By Yigal Grayeff and the Market Currents team
German economy shrank in Q4. The effects of the eurozone debt crisis appear to have hit the core in Q4 as German GDP fell a preliminary 0.25%, although the economy grew 3% in the whole of 2011. Adding to the gloom, Spain's industrial production slumped an annual 7% in November, the worst decline since October 2009. There was a piece of positive news, though, with Italy's Q3 budget deficit narrowing to 2.7% of GDP from 3.5% the year before.
Saudis may not be able to counter effect of Iran sanctions. Saudi Arabia is reportedly nearing its oil output capacity limit and may have little room to respond to potential shortages caused by sanctions on Iran. Currently pumping just under a record 10M bpd, the country has an on-paper capacity of up to 12.5M bpd, but hitting that target might involve extracting heavy crudes that the market isn't interested in.
Romney gains momentum with New Hampshire win. Mitt Romney has taken another important step in gaining the GOP nomination for the presidency, comfortably winning the New Hampshire primary ahead of a crucial test in South Carolina next week. In his victory speech, Romney rallied the crowd around bringing down unemployment and the country's debt.
Intel announces smartphones with Motorola, Lenovo. Intel (NASDAQ:INTC) has made important moves in its battle to challenge ARM's (NASDAQ:ARMH) smartphone dominance, forging deals with Motorola (NYSE:MMI) and Lenovo. The latter's K800 will launch in China in Q2, while Motorola plans to introduce its Intel-powered device in H2.
Fannie's Williams follows Freddie's Haldeman out the door. Fannie Mae (OTCQB:FNMA) CEO Mike Williams will step down once a successor has been found. News of Williams' departure follows the year-end resignation of Freddie Mac chief Ed Haldeman. Both had come under pressure for their high pay even as the organizations continued to bleed money at taxpayer expense. The moves may also clear the deck should the Administration want to move forward with its floated new housing proposals.
NYSE, Deutsche Boerse in fight to save merger. Deutsche Boerse (OTCPK:DBOEY) and NYSE Euronext (NYSE:NYX) reportedly plan to lobby EU commissioners and senior European government officials in a bid to save their $9B merger as antitrust regulators look set to recommend that the deal be blocked. The companies intend to argue that any analysis of the effect on competition should look at the derivatives market on a global rather than just European scale, and include the OTC market.
FDA faces scandal over Bayer decision. An FDA panel recently voted that the benefits of four popular Bayer (OTCPK:BAYRY) birth-control pills outweigh the blood-clotting risk, but the agency failed to disclose that three of the advisors have ties to Bayer as consultants, speakers or researchers.
Google wins biggest enterprise deal so far. Google (NASDAQ:GOOG) has won its largest enterprise contract ever as Spain's BBVA signs on to use Google Apps for its 110,000 employees spread across the globe. Analysts called the deal an "important" first step to help the firm land more large contracts in the financial sector.
EU fiscal treaty to allow deficits in deep recessions. The EU fiscal treaty, a major element of which is balanced budgets, could reportedly allow eurozone countries to incur deficits during severe recessions or other exceptional events. With the eurozone slumping, countries could use the escape clause before the treaty even comes into force, which is slated for the start of 2013.
Carlyle to list on Nasdaq; profit jumps 60%. Carlyle said late yesterday that it would list on Nasdaq under the symbol "CG," and that nine-month net profit and revenue jumped around 60% to $918.1M and $2.01B respectively. The rise in profit allowed Carlyle's three founders to receive a combined $413M last year, mostly in distributions.
Mafia becomes Italy's largest lender. The Mafia has taken advantage of Italy's banking woes to grab market share in the lending business. No more Mustache Petes, the business is more likely done by bankers, lawyers and notaries. An anti-crime group estimates the mob has €65B in liquidity, making it the largest bank in Italy; there's no word on its exposure to Italian sovereign debt or if it has access to the ECB borrowing window.
Alibaba scales back loan for stake purchase. Alibaba (OTC:ALBCF) intends to take only a $3B loan for its plans to buy back part of the 40% stake held by Yahoo (NASDAQ:YHOO), sources say, down from an earlier figure of $4B. Alibaba would make up the difference by tapping its cash reserves, estimated to be at least $3B. The reduced loan could attract more lenders to the deal.
Sanofi looks for M&A targets. Sanofi (NYSE:SNY) is planning "bolt-on" acquisitions of up to €2B ($2.6B) this year, CEO Chris Viehbacher has said. "All we want to do is continue to look for opportunities, particularly in emerging markets," although the company prefers to look beyond China and India where many peers are focused.
In Asia, Japan +0.3% to 8448. Hong Kong +0.8% to 19152. China -0.4% to 2276. India +0.1% to 16176.
In Europe, at midday, London -0.7%. Paris -0.7%. Frankfurt -0.8%.
Futures at 7:00: Dow -0.4%. S&P -0.5%. Nasdaq -0.4%. Crude -0.8% to $101.39. Gold +0.3% to $1636.90.
Wednesday's economic calendar:
7:00 MBA Mortgage Applications
8:40 Fed's Evans: Economic Outlook
9:00 Fed's Lockhart: Economic Outlook
9:30 CFTC Meeting: Swap Rules
10:30 EIA Petroleum Inventories
12:30 PM Fed's Plosser: Economic Outlook
1:00 PM Results of $21B, 10-Year Note Auction
2:00 PM Fed's Beige Book
Earnings Results: Companies that beat EPS expectations last night and today include Synnex (NYSE:SNX).
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