Google gains entry to home and prized team with $3.2 billion Nest deal

Google Inc took its biggest step to go deeper into consumers' homes, announcing a $3.2 billion (1.9 billion pounds) deal to buy smart thermostat and smoke alarm-maker Nest Labs Inc, scooping up a promising line of products and a prized design team led by the "godfather" of the iPod.

Nest will continue to operate as its own distinct brand after the all-cash deal closes, Google said on Monday.

The deal is the second largest in Google's history after the $12.5 billion acquisition of mobile phone maker Motorola in 2012.

The Nest acquisition gives Google a stepping stone into an important new market at a time when consumer appliances and Internet services are increasingly merging.

"Home automation is one of the bigger opportunities when you talk about the Internet of everything and connecting everything. This acquisition furthers their strategy around that," he said.

With the acquisition, Google gets Tony Fadell, a well-connected and well-respected Silicon Valley entrepreneur credited with creating Apple Inc's iconic iPod music player, along with co-founder Matt Rogers and a host of talented engineers and designers.

According to a search on professional network LinkedIn, roughly 100 of Nest's 300 employees have worked at Apple in the past.

Google, the world's largest online search engine, is increasingly expanding into new markets, with efforts ranging from a high-speed Internet access business to advanced research on self-driving cars and robotics.

But while Google's engineering expertise has generated major advances in technology, the company has at times struggled to create hardware products that resonate with consumers as much as Apple's products do.

The consumer experience of Nest's products "is Apple-like and it gives Google that," said Pat Moorhead, an analyst at Moor Insights and Strategy.

Fadell said the deal with Google was the culmination of "countless" discussions that began in the summer of 2013.

"It took us months to get comfortable that they are going to bring to the table the things we need for scale and to realize our decade-long vision and that they really truly respected what we did," he said.

While Fadell's expertise in mobile products could be a boon to Google and its money-losing Motorola smartphone division, he stressed that his focus was on home automation products.

"That was one thing I was very clear about. I said ‘Larry, I have already built all kind of mobile products, I have done all those things. I am not here to build those,'" Fadell said, referring to Google CEO Larry Page.

Source: Reuters

US Stock markets plunge

According to a a report from the Wall Street Journal "U.S. stocks had their first real selloff of 2014, with the Dow down nearly 200 points. The hesitancy that has marked trading so far this year snowballed into something more damaging.

For the Dow, which has lost ground in five of the past six session, it was the biggest one-day selloff since Sept. 20, 2013, and in these early days of 2014, the index is off 1.9%".

"There wasn’t any one big trigger. Part of it was simply that snowball effect. There was a note from Goldman Sachs, in which the firm said equities valuations looked “lofty by almost any measure.” There was a lingering bad taste from last week’s jobs report, and the news out of retail-land increasingly makes it seem like the holiday season was a weak one. Earnings season is just about upon us and it doesn’t look so hot.

Nobody’s going to start panicking now, even with the Dow down four days in a row. It suffered a similar losing streak in December, and its losses for the year are slight"

Coming Up: Asian investors aren’t getting anything to go on from overseas. Friday’s U.S. jobs report cast a pall on Asia on Monday, and Monday’s U.S. stocks selloff could cast a similar pall on Tuesday.

Japanese markets reopen Tuesday after a public holiday on Monday. Investors there will face data on the current-account balance, the broadest measure of Japan’s trade with the rest of the world. Economists expect a current-account deficit of 380 billion yen in November, after a surprise deficit of 127.9 billion yen in October.

Thailand will continue to be a focus. Monday’s protests were relatively calm, and the surprise of it sparked a stock rally in Bangkok. The protesters, though, only seem to be swelling in the city, shutting down the capital.

China: Fishing rules are 'normal practice'

Hainan province's demand that foreign fishing vessels entering its waters seek China's approval is a normal practice, the Foreign Ministry said on Thursday, refuting reports that it reflects Beijing's tougher stance on territorial disputes.

"The goal is to strengthen the security of fisheries resources and to reasonably utilize and exploit them," ministry spokeswoman Hua Chunying said at a regular news conference when asked about the rules.

"It is absolutely a normal routine practice" for an ocean state, she added.

The regulation, approved by the provincial legislature of Hainan on Nov 29, took effect on Jan 1.

It requires foreign fishing boats and foreigners to seek permission from relevant departments under the State Council to fish or carry out surveys on fisheries resources within waters administered by the southernmost island province.

Hainan, which administers 2 million square km of water, said the new rule is to protect local fisheries resources.

The news came into focus after foreign media highlighted it on Wednesday.

The reports described the regulation as akin to Beijing's late November announcement of its Air Defense Identification Zone, which requires foreign planes to notify the Chinese government of flights through the zone. The area covers China's Diaoyu Islands.

The Philippines' Department of Foreign Affairs said on Wednesday that Manila is checking the information.

"We are verifying the news with our embassies in Beijing and Hanoi," said Foreign Affairs spokesman Raul Hernandez.

Peter Paul Galvez, a Philippine defense department spokesman, told Reuters that Manila was ready to enforce fishing rules in the country's exclusive economic zone, which include regulations on the type of fish that can be caught.

Chen Qinghong, a researcher on Philippine studies with the China Institutes of Contemporary International Relations, said, "the regulation is just a step for Hainan to complete local fisheries regulations and standardize law enforcement".

"It should not be interpreted as Beijing adopting a tougher stance in pushing forward territorial claims. In my opinion, it has been sensationalized by media."

Wang Hanling, an expert on maritime law with the Chinese Academy of Social Sciences, said the new rule targets severe infringement by foreign fishing vessels.

He said the new rule was also based on China's increasing capability to protect its maritime interests.

"It is not targeting certain countries. Due to various reasons, China has not been strict in maritime administration. Now we are making more efforts, not just in the South China Sea, but also in other directions such as the Yellow Sea and the East China Sea."

Despite the new rule, Beijing will likely seek to avoid increasing frictions by enforcing them too zealously, City University of Hong Kong China politics expert Joseph Cheng told the AP.

China's fisheries law allows confiscation of catches and fishing equipment as well as fines of up to 500,000 yuan ($83,000) for violators. Those who commit crimes will be investigated for criminal responsibility.

U.S. Stocks Pull Back

    According to a report from the Wall Streer Journal "the Dow Jones Industrial Average gave up 152 points, or 0.9%, to 16283, in Monday afternoon trading. That was the lowest level for the Dow since Dec. 23.

The S&P 500 dropped 20 points, or 1.1%, to 1822. The Nasdaq Composite Index shed 54 points, or 1.3%, to 4120".

Stocks began the day in mixed territory then sold off midday. Traders said the selloff wasn't tied to any particular headlines, saying instead that investors were nervous to bid stocks much higher at current valuations, particularly on the heels of a strong 2013. The Dow is off 1.5% this year, while the S&P 500 has shed 1%.

"People feel like we're getting to a point where the market feels a little bit heavy here," said David Seaburg, head of equity sales trading at investment bank Cowen. "The market's extremely jittery right now. There's broad-based expectation for a little bit of a pullback."

Goldman Sachs said in a note to clients that the S&P 500 was becoming "lofty by almost any measure" and said further growth in valuations would be "difficult to achieve."

On Friday, the Dow slipped 0.1%, while the S&P 500 gained 0.2%, as investors weighed the weak December jobs-growth reading. The reading led to a sharp decline in Treasury yields, which had been rising for months.

The report sent analysts and economists scouring for explanations, with many attributing the weak number to unusually cold weather last month.

The Federal budget for December, posts a $53.2 billion surplus

Treasury Budget

Released On 1/13/2014 2:00:00 PM For Dec, 2013 Prior Consensus Consensus Range Actual Treasury Budget - Level $-135.2 B $44.0 B $44.0 B to $49.0 B $53.2 B

Highlights The government's declining deficit is a standout factor for the nation's economy, evidenced by a surplus -- not deficit -- in the month of December of $53.2 billion. Three months into the government's fiscal year, the deficit is down 41 percent from this time last year. Receipts, boosted by a stronger economy and higher tax rates, are up a year-on-year 8.0 percent so far this fiscal year with outlays, that include big declines for net interest and defense spending, down 7.8 percent. A lower deficit is of course a positive for the government's credit standing, though it reduces stimulus for the economy.

Market Consensus before announcement The U.S. Treasury monthly budget report showed the deficit dropping to $135.2 billion in November versus $172.1 billion in November last year. Two months into the government's fiscal year, the deficit is down 22 percent, benefiting from last year's payroll tax hike along with declines in spending including spending on defense which was down 10 percent during the first two months of fiscal 2014. Looking ahead, the month of December typically shows a deficit. Over the past 10 years, the average deficit for December has been $22.7 billion and $61.7 billion over the past 5 years. The December 2012 deficit came in at $1.2 billion. Source: Bloomberg

Structural Reforms Are Key for Emerging and Developing Countries Sustained Growth, IMF Study Says

Such a strategy would allow them to further narrow the gap in living standards with the advanced economies, a New IMF study says.

Despite clear progress in recent years, income levels of emerging market and developing economies are still far behind those of advanced economies, note the authors of Anchoring Growth: The Importance of Productivity-Enhancing Reforms in Emerging Market and Developing Economies. With a less favorable external environment and growing demographic challenges, continued strong economic performance in these countries will hinge on how well policymakers are able to unlock productivity growth by improving economic efficiency and a better allocation of resources in the economy.

“The scope for structural reforms remains considerable in most emerging market and developing countries, and recommendations tailored to where the country is located along the development path can help focus attention where potential productivity payoffs are likely to be larger,” the study says.

Recent gains

In many emerging market and developing economies, real GDP growth per capita picked up in the second half of the 1990s, and, since the mid-2000s, they—as a group—have been growing faster than advanced economies.

Growth over the past two decades was supported by a range of external factors—expansion of cross-country production chains, declines in transportation and communication costs, buoyed global trade, and easy financing conditions. However, domestic factors—such as structural reforms that gave greater play to market forces, better policymaking, and greater trade and financial openness—have also played an important role.

There are significant differences in the sources of growth across countries, the study notes. In some countries (for example, in Latin America), growth has been driven by increases in labor utilization. In others it is attributable to increases in labor productivity brought about by the accumulation of capital (such as in developing Asia) or improvements in total factor productivity (for example, in Central and Eastern Europe).

While productivity gains can arise from the adoption of advanced countries’ technologies or better use of resources within sectors of the economy, they often also reflect structural change—reallocation of resources from less productive sectors (such as agriculture) into higher-productivity ones (such as industry and services) or new activities. These changes that push up economy-wide productivity are the same channels through which advanced economies have increased their income in the past.

Varying reform priorities

Emerging market and developing countries have made significant progress, building stronger institutions and achieving greater and more durable economic stability. But as economies develop and external conditions change, new constraints emerge and policymakers need to adapt their reform priorities, the study observes.

The study notes that in low-income countries, there is room to raise productivity in agriculture while pursuing a shift toward higher-productivity industry and services. In emerging economies, where many structural changes have already taken place, productivity growth will depend more on climbing the technology ladder—that is, diversifying the economy toward higher value-added production and modern services.

The set of required policies varies given the vast differences among emerging market and developing countries. As countries get closer to the global technology frontier, payoffs from simply adopting technology diminish and innovation becomes more important. Reform measures that are effective in generating productivity payoffs for countries at earlier stages of development are thus often not appropriate for the ones that are more developed, the authors emphasize.

 IMF Staff Discussion Note  

Anchoring Growth: The 

Importance of Productivity-Enhancing 

Reforms in Emerging Market and 

Developing Economies 

Era Dabla-Norris, Giang Ho, Kalpana Kochhar, 

Annette Kyobe, and Robert Tchaidze 

IMF Research Department: Commodity Price Outlook & Risks

IMF, December 1, 2013.

U.K. Fracking incentives will give councils 'contradictory roles'

Government moves to persuade councils to support fracking have been condemned as giving them "contradictory roles" and undermining trust in local government decisions, according to anti-fracking campaigners and an MP whose constituency has a site that is being explored for drilling.

The prime minister, David Cameron, announced on a visit to a site close to Gainsborough in Lincolnshire on Monday that councils would be allowed to keep 100% of business rates from fracking operations rather than 50% as before, on top of other local incentives already announced. Cameron said that Britainis "going all out for shale"'   as the French oil major Total announced it was taking a 40% share in the drilling operations in the Gainsborough trough.

But Barbara Keeley, the Labour MP Worsley and Eccles South, which includes the Barton Moss site that hasbeenthetargetof major anti-fracking protests , told the Guardian: "To me, it [100% business rates] muddies the water to give councils two contradictory roles. One is a protective role, to check companies have safeguards. On the other hand, you have a cash strapped authority that's lost £100m off its budget, like ours, that gets offered this cash incentive in business rates. The public involved in this, who live near the site, how can they trust the local council will make the right decision on this?"

She also raised concerns about that government had not factored in the policing costs for the controversial extraction method. Sussex police said protests at a Cuadrilla-owned drilling site near Balcombe in West Sussex last summerhadcost more than  £3m, and Keeley said Greater Manchester police was spending £40,000 a day on the Salford protests, which have seen dozens of arrests, largely for obstructing a highway. "The process is so controversial, that the policing costs are much, much higher than anything that comes back. The policing side has just not been thought through."

Source: theguardian

Jaguar Land Rover reports record sales for 2013

Britain's largest car manufacturer, Jaguar Land Rover , owned by India's biggest carmaker, Tata Motors, has reported record-breaking global sales for 2013, the company has said.

Together the British brands sold 425,006 vehicles in 2013 – up 19% on 2012 – setting new sales records in 38 international markets.

In the UK, Jaguar sales were up 15% while Land Rover sales rose 13%.

Around the world, Land Rover represents the largest share of company sales with 348,383 sold in 2013, an increase of 15%.

But demand for the luxury Jaguar has surged over the last 12 months, almost doubling its international sales to 76,668.

Dr Ralf Speth, chief executive of Jaguar Land Rover, said: "2013 has proven to be a very positive year for Jaguar Land Rover thanks to continuing strong demand for vehicles across the range."

The glowing sales report comes just days after the car giant launched the first phase of a recruitment drive to take on staff at its new engine manufacturing centre.

Around 600 jobs will be created over the next four years at the firm's site near Wolverhampton in the West Midlands.

More than £500m is being invested in the centre, where low-emission engines will be built.

It also has design and manufacturing plants in Merseyside and Warwickshire and its head office is in Coventry.

The company said it supported more than 190,000 UK jobs through the supply chain, dealer network and "wider economy".

Source: theguardian

Asia gains despite weak U.S. Jobs Data

Most Asian markets marched higher on Monday, despite data showing US jobs growth expanded at a slower than expected rate.

The Bureau of Labor Statistics said non-farm payrolls increased by 74,000 in December, considerably below estimates for 193,000. The unemployment rate fell to 6.7% from 7%.

The weaker than forecast US non-farm payrolls also reduced expectations that the Federal Reserve will continue to trim its bond-buying programme.

Japanese markets were shut for a public holiday. The Hang Seng advanced 42 points at 22,888.

Hong Kong stocks shrugged off a weak start to Monday's session as shares of Chalco and China Resource Power pushed strongly ahead. Their shares rose 7% and 3.7% respectively.

Chalco surged after it said it expects to report a move back into profit in 2013. Oil giant Cnooc increased 1.02%. 

Elsewhere shares of PC maker Lenovo added 1.7% while retailer Esprit added 0.1% and Li & Fung firmed 0.2%.

Source: LiveCharts

Crude Slides After Iran Deal Advances

    According to a report from the Wall Street Journal "crude-oil futures were trading somewhat lower Monday, after further cementation of a deal that could return some Iranian crude to the market and with weaker U.S. economic data and prospective Federal Reserve tapering of economic stimulus both on the agenda''.

"Iran and six major powers reached an agreement over the weekend, which means a deal reached in November to curb Tehran's nuclear program will come into force Jan. 20. Next Monday will therefore mark the start of a six to 12-month period in which the conditions for a final nuclear agreement must be fulfilled''.

"In November Iran committed itself to eliminate its stocks of 20% enriched uranium within six months and limit the enrichment of uranium to 5%, explained JBC Energy in a note to clients. In return, Iran gets "an easing of sanctions that will give the country access to a reported $4.2 billion in oil revenues, realized in monthly installments," JBC said.

If Iranian crude flows back into the market in the coming months the excess supplies could mean a weaker price.

Germany only grew slightly in 2013 - economy ministry

 Germany is likely to have grown only slightly in 2013 due to a weak winter but growth is now picking up, the country's economy ministry said in its monthly report on Monday.

"The German economy is gathering speed after a weak winter," the ministry, now run by Deputy Chancellor Sigmar Gabriel, said in a statement.

"Economic performance ... is likely to have increased further in the final quarter of the year. Gross domestic product for the year 2013 as a whole, however, will be only slightly above that of the previous year, given the past weak winter half of the year," it added.

The country's statistics office will publish 2013 GDP data on Wednesday.

Source: Reuters

Euro Zone Market Data

  European Indices  Source:  BBC

London			Index Value          Change
FTSE 100		Mon 13:16	6745.94	+6.00		+0.09
FTSE 250		Mon 13:16	16226.61	+34.88		+0.22
FTSE 350		Mon 13:16	3683.03	+3.99		+0.11
FTSE All Share		Mon 13:16	3620.14	+4.11		+0.11
FTSE Techmark		Mon 13:16	3215.30	-1.72		-0.05
Pan European
FTSEurofirst 300		Mon 13:16	1322.13	+0.60		+0.05
DJ Eurostoxx 50		Mon 13:16	3105.10	+0.95		+0.03
Amsterdam AEX		Mon 13:15	403.87	-0.08		-0.02
Frankfurt
Dax		Mon 13:16	9488.95	+15.71		+0.17
MDax		Mon 13:16	16741.81	+97.02		+0.58
SDax		Mon 13:16	7076.80	+28.08		+0.40
TecDax		Mon 13:16	1221.24	+5.95		+0.49
Paris Cac 40		Mon 13:16	4252.53	+1.93		+0.05
Brussels Bel 20		Mon 13:16	2937.34	+2.45		+0.08
Madrid IBEX		Mon 13:16	10354.30	+63.70		+0.62
Zurich
SMI		Mon 13:16	8383.95	+18.83		+0.23
SPI		Mon 13:15	8007.20	+19.56		+0.24

Goldcorp announces offer to acquire Osisko

GOLDCORP INC (GG). (TSX: G, NYSE: GG) today announced that it intends to commence an offer to acquire all of the outstanding common shares of Osisko Mining Corporation ("Osisko") (TSX: OSK, Deutsche Boerse: EWX) for approximately C$2.6 billion in cash and shares (the "Offer").

Under the terms of the Offer, Osisko shareholders will be entitled to receive 0.146 of a Goldcorp common share plus C$2.26 in cash for each Osisko common share. Based on Goldcorp's TSX closing share price of C$25.29 on January 10, 2014, the total consideration offered to Osisko shareholders is C$5.95 per Osisko common share representing a premium of 28% over the 20-day volume-weighted average share price of Osisko from all trading on Canadian exchanges for the period ending January 10, 2014 and a premium of 15% over Osisko's TSX closing share price on January 10, 2014.

Transaction Highlights

• Consistent with Goldcorp's strategy of disciplined portfolio enhancement, focus on gold and investment in low political risk jurisdictions.
• Large ~10 million ounce gold reserve⁽¹⁾ that, with Goldcorp's financial and technical resources, should support a long mine life and low all-in sustaining costs.
• Immediately accretive on key per-share metrics, including free cash flow, operating cash flow, net asset value, gold production and gold reserves.
• Provides Goldcorp with immediate free cash flow as it completes the construction and ramp-up of its key growth projects at Cerro Negro, Éléonore and Cochenour over the next eighteen months.
• Addition of a high-quality operating mine in the prolific Abitibi mining district of Québec.
• Leverages Goldcorp's existing investments in Québec and Ontariowith opportunity for corporate and regional synergies.
  

"From a financial and strategic perspective, this offer represents a compelling transaction that is consistent with our strategy of improving the overall quality of our portfolio," said Chuck Jeannes, Goldcorp President and Chief Executive Officer.  "Goldcorp shareholders will benefit from a long-lived, high-quality gold mine with low all-in sustaining costs capable of generating long-term free cash flows. We are particularly pleased to be making a further substantial investment in the Province ofQuébec, one of the best mining jurisdictions in the world.  With our world-class Éléonore project in Northern Québec due to commence production later this year, Goldcorp will be the largest gold producer in the province with the resources to continue building collaborative, long-term relationships while leveraging corporate and regional synergies."

Benefits to Osisko Shareholders

Goldcorp believes the Offer is attractive to Osisko shareholders for the following reasons:

• Immediate Premium: The Offer represents a premium of 28% over the 20-day volume-weighted average share price of Osisko and a premium of 15% over Osisko's closing price on January 10, 2014.
  
• Greater Liquidity, Dividend Participation and Meaningful Ownership in the Industry Leader: Consideration is comprised of cash and highly liquid Goldcorp shares that provide a meaningful ownership stake in one of the lowest-cost, highest-growth senior gold producers, and allows Osisko shareholders to participate in Goldcorp's monthly dividend.
  
• Exposure to Goldcorp's High Quality Asset Portfolio and Industry Leading Growth Profile: Osisko shareholders will gain exposure to Goldcorp's suite of low-cost mines and development projects, and participate in Goldcorp's strong production growth profile.
  
• Disciplined and Focused Management Team with a Proven Track Record of Value Creation: Goldcorp's experienced and proven management team will help ensure optimum performance of Canadian Malartic for the benefit of all stakeholders.
  
• Continued Participation in Osisko's Assets: Osisko shareholders will continue to benefit from any future increases in value associated with operational improvements at Canadian Malartic and Osisko's other properties.
  
• Operational and Strategic Synergies: Osisko shareholders will benefit from synergies with Goldcorp's existing investments in Québec andOntario.
  
• Eliminates Single Asset Operating and Financial Risks: Osisko shareholders will benefit from exposure to Goldcorp's diversified portfolio and financial strength.
  

"This combination offers excellent strategic value as Canadian Malartic and its talented operating team will benefit from Goldcorp's strong financial position, technical expertise and commitments to safety and sustainability," added Mr. Jeannes. "Our clear preference remains to engage with Osisko, as we strongly believe in the compelling strategic and financial merits of this transaction to the mutual benefit of both companies` shareholders."

About the Offer

This Offer will be open for acceptance until 5:00 p.m. EST on February 19, 2014, unless extended or withdrawn.  The Offer will be subject to customary conditions, including the acceptance by Osisko shareholders owning not less than 66 2/3% of Osisko shares outstanding on a fully-diluted basis, confirmation to the satisfaction of Goldcorp that the Osisko shareholder rights plan will not adversely affect the Offer, no material adverse change in Osisko and receipt of all necessary regulatory approvals. The Offer will not require the approval of Goldcorp's shareholders and Goldcorp has obtained a $1.25 billion non-revolving term credit facility from Scotiabank which, together with cash on hand of approximately $620 million and an undrawn $2 billion credit facility, will be sufficient to fund the cash portion of the Offer.

Source: Seeking Alpha