Obama offers concessions over tax hikes. The haggling to avert a fiscal cliff has brought more movement, with President Obama offering to limit tax increases to those earning over $400,000 - up from his long-held desire of $250,000 but well below John Boehner's proposal of $1M. The latter's aides say the offer represents "a step in the right direction" but is too heavy on the tax revenues and too light on the spending cuts.
A tale of two coal markets. U.S. coal consumption will drop 14% from 2011-2017, the International Energy Agency forecasts, due to the shale gas revolution prompting power companies to abandon coal. Overseas, the picture is totally different, with demand booming in China, India and other emerging markets. The problem for U.S. producers is that international prices are low. The IEA predicts restructuring for the sector and possible job losses.
Judge Koh rejects Apple request to ban Samsung products. Judge Lucy Koh has refused to place injunctions on any of the 26 Samsung (OTC:SSNLF) devices that were ruled to be infringing Apple's (NASDAQ:AAPL) patents in this summer's trial. The verdict involves older Samsung products but will probably have implications for how newer devices covered in another Apple suit are handled. Koh also dismissed Samsung's request to overturn the ruling on grounds of jury misconduct.
Top Stock News
Nielsen to buy Arbitron in $1.26B deal. Nielsen Holdings (NYSE:NLSN) has agreed to acquire peer Arbitron (NYSE:ARB) for $48 a share, or a 26% premium to the latter's close yesterday. Nielsen estimates that the $1.26B deal for the media ratings firm will be accretive to EPS by $0.13 a year after the close and approximately $0.19 after two years.
Amgen faces fine of almost $780M. Amgen (NASDAQ:AMGN) is due to plead guilty today in an investigation into its business practices, the U.S. attorney's office says, with the NYT reporting that the company will admit to mis-branding, which usually means promoting drugs for non-approved uses. Amgen will pay a fine close to the $780M it has set aside to cover the allegations, of which $150M will be for a criminal penalty.
McKesson wins $2.61B Defense contract. McKesson (NYSE:MCK) has been awarded a contract of up to $2.61B from the U.S. Department of Defense to deliver mail-order pharmaceutical products. The contract will run through June 2015.
NYT lays out Wal-Mart de Mexico's alleged corruption. "Wal-Mart de Mexico (NYSE:WMT) was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited," writes the NYT in another in-depth investigation into the company. "It used bribes to subvert democratic governance — public votes, open debates, transparent procedures. It used bribes to circumvent regulatory safeguards that protect Mexican citizens from unsafe construction. It used bribes to outflank rivals."
UPS sweetens offer to allay EU fears over TNT acquisition. UPS (NYSE:UPS) has reportedly offered "substantially improved" concessions in its attempt to gain the EU's approval for its €5.2B ($6.84B) acquisition of Holland's TNT Express (OTCPK:TNTEF). UPS has already offered to sell assets and open up its flight operations to rivals, although Competition Commissioner Joaquin Almunia has expressed caution about UPS's ability to allay his antitrust concerns.
Corporate buyback spree hits $274B Flush with huge amounts of cash, companies repurchased $274B more shares than they issued in the first nine months of the year, says Yardeni Research. The buybacks reflect the lack of confidence in the economy as companies forgo capex and hiring, while they are also distorting EPS trends. One question is how much the repurchases have contributed to the rise in stocks this year.
Oracle earnings seen higher. Oracle (NYSE:ORCL) is due to release its FQ2 results after the bell, with analysts expecting that EPS rose to $0.61 from $0.54 and that revenue edged up 2.5% to $9.03B, helped by a strong increase in software-license revenue. Pacific Crest Securities has "heard about more large deals than we have in the recent past," although JMP Securities says the "hardware business (Sun) in the U.S. may have again been light."
Top Economic & Other News
China to settle for reduced growth. China is reportedly targeting GDP growth of 7.5% in 2013, the same as the goal for this year, and inflation of 3.5% vs the 2012 aim of 4% and November CPI of 2%. The GDP target is well below the 10% average growth that China has enjoyed over the past decade but reflects the new government's desire to seek a higher "quality" expansion.
Treasury to wind down bank TARP in 2013. The Treasury reportedly intends to wind down its banking TARP scheme next year by selling its shares in about two-thirds of the 218 institutions still left in the program. The other banks are expected to repay the money they received or restructure investments. The largest bank left in TARP is Synovus Financial (NYSE:SNV), which owes $967.9M. Under TARP's bank schemes, the Treasury invested over $245B and has recovered $268B.
RBI leaves interest rates unchanged. The Reserve Bank of India has withstood political pressure to ease monetary policy and again left its lending rate unchanged at 8% and commercial banks' cash reserve ratio at 4.25%. Growth is slowing but high inflation is causing the RBI to maintain tight policies. "Rate cuts are contingent on inflation coming down, tangible progress on fiscal consolidation and continued structural reforms," says HSBC's Leif Eskesen.
Spanish bank loans continue to sour at record rates. Spanish banks' bad loans rose to yet another record high in October, climbing to 11.23% of their outstanding portfolios from 10.7% in September. Debt that turned sour increased by €7.4B to €189.6B.
In Asia, Japan +1% to 9923. Hong Kong -0.1% to 22495. China +0.1% to 2162. India flat at 19365.
In Europe, at midday, London +0.4%. Paris flat. Frankfurt +0.4%.
Futures at 7:00: Dow +0.3%. S&P +0.3%. Nasdaq +0.5%. Crude +0.6% to $87.80. Gold +0.1% to $1699.40.
Today's economic calendar:
7:45 ICSC Retail Store Sales
8:30 Current Account
8:55 Redbook Chain Store Sales
10:00 NAHB Housing Market Index
1:00 PM Results of $35B, 5-Year Note Auction
Notable earnings after today's close: ORCL
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