by Rachael Granby and the Market Currents team
Greece lands new bailout. The big news today is the approval of Greece's bailout, a development welcomed by markets with relief and at the same time completely unsurprising. Financing will total €130B and involve a 53.5% loss for private debt holders on the nominal value of their bonds. The goal of the €130B program is to shrink Greece's debt to 121% of GDP by 2020, from about 160% now. National central banks won't be a part of the debt swap. Private debt holders will get "sweeteners" including 30-year bonds in exchange for the ones they give up. European markets are down (see below) but the euro soared in response to the deal, buying $1.329. At present, euro -0.3% to $1.3207 (6:45 ET).
URS buys Flint Energy. URS Corp (NYSE:URS) agreed to buy Canadian oilfield services company Flint Energy Services (OTC:FESVF) for C$1.25B ($1.25B). The C$25/share offer is a 68% premium to Flint's Friday close. URS will also assume C$225M in Flint debt.
Fed rules made in secret. The Fed has taken on a significantly larger regulatory role than ever before, but is writing new financial rules almost entirely behind closed doors. Just two public meetings have been held since July 2010, and on 45 of the 47 regulatory measures during that period, Fed governors have emailed in their votes to the Fed's secretary, with those votes not publicly disclosed until last week.
EU banks safeguard cash. Top European banks are stockpiling a growing amount of cash at central banks around the world. The eight major European banks that disclosed earnings in recent weeks reported a total of $816B held at central banks, up roughly 50% Y/Y. The problem is that central banks' paltry yields are squeezing banks' profits and the sidelined money is exacerbating a European lending drought.
Oil climbs as Iran snubs U.K., France. Oil has been on a tear the last couple of days, in part because of Iran-related concerns. Over the weekend, Iran said it had stopped selling crude to British and French companies, in retaliation for the EU's import ban. Oil markets, the EU included, can cope with the loss of Iranian oil exports, responded the IEA's Didier Houssin, but oil's elevated price "could represent a risk to the global economic recovery." In triple-digits, the burden of oil prices on the global economy is nearing 2008 levels. Crude +1.3% to $104.56 (6:45 ET).
Pfizer aims for China expansion. Pfizer (NYSE:PFE) is exploring partnerships with more Chinese drug companies as it tries to expand its marketshare in generic drugs, and reported progress over the weekend in a planned JV with China's Zhejiang Hisun Pharmaceutical. Big Pharma is increasingly turning to China to cut costs and to compensate for sales lost in Western markets as top-selling drugs go off patent.
Reliance Comm. eyes mobile phone contract. Reliance Communications is reportedly in talks with four companies about a possible $3B contract to manage its mobile phone networks, with a finalized contract expected in the next six weeks. The four companies are said to be Ericsson (NASDAQ:ERIC), Alcatel-Lucent (NYSE:ALU), ZTE Corp. (OTCPK:ZTCOF) and Huawei Technologies.
China favors automaker incumbents. China's clampdown on automobile overcapacity is good news for companies like GM (NYSE:GM) which already have entrenched positions in the world's biggest car market. Newcomers won't be eligible for incentives on factories, and China appears less likely to sign off on new applications from foreign automakers.
OECD growth slows. Economic growth in developed countries slowed to a measly 0.1% in Q4, according to provisional OECD estimates, down from +0.6% in Q3. The overall figure "masks diverging patterns," with accelerated growth in the U.S. and deterioration in Japan. The eurozone, unsurprisingly, also posted a decline.
Wal-Mart bets on China. Wal-Mart (NYSE:WMT) said yesterday that it had lifted its stake in Chinese e-commerce firm Yihaodian to around 51% as the company angles for a larger presence in China's fast-growing consumer market. Financial details weren't disclosed.
Samsung splits from LCDs. Samsung (OTC:SSNLF) announced plans to spin off its unprofitable LCD business to focus on more profitable areas such as smartphones, non-memory chips, and next-generation panels. The new company, provisionally called Samsung Display Co, will be set up April 1 with paid-in capital of 750B won ($668M).
Japan posts record trade deficit. Japan posted a record trade deficit in January of ¥1.48T ($19B) as a strong yen and weak global demand hurt manufacturers and slowed the country's recovery. The numbers may be somewhat skewed, as the Lunar New Year holiday fell in January this year instead of February, decreasing business days in Asian markets.
In Asia, Japan -0.2% to 9463. Hong Kong +0.3% to 21479. China +0.8% to 2381. India +0.8% to 18429.
In Europe, at midday, London -0.4%. Paris -0.9%. Frankfurt -0.7%.
Futures at 7:00: Dow +0.2%. S&P +0.1%. Nasdaq flat. Crude +1.3% to $104.56. Gold +0.8% to $1739.40.
Tuesday's economic calendar:
8:30 Chicago Fed National Activity Index
Earnings Results: Companies that beat EPS expectations this morning include Home Depot (NYSE:HD).
Those that missed forecasts include Pioneer Drilling (PDC).
For real-time earnings coverage, please click here.
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