By Yigal Grayeff and the Market Currents team
Japan pledges to reduce Iran oil imports. While China has rebuffed U.S. appeals to cut its use of Iranian oil, Japanese Finance Minister Jun Azumi said his country would heed U.S. requests to do so. Ahead of any prospective oil embargo, European refiners have begun stopping spot purchases from Iran as bankers step back from financing such deals. Adding to the tensions, a third high-ranking Iranian nuclear scientist has reportedly been killed in a Tehran bomb blast.
Chevron becomes the latest to warn on earnings. Chevron (CVX) expects its Q4 earnings to be "significantly below" Q3, due to its downstream business operating near breakeven. The oil giant blamed the downstream weakness on lower margins and refinery input volumes, along with the absence of an asset sale. Chevron will post its Q4 report on Jan. 27. Shares were -1.4% premarket.
Sears loses source of ready cash flow. Sears (SHLD) has taken another hit after CIT Group said it will stop factoring accounts payable for it - cutting off a source of ready cash flow for the embattled retailer. The latest word from Sears is that it sat on $4.2B in liquidity at the end of December, including $900M in cash.
RBS to slash jobs as it overhauls its investment bank. RBS (RBS) plans to cut 3,500 jobs as part of a shake-up of its investment bank. The firm also plans to exit its cash equities, corporate broking, equity capital markets, and M&A businesses - either through divestments or closure - and is in talks with potential buyers.
Spanish, Italian yields fall in bonds auctions The ECB's massive liquidity injection continued to work its "we-don't do QE" magic on EU sovereign debt, helping Spain sell €10B ($12.7B) - almost double its target - in an auction of three bonds at yields that dropped by about one percentage point. A major reason for the success was that local banks used the ECB's ultra-cheap lending to support the sale. Meanwhile, Italy sold €8.5B of 12-month bills at just 2.735%, well down from almost 6% at an auction in December.
Chinese, German inflation falls. China's inflation continued its downward trajectory in December, falling to a 15-month low of +4.1% Y/Y from +4.2% in November. The data has kept analysts hopeful for additional monetary easing from Beijing. German CPI also dropped, declining to +2.1% from +2.4%. Despite the trend, Bill Gross reckons that with the world's central banks "printing money like gangbusters," the threat of inflation could be revived.
Fed reports "ongoing improvement" in Beige Book. The Fed's latest Beige Book is a little more upbeat than before, with "ongoing improvement" in conditions reported from most districts. Holiday retail sales were up noticeably for most, lending edged up, manufacturing continued a steady expansion, and wage and inflation pressures were very limited. Real estate activity, however, remained steady at low levels.
Race to buy $1.5B LME heats up. The London Metal Exchange reportedly sent 15 non-disclosure agreements to potential bidders last month, and at least two serious suitors have emerged for a deal that could be worth as much as $1.5B. The whisper list of potential acquirers includes CME Group (CME), IntercontinentalExchange (ICE) and ICAP (OTCPK:IAPLY).
Coke admits fungicide in OJ. Coca Cola (KO) has admitted that it was the orange juice maker that reported the presence of fungicide in its orange juice and in a competitor's products. In response to the disclosure, U.S. regulators have halted shipments of imported orange juice from all countries, and plan to destroy or ban products if tests find even low levels present. The contamination fears have caused volatility in OJ futures this week.
Foreclosure filings fall 9%. Foreclosure filings slipped a monthly 9% in December to 205,024, which represented a 20% annualized fall and a 49-month low. However, RealtyTrac expects repossessions to rise in 2012 as lenders were in "full delay mode" last year due to inappropriate foreclosure practices.
ING cancels IPO plan for EU and Asia units. ING (ING) has dropped plans to float its insurance and investment management operations in Europe and Asia, citing "the uncertain economic outlook and turbulent financial markets, especially in Europe." ING said the base case of an IPO for the U.S. insurance and investment management businesses remains unchanged.
In Asia, Japan -0.7% to 8386. Hong Kong -0.3% to 19095. China -0.5% to 2275. India -0.9% to 16038.
In Europe, at midday, London +0.3%. Paris +1.4%. Frankfurt +1.5%.
Futures at 7:00: Dow +0.5%. S&P +0.5%. Nasdaq +0.55%. Crude +1.1% to $102.00. Gold +0.95% to $1655.20.
Thursday's economic calendar:
7:00 BOE Rate Decision
7:45 ECB Rate Decision
8:30 Retail Sales
8:30 Initial Jobless Claims
10:00 Business Inventories
10:30 EIA Natural Gas Inventory
1:00 PM Results of $13B, 30-Year Note Auction
2:00 PM Treasury Budget
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
Earnings Results: Companies that were in line with EPS expectations last night and today include Infosys Technologies (INFY).
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