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Psst: Did you hear who may replace Bob Gates?

He's managed things before and has done a good job at CIA." Panetta, if nominated and confirmed, would also be the first Democrat to hold the position since Bill Perry in 1997.

"From the beginning, Panetta had enormous credibility with the White House," said a former senior U.S. official who helped advise the Obama campaign. Noting that Panetta also served as White House chief of staff and head of the Office of Management and Budget, the former official said Panetta has a "terrific record in Congress and did an extraordinary job from the moment he was appointed [as CIA Director] in developing the confidence of the Agency."

Referencing Panetta's fierce public defense of CIA personnel--including in fights early in Obama's term with then House speaker Nancy Pelosi (D-Ca.), who claimed she was not briefed on CIA waterboarding -- he "showed he was prepared to stand up for them in serious ways while working quietly internally to clean up a lot of the messes in the agency that existed from the previous administration," the former senior U.S. official said. "He redeveloped [the CIA's] credibility, both within the U.S. government as well as with foreign governments."

Panetta also successfully battled Obama's first director of National Intelligence Dennis Blair, the former official noted, to protect "traditional Agency funding and authorities," including on the decision of who--CIA director or DNI--gets to pick the top U.S. intelligence official posted in countries around the world. "Panetta is one of the smartest people in Washington," the former official continued. "He will be able to work with them and work them."

Indeed, the main drawback to nominating Panetta for the job, according to this source, is it opens up the can of worms of who should replace him as CIA director.

On that question, the rumors are hazier. One name that's been suggested is former Sen. Chuck Hagel (R-Neb.), currently the chairman of Obama's President Intelligence Advisory Board, who, said the former senior official, "knows Obama quite well." As a moderate Republican, Hagel may also "help with bipartisanship," the former official said.

A CIA spokesman declined to comment on the personnel rumors. Gates' spokesman also did not respond to a query.

(Defense Secretary Robert Gates, left, and CIA Director Leon Panetta, right, walk into the East Room of the White House in Washington, Tuesday, Sept. 21, 2010: Pablo Martinez Monsivais/AP)

BHP in $10 billion share buyback

MELBOURNE (Reuters) – BHP Billiton (BHP.AX), the world's biggest miner, bowed to investors with plans to hand back $10 billion and pour money into expansions rather than chase ambitious takeovers, after nearly doubling its first-half profit to a record.

The Anglo-Australian giant, flush with cash, said it plans to spend $80 billion on development and expansion projects over the next five years, playing down the near term chances of a major acquisition.

"The biggest surprise is the commitment to spend $80 billion over the next five years," said James Bruce, portfolio manager at Perpetual Investments, one of BHP's top 10 Australian shareholders.

"We think that this demonstrates the challenges that the industry is having satisfying rising demand, while replacing declining production from mature operations," he said.

BHP Chief Executive Marius Kloppers said the company's acquisitions sights remained focused on snaring long-life, low-cost, expandable assets.

But he said in light of the difficulties it faced on the three big deals it had to ditch over the past three years and the high price of potential targets, acquisitions may be too hard.

"While I can't rule out anything... if you put those couple of things together, you have a clear takeaway of our priorities, particularly in the light of the emphasis of the capital investment program today," he told reporters on Wednesday.

BHP forecast a strong outlook for commodities markets, due to tight supplies, but like its rival Rio Tinto (RIO.AX) (RIO.L), it warned that prices could be volatile.

"While we expect a slowdown in the growth rate of global commodity demand in calendar year 2011, the economic environment still underpins a robust near term outlook for our products," Kloppers said.

Kloppers said industry observers had long overestimated supplies, and he predicted that over the next one to two years supplies would remain tight, with few new large expansions or projects coming on line.

BIG BUYBACK

Investors had high hopes for a big share buyback as the miner is nearly debt free, its cashflow is booming and its failure to complete major takeovers limit its expansion options.

In the two weeks leading up to the result, its shares rallied 9 percent to a 33-month high in expectations of a buyback, and as expected, its shares retreated once the buyback was announced.

BHP shares last traded down 1.8 percent at A$46.50, lagging a 0.3 percent fall in the broader market.

Despite the recent rally, BHP shares are trading on a cheap forward earnings multiple of 11.9, which has 13 out of 16 analysts rating it a buy or strong buy.

The $10 billion buyback follows Rio Tinto's plan to return $5 billion to shareholders over the next two years, which some investors considered too little.

Kloppers said the company was most likely to follow the pattern it has for previous buybacks, buying its UK shares on market and buying its Australian shares off-market, but said no decisions had been made yet.

It is already in the midst of conducting a $4.2 billion buyback of its UK shares.

BHP's (BLT.L) attributable profit before exceptional items soared to $10.7 billion for July-December from $5.7 billion a year ago, beating an average forecast of $10.3 billion from 14 analysts.

"It looks to be a pretty robust set of numbers. I think it's ahead of market expectations and I think the $10 billion capital management initiative will be well received," said Neil Boyd-Clark, portfolio manager at Arnhem Investment Management, another BHP shareholder.

BHP stepped up its interim dividend by 10 percent to 46 cents a share, compared with broker forecasts of around 49 cents.

First-half earnings from iron ore nearly tripled, while earnings from base metals, including copper, jumped 45 percent.

Petroleum earnings, which set BHP apart from its mining peers, rose 23 percent.

BHP added that sharp cost increases cut its earnings by $521 million.

Kloppers said while materials cost increases were offset by price increases on BHP's key products, labor shortages were starting to bite, particularly in engineering jobs in Western Australia where billions of dollars of iron ore and oil and gas projects are competing for manpower.

(Editing by Ed Davies and Balazs Koranyi)

China says January inflation remains high at 4.9%

BEIJING (AFP) – China said Tuesday its inflation rate stayed stubbornly high at 4.9 percent in January, sparking analyst predictions that the government would take further aggressive fiscal steps to cool prices.

The consumer price index, the key gauge of inflation in the world's second economy, was "lower than market expectations" according to the National Bureau of Statistics but still above Beijing's four percent full-year target.

A Dow Jones Newswires poll of 15 economists before had forecast 5.4 percent growth.

The figure, which follows a 4.6 percent increase in December and a more than two-year high of 5.1 percent in November, comes despite three interest rate hikes in four months and several increases in the amount of money banks must keep in reserve to cut lending.

Brian Jackson, a Hong Kong-based senior strategist at Royal Bank of Canada, said the reading suggested pressure on prices would remain "uncomfortably strong" for the next few months.

"The policy focus will remain on curbing inflation, and we expect to see another 50 basis points of rate hikes and a faster pace of currency appreciation in coming months," he said.

New monthly lending data also released on Tuesday provided a ray of hope for policymakers.

The value of new loans fell to 1.04 trillion yuan ($158 billion), down about 23 percent year on year.

A torrent of lending over the past two years -- officially encouraged at first as a shield against the 2008 world financial crisis -- has helped spur inflation, and the January data suggested government curbs were having some effect.

But analysts said the overall picture indicated Beijing would need to step up its inflation fight.

Li Huiyong, chief economist at Shenyin & Wanguo Securities Co, wrote in a research note his firm expects two more rate hikes this year and further increases in the bank reserve ratio.

He said authorities also would likely allow a five percent strengthening of the yuan this year. A stronger yuan helps fend off the impact of price rises in imported commodities.

Inflation has become Beijing's top economic concern as it struggles to keep a lid on rising costs of food and other key items to head of public unrest.

The continued high prices came despite an adjustment in the index that lowered the weight of soaring food costs.

"Generally, inflationary pressure remains very high," said Yao Wei, a Hong Kong-based China economist with Societe Generale.

"(The data) cannot change the fact that the general economy is overheating and inflationary pressure is high."

A separate statement on the statistics bureau's website said the weightings are tweaked annually.

Despite the change, food costs continued to show strong growth in January, with grain prices up 15.1 percent, the bureau said.

The grain supply situation has become an increasing source of official anxiety as a drought across northern China over the past four months has raised fears that the important winter wheat crop could be severely affected.

At the same time, prices of fresh fruit grew 34.8 percent, the bureau said.

Inflation, particularly related to food, has a history of sparking unrest in China.

Tuesday's data did not include real estate prices, which also have grown sharply over the past year.

The statistics bureau said the food price weighting was lowered by more than two percentage points.

Yao said that brings food's weighting to less than 30 percent. The weighting of living costs such as utilities was raised by about four percentage points, bringing it near 20 percent, she said.

Jay-Z, Beyonce, Will Smith have pre-Grammy brunch

LOS ANGELES – Jay-Z laughed it up with Will Smith; Beyonce stood close to sister Solange in a DJ booth; and Charlize Theron made a late entrance.

It was an ultra-exclusive affair on Saturday as Jay-Z's RocNation and Gucci threw a pre-Grammy brunch for guests including Rihanna, Adrian Brody and Ryan Phillippe at the Soho House West, where the emphasis was on mingling and grooving to the beat.

Solange was one of the celebrity DJs at the event, entertaining the crowd while Beyonce and Solange's young son looked on.

Best new artist nominee Florence Welch of Florence + the Machine was greeted by admirers when she walked in.

Welch says she's excited about the Grammy week festivities.

Jay-Z is up for six awards at Sunday's Grammys.

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Ashton Kutcher claims George W. Bush snubbed him at Super Bowl

President George W. Bush allegedly snubbed “No Strings Attached” actor Ashton Kutcher at last week’s Super Bowl,BBC.

Kutcher sat directly behind Bush in a luxury suite at last Sunday’s Super Bowl, but the two had minimal interaction with each other.

“I don’t think he’s very happy with me,” Kutcher said of Bush. “He just was not very nice to me. He just kind of snubbed me a little bit … [He was] kind of more than [ just ignoring me] … [He was], well, just curt. He just said, ‘eh’ … almost like a burp.”

Kutcher said Bush turned around to “scowl” at him, adding that Bush was also the only one in the private booth using a BlackBerry during the game. Kutcher recalled trying to look over the former president’s shoulder to read what he was typing. Kutcher repeatedly said Bush’s expression resembled a “poop face.”

“I think I said some mean things [about Bush] during the election,” Kutcher said. “I feel like he probably doesn’t like me very much.”

Kutcher campaigned for Bush’s rival, Democrat John Kerry in 2004 in what he called an attempt to redeem himself for his election 2000 vote for Bush.

“I voted for him because I thought he was like me,” Kutcheran Iowa crowd in 2004. “I thought he was a good old boy like me … [He's] not going to fool me again. I’m here to take responsibility for my mistakes.”

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