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“Daniel S. Loeb, the founder of Third Point LLC, has sold his entire Apple stake during the fourth quarter, according to an 13F filing with the SEC.

At the end of the third quarter, Third Point owned 710,000 shares. …”
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” A combination of investment gains and worker contributions helped push the average amount stashed in a 401(k) to its highest level ever by the end of 2012, according to the latest Fidelity Investments analysis of the retirement-savings plans it manages.

But the average, while 12% higher than a year earlier, totals just $77,300, according to Fidelity’s data, which covers 12 million participants. That is a fairly dismal sign that there are some difficult retirement years ahead for many savers.

Still, that overall average balance counts savers young and old, so presumably many of those people have years of contributions ahead of them.

Meanwhile, for workers aged 55 and over, the average balance is $143,300. Not so great, but there is a chance these savers have other workplace plans or IRAs not covered by Fidelity’s data…..”

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“Some of the biggest U.S. hedge-fund investors have made billions betting against the yen, exploiting Japan’s determination to weaken its currency and boost its economy.

Wagering against the yen has emerged as the hottest trade on Wall Street over the past three months. George Soros, who made a fortune shorting the British pound in the 1990s, has scored gains of almost $1 billion on the trade since November, according to people with knowledge of the firm’s positions. Others reaping big trading profits by riding the yen down include David Einhorn‘s Greenlight Capital, Daniel Loeb‘s Third Point LLC and Kyle Bass’s Hayman Capital Management LP, investors say….”

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“South Korea’s central bank kept interest rates on hold as officials monitor the won’s gains against the yen and look ahead to policy changes after President Park Geun Hye takes office Feb. 25.

Governor Kim Choong Soo and his board kept the benchmark seven-day repurchase rate at 2.75 percent after a 25 basis point cut in October, the central bank said in a statement in Seoul today. For a second month, the decision was not unanimous. Fourteen of 15 economists surveyed by Bloomberg News predicted the decision and one forecast a cut.

Japan’s “expansionary policy operations” and fiscal tightening in advanced nations are among risks for a South Korean economy that is showing signs of gradual improvement, the central bank said. The frontloading of government spending in the first half of the year is already giving growth a boost and Deutsche Bank AG says a supplementary budget may be announced by Park’s administration in March.

The central bank may “decide in March to see if fiscal stimulus is sufficient in terms of size and scope to reduce the level of uncertainty in the economy,” said Wai Ho Leong, a senior regional economist at Barclays Capital in Singapore.

The won gained 0.2 percent to 1,084.80 per dollar at 10:42 a.m. in Seoul, according to data compiled by Bloomberg. It earlier rose as high as 1,084.27, near the strongest level since Feb. 6. The won was little changed at 11.60 per yen, according to data compiled by Bloomberg.

Currency Comments…”

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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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“As Brazil remains a laggard in Latin America, more U.S. investors are pulling money from funds that track the emerging-market giant.

But portfolio managers aren’t convinced that such a shift is short-term performance chasing. Rather, they see longer-term political and economic problems facing Brazil.

“The immediate problem is that China looks less likely to turn into Brazil’s long-term savior,” says Lee Munson, chief investment officer at Portfolio LLC, an advisory firm in Albuquerque, N.M. that manages about $200 million in assets. “But the bigger picture is that people are realizing there are other intriguing markets in Latin America.”

The $9 billion iShares MSCI Brazil ETF (EWZ), the most popular of its kind tracking Latin America, saw outflows of $269.4 million in the three months through January, according to Morningstar. In contrast, the iShares MSCI Mexico (EWW) attracted $596 million in net inflows while the iShares MSCI Peru (EPU) had $117.1 million in positive flows during that same period. Another member of BlackRock Inc.’sBLK +0.03% (BLK) iShares family covering Chile also has been racking up inflows.

Meanwhile, the performance of the large-cap dominated Brazil ETF has been badly lagging many of its smaller regional rivals, both in the past 12 months as well as the last three years.

“Brazil has some strong cross currents that are developing into real head winds for investors,” says Paul Christopher, chief international investment strategist at Wells Fargo WFC +0.69% Advisors. The advisory arm of San Francisco-based Wells Fargo & Co. (WFC) runs about $8 billion in assets through ETF-managed portfolios….”

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“Apple and Google are enemies and partners at the same time due to asymmetric competition. According to a report from Morgan Stanley, Google could pay more than $1 billion in 2014 to remain the default search engine on iOS. In 2009, Google paid only $82 million for the privilege. Analyst Scott Devitt believes that it is a per-device deal growing every year.

For every dollar of revenue Google makes on iOS thanks to advertising and data collection, Apple gets 75 cents from Google. The number is only going to increase in the coming years if iOS sales keep growing.

To put it into perspective, the Mozilla Foundation should get $400 million in 2014. Google remains the main contributor to the organization as one can read in Mozilla’s reports. Opera is another longstanding partner, but Morgan Stanley doesn’t give figures for this deal.

Over the years, Apple has gotten more revenue from Google as Microsoft has been pushing very hard and bidding to make Bing the default search engine. For example, Bing is now the default provider on Nokia and BlackBerry devices. Money is a major incentive for Apple. But selling aGoogle-free iPhone could dictate the company’s next move….”

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“…….It is important to remember that outside of the 2008 shock, the Debt Ceiling Debate and consequent US Debt Downgrade in Summer 2011 created the biggest volatility event of the past two decades.

Volatility metrics show that the market is extremely complacent heading into these events.   Equity volatility and skew are trading near multi-year lows (5th percentile or less over past two years), while many market indices are making new multi-year highs.  From a positioning standpoint, net exposures are higher than any time in 2012 while hedges are at multi-year lows.  Total SPX Put Open Interest has fallen from 9.5mm contracts to 5.7mm contracts in the past month – This is the lowest level of puts outstanding for the S&P500 since June 2009.  The bottom-line is that we are heading into a potential multiple-standard deviation volatility event with the price of options at their lows and market exposures/equity prices at their highs.

Below, we look at 3Q11 changes in price, front month put implied volatility, and 90-day realized volatility across asset classes to assess the best hedge for the upcoming debt ceiling debate.  We highlight some of our favorites – IWM puts, VIX call spreads and HYG puts – but lay out the full list below.

1)      IWM Puts —  Beta underperforms when the market gets volatile.  Summer 2011 saw IWM fall 22% vs the SPY falling 14%. However, the current volatility premium of IWM over SPY is only 3 vol points – which means you can get IWM beta on the cheap.   Currently IWM is trading on a 17 vol – in 3Q11 it rallied from 20 vol to 49 vol.  This means you not only won on deltas, but you had a vol explosion.  IWM March 82 puts for $1.30.

2)      VIX Call Spreads – Given its convexity, VIX knocks the competition out of the water when it comes to panic moves in the market.  VIX rose 160% during 3Q11.  VIX volatility is now trading at two year lows, which makes upside call spreads look interesting.  This could also be a good play on a run-up in volatility ahead of sequester/budget talks – similar to what took place at the end of the year ahead of the fiscal cliff.  VIX March 20-30 Call Spread for $1.30.

3)      HYG Puts – The High Yield ETFs have seen one of the largest price appreciations/inflows since Summer 2011 (+15% in that time).  The average junk yield is now below 6% and the space seems crowded and susceptible.  HYG protection has fallen dramatically– Put Open Interest fell from 270k contracts to 150k contracts in the past month as almost all fund protection was centered in December 2012.  HYG options are trading on a 6 volatility –implied vol got to over 18 and HYG fell 8% in 3Q11.  HYG March 92 Puts cost $1.05 – a 3% break-even….”

Full article and charts 

“LONDON—An internationally agreed, comprehensive overhaul of rules is needed if governments are to be able to continue to tax companies without resorting to unilateral action that would damage investment and economic growth, the Organization for Economic Cooperation and Development said Tuesday.

As governments in many developed countries look to boost their revenues to cut high budget deficits and debt, the strategies that companies with operations in a number of different countries use to minimize their tax bill have come under heightened scrutiny.

Led by the U.K., Germany and France, governments have begun to discuss how to stop big multinational companies from using legal loopholes to shift their profits to low-tax countries.

In a report prepared for a meeting of finance ministers from the Group of 20 largest economies in Moscow next Friday and Saturday, the OECD said that while corporate tax revenues haven’t fallen in recent years, there is evidence that the practice of recording profits in low tax jurisdictions rather than where revenue is generated—a practice known as profit shifting—is increasing.

It warned that the practice poses a threat to the ability of governments to tax any company, since the perception that large multinationals can avoid paying their fair share will erode compliance more broadly.

“If other taxpayers [including ordinary individuals] think that multinational corporations can legally avoid paying income tax it will undermine voluntary compliance by all taxpayers—upon which modern tax administration depends,” the OECD said.

The OECD also said that it would be impossible, and potentially damaging, for individual governments to act alone to prevent profit sifting.

“Unilateral and uncoordinated actions by governments responding in isolation could result in the risk of double—and possibly multiple—taxation for business,” the OECD said. “This would have a negative impact on investment, and thus on growth and employment globally.”

The OECD said corporate tax regimes haven’t responded to changes in the way businesses operate, both because they are “grounded in an economic environment characterized by a lower degree of economic integration across borders” and because the nature of cross-border transactions has changed….”

Full article

“Twitter users will be able to pay for products with tweets by using a new American Express payment system integrated onto the microblogging site.

The “Amex Sync” integration allows users who sync their Amex cards with Twitter to buy selected items by including special hashtags.

American Express first launched its original Twitter Sync feature last year, which allowed customers to get discount deals by tweeting hashtags of special offers. Now it has extended the feature to allow payments.

This new arrangement aimed at providing a new source of financing for Twitter, which has so far been largely reliant on advertising revenue.

Understandably, neither Amex nor Twitter will discuss financial terms of their partnership, but Twitter doesn’t rule out taking a cut of future e-commerce sales.

“We’re convinced that commerce is going to be one of the areas (for which) advertisers are going to start using our platform,” Joel Lunenfeld, Twitter’s vice president of global brand strategy, told the Wall Street Journal.

E-commerce has been slow to take off on social networks, with retailers who have tried to use their presence on the sites to stimulate transactions reporting disappointing results….”

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“Russia’s central bank refrained from easing borrowing costs after inflation surged to a 15-month high, warning of the threat of faster price growth and defying government calls for lower rates to support the slowing economy.

Bank Rossii held the refinancing rate at 8.25 percent for a fifth month at a meeting in Moscow today, it said in a statement on its website. The move was forecast by 21 of 22 economists in a Bloomberg survey. Price growth will probably remain above the upper limit of this year’s 5 percent to 6 percent target range until the second half, a prolonged run that risks heightening expectations of higher inflation, according to the statement.

Policy makers are resisting growing government pressure to ease monetary policy after economic growth last year slowed to 3.4 percent, the weakest since a 2009 slump. The central bank has a free hand to raise or lower borrowing costs and relies only on its own forecasts in steering policy, First Deputy Chairman Alexei Ulyukayev has said….”

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“Indonesia kept its benchmark interest rate unchanged for a 12th meeting as a depreciating currency and inflationary pressures reduce scope for an addition of monetary stimulus to spur a slowing economy.

Bank Indonesia Governor Darmin Nasution and his board held the reference rate at a record-low 5.75 percent, the central bank said in Jakarta today. The decision was predicted by all 17 economists surveyed by Bloomberg News.

Southeast Asia’s largest economy is facing rising price pressures from higher power tariffs, an increase in minimum wages and as a weakening rupiah raises the cost of imported goods. At the same time, the economy grew at the slowest pace in more than two years last quarter as an export slump countered gains in domestic consumption.

“The current rate is friendly for capital markets, bonds and to support growth,” Branko Windoe, head of treasury at PT Bank Central Asia, said after the decision. “By keeping the rate, Indonesian 10-year bonds are more attractive compared to other countries. Indonesia remains an investment destination and it will have a positive impact on the rupiah.”

The government’s 11 percent notes due October 2014 advanced, pushing the yield down by three basis points, or 0.03 percentage point, to 4.40 percent as of 3:24 p.m. in Jakarta, prices from the Inter Dealer Market Association show. That was the biggest drop since Feb. 6….”

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“Google Inc. GOOG +1.48% Executive Chairman Eric Schmidt plans to sell stock valued at $2.5 billion over the next year as part of a trading plan that will cut his stake in the Internet firm by more than 40%.

The Mountain View, Calif.-based company said in a regulatory filing on Friday that Mr. Schmidt plans to sell 3.2 million shares of stock over the next year. Mr. Schmidt owned 7.6 million shares of Google as of Dec. 31, according to the filing. At Friday’s closing price of $785.37, the shares being sold would have a value of $2.5 billion….”

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“European Union leaders prepared the first-ever cuts in the bloc’s budget, bowing to U.K. Prime Minister David Cameron’s insistence on thrift.

After an all-night bargaining session interspersed with catnaps on couches at EU headquarters in Brussels, the leaders neared agreement on a 2014-2020 spending ceiling of 960 billion euros ($1.3 trillion), down from an original proposal of 1.047 trillion euros and less than the 994 billion euros spent in the current budget cycle.

At the center of the controversy was Cameron, making his first EU summit appearance since announcing plans for a referendum that could result in Britain leaving the 27-nation bloc as early as 2017. Britain’s demands for savings ran into opposition from France, Italy and eastern and southern European economies keen to tap EU subsidies.

“The numbers that were put forward were much too high,” Cameron told reporters before the summit started yesterday afternoon. “They need to come down, and if they don’t come down, there won’t be a deal.”

Leaders, each of whom has a veto, were set to convene at 2:30 p.m. The meeting should be wrapped up today, said a French official who spoke to reporters under ground rules that he not be identified. The breakdown of spending between agriculture, infrastructure and regional development aid is still up for debate. An accord today must also be ratified by the European Parliament….”

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“If anyone was hoping that in the peak holiday month of December the US consumer would finally open up the purse strings and “charge” everything, we have bad news: in the last month of 2012 revolving consumer credit dipped by some $3.6 billion, a reversion of the modest increases seen in November and October, and the biggest decline in credit card debt since July of 2012. Yet overall consumer credit rose by some $14.6 billion and beat expectations of a $14 billion increase. Why? Because as we have been warning for quite a while, everyone is now piling into student debt (and NINJA Uncle Sam subprime car loans). Sure enough, non-revolving credit soared by $18.2 billion in December – a monthly record for this time series since its revision several months back – and shows that when it comes to levering up, few are using their credit cards, as increasingly more opt to rotate proceeds from their “student loans” into everyday purchases.

And so we end 2012 with a total increase in consumer credit of $146.7 billion of which student loans account for… $148.3 billion…”

“The European Central Bank left interest rates unchanged even as a stronger currency threatens the euro area’s recovery from recession.

Policy makers meeting in Frankfurt today kept the benchmark rate at a record low of 0.75 percent, as forecast by all 60 economists in a Bloomberg News survey. President Mario Draghiholds a press conference at 2:30 p.m. to explain the decision.

Recent indicators suggest the euro-area economy may return to growth later this year, easing pressure on the ECB to lower rates further. At the same time, a rising euro could hurt exports and stymie the recovery before it has begun, and looser monetary policy in the U.S. and Japan may continue to weaken the dollar and the yen.

“The euro is a little bit too strong,” Bernard Charles, Chief Executive Officer at the French software maker Dassault Systemes SA, said in an interview with Bloomberg Television today. This will “have an effect this year” on the economy and its “capacity to export,” he said.

The common currency rose 0.3 percent to $1.3568 today. It reached a 14-month high against the dollar this month and a three-year high against the yen. It has climbed 11 percent on a trade-weighted basis since Draghi pledged on July 26 to do whatever is needed to preserve Europe’s monetary union…”

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“It seems the repayment of LTRO funds had quite a significant ‘deleveraging’ effect on the world’s easy policy central bank balance sheet expansion. In USD terms, global central bank balance sheets have just experienced their biggest 4-week plunge since July 2009. Gold, like credit markets and European stocks, which have all underperformed US stocks, it appears merely discounted expectations of a drop in liquidity. We humbly suggest the momentum fueled, rotation-meme-driven, retail-is-in-now, US equity markets are due to meet their liquidity-maker sooner rather than later – if history is any guide. While, of course, the central banks’ balance sheets are expected to expand (infinitely if they are to be believed), it would appear markets are stuck in the short-term for now (as opposed to discounting the future). Certainly the dramatic drop in central bank liquidity has had an effect in Europe as (led by credit) equity markets are well off their highs…”

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“Online scrapbook Pinterest is trying to raise a new round of funding that would give it a valuation of $2 billion to $2.5 billion, the Wall Street Journal reported on Tuesday.

The company declined to comment on any fundraising efforts.

The talks are fluid with no investment finalized, the Journal said in its report.

(Read More: Pinterest Opens the Business Floodgates … Finally)

Pinterest, which allows users to create online bulletin boards based on various themes such as travel, decorating, or sports, is part of a group of Internet companies that offer twists on Internet networking among various groups. They typically have little discernible profit or revenue, but have landed some outsized investments from venture capitalists.

They include private social-network Path, which raised $30 million at a valuation of $250 million last year; question-and-answer site Quora, which raised $50 million at a $400 million valuation last year; and microblogging service Twitter, which raised $400 million in new funding and another $400 million to buy out existing investors at an $8 billion valuation in 2011….”

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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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