World shares surged on Tuesday as investors took heart from the rally on Wall Street and brushed off jitters related to Friday's terror attacks in Paris. "What we have learned is that there is not a meaningful market impact from such attacks," said Anastasia Amoroso, a global market strategist at JPMorgan. "So because we have this unfortunate precedent, that's why the market is looking past this." Equity selloffs that occurred after the Madrid train bombings in 2004 and London bombings of 2005 were erased only days following the attacks.
Economy
Two government reports this morning should provide an early indication of how the U.S. economy performed last month. The Labor Department's Consumer Price Index is anticipated to show a 0.2% increase, reversing September's 0.2% drop, but still tame in regards to inflation. Industrial production, tracked by the Federal Reserve, is expected to contain several mixed components, but will likely show an overall gain of 0.1% for October.
In their final communique from a summit in Turkey, the leaders of the world's largest economies stuck to a goal of lifting their collective output by an extra 2% by 2018, even though growth remains uneven and weaker than expected globally. "Our top priority is timely and effective implementation of our growth strategies that include measures to support demand and structural reforms." G20 leaders also endorsed plans to address Syria's refugee crisis, taxation, climate change, cyber security and inequality.
Greece has reached a preliminary deal with its international lenders on home foreclosures reform, removing a major obstacle holding up fresh bailout loans for the debt-laden country. The changes will see Athens qualify for a €2B sub-tranche of new financial aid to pay off state arrears and €10B in funds to help recapitalize the country's four main banks.
Italy, Lithuania, Austria and Spain risk breaking European Union rules with their 2016 budget plans, the European Commission declared today, stating that France might also come short of its fiscal targets. The Commission checks draft budget plans of eurozone countries every year to see if they are in line with the Stability and Growth Pact, which sets rules for EU budgets. Costs associated with Europe's migrant and refugee crisis are being treated as a special case.
France also launched another set of airstrikes on the Islamic State stronghold of Raqqa in Syria early Tuesday as the country steps up its response to last week's deadly attacks. The bombings follow a second night of home searches in France and Belgium to catch those responsible and linked to the killings. President Francois Hollande is now looking to expand his powers under France's state-of-emergency statute and has called on the U.S. and Russia to form a "big unified coalition" to destroy ISIS.
Stocks
BlackBerry is expecting to post a profit next year, helped by the launch of its Priv model, as the company recovers from a bruising few years that saw it lose its dominant position in the smartphone market. "The company is doing reasonably well now, from a financial standpoint, so now our focus is to grow our businesses," CEO John Chen told CNBC in Manila. "We still have very high fixed costs but [handset] profitability will come next year." For the three months ended August 29, BlackBerry (NASDAQ:BBRY) reported a quarterly loss of $66M. BBRY +2.9% premarket.
Struggling online music service Rdio is selling its assets to Pandora (NYSE:P) and will subsequently shut down its service and seek Chapter 11 bankruptcy protection. Pandora will pay $75M in cash for the assets, including technology and intellectual property, to help deliver "an expanded Pandora listening experience by late 2016." The deal also suggests the company is getting set to join Spotify, Apple (NASDAQ:AAPL), Google (GOOG, GOOGL), and others offering a subscription-based, on-demand, music service.
FedEx is confident it will successfully take over Dutch peer TNT Express (OTCPK:TNTEY) following a failed bid by rival UPS three years ago, the company told CNBC. "UPS had a different level of concentration of position in the market than FedEx does, so we're very comfortable that our position doesn't create an issue from a competitive standpoint," COO David Cunningham explained. Last month, FedEx (NYSE:FDX) and TNT announced that their €4.4B deal won't be challenged by European regulators, clearing one of the biggest hurdles for the acquisition.
Liberty Global has agreed to acquire Caribbean cable operator Cable & Wireless Communications (OTCPK:CWIXF) in a cash and stock deal valued at $5.3B, extending John Malone's European cable empire deeper into Latin America. The deal represents a premium of roughly 50% to Cable & Wireless's stock price before the potential takeover talks were first disclosed in October. Liberty (NASDAQ:LBTYA) plans to fold the company into its LiLAC business unit, which it spun off with a tracking stock in July.
A new Reuters analysis shows that corporate spending on buybacks and dividends has surged relative to investment in long-term growth through R&D and other forms of capital spending, in a troubling sign that corporate America may be undermining itself. Almost 60% of the 3,297 publicly traded non-financial U.S. companies examined bought back their shares since 2010. In fiscal 2014 alone, the total amount returned to shareholders (including share repurchases and dividends) reached $885B, way more than the companies' combined net income of $847B.
New industry data today showed Volkswagen's (OTCQX:VLKAY) European sales and market share slipping in October, as the German automaker's emissions-cheating scandal began to take its toll. Sales for the Volkswagen Group dropped 0.8 percent last month, while its European market share slipped from 26.1% to 25.2%. Because car deliveries typically occur several weeks after purchase decisions, the full repercussions of the scandal are expected to be even more apparent in November's registration figures.
The United Launch Alliance joint venture of Boeing (NYSE:BA) and Lockheed Martin (NYSE:LMT) is pulling out of the U.S. Air Force's first space launch competition in a decade because it can't buy enough Russian-made engines. The decision leaves SpaceX as the sole entrant for the launch of a new satellite for the Air Force-run GPS in 2016. A final contract award is expected next March unless ULA supporters in Congress manage to postpone a deal until there is more than one bidder.
Russian officials have found evidence that the passenger jet that crashed in Egypt's Sinai last month was downed by a bomb, the first time those investigating the crash have cited proof of a terrorist attack. Alexander Bortnikov, the head of Russia's FSB security service, told a meeting chaired by Vladimir Putin that traces of explosives were discovered on fragments of the Airbus (OTCPK:EADSY) A321 and on passengers' luggage. Putin has ordered the Russian air force to intensify its air strikes in Syria in response.
A New York state judge has denied a temporary restraining order sought by daily fantasy sports companies DraftKings and FanDuel in an effort to keep operating in the state after NY Attorney General Eric Schneiderman deemed the games to be illegal gambling. The government will now move for an injunction against the companies which will be heard in court on Nov. 25. DraftKings continues to operate as usual in New York despite the pressure from Schneiderman's office, but FanDuel stopped taking new deposits from state players on Friday.
On top of 250M reais ($66.2M) in fines levied by Brazil's environmental regulator, the Samarco joint venture of BHP Billiton (NYSE:BHP) and Vale (NYSE:VALE) (responsible for the Brazil dam burst that killed as many as 11 people earlier this month) has agreed to set aside 1B reais ($262M) to fund initial cleanup efforts. Brazilian authorities and the companies are only beginning to work out the costs of the disaster, which could total over $1B.
Internet companies are continuing to shake up China's financial sector, offering mobile payments, wealth management and peer-to-peer lending. Baidu (NASDAQ:BIDU) is set to announce that it will partner with Citic Bank (OTCPK:CHCJY) to launch an online lender, even as similar ventures by rivals failed to meet expectations. In January, Tencent (OTCPK:TCEHY) launched the country's first online-only bank, WeBank, while the financial affiliate of Alibaba (NYSE:BABA), Ant Financial, followed with its own - MyBank - in June.
A U.S. House of Representatives investigative panel plans to hold a 2016 hearing on skyrocketing drug costs, a move that comes at a time when Valeant Pharmaceuticals (NYSE:VRX) is facing increased scrutiny into its pricing practices. Earlier this month, the U.S. Senate Special Committee on Aging launched a probe into drug pricing at Valeant and Turing, signaling growing bipartisan agreement over the need to review prescription medicine costs across the nation.
Today's Markets
In Asia, Japan +1.2% to 19631. Hong Kong +1.2% to 22264. China -0.1% to 3605. India +0.4% to 25864.
In Europe, at midday, London +2%. Paris +2.4%. Frankfurt +2%.
Futures at 6:20, Dow +0.6%. S&P +0.5%. Nasdaq +0.5%. Crude -0.5% to $41.53. Gold -0.3% to $1080.10.
Ten-year Treasury Yield flat at 2.28%
Today's Economic CalendarIn Europe, at midday, London +2%. Paris +2.4%. Frankfurt +2%.
Futures at 6:20, Dow +0.6%. S&P +0.5%. Nasdaq +0.5%. Crude -0.5% to $41.53. Gold -0.3% to $1080.10.
Ten-year Treasury Yield flat at 2.28%
8:30 Consumer Price Index
8:55 Redbook Chain Store Sales
9:15 Industrial Production
10:00 NAHB Housing Market Index
10:00 E-Commerce Retail Sales
4:00 PM Treasury International Capital
Companies reporting earnings today8:55 Redbook Chain Store Sales
9:15 Industrial Production
10:00 NAHB Housing Market Index
10:00 E-Commerce Retail Sales
4:00 PM Treasury International Capital
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