Mark Gongloff is off the newsletter this morning, so today's 7.5 Things are brought to you by Jillian Berman.
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Thing One: Fed's Money Spigot Still On: It appears the Federal Reserve has no plans to turn its money spigot off when it meets this week for a highly-anticipated gathering likely to produce more of the same. With the unemployment rate still stuck at 7.8 percent and inflation nowhere near running away (despite what some on the right might have you think) Fed officials will probably decide to continue the central bank’s $85 billion bond-buying program and keep short-term interest rates near historic lows, according to the Wall Street Journal.
Even though the Fed is likely to come out with a relatively boring policy statement Wednesday that announces it is continuing its previous programs, investors and pundits will likely pore over the document looking for any sign of when the Fed will turn its money helicopter off -- a move that some would like to see happen soon, The New York Times writes. For example, Esther George, president of the Kansas City Federal Reserve, has said that the Fed’s willingness to give away easy money could undermine the stability of the financial system in the future.
But proponents of the policies, like Boston Fed President Eric Rosengren, point to signs like a boost in the housing market to argue that the programs are working. We’ll all be waiting with bated breath for the big beard’s announcement Wednesday.
Thing Two: Regulators And Airlines, A Love Story: Boeing’s 787 nightmare liner got some help in the regulating process from Japan, which eased safety regulations in order to get its made-in-Japan technology out faster, according to Reuters. The steps were taken at two major Japanese airlines’ urging, underscoring the uncomfortable closeness of companies and regulators. Still, the lax regulations didn’t specifically target the fire-catching batteries that have been cited as the reason for grounding the Dreamliner, according to Reuters.
But Boeing did help to stop a set of stricter regulations on the batteries. In 2007, an industry safety group urged stricter testing for preventing airplane battery fires, the Wall Street Journal writes. In other another example of businesses cozying up to regulators, Boeing and the Federal Aviation Administration decided that the Dreamliner was too far along in its design and the new regulations would unfairly delay production. In retrospect, slower production probably would have been better for Boeing than the whole fire-catching battery thing.
Thing Three: Banks Ordered To Die Alone: Regulators have sent their latest wrist slap to banks in the form of a warning on their “living wills.” Banks have been told that they shouldn’t count on regulators cooperating if they face a Lehman-style catastrophe, according to the Financial Times, and the wind-down plans that regulators have asked them to file this summer should reflect that, officials said. Bank executives apparently find the notion that they can’t count on government officials to fix their messes, which could lead to another financial crisis, “shocking,” the FT writes. Some even turned it around, saying the simple request indicates regulators haven’t made progress since Lehman’s 2008 meltdown.
Thing Four: Bank Of America To Move Some Money Around: In typical giant, multinational corporation fashion, Bank of America has found a way to move some of its money to cut down on its tax bill. The bank is reportedly trying to shift more than $50 billion of its Dublin-based European derivatives business to the UK, according to the Financial Times. The move will position the bank to take advantage of tax breaks in the UK, at the same time that the low-tax environment in Ireland is eroding.
BofA’s strategy is just one of many ways major corporations manage to cut down their tax bill. The 10 most profitable companies in the U.S. paid an average 9 percent tax rate in 2011 -- way lower than the official corporate tax rate of 35 percent. Many employed strategies like shipping some of their cash overseas to avoid paying taxes on the money in the U.S. and some are even avoiding taxes by hiding their money at home, according to a recent Wall Street Journal report.
Thing Five: Europe Blues: Despite rumors being spread by European officials that the region’s debt crisis is over, the region is still suffering. The eurozone will likely report record joblessness on Feb. 1, climbing to 11.9 percent, according to Bloomberg. That’s largely thanks to the debt crisis, recession and mandated austerity policies used in an aim to solve those problems. Meanwhile in the U.S., though the overall job situation is improving, it’s still difficult for the nearly 4.8 million long-term unemployed to find a job. Employers are turning to current workers to refer their friends to them, putting workers disconnected from job networks at a disadvantage, The New York Times writes.
Thing Six: Obamacare Challenges: Everyone’s favorite socialist, President Obama, is facing renewed attacks in his second term over his health care reform law. The lawsuits from companies, faith-based charities and universities challenging Obamacare’s mandate that employers cover birth control are likely headed to the Supreme Court. Meanwhile, the CEO of health care company Aurora is just the latest to blame possible job cuts on Obamacare.
Thing Seven: Toyota Resumes Taking Over The World: Toyota is back on top. The company reclaimed the “world’s largest automaker” title from General Motors, according to the Wall Street Journal, after recovering from the supply-chain disruptions caused by the 2010 Japan earthquake and tsunami. Still, the Japanese automaker had some trouble selling its cars in China, after a territorial dispute over some islands led Chinese consumers to buy fewer Japanese products, according to Bloomberg.
Thing Seven And One Half: Because YOLO: Lonely Island, the Andy Samberg-led group responsible for a variety of great digital shorts not appropriate for this family newsletter returned to Saturday Night Live this weekend to present its take on the most annoying phrase to catch on this year. Watch the video featuring Maroon 5’s Adam Levine here.
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Calendar Du Jour:
Economic Data:
8:30 a.m. ET: Durable Goods Orders for December
10:00 a.m. ET: Pending Home Sales for December
Corporate Earnings:
Caterpillar
Yahoo
Heard On The Tweets:
Only way for Manti Te'o story to get any crazier would be if we find out that Ronaiah Tuiasosopo stole his money and invested it in $AAPL.
— Paul R. La Monica (@LaMonicaBuzz) January 25, 2013
-- Calendar and tweets rounded up by Mark Gongloff.
And you can follow us on Twitter, too, if you want, no pressure: @JillianBerman and @MarkGongloff
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