Asian Stocks Swing Between Gains, Losses Amid Europe Concern (Source: Bloomberg)
Asian stocks swung between gains and losses as U.S. retail sales beat estimates while Italian bond yields rose amid concern Italy’s new government will struggle to trim its debt and prevent Europe’s crisis from spreading. Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, fell 1.3 percent. Hyundai Motor Co. (005380), South Korea’s biggest carmaker by market value, rose 0.9 percent. BHP Billiton Ltd. (BHP), the Australian oil producer, rose 0.9 percent after oil approached $100 a barrel. The MSCI Asia Pacific Index slipped 0.2 percent to 117.51 as of 9:20 a.m. in Tokyo, after swinging between gains and losses at least six times. The measure fell 0.9 percent yesterday.
“The U.S. seems to be back on the recovery path, which is very helpful because it’s the biggest economy in the world and it fixes sentiment in a big way,” said Prasad Patkar, who helps manage about $1 billion at Platypus Asset Management Ltd. in Sydney. “Investors around the world would be happy if Europe doesn’t export its toxicity.”
U.S. Stocks Rise on Italy Optimism as Retail Sales Top Estimates (Source: Bloomberg)
U.S. stocks rose, rebounding from earlier losses, on speculation Italian Prime Minister designate Mario Monti will succeed in forming a new government to battle the debt crisis and after growth in retail sales beat estimates. Technology and industrial shares had the biggest gains among 10 groups in the Standard & Poor’s 500 Index, rising at least 0.5 percent. Intel Corp. (INTC) spurred a rally in semiconductor companies, climbing 2.9 percent, after Warren Buffett’s Berkshire Hathaway Inc. said it invested in the world’s largest chipmaker. Wal-Mart Stores Inc. (WMT) slumped 2.4 percent as profit at the world’s biggest retailer trailed analysts’ forecasts. The S&P 500 gained 0.5 percent to 1,257.81 at 4 p.m. New York time, rebounding from a loss of 0.6 percent. The Dow Jones Industrial Average advanced 17.18 points, or 0.1 percent, to 12,096.16. About 6.3 billion shares changed hands on U.S. exchanges, 24 percent below the three-month average.
European Stocks Drop as Monti Struggles to Win Backing in Italy (Source: Bloomberg)
European stocks declined as Italy’s premier in waiting Mario Monti struggled to get political parties to help form his new Cabinet and the country’s biggest defense company forecast an unexpected loss. Finmeccanica SpA (FNC) sank 20 percent, saying it will sell 1 billion euros ($1.4 billion) in assets after predicting a loss for this year. UniCredit SpA (UCG) slid 4.5 percent as banks posted one of the worst performances of the 19 industry groups in the Stoxx Europe 600 Index. Cable & Wireless Worldwide Plc (CW/) plunged 26 percent as the company suspended future dividend payments and named a new chief executive officer. The benchmark Stoxx 600 fell 0.6 percent to 237.03 at the close of trading. The gauge has declined 19 percent from this year’s high on Feb. 17 as policy makers struggle to contain a debt crisis that has Greece on the edge of a default.
Japanese Stocks Swing Between Gains, Losses on Europe, BOJ (Source: Bloomberg)
Japanese stocks swung between gains and losses ahead of the Bank of Japan’s monetary policy decision today, and amid concern Italy’s new government will struggle to secure enough support to ease Europe’s debt crisis. The Nikkei 225 (NKY) Stock Average rose 0.1 percent to 8,550.45 as of 9:06 a.m. in Tokyo, after declining as much as 0.1 percent. The broader Topix index slipped 0.1 percent to 730.45, with about six stocks falling for every five that advanced.
Electronics Boost U.S. Retail Sales (Source: Bloomberg)
Retail sales rose more than projected in October as American shoppers gave the economy a boost at the start of the fourth quarter. The 0.5 percent gain, helped by the biggest jump in electronics purchases in two years, followed a 1.1 percent increase for September, Commerce Department figures showed today in Washington. The median forecast of 81 economists surveyed by Bloomberg News called for a rise of 0.3 percent. “Another recession is pretty unlikely,” said Samuel Coffin, an economist at UBS Securities in Stamford, Connecticut, who correctly predicted the gain in retail sales. The report “suggests a very strong start to the quarter. We’ll continue expanding at a better pace.”
Democratic Lawmakers Said to Consider $800 Billion in New U.S. Tax Revenue (Source: Bloomberg)
Democrats on Congress’s supercommittee are weighing whether to reduce to about $800 billion their demand for new tax revenue as part of a deficit- reduction agreement, according to a Democratic aide. Last week, Democrats proposed a plan that would include $1 trillion in new revenue, $1 trillion in spending cuts and $300 billion from interest savings. A second Democratic aide said the spending cuts in any new proposal also would be smaller, without giving an amount. Both aides weren’t authorized to speak publicly. Republicans offered a plan for $300 billion in tax increases, which some lawmakers hailed as a breakthrough demonstrating new Republican support for tax increases. After Democrats rejected the plan, talks have been in a stalemate as Republicans called on Democrats to make a counteroffer.
Fed’s Evans Calls For More Economic Stimulus Steps to Address Unemployment (Source: Bloomberg)
Federal Reserve Bank of Chicago President Charles Evans said he is calling for “increasing amounts of policy accommodation” to reduce a 9 percent unemployment rate that’s far above the Fed’s objectives. “We ought to be behaving as if there’s a very big problem out there,” Evans said in New York today at the Council on Foreign Relations. Evans, 53, voted against the Federal Open Market Committee’s November decision to maintain its level of stimulus, casting the U.S. central bank’s first dissent in favor of further easing since December 2007. He said today that his position is “unusual” among policy makers. “I’m finding myself sufficiently outside” of the “consensus that I thought I had to publicize that,” Evans said. His vote contrasted with those by three of his colleagues. Dallas Fed President Richard Fisher, Charles Plosser of Philadelphia and Narayana Kocherlakota of Minneapolis earlier this year dissented against further easing in August and September.
Wholesale Prices in U.S. Declined by Most in Four Months, Core Unchanged (Source: Bloomberg)
Prices paid to U.S. wholesalers fell in October by the most in four months as the cost of energy and automobiles decreased, pointing to waning inflation. The producer price index declined a more-than-projected 0.3 percent after a 0.8 percent gain in September, Labor Department figures showed today in Washington. Economists forecast a 0.1 percent decrease, according to the median of 74 estimates in a Bloomberg News survey. The so-called core measure, which excludes volatile food and energy, was unchanged, marking the first time without an increase since November 2010. The report showed cheaper raw materials and partially finished goods, indicating companies are under less pressure to raise prices. Cooling inflation gives Federal Reserve policy makers more room to spur the recovery should the world’s largest economy falter.
Goldman’s Blankfein: Growth to ‘Snap Back’ (Source: Bloomberg)
Goldman Sachs Group Inc. (GS), the fifth- biggest U.S. bank, is preparing for a faster global economic rebound than most forecasters expect, Chairman and Chief Executive Officer Lloyd C. Blankfein said. “I don’t think that we can conclude that this slowdown is secular rather than cyclical change,” Blankfein, 57, said today at an investor conference in New York hosted by Bank of America Corp. (BAC)’s Merrill Lynch unit. “The world will snap back and it will be a surprise and it will be faster than people think. I don’t know when that will be and we will gear ourselves accordingly.” Goldman Sachs, which was the most profitable securities firm in Wall Street history before converting to a bank in 2008, last month reported its second quarterly loss in 12 years as a publicly traded company. The stock dropped 41 percent this year through yesterday to $99.29, below the company’s $120.41 tangible book value per share at the end of September.
Treasuries Hold Gain on Speculation Report to Show Cooling Consumer Prices (Source: Bloomberg)
Treasuries held gains from yesterday before a government report that economists said will show the cost of living in the U.S. stopped rising for the first time in four months, adding to signs inflation is cooling. The difference between yields on 10-year notes and Treasury Inflation Protected Securities, a gauge of trader expectations for consumer prices over the life of the debt, has narrowed to 2.03 percentage points from a 2011 high of 2.67 percentage points in April. The 12-month average is 2.26 percentage points. “Demand is very soft in the U.S.,” said Zeal Yin, a money manager at Taipei-based Shin Kong Life Insurance Co., Taiwan’s second-largest life insurer with the equivalent of $39.7 billion in assets. “A moderate slowdown in inflation was within expectations. It’s good for Treasuries.”
Temasek in Talks With BofA to Buy CCB Shares (Source: Bloomberg)
Temasek Holdings Pte., Singapore’s state-owned investment company, is in talks to buy shares of China Construction Bank Corp. (939) that Bank of America Corp. (BAC) is selling, a person with knowledge of the matter said. Bank of America will sell 10.4 billion shares this month in private transactions for a profit of about $1.8 billion, leaving the second-biggest U.S. lender with a 1 percent stake in Construction Bank, according to a statement Nov. 14. Charlotte, North Carolina-based Bank of America said the buyers were a group of investors, without providing names. Stephen Forshaw, a spokesman for Temasek, declined to comment on “market speculation.” Mark Tsang, a Bank of America spokesman in Hong Kong, had no comment.
Temasek bought shares in the Beijing-based lender in September for as much as HK$21.7 billion ($2.8 billion), about eight weeks after paring its holdings.
Euro Falls as Spain, France Prepare Bond Sales (Source: Bloomberg)
The euro declined for a third day against the dollar as Spain and France prepare to sell notes tomorrow after Italy led a slump in euro-area debt. The 17-nation currency was 0.2 percent from a one-month low versus the yen after the extra yield investors demand to hold bonds from France, Belgium, Spain and Austria instead of German bunds climbed to euro-era records on concern the region’s debt crisis is spreading. The dollar rose against the majority of its most-traded peers as investors sought safer assets. “France, Spain, they’re all seeing yields move out so you get the impression that we’re at some sort of juncture where banks, investors and corporations are starting to prepare for the worst-case outcome,” said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. “The euro will remain under pressure.”
Monti Confident Italy Can Overcome Crisis as He Prepares Cabinet Unveiling (Source: Bloomberg)
Italian Prime Minister-designate Mario Monti will announce his new government today as he strives to convince investors he can trim Europe’s second-biggest debt and fend off contagion from the euro-area sovereign crisis. Monti concluded two days of talks with political leaders yesterday in a bid to gain broad support for a Cabinet tasked with pushing through an overhaul of the currency region’s third- biggest economy. “Tomorrow morning I’ll be able to present a synthesis of this work” to President Giorgio Napolitano, the former European Union commissioner said last night in Rome. Monti, 68, is due to meet with Napolitano at 11 a.m. to officially accept the post and possibly present his ministers. He said his consultations with parties, unions and employers have left him “convinced” that Italy can overcome the crisis.
No Stopping Technocrats Rule as Debt Crisis Brings Down Europe Governments (Source: Bloomberg)
The European debt crisis has toppled four elected governments with the last two, in Greece and Italy, falling last week without a shove from voters. The appointment of prime ministers in Athens and Rome to push through unpopular austerity measures echoes efforts in the past five decades by European leaders to control policy-making when democratic means fall short. “The euro zone would never have been created if voters had been given a say,” Fredrik Erixon, head of the European Centre for International Political Economy in Brussels, said in a telephone interview. “It’s an elite project but that doesn’t mean it’s a bad project.” Greek Prime Minister Lucas Papademos, a former central banker, and Italian Prime Minister-designate Mario Monti, an academic and former European commissioner, were chosen by each nation’s president after their elected predecessors were abandoned by political allies, making them unable to pass legislation demanded by the other members of the euro region.
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