German economy contracts in Q4. The German economy probably suffered a "significant decline" in Q4, the Economy Ministry said today - in contrast to consensus forecasts of 0.8% growth - with the industrial sector cutting output due to weak demand in Europe. However, the ministry expects the economy to "revive significantly" this year given its underlying strength and encouraging signs in the global outlook. Germany is due to publish 2012 GDP estimates on Tuesday. The euro was flat vs the dollar at midday in Europe.
Boeing Dreamliners suffer two more mishaps as FCC orders review. A bad week is ending on even more of a low for Boeing (NYSE:BA) and its 787 Dreamliner after an oil leak was discovered in the left engine of a jet operated by All Nippon Airways today, while a cockpit window cracked in another ANA 787. The latest problems add to three earlier incidents this week, and come as the FAA orders a safety review of the plane. Shares were -1% premarket.
Chinese inflation rises more than expected. China's CPI rose 2.5% on year in December, accelerating from a 2% increase in November as food prices jumped 4.2%. The producer price index, however, which is reflective of wholesale prices, dropped at a more-than-expected 1.9%. Economists had estimated a 2.4% increase in the CPI and a 1.8% drop in PPI.
Top Stock News
JPMorgan to be ordered to improve compliance. Regulators will reportedly issue a cease-and-desist order to JPMorgan (NYSE:JPM) today requiring the bank to correct weaknesses with the way it monitors problematic cash flows and to improve its compliance. However, JPMorgan is expected to escape receiving a fine, unlike HSBC (HBC) and Standard Chartered (OTCPK:SCBFF), which were hit with massive penalties for allowing money laundering and other sins.
AmEx to slash 5,400 jobs. American Express (NYSE:AXP) plans to cut 5,400 jobs, or about 8.5% of its workforce, for which it will take a $600M Q4 charge. The company announced the job losses along with early results for the period, with EPS of $1.09 beating expectations by $0.03 and revenue rising 5% to $8.1B, which was roughly in line. Card-member spending grew 8% despite the effects of Superstorm Sandy. Credit indicators remained at "historically low levels" and the charge-off rate on AmEx's U.S. portfolio came in at 2%.
Chevron forecasts stronger Q4. Chevron (NYSE:CVX) expects its Q4 earnings to be "notably higher" on quarter as U.S. net oil-equivalent production increased 39,000 bbl a day during the first two months of the period, reflecting a recovery from Hurricane Isaac and higher output via recently acquired Permian Basin acreage. Chevron also booked a $1.4B gain on an asset transaction. Shares were +0.3% premarket.
First Quantum boosted in C$5.1B bid for Inmet. First Quantum (OTCPK:FQVLF) has received a boost in its C$5.1B ($5.19B) hostile bid for fellow Canadian peer Inmet Mining (OTC:IEMMF) after Leucadia National, which is Inmet's largest shareholder with a 15% stake, said late yesterday that it will tender its stock to First Quantum "in the absence of changed circumstances or new information." The deal would give the latter access to Cobre Panama, one of the world's largest undeveloped copper deposits.
Ford to hire 2,200 salaried staff in U.S. in 2013. Ford (NYSE:F) intends to recruit 2,200 white-collar workers this year in what would be the car-maker's biggest expansion of new salaried positions in over ten years. Three-quarters of the jobs will be in engineering, manufacturing and IT as Ford expands and refreshes its product line-up globally, including in China, where the company plans to triple the number of models sold to 15.
Top Economic & Other News
Japan unveils $117B stimulus plan. Japanese Prime Minister Shinzo Abe has detailed a widely anticipated ¥10.3T ($117B) stimulus plan as he seeks to pull the economy out of deflation. The money will go towards public works, incentives for corporate investment and aid for small businesses. To fund its new largesse, the government plans to sell around ¥5T more bonds than was budgeted for the fiscal year.
California projects first surplus in years. After years of ballooning deficits, California is forecasting it will generate an $851M surplus in the next fiscal year starting on July 1. Under Governor Jerry Brown's budget, which he unveiled yesterday, general-fund revenue is forecast to rise 3.3% to $98.5B and spending 5% to $97.7B. Brown expects the state's cost cuts, tax rises and improving economy to be the main factors behind its better finances.
European oil consumption lowest since 1990s. OECD European oil demand is forecast to drop by 190,000 bpd this year after falling 510,000 bpd in 2012, the International Energy Agency said, with consumption the lowest since at least 1995 and probably since the early 1990s. The decline is due to improved energy efficiency, the rise of alternative energy, and the slumping economy. In contrast to Europe, demand in non-OECD Asia, the Middle East and Latin America is expected to grow.
Long-term unemployment looks like it may finally be easing. The proportion of job-seekers without work for over six months dropped to 39.1% in December, the first time the rate has been under 40% in three years. The improvements in the economy and broader job market are among the main factors, although another reason may be that millions of people have stopped looking for work and so aren't counted in the statistics.
Spanish industrial output gets worse. The eurozone may think it has averted catastrophe, for now, but the south remains mired in depression. The decline in Spanish industrial production accelerated sharply in November, dropping to -7.2% on year from -3.1 in October and marking the 15th consecutive month of falls. Still, investors don't seem to be too bothered, with Spanish shares and 10-year bond yields little changed at midday in Europe.
In Asia, Japan +1.4% to 10802. Hong Kong -0.4% to 23264. China -1.8% to 2243. India flat at 19664.
In Europe, at midday, London +0.2%. Paris -0.1%. Frankfurt +0.1%.
Futures at 7:00: Dow -0.1%. S&P -0.05%. Nasdaq flat. Crude -0.6% to $93.26. Gold -0.55% to $1668.80.
Today's economic calendar:
8:30 International Trade
8:30 Import/Export Prices
9:30 AM Fed's Plosser: Economic Outlook
2:00 PM Treasury Budget
Notable earnings before today's open: WFC
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