Frontrunning: February 15
- Europe ushers in the recession: Euro-Area Economy Contracts for the First Time Since 2009 (Bloomberg)
- Greek conservative takes bailout pledge to the wire (Reuters)
- China Pledges to Invest in Europe Bailouts (Bloomberg) - as noted last night, the half life of this nonsense has come and gone
- Japan's Central Bank Joins Peers in Opening the Taps (WSJ)
- EU Moves on Greek Debt Swap (EU)
- EU Divisions Threaten Aid For Greece (FT)
- Athens Woman facing sacking threatening suicide (Athens News)
- King Says Euro Area Poses Biggest Risk to UK’s Slow Recovery (Bloomberg)
- Sarkozy to Seek Second Term, Banking on Debt Crisis to Boost Bid (Bloomberg)
- US Congressional Negotiators Reach Payroll Tax Deal (FT)
Overnight press digest:
* Roche warned that a counterfeit version of its cancer drug Avastin was found in the U.S., but it is not clear it has done any harm.
* Federal criminal authorities are investigating whether a Goldman Sachs analyst leaked inside information to hedge funds, people close to the situation say.
* Regulators said they plan to pull the plug on LightSquared's proposal to build a new national wireless network, a blow to the firm and its chief backer, Philip Falcone.
* Apple's gargantuan size is prompting some equity analysts to cut Apple out of the big-picture view of corporate earnings and find a dimmer outlook for the broader market.
* Greek bailout talks entered a new round of brinkmanship, as euro-zone finance ministers scrapped a meeting to approve a new aid package.
* Yahoo's attempt to sell a portion of its stakes in Asian Internet companies has stalled, and hedge fund manager Daniel Loeb said he would launch a proxy fight.
* Hedge-fund manager John Paulson stepped up pressure on Hartford Financial Services Group to split the firm in two, a move that escalates tension between the veteran investor and the 201-year-old insurer.
* The famously conservative Bank of Japan surprised the markets on Tuesday with two new measures to battle the country's long-running decline in prices, or deflation. The Japanese central bank announced a sizable 10 trillion yen ($129 billion) expansion in an asset-purchase program to 65 trillion yet by buying more long-term government bonds. Also, for the first time the bank set what amounts to a numerical target for inflation.
GREECE RESCUE PACKAGE IN DOUBT
Euro zone officials have called off an emergency meeting of finance ministers to approve a vital 130 billion euro ($170 billion) bailout for Athens amid a growing fight among the country's European creditors about the merits of allowing Greece to go bankrupt. http://www.ft.com/cms/s/0/7cb53ba0-573a-11e1-869b-00144feabdc0.html#axzz...
MURDOCH PUTS TOP LAWYER ON SUN CASE
Rupert Murdoch has put his top lawyer on to News Corp's internal affairs committee as the media group comes under fire from its reporters for passing information to the police that led to the arrests of nine journalists at The Sun. http://www.ft.com/cms/s/0/91141308-5732-11e1-be25-00144feabdc0.html#axzz...
HSBC LOOKS TO ESTABLISH CHINESE PRESENCE
HSBC is aiming to increase its presence in mainland China through a big expansion of its branch network or by raising its stake in Bank of Communications. http://www.ft.com/cms/s/0/dd544b24-5558-11e1-b66d-00144feabdc0.html#axzz...
BUMI INVESTORS ISSUE CONDITIONS TO ROTHSCHILD
The Indonesian investors in coal miner Bumi have said UK financier Nat Rothschild can stay on the company's board, but only if he steps down as co-chairman and stops being a "disruptive influence" over his calls for a shake-up at PT Bumi Resources, a Bumi affiliate. http://www.ft.com/cms/s/0/c80020b8-5706-11e1-be5e-00144feabdc0.html#axzz...
FACEBOOK IN LINE FOR HUGE TAX BILL
Facebook faces a requirement to raise as much as $5 billion through an extra share sale late this year to cover a tax bill for its employees, or as much again as the minimum amount it has already said it plans to raise in its initial public offering in May. http://www.ft.com/cms/s/2/d4e3fb44-5736-11e1-be25-00144feabdc0.html#axzz...
UK'S FRAUD ARM FACES INSPECTION
Dominic Grieve, the Attorney-General, has ordered the first inquiry into the UK's anti-fraud authority to help improve its operations only weeks after it was forced into a climbdown. http://www.ft.com/cms/s/0/a1c499bc-5736-11e1-869b-00144feabdc0.html#axzz...
FRANCE TELECOM HITS OUT AT RIVAL
France Telecom's chief executive has stoked fears about technical problems at Free Mobile, its upstart domestic rival, by insisting that it will not prop up its competitor's phone network at the expense of its own customers. http://www.ft.com/cms/s/0/53a872a0-5734-11e1-869b-00144feabdc0.html
* The health care products giant Johnson & Johnson continued to market an artificial hip in Europe and elsewhere overseas after the Food and Drug Administration rejected its sale in the United States based on a review of company safety studies.
* A proposed wireless broadband network that would provide voice and Internet service using airwaves once reserved for satellite-telephone transmissions should be shelved because it interferes with GPS technology, the Federal Communications Commission said Tuesday. The news appears to squash the near-term hopes for the network pushed by LightSquared , a Virginia company that is majority-owned by Philip Falcone, a New York hedge fund manager.
* Yahoo's talks to sell back most of its stakes in Alibaba of China and Yahoo Japan to its Asian partners have collapsed, according to people briefed on the matter.
* Counterfeit versions of Roche's multibillion cancer drug Avastin have been distributed in the United States, the Swiss drug maker and its United States biotech unit, Genentech, said on Tuesday.
* Regulators on Tuesday approved Capital One's $9 billion acquisition of ING Groep NV's U.S. online banking unit ING Direct USA, casting aside criticism that the deal would create the next too-big-too-fail banking behemoth.
* A team of European and American mathematicians and cryptographers have discovered an unexpected weakness in the encryption system widely used worldwide for online shopping, banking, e-mail and other Internet services intended to remain private and secure.
* Members of a House-Senate committee charged with writing a measure to extend a payroll tax reduction and provide added unemployment benefits reached a tentative agreement Tuesday evening, with Republicans and Democrats claiming a degree of political victory in a fight with significant election-year implications.
Europe economic update:
- France GDP 0.2% q/q 1.4% y/y – higher than expected. Consensus -0.2% q/q 1.1% y/y. Previous 0.3% q/q 1.5% y/y.
- Germany GDP -0.2% m/m 1.5% y/y – higher than expected. Consensus -0.3% q/q 1.9% y/y. Previous 0.6% q/q 2.7% y/y.
- Czech GDP -0.3% q/q 0.5% y/y – lower than expected. Consensus 0.0% q/q 0.7% y/y. Previous -0.1% q/q 1.2% y/y.
- Hungary GDP 0.3% q/q 1.4% y/y – higher than expected. Consensus 0.9% y/y. Previous 0.4% q/q 1.4% y/y. Revised 0.4% q.q,
- Spain CPI (Core) -1.7% /m/m 1.3% y/y – lower than expected. Consensus -1.7% m/m 1.5% y/y. Previous 0.2% m/m 1.5% y/y.
- Turkey Unemployment Rate 9.1%. Previous 9.1%.
- Italy GDP -0.7% q/q -0.5% y/y – lower than expected. Consensus -0.6% q/q -0.2% y/y. Previous -0.2% q/q 0.3% y/y.
- UK Claimant Count Rate 5.0% - in line with expectations. Consensus 5.0%. Previous 5.0%.
- UK Jobless Claims Change 6.9K – higher than expected. Consensus 3.0K. Previous 1.9K.
- UK ILO Unemployment Rate (3m) 8.4% - in line with expectations. Consensus 8.4%. Previous 8.4%.
- UK Average Weekly Earnings 3m/y/y 2.0% - higher than expected. Consensus 1.9%. Previous 2.0%.
- Eurozone GDP -0.3% q/q 0.7% y/y – higher than expected. Consensus -0.4% q/q 0.7% y/y. Previous 0.1% q/q 1.3% y/y.
- Eurozone Trade Balance (s.a.) 7.5B – higher than expected. Consensus 4.5B. Previous 6.1B