by Rachael Granby and the Market Currents team
Obama to ask for higher debt limit. The Obama administration will ask Congress to raise the nation's borrowing limit by another $1.2T this week, marking the third and final increase from a deal reached over the summer. The government will approach within $100B of its current limit by Friday.
Italian borrowing costs fall. Italy sold €9B worth of 6-month bills at 3.251%, a huge improvement from 6.504% on November 25. The ten-year yield dipped back below 7%, and was around 6.78% as of 5:20 ET.
Banks tap ECB. Use of the ECB's overnight deposit facility hit a new all-time high, with banks depositing €452.034B ($589.7B) last night, up from a high of €411.813B the night before.
Cavium disappoints on Q4. Shares of Cavium (NASDAQ:CAVM) fell 5.9% in post-market trading after the company became the latest chipmaker to issue a Q4 warning. The company now expects revenue of $56M-$57M for the quarter, below a $61.6M consensus. Cavium blamed weak demand from a variety of market segments, as well as a "hub transition" at a major customer (most likely Cisco).
China not named as currency manipulator. The Treasury Department spent several paragraphs of its semi-annual report on exchange rates calling out China for manipulating the yuan to keep its value low, but stopped short of formally naming the country a "currency manipulator." The Treasury did note some signs that China is moving on the right path, including a 12% real appreciation in the yuan since June 2010 along with a decline in China's trade surplus.
NYT sells regional papers. The New York Times Co. (NYSE:NYT) announced it had agreed to sell its Regional Media Group, which owns 16 regional newspapers and various other publications, to privately-owned Halifax Media Holdings for $143M in cash ($150M in post-tax proceeds). The transaction is expected to close in Q1 2012.
IPOs fail to impress in 2011. Despite much talk about an IPO comeback, this year will close out with fewer IPOs than there were in 2010, while money raised in the offerings will be ~6% lower than last year and ~40% below the 2007 peak. Among companies that did manage a U.S. offering, around 2/3 are now trading below their IPO price.
Obama names Fed board replacements. President Obama plans to nominate Harvard finance professor Jeremy Stein and Jerome Powell, a former Bush official and P-E executive, to fill the two vacancies on the Federal Reserve Board.
Court to review BofA settlement. A U.S. appeals court will review whether BofA's (NYSE:BAC) $8.5B MBS settlement should be sent back to a New York state court for approval; some institutional investors want the case to stay in federal court where it will be easier to negotiate higher payouts. A ruling is expected within 60 days.
Court delays lawsuit against Citi. A federal appeals court agreed to the SEC's request to place an emergency hold on its fraud lawsuit against Citigroup (NYSE:C). The regulatory agency made the request in order to ensure it can continue settling enforcement cases without requiring corporate defendants to address whether they did anything wrong, a practice which had recently been called into question by the court.
General Re eyes Korea purchase. Berkshire's (NYSE:BRK.A) General Re is interested in buying Tong Yang Life Insurance to tap into the promising South Korean market. Tong Yang's majority stakeholder Vogo Fund is looking to sell its 60.7% stake worth ~937B won ($808.7M), and General Re has reportedly signed a confidentiality agreement to participate in the deal.
AIG settlement approved. A federal judge approved a $450M settlement between AIG (NYSE:AIG) and rival insurers. The settlement addresses claims AIG had incorrectly reported the size of its workers' compensation business in the 1980s and 1990s, which in turn allowed it to make smaller contributions to state-mandated pools for uninsured workers.
In Asia, Japan -0.2% to 8424. Hong Kong -0.6% to 18519. China +0.2% to 2170. India -0.9% to 15728.
In Europe, at midday, London +0.6%. Paris +0.6%. Frankfurt +0.1%.
Futures at 7:00: Dow +0.2%. S&P +0.3%. Nasdaq +0.25%. Crude -0.4% to $100.94. Gold -0.4% to $1589.50.
Wednesday's economic calendar:
7:00 MBA Mortgage Applications
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
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