Scandal at world's oldest bank

Monte dei Paschi di Siena, founded in 1427, is at the center of a banking scandal that could shake the Italian elections.

LONDON (CNNMoney)

Monte dei Paschi di Siena, founded in 1427, last week revealed it faced losses of up to €720 million on three derivatives trades, carried out in 2006-2009, details of which were kept hidden from regulators.

Italy's third-biggest bank was forced to ask for €3.9 billion in state aid last year when it failed to meet tougher European capital standards, as losses on Italian government bonds weakened its balance sheet. If it is unable to repay the special bond, it may face nationalization.

The bank's shares have lost 16% since posting a 2013 high on Jan. 7.

The revelations have sparked a round of recriminations about who knew what, and when, about the derivative trades, drawing outgoing Prime Minister Mario Monti and European Central Bank President Draghi into the firing line.

Draghi, who has been praised for his deft handling of Europe's credit crisis last year, was head of the Bank of Italy at the time the trades were carried out. He is due to take charge of EU banking regulation under plans for a single supervisory authority.

Related: No retreat from austerity

Giulio Tremonti, a former economy minister in Silvio Berlusconi's government, has described Draghi's failure to prevent the trades during his time at the Bank of Italy as shocking. The ECB has declined to comment, while the Bank of Italy has accused the previous leadership at Monte dei Paschi of withholding critical information, subsequently made available by the new management.

Monte dei Paschi appointed Alessandro Profumo, a former CEO at Italy's biggest bank Unicredit, as chairman last April, and Fabrizio Viola as new chief executive last February.

Other observers believe Draghi did what he could.

"There are some official documents from the Bank of Italy that point to the fact that the bank was engaged in very risky activities, and that some of the risks were not balanced and some were not properly accounted for on their books," Nicola Borri, assistant economic professor at LUISS Guido Carli University in Rome told CNN.

"However, some of the revelations of (the) last few days point to the fact that the Bank of Italy might not have known some details of these derivatives," Borri added.

Italian finance minister Vittorio Grilli told Parliament Tuesday that Bank of Italy oversight in 2010 had prevented Monte dei Paschi from carrying out similar trades, and dismissed suggestions that the scandal raised questions about the stability of the country's banking system.

Monti has come under fire from political rival Silvio Berlusconi and his allies for agreeing to provide assistance to the bank. Monti steered Italy through the depths of the sovereign debt crisis last year at the head of a technocrat government, and is seeking re-election when Italians go to the polls next month.

Related: Investors back Italy despite political turmoil

But he, in turn, has criticized the center-left Democratic Party, currently leading in opinion polls, for its close links to the bank. Democratic Party politicians control Monte dei Paschi's biggest shareholder.

Italy faces a tough 2013. It has already been in recession for five consecutive quarters. The economy is believed to have shrunk by 2.4% in 2012, and is expected to contract again this year.

Investors are hoping that the election delivers a government that continues with the fiscal consolidation and reform agenda introduced by Monti last year. The Democratic Party, led by Pier Luigi Bersani, supported many of Monti's reforms and could build a coalition with the former European Commissioner.

But support for Bersani may slip as a consequence of the banking scandal, complicating his search for a workable majority in both houses of Parliament, particularly if his party loses a number of tight regional races to Berlusconi.

"The Democratic Party needs to win in most regions to get a majority in the Senate, while the majority in lower chamber seems assured. So the impact might be important," Borri said.

First Published: January 29, 2013: 1:59 PM ET

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Where Americans are moving to - and from

Germany was the top destination for Americans moving abroad in 2012, followed by the United Kingdom.

NEW YORK (CNNMoney)

United Van Lines moved 573 people to Germany last year, 29% more than to the United Kingdom, the second most popular destination, according to a report released Tuesday. And the relationship was reciprocal: Of foreigners migrating to the United States, Germany was the second most popular country of origin.

"[The] international migration study offers a unique perspective into what is happening with overall migration patterns to and from the U.S.," said Rich McClure, CEO of UniGroup Relocation, United's parent company.

One of the largest U.S. moving companies, many of United's international moves are corporate relocations, which reveal where firms are investing manpower. They also reflect the burgeoning economic recovery, as the total number of moves increased for the second year in a row after declining in 2009 and 2010.

"During the first and second years of the recession, there were steep cutbacks in corporate relocations," said McClure.

Related: 10 great foreclosure deals

Many of the moves from the United States to Germany involved the U.S. military, as more than 50,000 members of the armed forces are stationed in the country.

Foreigners moving to the United States were most likely to arrive from the United Kingdom.

But the hottest markets for migration are countries on the Pacific Rim. United's moves to that region have jumped by more than 10% over the last two years due to "an uncertainty about the U.S. economy," said McClure. Until things stabilize, he thinks many U.S. companies will focus on growing their overseas subsidiaries and invest human capital accordingly.

Related: Europe on the mend but eurozone still shaky -- Draghi

Australia, which has seen a recent boom in energy production and mining, finished third among people leaving the United States.

United also released data on domestic migration earlier this month. United's clientele tends to skew wealthier, but McClure says the company's report tracks closely with the Census Bureau's data on U.S. migration and population estimates.

Washington, D.C. had the highest proportion of people moving in rather than leaving. Corporations have been steadily expanding in Washington, as more companies -- especially defense contractors, banks, pharmaceuticals and health care providers -- open branch offices to be closer to the federal government, which is the source of much of their revenues. This was the fifth straight year Washington has had the highest ratio of people moving in to those moving out.

Related: America's hardest hit foreclosure neighborhoods

Oregon was the second most popular destination, followed by Nevada, North Carolina and South Carolina.

As for the states Americans were leaving? New Jersey topped the list, followed by Illinois, West Virginia, New York and New Mexico.

First Published: January 29, 2013: 3:28 PM ET

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Embattled Chesapeake CEO McClendon to step down

Aubrey McClendon, outgoing CEO of Chesapeake Energy, is part-owner of the Oklahoma City Thunder basketball team.

NEW YORK (CNNMoney)

The Oklahoma-based firm faced scrutiny last year after Reuters reported that McClendon had taken out more than $1 billion in loans against his personal stakes in the company's wells. Chesapeake subsequently revealed that it was the subject of an inquiry from the Securities and Exchange Commission, and announced that the program through which McClendon acquired his stakes would be ended early.

In a statement released after the closing bell Tuesday, Chesapeake's board praised McClendon's "strong leadership" and said an "extensive review" of his alleged conflicts of interest had yet to uncover any improper conduct. The firm, America's second-largest natural gas producer, said its "decision to commence a search for a new leader is not related to the Board's pending review of [McClendon's] financing arrangements and other matters."

Chesapeake (CHK, Fortune 500) shares surged on the news in after-hours trading, gaining 10%.

McClendon has served as Chesapeake's CEO since the company's inception in 1989, when it had just 10 employees compared to the 12,000 it boasts today. He was also chairman until last year, when shareholders forced the firm to overhaul its board and appoint an independent chairman.

"[A]s the company moves towards more fully developing the value of its outstanding assets, Chesapeake is at an important transition in its history and Aubrey and the Board of Directors have agreed that the time has come for the company to select a new leader," Chesapeake chairman Archie Dunham said in the company's statement Tuesday.

McClendon said in the statement that he had "certain philosophical differences with the new Board," but that he was looking forward "to working collaboratively with the company and the Board to provide a smooth transition to new leadership for the company."

McClendon, 53, is a part-owner of the Oklahoma City Thunder basketball team, whose arena bears Chesapeake's name. He will retire from Chesapeake on April 1, and will step down from his position as CEO once a successor is appointed, the firm said.

The results of Chesapeake's review of McClendon's financing arrangements will be released when the company reports its quarterly earnings on February 21.

First Published: January 29, 2013: 7:01 PM ET

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Marissa Mayer calls Yahoo turnaround a 'multi-year march'

Yahoo eked out fourth-quarter sales growth, but CEO Marissa Mayer has a long way to go to restore the company's luster.

NEW YORK (CNNMoney)

Shares jumped 4% in after-hours trading Monday, but later cut those gains to about 1%. Yahoo reported earnings of 32 cents per share. That handily beat estimates from analysts polled by Thomson Reuters, who expected earnings of 28 cents per share.

Excluding traffic acquisition costs -- the portion of its revenue that Yahoo shares with partners -- revenue came in at $1.22 billion, right around what analysts were expecting. That's a 4% jump over the fourth quarter of 2011.

Yahoo's revenue for the full year was $4.5 billion, up just 2% from a year earlier.

That stat shows just how much Mayer, who is six months into her role as CEO, needs to change at a stagnant Yahoo. She immediately set out to revamp Yahoo's (YHOO, Fortune 500) business strategy, saying that she wants the company to refocus on personalizing the Web for its users.

On a post-earnings conference call with analysts, Mayer struck an upbeat but cautious tone.

"While the road to growth is certain, it will not be immediate," she said at one point.

Later, she categorized the Yahoo turnaround as a "multi-year march toward growth."

Yahoo expects its revenue, excluding partner costs, to be between $1.07 billion to $1.1 billion for the first quarter of 2013. That's essentially flat with the$1.08 billion it generated in the same quarter last year.

While the turnaround will take years, Mayer insisted that Yahoo is moving fast day-to-day: "There's basically been a new major initiative every other week."

At least for now, industry watchers and investors believe in Mayer. Shares closed Thursday at their highest level since September 18, 2008.

But Yahoo's core problems are longstanding, and analysts are especially focused on those involving Yahoo's two main sources of advertising revenue: search and display.

Yahoo gave up on search years ago, partnering instead with Microsoft's (MSFT, Fortune 500) Bing. Mayer called Yahoo's search revenue "disappointing" last quarter, but the fourth-quarter numbers were much better: Search revenue rose 14%, to $427 million.

The bigger concern is Yahoo's display revenue: its sales from banners, videos and other graphic ads. Display sales fell 5% over the year to $520 million for the fourth quarter, though that's something of an improvement over the even sharper drops in some previous quarters.

On the Monday conference call, Mayer cited search and display as two of her "big four" focus areas, along with mobile and video.

Related story: Yahoo CEO Mayer's "God" and "baby is easy" quotes go viral

Meanwhile, Mayer is trying to shake up the Yahoo culture at large, urging Yahoo staffers to move more quickly and interact with the Web the way the company's users do. She recently eliminated company-issued BlackBerrys in favor of new Apple (AAPL, Fortune 500), Google (GOOG, Fortune 500) and Microsoft (MSFT, Fortune 500) phones.

Last week at the World Economic Forum in Davos, Mayer said her overall plan is for Yahoo to "get back to its roots."

Mayer expanded on that point during Monday's call, saying she wants Yahoo to "redouble its efforts" on its original mission: "to make the world's daily habits inspiring and entertaining."

First Published: January 28, 2013: 4:41 PM ET

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Auto insurers charge (some) safe drivers higher rates

When setting rates, insurers often put more weight on income-related factors, like education or occupation, than factors like driving history, according to a consumer watchdog report.

NEW YORK (CNNMoney)

In a case study of five major insurers in 12 cities, the Consumer Federation of America found that major insurers charged a safer driver with less education and a lower-paying job higher premiums two-thirds of the time. In a majority of those cases, the premiums were at least 25% higher. In some cases, the rates were more than double what was quoted for a driver who had recently had an accident but had a higher-paying job.

That's because most of the insurers surveyed put more weight on income-related factors, like education or occupation, than driving-related factors including miles on the road and driving history, said CFA Executive Director Stephen Brobeck.

Related: Cheapest cars to fuel

To conduct the survey, CFA used the websites for five major insurers -- Geico (BRKA, Fortune 500), Progressive (PGR, Fortune 500), State Farm, Allstate (ALL, Fortune 500) and Farmers -- to solicit rates for two hypothetical customers in 12 cities, generating 60 sets of rate quotes.

For each company and city, CFA entered information for two 30-year-old women who drove the same car, had the same annual mileage and were both seeking minimum liability insurance as required by state law. In each city, the women lived on the same street in a zip code with a median income of about $50,000. No credit score was entered.

The difference: One woman was a high-school educated single receptionist who rented her home and had been without insurance coverage for 45 days. The other was a married executive with a masters degree who owned her own home and had no lapse in coverage. The receptionist had a perfect 10-year driving record, while the executive had recently caused a car accident.

In the most extreme example, Allstate in Baltimore quoted the receptionist an annual premium of $3,292, compared to $1,248 for the executive -- a difference of 164%. Of the five companies surveyed, only State Farm consistently quoted lower rates for the receptionist -- the safer driver.

"If [State Farm] can be a successful company without using highly discriminatory factors, other large companies should be able to do so as well," Brobeck said.

Insurers say that they use a wide variety of factors to determine the likelihood a customer will be in an accident, in accordance with state regulations.

"The use of factors such as credit-based insurance scoring, location of the vehicle, driver experience, traffic citations, continuity of coverage and education helps insurers to more accurately price risk," Willem O. Rijksen, vice president of public affairs for the American Insurance Association, said in a statement.

Related: Protect your home

Insurers are barred from basing rates on race or income, but the CFA says that their rate-setting practices tend to result in higher rates for low and moderate-income drivers.

Up to a third of low-income drivers do not have insurance even though it is required by law in 49 states, according to CFA studies.

"Is there any question why so many of them drive uninsured when what is being asked for auto insurance is so much of their income?" said Robert Hunter, CFA's director of insurance.

Industry officials countered that insurance is widely available, and drivers are always able to shop around for the best price.

Geico, State Farm, Allstate and Farmers all declined to comment. Progressive noted it has a voluntary program that installs a device on a customer's vehicle to track actual driving behavior, and provide rates based on that information.

Auto insurance quotes by city

A sampling from the CFA report

Atlanta	Allstate	$1,248	$1,386
	Farmers	$1,274	$782
	GEICO	$812	$546
	Progressive	$1,224	$1,218
	State Farm	$770	$1,090
Los Angeles	Allstate	$832	$1,334
	Farmers	$888	$678
	GEICO	$624	$578
	Progressive	$790	$694
	State Farm	$678	$942
Washington D.C.	Allstate	$1,622	$950
	Farmers	$2,074	$1,486
	GEICO	$760	$554
	Progressive	$1,344	$1,126
	State Farm	$1,210	$1,394

Source: Consumer Federation of America

First Published: January 28, 2013: 4:34 PM ET

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Ex-Jefferies trader charged with defrauding TARP

The Treasury Department established several investment funds in 2009 with the goal of reviving the market for mortgage bonds in the aftermath of the financial crisis.

NEW YORK (CNNMoney)

Jesse Litvak, 38, is accused of inflating the cost of mortgage bonds when brokering sales by quoting a higher price to buyers than the sellers were actually seeking -- or vice versa -- and pocketing the difference for Jefferies (JEF). In other cases, Litvak allegedly told buyers that bonds held by Jefferies were being offered by fictitious third-party sellers, allowing him to charge extra for the transactions, federal officials said.

Among the buyers Litvak is accused of defrauding are several investment funds established by the Treasury Department in 2009 with the goal of reviving the market for mortgage bonds in the aftermath of the financial crisis. All told, Litvak is accused of defrauding the government and investors of more than $2 million.

Litvak, who has pleaded not guilty, faces 11 counts of securities fraud --which carry a maximum prison term of 20 years each -- and one count of TARP fraud, among other charges. He faces a parallel civil case from the Securities and Exchange Commission.

Related: Pay remains "excessive" for execs at bailed-out firms, TARP watchdog says

Litvak's lawyer, Patrick Smith, said his client "did not cheat anyone out of a dime."

"Every Jefferies counter-party in each transaction in this indictment got the exact bond bargained for at a price each wanted to pay," Smith said in an e-mail. "Jesse looks forward to the trial in this case so that his name can be cleared and he can get on with his career."

A spokesman for Jefferies did not immediately respond to requests for comment. Industry records show that Jefferies terminated Litvak in December of 2011 after allegations that he "was not forthright with a customer" in a trade.

The charges were filed in conjunction with President Obama's Residential Mortgage-Backed Securities Working Group, a joint federal-and-state effort announced last year to investigate wrongdoing in the mortgage-bond market that contributed to the financial crisis. Litvak's alleged offenses occurred after the peak of the crisis, however, between 2009 and 2011, and are not related to the packaging of bad mortgages into securities thought to have contributed to the meltdown.

Federal officials have faced persistent criticism in the past few years regarding the lack of criminal cases against Wall Street executives over the industry's role in the crisis.

First Published: January 28, 2013: 6:44 PM ET

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Using a credit card? Watch out for the 'checkout fee'

Stores in most states could start charging you a fee on Sunday when you buy something with credit cards, as a result of a Visa and Mastercard settlement last summer.

NEW YORK (CNNMoney)

The new fees stem from a multi-billion dollar settlement announced in July between credit card issuers and millions of merchants.

Visa (V, Fortune 500), MasterCard (MA, Fortune 500) and nine major banks agreed to a $7.25 billion deal to settle charges that they were fixing credit card processing fees. As part of the settlement, credit card issuers said they would reduce these "swipe fees" -- fees paid by merchants to issuers when cards are used -- but only for eight months.

In addition, the settlement also gave retailers the option to tack on a surcharge if a customer uses a credit card. The retailer can only charge enough to cover the processing costs, which is about 1.5% to 3% of the total purchase, according to watchdog group Consumer Action.

This fee doesn't apply to purchases made using debit cards. And it will still be illegal to charge the new fee in 10 states, including New York, California and Texas.

Many big players in the retail industry have been up in arms about the settlement. Stores from the nation's largest retailer down to small businesses have lamented the agreement, claiming that it transferred the wrongdoings of credit card issuers to the consumer.

In November, the National Retail Federation and more than a dozen retailers asked a judge to reject the proposed settlement. In a brief submitted to a U.S. District Court judge in Brooklyn, N.Y., the trade organization wrote that the new fees threaten a merchant's ability to keep prices low for customers.

Wal-Mart (WMT, Fortune 500), Macy's (M, Fortune 500), JCPenney (JCP, Fortune 500), Limited Brands (LTD, Fortune 500), Gap Inc (GPS, Fortune 500). and The Neiman Marcus Group were among those who joined the NRF in claiming that "raising consumer prices by adding an 'interchange tax' is no remedy for Visa's and MasterCard's continuing monopoly abuse."

Related: Local merchants not crazy about swipe fee deal

In a separate statement, Wal-Mart said that it would cost consumers "tens of billions of dollars each year." Target (TGT, Fortune 500) called the agreement "bad for both retailers and consumers."

Merchants have a choice as to whether to implement the surcharge, but it poses quite a dilemma for them: Either get stuck footing the bill for the swipe fees, or risk transferring the cost to customers in an already competitive environment.

Last summer, Target said it had no interest in charging customers who use credit cards more "in order to allow Visa and MasterCard to continue charging unfair fees."

Smaller merchants echoed these concerns over the deal, saying it doesn't go far enough.

MasterCard said it doesn't expect most merchants to put the surcharge into effect, since stores won't want to drive away business.

"We anticipate that they will not impose checkout fees, particularly because the value merchants derive from card acceptance far exceeds their costs," the credit card company said in a statement.

First Published: January 27, 2013: 3:45 PM ET

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Yahoo earnings: Mayer still has much to prove

NEW YORK (CNNMoney)

Since then, Yahoo's stock has been on a tear and analysts are pinning their hopes for a Big Purple Turnaround squarely on Mayer.

Mayer has laid out her plans to usher in a new era at Yahoo (YHOO, Fortune 500), and she's generated more excitement about the company than any of the numerous other CEOs Yahoo has had in the past decade. That includes a buzz-worthy appearance at the World Economic Forum in Davos.

But industry watchers are now starting to look for proof that Mayer can deliver on her promises.

To be fair, Mayer has only been on the job for two full quarters. In October, results for the third quarter beat estimates but were hardly fantastic. Mayer's next test comes via Monday's fourth-quarter earnings report, and it will be a look into the new Yahoo business strategy -- the results of which Mayer began laying out in an all-staff meeting in September.

Mayer wants Yahoo to focus on personalizing the Web for its users. She's also trying to shake up the company culture, urging Yahoo staffers to move more quickly and interact with the Web the way the company's users do. To that end, she eliminated company-issued BlackBerrys in favor of new Apple (AAPL, Fortune 500), Google (GOOG, Fortune 500) and Microsoft (MSFT, Fortune 500) phones.

Mayer has also discussed efforts to revamp search and display advertising, as well as focusing on attracting top talent to Yahoo. Her message is convincing, at least to investors: Shares closed Thursday at their highest level since September 18, 2008.

And so Marissa-love has proliferated, with Yahoos and techies alike wondering if Mayer will finally be the one to right the Yahoo ship after years of failings. Adding to the Mayer obsession is her personal life: She gave birth to a baby boy on September 30 and returned to work after a two-week maternity leave.

Related story: Yahoo CEO Mayer's "God" and "baby is easy" quotes go viral

But, as always in business, the proof is in the numbers. Analysts polled by Thomson Reuters expect Yahoo to report fourth-quarter earnings of 28 cents per share, up 18% from a year ago. But they're forecasting just a 4% gain in revenue.

Of particular concern is Yahoo's display revenue: sales from banners, videos and other graphic ads. Display sales were flat in the third quarter, but that's an improvement over the sharp falls from previous quarters.

Still, analysts want to see a return to strong growth, not just stabilization.

BCG Financial analyst Colin Gillis put his thoughts in a haiku: "Time for the next stage, of the turnaround story: drive revenue growth," he wrote in a note to clients Tuesday.

Related story: Yahoo ordered to pay $2.7 billion in bizarre Mexico lawsuit

Gillis called Yahoo's display performance "anemic," and he's not happy with revenue from Yahoo's search partnership with Microsoft's Bing. Mayer herself called Yahoo's search results "disappointing" last quarter, and analysts will look to her after Monday's earnings report for more clarity on what she plans to change.

J.P. Morgan analyst Doug Anmuth offered tepid optimism about Mayer's reign, saying in a note Friday that he was "encouraged" by her focus on user experience, search, mobile, and more. Like Gillis, he wants more information on changes to search and display, plus investment and recruitment efforts.

Overall, Anmuth said he wants "to see a better path toward improved execution in the core business."

In other words, Mayer's honeymoon period with Wall Street may soon be over. It's time for Mayer to begin proving that her plan to get Yahoo back on track works, starting with Monday's results.

First Published: January 27, 2013: 12:57 PM ET

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Housing to drive economic growth (finally!)

Economists expect the housing market to be the primary driver of growth this year.

NEW YORK (CNNMoney)

Just over half of economists surveyed by CNNMoney identified a housing recovery as the primary driver of economic growth this year. The rest were split fairly evenly between consumer spending, increased domestic energy production and stimulus from the Federal Reserve as major growth drivers.

"Homebuilding activity will likely remain the strongest growing component of the economy in 2013," said Keith Hembre, chief economist of Nuveen Asset Management. "After several years of excess supply, demand and supply conditions are now in much better balance."

Home sales rebounded to the strongest level in five years in 2012, as home building bounced back to levels not seen since early in the recession. Near record low mortgage rates, rising home prices and a drop in foreclosures have combined to bring buyers back to the market.

The economists surveyed also forecast that there will be just under 1 million housing starts this year -- roughly matching the 28% rise in home building in 2012. Moody's Analytics is forecasting much stronger growth -- a 50% rise both this year and next year, which it estimates will create more than 1 million new jobs.

"There's a lot of pent-up demand for housing, and very little supply," said Celia Chen, housing economist for Moody's Analytics. "As demand continues to improve, home builders have nothing to sell. They'll have to build." She said that growth in building will mean adding not just construction jobs, but also manufacturing jobs building the appliances and furniture needed in the new homes, which in turn drives overall consumption higher.

Related: The road to real recovery is open

And economists say the tight supply and renewed demand for housing should lead to higher home values -- about a 3.7% increase according to the survey.

"One of the most significant indirect effects from the housing recovery is the 'wealth effect' on consumers due to the recovery in home prices," said Joseph LaVorgna, chief U.S. economist of Deutsche Bank, who said better home values can affect both consumer psychology on spending as well as their actual finances.

"Even small moves in home prices can have large effects on consumption, because housing comprises such a significant share of household assets," he said.

But even with the bullish outlook on housing, economists are still forecasting only a modest rise in the overall economy this year. The consensus estimate is for economic growth of about 2.4% in 2013, only a modest improvement from the 2012 growth rate of about 2% they're forecasting when the final numbers are in.

By far the biggest concern is a standoff on Capitol Hill. About three-quarters of those surveyed picked Congressional gridlock -- which could result in a cutback in federal spending -- as the biggest problem facing the U.S. economy. Other choices, such as the European sovereign debt crisis, continued high unemployment and increased government regulation, were much less of a concern.

"Washington is now the primary impediment to stronger economic growth," said Russell Price, senior economist of Ameriprise Financial.

First Published: January 27, 2013: 5:33 PM ET

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Boeing keeps building Dreamliners it can't fly

Boeing hasn't slowed production of its 787 Dreamliner despite the federal probe that has grounded the jet.

NEW YORK (CNNMoney)

A federal probe into electrical fires has grounded all 50 Boeing 787 Dreamliners around the world. But Boeing has little choice but to keep its assembly lines in South Carolina and Washington State running at their normal pace, building five jets a month. A significant slowdown in production, let alone a full shutdown, would be too costly for both Boeing and its suppliers who are counting on making parts for the aircraft.

"Stopping production is not going to happen," said Carter Leake, an aerospace analyst with BB&T Capital Markets. A halt in production or even a slow down would risk crucial suppliers going out of business. "They need to keep the lines running to support the supply chain. They can't do that to suppliers that barely survived the three year delay in producing the first plane."

National Transportation Safety Board Chairman Deborah Hersman said Thursday that investigators have yet to determine what caused the two lithium battery fires earlier this month that led the FAA to ground all Dreamliners. So even though Boeing has no idea what kind of fix to the aircraft will eventually be required, it continues to make the planes as if there is no problem.

Related: What's wrong with the Dreamliner?

"If it stopped it would be very difficult to start production again," said Chris DeNicolo, aerospace credit analyst for Standard & Poor's. And Boeing still has 800 Dreamliner orders left to fill for airlines.

Related: Dreamliner - Where the parts come from

Boeing spokeswoman Kate Bergman confirms the manufacturer hasn't changed its production schedule since the Dreamliners were grounded. Indeed, the manufacturer still plans to double production by year's end. The company would not say how many planes have been built since the FAA grounded the jets on Jan. 16, or what it will do with the completed aircraft since it can't fly them off Boeing's property.

NTSB's Hersman said the probe is only in the very early stages and suggested it could take a long time to resolve.

"This is not something we expect will be solved overnight," she said. "We are prepared to be methodical."

Related: United: Passengers will 'flock' back to Dreamliner

Leake said he is worried that the relatively quick fix that many investors were hoping for is becoming less and less likely. Airlines eager for the jet's improved fuel economy have yet to cancel any orders due to the grounding. But that won't necessarily be the case forever.

"It does sound like we're in the first inning," Leake said. "I don't know what the tipping point is. If it's three months, they'll be no cancellations, six months, some cancellations, Nine months, it's a big problem."

Working in Boeing's favor is the fact that it has more than $11 billion in cash and short-term investments on its balance sheet.

"There's an ability [for it] to absorb the additional costs," said DeNicolo. "The rest of its commercial airplane business is doing quite well."

The Dreamliner was supposed to be a major profit driver for Boeing, but that won't be the case as long as it's building planes that it can't deliver.

First Published: January 25, 2013: 4:44 PM ET

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RIM to advertise BlackBerry 10 during Super Bowl

NEW YORK (CNNMoney)

It's RIM's (RIMM) first-ever Super Bowl commercial, and while the company didn't say how much it spent, Super Bowl broadcaster CBS (CBS, Fortune 500) previously told CNNMoney that 30-second spots are going for a record high of at least $4 million.

RIM will unveil the BlackBerry 10 platform at events on Wednesday, as well as the first two devices to run on the new platform. It's been a long time coming: The software had previously been slated for release in early 2012, which was pushed to late 2012, and again to the first quarter of 2013.

While delays in tech do happen, the news was damning for the struggling RIM because BlackBerry 10 is meant t to be the crown jewel of the company's turnaround plan. Critics wondered if RIM would even survive long enough to launch the OS.

Now that launch day is nearly upon us, RIM is doing all it can to market BlackBerry 10. In addition to the Super Bowl ad, RIM said it will push BlackBerry via online ads and on social networks before and after the game. Launch day on Wednesday includes BlackBerry events around the globe.

Related story: RIM's fate hangs on BlackBerry 10

So RIM will survive to see BlackBerry 10 launch, but the delay has left the company stuck in a holding pattern. Everyone from Apple (AAPL, Fortune 500) to Nokia (NOK) to Microsoft (MSFT, Fortune 500) released new gadgets in the fall, but RIM was essentially forced to wait for the BlackBerry 10 software before selling any significant new hardware.

The company has said BlackBerry 10 will run on a smaller number of devices with essential smartphone features: a much-improved camera, a modern Web browser and social-networking integration. The software will allow customers to access e-mail with one swipe from any app, and it will shift automatically between personal and corporate modes.

RIM's main problem is its lost stronghold in the corporate market, where it once dominated. Rather than issuing company BlackBerries, many employers now have workers bring their own devices into work, usually Apple's (AAPL, Fortune 500) iPhone and Google's (GOOG, Fortune 500) Android devices.

First Published: January 25, 2013: 5:32 PM ET

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China's growth to hit 8% in 2013

Davos, Switzerland (CNNMoney)

"I think China's growth rate will be about 8% this year," Yi Gang said during a debate at the World Economic Forum in Davos, Switzerland. He said consumer price inflation could reach 3% or slightly higher.

The world's second-biggest economy grew by 7.8% last year, well below the average 10% growth seen in the past three decades but better than the government's own target of 7.5% and above analyst expectations.

The annual figure was boosted by a recovery in industrial production and exports in the fourth quarter, which grew 7.9%, prompting economists to forecast a slow but steady recovery in 2013

The acceleration in the last three months of 2012 followed seven quarters of slowing growth as China felt the impact of weak activity in the United States and Europe, as well as its own efforts to control a real estate boom and contain inflation.

Related: China's hottest companies

China's manufacturing sector showed more signs of improvement this month, with a preliminary reading of purchasing managers' sentiment rising to its highest level in two years.

Inflation rose to 2.5% in December, as a spurt of extremely cold weather drove food prices higher. That compared with 2% in November, but still represents tame inflation -- the government aims to keep annual inflation below 4%.

China is trying to rebalance its economy, placing greater emphasis on consumption. Yi said domestic demand was playing an ever more important role in the economy as growth in incomes outpaced GDP growth.

"Consumption is very robust," he said.

China would continue to aim for a reduction in its current account surplus as a percentage of GDP, he said. The figure stood at 2.8% of GDP in 2012.

First Published: January 26, 2013: 11:42 AM ET

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Chicago mayor asks banks to cut off gun makers

Chicago Mayor Rahm Emanuel wants banks to stop lending to gun makers.

WASHINGTON (CNNMoney)

Emanuel, mayor of the nation's third-largest city and former chief of staff to President Obama, wrote the CEOs of Bank of America (BAC, Fortune 500) and TD Bank (TD), since they finance gun makers that lobby against federal and local efforts to toughen gun control laws.

Bank of America gives Sturm, Ruger & Company Inc. (RGR) a $25 million line of credit and TD Bank gives Smith & Wesson (SWHC) a $60 million line of credit, according to the letter.

"I ask you to use your influence to push this company to find common ground with the vast majority of Americans who support a military weapons and ammunition ban, and comprehensive background checks," Emanuel wrote to Bank of America CEO Brian Moynihan. He wrote a similar letter to TD Bank CEO Bharat Masrani.

Both Bank of America and TD declined to comment.

Smith & Wesson and Sturm, Ruger make a wide variety of firearms, including the semiautomatic rifles that are known variously as assault weapons or modern sporting rifles.

Related: Gun industry thrives in face of ban proposal

Emanuel pushed for tougher gun control measures long before the slayings of children and teachers at a Newtown, Conn., elementary school last month. Two years ago, the Supreme Court overturned the city's handgun ban, forcing the city to rewrite its laws. Chicago maintains some of the nation's toughest gun control laws, including registration of any kind of gun and a ban on assault weapons.

"Doing business with gun manufacturers might benefit the banks' bottom line, but they put our police officers, our children, and our communities at risk," Emanuel said in a Friday statement.

His office has also ordered city pension and retirement funds to divest shares in gun makers. This week, the Chicago Municipal Employees Annuity and Benefit Fund agreed to shift $1 million from manufacturers of assault rifles, including Freedom Group, Smith and Wesson and Sturm, Ruger.

- CNN's Todd Sperry contributed to this report.

First Published: January 25, 2013: 2:56 PM ET

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Boeing keeps building Dreamliners it can't fly

Boeing hasn't slowed production of its 787 Dreamliner despite the federal probe that has grounded the jet.

NEW YORK (CNNMoney)

A federal probe into electrical fires has grounded all 50 Boeing 787 Dreamliners around the world. But Boeing has little choice but to keep its assembly lines in South Carolina and Washington State running at their normal pace, building five jets a month. A significant slowdown in production, let alone a full shutdown, would be too costly for both Boeing and its suppliers who are counting on making parts for the aircraft.

"Stopping production is not going to happen," said Carter Leake, an aerospace analyst with BB&T Capital Markets. A halt in production or even a slow down would risk crucial suppliers going out of business. "They need to keep the lines running to support the supply chain. They can't do that to suppliers that barely survived the three year delay in producing the first plane."

National Transportation Safety Board Chairman Deborah Hersman said Thursday that investigators have yet to determine what caused the two lithium battery fires earlier this month that led the FAA to ground all Dreamliners. So even though Boeing has no idea what kind of fix to the aircraft will eventually be required, it continues to make the planes as if there is no problem.

Related: What's wrong with the Dreamliner?

"If it stopped it would be very difficult to start production again," said Chris DeNicolo, aerospace credit analyst for Standard & Poor's. And Boeing still has 800 Dreamliner orders left to fill for airlines.

Related: Dreamliner - Where the parts come from

Boeing spokeswoman Kate Bergman confirms the manufacturer hasn't changed its production schedule since the Dreamliners were grounded. Indeed, the manufacturer still plans to double production by year's end. The company would not say how many planes have been built since the FAA grounded the jets on Jan. 16, or what it will do with the completed aircraft since it can't fly them off Boeing's property.

NTSB's Hersman said the probe is only in the very early stages and suggested it could take a long time to resolve.

"This is not something we expect will be solved overnight," she said. "We are prepared to be methodical."

Related: United: Passengers will 'flock' back to Dreamliner

Leake said he is worried that the relatively quick fix that many investors were hoping for is becoming less and less likely. Airlines eager for the jet's improved fuel economy have yet to cancel any orders due to the grounding. But that won't necessarily be the case forever.

"It does sound like we're in the first inning," Leake said. "I don't know what the tipping point is. If it's three months, they'll be no cancellations, six months, some cancellations, Nine months, it's a big problem."

Working in Boeing's favor is the fact that it has more than $11 billion in cash and short-term investments on its balance sheet.

"There's an ability [for it] to absorb the additional costs," said DeNicolo. "The rest of its commercial airplane business is doing quite well."

The Dreamliner was supposed to be a major profit driver for Boeing, but that won't be the case as long as it's building planes that it can't deliver.

First Published: January 25, 2013: 4:44 PM ET

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Microsoft's Windows 8 sales are big -- just not big enough

NEW YORK (CNNMoney)

Windows sales rose 24% to $5.8 billion in the quarter that ended Dec. 31. Microsoft unveiled its years-in-the-making Windows overhaul on Oct. 26.

The gain ended a streak of four straight quarters in which Windows sales declined year-over-year. But it pales in comparison to prior launches of the operating system: Windows sales soared 76% during the quarter that Windows 7 launched, and rose by 65% when Windows Vista debuted.

Lisa Nelson, Microsoft's investor relations director, said Windows 8 sales should be put into perspective. PC sales have slumped lately, and the computer market is very different now than it was when previous versions of Windows launched.

Nelson said that a more apples-to-apples comparison would be to measure how much Windows sales have outpaced overall PC sales. The gap between those figures was roughly the same during Windows 8's launch as it was during the debuts of Windows 7 and Windows Vista.

But there's another way to look at it: PC sales have been dreadful for more than a year, and Windows 8 is not doing anything to turn the tide.

Related story: Microsoft is risking an $18 billion empire on Windows 8

Last quarter's Windows sales included some deferred revenue for upgrade-eligible Windows PCs sold earlier in the year. Stripping those upgrades out, Windows sales rose by just 11%. When Windows 7 launched, Microsoft offered similar upgrades. Even with those stripped out, Windows sales jumped 28%.

A different PC market indeed.

Last quarter's Windows revenue includes sales of the Surface tablet -- Microsoft's first PC of its own design. The tablet received mixed reviews and has not sold well, according to analysts. Most estimate that fewer than 1 million units have sold so far.

Microsoft said it would not be breaking out Surface sales -- typically not a sign that a product is a hit.

Shares of Microsoft (MSFT, Fortune 500) fell 2% after hours.

Microsoft also debuted Windows Phone 8 during the past quarter, but sales in that division slipped 11% from last year. Excluding some $380 million in video game sales deferrals, revenue fell by just 2%. The division also includes the Xbox 360 and Kinect entertainment systems.

Office sales slipped 10% ahead of this month's launch of Office 2013.

The Redmond, Wash.-based software giant said net income for its fiscal second-quarter fell 4% to $6.4 billion, or 76 cents per share. Analysts polled by Thomson Reuters forecast had earnings of 75 cents per share.

Sales -- which includes about half a billion dollars of deferred revenue for Windows, Office and Xbox promotions -- rose 3% to $21.5 billion, meeting analysts' forecasts.

First Published: January 24, 2013: 4:48 PM ET

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AT&T reports record iPhone sales

An iPhone display at an AT&T cellular store in Houston, Texas.

NEW YORK (CNNMoney)

The company sold 10.2 million smartphones in the fourth quarter, which it said was the most ever for a U.S. carrier. Ma Bell activated a record 8.6 million iPhones, though AT&T said it also had its best-ever quarter for sales of Android phones.

The news comes on a day when Apple shares sold off sharply, sinking 12% following the release of the company's quarterly results Wednesday afternoon.

Apple (AAPL, Fortune 500) reported a record quarter, boosted by strong iPhone and iPad sales, but the popularity of cheaper versions of its mobile devices pinched profits.

AT&T's overall fourth-quarter smartphone sales topped the previous record of 9.4 million from the fourth quarter of 2011.

Ironically, strong smartphone sales are bad for carriers' profit margins.

A new phone you buy for $199 may cost your carrier two or three times as much when they buy it from the manufacturer. They pay a heavy upfront subsidy to get you hooked on a long-term contract.

AT&T did not break down iPhone activations by model in its press release. But the company noted that its wireless operating margins took a hit in the fourth quarter, a possible sign that it sold a large number of newer iPhone 5s as well as older iPhone 4S and iPhone 4 models.

AT&T rival Verizon (VZ, Fortune 500) said Tuesday that it sold a record 6.2 million iPhones in the fourth quarter, making up two thirds of its total smartphone sales.

Overall, AT&T (T, Fortune 500) reported earnings per share, excluding special items, of 44 cents, on $32.6 billion in revenue. Analysts surveyed by Thomson Reuters expected the company to post earnings of 45 cents a share on $32.2 billion in revenue.

Shares rose 0.4% in after-hours trading.

CNNMoney's David Goldman contributed reporting.

First Published: January 24, 2013: 4:42 PM ET

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Vine is Twitter's attempt to become the 'Instagram of video'

Twitter's new Vine app is a standalone social network for video.

NEW YORK (CNNMoney)

Living (for now) on the Internet and the iPhone as a separate social network, Vine will integrate closely with Twitter and Facebook (FB), delivering video snippets that behave like an animated GIF with sound.

Videos are kept short to simplify the creative process and facilitate sharing, but some clever tricks prevent these limitations from becoming too overbearing.

Instead of using a typical "record" button to capture footage that you then have to trim down or stitch together, you simply touch the Vine app's screen to record and let go to stop. While you capture video, a progress bar along the top fills up as you approach the six-second mark.

When you finish, no editing is necessary.

The iPhone app itself is solid. Its clean design and easy-to-use interface make it something anyone can pick up.

But it doesn't seem like a visionary solution to making video creation fit into our lives, the way Instagram instantly tapped into our shutterbug-and-share instincts. Vine is more of a lofty attempt to see what sticks.

If you've spent any time following technology and the Internet, you've heard nerds, pundits, analysts, investors and entrepreneurs all droning on about the "Instagram of video." Viddy, Socialcam and even ill-fated Color tried to claim the crown.

It's an idea that seems great on paper, but in actual reality is probably best left untouched.

Dealing with video begs for devices with more storage space, faster Internet connections, more powerful processors and bigger batteries. Those are just the teeny problems, though. The big one is that it's unbelievably hard to make bad video remotely appealing.

The biggest virtue of Instagram -- and before that, Hipstamatic -- isn't the sharing aspect. It's that it makes our horrible, banal photography appear skilled and intriguing. Haphazardly capturing lightning in a bottle is easier because you only have to grab a single moment and pancake it in digital makeup.

With Vine, we're tasked with capturing 180 consecutive moments, exposed bare to the world.

And in turn, we're expected to spend a minimum of six seconds consuming every video in our feed. This could get laborious.

Well-made as Vine is -- this is a service people will probably use -- it just doesn't have the metal to become a cultural craze that demands our participation.

First Published: January 24, 2013: 7:22 PM ET

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The truth behind Mickelson's taxes

Phil Mickelson doesn't pay as much taxes as he thinks.

NEW YORK (CNNMoney)

The champion golfer said this week he might have to move out of the Golden State because of recent hikes in federal and state taxes on the wealthy.

"If you add up all the federal and you look at the disability and the unemployment and the Social Security and the state, my tax rate's 62, 63 percent," he was quoted as saying in Yahoo Sports. "So I've got to make some decisions on what I'm going to do."

California recently became the state with the highest top marginal tax rate thanks to voters passing in November a temporary tax hike on wealthy residents.

"California is beautiful, but we do have high taxes," said Gregg Wind, a partner at Wind & Stern, an accounting firm in Los Angeles. "That is a consideration for some folks."

Mickelson's tax rate, however, is closer to 51%, according to the Tax Foundation and California tax experts. His winnings and endorsements, which Sports Illustrated pegged at nearly $61 million in its most recent annual estimate, subject him to the highest marginal rates for married couples. Here's what they consist of:

-- A 39.6% top federal tax rate, up from 35%, on income above $450,000, thanks to the fiscal cliff deal passed by Congress on New Year's Day.

-- A 12.3% top state tax rate, up from 9.3%, on income above $1 million.

-- A 1% state mental health surcharge levied on incomes above $1 million.

-- A 3.8% Medicare tax rate, which includes a new 0.9% Medicare surcharge on earnings above $250,000.

But you have to consider that his state taxes are deductible from his federal taxes, which would leave him with a top rate of roughly 51%.

So where did he get the higher figure? It may be that he's adding in Social Security, disability and unemployment taxes. But those are levied only on a relatively tiny portion of his income and don't factor into his marginal tax rate.

Mickelson would have to fork over 15.3% in payroll taxes on the first $113,700.

And if he's self-incorporated, he may pay an additional:

--1% of the first $100,800 in state disability insurance taxes.

-- Up to 6.2% of the first $7,000 for state unemployment taxes.

-- 1.2% in federal unemployment taxes.

-- 0.1% in state employment training taxes.

Regardless of Mickelson's top rates, his actual tax bill isn't anywhere near one-half of his income. While it's hard to tell what the golfer really pays without seeing his tax returns, millionaires pay roughly 26% of their income in federal taxes, on average, according to William McBride, chief economist at the Tax Foundation.

First Published: January 23, 2013: 5:44 PM ET

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Japan spurs talk of currency war

NEW YORK (CNNMoney)

The political rhetoric became heated after the Bank of Japan announced plans to make open-ended asset purchases in an effort to re-inflate the Japanese economy, which recently slipped into recession.

Jens Weidmann, president of Germany's central bank, criticized the BoJ for caving under pressure from newly elected prime minister Shinzo Abe. Weidmann warned that the bank risks losing its independence, which could lead to a "politicization of exchange rates."

Akira Amari, Japan's economy minister, quickly pushed back.

In an interview with the Financial Times Wednesday, Amari said Germany has benefited from the fixed exchange rate maintained by the European Central Bank. "He's not in a position to criticize," said Amari of Weidmann.

The Japanese yen has lost about 12% of its value versus the U.S. dollar since October as investors in the currency market anticipated more easing from the BoJ. But the yen has rebounded in the days since the BoJ's announcement, which wasn't as drastic as some had feared.

"The Japanese yen is continuing to trade higher following the outcome of the BoJ meeting, which seemingly gave the appearance of easing without really doing very much," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman.

Related: Europe is like Japan, only worse

Central banks have to walk a fine line. Their policies, which are aimed at boosting economic growth, effectively weaken domestic currencies.

Japan has stressed that it's not deliberately trying to devalue its currency, saying the yen's decline has more to do with a market correction following a period of strength.

But the fact remains that a weaker yen, which makes Japanese goods more competitive on the global market, is a boon for Japan's export-driven economy.

By the same token, Germany's economy is struggling and German exporters could feel the pinch if the euro appreciates, hence the shot across Tokyo's bow.

"The main reason why the Europeans are worried is because of the slowdown in growth," said Kathy Lien, director of currency strategy for BK Asset Management.

Beyond that, there's concern that other nations could take similar steps, leading to so-called competitive devaluation, also known as a currency war.

Some analysts say a mild currency war has been underway for years.

"We have been in the midst of a currency war for some time, with some central banks devaluing their currencies through quantitative easing and others responding with intervention," said Lien.

Related: Japan's Abe makes economy top priority

But not every QE move has led to weak currencies. In the United States and Europe, central banks have maintained record low interest rate policies and instituted various bond-buying programs, yet the dollar, pound and euro have been relatively resilient.

"Japan is trying to use monetary policy to spur demand for its exports. But as long as it's limited to Japan, I don't think it's a serious problem," said Jeffrey Bergstrand, University of Notre Dame finance professor and an expert on international trade

Still, the push to lower interest rates and devalue currencies has set off alarm bells in emerging markets.

Officials in Korea and Thailand were the latest to voice concern over the rapid appreciation of their currencies as easing in Japan and the United States boosts demand for higher yielding assets.

Brazil has also complained about the flood of money that has driven up the value of the real and raised concerns about asset bubbles. In March, Brazil's finance minister blasted the "monetary tsunami" unleashed by interest rate cuts in the United States, Japan and Europe.

This trend could lead to more outright intervention in the currency market, and maybe even capital controls in some emerging economies, said Julian Jessop, an economist at Capital Economics. But given the dim outlook for global growth, he added, officials in the developed world may not have any other choice but to continue weakening their currencies.

"This might simply be part of the price that has to be paid for a sustained global recovery," said Jessop.

First Published: January 23, 2013: 7:07 PM ET

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China manufacturing at 2-year high

NEW YORK (CNNMoney)

Global bank HSBC said its "flash" index of purchasing managers' sentiment rose to 51.9 in January from December's final reading of 51.5. Any reading above 50 signals expansion in the manufacturing sector.

It was the fifth straight month that the index has risen.

The report showed a quickening pace of employment and output.

"Thanks to the continuous gains in new business, manufacturers accelerated production by additional hiring and more purchases,: Hongbin Qu. HSBC's chief economist for China, said in a statement. "Despite the still tepid external demand, the domestic-driven restocking process is likely to add steam to China's ongoing recovery in the coming months."

The fate of manufacturing is considered a barometer of the global economy because of the nation's role as a powerhouse exporter. Because it makes up a large part of China's economy, manufacturing plays an important role in shaping domestic policy.

Related: China growth points to gradual recovery.

China's economy has grown at an average of around 10% a year for the past three decades, allowing the nation to rocket past competition to become the world's second-largest economy. While the growth slowed in 2012 to 7.8%, that figure topped government targets and analyst expectations, signaling an exit to the slowdown that had worried economists.

First Published: January 23, 2013: 9:40 PM ET

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Keystone pipeline faces new hurdles

NEW YORK (CNNMoney)

"By elevating climate change, he risks backlash and calls of hypocrisy if he promptly approves the pipeline," said Divya Reddy, an energy and natural resource analyst at the Eurasia Group, a political risk consultancy.

Reedy, like most analysts, still expects the pipeline to be approved, though the chance that it won't is growing.

"We expect the inaugural address will invigorate pipeline opponents," Whitney Stanco, an energy analyst at the Guggenheim Securities' Washington Research Group, wrote in a research note Tuesday.

Related: Exxon's big plans for offshore drilling

The expansion of the Keystone pipeline has touched off an intense debate in the United States. Supporters like it because it will carry 830,000 barrels a day of oil from Alberta, Canada, to the U.S. Gulf Coast -- potentially reducing imports from other, more volatile areas. Its construction is also estimated to create some 5,000 jobs, according to the State Department. The company building the pipeline, TransCanada, estimates even higher job growth.

Opponents hate it because oil from Canada's oil sands region produces between 5% and 30% more greenhouse gases than other types of conventional crude. Extracting the oil sands also uses massive amounts of water and can result in deforestation, and transporting it raises the possibility of spills.

It was the spill concern that derailed the project last year. The pipeline's original route had it going over Nebraska's environmentally sensitive Sand Hills region, and many state lawmakers opposed it. The concerns allowed Obama to delay his decision, especially as it became a hot-button election issue.

On Tuesday, Nebraska Governor Dave Heineman said state officials had concluded that the pipeline's new route poses minimal risk to the environment.

That clears the way for the State Department, which has final say, to move forward with their own environmental review. A State Department official indicated Tuesday that a decision would come shortly, but probably not before the end of March.

As predicted, Obama's focus on climate change during his speech Monday galvanized the pipeline's opponents.

"Approving Keystone XL would make a mockery of the commitment he made at the inauguration to take action on climate change," May Boeve, head of the environmental group 350.org, said in a statement Tuesday.

Opponents are planning a protest at the White House February 17.

Still, analysts think Obama is leaning toward approval.

Reedy noted that the pipeline is strongly backed by the unions -- big Democrat supporters -- and that the presumed incoming secretary of state, John Kerry, "probably won't want to intervene in such a controversial topic so early in his new post."

Others think it could be used as a bargaining chip.

"Approving Keystone, possibly with additional conditions, at the same time that EPA proposes new standards for greenhouse gas emissions from existing power plants would line up with the recent trend of 'give a little, take a little' energy policy," said Kevin Book, managing director of research at ClearView Energy Partners.

First Published: January 22, 2013: 6:49 PM ET

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Groupon suspends gun deals

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IBM earnings beat expectations

IBM shares are up slightly over the past year. Click the chart for more info.

NEW YORK (CNNMoney)

Tech giant IBM reported strong fourth-quarter results on Tuesday, posting earnings and sales that came in ahead of expectations.

The Armonk, N.Y.-based firm reported net income, excluding special items, of $6.1 billion for the fourth quarter. Earnings per share were $5.39, while sales hit $29.3 billion.

Analysts surveyed by Thomson Reuters had projected that the company would post earnings of $5.25 a share on $29.1 billion in revenue. Shares rose 3.6% in after-hours trading.

IBM's businesses include software and hardware development, along with consulting and IT services. With its vast size and global footprint, investors tend to view the company's earnings as indicative of overall corporate technology spending and demand.

The company is in the process of shifting to "higher-value businesses," including analytics and cloud computing, CEO Ginni Rometty said in a statement Tuesday.

Related: Microsoft buying a chunk of Dell would be smart (for Microsoft)

IBM reported a 3% gain in software sales for the quarter, which helped offset declines in its services business.

The company appears to be feeling the effects of the slowdown in Europe, with revenue from the region down 5%. Sales in the Americas were flat, while Asia-Pacific revenues climbed 4%.

Overall, sales slipped 1% versus a year ago, through profits reached record levels, up 10%. For 2013, the company said it expects earnings of at least $16.70 a share, ahead of the analyst projection of $16.63.

First Published: January 22, 2013: 5:04 PM ET

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Atari U.S. files for bankruptcy, but plays on

An error message flashed briefly on the website of Atari U.S. on Monday, the same day the company filed for bankruptcy. The "Centipede" maker wants to break away from its French parent, Atari S.A.

NEW YORK (CNNMoney)

But Atari will live on. The move is aimed at breaking the American branch away from its unprofitable French parent company.

In particular, Atari U.S. is looking to "secure independent capital for future growth, primarily in the areas of digital and mobile games," the company said in a written statement.

Over the next three to four months, Atari U.S. will seek buyers for some of its assets, including the Atari logo and the company's games catalog. Atari as a whole owns or manages more than 200 games and franchises.

The gaming landscape has changed dramatically since Atari was founded in 1972. Atari scored hits with groundbreaking gaming consoles and classic titles like "Pong," "Centipede" and "Asteroid," but later lost its dominance to rivals like Nintendo. The brand has bounced around through several different owners.

France's Infogrames Entertainment acquired a stake in Atari in 2000, then bought out the company in 2008 and changed its name to Atari S.A.

Since then, the rise of casual gaming on PCs and mobile devices has cut into the video game industry as a whole. Atari S.A. has been unprofitable for years, and warned just last month that it will book a "significant loss" for its fiscal year 2013.

The biggest headache for Atari S.A. is the suspension of its credit line with BlueBay Asset Management. Atari owes 21 million euro ($27 million) to BlueBay, with the balance due on March 31. The company says it is "starved for funds" and hasn't found another principal creditor to take BlueBay's place.

The New York-based U.S. arm wants to be free of its French baggage. Atari U.S. said it will "conduct its normal business operations" during the bankruptcy proceedings, and it's been approved for $5 million in debtor-in-possession financing from Tenor Capital, a firm that specializes in distressed lending.

First Published: January 21, 2013: 2:55 PM ET

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Obama: Let's 'revamp' our taxes

NEW YORK (CNNMoney)

Each president used an inaugural address to herald his intent to push tax changes during his term. Reagan and Bush were successful, but experts say Obama faces high hurdles to achieve the tax code revamp he has in mind.

Still, the mention signals that Obama is not giving up on his desire to require tax revenue hikes to balance any spending cuts Republicans will demand in the looming deficit reduction battles.

But Obama and the GOP also have different ideas on revamping the tax code. Republicans want to lighten the burden on businesses and on the wealthy, who they argue are job creators. Obama, on the other hand, wants to cut tax breaks for high-income Americans and eliminate certain corporate loopholes. This comes after the two sides agreed to raise taxes on the rich as part of the fiscal cliff deal.

"The Republicans want different things than Democrats want out of tax reform," said Mark Luscombe, principal analyst at tax research firm CCH. "It will be hard to bridge the gap."

Whether the two sides will be able to forge an agreement remains to be seen. Today's atmosphere in Washington is far more polarized than it was when Bush and Reagan pushed their tax overhauls through.

Related: Obama's economy

Obama does not have advantages that his predecessors did. Unlike Reagan, he does not share a broad consensus with lawmakers on how much money needs to be raised and who should pay for it. The 1986 tax reform lowered rates across the board, but raised the capital gains levy to 28%, closed tax shelters and shifted part of the tax burden to corporations by eliminating a popular business credit.

And Obama will probably not have an assist from the likes of Alan Greenspan, then chair of the Federal Reserve, whose testimony helped sway Senate Democrats to support the 2001 Bush tax cuts in a time of budget surpluses.

That's likely why Obama touched on it in his address, which hit hard on another of his themes: protecting the middle class and eliminating income inequality.

"For we, the people, understand that our country cannot succeed when a shrinking few do very well and a growing many barely make it," he said. "So we must ... revamp our tax code, reform our schools, and empower our citizens with the skills they need to work harder, learn more, reach higher."

The speech allowed the president to once again connect tax changes with leveling the playing field.

"It's a way for him to talk about income inequality that Republicans have to listen to in the first instance because it's about tax reform," said Clint Stretch, a Washington tax expert. "At least it gets the conversation started."

First Published: January 21, 2013: 6:25 PM ET

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Davos: Too soon to celebrate

IMF Managing Director Christine Lagarde speaks with ECB President Mario Draghi prior to a Eurozone meeting in Brussels.

DAVOS, SWITZERLAND (CNNMoney)

Nearly five years after the banking meltdown, the world economy is back on track, right?

As policymakers and senior executives fly off for a week of brainstorming and partying in the Swiss mountain resort of Davos, they may be tempted to pat themselves on the back.

Yet many are more pessimistic about the future than they were 12 months ago, according to a survey by the World Economic Forum, host of the annual Davos shindig from January 23 to 27. Clouds over Davos include anemic growth, rising social tensions and increased volatility in emerging markets.

"We face a new reality of sudden shocks and prolonged global economic malaise, particularly in major economies experiencing economic austerity," said WEF founder Klaus Schwab.

For the second year running, over 1,000 industry leaders and experts surveyed by the WEF rated wealth gaps and unsustainable government debt as the most prevalent risks to the world economy.

It will take years for the debt of most major economies to fall. And growth won't recover enough this year to lend a hand or dull the pain -- the World Bank expects the global economy to grow by 2.4%, barely changed from 2012.

Some states are borrowing more, not less. Japan is tapping bond markets to fund part of a stimulus program aimed at ending decades of stagnation, adding to debt that is twice as big as the economy.

Whatever happens in Washington next month, a compromise is likely to see the U.S. debt ceiling raised again. And most Americans will end up paying more taxes.

Related: U.S. economy to dominate Davos 2013

The European Union, crucible of the debt crisis in 2012, is in the middle of an austerity drive that has left 26 million people out of work, almost 19 million in the eurozone. In Spain, every other worker under 25 is out of a job.

While recession has forced governments and lenders to relax debt targets and ease deadlines, there's no hint of a change in the direction of travel.

"Our patient may be out of intensive care, but it will still take some time before she can be given a clean bill of health," said Olli Rehn, the EU's top economic official, in a recent speech. "That's why any lapse into complacency would be unforgiveable."

Initiatives such as the launch of a bailout fund, the first tentative steps toward a banking union, and the ECB's pledge to buy short-term debt from struggling eurozone members have gone a long way to reassure investors that the euro is not about to disintegrate.

Related: Davos 2013: Economic mood map

But the pace of reform this year could slacken as the backlash against austerity grows, Germany and Italy go to the polls, and market pressure for change subsides.

"In 2013, the risks shift from threat of financial crisis to a loss of momentum in creating the institutional and policy frameworks for a redesigned union," political risk consultancy Eurasia Group wrote in its annual outlook.

Governments may also find reform of labor and product markets to restore European competitiveness hard going.

"That's where action is needed, and will continue to be needed in the future," ECB President Draghi said last week.

Credit rating agency Standard & Poor's says the need for further reform will challenge Europe's leaders, and strain the political consensus if the pain isn't more evenly shared and vulnerable citizens aren't better protected.

"Safeguards to the social contract may be necessary to assist in the cohesion of those member states suffering from high unemployment, excessive private leverage, and stagnating or falling living standards," said S&P analyst Moritz Kraemer.

Related: New year, same old problems?

Emerging markets could provide a bright spot -- their share of global economic growth is forecast to rise to 75% by 2020 -- but as their role grows so will the risk of increased volatility.

China's future, particularly the ability of its new leaders to manage the rising clamor for access to information, is critical, argues Eurasia Group.

"Uncertainty over China's short- to medium-term trajectory is an order of magnitude greater than that of any other major global economy," Eurasia Group said.

If that wasn't enough to upset the most upbeat of optimists, the WEF survey found concerns about rising greenhouse gas emissions and the impact of climate change have increased significantly.

That may not come as a surprise after Hurricane Sandy, fires in Australia and flooding in China. 2012 was the warmest year yet in the United States, and the cost of weather disasters could end up topping 2011's record $60 billion.

Economic and climate stress makes it harder to find solutions to either. Against that backdrop, Davos delegates may be forgiven for grabbing a few moments to simply enjoy the snow.

First Published: January 21, 2013: 6:40 PM ET

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Stocks: Tech earnings to dominate

Click the chart for more stock market data.

NEW YORK (CNNMoney)

U.S. markets will be closed Monday in observance of Martin Luther King, Jr. Day.

Earnings season will pick right back up again on Tuesday, as several tech giants, including Google (GOOG, Fortune 500), IBM (IBM, Fortune 500) and Verizon (VZ, Fortune 500), release their quarterly reports.

The barrage of tech earnings will continue throughout the week, with AT&T (T, Fortune 500), Microsoft (MSFT, Fortune 500), Netflix (NFLX) and Nokia (NOK) following.

The most hotly anticipated report will come from Apple (AAPL, Fortune 500) on Wednesday.

The iPhone and iPad maker already warned that its profit margins would come down significantly during the final three months of the year thanks to higher production costs tied to all of its new products, including the iPhone 5 and the iPad mini. Less-expensive products, like the iPhone 4S and iPad mini, also make up a growing portion of Apple's sales mix.

While expectations are all over the map, some analysts anticipate a year-over-year decline. That would mark Apple's first drop in profits in nine years.

Overall, S&P 500 companies are expected to report earnings growth of 3.8% for the last three months of 2012, according to S&P's Capital IQ.

Related: Fear & Greed Index

In economic news, several pieces of data on the housing market are due throughout the week, including existing and new home sales and the MBA mortgage index.

The housing market has continued to pick up steam throughout the recovery, as record-low mortgage rates spur demand for homes. A recovering job market and a tapering off of foreclosures have also given the market a boost.

Last week, all three major indexes logged a third straight week of gains, with the Dow Jones Industrial Average and S&P 500 climbing to their highest levels since December 2007. The Dow gained 1.2%, the S&P 500 rose 1% and the Nasdaq added 0.3%.

First Published: January 20, 2013: 10:53 AM ET

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Batmobile sells for $4.6 million

NEW YORK (CNNMoney)

The car had been the sole property of its creator, legendary car customizer George Barris, since its creation. It was sold at collector car auction company Barrett Jackson's annual auction near the company's Scottsdale, Ariz., headquarters. The final price includes a 10% sales commission.

There had been some question as to whether the car would fetch a large sum. Craig Jackson, chief executive of the auction firm, said he expected the car to sell for millions.

Others pointed out, though, that many imitation Batmobiles had been built over the years, a good number of them virtually indistinguishable from the original. That raised the question of whether collectors would be willing to pay a huge sum for this Batmobile simply because it was the first.

Rick Champagne, who owns a logistics company in Tempe, Ariz., was very willing. He identified himself as the buyer in an interview with Speed TV immediately after the sale, and his name was confirmed by a representative for Barrett-Jackson.

He told Speed that the car would go in his living room. CNNMoney was not immediately able to reach Champagne for comment.

"The energy in that room was just electric. We haven't experienced anything like that since the Futurliner," Jackson said, referring to the 2006 auction of a General Motors concept bus that sold for $4 million.

Bidders were so tightly packed around the Batmobile that it was hard at times to tell who was bidding, he added.

Some particularly iconic TV and movie cars have gone for very high prices. For example, a highly modified 1964 Aston Martin DB5 used in James Bond films sold for $4.6 million in 2010.

But Hollywood cars don't always command top dollar. For one thing, there are usually multiple versions created for different types of shots and for promotional use, making it hard to to say that one vehicle is definitively "the car."

In this case, the TV Batmobile really is a singular creation. While there have been many imitations, this is the only original.

The Batmobile started life as a Ford (F, Fortune 500) 1955 Lincoln Futura concept car, which was itself based on a Lincoln Mark II. Aside from its pearl white paint job, the Futura actually looked very much like the Batmobile it would become a decade later.

Related story: Shah of Iran's Plymouth XNR sells for $935,000

Famed car customizer George Barris -- also known for creating the Munster Koach and the Beverly Hillbillies' car -- was tasked with creating the Batmobile in 1966. With a tight deadline, he decided that modifying the Futura, rather than starting from scratch, was the way to go.

On television, the Batmobile's technology allowed it to shoot flames, squirt oil and shoot tire slashers, but the car is not actually designed to do any of that.

In an interview with CNNMoney in November, Barris said he had been offered large sums for the car in the past but had never considered selling before. He agreed to sell this time, he said, because he thought it was time to move the car out of his studio and put it someplace where more people could enjoy it.

First Published: January 20, 2013: 10:18 AM ET

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Eric Schmidt's daughter details North Korea visit

Google's Eric Schmidt, along with his daughter Sophie and former New Mexico Gov. Bill Richardson, wrapped up a controversial trip to North Korea earlier this month, during which he urged the isolated state to embrace the Internet or face further economic decline.

NEW YORK (CNNMoney)

She posted her impressions on a Google Sites page, sharing details of what the nine-person delegation, led by and former New Mexico Gov. Bill Richardson, saw on their controversial visit. Eric Schmidt confirmed the page's authenticity to news site Quartz. A Google representative did not return a call seeking comment.

The younger Schmidt described a "very, very cold" and "very, very strange" journey overseen by a pair of official minders -- two, she wrote, "so one can mind the other."

"It's impossible to know how much we can extrapolate from what we saw in Pyongyang to what the DPRK is really like. Our trip was a mixture of highly staged encounters, tightly-orchestrated viewings and what seemed like genuine human moments," Schmidt wrote. "We had zero interactions with non-state-approved North Koreans."

The trip got off to surreal start: North Korea's customs form asks arriving travelers to declare any "killing device," GPS technology, or "publishings of all kinds" they might be carrying.

The travelers had access to North Korea's mobile network, which allows international calls but has no data service. They also got a look at North Korea's national intranet, which Schmidt described as "a walled garden of scrubbed content taken from the real Internet."

One of the more striking things Schmidt described was a visit to Kim II Sung University e-Library, where she saw about 90 people sitting at computers. The group appeared to be staged, though: A few people scrolled or clicked, but the rest just stared straight at their screens.

"When our group walked in -- a noisy bunch, with media in tow -- not one of them looked up from their desks," she wrote. "Not a head turn, no eye contact, no reaction to stimuli. They might as well have been figurines."

North Korean leader Kim Jong Un has expressed interest in beefing up the country's technological and industrial standing in the world, but the regime's plans remain largely undefined.

Google (GOOG, Fortune 500) has been expanding its presence throughout Asia in recent years, but censorship concerns have thwarted its efforts. Eric Schmidt is currently working on a book about the Internet's ability to embolden citizens oppressed by autocratic governments, a subject he's written about at length in the past.

Some of those the delegation spoke with were technically savvy, according to Schmidt's daughter. They asked questions about when the next version of Android would come out ("soon") and if Schmidt could help them get North Korean apps listed in Google's Play Store. Sophie's response: "No, silly North Koreans, you're under international bank sanctions."

Sophie Schmidt's photo-filled diary has a chatty, informal tone, and includes a few digs at her dad's products. Anyone irked by the travelogue's layout should blame Google Sites "for limited functionality," she quipped.

Schmidt seems uncertain what to make of everything she saw. "Nothing I'd read or heard beforehand really prepared me," she wrote. "The longer I think about what we saw and heard, the less sure I am about what any of it actually meant."

Eric Schmidt offered his own, more carefully scripted comments about the trip in a Google+ post that went up early Sunday.

"Overall, the technology in North Korea is very limited right now," he wrote. "As the world becomes increasingly connected, the North Korean decision to be virtually isolated is very much going to affect their physical world and their economic growth. It will make it harder for them to catch up economically."

-- CNNMoney's Charles Riley contributed to this report.

First Published: January 20, 2013: 1:24 PM ET

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$21 million payday for Goldman Sachs CEO

Goldman Sachs' CEO Lloyd Blankfein got a 75% raise in 2012.

NEW YORK (CNNMoney)

Four other executives at the helm of the investment bank were rewarded with similar spikes in their 2012 pay.

On top of his base salary of $2 million, Goldman Sachs' board granted Blankfein a nearly $19 million bonus: $13.3 million in stock and $5.6 million in cash.

Goldman Sachs reveals stock options awarded to its top five executives in regulatory filings, but does not disclose their cash bonuses. A spokesperson for Goldman Sachs declined to comment beyond what was outlined in the bank's Securities and Exchange Commission filings.

Related: The old Goldman Sachs is back

Goldman's other top four executives had salaries of $1.85 million. On top of that, both Goldman Sachs' President and COO Gary Cohn and its recently departed CFO Dave Viniar received $17 million bonuses last year, according to the source. Michael Evans and John Weinberg, both vice chairmen, received $15.1 million in 2012 bonuses.

With this spike in salary, Blankfein is likely to be one of the highest paid executives on Wall Street. JPMorgan's CEO Jamie Dimon won't be in the running for 2012. After topping the list in 2011 with a $23.1 pay package, JPMorgan's board cut Dimon's bonus by 53% to $10 million, citing the bank's trading losses from the so-called London Whale.

Shares of Goldman Sachs rose 49% in 2012, after dropping 46% the prior year. So far in 2013, Goldman's stock is still running higher. It's up more than 13%.

First Published: January 18, 2013: 4:06 PM ET

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