Eurozone debt crisis hits Germany in disastrous bond auction. Eurozone debt contagion has firmly ensconced itself in the core, with an auction of €6B ($8.06B) of German 10-year bonds attracting bids of just €3.644B, or 39% short of the total available. That was apparently the worst demand on record. The low yield of under 2% deterred investors, especially because of increasing worries over the cost to Germany of the bloc's debt crisis.
Dexia rescue at risk. Belgium wants France to take a greater share of Dexia's (OTC:DXBGF) bailout, with the former's eternal interim government believing that the €4B ($5.4B) that the country has agreed to pay the French is too high, while the guarantees provided by the Belgian taxpayer - almost €55B - are unrealizable. The problem is that any new deal could risk France's AAA rating.
Investors get early insights in Fed meetings. Fed officials regularly meet with leading investors in order to understand how the central bank might respond to monetary policy changes, avoid surprising markets, and learn about unseen dangers, The Wall Street Journal reports. However, the meetings provide investors with early insights into possible Fed actions, allowing them to tip off their clients.
Manufacturing contracts in Europe and China. The disastrous German bond auction came as data showed that the eurozone's manufacturing PMI fell to 46.4 in November from 47.1 in October. Markit said the data suggests that the eurozone is contracting at 0.6% in Q4 2011. "Malaise has spread from the periphery to the core, with Germany stagnating and France contracting by around 0.5%," Markit said. China's PMI was just as gloomy, falling to 48 in November from 51 in October.
OPEC poised to maintain output. Comments from senior Saudi Arabian and Iraqi oil officials, as well as from OPEC's secretary general, signal that they want the organization to maintain current crude-production quotas, as prices have remained high. OPEC had been hinting that some members may cut output.
AT&T purchase of T-Mobile gets another blow. In what could be a possible death blow, FCC head Julius Genachowski will seek an administrative hearing on AT&T's (NYSE:T) proposed $39B acquisition of T-Mobile (OTCQX:DTEGY). The transaction already faces opposition from the DOJ, which has filed a lawsuit to stop it. Genachowski made the move after the FCC concluded that the deal would harm consumers, kill jobs and result in an overly concentrated wireless phone industry.
$18.5B foreclosure settlement may preclude California. Banks and government officials are working on an $18.5B deal to settle claims over problematic foreclosure practices that would exclude California, which left the talks in the September, sources say. Should the state return, the agreement would rise to $25B. Crucially for some AGs, any deal would not stop them from suing banks over mortgage bonds.
Fed introduces stress tests. The Fed has introduced new bank stress tests in which lenders will be forced to model a severe eurozone recession - a 6.9% decline in real GDP - and a skying domestic unemployment rate. In addition, the six largest U.S. banks will need to estimate losses "stemming from a hypothetical global market shock," similar to that of late autumn 2008.
Americans economize for Thanksgiving. With the economy weak, unemployment high and prices rising, many Americans are scaling back Thanksgiving. The cost of a 16-pound turkey and all the trimmings has jumped $5.73 since last year to $49.20. Airfares and pump prices are up 20%, while most one-way Amtrak tickets are 2%-5% more. Despite the increased costs, around 42.5M people are expected to travel, the highest since the start of the recession in 2008.
Consumers to benefit on Black Friday frenzy. The Black Friday contest between retailers and shoppers over price appears to be over before it has begun, and the shoppers have won. "Consumer anxiety has resulted in a frenzy among retailers to compete for market share," said Deloitte's Mary Delk. "The inducements and deals are bigger and bolder." The result may be higher sales volumes but lower profits for retailers over the holiday season.
In Asia, Japan closed. Hong Kong -2.1% to 17864. China -0.7% to 2395. India -2.3% to 15700.
In Europe, at midday, London -0.6%. Paris -0.1%. Frankfurt +0.6%.
Futures at 7:00: Dow -0.6%. S&P -0.7%. Nasdaq -0.6%. Crude -1.6% to $96.47. Gold -0.5% to $1694.10.
Wednesday's economic calendar:
7:00 MBA Mortgage Applications
8:30 Durable Goods
8:30 Personal Income and Outlays
8:30 Initial Jobless Claims
9:55 Reuters/UofM Consumer Sentiment
10:30 EIA Petroleum Inventories
11:00 KC Fed Manufacturing
12:00 EIA Natural Gas Inventory
1:00 PM Results of $29B, 7-Year Note Auction
Earnings Results: Companies that beat EPS expectations last night and today include Nuance Communications (NASDAQ:NUAN), Pandora Media (NYSE:P), TiVo (NASDAQ:TIVO).
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