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Mark Gongloff is off the newsletter this week, so today's 7.5 Things are brought to you by Jillian Berman.
Thing One: Economy In The Spotlight: After being overshadowed by gun control, immigration reform and more pressing -- and albeit sexier -- issues, the economy and job creation will be back in the spotlight tonight during the president's State of the Union address. The aim of the speech, in part, is to counter criticism that his inauguration speech was too unabashedly liberal, according to the Financial Times. It’s also an aim to connect to Americans, who have the economy on their mind.
More than half of Americans say they still believe the U.S. is in a recession, according to a Quinnipiac poll cited by Reuters, indicating that the economic downturn is still weighing on the country even as it slowly recovers. Thirty-five percent of the respondents said the economy is their top concern ahead of the speech, while 20 percent said it was the federal deficit. That compares to 15 percent who said that gun control was their top priority.
Though Obama may offer some reassuring platitudes to those suffering from the downturn and jobs crisis, it’s unlikely he’ll be able to offer much in the form of actual policy. Obama’s biggest job creation proposals have been stopped by Congressional Republicans in the past and the tense dynamic doesn’t show any signs of letting up soon, The Huffington Post’s Chris Kirkham reports.
Whatever message he sends, his intended audience won’t be able to avoid it. He’s rebooted his campaign machine to spread his words, according to the FT.
Thing Two: Barclays' Bad Year Ends Badly: This morning’s not-so-great earnings report capped off a terrible scandal-plagued year for Barclays. The bank lost $1.3 billion in the last quarter of 2012 and plans to lay off 3,700 workers, according to The New York Times. Some of those workers come from the investment bank unit, where the slashing is aimed at cutting Barclays’ exposure to risk.
In announcing the cuts, Barclays CEO Anthony Jenkins acknowledged that banks had become too aggressive over the past 20 years and too “disconnected” from society, according to the Financial Times. The cuts are part of a larger overhaul, which includes closing the bank’s tax planning unit, which engaged in controversial tax avoidance strategies for its clients. Jenkins couched the overhaul as a push to change the bank’s reputation by building something new during an interview with BBC radio cited by Reuters. In addition to the overhaul, he’s also been aggressive on cutting pay and bonuses for his staff.
Thing Three: The Merger To End All Mergers: This could be the merger to end all mergers. The combination of American Airlines and U.S. Airways follows three other major airline industry mergers since 2008, according to the Wall Street Journal, and it could be the sector’s last megamerger. The new mega-company would be good news for the airlines making it up because they would be more likely to sustain a profit. It could leave travelers with fewer options, as just four airlines will control 83 percent of domestic seats. The two airlines’ board of directors are scheduled to meet separately to discuss the merger Wednesday and the deal could be announced as early as Thursday, according to a separate WSJ report. But there are still contentious terms to be worked out, mainly how everyone will get paid and what the company’s new board will look like.
Thing Four: RBS Too Busy To Catch Libor Rigging: The head of RBS said he was just too busy cleaning up his bank’s problems in the wake of the financial crisis to notice that another major issue was festering: His employees were trying to rig the Libor rate. RBS CEO Stephen Hester told a U.K. parliamentary committee that his management team was too slow to react to evidence their traders were participating in shady business because they were focused on fixing the bank after it was bailed out by taxpayers, the Wall Street Journal writes. RBS agreed to pay $616 million last week to settle allegations of Libor rigging. Meanwhile, government officials are expanding their probe into Libor manipulation to include some London brokerage firms that help banks decide their submission to Libor, according to a separate WSJ report.
Thing Five: Here's How You Squeeze Cash Out Of A Company: Shareholders looking for more cash from their companies could take a lesson from the famed investor currently trying to squeeze some out of Apple. Billionaire star hedge fund manager David Einhorn’s proposal to offer Apple shareholders a “perpetual preferred” stock could work better than other moves companies have tried in the past to return cash to shareholders, according to the Wall Street Journal. Though Einhorn’s lawsuit has put a spotlight on Apple’s cash stash, the company certainly isn’t the only one sitting on a hoard of dough. Since 2008, U.S. companies have been keeping an “unusually” large amount of cash on hand because they’re concerned about another possible credit crunch. We could learn more about Einhorn’s suit sooner than expected; a judge honored Apple’s request to move up the schedule of the case because it would impact the company’s shareholder meeting on February 27, according to Reuters.
Thing Six: Companies Profiting Off Government Program: Phone companies may be taking advantage of a government program to help the poor in order to make a profit. More than 40 percent of the people currently enrolled in the Lifeline program -- a 1984 government initiative that supplies phones to low-income Americans -- aren’t eligible or couldn’t prove their eligibility, according to a Wall Street Journal analysis. That’s a boon for phone companies, who make a small profit off of each subscriber and get more money if the customers go over their small allotment. At the same time, another government program aimed at boosting connectivity is also being accused of waste. The Obama administration’s effort at extending internet to rural areas is actually setting up networks in places where they already exist, according to The New York Times.
Thing Seven: Tweet To Spend Money: Twitter is moving beyond a vehicle for narcissism; now you can can buy stuff on it too! American Express is launching a pay-by-tweet service that allows customers to tweet a hashtag to accept offers from merchants, according to the Financial Times. Though Twitter won’t make any money directly off the transactions, the company could benefit from a boost in advertising coming from more e-commerce.
Thing Seven And One Half: Happy birthday Abe! If he were still alive, President Abraham Lincoln would turn 204 today. One can only hope President Obama channels the famed orator during his remarks tonight.
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Calendar Du Jour:
Heard On The Tweets:
@JoyceCarolOates: Even a woman not so very interested in fashion would, if elected Pope, redesign the Papal costume for a more "contemporary" look.
@amtendler: I heard the Pope is quitting because he was offered a job at a cool new web startup.
@WilliamAder: The Vatican finally realized that, if the pope is going to be on Twitter, they need a funnier pope.
@morningmoneyben: What do we need to do to get rid of the annoying, pandery tradition of SOTU "special guests"? It's so 2000 and late.