Lloyds to take extra provisions of £1.93B. Lloyds (LYG) shares were -2.9% premarket after the bank said it has taken a further provision of £1.8B to cover compensation for mis-sold payment-protection insurance and another £130M connected to the sale of interest-rate hedging products. The new figure takes Lloyds' PPI costs to £9.8B and means that the bank won't pay a dividend on 2013 results, although it does plan to request permission to resume distributions. Lloyds expects to report that 2013 underlying profit more than doubled to £6.2B. Meanwhile, preparatory work has started on selling more of Lloyds' government-owned stock to the public.
Chinese official PMIs show growth slowdown. China's official manufacturing PMI fell to a six-month low of 50.5 in January from 51 in December, while the non-manufacturing print slipped to the lowest level since December 2008, falling to 53.4 from 54.6. The readings add to other data that indicate slowing growth in China, although at least the latest manufacturing figure shows expansion - HSBC's PMI gauge indicated contraction. The trends have partly been attributed to the Lunar New Year as people traveled home for the holiday.
Top Stock News
Nikkei in correction mode. Japan's Nikkei closed -2% and has entered correction territory, which is a fall of 10% or more from a recent peak. The drop follows weakness on Wall Street on Friday and disappointing Chinese PMI data, and comes amid a strengthening yen but despite decent corporate earnings reports. "It's important to note that fundamentals are not driving Japanese stocks lower — it's the fault of the weak overall investing environment," says asset manager Yoshihiro Okumura.
WSJ: Financial firms probed over possible bribery in Libya. The Department of Justice has joined an expanding probe of banks, private-equity firms and hedge funds over the possible violation of bribery laws involving Libya's state investment fund prior to the rebellion against Muammar Gaddafi in 2011, the WSJ reports. The investigation originally focused on Goldman Sachs (GS) but now includes Credit Suisse (CS), JP Morgan (JPM), Société Générale (OTC:SCGLF), Blackstone (BX) and hedge-fund operator Och-Ziff Capital Management Group (OZM).
Smith & Nephew to buy ArthroCare for $1.7B. Smith & Nephew (SNN) has agreed to acquire medical-device company ArthroCare (ARTC) for $1.7B in a move that Smith & Nephew says will strengthen its global sports-medicine business. The company is offering $48.25 a share, 6.3% above ArthroCare's closing price of $45.38 on Friday. Smith & Nephew CEO Olivier Bohuon said ArthroCare's focus on shoulder joints would complement his firm's strength in knee surgery.
Jos. A. Bank rebuffs Men's Wearhouse again. Jos. A. Bank Clothiers (JOSB) has rejected Men's Wearhouse's (MW) latest offer, saying yesterday that the bid "substantially undervalues" the clothing retailer. Last week, Men's Wearhouse said that it is open to sweetening its $1.61B proposal "if additional value was discovered through discussions or limited due diligence." Jos. A. Bank's comments came after it was reported that the company is in talks to acquire fellow retailer Eddie Bauer.
New Wal-Mart CEO Doug McMillon starts in job. Doug McMillon officially took over as CEO of Wal-Mart (WMT) on Saturday, with the retail giant facing numerous challenges. Congress' new farm bill, for example, cuts food stamps by a moderate amount and comes after the company cited lower government assistance in the program as a factor in sales running below expectations in Q4. Internationally, growth in Brazil and China remains choppy.
Sony mulls options for PC ops. Sony (SNE) is considering "various options" for its Vaio PC unit, the company said over the weekend, but it described as inaccurate a report that it is in discussions with Lenovo (OTCPK:LNVGF) for a joint venture that would take over the loss-making business' overseas operations. The Japanese firm has said in the past that it intends to change its product and manufacturing strategy for Vaio. Sony is due to report its latest earnings results this week.
Reports: United to drop Cleveland as a hub. United Continental Holdings (UAL) reportedly intends to stop using Cleveland as a hub and will axe 470 positions. The airline will cut daily departures by 60% and eliminate most regional flights from the city. "Our hub in Cleveland hasn't been profitable for over a decade, and has generated tens of millions of dollars of annual losses in recent years," United CEO Jeff Smisek said in a memo to staff.
U.S. auto sales seen edging higher. U.S. auto data for January is due out this morning, with research firm Kelley Blue Book forecasting that new sales will have risen 1.6% on year to 1.06M units. Nissan (OTCPK:NSANY) is expected to have enjoyed the strongest growth with 7.5%, while Ford (F) and Toyota (TM) are forecast to have suffered a drop, as their biggest auto launches for 2014 are set to come down the road.
Furnishings Web site Wayfair valued at $2B - Reuters. Online home-furnishings site Wayfair has raised $150M at a valuation of $2B in a round led by one-time Twitter (TWTR) investor T. Rowe Price, Reuters reports. The fundraising follows a financing in 2012 in which Wayfair drew in $36M. The latest round also comes after rival One King's Lane said on Thursday that it has raised $112M at a valuation of $912M.
Top Economic & Other News
Yellen set to assume the reins at the Fed. Janet Yellen is due to begin her new job today as the first Chairwoman of the Federal Reserve, becoming "one of the most powerful women in the world," as the Washington Post puts it. Yellen is seen as a monetary policy dove, but she starts as Fed chief at a time when the bank has begun to taper its QE program and prior to a decision about if and when to raise interest rates.
Eurozone manufacturing PMI rises, Greece returns to growth. Eurozone manufacturing PMI increased to a 32-month high of 54 in January from 52.7 in December. Germany led the expansion and Greek PMI returned to growth for the first time since August 2009, while Spain hit a 45-month high and France showed signs of stabilization. The data is consistent with GDP growth of 0.4-0.5% in Q1. The euro was +0.2% at $1.3516 at the time of writing.
U.K. manufacturing growth cools but economic rebalancing seen. U.K. manufacturing PMI slipped to 56.7 in January from 57.2 in December and missed consensus of 57. The survey indicates that a "long-awaited rebalancing of economic growth may...finally be within sight," says Markit. "Recent months have seen the largest surge in demand for U.K. investment goods for two decades, while new export orders are rising at one of the fastest rates ever recorded by the survey as global demand also undergoes a broad-based upswing."
Top Ideas: Movers and Great Calls
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In Asia, Japan -2% to 14619, Hong Kong, China closed. India -1.5% at 20209.
In Europe, at midday, London -0.7%. Paris -0.6%. Frankfurt -0.7%.
Futures at 6:20: Dow -0.2%. S&P -0.2%. Nasdaq -0.2%. Crude -0.2% to $97.26. Gold +0.5% to $1245.80.
Ten-year Treasury Yield +1 bps to 2.66%.
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