TheChek News Flow

March 13, 2014 8:36 PM Missing Flight Left Data Trail Jetliner 'Pinged' Satellites With Location, Altitude for Hours After Disappearance

Communication satellites received intermittent data "pings" from a missing Malaysia Airlines jet, giving the plane's location, speed and altitude for at least five hours after it disappeared from civilian radar screens, people briefed on the investigation said Thursday. The final satellite ping was sent from over water, at what one of these people called a "normal" cruising altitude. The people declined to say where specifically the transmission originated, adding that it was unclear why the transmissions stopped. One possibility one person cited was that the system sending them had been disabled by someone on board. The automatic pings, or attempts to link up with satellites operated by Inmarsat PLC, occurred a number of times after Malaysia Airlines Flight 370's last verified position, these people said, indicating that at least through those hours, the Boeing Co. 777 carrying 239 people remained intact and hadn't been destroyed in a crash, act of sabotage or explosion. Malaysian Airlines said it hadn't received any such data. Chicago-based Boeing declined to comment Thursday. If the plane remained airborne for that entire period it could have flown more than 2,200 nautical miles from its last confirmed position over the Gulf of Thailand, these people said. On Thursday, meanwhile, the international search for the plane zeroed in on areas far west of the plane's last known location. Cmdr. William Marks, the spokesman for the U.S. Seventh Fleet, said the USS Kidd would move through the Strait of Malacca, on Malaysia's west coast, and stay at its northwest entrance, while surveillance planes would search an area of the Indian Ocean 1,000 miles or more west of the strait. Malaysia, which is overseeing the search effort, directed Indian forces to a specific set of coordinate in the Andaman Sea, northwest of the Malay peninsula, an Indian official said Thursday. "There was no specified rationale behind looking in those areas, but a detailed list was provided late Wednesday evening," the Indian official said. U.S. aviation investigators said they were analyzing the satellite transmissions to determine whether they can glean information about the plane's location or status. The transmissions were sent via onboard technology designed to send routine maintenance and system-monitoring data back to the ground via satellite links, according to people familiar with the matter. Among the possible scenarios investigators said they are now considering is whether the jet may have landed at any point during the five-hour period under scrutiny, or whether it ultimately crashed. The people said aviation investigators are exploring the possibility that someone on the plane may have intentionally disabled two other automated communication systems in an attempt to avoid detection. One system is the transponders, which transmit to ground radar stations information on the plane's identity, location and altitude, and another system that collects and transmits data about several of the plane's key systems. The widebody jet was scheduled to fly overnight to Beijing from Kuala Lumpur in the predawn hours of March 8. Its transponders last communicated with Malaysian civilian radar about an hour after takeoff. After the plane dropped off civilian radar screens, these people said, the satellite link operated in a kind of standby mode for several hours and sought to establish contact with a satellite or satellites. These transmissions didn't include data about any of the plane's critical systems, they said, but the periodic contacts indicate to investigators that the plane was still intact and believed to be flying at least a significant portion of that time. The people said the transmissions included detailed information about the plane's location, speed and bearing. The transmissions, one person said, were comparable to the plane "saying I'm here, I'm ready to send data." Unknown so far to investigators is what happened to the plane following the final satellite ping, these people said. Questions remain about the plane's status, including what was happening in the cockpit. But the huge uncertainty about where the plane was headed, and why it apparently continued flying so long without working transponders and other communication links, has raised theories among investigators that the aircraft may have been commandeered for reasons that remain unclear to U.S. authorities. At one briefing, according to this person, officials were told that investigators are actively pursuing the notion that the plane was diverted "with the intention of using it later for another purpose." As authorities scramble to analyze and understand all of the transmissions from the missing 777, the situation continues to change rapidly. Some people briefed on the issue initially described the transmissions as information that had been relayed from onboard monitoring systems embedded in the two Rolls-Royce PLC Trent 800 engines, not the idling satellite communications system.

Closing Market Summary: S&P 500 Surrenders Year-to-Date Gain

The major averages finished the Thursday session near their lows after renewed concerns surrounding the situation in Ukraine, combined with more warnings signs from China, contributed to participants reducing their risk exposure. The jitters related to China are tied up in economic and financial risk, whereas, the concerns over Ukraine are tied up in geopolitical risk that has the potential to become a global economic problem.

The tech-heavy Nasdaq (-1.5%) led the retreat while the S&P 500 lost 1.2% with eight sectors ending in the red. As a result, the benchmark index settled below its 2013 closing high of 1848.36.

Equity indices began the session with modest ins, but the early strength was short-lived as the S&P 500 notched its high within the first ten minutes of action, spending the remainder of the trading day in a steady slide. Although stocks opened higher, the dollar/yen pair flashed an early warning signal when it began dropping at the start of the New York Session. The currency pair hovered near 102.80, but slumped all the way to 101.60 by the time the closing bell rang.

The yen often draws safe-haven interest in times of geopolitical distress and today's move basically snowballed given carry-trade dynamics that work against yen-based borrowers when the currency strengthens. In turn, the sharp move weighed on risk assets, including US stocks.

Continued worries about the strength of the Chinese economy fed into the risk-off posture after industrial production (8.6% year-over-year versus9.5% expected), fixed asset investment (17.9% year-over-year versus 19.4% expected), and retail sales (11.8% year-over-year versus 13.5% expected) all fell short of estimates. Copper futures have been pressured recently, and continued retreating today. The red metal fell 1.3% to $2.923/lb.

Elsewhere, the dispute between Russia and Ukraine jumped back into focus after Ukraine's acting President Oleksandr Turchynov was quoted by Reuters as saying he believes Russian forces concentrated on Ukraine's eastern border are ‘ready to invade.' The comments were followed by a statement from U.S. Secretary of State John Kerry, who said if the Sunday referendum goes ahead as planned there will be a ‘serious series of steps' taking place on Monday from the United States and Europe.

Notably, Treasuries, which began climbing just after the start of the New York session, accelerated their advance following the remarks from President Turchynov. The 10-yr note added 24 ticks, sending the benchmark yield lower by nine basis points to 2.65%.

Similarly, volatility protection was in high demand as indicated by an 12.1% increase in the CBOE Volatility Index (VIX 16.22, +1.75).

Nine sectors posted losses with cyclical groups bearing the brunt of the weakness. The tech sector (-1.6%) registered the largest decline while industrials (-1.5%) and consumer discretionary (-1.4%) followed not far behind. The underperformance of technology weighed on the Nasdaq, which also suffered from the relative weakness of biotechnology. The iShares Nasdaq Biotechnology ETF (IBB 254.80, -6.70) tumbled 2.6%. Biotech also weighed on the health care sector (-1.4%), which was the only laggard among countercyclical groups.

The remaining defensive sectors—consumer staples (-0.6%), telecom services (-0.4%), and utilities (+0.9%)—outperformed with utilities overtaking the health care sector for the top spot on this year's leaderboard. The rate-sensitive sector extended its year-to-date gain to 6.2% versus 5.6% for health care.

Despite the daylong selling pressure, participation was below average with 678 million shares changing hands at the NYSE floor.

Reviewing today's data:

* Retail sales increased 0.3% in February after declining a downwardly revised 0.6% (from -0.4%) in January. The consensus expected retail sales to increase 0.2%.The report was pretty solid, but did not represent an upward shock that would come as a result of pent up winter-delayed demand. Sales increased in-line with the 0.2% increase in aggregate earnings that were reported in the February employment report. We would have expected a bigger upward swing if pent up demand was unleashed. 

* The initial claims level fell to 315,000 for the week ending March 8 from an upwardly revised 324,000 (from 323,000) for the week ending March 1. The consensus expected the initial claims level to increase to 329,000. The DOL reported that there were no special factors that drove the initial claims level to its lowest point since November 2013. 

* Total business inventories increased 0.4% in January after increasing an unrevised 0.5% in December while the consensus expected an increase of 0.3%. Total inventories consist of manufacturers, merchant wholesalers, and retailers. Both manufacturer (0.2%) and wholesaler (0.6%) inventories were announced prior to the release. The only unknown was retailer inventories, which increased 0.4% in January after increasing 0.7% in December. The important takeaway from the report was that the inventory gain may not have been planned. Total business sales fell 0.9% in January after declining 0.1% in December. That sharp drop in spending caused an overstock situation as more goods than expected were left on shelves. 

* The Treasury Budget for February showed a deficit of $193.50 billion, which followed the prior month's deficit of $203.50 billion. The consensus expected the deficit to hit $195.00 billion. 

Tomorrow, February PPI will be released at 8:30 ET while the preliminary reading of the Michigan Sentiment Survey for March will cross the wires at 9:55 ET.

* Nasdaq Composite +2.0% YTD  * Russell 2000 +1.5% YTD  * S&P 500 -0.1% YTD  * Dow Jones Industrial Average -2.8% YTD

Barclays to shake up investment bank

Barclays is preparing a radical overhaul of its troubled investment bank in a move which is expected to result in thousands of job cuts, adding to pressure on the division’s two heads. The shake-up comes amid growing investor disquiet about the bank’s decision to increase bonus payments by 10 per cent to £2.4bn in total last year in spite of a one-third fall in its pre-tax profits. Shareholders are also unhappy about rising costs and falling profits at the investment bank, which is jointly run by Tom King in the US and Eric Bommensath in Europe. The new strategy for the investment bank is expected to be unveiled before the summer. Two people familiar with the situation said the bank was also considering replacing Mr King and Mr Bommensath, though this may not happen until after the new strategy is presented. Barclays denied that a search was "in train for any change to leadership in the investment bank". Antony Jenkins, chief executive, has attracted widespread criticism for the performance of the investment bank and for arguing that without the higher bonuses Barclays would face a "death spiral" of departing bankers. One top 25 investor at Barclays said: "Jenkins has been slow to act. The honeymoon . . . is clearly over, if there ever was one. The issue of costs is one Jenkins needs to get a grip of." Last year the division generated a return on equity of 8.2 per cent – below its cost of capital – while its ratio of costs to income increased from 39.6 to 43.2 per cent. The unit was hit by a sharp drop in revenues at its core fixed income division, once the main motor of Barclays profits. The climate has worsened this year, as the fixed income industry has suffered a decline of up to 25 per cent since December. Barclays is expected to slash thousands of jobs at the investment bank and reallocate capital away from the division to more profitable areas, such as Barclaycard and UK mortgage lending. Mr King and Mr Bommensath were only appointed by Mr Jenkins a year ago to replace Rich Ricci, a close ally of the previous chief executive, Bob Diamond, who was ousted in 2012 as a result of the Libor rate manipulation scandal. One potential replacement as head of the investment bank is Tushar Morzaria, the well-regarded finance director who joined in October from JPMorgan Chase. However, some question whether he has enough experience. Mr King was regarded as a talented M&A adviser in his previous jobs at Barclays and Citigroup. Mr Bommensath, who joined Barclays in 1997, faces growing criticism from within the bank, according to insiders. The duo have failed to convince investors that they can restore the investment bank to making sustainable returns above its cost of equity. Shares in Barclays have fallen more than 10 per cent since its results last month, underperforming the sector, but mirroring a similar fall at its main European rival Deutsche Bank. Some investors are threatening to vote against the bank’s remuneration report at next month’s annual meeting, adding to the pressure on Mr Jenkins to take swift action. "The pay thing was a scandal and it has put fund managers who I speak to in a really tricky position," said one adviser to Barclays. Another person familiar with the bank said: "The investment bank has to shrink and be reshaped. They are a bit like rabbits in headlights."

+------------------------------------------------------------------------------+

*CARREFOUR SEEKS TO SELL STAKE IN BRAZIL UNIT FOR $2.1B:REUTERS 2014-03-13 15:52:41.349 GMT

--RITA DEVLIN

-0- Mar/13/2014 15:52 GMT