Tuesday Market Prepper
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Bankers are running out of private sector solutions for Banca Monte dei Paschi (OTCPK:BMDPY) and have told the Italian lender to prepare for a state bailout this weekend after Matteo Renzi suffered a referendum defeat. While financial markets responded relatively calmly, sources told FT that the political upheaval made it "more difficult" to secure a €1B investment from Qatar on which BMPS's €5B capital-raising plan hinges. Shares in the bank have shed more than 85% in value this year.
Matteo Renzi will remain in office for at least a week after Italian President Sergio Mattarella asked him to delay his resignation until the Senate passes his government's 2017 budget. Mattarella also signaled that he won't call snap elections in response to the referendum results, stating it was important for Italy's institutions to "respect commitments and deadlines" and it would take time to find the right solutions.
Prime Minister Manuel Valls has declared his candidacy for the French presidency, stating he wants to lead the Socialist party to victory after Francois Hollande declined to seek a second mandate. Meanwhile, German Chancellor Angela Merkel will be officially nominated today as the Christian Democratic Union's top candidate heading into the 2017 national election.
Despite approving a set of "short-term" debt relief measures, talks between eurozone ministers and the IMF broke down on Monday with little headway having been made in resolving splits over Greece's €86B bailout. Eurogroup President Jeroen Dijsselbloem even acknowledged after the meeting that his goal of having the IMF join the program by the end of 2016 had been abandoned.
South Korean President Park Geun-hye has accepted a proposal for her to step down in April over an influence-peddling scandal, upon which a presidential election would be held 60 days after her resignation. She will also accept the result of an impeachment vote against her this week. If the latter were to happen, she would be suspended from power unless the move was rejected by the constitutional court.
In its last monetary policy review for the year, the Reserve Bank of Australia left interest rates on hold at an historic low of 1.5%. The central bank said that a rising Aussie dollar might pose risks to the country's economic transition as it moves away from a resource-led economy, and flagged that some "slowing in the year-ended growth rate is likely" before picking up again.
Fed officials yesterday offered the last insight into the central bank's thinking before a media blackout period went into effect ahead of the Dec. 13-14 policy meeting. St. Louis Fed President James Bullard warned that President-elect Trump shouldn't design fiscal policy as if the U.S. economy were in crisis, while Chicago Fed President Charles Evans echoed the view, arguing that "you don't need explicit stimulus" given such a low unemployment rate.
The end of the checkout line? Amazon Go - Amazon's pilot convenience store in Seattle that plans to open to the public early next year - will use an app and computer vision instead of traditional checkouts. Customers scan into the store with an app, shop as usual and the items are billed to their Amazon.com (NASDAQ:AMZN) account. The company also envisions opening more than 2,000 of its Amazon Fresh grocery stores over the next decade.
McDonald's is looking to raise $1B-$2B with the sale of its China and Hong Kong stores after the U.S. fast food chain decided to keep "a significant minority stake in the business," Reuters reports. McDonald's (NYSE:MCD) picked a consortium led by Carlyle Group (NASDAQ:CG) and Chinese conglomerate Citic Group to buy the outlets, but its decision lowered the price tag for the stores from an expected $3B.
Top executives from the largest U.S. banks and asset managers are set to begin speaking today at the Goldman Sachs U.S. Financial Services Conference. Those appearing at the event include CEOs of JPMorgan (NYSE:JPM), BofA (NYSE:BAC), Carlyle Group (CG), Blackstone (NYSE:BX) and American Express (NYSE:AXP). Wells Fargo's (NYSE:WFC) new CEO, Tim Sloan, who took the top job in October after the bank's fake account scandal, will also take the podium.
Shares in U.K. spread-betters have tanked after the Financial Conduct Authority announced a comprehensive series of proposals to clamp down on the business, which it says is poorly understood by clients. Over 80% of customers lose money on "contract for difference" products and binary bets, according to the British regulator. IG Group (OTC:IGGRF), CMC Markets (OTC:CCMMF) and Plus500 (OTC:PLSQF) have plunged around 30% on the news.
A group effort? YouTube (GOOG, GOOGL), Facebook (NASDAQ:FB), Twitter (NYSE:TWTR) and Microsoft (NASDAQ:MSFT) are stepping up efforts to remove extremist content from their websites by creating a common database that will be up and running in early 2017. The web giants will share "hashes" - unique digital fingerprints they automatically assign to videos or photos - of terrorist material to enable their peers to identify the same content on their platforms.
"Sales growth is off the charts. During the first week of holiday shopping, our sell-through (a measure of how many units are sold, rather than stocked on retailers' shelves) of Apple Watch was greater than any week in the product's history. We're on track for the best quarter ever," CEO Tim Cook told Reuters. Apple (NASDAQ:AAPL) has disclosed few details about the performance of the Apple Watch, its first new product released under Cook, and hasn't broken out sales of the gadget in its earnings, instead lumping it into an "other products" category.
At an unprecedented parliamentary hearing, Samsung (OTC:SSNLF) Vice Chairman Lee Jae-yong apologized for the conglomerate's involvement in South Korea's political scandal, but denied that the group paid bribes and said it was a victim of extortion. Others business tycoons grilled during the session included the chiefs of Hyundai (OTC:HYMLF) and Hanjin (OTC:HNJSF).
United Technologies, parent company of Carrier, got a "good deal" with President-elect Donald Trump and there was no "quid pro quo," CEO Greg Hayes said in an interview with Jim Cramer. "I was born at night but not last night," he declared. "I also know that about 10% of our revenue comes from the U.S. government. And I know that a better regulatory environment, a lower tax rate can eventually help UTC (NYSE:UTX) over the long run."
The man who led Lego through a turnaround over the past decade is stepping down as head of the popular toymaker and will instead become chairman of company. Jorgen Vig Knudstorp will be replaced at the end of the year by COO Bali Padda, who will be the firm's first foreign chief executive and first CEO from outside the Kristiansen clan, Denmark's richest family.
Airbus is still trailing Boeing in aircraft stats this year despite stepping up the pace in November on two models that have been hit by delays. In the first 11 months of 2016, Airbus (OTCPK:EADSY) recorded a total of 410 net orders compared to Boeing's (NYSE:BA) 466, and delivered 577 planes. The U.S. planemaker's delivery data for November is not yet available, but it ended October with a lead of about 100 aircraft over its European rival.
Meanwhile, Statoil will not resume using Airbus's (OTCPK:EADSY) Super Puma helicopters even if Norway's Civil Aviation Authority decides to lift the ban imposed on the workhorse of the offshore oil industry. Super Pumas were barred from commercial traffic in Norway and Britain following an accident in April that killed 13 oil workers flying from a Norwegian oil platform operated by Statoil (NYSE:STO).
A day after the Obama administration put the brakes on Energy Transfer Partners' (NYSE:ETP) Midwest oil pipeline, the incoming Trump administration voiced its support for completing the project. "With regard to the Dakota Access Pipeline, that's something that we support construction of and we'll review the full situation when we're in the White House," said Jason Miller, a spokesman for the President-elect.
Next rumor about an Actelion bid... According to a Bloomberg report, Sanofi (NYSE:SNY) has made its interest known to Europe's largest biotech firm, creating competition for Johnson & Johnson (NYSE:JNJ), which made an offer for the company last month. Sanofi is working with advisers as it weighs its options for Actelion (OTCPK:ALIOY), but hasn't yet made a final decision on whether to proceed with a bid. SNY -1.7% premarket.
IBM Chief Executive Ginni Rometty is one of 16 business leaders, and the only tech CEO, who will advise Donald Trump as members of the President's Strategic and Policy Forum. The group will consult with Trump, who criticized IBM on the campaign trail for offshoring, as he implements his plans to stem the flow of U.S. jobs to other countries.
5G and its multi-gigabit cellular speeds probably won't hit the market until 2020, but AT&T (NYSE:T) has started testing the technology inside of one of Intel's (NASDAQ:INTC) offices in Austin, TX. The company is particularly interested in how the new network will stand up to streaming 4K video, but will also test a wide variety of uses, including VPN, VoIP, "unified communications applications" and good old internet access.
In Asia, Japan +0.5%. Hong Kong +0.8%. China -0.2%. India +0.2%.
In Europe, at midday, London +0.2%. Paris +0.2%. Frankfurt +0.2%.
Futures at 6:20, Dow flat. S&P +0.1%. Nasdaq +0.1%. Crude -0.9% to $51.34. Gold -0.3% to $1172.60.
Ten-year Treasury Yield flat at 2.39%