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US stock market daily report (February 06, 2013, Wednesday)

February 7, 2013, Thursday, 04:55 GMT | 23:55 EST | 10:25 IST | 12:55 SGT
Contributed by Millennium Traders


The Federal Reserve reported they have been the latest victim of a cyber attack as its internal websites was infiltrated by hackers, although short-lived and without any critical impact. A Federal Reserve spokeswomen said, "The Federal Reserve system is aware that information was obtained by exploiting a temporary vulnerability in a website vendor product. Exposure was fixed shortly after discovery and is no longer an issue. This incident did not affect critical operations of the Federal Reserve system." On Sunday, Anonymous - an Internet-based activist group - penetrated the Federal Reserve's security system and published stolen information on 4,000 U.S bank executives. Other institutions reporting cyber attacks in recent days: Department of Energy confirmed a breach of its systems on Monday, blaming China the attack; a handful of major U.S. media organizations were faced with cyber attacks last week: Bloomberg News, New York Times, Wall Street Journal and Washington Post - all reporting that Chinese hackers gained entry to their computer systems, exposing employee information and last Friday, Twitter reported they had been hacked and information on 250,000 of its users may have been exposed to hackers however, the origin of this attack remains unknown.

According to Postmaster General Patrick Donahoe, the struggling U.S. Postal Service loses $25 million a day and announced Wednesday, it's canceling Saturday delivery, effective in August 2013. Packages will still be delivered on Saturdays as well. The move will save the USPS $2 billion annually. Merging plant locations and reducing retail location hours have already been enacted, to assist in cost cutting measures. In April 2012, Senate approved a bill that would allow the USPS to offer early retirement to 100,000 postal workers, nearly 18% of their workforce. This would have allowed the agency to recoup more than $11 billion it had previously paid to an employee pension program. The USPS reached its $15 billion borrowing limit with the Treasury and last November reported a loss of $15.9 billion for the fiscal year that ended September 20 - more than triple its loss from 2011. USPS mail volume for 2012 totaled 159.9 million pieces which is a 5% decline from 2011 with online banking and email making the service less relevant in today's digital age. Contributions to the employee pension fund and future retiree health benefits have also contributed to the agency's financial problems.

If reports that domestic hackers from China attacked prominent Western news outlets are accurate, new leadership of China will be getting very nervous. Allegations that Chinese hackers are attacking foreign media outlets presumably in order to monitor coverage of the country, suggest extreme attempts to frame and shape the discourse about China both within and beyond, their borders. The rise of sophisticated Chinese hackers will generate concerns in the business community about its ability to protect intellectual property and trade secrets. As cyber security makes its way up on the U.S. and China agenda, diplomatic ties between the world’s two biggest economies will face additional strains. Social tension domestically and unnerving foreign investors will be a result of attempts to control the flow of information and dominate the narrative about China. During 2012, Chinese and foreign media aired the Communist Party’s dirty laundry. The move unearthed the most gruesome details of the Bo Xilai scandal and exposed Chinese elites’ unseemly wealth, just as Beijing was undergoing a complicated leadership transition. Tough rhetoric from the incoming leadership on the need to fight corruption has sparked hopes that the Chinese regime will become more accountable for its actions, and that the accumulation of wealth, power and privileges will not be only for a select few. Stress in China is mounting - heavy-handed controls of the Chinese press has led to strikes at China’s most liberal and independent newspaper, Southern Weekend.

Royal Bank of Scotland Group PLC and RBS Securities Japan Limited have been ordered by the U.S. Commodity Futures Trading Commission on Wednesday, to pay a $325 million fine to settle charges of manipulation and attempted manipulation of the London interbank offered rate. The fine brings the total of penalties on banks related to the Libor scandal to $1.2 billion. Between 2006 and 2010, the CFTC found that RBS made hundreds of attempts manipulate the yen and Swiss franc Libor rates plus, made false Libor submissions, with a dozen of the banks employees involved in the trades.

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