Economy
Speculation of further policy easing from the ECB drove down the euro and bond yields to new lows this morning, with markets wagering that steps toward stimulus measures could come as early as next week. Euro zone inflation data due on Friday is also likely to show a fresh low for this cycle of just 0.3% and add to the sense of urgency on policy. The euro fell to an 11-month low of $1.3154 taking it nearer to the Sept. 6 trough of $1.3104.
The Japanese government needs to be more cautious regarding its upcoming decision to raise national sales tax, warns Vice Economy Minister Yasutoshi Nishimura. Consumer spending has been on the decline since the 3% tax hike in April, and Nishimura hopes that the Bank of Japan will decide that further monetary easing is appropriate. Meanwhile, Prime Minister Shinzo Abe is to soon decide whether to proceed with the proposed plan of raising the national sales tax even higher, lifting the rate to 10%.
President Petro Poroshenko has vowed to put together an urgent ceasefire plan to end the crisis in Ukraine's east following yesterday's meeting with Vladimir Putin. Putin described the negotiations as positive, but says it is ultimately up to Kiev to work out conditions for a ceasefire with separatist rebels. Still, the two seemed to make little progress over their fundamental trade and energy disagreements and Kiev's relations with the EU.
Stocks
Federal judge Thomas Wheeler has turned down a U.S. bid to dismiss a more than $25B lawsuit filed by former CEO of AIG (NYSE:AIG) Maurice "Hank" Greenberg. The government's bailout in 2008 took an initial 79.9% stake in AIG and conducted a reverse stock split, diluting existing shareholders. Greenberg's Starr International had been AIG's largest shareholder with a 12% stake. Starr sued in 2011, stating that the $182.3B bailout of AIG was an illegal taking and violated its due process rights.
Apple is preparing to manufacture the company's largest iPad to date at 12.9" (current versions are 9.7" and 7.9"), with production set to start early next year. The move comes as sales for iPads have declined for two straight quarters, and suggests that Apple (AAPL) is going to go after enterprise customers where the larger device could replace the traditional laptop.
VC firm Kleiner Perkins has agreed to invest in Snapchat at a valuation of close to $10B, WSJ reports. Kleiner reportedly "committed to invest up to $20M in May," and at least one "strategic investor" is also said to be taking part in the funding round. Alibaba (BABA) was previously reported to be considering an investment in Snapchat, but talks are believed to have ended without a deal.
HSBC declares that it will fight the $250M Keydata lawsuit that alleges it aided a major international fraud. Keydata, which collapsed in 2009, invested many of its funds in bonds that were issued by SLS Capital, which was later liquidated. HSBC (HSBC) is accused of doing little to correct the misleading marketing material that displayed the bank as the trustee over the bonds, and that it did not properly investigate claims that Keydata was an alleged Ponzi scheme.
Chiquita Brands has reiterated its commitment for a merger with Fyffes (FYFFF) and expects the deal to provide $60M in annualized pre-tax cost savings. "Chiquita (CQB) and Fyffes remain committed to the transaction and are continuing to work together to complete the combination as expeditiously as possible," says Chiquita CEO Ed Lonergan.
Royal Dutch Shell is leading a consortium to sell several Nigerian oilfields for approximately $5B, as foreign companies reduce their onshore oil presence in the country due to theft, sabotage and local disruptions. The four oilfields and a key pipeline are co-owned by Shell (RDS.A, RDS.B), France’s Total (TOT) and Eni (E) of Italy. A deal is expected in the next few weeks after which all potential buyers will require government approval.
Allergan has asked the U.S. District Court for the Central District of California for an expedited schedule for discovery and a preliminary injunction against Valeant Pharmaceuticals (VRX) and Pershing Square Capital Management for violating insider trading laws. If successful, the pursuers will be blocked from voting on those Allergan (AGN) shares in the special meeting called for December 18.
Carlyle Group is said to be in advanced talks with China's largest developer, China Vanke (OTC:CVKEY), to buy stakes in nine of its shopping malls. The purchase would give Carlyle (CG) access to China's commercial real estate market and a non-binding memorandum of understanding could be signed as early as tomorrow. Sources say the deal could fetch between 6B-7B yuan ($976M-$1.1B) or even be valued at up to 10B yuan.
An e-commerce joint venture valued at 5B yuan ($813M) between China's privately-held Dalian Wanda Group, Baidu (BIDU) and Tencent Holdings (OTCPK:TCEHY, OTCPK:TCTZF) will be announced later this week, Reuters reports. The new venture will unite three of China's most powerful non-state companies, and will be 70% owned by Wanda and 15% held by Baidu and Tencent respectively. Wanda is a commercial property, luxury hotel and film conglomerate.
Repsol's talks to buy oil and natural gas assets from Talisman Energy (TLM) have stalled, in a setback for both companies as they try to reposition themselves. TLM's stock price has been helped this summer by the talks, while Repsol (OTCQX:REPYF, OTCQX:REPYY) has said it wants to better balance its production growth potential and risk by strengthening its business in politically stable, developed countries.
The program to compensate victims of crashes linked to a faulty ignition switch in GM (GM) vehicles has received claims for 107 deaths and more than 200 other claims, according to the office of the lawyer overseeing the program. The number of death claims submitted already far exceeds the 13 deaths GM has officially attributed to the switch, which prompted the recall of 2.6M vehicles earlier this year.
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Today's Markets:
In Asia, Japan +0.1% to 15535. Hong Kong -0.6% to 24919. China +0.1% to 2209. India +0.4% to 26560.
In Europe, at midday, London +0.1%. Paris -0.1%. Frankfurt -0.1%.
Futures at 6:20: Dow +0.1%. S&P +0.1%. Nasdaq +0.1%. Crude +0.2% to $94.08. Gold +0.1% to $1286.70.
Ten-year Treasury Yield -2 bps to 2.38%
Today's economic calendar:
7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
11:30 Results of $13B, 2-Year FRN Auction
1:00 PM Results of $35B, 5-Year Note Auction
Notable earnings before today's open: BF.B, BRLI, BWS, CHS, DCI, EXPR, ISLE, SDRL, TIF, YGE
Notable earnings after today's close: BYI, CWST, GEF, GES, GMAN, LCI, TLYS, VMEM, VNET, WDAY, WSM
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