Crude rises as Gaddafi's son appears after arrest. Crude oil prices rose amid resistance from government loyalists in Tripoli against the rebel forces, characterized by the public appearance of Muammar Gaddafi's son Saif al-Islam, whom the insurgents said they had captured. The strength of the loyalists surprised some in the market, and Brent crude was +0.2% at $108.60 and WTI was +1.4% at $85.57. Prices were also supported by better-than-expected manufacturing data in Germany and China.
Eurozone, China manufacturing contract. Eurozone manufacturing contracted in August for the first time since September 2009, with flash PMI falling to 49.7 from 50.4 in July. Activity in China's factories also contracted, although PMI increased to 49.8 from July's 49.3 and beat forecasts. Germany's manufacturing sector topped predictions as well and is still growing, albeit at the same rate as in July, while France's service sector unexpectedly picked up pace. HSBC economist Hongbin Qu reckons the China data "provides leeway for the PBOC to keep the current tightening measures in place," as a "hard landing risk is still remote."
UBS to cut 3,500 jobs. Facing increasing regulatory expenses and a record high Swiss franc, UBS (UBS) intends to cut 3,500 jobs in order to save 2B francs ($2.54B) by the end of 2013, with almost half the losses to come from the company's investment bank. The restructuring will cost UBS 550M francs, 450M francs of which the bank will book in H2. UBS joins Goldman Sachs (GS), HSBC (HBC), Credit Suisse (CS) and other major banks in slashing thousands of jobs.
Heinz earnings top forecasts. Heinz (HNZ) FQ1 results beat expectations as revenue grew 14.9% to $2.85B and EPS excluding special charges rose 4% to $0.70. Earnings were "fueled by dynamic growth in emerging markets, and higher global sales of ketchup and the company's top 15 brands." Heinz reaffirmed its FY 2012 EPS outlook of $3.24-$3.32.
S&P chief to quit as shareholders call for breakup. S&P President Deven Sharma will step down next month and be replaced by Citibank (C) COO Douglas Peterson. While the announcement yesterday came just weeks after S&P cut the U.S.'s rating, the agency said Sharma's departure had been underway since the start of the year and was unrelated. The disclosure also came on the day two institutional shareholders called for breaking up S&P parent company McGraw-Hill (MHP) into four: education, media & information, S&P’s ratings & financial business, and S&P indexes.
Bullard: Fed would take action if deflation became a risk. Ahead of Ben Bernanke's much anticipated Jackson Hole speech at the end of the week, St. Louis Fed President James Bullard said the central bank "would definitely take action," which he would support, if U.S. deflation became a risk again. However, Bullard, who is perceived as a hawk, said the concern right now was inflation. Still, if QE3 became necessary, Bullard said the Fed should do it "on a meeting-by-meeting basis," and not commit to "a long string of purchases that may not fit" evolving data.
Japan's Kan set to quit on Friday. Japan PM Naoto Kan is likely to announce his resignation on Friday, with the ruling Democratic Party set to choose the country's sixth leader in five years early next week. The leading candidates to replace Kan include Finance Minister Yoshihiko Noda and Foreign Minister Seiji Maehara, although expectations are low that Japan will gain a stable government. Meanwhile, Noda and Bank of Japan Governor Masaaki Shirakawa made more noises about the strong yen, but whether any intervention will have a lasting impact is questionable.
DOJ: Deutsche Bank was aware of MortgateIT problems. Deutsche Bank (DB) knew in 2006 that MortgageIT, a lender it was preparing to acquire, lied about its mortgages but made the purchase anyway in 2007, the Justice Department said. In an amended $1B complaint, the DOJ said Deutsche Bank was "on notice of and expressly assumed responsibility" for wrongdoing at MortgageIT. The DOJ is suing Deutsche Bank and MortgageIT for allegedly misleading the Federal Housing Administration about the quality of the unit's loans.
ConvaTec bid for Kinetic tops $6.3B ConvaTec's offer for wound-care company Kinetic (KCI) is reportedly worth over 40B Swedish kroner ($6.3B) compared with a proposal from Apax and two Canadian pension funds valued at $5B, or $6.3B including debt. Although the ConvaTec bid is apparently higher, The Wall Street Journal reported that Kinetic may prefer the Apax-led proposal as ConvaTec doesn't have committed financing.
Judge OKs intervention request in BofA settlement. A judge has granted the request of dozens of investors to intervene in Bank of America's (BAC) proposed $8.5B settlement with 22 major institutions that lost money on mortgage-backed securities. BofA did not oppose the request, which came from pension funds, insurers and several Federal Home Loan Banks. A hearing is scheduled for December.
Foster's tries to win over shareholders with $521M. Foster's (OTC:FBRWY) plans to return at least A$500M ($521M) to shareholders via a capital reduction or a share buyback as it looks to receive support for its defense against SABMiller's (OTCPK:SBMRY) hostile A$9.5B bid. The U.K. brewer has said it will cut its offer equal to the amount of any dividends paid out.
Deutsche Boerse-NYSE merger passes regulatory hurdle. The U.S. Committee on Foreign Investment has approved Deutsche Boerse's (OTCPK:DBOEY) proposed purchase of NYSE Euronext (NYX). The committee is an inter-agency body that reviews the national security implications of foreign investments in the U.S. Now the deal needs to get past competition authorities in the U.S. and Europe, with the reviews by these agencies expected to take until the year-end.
In Asia, Japan +1.2% to 8733. Hong Kong +2.0% to 19876. China +1.5% to 2554. India +1.0% to 16498.
In Europe, at midday, London +1.2%. Paris +1.7%. Frankfurt +1.7%.
Futures at 7:00: Dow +1.1%. S&P +1.3%. Nasdaq +1.2%. Crude +1% at $85.30. Gold -0.2% to $1888.10.
Tuesday's economic calendar:
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
10:00 Richmond Fed Mfg.
10:00 New Home Sales
Earnings Results: Companies that beat EPS expectations last night and today include Heinz (HNZ), Focus Media (FMCN +7.2%), Williams-Sonoma (WSM -1.9%). Full real-time earnings coverage here.