Italian yields soar in another horrific EU bond auction. Yields almost doubled to an average of 6.5% as Italy sold €8B ($10.7B) worth of 6-month bills in an auction. A sale of €2B worth of 2-year zero-coupon bonds saw yields soar to 7.814% from 4.628%. Italian bonds have been taking a hammering all day, even prior to the auction, with 10-year yields +21 bps to 7.317% at around lunchtime in Europe. Even ECB buying has not been able to halt the battering. The picture around the rest of Europe has not been pretty either.
Rescue fund to fall "well short of its billing." The deterioration in market conditions over the past month - particularly surging Italian bond yields - means that the eurozone may not be able to meet its goal of leveraging up its €440B ($583.9B) EFSF rescue fund to over €1T, sources say. Even a lower target might be difficult to reach, with the fund's eventual capacity expected to fall "well short of its billing."
Shoppers flock to Black Friday openings. Enticed by huge discounts, shoppers flocked to early Black Friday openings at major stores such as Macy’s (NYSE:M) Herald Square outlet, where an estimated 9,000 people waited outside for its midnight start. At Best Buy (NYSE:BBY), notable bargains included a $500 Sharp TV for $200 and a $400 Lenovo laptop for $179. Overall, the number of shoppers this weekend is expected to rise 10% from last year to 152M, although November-December sales growth is forecast to slow to +2.8% from +5.2%.
AT&T takes $4B charge on T-Mobile deal. While not yet admitting defeat, AT&T (NYSE:T) will take a $4B charge in the fourth quarter to reflect payments it might have to make to Deutsche Telekom (OTCQX:DTEGY) if the U.S. carrier's $39B acquisition of T-Mobile collapses. AT&T has also withdrawn its FCC application for the deal and will instead focus on gaining antitrust approval from the Department of Justice.
JP Morgan gets approval for $1B yuan fund. China has taken another small step in loosening its currency controls and opening its market, giving JP Morgan (NYSE:JPM) permission to create a $1B renminbi fund, sources say. Such funds are able to bypass forex controls, cut through red tape, and gain greater access to restricted industries.
Congress to probe rating agencies' role in MF Global collapse. The Congressional panel looking into MF Global's (OTC:MFGLQ) bankruptcy plans to study whether Jon Corzine's "star power" clouded the judgement of the ratings agencies, a source says. The agencies only downgraded the firm just before or just after its failure, but given MF's EU debt exposure, the alarm should have been raised sooner, says Evercore equity research analyst Chris Allen.
Japan stuck in deflation. Japan's October core CPI dropped a monthly 0.1%, the first fall in four months. The data confirms that the country is still grappling with deflation, which will probably ensure that the Bank of Japan will maintain its ultra-easy monetary policy for a while to come.
S&P warns of Japan downgrade. S&P's Takahira Ogawa has said that the agency is getting closer to downgrading Japan's AA- rating, due to the government's finances "getting worse and worse every day, every second." Ogawa's remarks follow an IMF warning that Japan is at risk of a "sudden spike" in bond yields that could make its debt unsustainable.
France wants Iranian oil boycott. France is pushing for a European embargo of Iranian oil, a move the U.K. "broadly" supports but which will face strong resistance from Italy and Spain, both heavily dependent on Iran's crude. Analysts say the embargo could keep crude prices above $100 a barrel despite slowing economic growth.
KKR-led group to buy Samson for $7.2B. As expected, a consortium led by KKR (NYSE:KKR) and Itochu (OTCPK:ITOCY) has agreed to acquire closely held oil and gas group Samson for $7.2B. KKR is buying 60% and Itochu 25%, with the latter planning to exploit an explosion in demand for natural gas in Japan as a result of the problems in the country's nuclear industry.
Legume shortage threatens gas boom. A shortage of a legume used in ice cream and chocolate milk may put the breaks on the boom in drilling for shale gas. Guar is a crucial ingredient in the fracking process, sending global demand and prices for the bean-like vegetable soaring. Although ubiquitous, the crop is so low profile the government doesn't insure or subsidize it, nor is there a U.S. futures market for it.
A great infographic. A notable stat is that the U.S.'s 400 richest people have a greater combined net worth than the country's bottom 50%.
In Asia, Japan -0.1% to 8160. Hong Kong -1.4% to 17689. China -0.7% to 2380. India -1.0% to 15695.
In Europe, at midday, London -0.3%. Paris -0.6%. Frankfurt -0.3%.
Futures at 7:00: Dow -0.6%. S&P -0.7%. Nasdaq -0.7%. Crude -0.65% to $95.54. Gold -1.1% to $1677.10.
Friday's economic calendar:
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
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