EU fines banks €1.71B for rate-rigging. The EU Commission has fined a group of leading multinational banks €1.71B for rigging inter-bank interest rates in what is the largest antitrust penalty that the commission has ever levied. The banks being fined include many of the old favorites: Citigroup (C), Deutsche Bank (DB), Royal Bank of Scotland (RBS) and JPMorgan (JPM), as well as Societe Generale (OTC:SCGLF). HSBC (HSBC) and Credit Agricole (OTCPK:CRARF) are facing charges for contesting the EU's accusations, while UBS (UBS) and Barclays (BCS) have avoided hefty penalties for exposing the rate-manipulation.
Illinois legislature OKs pension overhaul. Illinois' Senate and House have approved a revamp of the state's retirement system, one of the most underfunded in the country with a gap of almost $100B. The plan is designed to fully fund Illinois' five pension systems by 2044 by saving an estimated $160B over 30 years with cuts and other measures. Unions strongly oppose the proposals and intend to go to court to try to block them. Still, the Illinois revamp could provide a template for other local and regional governments that are grappling with similar problems.
Eurozone business activity loses momentum. Eurozone services PMI slipped to 51.2 in November from 51.6 in October, while composite output fell to 51.7 from 51.9. Activity in Germany, Ireland and Spain grew but contracted in Italy and France. The eurozone recovery "lost some momentum in November," says Markit. "It's clearly a concern that the rate of growth remains so fragile." The survey indicates that the bloc's economy is on course to grow by just 0.2% in Q4.
Top Stock News
AstraZeneca eyes bid for Forest Labs. AstraZeneca (AZN) has been running the numbers on a takeover bid for Forest Labs (FRX), the FT reports. The U.K. company's advisers gained preliminary board approval for a cash offer and then met with top Forest executives, although the talks might have already stalled following a recent surge in the latter's shares. Some wonder why Forest, which has a market cap of $15.2B, announced a restructuring on Monday if it was planning to sell itself.
Shoppers returned to J.C. Penney last month. J.C. Penney's (JCP) comparable-store sales rose 10.1% in November, with e-commerce activity continuing to be strong and coming in well ahead of last year. Even running off of a soft comparable from the Ron Johnson led sales debacle a year ago, it's a nice piece of momentum for the retailer during the critical holiday shopping season.
Microsoft closes $8B debt sale. Microsoft (MSFT) has raised $8B worth of debt, including €3.5B in euro-denominated bonds and $3.25B in dollar-denominated paper. Microsoft didn't say much about what it plans to do with the proceeds, but buybacks are a good bet. In addition to boosting EPS, eliminating shares via repurchases removes the dividend payments attached to them.
Top Economic & Other News
Japan prepares $181B stimulus package. Japan has reportedly been putting together an ¥18.6T ($181B) stimulus package to offset the impact of a rise in sales tax that is due to take place in April. The government will use tax revenue to finance the spending and forgo raising new debt. The package will add to a ¥20T plan that Prime Minister Shinzo Abe unveiled earlier this year, as well as to the Bank of Japan's massive stimulus.
Growth in China's services sector slows. China's HSBC services PMI slipped to 52.5 in November from 52.6 in October, although composite output increased to an eight-month high of 52.3 from 51.8. Employment in the services sector expanded for the third consecutive month. "However, the moderation of new business and prices-charged growth implies that the underlying growth momentum started to soften," HSBC says.
Irish recovery process continues with €1.84B sale of bank stake. The Irish government is exiting Bank of Ireland, which it bailed out during the financial crisis, by selling €1.3B of preferred shares to investors and another €537M to the bank. Overall, the government expects to have recovered €5.9B from its rescue of BOI, representing a handy profit on the €4.8B that was provided. "This transaction will build further confidence in Ireland's recovery and will strengthen Ireland's return to normal market funding," said Finance Minister Michael Noonan.
Alpha-Rich Stock Movers and Great Calls
1) On Monday, Dennis Beaudet said Taipan Resources (OTC:TAIPF) is a 'minnow' that could grow into 'Jaws,' as a recent deal was worth more than the company's market cap. Shares are +17.4% since. Read article »
2) On September 11, Intangible Valuation noted that Cinedigm Digital Cinema (CIDM) had a highly profitable business model largely obscured by accounting rules, with a new deal with Netflix serving as a catalyst. The stock is +56.2% to date. Read article »
Alpha-Rich Stocks To Watch
1) Richard Zeits' first call on Penn Virginia (PVA) returned over 100%, but the energy expert says multiples remain compressed, pointing to further upside. Read article »
2) Darling International (DAR) is benefiting from a recent regulatory decision; with more catalysts to come, EBITDA and share price increases should follow, says Alpha Gen Capital. Read article »
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In Asia, Japan -2.2% to 15408. Hong Kong -0.8% to 23729. China +1.3% to 2252. India -0.7% to 20709.
In Europe, London -0.1%. Paris -0.1%. Frankfurt +0.1%.
Futures at 6:20: Dow +0.1%. S&P +0.1%. Nasdaq +0.15%. Crude +1.2% to $97.18. Gold -0.75% to $1211.60.
Ten-year Treasury Yield +1 bps to 2.8%.
Today's economic calendar:
7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
8:30 International Trade
10:00 New Home Sales-Sep
10:00 New Home Sales-Oct
10:00 ISM Non-Manufacturing Index
10:30 EIA Petroleum Inventories
2:00 PM Fed's Beige Book
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