For Friday Morning, February 3
• Panasonic forecasts record annual loss. Panasonic (PC) has reported a ¥197.6B ($2.6B) net loss for FQ3 and now expects its full year results to be its worst ever at a projected loss of ¥780B. The contributing factors include: a strong yen, production problems related to Thai flooding, costs from its absorption of Sanyo, the global slowdown, and the eurozone-driven instability in financial markets.
• Senate votes to ban insider trading in Congress. It's been a long time in coming, but yesterday the Senate voted 96-3 to pass the Stop Trading On Congressional Knowledge Act, or Stock Act, which will ban legislators from trading shares based on insider information they pick up on Capitol Hill. The bill now goes to the House for a vote next week.
• Blackstone mulls bid for Brocade. Blackstone (BX) is considering a leveraged buyout of Brocade Communications Systems (BRCD), a developer of switches for data-storage networks, Bloomberg reports. Brocade, which has a market cap of $2.65B, has been looking for an acquirer since 2009, with Dell among those to have looked but not touched.
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• Checkmate For Japanese Sovereign Debt
Greece and Portugal are stuck in a very vicious cycle. Greek and Portuguese sovereign bond yields have risen substantially making it nearly impossible for these nations to roll over the debt with yields they can pay. For Greece, rising yields have brought it to the edge of default several times. To prevent a Greek default, the Troika (European Commission, International Monetary Fund, European Central Bank) has been sending large tranches of money to Greece to keep Greek bonds afloat and the Greek government solvent. Last year Portugal became the third EU country to ask for aid from the EU and IMF.
In June, Portugal will need to rollover 10 Billion Euros of debt and it is a dubious notion that Portugal can do this without paying extremely high yields, unless the troika again becomes the lender of last resort. When Greece went this route two years ago, massive amounts of money were needed in aid and bond buying to keep its country from default. When I see headlines fearing the end of the world for Greek bond owners and possibly Portuguese Bond owners, I have to think, "Whose head will roll next?"
In my previous article examining the future of Japan's equities, I came to the conclusion that Japanese debt is not a safe haven, but is sailing into a tsunami. In this article, I hope to develop an even stronger argument for why Japan's sovereign debt is an unsafe investment and why I suspect Japanese sovereign debt will soon be bludgeoned by a tide of rising yields, which we have seen wreak havoc on both Greek and Portugal bond prices, their economies and political stability.
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Headlines
back to topEconomists expect that unemployment was steady in January. Nonfarm payroll figures for January are out this morning, with economists expecting that the number grew by 140,000 after rising by 200,000 in December. The jobless rate is expected to have held at an almost three-year low of 8.5%.
BofA wins court battle over Countrywide bonds. Bank of America (BAC) has won a dismissal in a lawsuit filed by Allstate (ALL) over losses incurred from mortgage-backed securities purchased from BofA-acquired Countrywide Financial. The judge's ruling allows Allstate to refile a narrower case, but it gives BofA a stronger position if settlement negotiations commence.
Opposition grows to Verizon-Comcast partnership. Political headwinds are building up against a marketing alliance between Verizon Wireless (VZ) and Comcast (CMCSA), as worries grow that such cooperation could restrict competition and lead to higher prices. Senate Antitrust Subcommittee chair Herb Kohl said he will hold a hearing on the deal, as well as on Verizon's recent agreements to buy radio frequency licenses from several cable companies.
Corporate tax payment rate lowest since 1972. While company profits have rebounded following the recession, when they fell sharply, corporate tax receipts have stayed low. The total paid to the government fell to 12.1% of profits earned from U.S. activities in FY 2011, under half the value paid on average from 1987-2008, and the lowest since at least 1972.
Spain's banks could get extra year to cover property assets. Spanish banks that agree to merge by May could get two years to make provisions against troubled real-estate assets rather than just a year. The merged companies would also be able to tap the state’s bank-bailout facility for funds. In total, the government's tough new rules will force Spanish banks, which have €175B of problematic property loans, to raise €50B in capital.
Swiss probe banks over interbank lending rates. Switzerland is investigating a dozen U.S., European and Japanese banks suspected of conspiring to manipulate interbank lending rates. Banks under investigation include Citigroup (C), Credit Suisse (CS), Deutsche Bank (DB), HSBC (HBC), JPMorgan (JPM), UBS (UBS) and RBS (RBS).
Swiss start action against UBS over trader's losses. Swiss financial regulators have started formal administrative enforcement proceedings against UBS (UBS) for oversight gaps that enabled an employee to make unauthorized trades last year that resulted in $2.3B in losses. The Swiss authorities have also launched a deeper investigation with their U.K counterparts.
U.S. charges Swiss bank over tax evasion. The Justice Department has indicted Swiss private bank Wegelin on charges it enabled wealthy Americans to evade taxes on at least $1.2B hidden in offshore bank accounts. It's the first time an overseas bank has been indicted by the U.S. for enabling tax fraud by American taxpayers.
Today's Markets:
In Asia, Japan -0.5% to 8832. Hong Kong +0.1% to 20757. China +0.8% to 2330. India +1.0% to 17605.
In Europe, at midday, London +0.4%. Paris +0.3%. Frankfurt +0.2%.
Futures at 7:00: Dow +0.1%. S&P +0.15%. Nasdaq +0.3%. Crude +0.4% to $96.76. Gold +0.1% to $1761.60.
Friday's economic calendar:
6:00 Monster Employment Index
8:30 Nonfarm payrolls
10:00 Factory Orders
10:00 ISM Non-Manufacturing Index
Earnings Results: Companies that beat EPS expectations last night and today include CareFusion (CFN), Edwards Life Sciences (EW), Ruddick (RDK), Wynn Resorts (WYNN), Vertex Pharmaceuticals (VRTX), Aon Corporation (AON), Spectrum Brands (SPB).
Those in line include Fiserv (FISV), Simon Property Group (SPG).
Those that missed forecasts include Con-Way (CNW), Gilead Sciences (GILD), Principal Financial Group (PFG - operating earnings/share).
Notable earnings before Friday's open: : AON, AXL, BEAM, CLX, EL, HNT, MAC, SPG, TSN, WY
back to top• environment
Toxic-time-bomb spawned two-headed Brown trout in Greater Yellowstone Ecosystem
Selenium laden toxic-time bomb triggered by 50-years of Phosphate mining in Northwest U.S. Experts claim two-headed trout and dead livestock portend hundreds of years of surface and groundwater contamination.
Scientists Worried by the Rush to Develop Arctic Oil and Gas Resources
The Arctic is a goldmine of untapped resources. According to a 2008 estimate by the US Geological Survey it boasts 90 billion barrels of oil (13% of the world's recoverable oil reserves), up to 50 trillion cubic metres of natural gas (about 30% of the world's natural gas reserves), and 44 billion barrels of natural gas liquids. Decisions are being made as to when the oil majors should be unleashed upon this pristine environment. As Tim Dodson, executive vice-president of the Norwegian oil and gas company Statoil, said, "The race is on for positions in the new oil provinces."
• humor
Coconut Oil Touted as Alzheimer's Remedy
Researchers say the ketones found in coconut oil have slowed the progression of Alzheimer's disease in some people and may actually prevent it. [Must See video]
• other news – opinions
Doomsday Scenario: What Happens When Banks Control the Economy?
Banks weren't meant to be in control of our economy and our governments. How did it get like this and how can we restore sanity to our banking system?
Billions for the Bankers
"Money is the blood of civilized society...."
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