Markets calm as U.S. teeters on the cliff edge. Like Sherlock Holmes and Professor James Moriarty, Democrats and Republicans could tumble over the fiscal cliff in a mutual rolling bear hug and take the U.S. economy with them unless they can reach a deal today. CNBC's John Harwood has tweeted a source as saying, "Looks like they'll get there." Despite the warnings of doom, futures were anyway higher premarket, indicating a belief that a deal in a week or two could be just as good (see below).
Chinese PMI expansion accelerates. China's HSBC PMI grew at the fastest speed in 19 months in December, increasing to a final reading of 51.5 from 50.5 in November and coming in higher than the preliminary figure of 50.9. "Momentum is likely to be sustained in the coming months when infrastructure construction runs into full speed and property market conditions stabilize," says HSBC's Qu Hongbin. The PMI data helped Chinese shares close sharply higher on the day and record their first annual gain in three years.
Top Stock News
Banks set to reach $10B deal over loan abuse. Fourteen banks are reportedly poised to agree on a $10B settlement with regulators over abusive foreclosure practices such as incorrect paperwork and excessive charges. The banks include the five that agreed to pay $26B in another deal earlier this year - JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C) and Ally Financial. The latest settlement will allow banks to end a review of 4M loan files that has cost 1.5B so far.
Tribune closes the book on Chapter 11. Tribune Co. is leaving bankruptcy protection today in a move that could pave the way for a sale of some of the media company's newspaper assets, which include eight daily titles such as the LA Times and Chicago Tribune and which have reportedly been eyed by Rupert Murdoch's News Corp. (NASDAQ:NWS). As part of its exit from Chapter 11, Tribune will receive a $1.1B term loan and a $300M revolving credit line.
P-E group to buy Duff & Phelps for $665M. Duff & Phelps (NYSE:DUF) has agreed to be acquired for $665M by a private-equity consortium that includes Carlyle (NASDAQ:CG), with the $15.55-a-share offer representing a 19.2% premium to Duff's close on Friday. Duff offers advisory services for corporations, governments, private-equity firms and hedge funds.
Intel works on pay-TV service. It looks like Intel (NASDAQ:INTC) is serious about becoming a pay-TV provider, with TechCrunch adding to speculation from earlier this year that the chip giant will soon launch a Web-based service that features traditional channels and Web video, and relies on an Intel-powered set-top. Unsurprisingly, content licensing issues will limit availability.
Top Economic & Other News
OPEC earns record oil revenues this year. OPEC's oil revenues are set to grow 2.5% this year to an all-time high of $1.05T, boosted by a record average daily price for Brent oil of $111.50 a barrel and strong output in H1. OPEC's income in 2012 is over five times the $200B that the cartel earned a decade ago and is a record even when adjusted for inflation, topping the peaks seen during the oil crises of 1973-74 and 1979-81.
Congress kicks milk bottle down the road. The U.S. economy may be about to drop off the fiscal cliff, but Washington looks to have averted the "dairy cliff." Congressional leaders yesterday agreed to an extension until September 30 of a farm law whose lapse tomorrow could lead to a doubling of milk prices by reviving a decades' old subsidy and forcing the USDA to buy up milk at prices way above what farmers are receiving now.
Senate finally OKs DOJ antitrust chief. The Senate yesterday approved William Baer as Assistant Attorney-General for the Justice Department's antitrust division 10 months after President Obama nominated him and 16 months after the department's previous permanent antitrust chief stepped down. Baer, who has spent his career passing through the revolving door that connects private and public practice, is expected to continue the DOJ's tough line on antitrust issues.
In Asia, Japan closed. Hong Kong flat at 22657. China +1.6% to 2269. India -0.1% to 19427.
In Europe, at midday, London -0.3%. Paris +0.7%. Frankfurt closed.
Futures at 7:00: Dow +0.2%. S&P +0.4%. Nasdaq +0.1%. Crude -0.7% to $90.17. Gold +0.2% to $1659.90.
Today's economic calendar:
10:30 Dallas Fed Manufacturing Outlook
3:00 PM USDA Ag. Prices
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