By Yigal Grayeff and the Market Currents team
Manufacturing starts to revive across the world. U.S. manufacturing data for December is due out this morning, with the ISM factory index expected to have risen to 53.4 from 52.7 in November, boosted by rising demand for autos, gains in holiday sales and lean inventories. The figures will come after data showed that Indian manufacturing strengthened and that Chinese factory activity returned to expansion, as did Swiss and Australian manufacturing. German and U.K. PMI improved, although activity in both countries still contracted.
Total in $2.3B shale deal with Chesapeake, EnerVest. Total (NYSE:TOT) has become the latest foreign company to buy into or strengthen its position in the U.S. shale sector, purchasing a 25% stake in an Ohio-based joint venture from Chesapeake Energy (NYSE:CHK) and EnerVest (OTC:EOSOF) for a total of $2.3B. The deal will help Chesapeake in its aim of cutting long-term debt by 25% while boosting production 30%.
Tensions rise in Persian Gulf. Having test-fired two long-range missiles yesterday at the end of a 10-day navy drill in the Persian Gulf, Iran has threatened action if a U.S. aircraft carrier that left the area because of the exercises returns. Iran didn't provide details but has threatened to close the Strait of Hormuz if oil sanctions are imposed. Oil prices have risen today on concerns that the sanctions could disrupt supply, with the improved PMI data from China and India also providing upward pressure.
Greece warns of eurozone exit. Greece must finalize a deal on a second, €130B bailout from international lenders, or face an exit from the eurozone, a government spokesman said, adding that the "next three to four months are the most crucial." Inspectors from the EU, IMF and ECB "troika" are scheduled to arrive in Athens this month to forge the details of the country's latest plan, the framework of which was agreed to in October.
Venezuela to pay Exxon far less than demanded. Venezuela said yesterday that it will pay Exxon (NYSE:XOM) just $255M as compensation for nationalized assets, less than a third of what the oil company had been awarded by an arbitration panel and just a small fraction of the $10B Exxon had sought.
Teva CEO to leave. Teva (NASDAQ:TEVA) CEO Shlomo Yanai is stepping down, to be replaced in May by Jeremy Levin, formerly of Bristol-Myers Squibb. Yanai, who had no previous pharma experience, recently told investors the company may not be able to meet its long-term target of $31B in sales by 2015, and saw shares drop 22% over the last year.
BP sues Halliburton over oil spill - again. BP (NYSE:BP) has sued contractor Halliburton (NYSE:HAL) to pay all the expenses and damages that BP incurred over the Deepwater Horizon oil spill, including clean-up costs and lost profits. BP didn't say how the suit was different from one it filed last year, nor how much it was seeking from Halliburton, which cemented the failed well, although the U.K. firm has previously tallied the costs at around $42B.
Aveo gets good results in cancer-drug trial. A kidney cancer drug from Aveo Pharmaceuticals (NASDAQ:AVEO) outperformed an approved drug from Onyx Pharmaceuticals (NASDAQ:ONXX) in a late-stage study comparing the two treatments head-to-head. Based on the data, Aveo plans to submit its drug for marketing approval in the U.S. and Europe this year.
Bank failures drop to 92 in 2011. The number of banks that closed in 2011 fell to 92 from 157 in 2010 and the number of "problem banks" dropped as well, although 844 institutions still face trouble. The improving economy means that banks deteriorate more slowly and so are being given more time to turn things around.
Shareholders sue Lloyds over HBOS acquisition. U.S. shareholders are suing Lloyds (NYSE:LYG) and two of its former executives over the "reckless disregard for the truth" displayed during the rescue of lender HBOS in 2008. At the time, Lloyds called the takeover a "fantastic opportunity;" weeks later, Lloyds was forced to accept a state bailout.
G7 countries to seek $8T this year. G7 countries will need to refinance over $7.6T of debt this year, with the amount increasing to more than $8T when interest payments are included. Japan leads the way with $3T, followed by the U.S. with $2.8T. Crucially, Italy will need to raise $428B and pay another $70B in interest.
In Asia, Japan closed. Hong Kong +2.4% to 18877. China closed. India +2.7% to 15939.
In Europe, at midday, London +1.2%. Paris -0.5%. Frankfurt +1.0%.
Futures at 7:00: Dow +1.8%. S&P +1.8%. Nasdaq +1.9%. Crude +2.75% to $101.55. Gold +2% to $1597.80.
Tuesday's economic calendar:
10:00 ISM Manufacturing Index
10:00 Construction Spending
2:00 PM FOMC minutes
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