Pfizer has secured formal board approval for its acquisition of Allergan (AGN), in a deal that will create the world's biggest drugmaker and mark the largest tax inversion on record. Pfizer's (PFE) Chief Executive Ian Read will be CEO of the combined company, with Allergan's CEO Brent Saunders serving in a very senior role focused on operations and the integration. The $150B mostly stock transaction was ratified on Sunday and is expected to be officially announced in the coming hours. AGN +4.9% premarket.
Economy
Economic activity in the eurozone grew at the fastest pace since May 2011 in November, giving some optimism over the health of the region's economy. Markit's flash composite Purchasing Managers' Index climbed to 54.4 from 53.9 last month, as a recovery continued to be led by the service sector. Growth meanwhile accelerated to a three-month high in Germany, where Markit's flash composite PMI rose to 54.9 from 54.2, fueled by a big improvement in new business.
Prior to the release of the PMI figures, the euro slumped to a seven-month trough at $1.0601, following Mario Draghi's strongest hint yet that the ECB will unveil fresh stimulus at its policy meeting next week. "The ECB is prepared to deploy its full range of stimulus measures to fight low inflation," Draghi said on Friday. The contrast with the U.S. Federal Reserve could not be more stark as it seems destined to lift rates in December for the first time in almost a decade.
San Francisco Fed President John Williams echoed that view on Saturday, stating there was a "strong case" for raising interest rates next month provided that U.S. economic data does not disappoint. "Assuming that we continue to get good data on the economy, continue to get signs that we are moving closer to achieving our goals and gaining confidence getting back to 2% inflation...if that continues to happen there's a strong case to be made in December to raise rates." Williams is a closely watched policy maker who often signals the Fed's consensus position on monetary policy.
Belgian authorities have extended a lockdown of Brussels for a third straight day after late night raids searching for those behind last week's Paris attacks failed to find a prime suspect. Salah Abdeslam, the 26 year old who has been on the run since he left Paris hours after his elder brother blew himself up at a cafe there, continues to elude a Europe-wide manhunt. The lockdown will see Brussels' metro and many shops closed, as well as schools and offices.
Conservative opposition candidate Mauricio Macri has been confirmed as the winner in Argentina's presidential elections, defeating the ruling Peronist party's Daniel Scioli by a smaller margin than expected. Macri will have to deal with the difficult economic legacy of Cristina Fernandez de Kirchner, who with Nestor Kirchner, her late husband and predecessor, ruled Argentina for the past 12 years. Since taking over in 2007, Fernandez has seized pension fund assets and the nation's largest energy company, while increasing welfare programs and battling U.S. hedge funds over defaulted debt.
Other elections around the globe: Egyptians are voting in the second phase of elections that are meant to elect its first representative body in three years, but which critics say have been undermined by widespread repression. Results will be announced in early December. Separately, Hong Kong's pro-democracy movement got a boost on Monday with about eight candidates involved in the city's mass protests last year winning office at district-level elections, reflecting the continued support for political change in the Chinese-ruled territory.
With a host of contentious problems to discuss, American and Chinese trade officials are scheduled to wrap up three days of top-level talks today that cover topics like market access and industry restrictions. Those issues, and slow progress on a bilateral investment treaty, have combined to sour commercial relations, and experts think the meetings will do little to alleviate the mood.
Crude is beginning the week deep in the red, as part of a wider decline in commodity prices and renewed concerns of oversupply with OPEC expected to ramp up output at its next meeting on Dec. 4. "Oil prices may drop to as low as the mid-$20s a barrel unless OPEC takes action to stabilize the market," Venezuelan Oil Minister Eulogio Del Pino declared. The slump is also heavily biting into industrial and precious metals: Copper is now below $4,500 a metric ton for the first time since 2009, nickel lost more than 5% to its lowest level since 2003, zinc is down 4.2%, and gold is 0.8% lower at $1068.20 an ounce. Crude futures -3.4% to $40.49/bbl.
Stocks
Facebook's Mark Zuckerberg has announced he will take two months of paternity leave after his daughter's birth, though he did not say when she is due, or who would be his interim successor. Facebook (FB) allows its U.S. employees to take up to four months of paid maternity or paternity leave, which they can use all at once or throughout the year. Time off policies have recently become a hot topic across the tech world, with giants like Amazon (AMZN), Microsoft (MSFT) and Netflix (NFLX) announcing extensions for paid paternity leave, ranging from five months to a full year.
Wal-Mart is pulling back Cyber Monday - the biggest online shopping day of the year - to Sunday, in yet another Thanksgiving makeover at the world's largest retailer. Cyber Monday's origins trace back more than a decade when people started using the high-speed Internet access at their office to purchase things they saw but did not buy during trips to the shopping mall over Thanksgiving weekend. Now, with Internet access readily available, the logic of limiting the event to a weekday no longer holds, said Fernando Madeira, chief executive of Walmart.com (WMT).
Procter & Gamble is at a crossroads, according to Barron's, which states the company should break itself up to improve its beleaguered performance. The "radical action" would give P&G the chance to contend with more "agile competitors" and would offer investors an opportunity to invest in companies growing from a dramatically smaller base. Barron's also figures that P&G's businesses could be worth about $90 a share if they traded separately, compared with a recent stock price of $75. PG is down about 17% YTD.
Looking to create the world's largest ATM maker, Diebold (DBD) has launched a $1.8B bid for German rival Wincor Nixdorf (WNXDF), which includes €38.98 in cash and 0.434 of a common Diebold share. A deal would see the two companies land about 35% of the ATM market, leaving NCR Corp. (NCR), the global number two, with an estimated share of 25%. Wincor expects the transaction to yield at least $160M in annual cost savings.
Petco is nearing an agreement to be acquired by CVC Capital and the Canadian Pension Plan Investment Board for $4.7B, in what would be one of the biggest leveraged buyouts of 2015. The pet-supplies retailer, which was taken private by TPG Capital and Leonard Green & Partners in 2006, hired advisers earlier this year to explore options including a sale or taking the company public, and even filed for an IPO in August.
Traders will be eyeing food stocks over Thanksgiving week: Tyson Foods (TSN) and Post Holdings (POST) report results today, followed by Campbell Soup (CPB) and Hormel Foods (HRL) tomorrow. Investors will be watching how major food producers adapt to a more health-conscious consumer and to millennial spending patterns that gear more toward protein and hormone/antibiotic-free products. Tyson Foods (+9% YTD), likely the provider of many a turkey for the holiday, said in April it plans to end the use of human antibiotics in its chicken by 2017, while Hormel (+31% YTD) announced the acquisition of organic meat processor Applegate Farms in May.
AstraZeneca has finalized plans to divest its Crohn's disease drug Entocort by selling U.S. rights to the medicine to Perrigo (PRGO) for $380M. The move is part of AstraZeneca's (AZN) "externalization" drive, which aims to sell non-core products to help it fill a short-term revenue gap caused by older drugs, while investing in a pipeline of new medicines. Entocort had U.S. sales of $89M in the first nine months of 2015.
Unlike owners in the U.S., Volkswagen (VLKAY) will not be offering any sort of compensation to European owners of diesel vehicles affected by its emissions scandal, Automotive News reports. Some 482K diesel owners across America are set to receive a $1000 goodwill package and three years of free 24-hour roadside assistance. On Friday, Volkswagen slashed €1B from its 2016 investment plan and submitted a proposal to fix thousands of diesel cars equipped with "defeat devices."
Meanwhile, the United Auto Workers union has finally completed talks with Ford (F) workers following a nail-biting vote that kept everyone guessing until the final ballots were cast and counted. With the new contracts in place, General Motors (GM), Ford and Fiat Chrysler Automobiles (FCAU) can look forward to four years of labor peace and prosperity as the industry heads to record U.S. sales and healthy profits margins.
In Asia, Japan closed. Hong Kong -0.4% to 22666. China -0.6% to 3610. India -0.2% to 25819.
In Europe, at midday, London -0.6%. Paris -0.9%. Frankfurt -0.5%.
Futures at 6:20, Dow -0.3%. S&P -0.3%. Nasdaq -0.3%. Crude -3.4% to $40.49. Gold -0.8% to $1068.20.
Ten-year Treasury Yield +2 bps to 2.28%
8:30 Chicago Fed National Activity Index
9:45 PMI Manufacturing Index Flash
10:00 Existing Home Sales
