The jobs report sets the stage for liftoff, oil is falling again, and more Chinese executives are disappearing. Here are some of the things that people in markets are talking about today.
Prepare for liftoff
Friday's better than expected U.S. jobs report seems to have cemented the Federal Reserve's case for liftoff later this month. Economists at Barclays reckon that a rate hike is now fully priced in, while Allianz SE Chief Economic Adviser and Bloomberg View columnist Mohamed El-Erian says it would be difficult for the Fed to avoid raising rates at the conclusion of its meeting on Dec. 16. Federal funds futures imply a 76 percent probability of liftoff in December, and the U.S. two-year Treasury has risen by more than 30 basis points over the past two months. The U.S. dollar, meanwhile, is gaining on most major currencies this morning on the heels of its largest one-week loss since May. In the wake of November's solid non-farm payrolls report, the conversation has now shifted towards how fast the Fed will have to raise rates and to what terminal level.
Oil breaks below $40 (again)
Crude oil is extending last week's losses in early trading with the West Texas Intermediate front-month futures contract falling to a low of $39.20 per barrel — less than $1.50 shy of its Aug. 24 low of the year. Petrocurrencies like the Norwegian krone and Russian ruble have been slammed overnight. (The krone is also being hurt by a dismal manufacturing number.) The Organization of Petroleum Exporting Countries (or OPEC) not only elected to avoid cutting production after its meeting on Friday, but refrained from even setting a target. With no ceiling on production, oil prices are having a tough time finding a floor. Meanwhile, iron ore for delivery in China has also fallen below $40 a ton.
GE pulls plug on appliance sale to Electrolux
It's the mirror image of Merger Monday for Electrolux AG, as General Electric Co. said it was giving up on its plan to sell its household appliance business to the Stockholm-based company for $3.3 billion. GE will search for another buyer for this business unit and is seeking a $175 million break-up fee from Electrolux. The U.S. Department of Justice had previously rejected Electrolux's proposal to divest assets to assuage its anti-trust concerns. Shares of the Swedish manufacturer took their biggest hit in nearly four and a half years.
Winds of political change blowing
Economic and geopolitical turmoil are sparking political change in South America and Europe. Sunday's Venezuelan elections saw the opposition alliance led by Jesus Torrealba win a majority. A deep recession, high inflation, heavy indebtedness, and a crippled currency proved a toxic combination for President Nicolas Maduro's populist party. Venezuelan bonds gained as traders digested the results, with the hope that reforms will pave the way for economic stability. Meanwhile, in France, the right-wing National Front party led by Marine Le Pen performed well in the regional elections held on Sunday. The party, which opposes immigration and the country's membership in the euro currency union, more than doubled its share of the national vote compared to the 2010 election. Analysts suggested the influx of refugees into Europe and the terrorist attacks in Paris bolstered the National Front's appeal.
Chinese executives keep disappearing
Two members of Citic Securities Co.'s executive committee are incommunicado, according to a statement released by the company on Sunday. Some media reports allege that Chen Jun and Yan Jianlin, the investment-banking officials in question, were sought by the Chinese government in connection with a probe into the plunge in domestic stocks this year after their parabolic advance. The brokerage isn't alone in having high-profile members go missing. In November, Guotai Junan International Holdings Ltd. said that it was unable to contact Yim Fung, chairman and chief executive officer at the brokerage.
What we've been reading
This is what's caught our eye over the last 24 hours.
- Merry Christmas! How marketers (and hackers) are spying on your children through their toys.
- How the big banks have been trying to unseat Fannie Mae and Freddy Mac.
- Tax wealth - unless it's inherited, U.K. citizens say.
- A bank's got to have a dress code, Citigroup reminds its Hong Kong division.
- "What exactly do we want our banks to do?"
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