HSBC mulls listing £20B U.K. operations. HSBC (HSBC) has reportedly asked investors if they would support the bank selling as much as 30% of its U.K. unit in an IPO that could value the subsidiary at £20B. A listing could help HSBC comply with upcoming rules that will require U.K. banks to ring-fence domestic retail operations, deal with increasing capital requirements, and unlock shareholder value. HSBC's shares were -0.3% in London at the time of writing.
Chinese exports power higher, inflation remains relatively tame. China's exports climbed a greater-than-expected 12.7% on year in November and helped the country's trade surplus increase 8.7% to $33.8B, the highest level since January 2009. Meanwhile, inflation nudged down to 3% from 3.2% as a rise in food prices eased. The trade figures indicate that the global economy is beginning to tick along swimmingly, while the softening inflation could give China's central bank room to refrain from further tightening.
Top Stock News
EADS to axe up to 6,000 jobs. EADS (OTCPK:EADSF) reportedly plans to reduce its headcount by 5,000-6,000 people and sell its Parisian headquarters as part of a restructuring. However, the company doesn't intend to lay staff off but will instead use voluntary redundancy and other measures. The overhaul will mainly affect EADS's defense operations, which have suffered from governmental cutbacks, and it will enable the company to save an estimated €300-500M from 2014-2016.
GM to slash S. Korea output, end Australian production. GM (GM) is reportedly planning to reduce production in South Korea by up to 20% by 2016 and close its two factories in Australia, where the strong dollar has hurt the carmaker's competitiveness. In Korea, the company has had to deal with high wages and labor unrest. The cutbacks would add to the shutting of a factory in Germany and GM's decision to significantly scale back Chevrolet sales in Europe.
SEC widens probe into hiring practices at banks. Goldman Sachs (GS), Deutsche Bank (DB) and Credit Suisse (CS) have reportedly joined JPMorgan (JPM) on the list of banks being investigated for their hiring practices in China. Morgan Stanley (MS) and Citigroup (C) are also being scrutinized. The SEC is looking at whether the banks breached laws relating to foreign bribery by recruiting the family members of the well-connected in order to win business.
Leaked documents don't look good for JPMorgan. The probe into JPMorgan's (JPM) hiring activities in China has uncovered an email from a senior executive in Hong Kong saying that the bank's recruitment program for family members of senior government and other officials had an almost "linear relationship with winning assignments to advise Chinese companies." A spreadsheet tracks JPM's record for converting hires into business deals. However, there's apparently no indication that executives at the bank's New York HQ knew of the recruitment strategy.
AMR-US set to take off as new company. American Airlines (AAMRQ) and US Airways (LCC) are all set to begin their new life as a married company (AAL) today after Supreme Court Justice Ruth Bader Ginsburg denied a last-minute effort by consumer groups and travel agents to prevent the carriers' merger from taking place. The plaintiffs fear that the deal will force prices up, hurt services and make planes more crowded.
Bain, Golden Gate enter battle for Compuware. Bain and Golden Gate Capital have reportedly teamed up to make a bid for software provider Compuware (CPWR), whose market cap is $2.34B. The private-equity firms agreed to acquire larger rival BMC Software (BMC) in May, although they wouldn't necessarily merge Compuware with BMC. Bain and Golden Gate could face competition from Thoma Bravo and Vista Capital.
Top Economic & Other News
WTO finally agrees to new trade pact after years of talks. A meeting of ministers at the World Trade Organization has agreed to a "trade facilitation decision" that is designed to cut the cost of trade by 10-15%, which could add $400B-$1T to the global economy and create 21M jobs. Once the deal is adopted, it should "speed up customs procedures, and make trade easier, faster and cheaper." The pact came at the latest round of the Doha talks, which have been going on since 2001, and is much weaker than the original goals of the discussions.
German industrial production in shock fall. German industrial output unexpectedly fell 1.2% on month in October after dropping 0.7% in September and badly missed consensus for a rise of 0.8%. Meanwhile, unadjusted exports increased 0.6% to a record €99.1B, a figure that may add strength to those in Europe who have criticized Germany for relying too much on foreign trade.
Mexico unveils radical bill to open up energy market. Legislators in Mexico have been debating a draft bill to open up the country's energy industry and end the decades-long monopoly of the state-run and highly inefficient Pemex. The measures would allow private oil companies to explore for, produce, and refine oil and gas, as well as share and market the resources they extract. If the bill becomes law - and the expectations are that it will - it could add 50-100 bps to Mexico's GDP, says economist Pedro Tuesta.
Freezing weather hits airlines, freight companies. Airlines have canceled hundreds of flights, freight companies and online retailers have delayed deliveries, and power has been cut to tens of thousands of customers due to severe winter weather across the U.S. American Airlines (AAL) has been especially affected after more than 400 flights from Dallas/Fort Worth, American's largest hub, were scrapped. FedEx (FDX) and UPS (UPS) have also felt the impact of the weather, while eBay (EBAY) has warned of shipment delays.
Alpha-Rich Stock Movers and Great Calls
1) On November 25, energy expert Richard Zeits highlighted the macro and balance sheet issues facing EXCO Resources (XCO) and recommended a short sale. Shares are -12% since. Read article »
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Alpha-Rich Stocks To Watch
1) E&P company Chinook Energy (OTC:CNKEF) is trading at massive discounts to its book value, net asset value and peers, with pending assets sales poised to unlock value, writes Value Digger. Read article »
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In Asia, Japan +2.3% to 15650. Hong Kong +0.3% to 23811. China +0.05% to 2238; India +1.4% to 21286.
In Europe, at midday, London -0.2%. Paris -0.3%. Frankfurt +0.1%.
Futures at 6:20: Dow flat. S&P flat. Nasdaq +0.1%. Crude +0.1% to $97.78. Gold -0.1% to $1228.
Ten-year Treasury Yield -1 bps to 2.85%.
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