AIG to sell aircraft-leasing unit for $5.4B. AIG (NYSE:AIG) has agreed to sell its aircraft-leasing subsidiary, International Lease Finance Corp. ((ILFC)), to Holland-based AerCap Holdings (NYSE:AER) in a deal worth $5.4B. The transaction comprises $3B of cash and 97.56M new AerCap shares, and is expected to close in Q2 next year. The sale "marks the last major disposition of AIG's non-core assets," the insurer said.
Eurozone business activity accelerates, but growth uneven. Eurozone flash composite PMI increased in December after two successive months of decline, rising to 52.1 from 51.7 in November. However, the upturn was uneven as manufacturing PMI increased to a 31-month high of 52.7 from 51.6 and services slipped to 51 from 51.2. Germany powered ahead, while France, in the words of Markit, "looks increasingly like the new 'sick man of Europe.'" The euro was +0.2% at $1.3774 at the time of writing.
Chinese manufacturing growth slows. Chinese HSBC flash manufacturing PMI has dropped to 50.5 in December from 50.8 last month as output, backlogs, input prices and new orders have grown but employment and output prices have decreased. The overall reading is above the average for Q3, says Markit, implying that a recovery that started in July "still holds up." As a result, the research firm expects "China's GDP growth to stabilize at around 7.8% on year in Q4."
Top Stock News
Google continues robot M&A spree by acquiring Boston Dynamics. Google (NASDAQ:GOOG) has bought Boston Dynamics, a developer of advanced robots and related software for the U.S. military. Boston has "gained an international reputation for machines that walk with an uncanny sense of balance and...run faster than the fastest humans," the NYT writes. Boston's products include Atlas, a humanoid robot able to handle difficult terrain; and Cheetah, the fastest legged robot in the world with a top speed of over 29 mph. Boston is Google's eighth robotics acquisition this year, with the Web giant looking at manufacturing and retail applications.
BlackRock discloses influential stake in TI ahead of key vote. BlackRock (NYSE:BLK) has disclosed that it holds 7.789% of Telecom Italia's (NYSE:TI) voting stock ahead of a special shareholder vote on Friday over the composition of TI's board amid accusations of conflicts of interest involving Telefonica (NYSE:TEF), a major TI stockholder. Of particular concern is that TI's TIM Participacoes Brazilian unit competes with Telefonica, causing regulators to demand that TI sell the subsidiary.
How big pharma sells ADHD. A New York Times feature looks at drug companies' wildly aggressive and successful marketing campaigns for ADHD treatments such as Shire's (NASDAQ:SHPG) Adderall and Novartis' (NYSE:NVS) Ritalin. Recent data show that 15% of high school-age children are now diagnosed with the condition and that the number of minors taking medication has soared to 3.5M from 600,000 in 1990. One doctor calls the rising rates of diagnosis "a national disaster of dangerous proportions."
BP to invest $16B in Oman gas project. BP (NYSE:BP) has signed a 30-year deal with Oman to invest $16B in the country's Khazzan tight gas project, which could produce up to 1B cubic feet (bcf) per day of gas. BP expects to start construction next year, extract the first gas in 2017 and reach plateau output in 2018. The deal also enables BP to assess other gas resources in Oman.
GSK increases exposure to India with $1B+ deal. GlaxoSmithKline (NYSE:GSK) intends to increase its holding in Indian subsidiary GlaxoSmithKline Pharmaceutical to up to 75% from 50.7% through an open offer in a deal worth $1.02B. GSK said the "transaction will increase exposure to a strategically important market." The unit provides respiratory, cardiovascular and cancer drugs, antibiotics, and vaccines. The offer comes after GSK paid $901M in February to raise its holdings in another Indian unit, GlaxoSmithKline Consumer Healthcare, to 72.5% from 43.2%.
Top Economic & Other News
Germany finally set for new government. It's taken three months since Germany's general election, but only now is the country finally to get a new government after the left-leaning Social Democrats (SPD) overwhelmingly voted to join Chancellor Angela Merkel's conservatives in a grand coalition. Wolfgang Schaeuble will remain Finance Minister and SPD leader Sigmar Gabriel will take responsibility for the Economy and Energy portfolios. The coalition deal means that Germany will increase spending and enact a minimum wage.
Japanese manufacturers becoming more optimistic. The Japanese Tankan sentiment index for large manufacturers has jumped to a six-year high of 16 in December from 12 in September. The index for small non-manufacturers turned positive for the first time in 21 years with an increase to 4, while the reading for small manufacturers was 1, the first positive number for six years. However, large Japanese companies have scaled back their capex projections, expecting to increase FY 2014 spending by 4.6% vs a forecast of 5.1% three months ago.
Indian WPI increases to 14-month high. India's wholesale price index, one of the country's main inflation gauges, accelerated to a 14-month high of 7.52% on year in November from 7% in October and topped estimates that were also 7%. The growth adds to CPI of 11% and will strengthen the case of those who argue that the Reserve Bank of India should again increase interest rates when it meets on Wednesday despite stuttering growth. The RBI's key repurchase rate is 7.75%.
Alpha-Rich Stock Movers and Great Calls
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In Asia, Japan -1.6% to 15153. Hong Kong -0.6% to 23115. China -1.6% to 2161. India -0.3% to 20660.
In Europe, at midday, London +0.5%. Paris +0.8%. Frankfurt +1.4%.
Futures at 6:20: Dow +0.4%. S&P +0.4%. Nasdaq +0.5%. Crude +0.5% to $97.11. Gold -0.5% to $1228.50.
Ten-year Treasury Yield -2 bps to 2.86%.
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