Tuesday, January 7, 2014

2014 The Year of the Horse

Editor’s Note: A day late this week, our apologies.

BUZZWORDS THAT YOU SHOULD BAN IN 2014 – “Moving forward”, “Proven alignment”, “Leverage”, “Alpha”, “Transparency”, De-layering”, “Viral”, “Reach out”, “Incentivize”

People who use these buzzwords have no idea what they mean and what context they should be in. Nice excuses for leaders to veer from their strategy and not stay focused on the few key things they truly create and manage.

NEW ERA TO BEGIN - Regulators are set to usher in a new era of tough banking oversight in 2014 that drills to the core of Wall Street's profitable markets and trading businesses, according to a draft ... The so-called Volcker rule will put in place new hurdles for banks that buy and sell securities on behalf of clients, known as market making, and will restrict compensation arrangements that encourage risky trading ... Five U.S. financial regulatory agencies are expected to approve the rule, which bans banks from making bets with their own money and limits their ability to invest in certain trading vehicles, such as hedge funds and private-equity vehicles.

The approval would bring to an end a 2½-year effort to complete the 2010 Dodd-Frank provision. The final language of the Volcker rule could change before Tuesday's vote. Regulators have told firms that they don't expect to strictly enforce the rule's provisions until 2015. ... The rule, which hasn't been publicly released, will require banks to provide 'demonstrable analysis of historical customer demand' for financial assets they buy and sell on behalf of clients. That essentially requires a firm to prove it has engaged in a certain type of trading previously. It is an effort to keep banks from attempting to disguise bets made for a profit - so-called proprietary trading, which would be banned - as permissible market-making activity.

DEBT CEILING - Treasury says it must be raised by late February or early March. The Congressional Budget Office says as late as June. Either way, Congress must raise the borrowing limit and Republicans will demand something in return. Consensus among Beltway insiders and Wall Street executives is that with the focus shifting to the midterm elections and everyone fearful of fallout from a big fight, a deal will get made that offers Republicans something on spending while not pushing the nation to the brink of default. ... It's not at all clear what this deal will look like but M.M. does not believe a fresh debt limit crisis is likely. So don't let fear of default ruin your Christmas or New Year's.

MID-TERM ELECTIONS - The Baucus-to-China move upends conventional wisdom that Republicans have a good shot at taking control of the Senate. The GOP needs six seats and now both Montana and Louisiana seem like less likely pick-ups. Montana Lt. Gov. John Walsh will now likely to be able to run for Baucus' seat as the appointed incumbent. And in Louisiana, Sen. Mary Landrieu will now likely take the gavel of the Energy Committee if Wyden moves to Finance. That would give her significant ability to boost Louisiana drilling interests and make her defeat less likely.

On the House side, the Democrats have essentially zero chance of regaining control. They would need a net gain of 17 seats, a near impossibility given the number of competitive districts and the historic tendency of the incumbent president's party to lose seats in the sixth year of the president's term. An improving economy might boost Democrats' a bit. But that would probably just serve to limit GOP gains. The safest bet right now is that Washington at the end of 2014 will look much as it does now.

COMING ATTRACTIONS - Books, TV, movies to watch for in 201 : Former Secretary of State Hillary Clinton's as-yet-untitled new memoir will focus on American foreign policy using 'a number of dramatic moments' such as the killing of Osama bin Laden and the Arab Spring ... Glenn Greenwald's upcoming book, 'No Place to Hide: Edward Snowden, the NSA, and the U.S. Surveillance State' ... Robert Gates's book 'Duty: Memoirs of a Secretary at War' ... New York Gov. Andrew Cuomo ['s book] will be a 'full and frank look at his public and private life' ... Texas state Sen. Wendy Davis ... is penning a memoir ... of how she went from single mom to gubernatorial candidate. ... Gabriel Sherman[s] 'The Loudest Voice in the Room: How the Brilliant, Bombastic Roger Ailes Built Fox News-and Divided a Country' ... will be out January ... Sen. Elizabeth Warren ... will release a still-untitled autobiography in spring ...

Glenn Beck's next book, tentatively titled 'Controlling Education,' will be the follow-up to his New York Times bestseller, 'Control: Exposing the Truth about Guns.' ... Michael Hastings wrote a novel titled 'The Last Magazine' before he died in a car accident in June ... Michelle Malkin's fifth book, tentatively called 'Who Built That: The Tinkerpreneurs Who Built Everything From the Bottle Cap to Bridges' ... 'Good Morning America' co-host Robin Roberts is set to release a memoir chronicling her battle with myelodysplastic syndrome

THE YEAR AHEAD - "Europe unity tested on WWI centenary," by AFP's Laurent Maillard in Paris : "Commemorations for the 1914-18 Great War are planned through the summer on either side of the Western Front, but with no single event bringing all of the former foes together. ... For the British and French, World War I is vividly etched in the collective imagination as a just and necessary victory, secured at a terrible human cost. ... In Germany and Russia, by contrast, the Great War's memory was all but supplanted by the cataclysm of World War II, two decades later. The centenary also comes as the very idea of a shared European future is under attack, with eurosceptics, nationalists and the far-right gaining ground across the continent as the eurozone heads into a fourth year of economic crisis."
From smartphones to tablet computers and mobile apps, Google and Apple have been competing head-to-head for digital supremacy. The next battlefront: the automobile. Just a few months after Apple launched an initiative to integrate iPhones and other devices running its iOS operating system with dashboard control panels, we report that Google and German auto maker Audi plan to announce next week that they are working together to develop in-car entertainment and information systems, as well as collaborating with other tech and auto companies. The aim: to allow drivers to access features similar to those available on Android-powered smartphones. "The car is becoming the ultimate mobile device," said a research analyst.

"Wall St. ends best year since 1990s with moderate gains," by Reuters' Ryan Vlastelica: "The S&P 500 rose 29.6 percent over the year, its best annual performance since 1997, while the Dow climbed 26.5 percent in its best year since 1995. The Nasdaq jumped 38.3 percent, its best year since 2009. Both the Dow and the S&P 500 finished the final trading day of 2013 at record closing highs."

GOLD FALLS FROM FAVOR -- Commodities Post First Drop in 5 Years as Corn to Gold Tumble: Commodities posted the first annual drop in five years as supply exceeded demand for corn to sugar to nickel and investors lost faith in precious metals as a store of value amid signs that economies are improving. ... Gold marked its first annual drop in 13 years with a 28 percent slide and silver slumped 36 percent.

GENEROUS ZUCK - Chronicle of Philanthropy's Maria Di Mento: "The largest [2013 announced] donation came from Mark Zuckerberg and his wife, Priscilla Chan. The couple ... provided 18 million shares of Facebook stock, valued at more than $990-million, to the Silicon Valley Community Foundation. ... [The gift] sets a ... record because it [is] the first time donors that young have made the [year's] biggest contribution."

GET SMART FAST: 2014 DATES TO WATCH - POLITICO's James Hohmann rounds up some of the key moments to watch this year: "Mark your calendars, and buckle up: 2014 is an election year with control of the Senate, House and 36 governorship's at stake. ... The battle for the soul of the GOP will intensify, while the economic recovery faces its own challenges. ... Here are POLITICO's top 14 dates to watch in 2014. ...

Jan. 28 - State of the Union: "Obama becomes more of a lame duck with each annual update to Congress, and, faced with strong Republican opposition, it's likely many of the priorities he outlines will go nowhere. ...

Late March-June - Raising the debt ceiling: "Highlighting ... debt is a winning issue for Republicans, but flirting with economic catastrophe is not. Obama again insists he will not negotiate. Some conservatives think that Republicans must push for concessions, and other Republicans believe that going to the brink will scare major donors and spook independents"

March 31 — Obamacare D-Day
This is the end of the enrollment period for the first year of the new Obamacare exchanges, the last date people can buy insurance to avoid paying a penalty on their 2014 taxes. We’ll finally know how many people signed up for health plans under the law in the first year.
It will be a key messaging opportunity for proponents of the Affordable Care Act to talk about the benefits of reform and for detractors to highlight the problems with the rollout.

HITTING THE JACKPOT - The Las Vegas Strip, synonymous with gambling, isn't the casino capital of the world. That title belongs to Macau, the only place in China where casino gambling is legal. Our story takes a look at the rise of Macau—how it went from a smattering of casinos to a booming gambling destination. We find that while the Chinese territory has been hitting the jackpot for the past few years, the Strip and Atlantic City are struggling to recover from the financial crisis. The Las Vegas Strip's revenue in 2013 was likely down to only about one-seventh that of Macau. We also note that Macau has become the fastest-growing economy in the world, but has yet to achieve the status of Las Vegas in global popular culture.

BIRTHDAYS THIS WEEK – Birthday wishes and thoughts this week to: Jeff Bezos (50), Nicolas Cage (50), Katie Couric (57), George Foreman (65), Stephen Hawking (72), Nancy Lopez (57), Jimmy Page (70), John Rich (40), Frank Sinatra, Jr. (70), Bart Starr (80), Howard Stern (60).

WILL THE ECONOMY BREAK OUT? - Friday's big GDP surprise saw third quarter growth hit 4.1 percent, driven in part by increases in consumer and business spending, very hopeful signs that the economy is gaining traction. And the good data come after some other positive developments. Washington managed to agree on a budget deal to all but erase the threat of a government shutdown next year. And the Fed gave the economy a big vote of confidence by saying it would start cutting back on emergency stimulus.

And instead of freaking out, markets embraced the news and decided the taper was mild enough not to choke off growth. Investors also embraced the many caveats from Ben Bernanke that the central bank would keep rates at effectively zero well into the future and could resume other stimulus if needed.

Job creation rates, consumer balance sheets, house prices and confidence levels all suggest a strong year. We asked on Twitter for some bold predictions for 2014 (more on which below). Justin Wolfers, one of the nation's leading economists, came up with this huge call:
"The economic recovery finally gathers momentum. And unlike others, I haven't said this for each of the past five years." As BI's Joe Weisenthal would say: BOOM. Citi's Peter Orszag followed up Wolfers' Tweet: "Me too, on both counts."

SUPER BOWL ADS ... a record $4M for 30 seconds: Laurence Fishburne, the straight-faced star of the 1999 hit sci-fi film 'The Matrix,' will show up with a humorous twist on the cult classic in a Kia ad ... Wonderful Pistachios ... will feature ... Stephen Colbert in two 15-second ... commercials. ... Dannon and Chobani ... will go toe-to-toe ... Jaguar will appear in its first-ever Super Bowl to tout its new F-Type sports coupe ... Several other first-time advertisers[:] Nestle is using the Super Bowl to promote the national roll-out of its new Butterfinger Peanut Butter Cup. Intuit ... will feature its small business contest winner ... Cheerios -- which went out on a limb with a much-discussed interracial family TV ad last spring -- will do with its first-ever Super Bowl ad.

COLLEGE FOOTBALL PICK OF THE WEEK – A great season has come to an end with Florida State University winning the BCS Title game in Pasadena. Final Season totals (13-6)

COLLEGE HOCKEY PICK OF THE WEEK – Saturday 1/11, 8:00 PM ET, FSW; #8 Michigan Wolverines (10-4-2) at #14 Wisconsin Badgers (11-6-1). Rink Rats College Hockey season now begins, a great first game. We like Michigan to pull the upset in Madison, 4 -2.

NFL PICK OF THE WEEK – Saturday 1/11, 8:15 PM ET, CBS: Indianapolis Colts (12-5) vs. New England Patriots (12-4). This game will be closer than you think, Pats 35 Colts 31. Season to date (13-4)

(NFL Playoff, Jan 11) New Orleans Saints (12-5)  14 at Seattle Seahawks (13-3)  28
(NFL Playoff, Jan. 12) San Francisco 49ers (13-4)  27 at Carolina Panthers (12-4)  24
(NCAA Hockey, Jan. 11) Harvard Crimson (5-7-2)  2 at #10 Yale Bulldogs (7-3-4)  6
(NHL, Jan. 12) Detroit Red Wings (19-14-10)  2 at Anaheim Ducks (31-8-5)  5
(NFL Upset of the Week, Jan. 12) San Diego Chargers (10-7)  24 at Denver Broncos (13-3)  20
2014 Season Final (1-4)

DRIVING THE WEEK - Welcome to the first jobs week of 2014. Reading on December employment, out Friday at 8:30 a.m., expected to show a gain of 195K with no change to the 7.0 percent jobless rate. However, there is a decent chance unemployment drops below 7 percent for the first time since November of 2008 ... ISM non-manufacturing this morning at 10:00 a.m. expected to dip to 54.5 from 55 ... Factory orders today at 10:00 a.m. expected to rise 1.7 percent ...

FOMC minutes at 2:00 p.m. Wednesday will offer some insight into how close the call was on tapering asset purchases ... ADP private employment at 8:15 a.m. Wednesday expected to show a gain of 200K ... Both Congress and President Obama are back in DC with Dems set to push for an extension of expired emergency jobless benefits ... Consumer Electronics Show takes place in Las Vegas.

Next week: Dear Rink Rats and NHL Power Ratings.

Until Next Monday, Adios.

Claremont, CA

January 7, 2014
#IV-38, 195

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