Brent crude is shattering records, losing a fifth of its value in the last month and a third since early October. The benchmark has now hit levels not seen since 2004, skidding 2% to as low as $36.06 per barrel, as oversupply concerns and a strong dollar continue to weigh on the market. With a ban on U.S. oil exports lifted and new supplies looming from Iran, West Texas Intermediate crude is also feeling the pressure, down 0.9% at $34.42/bbl, its lowest since February 2009.
Economy
Just in time for the holidays! The average price of gasoline at the pump on Saturday dropped below $2/gallon for the first time in more than six years. That compares with an average price of $2.11 a month ago and $2.44 a year ago, according to data from GasBuddy, a price tracker based in Maryland. Low oil prices tied to overproduction and to lower seasonal demand are "the main catalyst" for the decline, said Patrick DeHaan, a senior petroleum analyst at the organization.
Taking a page out Kazakhstan's playbook, the central bank of Azerbaijan has abandoned its currency peg and floated the manat. Both countries are highly dependent on oil and gas - which are collapsing under pressure from a global supply glut - intensifying pressure on their public finances. Immediately following the move, Azerbaijan's currency plunged 48% and was at 1.55 to the dollar.
China's latest industrial disaster: At least 91 people are missing after a huge mound of mud and construction waste collapsed at a business park in Shenzhen, burying 33 buildings and exploding a pipeline that provides natural gas to Hong Kong. The landslide comes four months after huge chemical blasts at the northern port of Tianjin killed more than 160 people, and as Beijing residents stay indoors due to a pollution red alert that runs through tomorrow. Shenzhen +1% despite the news.
Greek prime minister Alexis Tsipras is pushing for the International Monetary Fund to stay out of the country's €86B third bailout, leaving the eurozone to take full responsibility for overseeing economic reforms. The assertion risks alienating the IMF, which is a strong advocate of debt relief for Athens, and is likely to anger the German government, which has always insisted the fund stay on board. The IMF will likely decide whether to stay involved in the bailout early next year.
Spain's ruling Popular Party lost its parliamentary majority in elections Sunday, leaving Prime Minister Mariano Rajoy struggling to avoid becoming the latest European leader to be ousted after pushing through unpopular austerity policies. The elections - which saw the country's two establishment parties lose significant ground to two upstarts (the anti-austerity Podemos movement and the centrist Ciudadanos faction) - could pose serious challenges and produce a parliament vastly fragmented under a newborn minority or coalition government. Spain's IBEX 35 Index -2.3%.
The World Trade Organization is facing the biggest shake-up of its agenda since 2001 after its members in effect abandoned the long-stalled Doha round. The decision marks a victory for the U.S. and EU, who alongside other developed economies argued that clinging to the long-stalled Doha negotiations was making the institution irrelevant in a changing global economy. That frustration has also led to a push for large regional and sectoral trade agreements, including the Trans-Pacific Partnership.
Stocks
Not so long ago and very close to home...Star Wars: The Force Awakensgrossed a preliminary $238M in North America to mark the biggest opening of all time. More important for Disney (NYSE:DIS) investors may be what the opening signals for the long term. Typical recent multipliers suggest that the film could indeed threaten Avatar's domestic gross record of $760.5M as it's tracking toward $714M-$833M, dependent largely on how it holds up through U.S. holidays.
Following a major $1.3B accounting scandal, Toshiba (OTCPK:TOSYY) will slash around 6,800 jobs in its consumer electronics operations, in an overhaul that will streamline the sprawling conglomerate into a company focused on chips and nuclear energy. Due to costs of restructuring, which also includes the sale of its TV manufacturing plant in Indonesia, Toshiba expects a net loss of around ¥550B ($4.53B) in its fiscal year ending in March. Toshiba shares closed down 9.8% in Tokyo.
Panasonic has agreed to buy a majority stake in Hussmann, a U.S. refrigeration systems maker, from private equity firm Clayton Dubilier & Rice. The deal is said to be priced at over ¥150B ($1.2B). After exiting unprofitable product lines in smartphones and semiconductors, Panasonic (OTCPK:PCRFY) has been shifting to growth areas such as automotive and advanced technologies that earn higher profit margins.
Ericsson has signed a license agreement with Apple (NASDAQ:AAPL) that covers patents relating to both firms' standard-essentials (including GSM, UMTS and LTE cellular) and grants certain other patent rights. While it didn't specify how much it would earn from the deal, Ericsson (NASDAQ:ERIC) estimated that its overall revenues from intellectual property rights would hit 13B-14B Swedish crowns ($1.52B-$1.64B) this year, up from 9.9B in 2014. The agreement also includes releases that resolve all pending patent-infringement litigation between the companies. ERIC +7.1%; AAPL +1.5%premarket.
Meanwhile, in an interview with 60 Minutes' Charlie Rose that aired last night, CEO Tim Cook defended Apple's (AAPL) tax practices. "It would cost me 40% to bring it home, and I don't think that's a reasonable thing to do," Cook declared. "This is a tax code...that was made for the industrial age, not the digital age. It's backward. It's awful for America. It should have been fixed many years ago." Cook also dismissed claims that the company does its best to avoid paying taxes on overseas earnings as "total political crap," adding that "Apple pays every tax dollar we owe."
General Electric expects to announce a decision next month about whether it will transfer its headquarters out of Connecticut, Reuters reports quoting a company spokesman. The conglomerate has been weighing a move out of the state since the summer, when lawmakers passed a budget that included hefty tax increases. GE is also likely to sign a deal on Tuesday to sell a 23% stake in Hyundai Capital to the latter's majority owner, Hyundai (OTC:HYMLF) and affiliate Kia Motors (OTC:KIMTF), for about 800B won ($679M).
False alarm! A suspected bomb that forced an Air France (OTC:AFRAF) flight from Mauritius to make an emergency landing early Sunday in Kenya turned out to be a fake. The device was made of cardboard, paper and a household timer, said Frederic Gagey, the head of the airline. Air France has been the target of four bomb alerts, including three on flights in the U.S., since a terrorist attack in the French capital killed 130 people on Nov. 13.
Shire Pharmaceuticals could sweeten a bid for Baxalta (NYSE:BXLT) by offering £8B in cash as part of what was a £19B all-share bid, sources toldThe Times. The Ireland-based company made an initial all-share offer approach to Baxalta in August but appeared to back down when its market value dropped 20% in October. Shire (NASDAQ:SHPG) hopes to complete the deal by mid-January.
Martin Shkreli, the pharmaceuticals entrepreneur vilified for lifting the price of toxoplasmosis drug Daraprim 5000%, said on Saturday that the securities fraud allegations which resulted in his arrest last week were "baseless and without merit." Federal prosecutors charged Shkreli of running a Ponzi-like scheme at a former hedge fund before taking the helm of Turing Pharmaceuticals. He resigned as the company's CEO on Friday.
Sepp Blatter and Michel Platini, two of the most powerful men in world soccer, have been handed eight-year bans from the game, making them the highest-profile casualties of sprawling investigations into corruption at FIFA. The move is likely to be welcomed by top sponsors Coke (NYSE:KO), Visa (NYSE:V), McDonald's (NYSE:MCD), Adidas (OTCQX:ADDYY), Emirates and Hyundai (OTC:HYMLF), which have all called for more transparency and credible reforms at soccer's governing body. FIFA will hold a special election to choose Blatter's successor on Feb. 26.
Volkswagen is considering implementing a mandatory rotation of key executives in its engine-development groups, another indication that the automaker is growing certain that a culture of tolerance for breaking rules was behind its emissions crisis. Moving key managers and software developers to new positions after a certain period would prevent structures that block change or conceal mistakes from forming, VW (OTCPK:VLKAY) Chairman Hans Dieter Pötsch said in an interview with the German weeklyWelt am Sonntag.
Shareholders of Royal Dutch Shell and BG Group (OTCQX:BRGYY) are expected to vote on Jan. 27 & 28 on their planned combination announced eight months ago. The decision comes after the two firms won Chinese antitrust approval for the merger, clearing the last regulatory hurdle for the deal. In BG's case, votes in favor must represent at least 75% of the total value of BG shares. Shell (RDS.A, RDS.B) requires 50% backing.
Brazil's state of Minas Gerais has frozen the Brazilian assets of BHP Billiton (NYSE:BHP) and Vale (NYSE:VALE) after determining their joint venture Samarco was unable to pay for damage caused by the bursting of a dam at its mine last month. The ruling comes as BHP steps up its hunt for acquisitions, hoping to take advantage of distressed prices at a low point in the commodity cycle, while increasing the likelihood it will make a dividend cut next year. BHP +4.4% premarket.
The FAA will open its mandatory drone registration program today in a move that could likely transition a growing hobbyist community to mass-market commercial industry. Owners will be required to submit their names, home and email addresses to a national database, and to put a registration number on unmanned aircraft weighing from half a pound to 55 pounds. An owner of a drone before Monday will have until Feb. 19 to register, but anyone who gets a drone after the website opens will have to register before its first flight. Related stocks: AMBA, AVAV, OTCQB:DRNE, GPRO, INVN, IXYS,TRMB
Today's Markets
Companies reporting earnings today
In Asia, Japan -0.4% to 18916. Hong Kong +0.2% to 21871. China +1.8% to 3642. India +0.9% to 25736.
In Europe, at midday, London +0.9%. Paris +0.5%. Frankfurt +0.9%.
Futures at 6:20, Dow +0.8%. S&P +0.8%. Nasdaq +0.9%. Crude -0.9% to $34.42. Gold +0.6% to $1071.80.
Ten-year Treasury Yield +1 bps to 2.20%
Today's Economic CalendarIn Europe, at midday, London +0.9%. Paris +0.5%. Frankfurt +0.9%.
Futures at 6:20, Dow +0.8%. S&P +0.8%. Nasdaq +0.9%. Crude -0.9% to $34.42. Gold +0.6% to $1071.80.
Ten-year Treasury Yield +1 bps to 2.20%
Companies reporting earnings today
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