Worst could be over for eurozone. Eurozone composite output PMI rose to 47.2 in December from 46.5 in November, with the services index edging up to 47.8 from 46.7. Surveys across the region, such as in Germany, "provide some hope that the eurozone is showing signs of lifting out of its deep double-dip recession," says Markit, although the December improvements are "unlikely to prevent the eurozone economy from having contracted at a sharper rate" in Q4.
Stock futures tread water ahead of payroll data. Dow and S&P futures were flat premarket, while the Nasdaq was +0.1% ahead of December's nonfarm payroll data this morning. Economists estimate that 160,000 jobs were created vs 146,000 in November, while the unemployment rate stayed at 7.7%. European stocks, oil, gold and silver were lower while Asian stocks ended mixed following the surprisingly hawkish FOMC minutes (see below). However, Tokyo shares surged as Japanese investors played catch-up following a week's holiday.
Transocean settles with DOJ over Gulf spill. Transocean (NYSE:RIG) has agreed to pay over $1.4B to settle federal claims related to the 2010 Gulf of Mexico oil spill, including a $400M criminal penalty. The deal is a "welcome surprise," says Wells Fargo, with analysts predicting that it could be positive for BP (NYSE:BP) as well, because it doesn't include language that Transocean was grossly negligent.
Top Stock News
Car makers enjoy best year since 2007 in U.S. Automakers sold almost 14.5M vehicles in the U.S. in 2012, up 13% from 2011 and the highest since 2007. A strong December for Ford (NYSE:F), GM (NYSE:GM) and Chrysler (FIATY.PK) capped off the year, while Japanese car firms improved sales dramatically from the earthquake-ravaged levels of 2011 but fell short of analyst estimates. In the luxury market, BMW (BAMXY.PK) edged out Audi (OTCPK:VLKAY) and Mercedes (OTCPK:DDAIF).
Obscure patent could save Eli Lilly billions. Eli Lilly (NYSE:LLY), which is suffering from a massive patent cliff and faces another one in 2017, could keep marketing exclusivity for its blockbuster Alimta lung cancer drug until 2022 rather than 2016 if it wins a case over a "method-of-use" patent on the way the multibillion dollar selling treatment is administered. Such IP is usually not upheld, although some experts believe that the Alimta case is different.
Ratings agencies must face fraud suit. Moody's (NYSE:MCO), S&P (MHP) and Fitch (OTC:FMLCF) have failed in a bid to dismiss a lawsuit that accuses them of fraud in their ratings of Rhinebridge, an investment vehicle that failed in 2007. District Judge Shira Scheindlin said in a ruling yesterday that the agencies could be liable if they misstated their opinions or if the ratings were false or misleading. Morgan Stanley (NYSE:MS), which helped create the vehicle, must also face the suit.
Investors swap stock-pickers for ETFs. Investors pulled $119.3B out of actively managed vehicles in January-November and poured $154B into stock and bond exchange-traded funds, with both figures the largest since 2008. The trends reflect the under-performance and higher fees of the stock pickers. Companies benefiting include Vanguard, BlackRock (NYSE:BLK) and Pimco, while those losing out include Artio (NYSE:ART).
Big Pharma lines up for Bausch & Lomb. Abbott Labs (NYSE:ABT), Johnson & Johnson (NYSE:JNJ) and Sanofi (NYSE:SNY) have reportedly displayed an interest in Warburg Pincus' Bausch & Lomb. Warburg is hoping to get at least $10B for the business and is seeking first-round bids by the end of the month. The $10B price tag would be a major coup for Warburg and give it a hefty return on its $1.7B equity investment.
Liberty Media on cusp of Sirius control. Liberty Media (NASDAQ:LMCA) has won FCC approval to obtain de jure control of Sirius XM (NASDAQ:SIRI). Liberty, which owns a 49.8% stake in the satellite radio provider, expects to complete the process within the next 60 days.
Former Buffett aide escapes insider-trading charges. The SEC has closed its investigation into David Sokol, a former top aide to Warren Buffett, for possible insider trading and decided not to press charges. Sokol resigned from Berkshire Hathaway (NYSE:BRK.A) in 2011 after he bought shares in Lubrizol about two months before Berkshire said it was acquiring the lubricants company. It was Sokol who recommended that Berkshire purchase Lubrizol in the first place.
Top Economic & Other News
Some FOMC members turn hawkish. Fed policy officials "were approximately evenly divided" between those who want endless QE and those who surprisingly want to end it by the middle of this year, the minutes of the latest meeting show. Five voting members will be replaced in 2013, although a quick glance shows the hawk/dove makeup of the voters should be little-changed.
Forex manipulation costs 1M-5M U.S. jobs - study. Forex intervention by foreign countries has cost the U.S. 1M-5M jobs over the past few years, a report from the Peterson Institute for International Economics says. The biggest sinner, so to speak, is China, which held $3.3T of reserves by the end of 2011. Critics might point out that the Fed does its own spot of manipulation by cranking up the money printing presses.
New York finds that fracking can be done safely. State regulators have determined that fracking can be done safely in New York, the NYT reports, but the findings have been closely guarded by Governor Andrew Cuomo, "unnerved in part by strident opposition on his party's left." That's tantamount to a Cuomo cover-up, the WSJ's Jason Riley writes. "For the governor, this is about politics, not science."
In Asia, Japan +2.8% to 10688. Hong Kong -0.3% to 23331. China +0.3% to 2277. India +0.1% to 19784.
In Europe, at midday, London -0.1%. Paris -0.4%. Frankfurt -0.3%.
Futures at 7:00: Dow flat. S&P flat. Nasdaq +0.1%. Crude -1.2% to $91.82. Gold -2.5% to $1632.70.
Today's economic calendar:
Monster Employment Index
8:30 Nonfarm payrolls
10:00 Factory Orders
10:00 ISM Non-Manufacturing Index
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
Notable earnings before today's open: MOS
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