ICAP Poised to Lose Central Role in Helping Setting Benchmark Rate (WSJ)
Market officials plan as soon as Monday to alter the methodology used daily to calculate the benchmark, known as ISDAfix, cutting London-based ICAP out of its longtime role in helping calculate it, according to people familiar with the decision. The International Swaps and Derivatives Association, which oversees the ISDAfix benchmark, expects to implement the changes this week, the people said. The benchmark is used widely, in areas such as setting payout rates on pension funds, determining the cost of real-estate loans and valuing contracts settled between banks and institutional and wealthy investors. People familiar with ISDA’s plans say banks will no longer submit information about bids and offers on U.S. dollar-based interest-rate swaps to ICAP to help calculate the benchmark. Nor will banks rely as heavily as they do now on ICAP-generated trading data as a reference point for their submissions, the people say. Banks will now determine submissions based on data sources that won’t necessarily include trades executed through ICAP, such as trades executed with other banks. The banks will send interest-rate information directly to Thomson Reuters Corp., which currently calculates and publishes the ISDAfix benchmark.
Pot Stocks May Go Up In Smoke (NYP)
The sudden US investor interest in marijuana-related stocks — some having soared as much as 1,700 percent in value in recent weeks — may be growing as recreational and medical use of pot is legalized and debated nationwide. But stock pickers and regulators issue this sober warning — these mostly pink sheet and over-the-counter “pot” stocks, a total of about 35 listings, could go up in smoke. And some pot-stock promoters are scammers trying to go legit in a dodgy industry, critics say. “Most of these stocks are not good investments, but they are great for trading,” said Alan Brochstein, a widely followed “pot” stock expert who estimates their total market cap today at $5.5 billion based on converting all securities, like convertible notes or preferred stock, in the capital structure. “The demand is high and supply low, leaving ridiculous valuations,” Brochstein said.
Justice Department Inquiry Takes Aim at Banks’ Business With Payday Lenders (Dealbook)
The Justice Department is weighing civil and criminal actions against dozens of banks, sending out subpoenas to more than 50 payment processors and the banks that do business with them, according to government officials. In the new initiative, called “Operation Choke Point,” the agency is scrutinizing banks both big and small over whether they, in exchange for handsome fees, enable businesses to illegally siphon billions of dollars from consumers’ checking accounts, according to state and federal officials briefed on the investigation.
Securities Lawsuits Are On The Rise (WSJ)
Stockholders filed 234 federal securities class-action suits against U.S. companies last year, the most since 2008, according to a report by NERA Economic Consulting. Federal courts approved shareholder settlements valued at a combined $6.5 billion last year, nearly doubling 2012’s total, NERA said. The average settlement hit a record $55 million last year, after excluding certain cases that can skew the total.
Growing beard popularity shaves P&G sales (AP)
The US consumer giant, fresh off a recent corner office shakeup and already facing a battle for market share in shampoo, said second-quarter earnings were marred by the growing preference of men for moustaches and beards, which hit sales in its “grooming” segment…Chief financial officer Jon Moeller characterized the latest round of results as on par with expectations. But he cited three areas in need of improvement: skin care, where P&G’s Oil of Olay line has lagged hopes; shampoo, where several campaigns around the Pantene line have underperformed amid discounting by rival Unilever; and grooming. “Grooming is really a story about the market,” said Moeller, who alluded to the mainstreaming of the three-day stubble “hipster” look in the US and other developed markets. The most recent quarter included the effects of “Movember,” a health promotion in November that urges men to grow out their moustaches and beards to raise awarness of prostate cancer. The beard moving weighed on P&G’s Gillette razors and shaving cream and Braun electric razors. But all is not lost for P&G in grooming, Moeller said. “While the incidence of facial shaving is somewhat down, the incidence of body shaving is up, and we can take advantage of that and plan to do that as well.”
Elephant Preserve Planned in California for ‘Near-Wild’ Herd (WSJ)
Many elephants in U.S. zoos have the same problem as visitors who gawk at them: They are fat. “The general public are familiar with Disney and the tale of Dumbo,” said Deborah Olson, executive director of the International Elephant Foundation, a conservation group. “They’re drawn as round creatures, so the general public has this conception that they’re round instead of what they truly look like in the wild.” But now there is hope. In the rural, rolling hills of Northern California, plans are under way for a 4,900-acre preserve that would keep African elephants healthy, in shape and breeding. Part fat farm and part laboratory, the elephant preserve would start with three to five elephants and let them grow into a herd of 12 to 15 over two decades…The proposal highlights a trend in elephant husbandry of providing more space to captive animals. A recent study found that three-fourths of North American zoo elephants were overweight. The conclusion was drawn by researchers who made their determinations in part by studying the size and shape of the pachyderms’ posteriors. They had too much junk in the trunk.
Yellen’s First Challenge: Coping With Too-Low Inflation (Bloomberg)
One of Janet Yellen’s first challenges as Federal Reserve chairman is generating enough inflation to meet the central bank’s target of 2 percent. Policy makers have failed to attain their goal for almost two years and now are paring the pace of their bond buying. Inflation rose at a 0.9 percent rate for the 12 months ending in November, according to the central bank’s preferred measure. The last time prices were climbing at or above 2 percent was in April 2012.
Lagarde Cautions Davos on Global Deflation Risk (Bloomberg)
Lagarde’s concern springs from her experience as an eyewitness to the spread of the U.S. mortgage meltdown to banks including France’s BNP Paribas SA and an understanding of how freely money traverses borders. As officials from the U.S. and Europe exuded optimism in Davos last week, Lagarde cautioned that progress is unbalanced, with still “massive unemployment” worldwide even as some markets look “hot.” “In case there was a shock, which is something we have to consider and imagine — not that it is in the cards yet — then we have the risk of deflation,” Lagarde said Jan. 23 at a forum in Davos. “What the crisis has taught us is that we need to be extremely vigilant and expect bubbles from places that we don’t anticipate.”
Bank of America’s trading practices have been probed, filing shows (Reuters)
The U.S. Department of Justice and the Commodity Futures Trading Commission have both held investigations into whether Bank of America engaged in improper trading by doing its own futures trades ahead of executing large orders for clients, according to a regulatory filing…Reuters has since learned that Bank of America’s trading practices regarding Fannie and Freddie are the subject of probes, and that the investigations are ongoing.
Boyfriend colludes with police for arresting wedding proposal to girlfriend (Metro)
Matt Van Vliet’s unsuspecting girlfriend Samantha Labo was in tears while he was apparently being handcuffed by police in Connecticut, United States, before discovering it was all a sneaky ruse. Officers pulled the couple over while they were travelling in New London and asked them to step out of their car. Mr Van Vliet was then taken to one side and as he appeared to be getting restrained his girlfriend started to cry. One of the officers then pulled a ring out of the future groom’s pocket, which was the cue for him to go and ask Ms Labo to marry him. ‘I went from being the most terrified I’ve ever been to probably the most ecstatic,’ she told Channel 9.