FBI probing H-P claims about Autonomy. The FBI is reportedly investigating H-P's (NYSE:HPQ) accusations of accounting improprieties at Autonomy prior to H-P buying the software company and for which it took an $8.8B charge in FQ4. The feds are responding to a request from the SEC after H-P brought its claims to the regulator. Don't be surprised if more government agencies jump onto the investigation bandwagon.
Japan's trade deficit soars. Japan's October trade deficit almost doubled from a year earlier to ¥549B ($6.7B), well above consensus of ¥360B. Exports dropped 6.5% to ¥5.15T, with shipments to China diving 11.6% due to the islands dispute, and those to the EU plummeting 20.1%. Still, it's not all doom: "I believe Japan's exports will recover gradually, as the U.S. and Chinese economies are picking up," says Mizuho economist Norio Miyagawa.
Eurozone finmins delay Greek aid once more. As expected, eurozone finance ministers have again postponed approving the next tranche of Greece's bailout after failing to reach an agreement on how to make the country's debt more sustainable. Eurogroup chairman Jean-Claude Juncker blamed the delay on technical details, although German Finance Minister Wolfgang Schaeuble reportedly seems to indicate that Troika divisions remain deep. They'll all meet again on Monday for more talks.
Glencore-Xstrata deal poised to win EU approval. Glencore's (OTCPK:GLCNF) mega-merger with Xstrata (OTC:XSRAF) is reportedly set to win EU antitrust approval after Glencore met the main concerns of competition chief Joaquin Almunia by offering to end a sales deal with zinc-smelter Nyrstar. Glencore won't have to divest Xstrata's Nordenham zinc plant in Germany. An EU decision over the merger is due tomorrow; it will then need approval in China and South Africa.
News Corp in talks to buy CBS's Simon & Schuster. News Corp (NASDAQ:NWS) is reportedly in preliminary negotiations to acquire CBS's (NYSE:CBS) Simon & Schuster book business. News Corp is in the process of splitting in two, with one company to comprise its entertainment assets and the other its publishing interests, which include HarperCollins. The publishing firm is also expected to have plenty of cash on its balance sheet.
FTC wobbling about suing Google over search rankings. The FTC is reportedly unsure that it can successfully sue Google (NASDAQ:GOOG) for placing links to its products and services above those of its competitors in search results. The commission's uncertainty is based on doubts that it can prove that consumers are hurt by the practice. The speculation comes just over a week after a report said the FTC was pressuring Google to agree to a settlement.
Hostess to again seek liquidation as talks fail. Hostess Brands will again ask bankruptcy Judge Robert Drain to authorize its liquidation after mediation talks with the company's striking bakers' union failed to resolve their differences. Potential suitors for all or part of Hostess' assets could include Flowers Foods (NYSE:FLO), which said on Monday that it has renegotiated lending terms to enable it to borrow additional cash. Private-equity firm Sun Capital may also be in the mix.
Google vs Microsoft patent trial wraps up. A judge has to decide how much Microsoft (NASDAQ:MSFT) should pay for the use of Google (GOOG) wireless and video patents following the end of a week-long trial yesterday. Google wants $4B a year, although Microsoft reckons that $1M+ is all that Google deserves. A small verdict would weaken the Californian company's position in negotiating deals with other rivals.
Government puts patent trolls in its cross-hairs. The Department of Justice and the FTC plan to hold informal hearings next month on whether patent trolls, which license IP but don't sell any tangible products, do more harm than good. Also receiving scrutiny are patent-holding companies created by tech giants, such as Rockstar. A crackdown could well hurt the likes of Acacia (NASDAQ:ACTG), InterDigital (NASDAQ:IDCC) and Rambus (NASDAQ:RMBS).
Japanese utilities to buy U.S. coal. Japan's Kansai Electric Power and Kyushu Electric Power have agreed to acquire 1M tons of low-sulphur high-quality U.S. coal from Oxbow Carbon in a one-year deal. The contract comes as Japan's nuclear reactors remain closed following last year's Fukushima disaster. The prospect of selling more coal to Japan could provide a boon to the U.S.'s beleaguered coal sector.
DOJ seeks to prevent outsized bonuses at failing companies. The Department of Justice is objecting to a plan to pay Hostess Brands executives $1.8M in retention bonuses while the company is wound down. It's the latest example of Justice trying to prevent such payments to managers at failing businesses, which say they need to motivate managers to stay on to help avoid disorderly bankruptcies. "They're objecting more and they're finding more success," says a former senior DOJ staffer.
Top Economic & Other News
Could BOJ independence be under threat? Japan's LDP, which is expected to win the country's election on December 16, would change the law governing the Bank of Japan in order to bolster co-operation between the government and the bank. The LDP, whose leader Shinzo Abe has called for much more powerful easing, would also set a 2% inflation target and strengthen Japan's effective control of highly disputed islands in the East China Sea.
Asia's big three to start trade talks despite dispute. China, Japan and South Korea intend to begin a first round of talks next year about a free-trade agreement despite the row over islands in the East China Sea. Chinese Vice Foreign Minister Fu Yin played down the impact of the spat, saying, "We do not want to give overemphasis to the territorial disputes and the differences." The deal is key to a 16-country trade pact called the Regional Comprehensive Economic Partnership.
In Asia, Japan +0.9% to 9223. Hong Kong +1.4% to 21524. China +1.1% to 2030. India +0.7% to 18460.
In Europe, at midday, London flat. Paris +0.1%. Frankfurt +0.1%.
Futures at 7:00: Dow +0.1%. S&P +0.1%. Nasdaq +0.1%. Crude +0.9% to $87.50. Gold +0.15% to $1726.20.
Today's economic calendar:
7:00 MBA Mortgage Applications
8:30 Initial Jobless Claims
9:00 PMI Manufacturing Index
9:45 Bloomberg Consumer Comfort Index
9:55 Reuters/UofM Consumer Sentiment
10:00 Leading Indicators
10:30 EIA Petroleum Inventories
11:00 EIA Natural Gas Inventory
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