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What to watch for today
Europe introduces a Tobin tax. The European Commission is expected to announce a new financial transaction tax. The tax, of 0.1% for stock and bond trades and 0.01% on derivatives transactions, will raise about €37 billion ($50 billion) annually. The tax, to be implemented by 11 euro zone countries, is named after the American economist James Tobin who proposed a similar idea more than 40 years ago.
General Motors reports earnings. Expect strong sales in its profitable trucks segment, which has been bolstered by high farming incomes and rebounding US construction.
American Airlines and US Airways merge. The new entity, to be announced this morning after late-night board meetings, will save American Airlines from bankruptcy and allow US Airways to compete with the other big airlines. It will take American’s name and US Airways’ CEO.
Zuma makes the case for South Africa. President Jacob Zuma delivers his annual State of the Nation address and will try to convince the world that South Africa is not the worst bet in emerging markets. The country is still hurting from miner strikes and downgrades from credit rating firms over the last two years.
While you were sleeping
Rio Tinto posted its first ever full-year loss. The Anglo-Australian mining giant lost $3 billion in 2012 after having to write down $14 billion in its aluminium and coal businesses.
French, German and Euro area GDP contracted in Q4. German exports “declined significantly” as Europe’s largest economy shrunk by 0.6%. France’s GDP fell by 0.3% and combined euro zone output fell by 0.6% in the fourth quarter compared to the previous three months. The figures are the bloc’s worst in nearly four years. Output for the EU– all 27 member states – fell 0.5%.
François Hollande began wooing India. The French president, five ministers and 60 business heads are in India to push for closer economic ties and perhaps nudge New Delhi closer to signing a delicate, $12-billion deal to buy 126 fighter jets from France’s Dassault Aviation. David Cameron heads to India next week.
Japan’s recession entered its third quarter. GDP shrank an annualized 0.4%in the last quarter of 2012. That disappointed analysts, who expected Japan to emerge from its third recession in five years. But prime minister Shinzo Abe is likely pleased: the news supports his case for aggressive stimulus measures.
Finmeccanica got a new CEO. The Italian defense and aerospace giant appointed Alessandro Pansa as boss after CEO Giuseppe Orsi was arrested for corruption involving the sale of 12 helicopters to India. In India itself, the air chief, SP Tyagi, is now under scrutiny.
Quartz obsession interlude
Gina Chon asks whether some companies just can’t be saved. “JC Penney at one point seemed to be adapting to a changing world. But now it increasingly looks like yet another desperate attempt to prolong a failing brand. To be fair, clothing stores in general are being hit by weak US retail sales, which rose by only 0.1% in January. And under Johnson’s vision, redesigned JC Penney outlets are doing better than older models. But the company’s decision last month to bring back coupons may be too late for customers who left and are not coming back.” Read more here.
Matters of debate
Obama should start a hedge fund. His stock-market comments in early March 2009 nearly called the bottom of the market.
More college graduates = faster economic growth. The US government should help people get degrees.
Europe shouldn’t just hop into bed with the US in a free trade deal. It will be bad for Europe, and for global free-trade agreements in general.
Elected governments in countries facing sluggish growth should spend the cheap cash central banks are handing to them.
Taxes in emerging markets are too damn low.
The banks that sliced and diced mortgages into mortgage-backed securities lied to buyers about how terrible those mortgages were. Yes, old story, we know—but now there is evidence.
Russia’s stock market fared far better than America’s for half a century. When? The 50 years after the end of the US civil war in 1865.
Everyone wants to be Polish. Foreigners are lining up for citizenship.
There’s a one-man bank in the tiny southern German town of Gammesfeld.
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