Italian yields hit another record high in bond auction. Italy experienced more woe today at a bond auction as investors put to rest any hopes that the eurozone's fiscal union pact will calm the markets. Yields rose to a fresh euro-era high of 6.47% in a sale of €3B of five-year bonds, surpassing the previous record of 6.29% that Italy paid last month. In the secondary market, 10-year yields were up midday in Europe after initially falling.
OPEC likely to maintain output at current levels. OPEC ministers have edged closer to an agreement to keep oil production steady at 30M barrels a day, although members are unlikely to formally specify the figure, nor are they likely to agree on what to do when Libya gets back to full production. Iran and Saudi Arabia indicated they see demand for next year to be similar to 2011.
Express Scripts in dispute with major partner. Express Scripts (NASDAQ:ESRX) is locked in a contract dispute with WellPoint (NYSE:WLP), which accounted for nearly 30% of its revenue for the first nine months of the year, and the companies may go to court and fight it out. Adding to the bad news, New York Governor Andrew Cuomo signed legislation limiting the ability of Express Scripts and peers like Medco Health (NYSE:MHS) to guide prescriptions to mail-order pharmacies. The bill marks a victory for retail pharmacies desperate to hold on to market share.
Avon to replace CEO. Avon Products (NYSE:AVP) gained 6.3% in post-market trading after announcing it will split its Chairman and CEO roles. Andrea Jung, who holds both titles, will be named Executive Chairman and the company will "undertake an external search" to find a new CEO. Avon shares have been battered this year by weak earnings and an SEC probe, with the decline leading some to view it as an acquisition target.
TNK-BP to invest $10B in Arctic. TNK-BP (50% owned by BP (BP)) plans to invest $10B in Arctic oilfield development along with a pipeline to link the supply to the world. It's another move by Russia to mine the regions of the Arctic and East Siberia as the country's West Siberian fields are mostly depleted. The plan may also be a sign that BP is making up with its Russian oligarch partners in TNK-BP.
CME chief: Corzine knew about missing money. Testifying in front of the Senate Agriculture Committee, CME (NASDAQ:CME) Executive Chairman Terrence Duffy apparently contradicted Jon Corzine's oft-repeated testimony, saying he has information the former MF Global (OTC:MFGLQ) CEO knew about the missing customer money and was aware of improper transfers. "You have tossed a bomb here," said Senator Pat Roberts.
China postpones new bank rules. China's banking regulator has indefinitely postponed new bank capital adequacy rules due to the slowing economy. Officials had planned to start implementing in January regulation that was even tougher than Basel III. New data provides more evidence of the slowdown, with the M2 money supply rising 12.7% in November, the slowest since May 2001. Despite a "very grim" global outlook, China pledged to keep trying to reduce property prices, pursue "basically stable" consumer prices and seek "steady and relatively fast growth."
Ifo slashes 2012 forecast for Germany. Ifo has cut its growth forecast for Germany, projecting GDP of +3% in 2011 and just +0.4% in 2012. Ifo had previously forecast +3.3% this year and +2.3% next year. The reduction might still be overly-optimistic, as the forecast "rests on the assumption that it's possible to calm financial markets lastingly and thus prevent a further escalation of the crisis."
FOMC stays as is. The FOMC yesterday maintained its benchmark rate at 0%-0.25% and continued its twist policy by extending the average maturity of holdings. Charles Evans dissented again as he wanted more easing, although he might get succor from a comparison of the last two statements. November: "Inflation appears to have moderated." Yesterday: "Inflation has moderated." If elevated CPI has been a roadblock to QE3, it may no longer be.
MS returns $700M to investors in real-estate fund. Morgan Stanley (NYSE:MS) has reportedly had to return around $700M to investors in its flagship global real-estate fund, and has been forced to cut the fund's fees following lackluster performance. The concessions have persuaded investors to give the fund an extra year, until June 2013, to invest.
PayPal no pal of Groupon. PayPal (NASDAQ:EBAY) is taking on Groupon (NASDAQ:GRPN) and LivingSocial with plans to enter the market for online daily-deals, which could more than double in size by 2015 to $4.2B. PayPal intends to target its 103M customers with coupons tailored to their buying habits and mobile-phone locations.
Olympus reveals $1.1B hit as it submits H1 results. Scandal-stricken Olympus (OTCPK:OCPNY) has submitted its long-delayed H1 2011 results - it made a net loss of ¥32.33B ($414M) - in order to meet a deadline to keep its shares listed, for now. The stock still faces de-listing if the Tokyo Stock Exchange determines the firm's fraudulent accounting had a "material impact." A $1.1B hit in Olympus' balance sheet prompted speculation it will need to merge.
IBM avoids EU antitrust fine. EU competition regulators have accepted IBM's (NYSE:IBM) concessions to end an antitrust investigation and avert a possible fine that could have reached a maximum of 10% of the company's global turnover. The EU had accused IBM of abusing its dominant position in relation to its mainframe maintenance services.
Europe's problems are closer to your wallet than you think. In just six months, David Weidner notes, U.S. personal wealth has gone from having an indirect connection to Europe to being held hostage. We're already seeing tighter U.S. credit and less liquidity for stocks and bonds due to the crisis. To make matters worse, banks are starving for cash reserves, meaning they’re unlikely to lend more, or, as you may have noticed, pay interest on deposit accounts.
House OKs payroll tax cut. House lawmakers yesterday voted along party lines to approve a payroll tax-cut package that includes a provision for the Keystone XL pipeline which is opposed by the White House, and all but guarantees the bill will be vetoed. The Republican bill, which now goes to the Senate, also extends unemployment benefits and prevents cuts in Medicare payments to doctors.
In Asia, Japan -0.4% to 8519. Hong Kong -0.5% to 18354. China -0.9% to 2229. India flat at 15881.
In Europe, at midday, London +0.1%. Paris -1.7%. Frankfurt -1.4%.
Futures at 7:00: Dow -0.2%. S&P -0.1%. Nasdaq -0.35%. Crude -1% to $99.15. Gold -1.9% to $1630.90.
Wednesday's economic calendar:
7:00 MBA Mortgage Applications
8:30 Import/Export Prices
1:00 PM Results of $13B, 30-Year Bond Auction
10:30 EIA Petroleum Inventories
Earnings Results: Companies that beat EPS expectations last night and today include ABM Industries (ABM).
For full real-time earnings coverage, please click here.
Notable earnings before Wednesday's open: JOY