By Yigal Grayeff and the Market Currents team
RBS to sell aviation ops for $7.3B. RBS (RBS) has agreed to sell its aircraft leasing division to Sumitomo Mitsui Financial Group (SMFG) for $7.3B in a deal that's the largest-ever sale of assets in the sector. It's also RBS's largest single disposal since its 2008 bailout. Shares in the bank were +6.8% premarket.
Downgrades shmowngrades - yields fall in EU auctions. Some of the EU's weakest sovereign borrowers secured lower yields in bond auctions today despite S&P's slash-and-burn extravaganza on Friday and its downgrading yesterday of the eurozone's EFSF rescue fund. Spain sold €4.88B of 12-month and 18-month bills after receiving a two-notch cut, while Greece, Belgium and Hungary sold debt as well. A main reason for the successful sales was the ECB's recent liquidity injection.
China's economy slows. China's GDP growth slowed to an annualized 8.9%, the lowest expansion since mid-2009, but ahead of expectations of +8.7%. Not unrelated to GDP, China's urban population surpassed its rural population last year for the first time in the country's 5,000-year history, intensifying the challenge of providing jobs and social services.
Carnival plummets following cruise disaster. Carnival (CCL) shares were -17% premarket following the capsizing of the Costa Concordia cruise ship at the weekend. The company yesterday said the hit on 2012 earnings for the loss of use will be $85-$95M, or $0.11-$0.12 a share, while the firm will also suffer further undetermined costs. The incident occurred during the peak of "wave season," when close to a third of all cruise vacations for the year are normally booked. Royal Caribbean (RCL) was -6.6%.
Pembina to acquire Provident for $3.1B. Pembina Pipeline (PBNPF.PK) is to buy Provident Energy (PVX) for around C$3.2B ($3.1B) in stock, creating Canada's third-largest energy-infrastructure company. Using Pembina's Friday close, the deal carries a 25% premium over Provident's Canadian close.
AIA mulls offer for ING's $6B Asian ops. AIA Group, which is about 1/3-owned by AIG (AIG), is reportedly considering a bid for ING's (ING) $6B Asian insurance operations and has invited four banks to pitch for advisory roles. The planned sale of the business is expected to draw heavy interest.
Feds step up S&P mortgage ratings probe. Federal prosecutors are pushing forward with their probe of S&P's (MHP) ratings of troubled mortgage securities, sources say, after a delay that led many to believe the investigation had been all but abandoned. At issue is whether S&P ignored its own standards during the ratings process to gain favor with banking clients selling the securities.
Airbus warns of plunge in demand. Airbus (EADSY.PK) has forecast that demand for new aircraft could dive by over 50% in 2012 after the company hit a record 1,419 orders last year. A slowdown in A320neo purchases along with the financial pressures of both airlines and suppliers is expected to contribute to the tailoff.
Eurozone inflation falls; German sentiment improves. The eurozone's annual inflation fell to +2.7% in December from +3% in November, while core CPI steadied at +1.6%. Separately, Germany's ZEW Economic Sentiment Indicator rose a whopping 32.2 points to -21.6. It's still below the historical average of 24.5, but suggests that the next six months will see a stabilization of activity and that Germany will face a "dent" in its economy rather than a full-on recession.
MS capping bonuses at $125K. Morgan Stanley (MS) plans to tell employees this week that it's capping individual cash bonuses at $125,000, reflecting an effort to keep costs down in the face of tightened regulation and after a difficult year for the industry. Some top executives, including CEO James Gorman, will defer their bonuses for the year.
Samsung to spend a record $42B in FY 2012. Samsung (SSNLF.PK) plans to increase spending by 12% to a record 47.8T won ($41.7B) this year to boost growth in its chip and display businesses. The company will add 26,000 employees to facilitate the push into these rapid-growth areas.
France Telecom close to sale of Austrian stake. France Telecom (FTE) is reportedly close to selling its 35% stake in Orange Austria to Hutchison 3G, a subsidiary of Hong Kong's Hutchison Whampoa (HUWHY.PK). The deal, which could be signed within days, would value Orange Austria at around €1B ($1.3B).
Firms buy back more than they sell. U.S. companies repurchased $397B of stock last year and issued $169B of new equity, marking the first market shrinkage since 2009. "Having that equity base shrink and starting from a relatively pessimistic point usually sets up pretty well in the long term," said money manager Laton Spahr. "It gives you some hope that valuations have perhaps bottomed."
In Asia, Japan +1.1% to 8466.4. Hong Kong +3.2% to 19628. China +4.2% to 2298. India +1.7% to 16466.
In Europe, at midday, London +0.5%. Paris +1.3%. Frankfurt +1.7%.
Futures at 7:00: Dow +0.7%. S&P +0.7%. Nasdaq +0.8%. Crude +2% to $100.67. Gold +2% to $1663.20.
Tuesday's economic calendar:
8:30 Empire State Mfg Survey
Earnings Results: Companies that beat EPS expectations today include Check Point Software (CHKP).
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