The nominal high that the Dow Jones industrial average reached on Tuesday prompted few cheers on Wall Street, in contrast to the recoveries of years past. Even as the gain capped nearly five and a half years of progress since the depths of the financial crisis, there were questions about whether the forces that fueled the rally â€" in large part, the Federal Reserve’s stimulus and strong corporate profits â€" would be enough to keep it going, Peter Eavis writes in The New York Times. James P. Gorman, Morgan Stanley’s chief executive, cautioned that “prudent investors would be well served to tread carefully and look for improving economic evidence to support any moves to higher levels.â€
Will the rally lead to more deals Recent weeks have shown that deal makers are not deterred by a surging market, even amid concerns that some vauations may be getting particularly lofty, as The New York Times’s James B. Stewart recently noted. For now, market experts say stocks have room to go higher, especially as the Fed plans to continue its efforts to stimulate the economy. “The Fed and other central banks have been driving the market, and there’s no sign that’s going to stop,†Byron Wien of the Blackstone Group told Jeff Sommer of The New York Times.
While many note that the broader economy is still struggling, some are arguing that the strength of the corporate sector provides a solid foundation for a rally. “I think 2013 is a year where those who’ve been really skeptical of this market have to rethink their arguments,†said Thomas Lee, the chief United States equity strategist at JPMorgan Chase. “It’s been a pretty healthy rally.â€
Still, not all companies in the Dow are seeing the benefit of rising stock values, Nathaniel Popper writes in The New York Times. Bank of America, for instance, is today worth half of what it was five years ago, as it continues to work through the legacy of the housing collapse and the financial crisis.
MISSING THE POINT ON HERBALIFE  | The battle among Wall Street investors over Herbalife amounts to a reverse of the famous “Godfather†line, Steven M. Davidoff writes in the Deal Professor column:
“No one appears to be doing an actual investigation or asking the right questions. The central issue, in case you need reminding, is whether Herbalife is a pyramid scheme,†as the hedge fund manager William A. Ackman claims, Mr. Davidoff writes. “This is important, as not just billions are at stake, but an entire company and the tens of thousands of people who are affiliated with it.â€
ON THE AGENDA  | Data on factory orders in January is out at 10 a.m. The Federal Reserve releases its “beige book†about the economy at 2 p.m. At noon, Walt Disney has its annual meeting. Mervyn A. King, the governor of the Bank of England, and Andrew Bailey, the central bank official who will lead a new British regulator, are questioned by a parliamentary committee. A House Financial Services subcommittee holds a hearing on Fannie Mae and Freddie Mac at 10 a.m. Leon G. Cooperman of Omega Advisors is on CNBC at 7 a.m. Ralph L. Schlosstein, chief executive of Evercore Partners, is on Bloomberg TV at 4 p.m.
GENSLER IS EXPECTED TO STAY  | Gary Gensler, chairman of the Commodity Futures Trading Commission, is telling officials that he plans to stay in the Obama administration through at least December, even as he considers other options, DealBook’s Ben Protess reports. The White House approached Mr. Gensler in Jauary about serving a second term at the agency, and while he has yet to commit, he has no deadline and is considering staying, Mr. Protess says, citing three people briefed on the matter.
“But another corner of the Obama administration could draw him away from the trading commission, a once sleepy agency that he overhauled after the financial crisis. Mr. Gensler, the people briefed on the matter said, has discussed other senior financial roles with the White House. The jobs could include deputy Treasury secretary and head of the Commerce Department. Two of the people said Mr. Gensler was once interested in running the Securities and Exchange Commission, though President Obama recently nominated Mary Jo White for that job.â€
Mr. Gensler maintains that his task at his current agency is not complete. “It’s an incredible privilege and there’s still a lot of work to be done here at the C.F.T.C.,†he said in an interview.
Samsung to Invest $110 Million in Sharp  | By agreeing to buy a stake in the beleaguered technology company Sharp, Samsung Electronics “will broaden its supplier base, gain access to low-power thin screen technology and get a foot in the door at one of Apple Inc.’s key Asian display suppliers,†Reuters writes. REUTERS
J.C. Penney Board Said to Weigh Changes if Sales Don’t Recover  | The Wall Street Journal reports: “Members of Penney’s board will consider selling the company or replacing the chief executive if a deep drop in sales canâ™t be reversed this year, people familiar with the matter said. The group includes activist hedge fund manager William Ackman.†WALL STREET JOURNAL
Buyout Firms Said to Consider Teaming Up for Life Technologies  | Firms including the Blackstone Group and the Carlyle Group are “exploring a joint offer†for Life Technologies, Reuters reports. REUTERS
Still-Unhappy Southeastern Seeks Dell Shareholder List  | Southeastern Asset Management is seeki! ng a list! of shareholders and other books and records from Dell, according to a letter sent on Tuesday to the computer maker’s board. DealBook »
Verizon Said to Seek Resolution in Vodafone Relationship  | Verizon is “working to resolve its relationship†with Vodafone this year, and the companies have “weighed options that range from ending its wireless venture with its European ally to a full merger of the two phone companies, said people familiar with the situation,†Bloomberg News reports. BLOOMBERG NEWS
3 Women Named to Australian Panel on Takeovers  |Â
WALL STREET JOURNAL
Banks Move to Reduce Role in Setting Certain Rates  | JPMorgan Chase and UBS “are withdrawing from a panel that sets Australia’s benchmark swap rate and Citigroup Inc. is reducing its role in Malaysia amid increased scrutiny following the global rate-rigging scandal,†Bloomberg News reports. BLOOMBERG NEWS
Bonus for Capital One Chief Is in Cash  | ! Richard Fairbank, the chief executive of Capital One, received a $2.19 million deferred cash bonus as part of his $17.5 million pay package for last year, Bloomberg News reports. BLOOMBERG NEWS
HSBC Sells U.S. Loan Portfolio for $3.2 Billion  | The British banking giant HSBC is making progress in shrinking its consumer loan portfolio in the United States, which has been a drag on its earnings. DealBook »
Getting to Know a Young Banker  | A “friendly conversation†with a 28-year-old vice president of a big bank. THE BILLFOLD
Standard Chartered to Move African Business to Johannesburg  |Â
BLOOMBERG NEWS
Private Equity and Venture Capital Investments Rise in Latin America  | Private equity and venture capital firms last year committed $7.9 billion to invest in Latin America, although fund-raising was down significantly as smaller firms raised more than big firms. DealBook »
In Video Series, Wall St. Leaders Reflect on Their Careers  | Hamilton E. James, president and chief operating officer of the Blackstone Group, discusses his life and career in a video series created by OneWire, a financial services recruitment firm. DealBook »
Permira Said to Scale Back Goals for Fund-Raising  |Â
FINANCIAL TIMES
Relational Urges Hess to Talk With Elliott  | Relational Investors wrote in a letter to Hess’s board on Tuesday that, like Elliott Management, it has found the company’s response lacking. DealBook »
In Asia, Some Hedge Fund Workers Call It Quits  | Managers, traders and analysts at hedge funds in Asia “are quitting as assets have failed to recover after the 2008 global financial crisis, and trading losses have left a majority of funds unable to collect performance fees,†Bloomberg News reports. BLOOMBERG NEWS
Robe! rtson’s Seeding Fund Is Said to Recover  | Tiger Accelerator, a fund started in 2011 by Julian Robertson to seed hedge funds, is in the black after strong gains in the first six weeks of this year, according to Absolute Return. ABSOLUTE RETURN
Money Manager Tries Again With I.P.O.  | After withdrawing plans to go public in 2011, Artisan Partners Asset Management, a money manager based in Milwaukee, “is seeking as much as $333 million in an initial public offering today,†Bloomberg News reports. BLOOMBERG NEWS
Asian Airline May Revise Timing of I.P.O. Â |Â
BLOOMBERG NEWS
Kleiner Perkins Vows to Improve Performance  | Reuters reports: “Blue-chip venture-capital firm Kleiner Perkins Caufield & Byers expressed frustration with poor fund performance and promised to do better at gatherings for investors last month, according to people familiar with the discussions.†REUTERS
Former SAC Trader Gets More Time to Prepare Defense  | A federal judge has granted a former employee of the hedge fund SAC Capital Advisors additional time to review the government’s evidence in an insider trading case brought against him. DealBook »
Microsoft Is Fined $732 Million in Europe Over Browser  | The New York Times reports: “The European Commission on Wednesday fined Microsoft 561 million euros for failing to live up to a settlement agreement offering consumers a choice of Internet brosers.†NEW YORK TIMES
Former Wells Fargo Broker Is Sentenced to 2 Years  | A former Wells Fargo broker who pleaded guilty to defrauding more than a dozen clients was sentenced to two years in jail. DealBook »
Dallas Mavericks Owner May Face S.E.C. Insider Trading Trial  | A Federal District Court judge in Dallas denied a request by Mark Cuban to dismiss a nearly five-year-old insider-trading lawsuit brought against him by federal securities regulators. A June trial is scheduled. DealBook »
British Regulators Slow to Respond to Libor Scandal, Audit Says  | British officials were too focused on containing the financial crisis to analyze information connected to potential interest-rate manipulation, an audit by the Financial Services Authority said on Tuesday. DealBook »
In Favor of a Tax on Financial Transactions  | “After years of Wall Street excess, and at a moment when new revenues are badly needed, the time has surely come for a financial transaction tax,†Katrina vanden Heuvel writes in an opinion essay in The Washington Post. WASHINGTON POST
On Banker Bonuses, Britain Still Stands Alone  | “The British government stood isolated on an important European Union issue Tuesday after finance ministers from elsewhere in the bloc rejected its effort to water down proposed limits on bankers’ bonuses,†The New York Times reports. NEW YORK TIMES
Banks Say Libor Lawsuits Should Be Dismissed  |Â
REUTERS
JPMorgan Resolves Dispute Over MF Global Claims  |Â
REUTERS
