Government profit on AIG bailout tops $22B as Treasury sells out. The Treasury has sold its remaining 234.2M shares in AIG (AIG) at $32.50 each, giving it proceeds of $7.6B. With the sale, the combined gain to the Fed and Treasury has risen to $22.7B - $5B for the Treasury and $17.7B for the Fed.
HSBC to pay record $1.92B fine to settle money laundering probe. HSBC (HBC) has agreed to pay $1.92B to U.S. authorities to settle allegations over "inadequate compliance with anti-money laundering and sanctions laws." The fine is the largest ever imposed on a bank and is above the $1.5B that HSBC set aside to cover any penalties. The British company also expects to reach a deal with the U.K. regulator.
Spectra Energy to acquire pipeline for $1.49B. Spectra Energy (SEP) plans to buy the Express-Platte System pipeline for $1.49B to give it an edge in transporting crude oil across North America. The transaction should add $0.03-0.05 to full-year earnings. Kinder Morgan (KMP), one of the owners of the pipeline, will receive almost $380M in the deal.
Top Stock News
Investigation into corporate insider trading widened. Authorities have reportedly expanded their probe into possible insider trading by corporate executives, which was prompted by a WSJ expose last month. The Manhattan U.S. attorney's office is carrying out a criminal investigation into seven executives, including Mohawk Industries (MHK) CEO Jeffrey Lorberbaum. The SEC is scrutinizing the trades of VeriFone Systems (PAY) boss Douglas Bergeron, adding to its probe of Big Lots chief Steven Fishman.
SPX emerges as frontrunner to buy Gardner Denver. SPX (SPW) has reportedly entered negotiations to acquire industrial-pumps maker Gardner Denver (GDI), which has a market cap of $3.47B after closing at $68.32 yesterday. The talks leave private-equity firms on the sidelines after they made offers in the low- to mid-$70s per share in cash. SPX's bid is higher but may include a stock component.
Nike plans to expand in Oregon but only if the state plays nice. Nike (NKE) will reportedly expand its operations in Oregon significantly in a move that could add as many as 12,000 jobs directly and indirectly - if the state government promises not to change the tax code. The company is such a heavyweight in the region that the legislature will hold a special session later this week to discuss the issue.
Diageo halts talks to acquire top tequila brand. Diageo (DEO) has ended long-running negotiations to buy Jose Cuervo from Mexico's Beckmann family and will terminate its distribution agreement for the world's top tequila brand at the end of June 2013. The acquisition of Jose Cuervo, which probably would have been valued at $3B, would have been part of Diageo's strategy of purchasing top brands in fast-growing emerging markets.
Morgan Stanley could restart stock buybacks. Morgan Stanley (MS) could reportedly ask the Fed's permission to repurchase shares for the first time in four years. Any request could come next month as part of the bank's annual stress tests, and would follow CEO James Gorman last month expressing his desire to return capital to "long-suffering shareholders."
Abbott Labs worth less than spin-off. Abbott Laboratories' (ABT) AbbVie spin-off is worth more than Abbott ahead of the official split of the company in January. "When issued" trading in the two entities began yesterday in the secondary market, with the new Abbott valued at $47.9B and AbbVie $55.3B. The market cap of the combined Abbott is $103.27B.
Milk industry works to turn itself around as consumption slumps. The milk industry is facing a crisis. Per-capita consumption has dropped almost 30% since 1975, with the average amount drunk slipping 3.3% last year to 20.2 gallons per person. Problems include increasing prices, health perceptions, and the rise of alternatives. To revive sales, the industry is changing its marketing and introducing new milk products and packaging. Companies affected include Dean Foods (DF).
Top Economic & Other News
FOMC seen ramping up the money printing. The FOMC is due to hold its latest two-day policy meeting today, with economists predicting that the Fed will announce a new $45B monthly Treasury acquisition program. The purchases would replace those from Operation Twist, which expires this month. The Twist was notable in that its bond-buying was offset with sales of shorter-term debt. A new scheme without those sales would be far more expansionary.
Monti in talks to possibly run in Italian elections. Mario Monti is reportedly in discussions with centrist politicians who are urging him to run in Italy's elections early next year, although Monti himself has played down suggestions that he would do so. His announcement that he will quit as PM spooked Italian markets yesterday, although they're much calmer today, with shares +1.1% and 10-year yields -8 bps at 4.74% at midday in Europe.
Not everyone's scared of the fiscal cliff. While many companies have been holding off on capital spending because of the uncertainty surrounding the fiscal cliff, the WSJ homes in on small firms - particularly manufacturers of machinery parts - that have increased expenditures to meet demand. These include Oberg Industries, whose customers in sectors such as oil and gas, medical and aerospace are urging it to be ready for rising orders in 2013.
In Asia, Japan -0.1% to 9525. Hong Kong +0.2% to 22324. China -0.4% to 2075. India flat at 19387.
In Europe, at midday, London +0.2%. Paris +0.6%. Frankfurt +0.6%.
Futures at 7:00: Dow +0.2%. S&P +0.2%. Nasdaq +0.2%. Crude +0.6% to $86.06. Gold -0.05% to $1713.50.
Today's economic calendar:
FOMC meeting begins
7:30 NFIB Small Business Optimism Index
7:45 ICSC Retail Store Sales
8:30 Trade Balance
8:55 Redbook Chain Store Sales
10:00 Wholesale Trade
1:00 PM Results of $32B, 3-Year Note Auction
Notable earnings before today's open: DG
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