JPMorgan, government close to $13B settlement. JPMorgan (NYSE:JPM) and the U.S. government could announce a $13B deal today that would settle all civil federal investigations into the bank's mortgage practices, as well as state probes by New York and California, and a suit by the National Credit Union Administration. As part of the agreement, JPMorgan has dropped its opposition to shouldering the legal liability related to Washington Mutual, which the bank bought during the financial crisis.
PBOC to exit normal yuan intervention. The People's Bank of China intends to "basically" exit from regular intervention in the forex markets, Governor Zhou Xiaochuan has said. Writing in a book that outlines reform programs that the Chinese government announced last week, Zhou said the PBOC will extend the yuan's trading band in an "orderly" way. China also plans to phase out investment limits for domestic and foreign investors, and gradually remove the ceiling on deposit rates at banks.
Home Depot earnings beat the Street. Home Depot's (NYSE:HD) Q3 EPS of $0.95 beat by $0.06 and net profit increased to $1.4B from $947M, while revenue climbed 7.4% and topped estimates by $330M. Comparable store sales also grew 7.4%. The "results reflect the continuing improvement in the housing market and our solid operational performance," said CEO Frank Blake.
Top Stock News
Salesforce meets bottom line estimates. As expected, Salesforce.com (NYSE:CRM) generated EPS of $0.09 in FQ3, while sales surged 36% to $1.08B and beat forecasts, helped by the $2.5B acquisition of email marketing firm ExactTarget. Salesforce's net loss narrowed to $124.4M from $220.3M. The company also gave FQ4 sales guidance that was slightly above consensus. "They're starting to execute on their marketing strategy," says Oppenheimer analyst Brian Schwartz said. "They have traction in there." However, shares fell 0.9% in AH trading.
Nokia investors seen backing Microsoft deal. Nokia's (NYSE:NOK) shareholders are expected to approve the sale of the company's devices and services division to Microsoft (NASDAQ:MSFT) at a meeting today. The sale is part of a €5.44B ($7.36B) deal that also includes the licensing of patents. The transaction will boost Nokia's cash position to almost €8B, of which new investor Dan Loeb expects a "meaningful proportion" to be returned to investors.
JPM was prepared to fund federal benefits during budget crisis. While JPMorgan (JPM) finalizes a $13B settlement over its problematic practices, it can finally enjoy a bit of positive coverage. As the U.S. again threatened to default last month and the government shut down, the bank was reportedly prepared to fund federal benefits such as Social Security and food stamps for its retail customers. "It is the right thing to do," CEO Jamie Dimon said. The cost would have been $5B a month and it wasn't certain how JPMorgan could have legally recouped the money.
Nasdaq among exchanges considering bid for Euronext. Nasdaq OMX (NASDAQ:NDAQ), Deutsche Boerse (OTCPK:DBOEY) and the London Stock Exchange (OTCPK:LDNXF) are reportedly considering bids for Euronext, the European exchange group set to be spun off by InterContinentalExchange (NYSE:ICE) following its purchase of NYSE Euronext. However, none of the suitors are believed to have hired bankers to assist them, while the current plan is for Euronext to be spun off in a Paris IPO in 2014.
Exxon to sell HK power assets for $3.4B. Exxon Mobil (NYSE:XOM) has agreed to sell its majority stakes in Hong Kong electricity provider Castle Peak and Hong Kong Pumped Storage Development for a total of $3.4B. Exxon is selling a 30% stake in Castle Peak to CLP Holdings (OTCPK:CLPHY), which already holds 40%, for HK$12B ($1.6B), and another 30% to state-owned China Southern Grid, also for a reported HK$12B. In addition, CLP is buying a 51% stake in Pumped Storage Development for HK$2B.
Should investors mimic the trading patterns of CEOs? Research from S&P Capital IQ shows that in the six months through October, stocks of Russell 3,000 companies in which the CEO was a net buyer of shares performed an average of six times better than the index in the five days after the trade was publicized. The stocks also did better than the Russell 3,000 in the month and three months afterwards. However, results for CEO sales are less conclusive. And while there was a strong link between CEO acquisitions and share-price performance in 2008 and 2009, it reversed last year.
Top Economic & Other News
OECD lowers global outlook. The OECD, which has a history of cutting its growth forecasts, has done it again, reducing its global outlook for this year and next. The OECD expects that the world economy will expand 2.7% in 2013 vs a previous prediction of 3.1%, and 3.6% in 2014 vs 4%. OECD Chief Economist Pier Carlo Padoan cited a slowdown in emerging markets in a Bloomberg interview. "They used to be an important support engine for global growth in bad times. Now the reverse is true," Padoan said.
European car sales continue recovery. European car sales rose for a second month in a row in October, climbing 4.6% on year to 1.04M registrations after a 5.5% gain in September. However, registrations fell 3.1% in January-October, strengthening the likelihood that sales in the region will fall for a sixth consecutive year in 2013. The Spanish car market jumped 34.4% in October, while most other countries grew moderately, although Italy fell 5.6%. Toyota (NYSE:TM) and Renault (OTC:RNSDF) enjoyed the strongest growth amongst the carmakers, while Fiat (FIATY) and Honda (NYSE:HMC) led the decliners.
German investor confidence hits 4-year high. The German ZEW survey of investor confidence has climbed to its highest in over four years in November, rising to 54.6 from 52.8 in October and topping consensus of 54. However, the current situation print surprisingly fell. "Economic expectations for Germany have been hovering at a high level for months," says ZEW President Clemens Fuest. "The slightly improved economic outlook for the eurozone might have contributed to this development."
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In Asia, Japan -0.3% to 15127. Hong Kong flat at 23658. China -0.2% to 2193. India +0.2% to 20890.
In Europe, at midday, London -0.5%. Paris -1%. Frankfurt -0.4%.
Futures at 6:20: Dow flat. S&P -0.1%. Nasdaq -0.1%. Crude -0.3% to $92.78. Gold flat at $1272.20.
Ten-year Treasury Yield +2 bps to 2.69%
Today's economic calendar:
7:45 ICSC Retail Store Sales
8:30 Employment Cost Index
8:55 Redbook Chain Store Sales
2:15 PM Fed's Evans: U.S. Economy and Monetary Policy
7:00 PM Bernanke Press Conference
Notable earnings after today's close: LZB
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