Next Bank Shakeup - Deutsche Bank Bosses Resign
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Economy
China's exports fell for a third month in May, while imports slumped the most in three months, underscoring a sluggish domestic environment in need of more stimulus. Annual exports in May fell 2.5% while imports plunged 17.6%, data from the General Administration of Customs showed
on Monday. Many analysts have already penciled in sub-7% growth for the second quarter, raising the risk that the government will not meet its full-year growth target of around 7%. Shanghai closed
up 2.2%.
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On Tuesday, index provider MSCI will decide whether to include China’s domestic markets in its widely followed emerging-market and global indexes. Rival index provider FTSE Group has already inaugurated transitional indexes for emerging markets to include Chinese A-shares, while S&P Dow Jones Indices said it would likely add the shares to its indexes in September. The new step will add a piece of a market that has some of the world's highest valuations and volatility to millions of foreign investors.
Japan's economy grew faster than initially estimated in the first quarter, data
on Monday showed, however doubts remain over whether the momentum can be sustained. GDP expanded at an annualized pace of 3.9% in January-March, higher than the preliminary reading of a 2.4% increase, and up from 1.5% in the October-December period. The upward revision reflects a better-than-expected rise in capital spending, alongside solid exports to the U.S. and China.
Turkey's financial markets were rattled on Monday after the country's governing Justice and Development Party, or AKP, lost its parliamentary majority after 13 years in power. With an uncertain period of a coalition- or minority-led government ahead, Turkey's stock market index, the BIS 100,
plunged 8% at the open, while the lira fell almost 4% to a record low of 2.75 against the dollar. The vote also scuttled President Recep Tayyip Erdogan's bid to further centralize power by redrawing Turkey's constitution.
As talks between Greece and its creditors drag on, relations between Athens and its European partners seem to be getting worse, not better. Tensions over a cash-for-reform deal came to a head
Sunday when European Commission President Jean-Claude Juncker accused Greek PM Alexis Tsipras of distorting what the creditors had proposed to make some headway in securing a deal for the country. It was also reported that Juncker refused a request from Tsipras to meet
on Saturday after the Greek leader rebuffed the proposals as "absurd" and "irrational, blackmailing demands."
Leaders from the G7 industrial nations are scheduled to meet in the Bavarian Alps for a second day of a summit overshadowed by Greece's debt crisis and ongoing violence in Ukraine.
On Sunday, leaders focused on global growth, climate change and the TTIP free trade agreement being negotiated between Washington and the EU. Today, the summit will discuss militant threats from groups like Islamic State and Boko Haram.
Stocks
Deutsche Bank purged its leadership on Sunday, appointing John Cryan as chief executive to replace co-CEOs Jürgen Fitschen and Anshu Jain. Cryan has been on the bank's supervisory board since 2013 and was a former chief financial officer of
UBS. The move also follows recent CEO resignations at Credit Suisse (NYSE:
CS), Standard Chartered (
OTCPK:SCBFF),
RBS, Barclays (NYSE:
BCS), UBS, and Credit Agricole (
OTCPK:CRARY).
DB +6.4%premarket.
General Electric is close to an agreement to sell its private-equity-lending unit to Canada's largest pension fund, marking a major step in the industrial giant's retreat from banking, in one of the biggest finance takeovers since the credit crisis. The deal, which would include assets of more than $10B, may be announced by GE (NYSE:
GE) and the Canada Pension Plan Investment Board as soon as today.
Shire is considering a £12.4B takeover of Swiss rival Actelion (
OTCPK:ALIOY), Europe's biggest biotech firm, the
Sunday Times reported. Actelion, which makes treatments for rare diseases, has rebuffed the overture, which has been going on for a several weeks.
SHPG -2% premarket.
Although M&A has accelerated sharply since the financial crisis, the government's pace for reviewing proposed deals is slowing. In such deal reviews concluded this year, more than 10 months elapsed, on average, between a transaction's announcement and a yes-or-no decision by the FTC or Justice Department. That's an increase from an average of seven months in recent years. Recent notables: Comcast's (NASDAQ:
CMCSA) bid for Time Warner (NYSE:
TWC); Applied Materials' (NASDAQ:
AMAT) deal for Tokyo Electron (
OTCPK:TOELY); Sysco's (NYSE:
SYY) planned acquisition of U.S. Foods.
Monsanto has now offered to pay a $2B reverse break-up fee to Syngenta (NYSE:
SYT) if it cannot obtain global regulatory approvals to acquire the company, and reiterated that it would sell any overlapping business to obtain clearance for the deal. Despite the new proposal, Syngenta seems to have rejected Monsanto's (NYSE:
MON) approach, calling it the "same inadequate price" ($45B in cash and stock) with the same flawed view of execution risks.
Panasonic plans to send hundreds of its employees to Tesla's (NASDAQ:
TSLA) Gigafactory in Nevada from this autumn to prepare for production of lithium-ion batteries for electric cars, which it confirmed will start sometime next year. Panasonic (
OTCPK:PCRFY) also said it expects to invest around ¥60B ($478M) in the current fiscal year through March in its automotive business, which includes the Gigafactory and a joint development project with Spanish auto parts maker Ficosa International.
Google's new mobile phone payment service, Android Pay, will not garner any transaction fees from credit card companies,
WSJ reports, possibly putting pressure on Apple (NASDAQ:
AAPL) to drop or lower its charges for Apple Pay. Dominant payment networks, Visa (NYSE:
V) and MasterCard (NYSE:
MA), recently standardized their "tokenization" card-security service and made it free, preventing payment services, such as Google (
GOOG,
GOOGL), from charging fees to issuers. Separately, Apple is expected to unveil its new music service and better tools to build apps for its smartwatch at its annual gathering of developers in San Francisco today.
Samsung Electronics plans to offer a mobile payments function in a smartwatch to be launched in the second half of the year,
Electronic Timesreports. The South Korean firm has previously said its Samsung (
OTC:SSNLF) Pay mobile payments service, which supports NFC technology, will become available for "select partners" in July.
Earthquakes that have rocked the Dallas-Fort Worth area are putting two major oil and gas producers on the spot, as Exxon Mobil's (NYSE:
XOM) XTO Energy subsidiary and EOG Resources (NYSE:
EOG) face scrutiny from Texas regulators in their use of injection wells to dispose of wastewater from fracking operations. The state's energy regulator, the Railroad Commission of Texas, is set to begin a series of hearings in Austin this week to assess some oil companies' role in causing the temblors.
Brazil's Veja reported on Friday that local P-E firm 3G Capital is considering a bid for Diageo (NYSE:
DEO), just three months after striking a deal to merge existing holding H.J. Heinz with Kraft Foods (NASDAQ:
KRFT). Over the weekend, however, advisory firm Evercore stated a near-term bid for Diageo is "highly unlikely," as the company will not sell itself for less than $90B (vs. $74.2B as of
Friday's close). DEO
-3% premarket.
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Today's Markets:
In Asia, Japan flat at 20457. Hong Kong +0.2% to 27316. China +2.2% to 5132. India -0.9% to 26523.
In Europe, at midday, London -0.1%. Paris -0.6%. Frankfurt -0.5%.
Futures at 6:20: Dow -0.1%. S&P -0.1%. Nasdaq -0.2%. Crude -0.7% to $58.73. Gold +0.5% to $1174.20.
Ten-year Treasury Yield -2 bps to 2.38%
Notable earnings after today's close: CASY,
CBK,
FCEL,
HRB,
HQY,
KANG,
LAYN,
PBY,
PLAY,
SB,
TPLM,
UNFI
