Monti's appointment doesn't stop rise in auction yield. The market has given its initial verdict on the appointment yesterday of Mario Monti as Italian Prime Minister, with the yield on five-year government bonds rising to 6.29% in an auction of €3B ($4.1B) of debt from 5.32% in a previous sale last month. Demand increased as total bids outstripped supply 1.47 times vs. 1.34 times in October. Still, with new data showing that Italy's industrial output fell a monthly 4.8% in September, Monti has his work cut out in slashing the country's debilitating debt without hampering the growth it needs to pay back that debt.
Japan bounces back but eurozone heads for recession. A strong rebound in exports and consumption helped Japan recover from its March earthquake as GDP grew an annualized 6% in the third quarter, a turnaround from the 2.1% contraction in Q2 2011. In contrast, eurozone industrial output fell a monthly 2% in September after rising 1.4% in August as Germany dropped 2.9% and France 1.9%. The slowdown in Europe poses a big risk for export-oriented Japan, as do the strong yen and Thai floods. And given that Q3 growth was fueled by pent-up demand, Japan's economy is now expected to slow, if not contract.
Boeing wins record $18B record order from Emirates. Ignoring the EU's debt crisis and fears of a global slowdown, Emirates airline has ordered 50 Boeing (BA) 777 jets at the Dubai Air Show for $18B and taken an option for another 20, with the whole deal worth up to $26B. The booking is the biggest in the history of Boeing, which forecasts Middle East demand of 2,520 jets worth $450B over the next 20 years.
J&J, Bayer drug successful in late-stage trial. In a Phase III study, rivaroxaban, a blood thinner from J&J (JNJ) and Bayer (OTCPK:BAYRY), cut heart attacks, strokes, and cardiovascular deaths by 16% in patients who had suffered previous heart attacks or experienced unstable chest pain. The drug is already used to prevent strokes, and approval for people with acute coronary syndrome could open up a $1B+ market. However, a late-stage trial of apixaban, an anticoagulant from Pfizer (PFE) and Bristol-Myers Squibb (BMY), showed that the drug isn’t safer or more effective than the standard treatment, Sanofi’s (SNY) Lovenox, at preventing blood clots in the legs and lungs of patients after hospitalization.
BHP to bet billions more on shale gas. Having spent nearly $17B on buying shale gas assets this year, BHP Billiton (BHP) intends to invest more than $4B next year on development and then increase that figure to $6B-$7B by 2020. BHP provided the forecast in a presentation designed to reassure investors about the company's move into the sector at a time of controversy over the fracking drilling procedure and low prices. BHP takes the long view and believes that natural gas prices will rise to over $6 per million British thermal units (mmBtu) by 2020 from around $4 per mmBtu currently.
Canada to focus on Asia after pipeline delay. Canada will prioritize increasing its Asian energy exports, Prime Minister Stephen Harper said yesterday at the APEC summit, due to the U.S. delaying approval of TransCanada’s (TRP) $7B Keystone XL pipeline until after the 2012 election. Still, Harper remains optimistic that the controversial project will proceed, "because it makes eminent sense." However, this contradicts the view of his Finance Minister, Jim Flaherty, who said Keystone may not "survive" the delay.
Iraq warns Exxon over Kurdistan deal. Iraq has told Exxon (XOM) that it should choose between its deal with Kurdistan, which the latter confirmed yesterday, or "lose its contract in southern Iraq." However, Hampshire College's Michael Klare believes that Iraq can do no more than sabre-rattle. "Iraq has no hope of reaching its lofty goals of higher oil output without Exxon’s involvement,” Klare said.
Obama ups the rheotric with China. President Obama talked tough with China at the APEC summit in Hawaii over the weekend, demanding that the latter stop "gaming" the international system. Chinese officials defiantly countered Obama's contentions, with one saying, "If rules are decided by one or even several countries, China does not have the obligation to abide by that." More positively, progress was made at the summit on the "Trans-Pacific Partnership" free-trade deal, although while Japan wants to join the negotiations, China is less enthusiastic.
Farmers reclaim the land. With residential land values plummeting nearly 70% since peaking in 2006, thousands of acres of real estate bought for housing are reverting back to agricultural use as farmers pay bargain prices to buy land that was previously sold to developers for top dollar. In fact, one family recently bought 430 acres out of foreclosure for $1.75M, having sold it for $8.6M in 2009. Rising prices for corn, cotton and other crops are also factors in the trend, with net farm income forecast to jump 31% in 2011 to $103.6B, its highest in real terms since 1973.
Banks add stealth fees. Banks may have backed down on charging for debit cards, but they are adding or raising other "under-the-radar" fees instead as they look to recoup billions of dollars lost to lower transaction tariffs. Bank of America (BAC) charges $5-$20 for replacing a credit card, U.S. Bancorp (USB) wants 50 cents a check to deposit money with a mobile phone, while TD Bank will soon levy $15 for incoming domestic payments. "We’ll see if our customers complain and move, or just complain," U.S. Bancorp’s CEO said.
In Asia, Japan +1.1% to 8603.7. Hong Kong +1.9% to 19508. China +1.9% to 2529. India -0.4% to 17119.
In Europe, at midday, London -0.5%. Paris -1.4%. Frankfurt -0.8%.
Futures at 7:00: Dow -0.4%. S&P -0.6%. Nasdaq -0.5%. Crude -0.7% to $98.33. Gold -0.5% to $1778.70.
Monday's economic calendar:
No events scheduled.