Global market and economic updates
“What we want is a deal. But if there is no deal…then we have the obligation to go to Plan B. Plan B is to get funding from another source,” said Greek Defense Minister Panos Kammenos early Tuesday. “It could be the United States at best, it could be Russia, it could be China or other countries.” Meanwhile, Greece is in the middle of trying to negotiate a €10B bridge deal to stave off a funding crunch, as it tries to buy time to negotiate with its creditors. Athens’ ATG stock index is up 2% at 780.74.
Chinese shares gained for a second day today as lower-than-expected inflation raised the prospect of further monetary easing. China’s consumer-price index rose 0.8% on year in January, down from an already low 1.5% rise on year in December, according to data from the National Bureau of Statistics. Producer prices, which have been dropping for nearly three years, declined 4.3% in January on year, the sharpest fall since late 2009.
The recent surge in oil prices is just a “head fake” and West Texas crude as cheap as $20/bbl may soon be on the way, warned Citigroup (NYSE:C), lowering its crude oil forecast again. Despite declines in spending that have helped oil prices rebound in recent weeks, U.S. oil production is still rising, Brazil and Russia are pumping oil at record levels, and Saudi Arabia, Iraq and Iran have been fighting to maintain their market share by cutting prices to Asia, said Edward Morse, Citi’s global head of commodity research. Crude futures -1.5% to $52.07.
In the final stages of a long-running investigation, the U.S. Department of Justice has recently informed Barclays (NYSE:BCS), JPMorgan (NYSE:JPM), the Royal Bank of Scotland (NYSE:RBS) and Citigroup (C) that they must plead guilty to criminal charges that they manipulated the prices of foreign currencies, NYT reports. Last November, regulators fined five major banks a total of $3.4B for failing to stop traders from trying to manipulate the foreign exchange market, following a year-long global investigation.
In a separate probe disclosed today, the NY Department of Financial Services was reported to have sent subpoenas to Goldman Sachs (NYSE:GS), Credit Suisse (NYSE:CS), BNP Paribas (OTCPK:BNPQF) and Societe General (OTCPK:SCGLY), expanding its investigation of whether the banks’ electronic forex trading platforms allowed them to front-run clients. At issue is a latency period between the time an offer is floated and accepted. The department is already probing Barclays (BCS) and Deutsche Bank (NYSE:DB) over similar concerns and installed monitors at those banks in recent months.
U.S. prosecutors have stepped up efforts to establish whether HSBC (NYSE:HSBC) helped Americans evade taxes after the bank admitted yesterday to helping customers dodge taxes and conceal millions of dollars of assets at its Swiss subsidiary. U.S. authorities are also probing whether HSBC manipulated currency rates, which could prompt the Department of Justice to revisit a 2012 deferred prosecution agreement with the bank. HSBC -1.7% premarket.
IBM is suing Priceline, accusing it of infringing on four patents and claiming billions of dollars in royalties. “Priceline (NASDAQ:PCLN) has refused to engage in any meaningful discussion on the merits, resorting instead to delay and non-responsive answers,” IBM (NYSE:IBM) said in its complaint. The patents cover methods of tracking prior conversations with a user, Internet transmissions and advertising, and one that improves on a single sign-on.
Qualcomm +2% premarket after China’s National Development and Reform Commission fined the company $975M (less than the $1B previously reported) and imposed conditions on royalties charged on phones sold in China. Qualcomm’s (NASDAQ:QCOM) license fees were too high and the company used its dominant position to force customers into accepting its conditions, said the regulator. The company also hiked its FY15 guidance on the low end: Revenue guidance is now at $26.3B-$28B vs. $26B-$28B, while EPS guidance is at $4.85-$5.05 vs. $4.75-$5.05.
Growing its surveillance products business amid weak sales of its digital cameras, Japan’s Canon (NYSE:CAJ) said it plans to buy security camera maker Axis Communications (OTC:AXSAF) for about 23.6B Swedish crowns ($2.8B). The Swedish company said that its board of directors has accepted Canon’s bid, which represents a 49.8% premium to the company’s closing share price on Monday. Axis shares are up 48.1% in Sweden.
RadioShack, which filed for Chapter 11 bankruptcy last week, has received court approval for its proposed bankruptcy financing as it races to sell out and shut down some 1,100 stores by the end of the month. U.S. Bankruptcy Judge Brendan Shannon granted RadioShack (NYSE:RSH) interim approval to the $285M financing arrangement with existing lenders, which ultimately will make about $20M in new money available.
With stronger earnings at its investment bank and a 493M franc tax gain, UBS (NYSE:OUBS) beat analyst estimates, reporting Q4 net income of 963M francs ($1.04B), up from 917M francs a year earlier. However, the bank said it expected legal and regulatory costs to “remain elevated for the foreseeable future” and that the “increased value of the Swiss franc relative to other currencies and negative interest rates…will put pressure on profitability.”
SoftBank reported a sharp drop in its profit for the October-December quarter this morning, weighed down by the continuing struggles at Sprint (NYSE:S), the U.S. mobile operator it acquired in 2013. “Overall, SoftBank (OTCPK:SFTBY) is doing well, but with Sprint…being in a tough situation, I think it will have a long battle to fight,” said SoftBank’s Chief Executive Masayoshi Son. The telecommunications giant posted FQ3 net income of ¥32.3B ($272.3M), down from ¥93.8B a year earlier.
Pfizer has struck a $5B accelerated share repurchase deal with Goldman Sachs (GS), as part of its existing share repurchase authorization under which an additional $11B of authority was announced in October. Approximately 150M of the shares to be repurchased under the transaction will be received by Pfizer (NYSE:PFE) on Wednesday, with the settlement expected to occur during or prior to Q3.
Ten days into the strike, Royal Dutch Shell (RDS.A, RDS.B) says it will resume negotiations with the United Steelworkers union over a new labor contract for U.S. refinery employees. Worker walkouts widened over the weekend, with strikes being called at 11 plants, including nine refineries that account for 13% of U.S. refining capacity.