Crude prices fell again in the first trading session after OPEC members failed to agree on output targets - worsened by deep regional differences between Saudi Arabia and Iran - to reduce an oil glut that has cut prices by more than 60% since June 2014. Abandoning an official output ceiling effectively codifies what OPEC has already done for the past year: ignore its previous target of 30M barrels a day. The cartel produced 31.38M bpd in October. Indonesia also rejoined OPEC on Friday (after being inactive since 2008), boosting the group's participants to 13 members. Crude futures -1.4%to $39.43/bbl.
Economy
World shares started the week strongly on Monday, buoyed by Friday's big gains on Wall Street, after upbeat jobs data bolstered investor confidence in the U.S. economy. The sturdy employment report likely means a green light for a Federal Reserve rate hike next week, marking the first increase in nearly a decade. The news is also having a big effect on the currency markets, boosting the greenback against most of its peers. U.S. Dollar Index +0.5% to 98.77.
Why was last week's ECB stimulus package lower than expectations? Following weeks of dovish speeches by ECB President Mario Draghi, the central bank's Governing Council criticized him for raising expectations too high and concluded that markets needed to be disappointed because the eurozone's economic outlook had improved and new inflation forecasts were not as bad as feared. A pending U.S. Federal Reserve rate hike was also factored into the decision.
China news roundup: The country's foreign-exchange reserves declined last month to the lowest level since February 2013 as the PBOC sold dollars to prop up the yuan ahead of the IMF's reserve currency approval. The hoard dropped by $87.2B to $3.4T at the end of November, extending this year's decline to $405B and reigniting concerns about the central bank's ability to stop capital from leaving the country. Meanwhile, Beijing has issued an air pollution red alert for the first time. The warning comes as the world climate conference in Paris heads into its second week.
Greece's parliament has narrowly approved the country's 2016 budget, which projects a flat-lining economy for 2015 and a mild contraction for the next year but foresees billions in fresh austerity measures. Public spending cuts will amount to €5.7B, including €1.8B from pensions and €500M from defense, while tax increases will total over €2B. The budget is the first to be put before parliament by the Syriza-led government, which won national elections in January and again in September.
Venezuelan voters on Sunday delivered a heavy blow to the socialist party of President Nicolas Maduro by granting the opposition a considerable majority in the national assembly. The move represents a serious challenge to the current government's power to pass legislation, could grant amnesty to political prisoners and follows the recent election in Argentina - another example of a tired Latin American nation turning its back on a populist government.
NATO has ruled out sending ground troops to fight against Islamic State militants in Syria, NATO General Secretary Jens Stoltenberg told Switzerland'sTages-Anzeiger paper, stressing the need to bolster local forces in the conflict. Separately, EU interior ministers have agreed to press ahead with plans to suspend the Schengen passport-free travel zone due to the Syrian refugee crisis, in a move that paves the way for governments to introduce border checks for up to two years.
More slumping commodities? Iron ore sank below $40 a metric ton today on rising low-cost supply from the world's top miners and weakening demand in China. The raw material is now headed for a third annual decline and haslost 80% since peaking in 2011 at $191.70.
Stocks
General Electric has abandoned plans to sell its appliance business to Electrolux (OTCPK:ELUXY), with the latter paying a termination fee of $175M to end the transaction. "We're disappointed and regret GE has taken this decision," Electrolux CEO Keith McLoughlin said on a conference call. Both companies were being sued by the Justice Department to stop the deal, which would have combined the number two and three domestic appliance makers in the U.S.
Yahoo shareholders still do not know how - or if - the company's board plans to restructure the technology giant. The firm's directors ended three days of deliberations on Friday without announcing whether they will proceed with plans to spin off its stake in Alibaba (NYSE:BABA), sell its core business, shake up management, or do something else entirely. "A boatload of sources," however, told Re/code's Kara Swisher that Yahoo's (NASDAQ:YHOO) board will make a decision by the end of the weekend, although it looks like that also didn't happen. YHOO +1.7% premarket.
More news on Dell's $67B pending acquisition: VMware (NYSE:VMW) and parent company EMC Corp. (NYSE:EMC) are exploring steps to appease shareholders who are skeptical about the agreement, such as considering a multibillion-dollar buyback and restructuring money-losing Virtustream. The news comes ahead of next week's expiration of EMC's go-shop period for the Dell deal, which involves a payout of $24.05/share in cash and tracking stock equal to 0.11 VMware shares or each EMC share.
Avon Chairman Douglas Conant is set to open dialogue with Barington after refusing for months to engage with the activist shareholder, which is demanding management changes and heavy cost cuts. Today's planned telephone conversation follows a 55% YTD stock plunge and comes as potential suitors, including private equity firm Cerberus Capital, circle Avon's (NYSE:AVP) North American business.
Looking to reassure nervous shareholders, Glencore (OTCPK:GLNCY) plans to use a call with investors on Thursday to highlight the progress it's making with a disposal program and its expectations of completing a $10.2B debt reduction plan before the end of 2016. Glencore shares have tumbled over 70% since January and have lost more than three-quarters of their value since the company's 2011 stock market flotation due to its hefty debt load and rout in commodity prices.
Weight Watchers is going digital in an effort to appeal to new customers and fight back against the rise of wellness applications that cut its subscriber base nearly in half and contributed to 11 straight quarters of revenue declines. Weight Watchers' (NYSE:WTW) new app and online tools will help customers eat more healthily and set fitness goals, and comes shortly after Oprah Winfrey paid $43.2M to take a 10% stake in the company and a seat on its board.
Japanese securities regulators have recommended imposing a record fine of ¥7.3B ($59M) against Toshiba (OTCPK:TOSYY) for falsifying earnings and filing fictitious statements dating back to 2009. The proposed penalty would be the largest ever in Japan for accounting-related violations, even though it is small when compared with fines that U.S. companies have faced in such cases.
Shippers are protesting a new marine shipping safety rule they say will raise transport costs and cause delays at ports worldwide. The regulation, which kicks in next July in 171 countries, requires exporters to certify the weight of containers before they're loaded for transport. Carriers say accurate weights are needed because heavy containers frequently damage cargo and even cause vessels to capsize, but shippers in many countries say they are ill-equipped to weigh so many containers. Related tickers: SHIP, FREE, EGLE,GNK, SINO, DRYS, NM, SBLK, DCIX, BALT, PRGN, SFL, KEX, SB, SALT, DSX,GOGL, MATX, EURN, NNA
The United Auto Workers union gained entry to Volkswagen's (OTCQX:VLKAY) Chattanooga plant after a group of skilled tradesmen voted to create a collective bargaining unit at the automaker's only U.S. facility. The UAW has been attempting for years to crack the door open in the U.S. South where most foreign automakers have set up shop. Volkswagen said in a statement that it plans to appeal the decision to the National Labor Relations Board.
Ford is calling back over 451K cars because their fuel tanks may crack and leak gasoline, potentially leading to fire, but currently isn't aware of any accidents related to the defect. According to a notice posted on the NHTSA's website, the company will recall its 2010-2011 Ford (NYSE:F) Fusion and Mercury Milan models and won't charge customers if parts need to be replaced.
President Obama delivered a rare Oval Office address last night, discussing the broader threat of terrorism and the recent attack in San Bernardino. In the speech, Obama called for new firearm control measures and tightened visa application processes, but didn't suggest any new military initiatives. As a result, investors are eyeing the reaction from gun stocks, which have mostly rallied over the past year in the wake of mass murders across the country. Related tickers: SWHC +100%, RGR +57%, CAB -8%,SPWH +64% YTD.
Today's Markets
In Asia, Japan +1% to 19698. Hong Kong -0.2% to 22203. China +0.3% to 3537. India -0.4% to 25530.
In Europe, at midday, London +0.5%. Paris +1.6%. Frankfurt +1.9%.
Futures at 6:20, Dow +0.2%. S&P +0.2%. Nasdaq +0.3%. Crude -1.4% to $39.43. Gold -0.2% to $1082.40.
Ten-year Treasury Yield flat at 2.27%
Today's Economic CalendarIn Europe, at midday, London +0.5%. Paris +1.6%. Frankfurt +1.9%.
Futures at 6:20, Dow +0.2%. S&P +0.2%. Nasdaq +0.3%. Crude -1.4% to $39.43. Gold -0.2% to $1082.40.
Ten-year Treasury Yield flat at 2.27%
8:30 Gallup US Consumer Spending Measure
10:00 Labor market condition index
11:30 Fed's Bullard: U.S. Economy and Monetary Policy
12:30 PM TD Ameritrade IMX
3:00 PM Consumer Credit
Companies reporting earnings today10:00 Labor market condition index
11:30 Fed's Bullard: U.S. Economy and Monetary Policy
12:30 PM TD Ameritrade IMX
3:00 PM Consumer Credit
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