- UAE moves to quiet fears. In an apparent effort to calm global markets, the central bank of the United Arab Emirates said it will give affected banks a liquidity line of unspecified size after Dubai shocked markets on Wednesday with news of a standstill on some $60B of debt for Dubai World. Reports suggest European banks could be on the hook for some $40B. The central bank said it was standing behind local and international banks in the U.A.E. with a special additional liquidity facility linked to their current accounts at the central bank, at the rate of 50 bps above the 3-month Eibor. It said nothing about helping Dubai, but stated that the U.A.E. banking system "is more sound and solid than a year ago." The lifeline news helped sooth some nerves after big losses late last week, sending the MSCI Emerging Markets Index to its biggest gain in two weeks on Monday.
- Thirty financials on systemic risk list. Thirty giant financial institutions were selected by the FSB for cross-border systemic-risk oversight, and will be asked to write "living wills" that outline wind-down plans in the aftermath of a crisis. North America: Goldman Sachs (GS), JPMorgan (JPM), Bank of America (BAC), Royal Bank Of Canada (RY). U.K.: HSBC (HBC), Barclays (BCS), Royal Bank of Scotland (RBS), Standard Chartered. Europe: UBS (UBS), Credit Suisse (CS), Societe Generale, BNP Paribas, Santander (STD), BBVA (BFR), Unicredit, Banca Intesa, Deutsche Bank (DB), ING Group (ING). Japan: Mizuho (MFG), Sumitomo Mitsui, Nomura (NMR), Mitsubishi UFJ Financial Group (MTU). Insurers: AXA (AXA), Aegon (AEG), Allianz (AZ), Aviva, Zurich, Swiss Re.
- Black Friday: more people spent less. U.S. consumers flocked to buy cheap laptop computers and other specials the day after Thanksgiving, but heavy discounts meant that major retailers hauled in just 0.5% more in sales this period than a year earlier ($41.2B vs. $41B), even as the number of shoppers at stores and on web sites rose to 195M from 172M a year earlier. Recession-pressed shoppers spent an average $343.31, less than $372.57 a year ago. The NRF still expects spending to fall by 1% this season.
- Treasury losing patience with mortgage servicers. On Monday, the Treasury plans to meet with mortgage servicers and press them to act more swiftly in helping borrowers avert foreclosure under a $75B campaign meant to address this problem, sources say. One of its tactics will be to humiliate banks that aren't pulling their weight by naming them publicly. "Some of the firms ought to be embarrassed, and they will be," Treasury's Michael Barr said in a recent interview. The Treasury is also expected to unveil new measures to enhance mortgage servicer transparency and accountability as part of a broader focus on maximizing conversion rates to permanent modifications. BofA (BAC) is thought to be among the worst performers in the program, while Morgan Stanley (MS), Citigroup (C) and JPMorgan (JPM) have been among the better ones.
- Bernanke warns on clipping Fed's wings. In a blunt editorial in Sunday's Washington Post, Fed chairman Ben Bernanke spoke against government meddling to shrink the Fed's role in supervising the U.S. banking system, warning this would "impair the prospects for economic and financial stability in the United States." Some in the Senate have criticized the Fed for lax supervision and introduced legislation this month that would strip bank oversight from the Fed and create a single bank regulator. Senator Bernie Sanders Sunday said he will not vote to reconfirm Ben Bernanke as Fed chairman, saying "he is part of the problem." Bernanke's op-ed comes ahead of his re-nomination hearing this week.
- Sands China IPO starts with whimper. The IPO of Sands China, the world's seventh-largest IPO so far this year, dropped 10% on its first day, as many expected. Shares of the Macau unit of U.S. casino operator Las Vegas Sands (LVS) opened at HK$9.35, vs. their Hong Kong IPO price of HK$10.38. The IPO, which raised $2.5B, came in the middle of the Dubai debt debacle and more generally, a stock market that's been showing signs of fatigue.
- China spurns Europe on yuan. European officials flew back home empty handed over the weekend, having failed to convince the Chinese government to revise controls that shelter the yuan from the dollar's fall and expose the euro region. The euro has surged some 20% versus the U.S. dollar since Feb. 18, making exports less competitive and threatening the region's recovery. ECB President Jean-Claude Trichet admitted at a briefing that no immediate change to China's currency polices is likely. He said Chinese officials confirmed that they will continue to implement currency reforms begun in 2005, when a fixed exchange rate ended.
- IBM to buy safety start-up. IBM (IBM) is expected to announce that it closed on the purchase of database security start-up Guardium for $225M, according to Israeli financial newspaper TheMarker. Guardium, which has some 60 employees and was started as an Israeli firm in 2002, moved to Boston in 2003. The company had raised $21M from venture capital funds such as Ascent Venture Partners, Israel's StageOne Ventures and Veritas, and Cisco Systems (CSCO). Guardium's software lets companies give customers and partners access to their corporate applications, while ensuring that the databases used by those applications remain shielded.
- Iran provokes over nuclear plan. Tensions between Iran and the international community could worsen after the country unveiled plans for a massive expansion of its nuclear program and said it might pull out of the Nuclear Non-Proliferation Treaty. President Mahmoud Ahmadinejad told a cabinet meeting Sunday of plans to build 10 more nuclear facilities for enriching uranium to provide nuclear fuel for energy, but Western officials suspect Iran wants to build an atomic bomb.
- India growth powers ahead. India's GDP grew 7.9% in Q3 vs. last year's same period, shattering analyst expectations of 6.3% as higher domestic demand and strong mining and manufacturing growth helped. India is also likely to upwardly revise its official growth forecast for the fiscal year ending March 31, 2010, according to a news report. The government has forecast growth of 6.5% for the fiscal year.
- Saab has new suitors. Just days after Swedish car maker Koenigsegg reneged on plans to take Saab off General Motor's hands, two new suitors - U.S. investment firms Wyoming-based Merbanco and Renco Group in New York - have indicated an interest. Saab is racing to convince GM to save the company, which has yet to turn a profit after more than 20 years. It may get a needed boost after the Swedish government on Friday said it remains ready to act as the company's guarantor on €400M in loans from the European Investment Bank. Sweden is sending a delegation to Detroit to meet with GM officials early next week. GM's board begins its regular monthly meeting late Monday and could announce a decision on Saab's future as soon as Tuesday.
- Democrats expect green light for healthcare plan. Congress is expected to bless the healthcare reform proposal aimed at expanding medical coverage to millions of uninsured, but not without concessions, leading Democrats have said. The U.S. House of Representatives passed its version of the plan on November 7, and the Senate will be up to bat Monday to begin debate. Democrats have been struggling for consensus over issues such as abortion, a new government-run insurance plan and efforts to rein in costs.
Asia stocks bounced back Monday with sharp gains across the board. Europe opened higher but has mostly moved into the red, as have stock futures.
- Asia: Nikkei +2.9% to 9346. Hang Seng +3.3% to 21822. Shanghai +3.2% to 3195. BSE +1.8% to 16926.
- Europe at midday: FTSE +0.2% to 5202. CAC -0.9% to 3687. DAX -1.1% to 5624.
- Futures at 7:00: Dow -0.1% to 10281. S&P -0.1% to 1088. Nasdaq -0.1%. Jan. crude +0.1% to $76.13. Feb. gold -0.4% at $1,171. 30-year Tsy -0.13% to 123-01. 10-year -0.03%. 5-year +0.01%.
Monday's Economic Calendar
- 9:00 NAPM NY Report on Business
9:45 Chicago PMI
10:30 Dallas Fed Manufacturing Outlook
12:00 PM Chicago Fed's Midwest Mfg. Index
8:15 PM Larry Summers: Innovation and Economic Growth
- Notable post-market earnings: GES, OVTI
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