Spain may have exited recession after over two years. Spain's economy may have expanded for the first time in over two years in Q3, with the Bank of Spain estimating that the economy eked out quarterly growth of 0.1% following nine quarters of consecutive decline. With domestic demand falling 0.3%, strong exports helped pull Spain out of its protracted slump. The economy has been moribund since 2008, when a housing bubble burst, leaving millions out of work and thousands of companies bankrupt.
JPMorgan faces another $5.75B in claims. JPMorgan (JPM) is reportedly facing demands from a group of investors for $5.75B in compensation for the mis-selling of problematic mortgage bonds prior to the financial crisis. The investors include BlackRock (BLK) and Goldman Sachs Asset Management (GS). The $5.75B would be separate to a $13B fine that JPMorgan is close to agreeing with a number of authorities for various sins, including those related to mortgage debt.
Samsung displays faith in Corning with $2.3B investment. Corning's (GLW) shares soared 24% premarket after the company said yesterday that Samsung Display is buying $2.3B worth of its convertible preferred shares. The deal will give Samsung a 7.4% stake in Corning on an as-converted basis. It also features a new display glass supply agreement between the firms that will last until 2023, and a strengthening of their R&D collaboration. Corning is taking full control of the companies' Samsung Corning LCD glass joint venture, currently 43%-owned by Samsung.
Top Stock News
World stock markets fall. Global equities were in the red at the time of writing, with fears of tightening by China's central bank hurting sentiment. Japanese shares dropped sharply after the yen strengthened against the dollar following a bad miss for U.S. employment data yesterday, which has prompted investors to rule out Fed tapering this year. Chinese shares were also hampered by debt write-offs at banks (see below) and fears that small-caps are overvalued.
ECB to stress test top eurozone banks. The European Central Bank plans to carry out comprehensive stress tests on 128 top eurozone banks over the next year as it aims to build confidence in the financial sector by improving transparency and implementing "corrective action" where needed. The central bank will ask banks to provision 8% of their risk-adjusted capital as a buffer against losses on loans and other parts of their portfolio. The STOXX Europe 600 Banks index was -1.9% at the time of writing.
P-E firms reportedly eyeing Safeway. Cerberus and other private-equity firms are reportedly "exploring a deal for all or part" of Safeway (SWY), which has a market cap of $8.1B. The supermarket chain is reviewing its options. The speculation comes a month after activist investor Jana Partners disclosed a 6.2% stake in Safeway, since when the company has announced plans to abandon its money-losing Chicago operations and has launched a $2B buyback program. Safeway's shares were +4.1% premarket.
Peugeot, GM may reduce scope of partnership. Peugeot Citroen (OTC:PEUGF) and GM (GM) could scale back their alliance, with a plan to develop a platform for sub-compact vehicles "under review." Such a move would probably cut the expected medium-term synergies of the carmakers' alliance from the $2B that was forecast. Two GM-Peugeot programs for small and compact minivans are still in the pipeline, while the partners are also considering "new initiatives."
Dutch lender faces $1B fine over Libor rigging. Holland's Rabobank is reportedly facing a larger-than-expected fine of almost $1B over the alleged manipulation of Libor and other interbank lending rates. A settlement with U.S. and U.K. authorities, as well as with the Dutch central bank, could come next week. The penalty would be the second-largest for rate rigging, and while it is smaller than the $1.5B imposed on UBS (UBS), its size may concern other banks facing similar charges.
Twitter secures $1B credit line. Twitter (TWTR) has obtained a revolving credit facility of $1B from the underwriters of its upcoming IPO, the micro-blogging site said yesterday, although it hasn't yet drawn any money. Twitter also disclosed that last year, CEO Dick Costolo earned $11.5M in total.
Icahn slashes Netflix stake to 4.5%. Carl Icahn has lowered his holding in Netflix (NFLX) to 4.52%, having purchased as much as almost 10%. The video service's stock is up nearly fourfold since Icahn first disclosed that he'd bought into the company around a year ago. "Wish to thank Reed Hastings, Ted Sarandos, NFLX team, and last but not least Kevin Spacey," Icahn wrote on Twitter.
Top Economic & Other News
BOE united in keeping policy on hold. The Bank of England's Monetary Policy Committee voted unanimously to keep interest rates at 0.5% and against more quantitative easing at a meeting earlier this month. The BOE said that U.K. unemployment appears to be falling slightly faster than expected, while the recovery is stronger than anticipated.
China's top banks triple debt writeoffs. China's five largest banks wrote off 22.1B yuan ($3.65B) of debt in H1, triple the amount of a year earlier, as they prepared for what may be a new wave of defaults. "The banks and the regulators' interests are aligned in speeding up write-offs," says analyst Ma Kunpeng. "This prepares them for a rainy day." The news was among the factors that helped Chinese shares drop 1.25%.
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In Asia, Japan -1.9% to 14426. Hong Kong -1.4% to 23000. China -1.25% to 2183. India -0.5% to 20768.
In Europe, at midday, London -0.5%. Paris -0.9%. Frankfurt -0.4%.
Futures at 6:20: Dow -0.5%. S&P -0.6%. Nasdaq -0.6%. Crude -1.6% to $97.62. Gold -0.7% to $1333.10.
Ten-year Treasury Yield -2 bps to 2.5%.
Notable earnings before today's open: AEP, AMAG, ARG, ATI, BA, BEAV, BMY, BPOP, CAT, CKSW, CMC, CP, DPS, EAT, ECA, EDU, FDML, GD, GRA, HCBK, JAKK, LAD, LCC, LL, LLY,LO, MDCO, MOLX, MSA, MSI, MTH, NDAQ, NLSN, NOC, NSC, NYCB, OC, OCR, OSIS, PLD, RES, SIX, TMO, TUP, WLP, WYN
Notable earnings after today's close: AEM, AIZ, AKAM, ALGT, ANGI, ASGN, AVB, BDN, CAKE, CDNS, CLGX, CMO, CMRE, CTXS, CVA, EFX, EGHT, EQIX, ESV, ETFC, EVR, FBHS, FFIV, FIO, FOE,FTNT, GGG, HRC, INFN, KFN, LOGI, LRCX, LSI, MLNX, NOW, NXPI, ORLY, PLCM, PLXS, QDEL, QTM, RE, SCI, SGMO, SKX, SLG, SRCL, STMP, SUSQ, SWFT, SYMC, T, TAL, TCBI, TER, TEX, TMK, TQNT, TRIP, TSCO, TYL, VAR, WLL, WRE
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