose last week, an industry report showed.

West Texas Intermediate futures declined as much as 1.5 percent. WTI’s discount to London-traded Brent widened for a sixth day as limits on the Seaway pipeline cut flows to Gulf Coast refineries. U.S. crude supplies rose by 3.63 million barrels, the American Petroleum Institute said. Energy Department data due today will probably show oil inventories rose to a seven-week high. The U.S. will tighten sanctions on Iran today with measures blocking the exporter from repatriating oil payments in dollars, euros and other hard currencies.

“We’re moving into the refinery maintenance season so that could affect crude stock builds, at the end of this quarter demand should go lower,” said Thina Saltvedt, an analyst at Nordea Bank AG, who predicts that prices will remain supported at current levels by geopolitical concern and improved demand for riskier assets.

Crude for March delivery dropped as much as $1.45 to $95.19 a barrel in electronic trading on the New York Mercantile Exchange, the lowest since Jan. 24, and was at $95.37 at 1:16 p.m. London time. The contract rose 0.5 percent yesterday, the biggest gain since Jan. 29. Prices slid 1.6 percent on Feb. 4, the most since Dec. 6.

Brent for March settlement fell 62 cents to $115.90 a barrel on the London-based ICE Futures Europe exchange. The volume of all WTI contracts traded at that time was 66 percent above the 100-day average, while Brent was 35 percent higher….”

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“European leaders lulled into complacency by Mario Draghi’s pledge to buy their bonds may be stumbling toward the next euro-region emergency.

Policy makers are squandering the decline in borrowing costs triggered by the European Central Bank president’s commitment to defend the single currency, leaving the 17-nation bloc’s economy and financial systems vulnerable, according to economists Charles Wyplosz and Paul De Grauwe.

“I don’t see how we avoid having another acute crisis now that governments are so pleased with themselves,” Wyplosz, director of the International Center for Money and Banking Studies in Geneva, said in a telephone interview. “The wave of optimism we had was unjustified. Key elements of the crisis aren’t being dealt with.”

Concern that political turbulence would deepen backsliding has rattled markets. Ten-year bond yields in Spain and Italy rose this week to their highest of 2013 as Spanish Premier Mariano Rajoy faced opposition calls to resign amid contested reports of corruption in his party and Italy’s Silvio Berlusconi narrowed the front-runner’s lead before elections in three weeks.

Italian government bonds slid today with the yield on 10- year notes rising 1 basis point to 4.47 percent at 12:56 p.m. in Rome. Spain’s benchmark stock index fell 0.3 percent while the country’s 10-year bonds rose.

“The crisis has never been over,” said de Grauwe, a professor at the London School of Economics and a two-time candidate for a seat on the ECB’s Executive Board. “If this reversal goes on we’ll get a new stage and the ECB will have to act or it will lose credibility.” …”

Draghi’s Pledge…”

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“The euro weakened as European Central Bank policy makers prepared to meet tomorrow. The region’s stocks and U.S. equity-index futures erased gains, German bunds rose and natural gas climbed for a third day.

The 17-nation currency depreciated 0.5 percent to $1.3520 at 7:25 a.m. in New York, while the dollar gained against all of its 16 major counterparts. Germany’s 10-year yield fell one basis points to 1.64 percent. Russia’s 2027 ruble bonds snapped a seven-day slide on plans to open the market to foreign investors. The Stoxx Europe 600 Index slipped 0.2 percent and Standard & Poor’s 500 Index futures decreased less than 0.1 percent. Natural gas increased 1.6 percent….”

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“German factory orders rose in December as euro-area demand jumped, adding to signs that the region may be starting to recover from recession.

Orders, adjusted for seasonal swings and inflation, increased 0.8 from November, when they fell 1.8 percent, the Economy Ministry in Berlin said today. The median forecast in a Bloomberg News survey of economists was for a 0.7 percent gain. Factory orders from the euro area surged 7 percent….”

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“The pound rallied from near a 15- month low versus the euro amid speculation it has weakened too far on bets the next Bank of England governor Mark Carney will boost efforts to spur the economy when he takes over in July.

Britain’s currency strengthened against all 16 of its major counterparts before Carney testifies to U.K. lawmakers in London tomorrow. Economists predict the central bank will leave its benchmark interest rate at a record-low 0.5 percent and maintain its asset-purchase target at 375 billion pounds ($587 billion) when it meets the same day. Gilts rose after a report showed house prices declined in January.

“I am relatively optimistic on sterling at these levels,” said Geoff Kendrick, head of European currency strategy at Nomura International Plc in London. “Carney’s speech will be interesting tomorrow, there will be focus on what he’s going to do when he takes over. Sterling has overreacted to the idea that the BOE will take extreme measures and I think markets will pare back some of the bearishness.”

The pound gained 0.4 percent to 86.38 pence per euro at 12:19 p.m. London time. The U.K. currency depreciated to 87.17 pence on Feb. 1, the weakest since October 2011. Sterling was little changed at $1.5654 after dropping to $1.5631 yesterday, the lowest since Aug. 10….”

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“ArcelorMittal, the world’s biggest steelmaker, said it expects an earnings recovery in 2013 after posting the lowest quarterly profit in three years as the European debt crisis eroded demand for the metal.

Earnings before interest, taxes, depreciation and amortization fell to $1.32 billion in the fourth quarter from $1.71 billion a year earlier, ArcelorMittal said today in a statement. That beat the $1.25 billion median estimate of 18 analysts surveyed by Bloomberg. The company said 2013 Ebitda will exceed last year’s $7.1 billion as it ships more steel.

“Although we expect the challenges to continue in 2013, largely due to the fragility of the European economy, we have recently seen some more positive indicators,” Lakshmi Mittal, chief executive officer of the Luxembourg-based company, said in the statement. These will “support an improvement in the profitability of our steel business this year.”

ArcelorMittal will report 2013 Ebitda of $8 billion, according to the mean estimate of 30 analysts. Aditya Mittal, chief financial officer, wouldn’t comment on those projections on a call with reporters.

Steel-industry earnings have slumped as Europe’s economic crisis saps demand and slower Chinese growth weighs on commodity prices. European steelmakers are grappling with excess capacity that’s pushing down prices as operating costs climb. The region has 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.

Optimistic Signs…”

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“Royal Bank of Scotland Group Plc is set to pay about 400 million pounds ($627 million) in fines for manipulating interest rates, the second-largest penalty imposed in a global regulatory probe, two people with knowledge of the matter said.

An announcement will be made today, said the people, who requested anonymity because they weren’t authorized to speak publicly. An RBS unit will plead guilty to criminal charges as part of a deal with the U.S. Justice Department, a person familiar with the talks said. It’s the third fine to result from a global probe into whether lenders rigged the London interbank offered rate, or Libor. Investment banking chief John Houricanalso was expected to resign, the people said.

The penalty is the biggest blow to Chief Executive OfficerStephen Hester’s attempt to overhaul the Edinburgh-based bank after it took 45.5 billion pounds in a 2008 taxpayer bailout, the largest in history. The fine would exceed the 290 million pounds Barclays Plc paid in June, and be second only to the $1.5 billion UBS AG paid in December. Chancellor of the Exchequer George Osborne said this week that RBS should pay the U.S. fines by clawing back bonuses from its investment bankers.

‘Taxpayer Money’…”

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“UBS AG’s plan to pay part of top employees’ bonuses in bonds that can be wiped out will give traders and bankers an unfamiliar incentive: limit risk.

UBS will compensate some workers with contingent capital bonds, which can be written off if the bank’s common equity ratio falls below 7 percent or the company needs a bailout, the Zurich-based firm said yesterday.

The shift satisfies calls by regulators for debt-based pay and helps UBS meet stricter capital requirements, while risking defections among top performers. It may also go beyond pay changes at other companies in tying employees’ rewards to the bank’s safety as UBS exits some businesses and tries to move beyond recent trading losses and low returns.

“It’s hard for people to step out of their worlds and think macro about these institutions,” said Sallie Krawcheck, a former Bank of America Corp. executive who called for bankers to be paid with debt in a Harvard Business Review article last year. “While a trader, an investment banker or a financial adviser might not think about UBS’s leverage ratio, they will think about the message they get from this about the risk tolerance of the company.”

About 500 million francs ($551 million) of bonuses will be paid in contingent capital bonds, which vest after five years. The securities will account for 40 percent of bonuses for executive board members and 30 percent for all other employees with total compensation of more than $250,000.

‘Paradigm Shift’…”

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“Suncor Energy Inc., Canada’s largest energy company by market value, reported its first quarterly loss in 3 1/2 years after a charge of C$1.49 billion ($1.49 billion) related to its Voyageur oil project in the province of Alberta, which may face cancellation.

The net loss in the fourth quarter was C$562 million, or 37 cents a share, the biggest in at least two decades, compared with net income of C$1.43 billion, or 91 cents, a year ago, the Calgary-based company said yesterday in a statement that also disclosed it faces a possible C$1.2 billion tax bill. Operating earnings fell 30 percent to C$1 billion.

“The economic outlook for the Voyageur upgrader project is challenged,” the company said in the statement. “Suncor and its partners have agreed to minimize expenditures on the project pending a decision” on whether to proceed at the end of the first quarter, the company said.

The Voyageur upgrader project, being built by Suncor and a unit of France’s Total SA, will process about 269,000 barrels a day of bitumen from the Fort Hills and Joslyn mines, according to Total E&P Canada Ltd.’s website. The plant will use the heavy bitumen to produce 218,000 barrels a day of synthetic crude oil. Construction of the plant began in January 2012, according to the website.

Suncor Chief Executive Officer Steve Williams has been evaluating expansion plans since taking over from predecessor Rick George last year. The company is looking to reduce costs amid an expansion, including its oil-sands operations that may boost output to 1 million barrels a day by 2020.

Voyageur Prospects…”

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“Australia’s dollar fell to the lowest this year after data showed the nation’s retail sales unexpectedly dropped for a third month, adding to prospects the Reserve Bank will cut interest rates next month.

The so-called Aussie slid against all of its major peers after the central bank left the cash-rate at a half-century low yesterday and said the inflation outlook “would afford scope to ease policy further.” New Zealand’s dollar touched the strongest since July 2010 versus its Australian peer after Auckland-based Fonterra Cooperative Group Ltd., said whole-milk powder prices rose and before a report that may show the smaller nation’s jobless rate fell.

“Retail numbers came in on the weak side,” said Callum Henderson, the Singapore-based global head of currency research at Standard Chartered Plc. “While the RBA is on hold, that set of data is likely to add to expectations for further easing later this year.”

The Aussie declined 0.3 percent to $1.0356 at 5:26 p.m. in Sydney and touched $1.0342, the lowest since Dec. 25. It slid 0.2 percent to 97.11 yen, after touching 97.44 yesterday, the highest since August 2008. It declined 0.3 percent to NZ$1.2263, after reaching NZ$1.2247, the lowest since July 2010.

New Zealand’s kiwi dollar bought 84.45 U.S. cents from 84.53 yesterday. It touched 79.42 yen, the highest since July 2008, before trading 0.1 percent higher at 79.19.

Retail Sales

Retail sales in Australia fell 0.2 percent in December from the previous month, capping their longest stretch of declines in 13 years, the statistics bureau said in Sydney today. The median estimate of economists surveyed by Bloomberg News was for 0.3 percent growth….”

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“China’s stocks rose for an eighth day, driving the benchmark index to its longest stretch of gains in almost a year. Technology and financial companies climbed, overshadowing losses by energy producers.

Software maker Neusoft Corp. jumped to a nine-month high on a subsidiary’s plan to buy a stake in a joint venture from Royal Philips Electronics NV. Haitong Securities Co. led a rally for brokerages, climbing 3.5 percent on speculation increased demand for A shares will boost profits. China Coal Energy Co. and Datong Coal Industry Co. declined after a seven-day advance drove valuations to the highest level since November 2011.

The Shanghai Composite Index added 0.1 percent to 2,434.48 at the close, the highest since May 8. The eight-day win streak is the longest since the period ended Feb. 28. The index has risen 24 percent from a three-year low on Dec. 3 on signs economic growth is accelerating.

“Economic fundamentals are sound,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “Investors who have missed out on the rally are taking advantage of any dips to jump on to the bull- market run.”

The Shanghai gauge is valued at 13.4 times reported profit, the highest level since September 2011, data compiled by Bloomberg show. Chinese companies traded on the mainland were priced yesterday at the biggest premium to Hong Kong-listed counterparts since Oct. 9, according to an index from Hang Seng Bank Ltd….”

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“A Japanese finance official said the Bank of Japan’s policy tools are sufficient for now as a central bank board member said a new level of action is needed to counter deflation.

“The BOJ, for the time being, should stick to policy measures it has taken so far,” Vice Finance Minister Shunichi Yamaguchi said in an interview yesterday in Tokyo. Board member Takehiro Sato said in a speech today that reaching a 2 percent inflation goal will be difficult without new initiatives.

Prime Minister Shinzo Abe may seek to sweep away policy divisions as the early exit of Governor Masaaki Shirakawaaccelerates the reshaping of the central bank’s leadership. Shirakawa’s announcement yesterday that he’ll step down next month heightened investors’ expectations for aggressive steps to tackle entrenched deflation. The Nikkei 225 Stock Average surged by the most since March 2011 today as the yen slid.

“Abe will only gain momentum and public support as the yen weakens and stocks rise,” said Hiroshi Miyazaki, chief economist at Shinkin Asset Management Co. in Tokyo. “The next big focal point is the BOJ’s April meeting, when it will be important for the bank’s new leadership to show they are able to live up to Abe’s expectations.”

The yen fell to its weakest level in almost three years against the dollar and euro today, while the Nikkei closed at the highest since September 2008. At 5:53 p.m. in Tokyo the yen was at 93.74 per dollar, after earlier touching 94.06, and the Nikkei closed up 3.8 percent.

Yen ‘Correcting’…”

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World Markets

Currencies

Commodities

USD Libor

Euribor

Yields for Italy, Spain, France,  and Germany …

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