By Yigal Grayeff and the Market Currents team
Moody's warns on U.K.'s AAA rating. Moody's yesterday cut the outlooks for the U.K., France and Austria to negative, though each country keeps its AAA rating for now. The agency also downgraded Spain by two notches, and Italy, Portugal, Slovakia, Slovenia, and Malta by one notch. However, where once such a move would have caused panic, EU stocks shrugged a little today before moving higher.
Greek bailout not yet a shoo-in. Although Greece approved further austerity on Sunday, key elements of the country's bailout are still to be decided, including the contribution of eurozone governments to reducing Greece's debt. The EU also wants the nation to find an extra €325M ($429M) of budget cuts and further assurances from party leaders about the austerity package. The demands give credence to those who believe the EU is trying to force Greece out the euro, especially with Q4 GDP plumetting 7%.
BHP, Rio signal confidence in copper with $4.5B investment. BHP (BHP) and Rio Tinto (RIO) are to invest a combined $4.5B to expand the Escondida mine in Chile, the world's largest copper mine, as they look to boost output to meet the growing demands from China and other emerging nations. BHP also plans to reopen its idled Pinto Valley mine in Arizona.
U.S., EU OK Google's purchase of Motorola. U.S. and EU regulators have approved Google's (GOOG) $12.5B acquisition of Motorola (MMI) but said they would ensure that IP that is vital to the telecom sector would be licensed at fair prices. In a series of authorizations yesterday, the Department of Justice also approved the purchase of patents by an Apple (AAPL) led group from bankrupt Nortel, and the tech giant's acquisition of former Novell IP.
COF again left in limbo over $9B purchase of ING ops. The Fed has again postponed a decision on whether to approve Capital One Financial's (COF) proposed $9B acquisition of ING's (ING) U.S. online bank, the second delay within a week. The Fed considered the deal yesterday and promised a decision soon. It's the first M&A the Fed is looking at under new Dodd-Frank rules.
BOJ eases further, sets inflation goal. The Bank of Japan is expanding its asset-purchasing program by ¥10T and has maintained its near-zero interest rate target, while it has also set an inflation target of 1%. Although there was pressure to set the price goal, it may not be enough to keep the government from intervening further in monetary policy.
Eurozone production falls but Germans regain confidence. Eurozone industrial output contracted by a monthly 1.1% and an annualized 2% in December, which were both worse than expected. German production fell 2.7%, making it even more of a surprise that the ZEW gauge of investor sentiment in the country unexpectedly turned positive in February, rising to +5.4 from -21.6 in January and coming in well above forecasts of -11.6.
Airline group warns that carbon tax could cut profits 30%. The EU's controversial carbon emissions tax could erode more than 30% of the airline industry's profits, IATA chief Tony Tyler has warned. The first year of implementation could cost $1.2B, with worldwide profit pegged at $3.5B this year; there's also the possibility that costs could "balloon" in future years.
GOP moves on payroll tax cut extension. Reluctant to be seen as holding up a tax break for American workers, House Republican leaders said they will put forward a new proposal to extend the payroll tax cut, giving up for now on their earlier requirement that it must be paid for. Speaker John Boehner and others said their backup plan could come for a vote as soon as this week, well before the break expires on February 29.
In Asia, Japan +0.6% to 9052. Hong Kong +0.1% to 20918. China Shanghai -0.3% to 2345. India +0.4% to 17849.
In Europe, at midday, London +0.2%. Paris +0.3%. Frankfurt +0.4%.
Futures at 7:00: Dow +0.1%. S&P +0.1%. Nasdaq +0.2%. Crude +0.5% to $101.39. Gold -0.3% to $1719.60.
Tuesday's economic calendar:
7:30 NFIB Small Business Optimism Index
7:45 ICSC Retail Store Sales
8:30 Retail Sales
8:30 Import/Export Prices
8:45 Fed's Plosser: Economic Outlook
8:55 Redbook Chain Store Sales
9:00 Ceridian-UCLA Pulse of Commerce Index
10:00 Hearing: President’s Budget for FY 2013 (Geithner)
10:00 Business Inventories
5:40 PM Fed's Lockhart: Economic Outlook
Earnings Results: Companies that beat EPS expectations last night and today include Fidelity National Information Services (FIS), Health Management Associates (HMA), Regal Entertainment Group (RGC), Omnicom Group (OMC), Fossil (FOSL), Asbury Automotive Group (ABG), Goodyear Tire & Rubber Company (GT).
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