China PMI breaks year-long contraction streak... China's HSBC manufacturing PMI moved into expansion territory for the first time in 13 months in November, rising to 50.5 from 49.5 in October. The official PMI increased to 50.6 from 50.2, marking a seven-month high for the index. "We expect GDP growth to rebound modestly to around 8% in Q4 as the easing measures continue to filter through," says HSBC. Despite the improved numbers, Chinese and Hong Kong shares closed lower (see below).
...but eurozone manufacturing remains firmly in the doldrums. Eurozone manufacturing PMI rose to an eight-month high of 46.2 in November from 45.4 in October, although the downturn in activity remained severe. While the picture is "starting to brighten" and manufacturing activity may have "bottomed out" says Markit, official data lags PMI. That means that "the rate of GDP decline is likely to have gathered pace markedly on the surprisingly modest 0.1% decline seen in the third quarter."
News Corp to split by end of month. News Corp (NASDAQ:NWS) has reportedly advanced its break-up into two companies to the end of this month in order to limit the damage from the U.K. phone-hacking scandal to the firm's publishing arm and to protect the film and TV business. The speculation comes along with reports that WSJ managing editor Robert Thomson will become CEO of the publishing operations and confirmation that News International CEO Tom Mockridge is leaving.
Top Stock News
Delta in talks to acquire 49% stake in Virgin Atlantic. Singapore Airlines (OTCPK:SINGY) has confirmed widespread reports that it's in talks to sell its 49% holding in Richard Branson's Virgin Atlantic, with those reports saying that a potential suitor is Delta Air Lines (NYSE:DAL). The U.S. carrier is particularly attracted to Virgin's lucrative landing slots at Heathrow Airport in London, and could tie up with Air France-KLM (OTCQX:AFLYY) to buy into the U.K. operator.
UBS nears deal over Libor manipulation. UBS (NYSE:UBS) is reportedly nearing an agreement with U.K. and U.S. authorities to pay over $450M to settle allegations that it manipulated global inter-bank interest rates, including Libor. The amount would top the $450M that Barclays (NYSE:BCS) paid to settle accusations over its role in the rate rigging, and could increase the possibility that other banks will face large fines as well.
Japanese car makers still suffering in China. Automakers from Japan continue to struggle in China amid the territorial dispute between the countries. In November, Toyota's (NYSE:TM) sales fell 22% in China, while Mazda's (OTCPK:MZDAF) dropped 29%. Honda is due to release its Chinese sales later.
Martin Marietta to go friendly in Vulcan bid. After trying the friendly tack and then the hostile one, Martin Marietta Materials (NYSE:MLM) will reportedly again try the friendly approach in its long-running attempt to acquire larger building-materials rival Vulcan Materials (NYSE:VMC). Earlier this year, Vulcan rejected MLM's $5.1B hostile takeover, accusing the latter of attempting to buy it on the cheap. Vulcan is now worth $6.85B.
Union tries to stop wild-cat strike at Boeing. The Speea union has circulated a letter "asking members to ignore the call for a (one-day) wildcat strike" at Boeing (NYSE:BA), which has been planned for Wednesday. The stoppage would come a day after contract talks between Boeing and Speea in the presence of a federal mediator, which the company called in after negotiations broke off last week.
Woodside joins Noble in massive Israeli gas field. Australia's Woodside Petroleum (OTCPK:WOPEF) has agreed to acquire a 30% stake in Israel's huge Leviathan offshore gas field from the operators of the reserve, which include Noble Energy (NYSE:NBL) and Delek Drilling (OTC:DKDRF). Woodside will pay an initial $696M and as much as $550M once certain conditions are met, as well as revenue-sharing money of up to $1B a year. Noble's stake will fall to 30% from 39.66%.
RBS's return to private hands could take decade. RBS (NYSE:RBS) reportedly plans to restart paying dividends in late 2014, but predicts it will take ten years for it to become fully re-privatized. The government will give the bank time to boost its balance sheet before selling its 82% stake in four offerings that would each amount to over £10B. That compares with RBS's market cap of £33.5B.
Cerberus keeps options open in Supervalu talks. Cerberus is reportedly considering purchasing all of Supervalu (NYSE:SVU) or just a portion of the retailer's assets, such as the Albertsons chain. If Cerberus can get its hands on Albertsons, the private-equity firm could reunite the stores with 650 outlets pulled away from the chain in a previous deal.
Insurance regulators agree rules that could free up billions. The National Association of Insurance Commissioners has voted in favor of new regulations for how life insurers fix reserves for future claims in a decision that could free up billions of dollars for acquisitions, dividend increases and buybacks. However, critics, who include New York's Benjamin Lawsky, fear that insurers will become under-reserved and vulnerable to economic downturns.
Vale expected to detail investment cuts. Amid a fall in iron ore prices this year, Vale (NYSE:VALE) is expected to unveil a 2013 investment budget of $15.1B at its annual Vale Day meeting with shareholders today. Company executives have said recently that spending will be lower than in 2012, when the company will also miss its target of $21.4B; in the first nine months, Vale's capital expenditures were just $12.3B.
SEC's Schapiro delayed JOBS Act rule change due to legacy fears. Outgoing SEC Chairwoman Mary Schapiro postponed the easing of strict advertising rules for private placements - mandated under the JOBS Act - because she doesn't "want to be tagged with an anti-investor legacy," she wrote in an email to her replacement, Elisse Walter. "In light of all that's been accomplished, that wouldn't be fair, but it is what will be said."
Top Economic & Other News
Greek bond yields plummet on details of debt buyback. Greek 10-year bond yields have plummeted 1.44 percentage points to 14.6% after the government said it would spend up to €10B buying back bonds through a modified Dutch auction. Greece will pay a minimum of 30.2-38.1% of the face value of the debt it's acquiring and a maximum of 32.2-40.1%. The repurchase program is part of measures that the Troika agreed last week to reduce Greece's debt burden.
Japan showing earliest signs of green shoots. Japanese capital spending excluding software rose 2.4% on year in Q3, beating consensus of +1%, although growth was slower than Q1's 6.6%. The data adds to the unexpected 1.8% increase in industrial production in October and indicates that Japan's contraction could be a short one, although economists at RBS and Daiichi Life still believe the economy will shrink in Q4.
GOP, Democrats point fingers as talks over fiscal cliff stall. The he-said-she-said posturing over the fiscal cliff continued over the weekend, with Republicans and Democrats saying that the other will be to blame if the economy falls over the edge, which both sides agree is a possibility. Jim Kessler of The Third Way think tank says that while "this thing could fall apart...there's still a few more days where we should expect this kind of rhetoric before they start to coalesce around a deal."
Firms get $80B+ a year in incentives but benefits aren't tracked. States, counties and cities are providing over $80B in incentives a year to companies to locate to their areas, the NYT finds in an investigation of over 150,000 awards. However, municipalities don't know if they're getting their money's worth, because they don't often track how many jobs the firms bring. "It's really not creating new jobs," says Hallmark CEO Donald Hall.
In Asia, Japan +0.1% to 9458. Hong Kong -1.2% to 21768. China -1% to 1960. India -0.2% to 19305.
In Europe, at midday, London +0.4%. Paris +1%. Frankfurt +0.7%.
Futures at 7:00: Dow +0.3%. S&P +0.3%. Nasdaq +0.5%. Crude +0.1% to $89.01. Gold +0.3% to $1717.20.
Today's economic calendar:
09:00 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
1:40 PM Fed's Bullard: U.S. Economic and Monetary Policy
Notable earnings before today's open: LDK
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