The International Monetary Fund is expected to grant China's yuan reserve currency status at an executive board meeting today, in a decision that will elevate the renminbi and China's influence in the global economy. The group's benchmark currency basket, also known as special drawing rights, so far only contains the dollar, euro, pound and yen. While the decision is likely to be announced later today, the yuan will not officially become a reserve currency until September 2016.
Economy
The euro is closing out November with a major monthly decline as economists unanimously forecast the ECB will unveil additional stimulus this week. The currency has weakened 3.8% this month, its biggest loss since a4.2% decline in March, when the central bank embarked on a €1.1T asset-purchase program. In contrast, the U.S. Federal Reserve is widely expected to hike interest rates at its mid-December policy meeting, sending up the dollar index to 100.23, its highest level since mid-March. Euro -0.2% to 1.0568.
The Federal Reserve Board is also considering a proposal to curb its emergency lending powers, a change demanded by Congress following the central bank's controversial decision to support "too big to fail" banks in 2008. An open central bank meeting today will propose Dodd-Frank provisions that require any future emergency lending be only "broad-based," and not tailored to specific firms.
Leaders from nearly 150 countries have gathered in Paris to discuss a possible new global agreement on climate change. The conference, known as COP21, will last about two weeks and aims to craft a long-term deal to reduce greenhouse gas emissions. One key problem is what form an agreement will take. The U.S. for instance will not sign up to a legally binding "treaty" as there would be little hope of getting it through a hostile Congress.
Russian President Vladimir Putin announced additional measures against Turkey on Saturday in response to the recent downing of a Russian bomber on the Syrian border. The new sanctions include the suspension of visa-free travel, halting tours and chartered flights to Turkey and a ban on the hiring of Turkish nationals. Shortly before the decree, Turkish President Recep Tayyip Erdogan voiced regret over the incident, saying his country was "truly saddened" by the event and wished it hadn't occurred.
Meanwhile, European Union leaders and Turkey have agreed on measures to help stem the flow of migrants to Europe and other border controls, aided by a pledge to relaunch Turkey's EU membership bid and a €3B aid package. The money is intended to raise refugee living standards to persuade them to stay in the country instead of attempting perilous crossings to the EU via Greek islands. Problems ahead? Leaders still haven't agreed on the final sum or how much each nation will contribute.
Stocks
Ten companies are expected to begin taking orders for new listings on the Shanghai and Shenzhen stock markets this week, marking China's first IPOs since July (when the government banned new share sales to halt a heavy market selloff). The companies are among 28 that are expected to list before the end of the year and are part of a backlog of nearly 700 firms. Orders for shares must be prefunded under current rules and are expected to temporarily lock up hundreds of billions of dollars in funds, which may have contributed to the Shanghai Composite's 5.5% drop on Friday.
Separately, Japan's $1.1T Government Pension Investment Fund - the world’s largest pension fund - has posted its worst quarterly loss since 2008 after this summer's global stock rout wiped $64B off the asset manager's investments. The loss is GPIF's first since doubling its allocation to stocks and reducing debt last October, and highlights the risk of sharp short-term losses that come with the fund's more aggressive investment style.
Earlier deals, online sales, a retail slump... many headlines over the weekend reported that America's annual Black Friday shopping extravaganza was short on fireworks this year as retailer discounts failed to draw big crowds to stores and malls. While some feel the lack of a shopping rush won't bring a revival in retail stocks and consumers' confidence in the economy, critics say the early Black Friday sales numbers are bunk.
Anheuser-Busch InBev is aiming to head off European regulatory concerns over its proposed acquisition of SABMiller (OTCPK:SBMRY) by putting the Peroni and Grolsch labels that it would gain up for sale. No price for the brands has yet been indicated, but according to the Sunday Times, the sale would fetch billions of pounds. Potential buyers include Heineken (OTCQX:HEINY), Molson Coors (NYSE:TAP) and Ireland's C&C Group (OTCQX:CCGGY), makers of Bulmers and Magners ciders. BUD +1.4% premarket.
Amazon has unveiled what its unmanned drones for package delivery would look like with a new video of the prototype it announced two years ago. Details worth noting: Backyards appear to be a key delivery zone for Prime Air (the drone releases the package onto what looks like a plastic square with an Amazon logo). The octocopter would have a range of 15 miles - flying just under 400 feet - and deliver most items in under 30 minutes. Amazon (NASDAQ:AMZN) has also developed "sophisticated 'sense and avoid' technology," which identifies obstacles and automatically avoids them.
After announcing its departure from Pakistan due to privacy reasons, BlackBerry (NASDAQ:BBRY) now says it will delay shutting down its operations in the country until Dec. 30 as negotiations continue over access to users' data. The Pakistan Telecommunication Authority notified domestic mobile phone operators that the company's BES servers would no longer be allowed to operate for security reasons, said Marty Beard, chief operating officer at BlackBerry, but "the truth is that the Pakistani government wanted the ability to monitor all BES traffic."
Swatch is launching a project that lets Visa (NYSE:V) cardholders in the U.S., Switzerland and Brazil make payments with its new "pay-by-the-wrist" Bellamy watch. The transactions will require absolutely no energy from the watch itself, a serious advantage to poor battery life rivals. Swatch (OTCPK:SWGAY) Bellamy is set to hit the market in early 2016 and will be able to be used wherever contactless NFC Visa payments are accepted.
Looking to avoid further strikes, Lufthansa (OTCQX:DLAKY) has reached an agreement with trade union Verdi on the wages and pensions of around 33K ground staff and other personnel. The deal gives all full-time employees a one-off payment of €2,250 and a 2.2% pay increase for the next two years. Disputes with several of the airline's unions have led to regular industrial action over the past year, especially among pilots and cabin crew.
Volkswagen's top executives knew a year ago that some of the company's cars were markedly less fuel efficient than had been officially stated, according to Germany's Bild am Sonntag. Months after becoming aware of excessive fuel consumption, former CEO Martin Winterkorn decided in the spring to pull the company's Polo TDI BlueMotion off the market as the discrepancy was particularly pronounced. Winterkorn then resigned in September following VW's (OTCQX:VLKAY) admission that it had deceived global regulators, but denied knowing anything about the scandal.
Adding to pressure on weakened rivals, JPMorgan (NYSE:JPM) is leaving its bonus pool for bankers and traders nearly unchanged from 2014, Bloomberg reports. "Flat is the new up," said Michael Karp, CEO of the Options Group. "It's a feat for any bank to maintain its pool amid elevated costs from compliance and new regulations." A firm's bonus pool represents its total allocation for incentive pay, while compensation differs by individual and trading desk performance.
BHP Billiton -4.7% premarket after Brazilian authorities threatened a $7.2B legal suit over the company's mine disaster in the south-eastern state of Minas Gerais. The amount comes on top of 250M reais ($66.2M) by Brazil's environmental agency for the dam burst, which covered the flood plain in mud for 80 kilometers as well as polluting a major river valley. BHP has also confirmed that the death toll from the disaster had risen to 13, with six people still unaccounted for.
Today's Markets
Companies reporting earnings today
In Asia, Japan -0.7% to 19747. Hong Kong -0.3% to 21996. China +0.3% to 3445. India +0.1% to 26146.
In Europe, at midday, London flat. Paris +0.7%. Frankfurt +1%.
Futures at 6:20, Dow +0.1%. S&P +0.1%. Nasdaq +0.2%. Crude +1.1% to $42.17. Gold -0.1% to $1055.70.
Ten-year Treasury Yield +1 bps to 2.23%
Today's Economic CalendarIn Europe, at midday, London flat. Paris +0.7%. Frankfurt +1%.
Futures at 6:20, Dow +0.1%. S&P +0.1%. Nasdaq +0.2%. Crude +1.1% to $42.17. Gold -0.1% to $1055.70.
Ten-year Treasury Yield +1 bps to 2.23%
Companies reporting earnings today
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