The following are the day's top business stories:
1. Greece Default With Ireland Breaks Euro by 2016 in Global Investor Poll 2. Treasuries, Stocks Gain Before Obama's State of Union Address; Pound Drops 3. `Not Dead Yet' Billionaire Ho Demands Family Return Macau Casino Fortune 4. Bernanke Gets 66% Approval From Global Investors Disapproving of QE2 Ease 5. Housewives Lured by Tobu Bonds Paying 10 Times Savings Rate: Japan Credit 6. Cameron Responds to First Economic Shocks With Vow to Keep Up Deficit Cuts 7. Glencore International Plans Hong Kong, London IPO in April, Standard Says 8. Malaysia May Refrain from Raising Interest Rate as Economy Loses Momentum 9. Half of Wall Street Satisfied With '10 Bonuses as 56% See Gain, Poll Finds 10.Clean-Energy Stocks May Go Without State-of-Union Rebound: Chart of Day 11.Davos Dealmaking Shifts Away From West as BRIC Influx Brings New Influence 12.Strauss-Kahn Bailing Out Euro Gives IMF's Chief Popularity Sarkozy Misses
1. Greece Default With Ireland Breaks Euro by 2016 in Global Investor Poll
Most global investors predict at least one nation will leave the euro-area within five years and that Greece and Ireland will default, sentiment that is intensifying pressure on policy makers to strengthen their response to the debt crisis. As the World Economic Forum´s annual meeting gets underway, 59 percent of respondents in a Bloomberg Global Poll said one or more of the 17 euro nations will quit by 2016, including 11 percent who see an exit within 12 months. Respondents were divided over whether Portugal would default, while a majority expressed confidence in Spain. Such pessimism underscores the urgency German Chancellor Angela Merkel and French President Nicolas Sarkozy face in their hunt for new ways to placate investors after almost $1 trillion in emergency financial support failed to calm markets. Europe´s plight ranks high on the agenda for the conference in the Swiss ski resort of Davos, where Merkel, Sarkozy and European Central Bank President Jean-Claude Trichet are among the 2,500 officials, bankers and economists attending. "The problems in Europe have been addressed, but only with a band aid," said Ted Jarvis, senior vice president at the Indiana Trust Company in Anderson, Indiana, who participated in the survey. "Several euro members have not followed the correct policies and dug themselves a deep hole."
2. Treasuries, Stocks Gain Before Obama's State of Union Address; Pound Drops
Treasuries rose, pushing yields on 10- and 30-year debt down the most this year, and U.S. stocks reversed losses amid speculation President Barack Obama will propose a freeze on some spending and announce measures to bolster growth. Gold slid to a three-month low. Thirty-year Treasury yields tumbled as much as nine basis points and 10-year yields decreased as much as 10 points, while the Standard & Poor´s 500 Index recovered from a 0.8 percent slide to close up less than 0.1 percent at 1,291.18 at 4 p.m. in New York. The pound slid against all 16 major peers after the U.K. economy unexpectedly shrank. The S&P GSCI commodities index lost 1.6 percent as oil sank to an eight-week low. Treasuries and stocks headed higher as traders awaited Obama´s State of the Union address tonight. The president will call for a five-year freeze on non-security discretionary spending, according to a White House official who spoke on the condition of anonymity. Investors including Jeffrey Kleintop, chief market strategist at LPL Financial Corp. in Boston, said they expect tonight´s speech to be more "pro-business" and possibly contain plans to create jobs and cut corporate taxes. "People tried to take the market lower, but the bulls did not let it happen," said Alan Gayle, senior investment strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees $52.5 billion. "The trend for stocks is up. There are also some expectations on what the State of the Union address will be. Some people didn´t want to go short on a day like today."
3. `Not Dead Yet' Billionaire Ho Demands Family Return Macau Casino Fortune
Billionaire Stanley Ho demanded family members return the bulk of his Macau casino fortune by tomorrow or face legal action as an ownership dispute threatens to split Asia´s biggest gambling empire. The transfer of most of Ho´s assets to six family members, disclosed in a Jan. 24 statement, was done without his consent, and the 89-year-old patriarch gave his lawyers "very clear" instructions to recover them, Gordon Oldham, senior partner at law firm Oldham, Li & Nie, said yesterday. The ultimatum by Ho, who has sired 17 children by four women, raises the prospect of a family feud for control of a business he spent five decades building. Ho´s SJM Holdings Ltd., with a market value of $9.7 billion, runs most of the casinos in the Chinese city of Macau, where gambling revenue is four times that of the Las Vegas Strip. "The market´s puzzling about the whole thing, and it´s starting to feel like we´re watching a TV drama," said Victor Yip, a Hong Kong-based analyst at UOB-Kay Hian Ltd. "No one knows the final outcome. Many investors will be profit-taking in the short term."
4. Bernanke Gets 66% Approval From Global Investors Disapproving of QE2 Ease
Investors love Federal Reserve Chairman Ben S. Bernanke. It´s just his policies they don´t like so much. Sixty-six percent of investors have a favorable view of the 57-year-old former Princeton University economist, compared with 31 percent unfavorable, according to a quarterly global poll of 1,000 Bloomberg customers who are investors, traders or analysts conducted Jan. 21-24. Bernanke is more popular than his European counterpart, Jean-Claude Trichet, and scores higher than all other world political and economic leaders in the poll with the exception of German Chancellor Angela Merkel. Investors don´t have the same positive regard for the Federal Reserve´s actions, particularly the decision in November to inject $600 billion of stimulus into the financial system. A plurality of respondents, 35 percent, say that policy, know as quantitative easing, hasn´t had any significant effect on the economy; another 33 percent say the asset purchases risk a rise in inflation to dangerous levels. Just 27 percent say the plan to buy Treasuries is working as intended to help reduce unemployment and boost growth. "The impact is not negligible but looks marginal to me," says poll respondent Xavier Denis, 45, chief economist at Societe Generale´s wealth-management unit in Paris. More broadly, "the Fed has handled the crisis pretty well so far in terms of central banking policy."
5. Housewives Lured by Tobu Bonds Paying 10 Times Savings Rate: Japan Credit
Tobu Railway Co., the train operator building the world´s tallest tower, is taking advantage of investor demand for better returns to sell 10 billion yen ($121 million) of bonds at the lowest cost in six years. The Tokyo-based company, rated BBB by Japan´s Rating and Investment, is offering bonds to individual investors as yields on similarly rated securities fall to a three-year low of 28 basis points, or 0.28 percentage point, above notes with AA grades, according to Bank of America Merrill Lynch indexes. In the U.S., the same gap is 91 basis points, the data show. Tobu is luring individuals to the three-year notes with an interest rate of 0.6 percent, 10 times more than on deposits for three years or more at Japan Post Bank Co., the nation´s largest bank, according to its website. Buyers also get the chance to win a hotel stay near the Tokyo Sky Tree, a 634-meter (2,080 feet) structure being built by a Tobu subsidiary. "I visited Tokyo Sky Tree last year with my grandchild and have such good memories that now I´m thinking of buying Tobu´s bonds," said Masako Bando, a 56-year-old housewife. "It´s worth taking money from my savings if I consider any prize as part of the return."
6. Cameron Responds to First Economic Shocks With Vow to Keep Up Deficit Cuts
Prime Minister David Cameron reacted to the first economic shocks of his eight-month-old coalition by sticking with a vow to eliminate the budget deficit. A government report yesterday showing that the economy unexpectedly shrank in the fourth quarter, following last week´s news that inflation was accelerating, prompted pledges to maintain spending cuts and tax increases with record-low Bank of England interest rates providing a cushion. "There is no need for a Plan B if Plan A is right and sensible, as it is," Business Secretary Vince Cable told the British Broadcasting Corp. Cameron was pressed by the opposition Labour Party to slow the pace of cuts as Britons contend with an increase in sales tax and soaring food and fuel prices that drove inflation to an eight-month high of 3.7 percent in December. The opposition said the government risks doing further damage to the economy.
7. Glencore International Plans Hong Kong, London IPO in April, Standard Says
Glencore International AG, the world´s largest commodities supplier, plans to proceed with an initial public offering in Hong Kong and London in April, the Standard newspaper said, citing unidentified people. The company submitted its application to the Hong Kong exchange last week, the newspaper said. The offering would be the biggest by a non-mainland Chinese business in the Asian city, the Hong Kong-based, English-language paper said. The equity offering may raise about $10 billion, three people with knowledge of the matter said in November. Glencore would use the funds to pay the closely held partnership´s owners, upgrade plants and acquire assets. The Standard said today the offering may raise $8 billion. Glencore owns 34 percent of Swiss miner Xstrata Plc, which trades in London, and controls mines and metals plants on five continents. It trades oil, coal, metals and grains. The Baar, Switzerland-based company is working with banks including Citigroup Inc. and Morgan Stanley, while Credit Suisse Group AG may assist in the process, said two of the people last year.
8. Malaysia May Refrain from Raising Interest Rate as Economy Loses Momentum
Malaysia will probably refrain from raising interest rates this week as growth slows from the fastest pace in a decade, easing inflation pressure in the first Asian nation to tighten policy last year. Bank Negara Malaysia will leave its benchmark overnight policy rate at 2.75 percent at its first meeting of the year tomorrow, according to 15 of 16 economists surveyed by Bloomberg News. The central bank will release its monetary policy decision at 6 p.m. in Kuala Lumpur. Governor Zeti Akhtar Aziz started raising rates in March before any of her regional counterparts, a move that helped contain price pressures last year even as gross domestic product was estimated to increase the most since 2000. Prime Minister Najib Razak forecasts economic expansion will slow this year and Zeti said last month borrowing costs were at "appropriate levels" given the outlook for inflation and growth. "The economic recovery has inevitably lost some momentum as exports have been hit by the tough conditions in the West and the inventory-rebuilding cycle has worked through," said Kevin Grice, a London-based economist at Capital Economics Ltd., which expects no change in rates tomorrow. "What´s more, inflation so far has stayed relatively low."
9. Half of Wall Street Satisfied With '10 Bonuses as 56% See Gain, Poll Finds
Half of Wall Street finance professionals in a survey were satisfied with their bonuses for 2010 performance, eFinancialCareers.com found. About 56 percent of the 1,009 people who responded to the e-mailed survey in the U.S. said they received a bigger bonus than a year earlier, the job-search website said in a statement. Fifty percent of U.S. respondents were satisfied with the payout, while 34 percent were dissatisfied and 16 percent were neither, according to the survey. U.S. and European banks are under pressure to curb bonuses after taxpayers were forced to bail out the industry during the financial crisis. Average bonuses among respondents dropped 5 percent from the previous year, and about 37 percent of those polled in the U.S. expect to change firms in 2011, according to the survey. "This was not an easy bonus season for firms," said Constance Melrose, managing director of eFinancialCareers North America. "They faced the impact of higher demand for people, regulatory scrutiny and the need for the firm´s own performance. There are a lot of challenges in terms of retention right now."
10.Clean-Energy Stocks May Go Without State-of-Union Rebound: Chart of Day
President Barack Obama´s State of the Union address may do little to revive clean-energy stocks, which have yet to recover from the 2007-2009 bear market. The CHART OF THE DAY illustrates how badly the WilderHill Clean Energy Index, consisting of power generators and equipment producers, has trailed the Standard & Poor´s 500 Index since the latter gauge peaked in October 2007. The WilderHill index showed a 57 percent loss as of yesterday, largely because of declines among solar companies. SunPower Corp., the worst performer, tumbled 84 percent. The S&P 500 was only 18 percent lower. Obama is likely to mention a renewable-energy standard in today´s speech, Christine Tezak, an analyst at Robert W. Baird & Co., wrote yesterday in a report. He may also touch on finding alternatives to oil and other fossil fuels for transportation, according to the report.
11.Davos Dealmaking Shifts Away From West as BRIC Influx Brings New Influence
The balance of power among dealmakers is shifting, and this year´s World Economic Forum is proof: A record number of executives from emerging markets will attend the Alpine conference, a networking mecca for the global business elite. About 365 corporate executives from Brazil, Russia, India, China and other emerging nations are slated to gather in Davos, Switzerland, this week. Those countries helped lead the world out of a recession and will drive growth this year, according to the International Monetary Fund, which estimates emerging markets may expand 6.5 percent in 2011, more than double the 2.5 percent rate for developed nations. "It´s a reflection of where economic power and influence is starting to move," said William Vereker, Nomura Holdings Inc.´s co-head of global investment banking, who is based in London. Takeovers involving so-called BRIC countries surged almost 80 percent last year and accounted for a record 22 percent of the $2.23 trillion of global deals, according to data compiled by Bloomberg. Acquirers from BRIC nations announced $402 billion of takeovers, up 74 percent from 2009 and more than quadruple five years earlier, the data show.
12.Strauss-Kahn Bailing Out Euro Gives IMF's Chief Popularity Sarkozy Misses
As the dinner plates were cleared on a May night in Basel, Switzerland, International Monetary Fund Managing Director Dominique Strauss-Kahn and his fellow guests settled in for a challenging final course: saving the euro from extinction. Strauss-Kahn, European Central Bank President Jean-Claude Trichet and Bank of Italy Governor Mario Draghi had gathered with other central bankers at the headquarters of the Bank for International Settlements for a regular bimonthly meeting. They were waiting for word from Brussels, where European Union finance ministers were racing to assemble an emergency rescue program to restore investor confidence in the single currency, Bloomberg Markets magazine reports in its March issue. Every half hour, French Finance Minister Christine Lagarde, 55, would phone Basel from Brussels to report on the progress being made to contain Greece´s sovereign-debt crisis from infecting the entire euro region, Strauss-Kahn says. Euro-region policy makers planned to aid the single currency´s weakest members with a financial aid plan that grabbed the attention of bond buyers.
-0- Jan/26/2011 00:35 GMT