In China, economy sends mixed signals. Chinese industrial output growth printed at 9.3% in April, up from a seven-month low of 8.9% in March but still a whisker below economists' expectations of 9.4%. Investors were watching the data closely for signs of weakness after last week's trade data aroused suspicion for being too good to be true. Traders also got a read on the Chinese consumer as the National Bureau of Statistics said retail sales in the country grew 12.8% last month, matching forecasts. Despite the news, consumer discretionary stocks fell. Ultimately, investors once again came away with mixed feelings regarding the state of the Chinese economy.
Broken record: Nikkei rallies, yen falls. The yen (NYSEARCA:FXY) continued its slide early Monday, falling to a new four-and-a-half year low against the dollar (before recovering), helping the Nikkei (NYSEARCA:NKY) post another triple-digit gain on the session, rising 1.2% to 14782, its highest level since January 2008. The weak yen comes on the heels of the G7's reportedly amicable meeting over the weekend, at which officials were generally supportive of the BOJ's policies and reiterated that Japan's goal is to fight deflation not engage in the targeting of exchange rates.
G7 signals acceptance of Japanese monetary policy. Financial representatives of the G7 countries came away from an informal two-day gathering hosted by Britain's George Osborne satisfied that Japan's extraordinary monetary policy maneuvers are targeted at vanquishing deflation not exchange rate targeting. Although German finance minister Wolfgang Schäuble did mention "the relatively high levels of liquidity" present in the market (the obligatory German nod to conservative monetary policy), U.S. Treasury officials said the "conversation [with Japan] was good." Osborne also noted that when it comes to fiscal policy, "there are more areas of agreement between [the G7] than is commonly assumed."
Top Stock News
HSBC may cut more jobs. HSBC (HBC) may announce more job cuts this week as CEO Stuart Gulliver is set to unveil further measures to enhance efficiency at the bank, where the workforce has already been reduced by some 66,000. HBC could do away with up to 20 more businesses on top of the nine segments already dispensed in order to keep costs down and eliminate redundancies at an operation some say is "notorious" for its "levels of bureaucracy." An announcement could come as early as Wednesday, MarketWatch said, citing The Independent.
InterOil reports as investors eye partnership. Controversial integrated oil and gas company InterOil (NYSE:IOC) will deliver earnings after the bell Monday, its first quarterly report after announcing the retirement of CEO and founder Phil Mulacek. As usual, investors will be listening for any new clues as to the identity of a partner for its LNG project in Papua New Guinea. Speculation has swirled for some time now that Shell (NYSE:RDS.A) is the leading candidate. Analysts expect IOC to post Q1 EPS of $0.13 per share on revenue of $331.46M.
Elan to pay Theravance $1B for access to royalties. Elan (NYSE:ELN) said Monday it will make a one time cash payment of $1B to Theravance (THRX) for a 21% participation interest in future royalty payments from THRX's four respiratory collaborations with GlaxoSmithKline (NYSE:GSK) including the recently-approved Breo Ellipta/Relvar treatment for COPD. The news comes on the heels of THRX's recent earnings report and concurrent announcement that it will split into two separate publicly traded companies.
Chrysler to recall SUVs. Chrysler (FIATY.PK) will recall nearly half a million Jeep SUVs across the globe due to circuit board cracks which may cause faulty signals when the vehicles are started. In some cases, the SUVs may "shift into neutral without warning … and roll away," Fox News said over the weekend. The recall affects 2005-2010 Grand Cherokees and 2006-2010 Commanders.
GM to spend $200M on dealer revamp. General Motors (NYSE:GM) plans to spend $200M to update dealer showrooms and relocate under-performing outlets. The automaker will focus on dealers in California, New York, and New Jersey in particular in a bid to improve market share in metropolitan areas. Execs think the fresh slate of models will be attractive in areas where GM's market share lags some foreign manufacturers.
Top Economic & Other News
Libor replacement on the horizon. Libor may be replaced by a new system next year. FT says discussions are centered around a dual-track system wherein a survey-based approach (the old model) would operate concurrently with a transaction-based index (the new model). Presumably, such an approach would retain the stability of the traditional model, while incorporating an element of objectivity.
Bloomberg apologizes for "inexcusable" practices. "The recent complaints relate to practices that are almost as old as Bloomberg News," Bloomberg News' editor in chief Matthew Winkler said in an editorial Sunday, referring to complaints reporters accessed proprietary information on Bloomberg terminals in order to get an edge on other financial news agencies. Winkler apologized, calling the practice "inexcusable." Several former employees have said a function allowing them to access subscribers' contact information and login activity sometimes "advanced news coverage," according to the NY Times.
ECB's Visco talks negative deposit rates. The ECB's Ignazio Visco revived the discussion of negative deposit rates over the weekend, after Ewald Nowotny sought to dismiss the notion as largely out of the realm of near-term possibilities earlier this month. Visco told CNBC that the ECB is "technically prepared" to institute the policy and went so far as to say that in his opinion, "the economy is now capable of taking it on board." In the wake of the ECB's most recent policy meeting, Mario Draghi said he has an "open mind" to the policy, a statement which sent the euro (NYSEARCA:FXE) tumbling.
India's trade deficit widens. India's appetite for (now cheaper) gold (NYSEARCA:GLD) drove the country's trade deficit 70% wider in April as precious metals imports more than doubled Y/Y. The deficit came in at $17.8B last month, up from $10.31B in March as higher import taxes on gold failed to arrest voracious demand from the world's biggest consumer. The country's trade secretary called the figures "surprising."
In Asia, Japan +1.2% to 14782. Hong Kong -1.42% to 22989. China -0.22% to 2241. India -2.14% to 19691.
In Europe, at midday, London -0.24%. Paris -0.28%. Frankfurt -0.39%.
Futures at 7:00: Dow -0.28%. S&P -0.34%. Nasdaq -0.3%. Crude -0.91% to $95.17. Gold -0.4% to $1430.00.
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