Barclays to axe 3,700 jobs as it swings to £1B net loss. Barclays’ (BCS) swung to a far wider-than-expected 2012 net loss of £1.04B from a profit of £3B last year, hurt by charges for compensating customers for mis-sold products, and by the loss of the value of its own debt. However, adjusted pretax profit climbed 26% to £7.05B, in line with consensus. CEO Anthony Jenkins unveiled his "Project Transform" strategy, which includes cutting 3,700 jobs as part of a program to slash £1.7B from Barclays’ annual costs by 2015. Shares were +3.8% premarket.
BNY Mellon to take $850M charge following tax case loss. BNY Mellon (BK) will take a charge of $850M after it lost a tax case with the IRS, which accused the bank, along with several of its peers, of falsely claiming foreign tax credits via loans from Barclays (BCS). BNY wanted a $900M benefit on debt of $1.5B, but the court ruled that the transactions lacked "economic substance" and were only carried out for tax purposes.
Top Stock News
Falling yen continues to boost Japanese shares. Japanese shares rose sharply after investors returned from the country’s long weekend, boosted by a weakening yen following comments from Haruhiko Kuroda, a leading candidate to become the new Bank of Japan governor, that he is open to more easing this year. Remarks from Treasury Undersecretary Lael Brainard that the U.S. supports Japan’s attempts to end deflation and spark growth may also have helped. (See G7 communique below).
Avon earnings exceed forecasts. Avon Products’ (AVP) Q4 earnings topped Street expectations as EPS came in at $0.37, although revenue slipped 1% to $3B. "The overall business is showing early signs of stabilization," said CEO Sheri McCoy. "I am confident that in 2013, we will see progress against our three-year financial goals."
Speculation of increased Apple payout strengthens. Apple (AAPL) CEO Tim Cook is due to speak at a Goldman conference this morning amid rising hopes that the company will return more cash to shareholders, not to mention rumors of an iWatch and a cheaper iPhone. Cook’s presentation was moved up to 10:15 ET, fueling expectations of an announcement ahead of his remarks.
NYSE to spin off European grain-futures ops. NYSE Euronext (NYX) intends to spin off Paris-based Matif, Europe’s biggest grain-futures market, as part of its attempts to gain regulatory and political support for its $8.2B acquisition by ICE (ICE). Matif would be included alongside the spin-off of four NYSE Euronext European stock exchanges, although the companies plan to keep most of NYSE’s London-based Liffe futures operations.
Dish will sell spectrum if wireless attempt fails. Dish Network (DISH) will sell its billions of dollars of wireless spectrum if it fails in its bid to acquire Clearwire (CLWR) or it’s unable to find a partner to create a new wireless network. Still, Dish has "plan B, C, D, E and F," CEO Charles Ergen said yesterday. The company wants to build the network so it can provide its satellite subscribers with video inside and outside the house.
Shell’s summer Arctic drilling plans in doubt. Shell’s (RDS.A) plans to drill in Alaska’s Arctic waters this year are in doubt after it said yesterday that it’s sending its two special purpose offshore rigs to Asia for repairs and upgrades. The news comes after a series of mishaps, including the grounding of the Kulluk drill ship near Kodiak Island of the Alaskan coast on December 31. The question investors have is whether the huge investment – $4.5B so far – is worth it.
Mobile banking outshines mobile payments. While the growth of mobile payments is slower than expected, mobile banking is taking off, and, says Boston consultant Robert Hedges, "has caught the industry off guard." Such banking accounts for roughly 8% of transactions vs 53% for regular online banking and 14% for branches. JPMorgan (JPM), for example, has 13M customers who use its mobile services, which have become a "core experience."
American Express launches first "pay-by-tweet." American Express (AXP) yesterday launched the first "pay-by-tweet" service on Twitter, enabling cardholders to make purchases by sending a short message. The offering represents one of the most ambitious attempts so far to build e-commerce directly into Twitter, although strangely, the social media site won’t be taking a cut of the transaction revenue. Instead, the hope is the service will boost its ad income.
Top Economic & Other News
Markets to focus on automatic cuts in State of Union speech. President Obama is expected to talk about jobs, defense, energy, immigration and the housing recovery in his State of the Union speech tonight, although market focus will be on the automatic spending cuts on March 1. If the president "grandstands about the size of government and taxes," the reception will be poor, says strategist Larry McDonald. If Obama extends a meaningful olive branch, "that’s going to be good."
G7 moves to play down fears of currency war. G7 finance ministers and central bank governors have issued a joint statement reaffirming their "longstanding commitment to market-determined exchange rates and to consult closely in regard to actions in foreign-exchange markets." The statement is seen as an attempt to defuse growing fears about a global currency war, although Joe Wiesenthal reckons it’s fairly weak and "has no big implications at all."
In Asia, Japan +1.9% to 11369. Hong Kong, China closed. India +0.5% to 19561.
In Europe, at midday, London +0.3%. Paris +0.4%. Frankfurt +0.2%.
Futures at 7:00: Dow flat. S&P flat. Nasdaq -0.1%. Crude +0.3% to $97.29. Gold -0.2% to $1645.80.
Today’s economic calendar:
7:30 NFIB Small Business Optimism Index
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
11:30 Fed’s George: Economic Outlook
1:00 PM Results of $32B, 3-Year Note Auction
2:00 PM Treasury Budget
7:30 PM Fed’s Plosser: Economic Outlook and Monetary Policy
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