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Pope Benedict XVI resigns. Pope Benedict XVI has become the first Roman Pontiff since Pope Gregory XII in 1415 to resign, saying he will leave office on February 28 due to his failing strength, which is "no longer suited to an adequate exercise of the Petrine ministry." (Resignation statement)

Barclays to cut annual costs by at least £2B a year in revamp. Barclays (BCS) reportedly intends to slash at least £2B from its £20B annual cost base as part of an overhaul that CEO Anthony Jenkins is due to unveil tomorrow. Under "Project Transform," Barclays will cut 2,000 investment-banking jobs and scale back various operations in Europe and Asia. Barclays also plans to axe its tax-avoidance unit, which has generated huge profits but is seen as toxic to the bank's battered reputation. Shares were +0.8% at midday in London.

US Airways / AMR merger to be valued at up to $11B. US Airways (LCC) and AMR (AAMRQ.PK) have reportedly resolved key differences over valuation and management structure in their merger talks and may announce a deal late this week. The transaction could value the combined company at $10.5-11B and bring $1B in revenue and cost benefits. US CEO Doug Parker will lead the new firm and AMR's Tom Horton will be non-executive chairman until the spring of 2014.

Top Stock News
BlackRock slashes holding in Herbalife. BlackRock (BLK) has cut its stake in Herbalife (HLF) by over 20% to 4.08%. The latter's stock appeared to be untraded at the time of writing.

Novo Nordisk plunges on FDA insulin rejection. Novo Nordisk (NVO) shares cratered 12.8% premarket after the FDA unexpectedly rejected the company's Tresiba long-acting insulin and a related product called Ryzodeg. The FDA wants more cardiovascular data, which Novo doesn't expect to be able to provide this year. Tresiba and Ryzodeg are approved in Europe and Japan, and were forecast to generate billions of dollars of sales.

Ally Financial to repay bailout by next year. Ally Financial believes it will be able to return the remaining $14.6B of its $17.2B bailout by 2014. "We can make a significant repayment to Treasury this year, for sure," CEO Michael Carpenter said. "Whether we can get them all the way out this year, probably not is the real answer." Ally, in which the government owns 74%, is selling over $9B worth of international assets.

VW roars ahead in $70B quest for "global car." Volkswagen (OTCPK:VLKAF) is leaving its rivals in the dust in what's seen as the Holy Grail of the auto industry: the "global car." VW is investing $70B in its MQB "mega-platform" whereby it is taking a fundamental concept and implementing it across vehicles ranging from Skoda to Audi, Porsche and Lamborghini. One drawback, though, is that because VW vehicles share multiple parts, one recall could affect millions of cars.

AB InBev's Modelo plans could be hit by slowcoach judge. AB InBev's (BUD) $20.1B attempt to buy the 50% of Grupo Modelo it doesn't own could be hit by one unforeseen factor - the appointment of the slowest judge in Washington to oversee the Justice Department's lawsuit against the deal. Last year, Judge Richard Roberts had 73 motions pending for over six months and more than 50 cases pending for over three years.

Boeing 787 flies safely in test. Boeing (BA) completed an "uneventful" test flight of its 787 on Saturday as it collected data on the aircraft's battery. Boeing has told customers it may have to delay Dreamliner deliveries because of the problems with the the component. IAG (OTCPK:ICAGY) CEO Willie Walsh reckons it will take several months for Boeing to change the Dreamliner's battery system, although the carrier is still "committed" to its 787 orders.

Top Economic & Other News
Northern Plains brace for snow as North East clears up. Travel in blizzard-hit states in the North East is beginning to get back to normal, with just 80 U.S. flights canceled today so far compared with thousands from Friday-Sunday. However, as cities such as New York and Boston clear up, another storm across the Northern Plains was forecast to drop up to a foot of snow. Meanwhile, Hattiesburg and Petal in Mississippi were yesterday hit with a tornado that appeared to be a mile wide.

Shell changes Brent component terms. Shell (RDS.A) has unilaterally changed the SUKO 90 terms of how forward BFOE (Brent, Forties, Oseberg and Ekofisk) cargoes are traded. Shell said the new rules will support the Brent benchmark, whose validity has come under increasing scrutiny, by allowing more grades and cargoes to be used in establishing the price. However, Platts, which sets the Dated Brent physical price, will disregard Shell's new terms until it has consulted market participants. Brent crude was -0.6% premarket U.S.

Report slams "revolving door" at the SEC. The "revolving door" between the SEC and the finance sector may have helped delay attempts last year to reform the $2.6T money market fund industry, a report from the Project on Government Oversight says. "The close linkage between the regulators and the regulated can influence the culture, the values, and the mindset of the agency - not to mention its regulatory and enforcement policies," the report says.

Obama to unveil another spending program. President Obama will lay out yet another plan for trying to spark some life back into the economy when he gives his State of the Union address tomorrow. The program includes investments in infrastructure, manufacturing, clean energy and education. But as with countless proposals in the past, any new spending plans are likely to hit strong opposition from Republicans, who probably want to hear about deficit reduction.

China passes U.S. as world's leading trading nation. China surpassed the U.S. as the largest trading nation in the world last year, with the total value of Chinese imports and exports hitting $3.87T while those of the U.S. reached $3.82T. Still, the latter's economy remains more than double the size of China's.

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Today's Markets:
In Asia, Japan, Hong Kong, China closed. India -0.1% to 19461.
In Europe, at midday, London +0.2%. Paris +0.7%. Frankfurt flat.
Futures at 7:00: Dow +0.2%. S&P +0.2%. Nasdaq +0.2%. Crude -0.3% to $95.45. Gold -0.6% to $1657.10.

Today's economic calendar:
No events scheduled.

Notable earnings before today's open: ACAS, BWP, L, RDN

Notable earnings after today's close: AMSC, BKD, BNNY, CRK, DNB, LGF, MAS, MNKD, NCLH, NQ, OMI

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Source: Wall Street Breakfast: Must-Know News