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U.S. Auto Sales Expected to Top 15m Units in 2013

 

“The rebound in U.S. auto sales shows few signs of slowing down according to a new report that projects new vehicle registrations will top 15 million this year. The auto research firm Polk estimates new vehicle registrations will increase by 900,000 and total 15.3 million for the year.

“Provided we don’t see the economy slow down, we should see relatively strong auto sales growth this year,” said Anthony Pratt, director of forecasting for the Americas at Polk.

(Read MoreSticker Shock: New Car Prices Are Going Up)

Polk tracks new vehicle registrations, which tend to come in just short of auto industry sales….”

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U.S. Arms Sales to Asia Expected to Boom

“U.S. sales of warplanes, anti-missile systems and other costly weapons to China’s and North Korea’s neighbors appear set for significant growth amid regional security jitters.

Strengthening treaty allies and other security partners is central to the White House’s “pivot” toward a Pacific region jolted by maritime territorial disputes in China’s case, and missile and nuclear programs, in North Korea’s.

The pivot “will result in growing opportunities for our industry to help equip our friends,” said Fred Downey, vice president for national security at the Aerospace Industries Association, a trade group that includes top U.S. arms makers.

Demand for big-ticket U.S. weapons is expected to stay strong for at least the next few years, the trade group said in a 2012 year-end review and forecast released in December….”

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Ratings Upgrades Being Talked About for EU Periphery Countries

“The much-maligned peripheral economies of the euro zone are showing some encouraging signs, leading to talkof a revaluation which would have seemed optimistic for most of last year.

Greece, Ireland, Portugal and Spain all reported current account surpluses in late 2012, which has led someto suggest that the worst of the crisis is coming to a close.

There are fewer economists who, like Jonathan Loynes of Capital Economics, believe that Greece is “likely” to exit the euro zone and the crisis will “re-escalate”this year.

“It’s a different scale of problem. We do not have the same potential for Europe to generate systemic risk we had a year ago,” Stephane Deo, head of European economic research at UBS, told CNBC.

“The euro breakup call has been proved entirely wrong. The economy is recovering. European imbalances have been reduced massively, half of the GDP of Europe is now in countries which are able to stabilize their debt-to-GDP ratio.”

He argued that there is a case for further re-rating of peripheral euro zone countries, if growth improves unexpectedly or Spain goes into the European Central Bank’s new bailout-lite,the Outright Monetary Transactions (OMTs) program, earlier than forecast….”

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Borrowing for Small Business Rises Slightly in November

“NEW YORK (Reuters) – Borrowing by small U.S. businesses rose marginally in November, indicating they were essentially on hold in terms of growing their enterprises in the face of economic and government fiscal uncertainty, a report on Wednesday showed.

The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to small U.S. companies, rose to 108.3 from a downwardly revised 107 in October, PayNetsaid.

PayNet had initially reported the October figure as 107.5.

Borrowing was up 3 percent in November from a year earlier.

PayNet founder Bill Phelan, located in Chicago, said the small rise in the monthly index and the 3 percent year-on-year gain indicated small businesses are essentially on hold when it comes to borrowing and growing their businesses.

“Small businesses are on hold until they get some better stability from policymakers and greater clarity on the direction of the economy,” he said.

“Small businesses were waiting to see what is happening with Washington in November, they were waiting for more consumer activity to emerge, really watching the front door for new sales to emerge and it doesn’t look like any major new influx of sales came in — they have really been on hold,” Phelan said.

Small businesses are often responsible for the bulk of new job creation after recessions. The recent recession ended in 2009, but sluggish growth has meant weak job growth, and unemployment in November registered 7.7 percent, well above the 5.5 percent to 6 percent that many economists view as normal….”

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$CAR to Buy $ZIP for $491 m

“PARSIPPANY, N.J. (AP) — Avis is buying Zipcar for $491.2 million, expanding its offerings from traditional car rentals to car sharing services.

Car sharing has become a popular alternative to traditional rentals in metropolitan areas and on college campuses, allowing members to quickly procure a vehicle for quick trips. Zipcar, which was founded in 2000, has more than 760,000 members. It went public in 2011.

“By combining with Zipcar, we will significantly increase our growth potential, both in the United States and internationally, and will position our company to better serve a greater variety of consumer and commercial transportation needs,” said Avis Chairman and CEO Ronald Nelson.

Bringing the Avis fleet into play will also help Zipcar meet high demand on weekends, Avis said, when most people make a run to the grocery store or run other errands.

Avis Budget Group Inc. will pay $12.25 per share, which is a 49 percent premium to Zipcar’s Friday closing price. The companies put the total value of the deal at approximately $500 million….”

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$MCP Hands Investors a 61% Loss in 2012, Now Seen as a Takeover Target Based on Evaluation

 

Molycorp Inc. (MCP)’s plunge below the value of its net assets is turning the owner of a rare-earth supply that’s unmatched in the Western hemisphere into a takeover target.

The owner of the biggest U.S. deposit of metals that go into everything from smartphones to solar panels and hybrid cars handed investors losses of 61 percent in 2012 amid a slump in rare-earth prices, cost overruns at its California mine, a regulatory probe and the departure of its chief executive officer. Even after the shares rebounded from a record low in November, Molycorp is trading at a 19 percent discount to its book value, according to data compiled by Bloomberg.

Molycorp’s low valuation and the chance to lock in rare- earth resources could spur manufacturers from Nissan Motor Co. (7201) to Siemens AG (SIE) to make a bid, according to Byron Capital Markets Ltd. After expanding its refining and processing operations with last year’s purchase of Neo Material Technologies Inc., the $1.3 billion company may even appeal to private-equity firms, Robert W. Baird & Co. said. Goldman Sachs Group Inc. projects that Molycorp could fetch $15 a share in a takeover, a 59 percent premium to its Dec. 31 close.

“At this point, Molycorp is definitely in play,” Luisa Moreno, an analyst at Euro Pacific Capital Inc. in Toronto, said in a telephone interview. “It would be a very good target for companies that are interested in being in this space if they recognize the rare-earth space is important and they have the cash to take Molycorp and make it a real producing company.”

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The Yen and the Greenback Find a Deep Pitfall on U.S. Tax Resolution

“The yen and dollar weakened against higher-yielding currencies after U.S. lawmakers passed a bill undoing income-tax increases, helping avoid the so-called fiscal cliff and damping demand for refuge assets.

The Dollar Index fell the most in five weeks even as Republicans vowed to fight PresidentBarack Obama for spending cuts in exchange for raising the debt ceiling. The Australian and New Zealand dollars rallied and the pound rose to a 16-month high versus the U.S. currency. The yen slid beyond 87 per dollar for the first time since July 2010 after Japanese Prime Minister Shinzo Abe reiterated his intention to weaken the currency.

“There’s been a relief rally but most people expected the U.S. would come to some sort of a deal so this had been priced in,” said Eimear Daly, a currency-market analyst at Monex Europe Ltd. in London. “Currencies like the Australian dollar have also done very well. Breaking through 87 is a massive deal for dollar-yen.”

The dollar declined 0.4 percent to $1.3247 per euro at 6:14 a.m. New York from Dec. 31 after falling as much as 0.8 percent, the biggest drop since Nov. 23. The yen depreciated 0.9 percent to 115.49 per euro after sliding to 115.99, the lowest since July 8, 2011. The yen slid 0.5 percent to 87.16 per dollar. It reached 87.33, the weakest since July 29, 2010.

The Dollar Index (DXY), which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, slid 0.3 percent to 79.499 after dropping as much as 0.6 percent, the most since Nov. 23….”

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German Bunds Fall as Italian and Spanish Debt Rise

“German government bonds slumped, with 10-year yields rising the most in more than three months, after U.S. lawmakers passed a bill undoing income tax increases threatening growth in the world’s largest economy.

Finnish and Dutch securities also fell as investors shunned refuge assets even though Republicans vowed to fight President Barack Obama for spending cuts in exchange for raising the debt ceiling. Italian bonds rallied, with 10-year yields dropping to the lowest since December 2010, as the tax deal spurred demand for higher-yielding securities. Germany sold 4.15 billion euros ($5.5 billion) of two-year notes, with the sale resulting in a positive yield for the first time since October.

“The compromise on the U.S. fiscal cliff is dominating risk sentiment,” said Rainer Guntermann, a fixed-income strategist at Commerzbank AG in Frankfurt. “It’s a pro-risk environment and bund yields should correct a bit higher.”

Germany’s 10-year yield rose 11 basis points, or 0.11 percentage point, to 1.43 percent at 10:38 a.m. London time after climbing as much as 12 basis points, the biggest increase since Sept. 14. The 1.5 percent bond due September 2022 declined 1.005, or 10.05 euros per 1,000-euro face amount, to 100.655.

The U.S. House of Representatives voted in favor of the Senate’s budget legislation as Republican lawmakers abandoned efforts to add spending cuts to the bill, removing an impediment to growth. The 257-167 bipartisan vote breaks a yearlong impasse over how to head off $600 billion in tax increases and spending cuts set to start taking effect yesterday….”

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Stocks Beat Bonds by the Widest Margin Since 2009, Global Easing Root Cause

“Unprecedented central bank stimulus sent global stocks to the biggest annual rally in three years, beating bonds, commodities and the dollar by the most since 2009 as shares surged from America to Germany and Venezuela.

The MSCI All-Country World Index of equities increased 16.9 percent in 2012 including dividends after climbing 2.3 percent in December. The Standard & Poor’s GSCI Total Return Index of 24 commodities rose 0.1 percent last year, while the U.S. Dollar Index (DXY) lost 0.5 percent. Bonds of all types returned 5.73 percent, on average, according to Bank of America Merrill Lynch’s Global Broad Market Index….”

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Study Finds Being Plump Keeps You on the Stump

“People who are pleasantly plump may have a lower risk of dying than those who are considered the ideal weight or who are markedly obese, according to a U.S. government report that may alter New Year’s resolutions.

The report, published in the Journal of the American Medical Association, reviewed 97 studies involving more than 2.88 million people globally. It found the lowest risk among those who are overweight though not obese, according to generally accepted health standards. Those just over the obesity threshold had the next lowest risk…”

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Euro Zone Manufacturing Contracts More Than Expected in December

“Euro-area manufacturing output contracted more than initially estimated in December, adding to signs a recession in the currency bloc may extend into this year as leaders struggle to tackle the sovereign-debt crisis.

A gauge of manufacturing in the 17-nation euro area fell to 46.1 from 46.2 in November, London-based Markit Economics said today. That’s below an initial estimate of 46.3 on Dec. 14. A reading below 50 indicates contraction. The gauge has been below 50 for 17 months.

The euro-area economy has shrunk for two successive quarters and economists foresee a further decline in gross domestic product in the final three months of last year. The European Central Bank forecasts contractions of 0.5 percent and 0.3 percent in 2012 and 2013.

“The euro-zone manufacturing sector remained entrenched in a steep downturn at the end of the year,” Chris Williamson, chief economist at Markit, said in the report. “The region’s recession therefore looks likely to have deepened, possibly quite significantly, in the final quarter.”

The euro was little changed after today’s report and traded at $1.3258 at 10:32 a.m. in Brussels….”

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2012 Was Good to the World’s Richest, Collective Net Worth Rose $241 b to $1.9 t

“The richest people on the planet got even richer in 2012, adding $241 billion to their collective net worth, according to the Bloomberg Billionaires Index, a daily ranking of the world’s 100 wealthiest individuals.

The aggregate net worth of the world’s top moguls stood at $1.9 trillion at the market close on Dec. 31, according to the index. Retail and telecommunications fortunes surged about 20 percent on average during the year. Of the 100 people who appeared on the final ranking of 2012, only 16 registered a net loss for the 12-month period….”

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Macau Revenues Grow 20% Over Christmas Holiday

 

Macau casino revenue rose 20 percent to a record last month, beating analyst estimates, as Christmas promotions drew more holiday-makers to the world’s biggest gambling hub.

Casino revenue in the Chinese city jumped to 28.2 billion patacas ($3.5 billion) in December, trumping the previous record of 27.7 billion patacas in October, according to data from Macau’s Gaming Inspection and Coordination Bureau today. The growth compares with the 17.5 percent median estimate of four analysts surveyed by Bloomberg News, helping drive Sands China Ltd. (1928) shares to a record high in Hong Kong.

“This is definitely better than our expectation, and much higher than the street estimates,” Jeremy Tan, a Hong Kong- based analyst at Kim Eng Securities HK Ltd. said by phone, “It’s a combination of higher holiday footfall, higher win- rate, and a return to VIP market,” he said.

Sands China, the Hong Kong-listed unit of billionaire Sheldon Adelson’s Las Vegas company, rose 5.3 percent to HK$35.75, the highest close since its November 2009 debut.

Galaxy Entertainment Group Ltd. (27) also jumped 3.1 percent to HK$31.30, the highest since at least October 1991, according to data compiled by Bloomberg. The benchmark Hang Seng Index climbed 2.9 percent.

Full-year casino revenue in Macau increased 14 percent from 2011 to 304 billion patacas, also a record, according to the Gaming Bureau….”

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Kim Jong Un Would Like Better Relations With South Korea, Focuses on Economic Growth

North Korea’s Kim Jong Un named improving the economy and better relations with South Korea as top policy goals for his second year as leader, signaling he may ease his country’s confrontational approach toward Seoul.

“The building of an economic giant is the most important task that comes to the fore in the present stage of building a thriving socialist country,” Kim said yesterday in a New Year address carried by the official Korean Central News Agency. “The reunification of the country is the greatest national task that brooks no further delay.”

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Posco Will Buy $1.1 Billion Stake in ArcelorMittal Unit

“A group led by China Steel Corp. and Posco (005490) agreed to pay $1.1 billion for 15 percent of ArcelorMittal Mines Canada Inc. to secure supplies of iron ore from two mines.

China Steel (2002) will take 3.68 percent for $270 million, Steve Lee, executive vice president atTaiwan’s biggest steelmaker, said today by phone. Posco didn’t say how much it will pay.

The deal gives the group access to mines producing about 40 percent of Canada’s iron ore, according to ArcelorMittal’s website, as the cost of the raw material rises faster than steel prices. ArcelorMittal, the world’s largest steelmaker, is studying selling about 30 percent of the unit to try to reduce its debt, a person familiar with the matter said on Oct. 20.

“If you look at the steel companies and their performance to date, it’s very difficult to improve bottom line earnings if you do not have a low enough iron ore input cost,” said Vanessa Lau, an analyst at Sanford C. Bernstein & Co. in Hong Kong.

Posco and China Steel will agree long-term iron ore off- take agreements proportionate to their interests in the venture, Kaohsiung, Taiwan-based China Steel said today in a statement on its website. Other members of the group are “financial investors,” the company said without elaborating.

Kim Ji Young, a spokeswoman for Posco, the largest South Korean steelmaker, didn’t say how much the company will invest….”

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Industrial Metals Soar on U.S. Budget Resolution

“Industrial metals rose in London, paced by copper and nickel, after U.S. lawmakers passed a bill to avert the so-called fiscal cliff of higher taxes and cuts in government spending.

The U.S. House approved a measure undoing income-tax increases for most households in the country, the world’s second-largest copper consumer after China. President Barack Obamasaid he would sign the bill into law. Equities climbed in Asia and Europe, Treasuries retreated for a second day and raw materials from crude oil to sugar strengthened.

“The automatic spending cuts seem to have been avoided,” Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said by e-mail today. “That’s probably behind this morning’s higher risk appetite, also supported by firm Asian equity markets.”

Copper for delivery in three months climbed 2 percent to $8,091 a metric ton by 9:34 a.m. on the London Metal Exchange. Prices jumped as much as 2.5 percent, the most since Nov. 19. Copper for delivery in March increased 0.9 percent to $3.684 a pound on the Comex in New York. Markets in China are closed for a holiday until Jan. 3.

Prices advanced 4.4 percent last year on the LME, the third annual gain in four, helped by forecasts for supply of the metal used in pipes and wiring to lag behind demand. Copper inventories tracked by the exchange declined 14 percent in 2012, the third straight year of contraction.

Copper stockpiles climbed for a 17th session to 320,500 tons, remaining at the highest level since Feb. 6, LME figures showed today. Orders to withdraw the metal from warehouses were little changed at 51,600 tons.

Nickel for delivery in three months surged as much as 2.9 percent on the LME, leading gains among the exchange’s six main metals. Lead reached $2,380.25 a ton, the highest price since September 2011. Aluminum, zinc and tin climbed…”

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Rising Commodities Take South Africa To New Highs

“South Africa’s benchmark stock index rose to a record as commodity prices surged after U.S. lawmakers passed a bill that averted spending cuts and tax increases threatening the world’s biggest economy.

The FTSE/JSE Africa All-Share Index climbed as much as 1.6 percent to 39,873.15, and traded 1.5 percent stronger at 11:20 a.m. in Johannesburg. The measure advanced 23 percent last year. Anglo American Plc (AAL), a diversified miner that makes up about 9 percent of the gauge, surged 5 percent to a two-month high. BHP Billiton Ltd. (BHP) advanced 3.5 percent…”

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