VW plans to invest almost $65B over next three years. While its main rivals slash costs in Europe, Volkswagen (OTCPK:VLKAF) plans to invest €50.2B ($64.7B) in its automotive business from 2013-2015 despite the difficult economic conditions around the world. VW will spend €39.2B on property, plant and equipment, of which 60% will be in Germany, where GM (NYSE:GM) is trying to drastically cut back. Aside from the €50.2B, VW's Chinese joint ventures will invest €9.8B in new production facilities and products.
Chinese Vice Premier urges faster reform. Chinese Vice Premier Li Keqiang, who is set to become premier in March, said China needs to accelerate its economic overhaul, including the opening up of the economy. However, Li warned of a "fortress area" that can stymie progress. His comments follow concern about the conservative make-up of the new Politburo Standing Committee and its willingness to reform.
Alcatel-Lucent mulls financing options. Alcatel-Lucent (ALU) is reportedly exploring a number of options to raise cash and boost its balance sheet. The beleaguered telecom-equipment company is in negotiations with Goldman Sachs (NYSE:GS) about a loan, and it is considering the sale of assets such as units that manufacture undersea fiber-optic cables and provide equipment to businesses. Alcatel-Lucent is also looking at how to monetize its huge patent portfolio.
Top Stock News
Shoppers flock to catch Black Friday deals. Long lines snaked around city blocks last night as retailers such as Wal-Mart (NYSE:WMT) and Target (NYSE:TGT) opened late on Thanksgiving. Others, including Best Buy (NYSE:BBY) and Macy's (NYSE:M), waited until at least midnight on Black Friday. Despite the queues, the National Retail Federation reckons the number of shoppers will fall to 147M over the Thanksgiving weekend from 152M last year, and that the growth in retails sales will slow to 4.1% in November-December from 5.6%.
Lynch denies that Autonomy accounting practices were illegal. Former Autonomy CEO Mike Lynch has admitted to using some of the accounting practices that H-P (NYSE:HPQ) has alleged were irregular, such as selling computers to clients and booking part of the costs as marketing expenses, but denied that they're illegal. Lynch also said that turning what H-P claims was improperly recorded revenue of over $200M into a $5B writedown "doesn't add up." Some analysts agree.
Wal-Mart's Indian JV suspends CFO. Wal-Mart's (WMT) Indian joint venture has suspended a number of employees - reportedly its CFO and legal team - as the company investigates whether they broke U.S. anti-bribery laws. The suspensions come after Wal-Mart said last week that it's making internal inquiries into corruption in countries around the world, and as India debates whether to further open its domestic supermarket sector to foreign investment.
Glencore, Xstrata avoid prolonged review as EU OKs deal. As expected, the EU has approved Glencore's (OTCPK:GLCNF) mega-merger with Xstrata (OTC:XSRAF) without a lengthy review after Glencore offered concessions to allay EU concerns about the combined company's dominance in the European zinc market. Glencore will end a zinc sales deal with Nyrstar and sell its 7.8% stake in the world's top producer of the metal. The companies now need approval from China and South Africa.
Fitch slashes ratings of Sony and Panasonic. Fitch has cut Sony's (NYSE:SNE) and Panasonic's (PC) debt ratings to junk status, chopping Sony three notches to BB minus and Panasonic two notches to BB. The latter is in the better position due to its unglamorous but stable kitchen-appliance business, while most of Sony's electronic operations are loss making and "appear to be overstretched."
Japanese carmakers plan China growth as sales recover. Japanese car manufacturers intend to continue expanding in China as sales appear to be recovering from a sharp slump this autumn due to the islands dispute between Japan and China. Toyota (NYSE:TM), for example, intends to introduce 20 new models in China in the next three years. Sales "will return to normal in the not-too-distant future," says Toyota's Kunihiko Ogura.
SAP mulls listing in China. SAP (NYSE:SAP) is considering listing in Shanghai in a move that would add to its U.S. and German listings and give the software giant the option of raising money in one of its fastest-growing markets. SAP's software sales in China jumped 40% in Q3 and the company has a mid-term sales goal of €1B in the country. It also plans to invest $2B in China by 2015.
Top Economic & Other News
Superstorm could spark $240B of spending. While Goldman Sachs predicts that Superstorm Sandy could hit the economy by 0.25-0.5% in Q4, research firm Economic Outlook Group reckons that reconstruction, as well as related purchases and hiring, could range from $140-240B and add 0.5 percentage point to GDP next year. "We'll see construction ramped up, and that's going to bring in jobs and an increase in demand for material of all sorts," the firm says.
German business confidence brightens. Germany's Ifo business climate index has surprisingly increased to 101.4 in November from 100 in October, confounding expectations for a fall to 99.5. However, Ifo Chief Economist Klaus Wohlrabe remains gloomy about the prospects for the German economy, saying that it could even contract in Q4 as companies continue to postpone investment. Meanwhile, French companies are still pretty depressed despite a business confidence index rising to 88 from 85.
Chinese PMI returns to growth but eurozone still contracting. Chinese manufacturing PMI appeared to grow for the first time in 13 months in November, with the HSBC flash reading rising to 50.4 from 49.5 in October. Eurozone PMI has risen to an eight-month high but is still firmly contracting. "The (eurozone) PMI suggests that the (economic) downturn is set to gather pace significantly" in Q4 says Markit, adding that GDP could fall by up to 0.5%.
Troika inches closer to agreement on Greece. The Troika is reportedly edging closer to a deal that would allow Greece to receive the next tranches of its bailout, with the IMF agreeing to deem the country's debt viable if it falls to 124% of GDP by 2020 instead of 120%. That apparently means that the funding gap that negotiators would need to plug would fall to around €10B, for which several proposals have been made. It seems to be a case of, if you pass the red danger line, move the line.
S&P applauds French reform proposals as it maintains its rating. S&P has reiterated France's AA+ rating and its negative outlook, and warned that the government is likely to miss its 2013 deficit target of 3%, forecasting that the gap is likely to be 3.5%. However, S&P applauded the government's reform proposals, saying they will "improve the country's growth potential." S&P's action - or lack thereof - follows this week's downgrade from Moody's, which is more skeptical about France.
In Asia, Japan closed. Hong Kong +0.8% to 21914. China +0.6% to 2027. India -0.1% to 18507.
In Europe, at midday, London +0.1%. Paris flat. Frankfurt flat.
Futures at 7:00: Dow +0.15%. S&P +0.1%. Nasdaq +0.3%. Crude -0.3% to $87.11. Gold +0.3% to $1733.60.
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4:30 PM Fed Balance Sheet
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