Global economic and market update
Global stocks advanced today amid fresh optimism that Greece and its eurozone creditors may reach a compromise agreement on its bailout. Greece may request an extension of its loan agreement toGday for up to six months, many news outlets reported quoting officials with knowledge of the situation. It’s still unclear what the terms of the extension will look like, as both Athens and its creditors seem determined not to compromise over the loan’s conditions.
As widely expected, the Bank of Japan maintained its massive ¥80T annual stimulus program today, its main tool to hit 2% inflation by next fiscal year. Data earlier this week confirmed that the country pulled out of recession in the fourth quarter of last year, although annualized growth of 2.2% was much weaker than expected. The Nikkei closed up 1.2% at 18,199.17 following the decision, its highest level since July 2007.
The U.S. has directly accused Russia of violating the ceasefire in Ukraine, amid reports that some Ukrainian troops are pulling out of Debaltseve after separatist forces fought their way into the key railway junction on Tuesday. Strongly condemning the violence, Joe Biden warned the “costs to Russia will rise” if it “continues to violate the Minsk agreements.” Due to the ongoing conflict, Ukraine yesterday posted a 15.2% Y/Y fall in Q4 GDP.
Bank of England officials voted unanimously to leave the central bank’s benchmark interest rate unchanged at 0.5% this month and the stock of assets purchased under its bond-buying program unchanged at £375B. Although a unanimous opinion was reached today, one member of the panel concluded the next change in monetary policy in Britain was roughly just as likely to be a loosening as a tightening. U.S. futures are also on edge with a raft of economic data and the release of minutes from the Federal Reserve’s January meeting.
Bank of America reportedly cut CEO Brian Moynihan’s pay by 7% in 2014 to $13M, as its full-year profit fell 58% on higher legal settlements. BofA (NYSE:BAC) spent much of 2014 settling cases brought by U.S. regulators, including its record $26B settlement for selling faulty mortgage bonds. In contrast to Moynihan’s pay package, JPMorgan’s (NYSE:JPM) Jamie Dimon received total compensation of $20M in 2014, unchanged from a year prior.
The Swiss government will lay out tougher capital requirements for UBS (NYSE:UBS) and Credit Suisse (NYSE:CS) by year-end, ensuring the banks are not too big to fail. “Additional measures and adjustments are required to boost the resilience of systemically important banks further,” the Swiss government said in a statement. Hundreds of banks, including UBS, were bailed out during the 2007-09 financial crisis.
BNY Mellon has restated its Q4 results it announced in January, taking a $598M litigation charge that suggests it is on course toward a settlement of cases, including a three-year-old forex lawsuit filed by the DOJ. The adjustment lowers net income for the year by about a fifth, to $2.5B, and cuts quarterly profit from $807M to $209M. BNY Mellon (NYSE:BK) is one of the many banks under investigation for forex manipulation.
Tesco has appointed John Allan as its new chairman, succeeding Richard Broadbent who said in October that he would step down in the wake of the supermarket’s £263M profit overstatement. Earlier this week, it was reported that Tesco (OTCPK:TSCDY, OTCPK:TSCDF) is likely to slash up to 10K jobs, as it plans to fight back from years of market share losses, debt downgrades and its accounting scandal.
Bankruptcy Judge Robert Gerber said yesterday he would consider narrowing the bankruptcy shield awarded to GM (NYSE:GM) in 2009, should the company be found to have violated car owners’ constitutional rights by hiding ignition-switch defects during its bankruptcy. Plaintiffs have argued that they should be able to seek compensation from GM itself, rather than its compensation trust, based on those reasons. Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) and George Soros also disclosed increased stakes in GM yesterday, upping their holdings during Q4.
Boston Scientific +10.2% premarket after settling the $7.2B lawsuit brought by Johnson & Johnson (NYSE:JNJ) for $600M, ending litigation that has nagged BSX since its 2006 acquisition of Guidant. JNJ had sought damages after accusing Guidant of breaching their merger agreement by going with the higher offer from Boston Scientific (NYSE:BSX).
A sharp drop in crude prices wreaked havoc on Eni’s (NYSE:E) Q4 results, as the Italian oil and gas group reported lower profits and hefty write-downs. Adjusted profit fell by two-thirds to €464M, way below analysts’ estimates of €614M, while the company marked down the value of its inventories by €860M and booked asset impairments and other charges of €1.94B. Placating investors, Eni slightly raised its yearly dividend to €1.12 a share, from €1.10 a year ago.
China may merge its state-owned oil companies to create giants that will be more efficient and capable of taking on big overseas rivals,WSJ reports. One plan would combine the country’s largest oil companies, CNPC (NYSE:PTR) and Sinopec (NYSE:SNP), while other options include merging Cnooc (NYSE:CEO) with Sinochem.The firms have expanded into each others’ turf over the years, creating overlapping operations that span everything from exploration to running gas pumps.
Compared with its operating profit forecast of ¥20B this year, earnings will reach ¥500B ($4.2B) starting in fiscal 2017, announced Sony (NYSE:SNE) Chief Executive Kazuo Hirai today. The company is also targeting a boost in its return-on-equity to above 10%. The profit increase will be driven by Sony’s turnaround with games, image sensors and entertainment, while cutting back on loss-making products including TVs and smartphones. However, Sony still expects to report a net loss this year on a writedown of its smartphone unit. SNE -6%premarket.
Though the ink is barely dry on a $485.6M funding round valuing the company at about $10B, Bloomberg reports Snapchat is looking to raise as much as $500M at a valuation “as high as $19B.” That would make the ephemeral messaging platform the third-most-valuable VC-backed startup, behind Xiaomi and Uber, and give it a valuation nearly equal to the $22B paid by Facebook (NASDAQ:FB) for WhatsApp.