Asia: : Japan +1.2% to 18097. Hong Kong +2% to 22888. China +2.3% to 3338. India +0.9% to 27010.
Europe: London +0.9%. Paris +1.3%. Frankfurt +1.4%.
Futures: Dow +0.6%. S&P +0.7%. Nasdaq +0.8%. Crude -1.4% to $46.01. Gold +0.4% to $1184.60.
Ten-year Treasury Yield +2 bps to 1.99%
8:30 Initial Jobless Claims
8:30 Consumer Price Index
8:30 Empire State Mfg Survey
9:30 Fed’s Bullard Speech
10:00 Philly Fed Business Outlook
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
3:30 PM Treasury Budget
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
Officials in the Treasury Department and Puerto Rico are discussing the issuance of a “superbond” that would help restructure the commonwealth’s $72B of debt. Under the plan, the Treasury or designated third party would administer an account holding at least some of the island’s tax collections, and funds in that account would be used to pay holders of the superbond. Puerto Rico has warned that it is likely to exhaust its remaining cash in November, and a debt payment of almost $300M is due on Dec. 1.
Meanwhile, the pile of Treasury bills sold at an interest rate of zero since the financial crisis topped $1T this summer and multiplied this week through an auction of three-month bills on Tuesday and one-month bills on Wednesday. On its surface, it makes no sense for investors to lend their cash for free. But with rates stuck near zero and supply limited by the U.S. debt ceiling, investors who need a place to park their cash have few other options.
Gold prices held overnight gains and are heading higher for a fifth day, as a weaker dollar and soft U.S. economic figures add to expectations the Fed will delay a rate hike in 2015. Traders are now looking ahead to U.S. data on consumer prices for further indications on the direction of interest rates. Analysts expect the headline CPI to fall by 0.2% for the month, but anticipate that the core reading will inch up 0.1% from its level in August.
Ukraine is ready to go to court over a bond owed to Russia after Moscow failed to participate in an $18B restructuring that was approved by all other bondholders. Russia, which holds a $3B note due in December, didn’t take part in voting Wednesday on the debt deal that includes a 20% writedown and four-year maturity extension. Passage of the restructuring ends Ukraine’s seven-month battle to lower its debt and revive an economy battered by war with pro-Russian rebels.
Staff at HSBC’s investment banking unit in London have been ordered to take a 10% pay cut and two weeks of unpaid leave by the end of the year, The Times reports. Under intense pressure to reduce costs, the bank broke the news to staff last week and instructed managers that there would be “0% exceptions.” HSBC (HSBC) previously unveiled a three-year plan in June aimed at lowering headcount by 50K and cutting annual costs by as much as $5B.
The first U.S. criminal trial over Libor manipulation got underway in Manhattan yesterday, with former London-based traders Anthony Allen and Anthony Conti accused of conspiring to submit fraudulent rate reports to help colleagues profit on trades. The NY trial follows one this summer in London, where Tom Hayes, a former UBS (UBS) and Citigroup (C) trader, was convicted of conspiring with others to manipulate Libor. Hayes was sentenced to 14 years in prison, but is appealing.
The Fed has approved a request from Synchrony Financial (SYF), General Electric’s (GE) publicly traded subsidiary, to operate as a publicly owned savings and loan holding company. The move will allow GE to complete the spinoff of its consumer finance business and carry out a share swap to fully exit the operation. Since its IPO last year, Synchrony has been building an institution strong enough to stand on its own; it now has nearly $38B in deposits, with total assets of more than $75B.
Things are getting even gloomier in the IPO market. Following in the footsteps of Neiman Marcus (NMG), Albertsons (ABS) has delayed its IPO (which was to be priced this evening), after Wal-Mart’s (WMT) guidance yesterday weighed heavily on the U.S. market and pummeled retailers’ shares. Separately, payments processor First Data (FDC) priced its initial public offering at $16/share, below its previously indicated range of $18-$20/share. Despite the reduction, the offering is still set to be this year’s largest at a valuation of $14B.
Valeant Pharmaceuticals, which has come under fire for aggressively increasing the prices of its drugs, has received two federal subpoenas related to its pricing, distribution and patient support practices. Some of the material also requested documents regarding information the drugmaker provided to the Centers for Medicare and Medicaid Services. “All of us at Valeant (VRX) firmly believe in maintaining strong regulatory and financial controls and believe we have operated our business in a fully compliant manner,” Chief Executive J. Michael Pearson said.
Following years of rumors that an offering is on the way, Square has filed a public S-1. The mobile card-reader/payment service provider intends to list on the NYSE under the symbol SQ for a proposed aggregate offering price of $275M. Will the move put more pressure on Jack Dorsey? Twitter’s (TWTR) recently named permanent CEO also remains Square’s chief.
Unilever’s revenue rose sharply in the third-quarter as sales of ice cream jumped and emerging markets saw heavy growth. The company said underlying sales rose 5.7% – a measure that excludes acquisitions, disposals or changes in currency – outpacing 4% forecasts. The second quarter figure was just 2.9%. For the rest of the year, Unilever (UL) now expects underlying sales to come in toward the upper end of its estimated 2-4% range..
McDonald’s is calling the rollout of all-day breakfast in the U.S. a success and telling franchisees to prepare for the next course: a national value plan. “Regaining our dominance in value by aligning around a national value platform and the power of Opnad is the next step,” U.S. president Mike Andres wrote in an e-mail to domestic franchisees and employees. Opnad is McDonald’s (MCD) national advertising fund that includes contributions from franchise owners.
Coca-Cola has ended talks to invest in Chobani after deciding it was not the best fit for its portfolio, sources told CNBC. Coke (KO) had been competing against Pepsi (PEP) for a minority stake in the Greek yogurt maker, in a deal that Chobani hoped could value it at as much as $3B, including debt.
While Dish Network has taken a firm stance against the merger of Charter (CHTR) and Time Warner Cable (TWC), AT&T (T) has told the FCC it’s not opposed, but does want “careful scrutiny” on the subject of online video. The agency needs to “review the transaction carefully and consider the impact of cable consolidation and coordination on emerging competition,” AT&T said in its letter. On Tuesday, Dish Network (DISH) filed a petition to deny the merger on public interest grounds.
According to Reuters sources, Lockheed Martin’s (LMT) purchase of Sikorsky Aircraft from United Technologies (UTX) could close by late October or early November, well before the initial year-end target. Lockheed announced last month that officials in the U.S., South Korea and Japan had cleared the $9B acquisition, but it was still waiting for other regulatory approvals. China and the European Union are expected to support the deal next week.
Tesla’s much-anticipated autopilot system will become available today as a software update for Model S sedans (made after September 2014) and Model X SUVs. It uses a mixture of radar, ultrasonic sensors, and cameras to allow a car to change lanes, search for parking, parallel-park, and adjust its speed based on traffic flow. However, “the driver cannot abdicate responsibility,” Tesla (TSLA) CEO Elon Musk warned. “That will come at some point in the future.”
Volkswagen roundup: Germany’s automotive watchdog, the Federal Motor Transport Authority, is forcing the automaker to recall 2.4M vehicles after rejecting a VW proposal under which diesel car owners could voluntarily bring them in for fixes. Yesterday, the FTC joined the Justice Department and EPA in investigating the carmaker, while Volkswagen (VLKAY) announced the departure of Skoda chief Winfried Vahland, a key executive who was poised to lead efforts in North America and land a key board position.