CORELOGIC Expects Home Prices to Jump 6% This Year

“Going into 2013, home prices are expected to rise 6 percent driven by steady demand, lower bank-owned (REO) sales, and lower inventory of unsold homes.  This is according to CoreLogic’s latest report.

The CoreLogic Home Price Index (HPI) increased 6.3 percent in 2012, the largest increase and highest level since 2006. And year-over-year home price increases were more widespread.

This increase in home prices across a broader geographic spread is expected to continue in 2013.

Here is CoreLogic’s 2013 outlook….”
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“According to Bank of America Merrill Lynch, analysts have slashed 4Q EPS estimates by 12 percent since April due to fears about the macroeconomic environment.

But some companies may now have an easier time beating those lowered expectations.

Led by Savita Subramanian, BAML’s equity strategy team has screened for stocks they consider are most likely to beat analysts’ estimates for 4Q.

All of their choices are buy-rated stocks that beat either sales or EPS expectations the previous quarter.

All but four stocks from the team’s list come from either the Consumer Discretionary, Energy, or Information Technology sectors.

We’ve listed each of the 17 stocks along with their tickers, sectors, and consensus EPS and revenue estimates for 4Q…..”

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Furthermore, threatening to go over the cliff is a tactic that will not get him to negotiate….

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“Gold bulls have come out of hiding and are returning to the market,  MarketWatch proclaims, and some experts predict the precious metal could surge to new highs.

“Gold remains one of the best long-term safe-haven investments for the risk-averse investor despite some declines in price at the end of 2012,” David Beahm, vice president of precious metals firm Blanchard & Co., told MarketWatch.

“With as much uncertainty as there is today, and with quantitative easing and fiscal stimulus programs providing only a temporary fix, gold is poised to achieve new highs, somewhere north of $2,000 in the coming year….”

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“Volatility will deter investors from moving into stocks from bonds in 2013 even as dividend returns top fixed-income yields, according to Goldman Sachs Group Inc.’s U.S. equity strategist.

“It’s the drawdown risk that is inhibiting investors from reducing bond holdings and increasing equity holdings,” David Kostin said at a presentation in London “You need to have more stable markets. I do not anticipate flows into equities from bonds. It should happen, it won’t happen this year.”

The forecast is at odds with Goldman Sachs Asset Management Chairman Jim O’Neill’s comment this year that funds may be set for a “great rotation” into equities. Investor deposits with global equity mutual funds in the first week of January were higher than any other period except one, a sign they may be coming back to stocks after withdrawing cash for the past six years, according to data from EPFR Global.

The Standard & Poor’s 500 Index ended last year with a dividend yield that was 56 basis points, or 0.56 percentage points, higher than the yield on the benchmark 10-year Treasury, according to Bloomberg data. The spread reached a record weekly high of 1.16 percentage points in 2009 in favor of equities.

Most investors will probably sell U.S. government bonds if losses push the 10-year Treasury yield to 3 percent from 1.85 percent currently, Kostin said today.

2012 Advance…”

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“(Reuters) – MetLife Inc said on Monday it had closed the sale of its deposit business to General Electric Co , a move that allows the U.S. insurer to drop its registration as a bank holding companyand provides GE Capital with an alternative source of funding for its lending business.

The deal, for $6.4 billion in bank deposits, had been in the works for more than a year with regulatory review the main reason for the delay.

The two companies in September tweaked the deal structure to make it subject to the approval of theOffice of the Comptroller of the Currency, rather than the Federal Deposit Insurance Corp, and won approval in mid-December.

Fairfield, Connecticut-based GE reached the deal to buy the deposit-taking unit in December 2011, with an eye toward making its GE Capital finance unit less dependent on borrowing.

New York-based MetLife said the deal reflected its desire to focus on its insurance and employee benefit operations.”

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“Antitrust concerns will force UPS to scrap its acquisition of Dutch TNT Express. UPS expects the European Commission will not allow the proposed $7 billion deal to happen, despite negotiations over restructuring the merged businesses.

“We are extremely disappointed with the European Commission’s position. We proposed significant and tangible remedies designed to address the EC’s concerns with the transaction,” says UPS CEO Scott Davis….”

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NYSE

NASDAQ

AMEX

AXP, ARMH, COF, CSCO, DE, EMC, FB, HPQ, HUN, IBM, OKE, PM, S, VZ,

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In Play ,

On the Wires 

“CES has come and gone, but the memory of this year’s show will live on forever. Not necessarily because the 15-20 TechCrunch staffers who attended will remember it — chances are the night-time debauchery has wiped away all recollection of the past week — but because this post exists.

We met a bunch of celebrities. We discovered a phone with an e-ink display on the back, a giant spider walking vehicle, and a fork that tells you when you’re eating too fast.

We conducted a ton of interviews. (Even one with a robot.)

We met the Nyan Cat founder, and we even had time left over to film a CrunchWeek episode. And, of course, we went on a rampage of destruction in the iLounge accessories area.

But most importantly, we realized just how much CES matters (for now, at least.)

We had a blast, and we hoped you enjoyed our coverage as much as we enjoyed delivering it…”

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“Yesterday, Citigroup floated the idea that a temporary government shutdown once the full array of debt ceiling extension measures expires some time in mid/late February, is possible, which would also mean the first technical default of the US depending on the prioritization of US debt payments. Now, Politico reports that this idea is rapidly gaining support within the GOP and that “more than half of GOP members are prepare to allow default unless Obama agress to dramatic cuts he has repeatedly said he opposes.” It gets better… or worse depending how many ES contracts on is long: “Many more members, including some party leaders, are prepared to shut down the government to make their point. House Speaker John Boehner “may need a shutdown just to get it out of their system,” said a top GOP leadership adviser. “We might need to do that for member-management purposes — so they have an endgame and can show their constituents they’re fighting.”” Of course, at this point not even a US government bankruptcy may send the ES more than one or two ticks lower. After all, there is no risk of anything happening anywhere, any time.

More from Politico….”

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“The belt-tightening in American corporations that made relics of pension plans, in-house cafeterias and even many holiday parties is squeezing another victim:American Express Co.’s AXP +0.73% travel business.

Responding to the rise of do-it-yourself policies that ask employees to book work trips online rather than calling an AmEx travel agent, the New York company is trimming its corporate-travel operation.

The overhaul, announced last Thursday, will result in the loss of 5,400 jobs as the company invests more in technology to handle customer-service functions.

The move is the latest in a series of hits to the company. Long known for peerless customer service, global cachet and its throwback traveler’s checks, American Express was tarnished in the financial crisis by an ill-timed bet on less-affluent credit-card customers and last year was slapped by regulators for alleged billing missteps. AmEx said last week it would spend $153 million to make amends with wronged customers….”

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” From JPMorgan’s Adam Crisafulli:

The “macro” is fading – the last several years have seen markets swing violently in reaction to a succession of tail-events and while future problems are a certainty there seems to be too much of an eagerness to search out the next big “macro” event.  At this point the next big “tail event” could be an extended period of no tail events.

To some extent, this is the story of the past few years. Ever since the financial crisis, we’ve seen a series of expected blowups that never materialize.

For more of Crisafulli’s 7 big stories in the market right now, see here….”

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“HONG KONG (Reuters) – The U.S. economy is expected to grow by 2.5 percent in 2013, improving to 3.5 percent growth in 2014, top Fed official Charles Evans said on Monday.

Evans also forecast the U.S. unemployment rate would be 7.4 percent this year, easing to about 7 percent in 2014.

“One good indicator of labor market improvement would be if we saw payroll employment increase by 200,000 each month for a number of months. We’ve been averaging about 150,000, but it’s been very uneven … we need a higher pace of employment growth and less volatility in that pace,” Chicago Fed President Evans said.

The creation of 1 million jobs over six months would be a “substantive” improvement, but bringing unemployment down to the key level of 6.5 percent was likely to take much longer, probably until mid-2015, he said, speaking at the Asian Financial Forum in Hong Kong.

The U.S. Federal Reserve’s decision last year to tie monetary policy to specific economic conditions should help boost the recovery without letting inflation take hold, said Evans, a chief architect of the policy.

It also provides additional accommodation by assuring markets that rates will remain low even after the economy perks up, he said.

“Given more explicit conditionality, markets can be more confident that we will provide the monetary accommodation necessary to close the large resource gaps that currently exist,” he said. “Additionally, the public can be more certain that we will not wait too long to tighten if inflation were to become a substantial concern.”

Last month, the Fed ramped up asset purchases aimed at spurring growth, and pledged to keep rates near zero until the unemployment rate drops to 6.5 percent, as long as inflation expectations do not climb above 2.5 percent.

Evans, who rotates into a voting spot on the Fed’s policy-setting panel this year, had been pushing for exactly such a threshold-based policy for more than a year, saying the Fed needed to take a much more activist role in trying to meet its mandate to boost employment….”

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“Hedge funds are borrowing more to buy equities just as loans by New York Stock Exchange brokers reach the highest in four years, signs of increasing confidence after professional investors trailed the market since 2008.

Leverage among managers who speculate on rising and falling shares climbed to the highest level to start any year since at least 2004, according to data compiled by Morgan Stanley. Margin debt at NYSE firms rose in November to the most since February 2008, data from NYSE Euronext show.

The rising use of borrowed money shows that everyone from the biggest firms to individuals is willing to take more risks after missing the rewards of the bull market that began in 2009. While leverage means bigger losses should stocks decline, investors are betting that record earnings and valuations 9.8 percent below the six-decade average will help push the Standard & Poor’s 500 Index toward the record it set in October 2007.

“The first step of increasing risk is just going long, the second part of that is levering up in order to go longer,” James Dunigan, who helps oversee $112 billion as chief investment officer in Philadelphia for PNC Wealth Management, said in a Jan. 8 telephone interview. “Leverage increasing in the hedge-fund area suggests they’re now getting on board.”

The S&P 500 rose 0.4 percent to 1,472.05 last week on better-than-projected reports from Alcoa Inc. to Mosaic Co. (MOS)The index is about 6 percent away from the all-time high reached in October 2007 and has already gained 3.2 percent in 2013, led by Celgene (CELG) Corp. Futures on the S&P 500 advanced less than 0.1 percent at 8:24 a.m. in London today….”

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“The Bank of England’s Financial Policy Committee proposed powers to alter the amount of capital banks hold against real-estate assets as well as derivatives and bonds as it seeks to strengthen the financial system.

While the FPC will seek to act at the “highest level,” it also sees a potential need to target capital at a “more granular level,” it said a draft paper published in London today. “Such an approach might help to tackle threats to stability before they spread, particularly by leaning against exuberance in specific subsectors,” it said, noting high loan- to-value mortgages as an example.

The FPC has sought powers over so-called sectoral capital requirements — along with countercyclical capital buffers and leverage ratios — from the government as the Bank of Englandprepares to take over the role of ensuring financial stability. The committee, led by BOE Governor Mervyn King, is currently operating on an interim basis as legislation passes through Parliament.

The FPC said the use of the countercyclical capital buffer and the sectoral capital requirements “will improve the ability of the financial system to withstand shocks.” King is due to appear at a Parliament hearing in London tomorrow to answer lawmakers’ questions on the BOE’s semi-annual Financial Stability Report. FPC membersAndrew Haldane and Michael Cohrs will also attend the hearing….”

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“Swatch Group AG (UHR), the biggest maker of Swiss timepieces, agreed to buy the Harry Winston watch and jewelry unit for about $1 billion, adding a luxury label in its biggest acquisition.

Swatch Group will pay Harry Winston Diamond Corp. (HWD)$750 million and assume as much as $250 million in debt, the Biel- based company said in a statement today. Harry Winston Diamond, whose name was mentioned by Marilyn Monroe in “Diamonds are a Girl’s Best Friend,” said it will now be known as Dominion Diamond Corp. and focus on its diamond-mining operations.

The acquisition will help Swatch compete against Cie. Financiere Richemont SA’s Cartier brand in the market for high- end jewelry and watches decorated with precious stones. Swatch, the biggest purchaser of polished diamonds, had a gap in its portfolio after a collaboration with Tiffany & Co. (TIF)dissolved into a legal dispute in 2011, according to Rene Weber, an analyst at Bank Vontobel in Zurich.

“Swatch was always missing a jewelry-watch brand and Harry Winston definitely fits into that category,” he said. “After the Tiffany disaster, they now have another brand to expand.”

The stock rose as much as 4.8 percent to a record 516 Swiss francs. They were 3.3 percent higher at 508.5 francs at 12:27 p.m. in Zurich….”

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“Indian inflation slowed to a three- year low in December, boosting scope for a reduction in interest rates to revive the economy.

The wholesale-price index rose 7.18 percent from a year earlier, after climbing 7.24 percent in November, the Commerce Ministry said in a statement in New Delhi today. That’s the slowest since December 2009. The median of 34 estimates in a Bloomberg News survey was for a 7.37 percent gain.

India’s central bank signaled Dec. 18 that monetary policy should shift toward aiding growth, predicting the fastest inflation in major emerging nations will cool in an economy expanding at the weakest pace in a decade. Finance Minister Palaniappan Chidambaram, due to unveil the budget next month, has called for cheaper credit to back efforts to spur investment.

“The Reserve Bank of India can support growth only at the margin,” Suvodeep Rakshit, an economist at Kotak Securities Ltd. in Mumbai, said before the report. It will cut the repurchase rate at most by 25 basis points to 7.75 percent at the Jan. 29 review, since it faces “a serious dilemma” of trying to help the economy while containing prices, Rakshit said.

The yield on the 8.15 percent government bonds due June 2022 declined to 7.80 percent as of 4:44 p.m. in Mumbai, from 7.87 percent on Jan. 11. The BSE India Sensitive Index (SENSEX)advanced 1.2 percent, while the rupee strengthened 0.5 percent to 54.4906 per dollar.

Interest Rates…”

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