By Yigal Grayeff and the Market Currents team
Eurozone unemployment hits record. The biting austerity and debt crisis across the eurozone continued to hit hard in December, with unemployment coming in at a euro-era high of 10.4%, which was unchanged from revised November figures. At 22.9%, Spain clocked in with the greatest unemployment, followed by Greece and Lithuania. At the other end of the scale, Austria had a 4.1% rate, while Germany's jobless figures fell more than expected; the rate was 6.7%.
Freddie Mac bet billions against homeowners. An NPR-ProPublica report reveals that Freddie Mac's (OTCQB:FMCC) investment division placed billions of dollars of bets against homeowners who were trying to refinance their mortgages at lower rates - the very homeowners it is supposed to help. The report raises the question of a conflict of interest amid concerns Freddie has been turning down refinancing requests in order to benefit its prop trades.
Eurozone banks to tap ECB for even more money. In further evidence of the liquidity squeeze among eurozone banks, several of the largest may double or even triple their request for funds at the ECB’s three-year money auction on Feb. 29, The Financial Times reports. Banks borrowed €489B in the emergency funding scheme's debut auction last month.
EU finalizes permanent bailout fund. Twenty-five of 27 EU member states will sign off on the €500B permanent European Stability Mechanism rescue fund. The U.K. and the Czech Republic are not supporting the vehicle, which will replace the temporary European Financial Stability Fund. The ESM is unlikely to be big enough, though, as this infographic shows.
WTO rules against China over tariffs. A WTO appeals panel has ruled against China's efforts to limit the export of raw materials used in the steel and chemicals industries, confirming that the country's export duties and quotas on these products violate global trade rules and must be changed. The decision could provide the U.S. and Europe with ammunition against similar limits on China's rare-earth exports.
Amazon's investments seen overshadowing profits again. Amazon (AMZN) is expected to report another sharp drop in profits when it releases its Q4 results later, with analysts forecasting that EPS fell 79.1% to $0.19 due to the company's prodigious spending. Revenues are seen jumping 41% to $18.2B. Investors will be looking out for sales of the Kindle Fire, for which Stifel Nicolaus has predicted 6M vs. Apple's 15.4M, as well as updates on Amazon's Instant Video and Web services.
Honda's profit falls off a cliff. Honda's (HMC) FQ3 operating profit fell 65% to ¥44.3B ($580M), far short of the ¥81.2B consensus. The company expects full-year operating profit to be down 65% as well, to ¥200B vs. a ¥283B consensus. Natural disasters in Japan and Thailand hurt the automaker, as did a strong yen.
Apple taps Dixon chief to lead retail business. Apple (AAPL) has hired John Browett to run its retail operations, taking the rare step of filling its most high-profile vacancy with an outsider after ending a seven-month search. Browett is the CEO of Dixons (OTCPK:DSITY), one of Europe's largest electronics chains, and he will take over as Apple looks to expand its retail business internationally.
McKesson beats forecast, to make $918M in acquisitions. McKesson's (MCK) FQ3 earnings exceeded consensus as EPS rose 9.4% to $1.40 and revenue climbed 9% to $30.8B, with the pharmaceutical distributor benefiting from a strong performance in the U.S., and increasing sales of higher-margin products and services. McKesson also said it's acquiring the marketing and franchising businesses of over 1,000 Canadian independent pharmacies for $918M. Shares +3.6% post-market.
Mexico to get $5B Coke investment. Coca-Cola (KO) plans to invest $5B in Mexico over the next five years as it attempts to boost production and increase local sales. Coke's two largest Latin American bottlers, Coca-Cola Femsa (KOF) and Arca Continental (OTC:EMBVF), are based out of Mexico, and so is juice brand Jugos del Valle, which has annual sales of above $1B.
Japan's industrial output rises but so does unemployment. Japan's industrial production rose a larger-than-expected 4% in December, but sustained gains are at risk as global demand falls and the yen continues to strengthen. Household spending also surprised by increasing 0.5%, although so did unemployment, which ticked up to 4.6% from 4.5% in November.
Congress progresses in moves to ban insider trading. A bill giving regulators the power to prosecute members of Congress for insider trading has cleared a procedural hurdle, setting the stage for a Senate vote this week or next. A study released last year noting the abnormally high returns posted by House members on their personal stock trades led to calls for greater regulatory oversight.
In Asia, Japan +0.1% to 8803. Hong Kong +1.1% to 20390. China +0.3% to 2,292.61. India +2.0% to 17194.
In Europe, at midday, London +0.8%. Paris +1.4%. Frankfurt +1.0%.
Futures at 7:00: Dow +0.4%. S&P +0.4%. Nasdaq +0.4%. Crude +1.6% to $100.37. Gold +0.5% to $1743.40.
Tuesday's economic calendar:
7:45 ICSC Retail Store Sales
8:30 Employment Cost Index
8:55 Redbook Chain Store Sales
9:00 S&P Case-Shiller Home Price Index
9:45 Chicago PMI
10:00 Consumer Confidence
10:00 State Street Investor Confidence Index
3:00 PM USDA Ag. Prices
Earnings Results: Companies that beat EPS expectations last night and today include ARM Holdings (ARMH), Harris Corporation (HRS), McKesson (MCK), Rent-A-Center (RCII), Triumph Group (TGI), Entergy (ETR), McGraw-Hill Companies (MHP), Lexmark (LXK), Oshkosh Truck (OSK), Celanese (CE), Pfizer (PFE), Eli Lilly (LLY), Tyco International (TYC), Mattel (MAT), Danaher (DHR).
For full real-time earnings coverage, please click here.
Notable earnings before Tuesday's open: ADM, AMG, ARMH, AVY, BIIB, CE, CIT, CNH, DHR, ETR, GNTX, HP, HRS, ITW, LLL, LLY, LXK, MAT, MHP, MPC, NRGY, OSK, PCAR, PFE, PNR, TLAB, TYC, UPS, VLO, WDR, X, XOM