US FINANCIAL MARKET
- U.S. stocks rebounded modestly on Tuesday, a day after the S&P 500 suffered its biggest drop in two months, buoyed by solid retail sales data and as investors digested earnings from JPMorgan and Wells Fargo.
- Wells Fargo, the biggest U.S. mortgage lender, reported a better-than-expected 11 % rise in fourth-quarter profit as a steep fall in bad-loan provisions helped to make up for a big drop in mortgage lending.
- Net income rose to $5.37 billion from $4.86 billion a year earlier. Wells Fargo had $25 billion of mortgage applications in the pipeline at the end of the quarter, down from $35 billion at the end of the third quarter.
- Total revenue fell about 6 % to $20.7 billion.
- Total lending rose to $825.8 billion from $812.3 billion at the end of the third quarter and $799.6 billion in the fourth quarter of 2012. The increase was driven by foreign and commercial real estate lending as well as the retention of more residential mortgages on its balance sheet.
- JPMorgan Chase reported a better-than-expected adjusted quarterly profit.
- The bank, which agreed last week to pay $2.6 billion to settle government and private claims over its handling of accounts of fraudster Bernie Madoff, said fourth-quarter net income fell 7.3 % to $5.28 billion from $5.69 billion a year earlier. Revenue dropped 1.1 % to $24.1 billion while expenses declined 3.1 % to $15.6 billion.
- Full-year profit fell 16 % to $17.9 billion. The results took into account gains from the sale of Visa shares and One Chase Manhattan Plaza and legal expenses related to the Madoff settlements. The Madoff agreement, which the bank said last week reduced fourth-quarter profit by about $850 million, capped a year in which JPMorgan spent more than $23 billion on legal settlements.
- JPMorgan said its assets shrank to $2.42 trillion at the end of December from $2.46 trillion three months before and $2.36 trillion a year earlier.
- Google announced late Monday a $3.2 billion deal to buy smart thermostat and smoke alarm maker Nest Labs. Nest will continue to operate as its own distinct brand after the all-cash deal closes. The deal is the second largest in Google’s history after the $12.5 billion acquisition of Motorola in 2012.
- Like the Motorola deal, which marked Google’s first major foray into hardware, the Nest acquisition gives Google a stepping stone into an important new market at a time when consumer appliances and Internet services are increasingly merging.
- With the acquisition, Google gets Tony Fadell, a well-connected and well-respected Silicon Valley entrepreneur credited with creating Apple’s iconic iPod music player. According to a search on professional network LinkedIn, roughly 100 of Nest’s 300 employees have worked at Apple in the past.
- Charter Communications on Monday formally offered to acquire larger rival Time Warner Cable for $37.3 billion, sparking what is likely to be a contentious battle to control the No. 2 U.S. cable operator.
- Charter, the No. 4 cable operator, proposed paying $132.50 per share – barely higher than where Time Warner Cable shares closed on Monday – consisting of around $83 per share in cash and its own stock.
- Including debt, the deal is worth $62.35 billion.
- Within a few hours of receiving it, Time Warner Cable’s board rejected the offer as “grossly inadequate.” Time Warner Cable Chief Executive Officer Rob Marcus said the board told Charter it was open to a price of $160 per share, consisting of $100 in cash and $60 per share of Charter’s stock.
- Fox broadcast network will move to year-round development of television series, skipping the traditional pilot season in an approach that more closely resembles cable TV’s process. The change means Fox will no longer participate in the annual TV-pilot process.
- Each year at this time, the four major broadcast networks fund dozens of test episodes called pilots, choosing a handful to develop into series. The crunch creates competition for writers and talent, driving up prices and leading to projects of uneven quality that would improve if the process moved year-round, chairman of entertainment at 21st Century Fox said.
- GM’s global sales grew 4 % in 2013 on strong demand in the world’s two largest auto markets, China and the United States. Sales of the top U.S. automaker hit 9,714,652 cars and light trucks.
US ECONOMY & POLITICS
- Retail sales provided a boost after data showed a 0.7 % increase in December, excluding automobiles, gasoline, building materials and food services, after a 0.2 % rise in November.
- Overall retail sales increased 0.2 % in December.
- The increase suggested consumer spending accelerated in the fourth quarter from the third quarter’s 2 % annual pace. It was also the latest indication of strong momentum in the economy at the end of 2013.
- Core sales last month were lifted by a 1.8 % rise in receipts at clothing stores. Sales at food and beverage stores recorded their largest increase in seven years. There were also increases in online store sales.
- U.S. import prices were unexpectedly flat in December as the cost of petroleum fell marginally, still showing no signs of imported inflation pressures. November’s import prices were revised to show a 0.9 % decline rather than the previously reported 0.6 %. Import prices excluding petroleum were also flat in December after edging up 0.1 % in November.
- Negotiators in the U.S. Congress on Monday unveiled a $1.1 trillion spending bill that aims to prevent another government shutdown while boosting funding levels slightly for military and domestic programs – but not for “Obamacare” health reforms.
- The U.S. government last month posted the largest budget surplus for any December on record, boosted by payments from government-controlled housing finance giants Fannie Mae and Freddie Mac. Revenue exceeded spending by $53.2 billion last month, the Treasury Department said today. The deficit totaled $173.6 billion in the first three months of fiscal 2014.
- Seven recipients of the Nobel Prize in Economic Sciences were among 75 economists endorsing an increase in the minimum wage for U.S. workers. In a letter released today, the group called for the hourly minimum wage to reach $10.10 by 2016 from its current $7.25, and then be indexed for inflation thereafter.
EUROPE & WORLD
- Global shares fell on Tuesday as weak earnings pre-announcements in the United States fuelled worries that the upcoming reporting season may disappoint, leaving some indexes looking expensive after a bumper 2013. The dollar steadied against a basket of six major currencies.
- U.K. inflation unexpectedly slowed in December, cooling to the Bank of England’s 2 % target for the first time in more than four years. Consumer-price growth eased from 2.1 % in November.
- The number of luxury goods buyers reached 330 million last year and is set to rise to 400 million in 2020 and 500 million by 2030 as more people become wealthy in Asia, Latin America and Eastern Europe, a study has found.
- The study estimated that more than half of luxury spending globally came from shoppers aged 49 or older, as they represented the wealthiest bracket of the population.
- Consumers aged between 13 and 33 made up only 13 % of global luxury spending.
- Indonesia to China: Stop Buying Our Stuff:
- Indonesian mines account for about 20 % of the world’s nickel supply and a hefty chunk of the bauxite (used to make aluminum). China has been importing ever-larger amounts of these and other minerals from its Asian neighbor. Ironically, the more the Chinese buy, the angrier Indonesians become: Rather than purchasing refined minerals from Indonesia, China imports the raw rocks and does the processing itself, thus depriving Indonesians of jobs and tax revenue.
TODAY in HISTORY
- The first constitution of Connecticut, Fundamental Orders, was adopted (1639)
- The United States ratified treaty with England ending the Revolutionary War (1784)
- President Roosevelt and Prime Minister Churchill meet at the Casablanca Conference (1943)
- The Miami Dolphins became the first NFL team to go undefeated and have a perfect season by beating the Washington Redskins in Super Bowl VII (1973)
- The Simpsons premiered on television (1990)
Sources: Reuters, Yahoo Finance, Google Finance, Bloomberg, CNN Money.
This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S & P 500, are unmanaged and may not be invested into directly.