Abe expected to nominate Kuroda as Bank of Japan Governor. Japanese PM Shinzo Abe is reportedly set to nominate Asian Development Bank President Haruhiko Kuroda as next BOJ Governor. It’s a dovish choice as Kuroda has been vocal about his lack of concern over a weaker yen and the need to institute a 2% inflation target. Abe is also expected to nominate two other easy-money advocates as deputy governors, according to a source. The dollar is 0.5% higher vs. the yen (FXY) and the Nikkei gained 2.4% overnight.
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U.K stocks rise and the pound weakens following downgrade. The FTSE 100 (EWU) gained 0.8% in midday trade and sterling (FXB) slid to its lowest level against the dollar in two years following Friday’s downgrade of the country by Moody’s. Calling the timing of the downgrade a surprise, one analyst nevertheless reminded the market had been expecting the move and has priced it in – sterling had already dropped from $1.63 to below $1.52 this year.
Italy awaits vote outcome. As the country votes for a second day, an unexpected surge in the anti-austerity protest vote could eliminate the slim pre-election polling advantage held by Pier Luigi Bersani and leave no one with a mandate, or thrust Silvio Berlusconi back into power. The vote is seen as similar to last year’s election in Greece which shuddered the markets after parties friendly to the bailout regime did not get the votes needed to form a government. Polls close at 9 AM ET, with exit polls due shortly after and final results late today.
Top Stock News
Samsung challenge to iPad Mini. Maybe the most serious rival to the iPad mini (AAPL) seen so far, the Galaxy Note 8.0 – shipping in Q2 – sports a 1200×800 display, split-screen app viewing support, an S Pen stylus, and several apps built for it. There are no pricing details yet. It’s estimated Samsung’s (SSNLF.PK) tablet share grew to 15.1% in Q4, though still far below Apple’s 43.6%.
Possibly Monday movers? Suncor (SU) and Canadian Natural Resources (CNQ) were featured in a bullish Barron’s writeup over the weekend suggesting both – with valuable assets but less-than-aggressive capital return schemes – could be targets for activist investors. Also featured positively was Dick’s Sporting Goods (DKS), which continues to take share from mom-and-pop stores as well as Sports Authority. Following its 25% moonshot on Friday, WebMD (WBMD) rated a bearish article, with Teresa Rivas suggesting the company is no model of health.
Royalty Pharma offers to buy Elan for $11/share. Royalty said it made the offer to Elan (ELN) last week, but had yet to hear a response. Elan Friday inked an in-licensing deal with Biogen (BIIB) for Tysabri and announced a buyback plan of $1B with part of the proceeds. Royalty claimed "substantial" risk over Elan management’s ability to generate returns from the in-licensing deal and says its $11 cash bid offers shareholders a way to cash out and "eliminate execution risk." Shares +9.7% premarket to $11.63.
RBS may sell its U.S. retail unit. Under pressure from U.K. regulators to raise capital, RBS is considering spinning off its U.S. retail unit – Citizens Financial. North American banks have long eyed Citizens and its more than 1,400 branches, but RBS has repeatedly said it wasn’t for sale. The plan reportedly under discussion would have RBS offering the public 20-25% of Citizens within two years, and eventually selling off the entire unit.
Microsoft victim of cyberattack. Microsoft (MSFT) joins a growing list of tech giants hit by a cyberattack and says its recent intrusion was similar to those suffered by Facebook and Apple. A small number of the company’s computers were infected with malware, but there is "no evidence of customer data being affected."
Top Economic & Other News
China manufacturing slows. HSBC’s preliminary read on February manufacturing fell to 50.4 against expectations for 52.2 and January’s 52.3. "Chinese fundamentals may prove weaker than previously expected," says Nomura’s Zhang Zhiwei.
Japanese government to sell $10B stake in Japan Tobacco. The government is planning to reduce its stake in the company by 16.6% to raise money to help pay for reconstruction projects following the March 2011 earthquake. Now an owner of 50% of Japan Tobacco, the government’s stake would drop to about 33%. Nice timing by the government – JT’s stock price is up about 35% since mid-November when then candidate, now PM Shinzo Abe promised far greater monetary ease.
China invests reserves in U.K. property. China’s State Administration of Foreign Exchange (SAFE) – charged with managing most of the country’s $3.31T in foreign-exchange reserves – has been actively but discreetly picking up real estate in the U.K, with $1.6B in recent deals. It’s a significant shift for the secretive manager and shows it branching out beyond its typical holdings of "low-risk" government paper.
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In Asia, Japan+2.4%to 11662. Hong Kong+0.2%to 22820. China+0.5%to 2326. India +0.1% at 19332.
In Europe, at midday, London +0.7%. Paris +1.7%. Frankfurt +2.4%.
Futures at 7:00: Dow +0.4%. S&P +0.4%. Nasdaq +0.6%. Crude +1.1% to $94.18. Gold +1.2% to $1592.
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