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STOCKS WEIGHED DOWN BY OIL VOLATILITY, BANKS

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STOCKS WEIGHED DOWN BY OIL VOLATILITY, BANKS

  • Monday’s downbeat tone came as oil prices swung ahead of a meeting of major oil producers in Vienna.
  • European bank shares also posted steep losses Monday ahead of a Dec. 4 referendum on Italian constitutional reform.
  • Many investors are concerned that a “no vote” and the potential political uncertainty that follows could derail plans to shore up the country’s fragile banking system.
  • Time Inc jumped 12% after the New York Post reported that the publisher had rejected a takeover bid from billionaire investor Edgar Bronfman Jr.

US FINANCIAL MARKET

Oil Prices Swing Ahead of Key OPEC Meeting

  • Oil prices fluctuated between positive and negative on Monday as investors debated the possibility of a production cut at this week’s OPEC meeting.
  • The price of oil dipped by 4% on Friday after Saudi Arabia canceled a meeting with Russia.

Correlations are breaking down in the wake of the U.S. election

  • In the weeks before Donald Trump’s election Nov. 8, high-quality bonds such as U.S. Treasuries and investment-grade corporate debt rose and fell with no apparent connection to the action in financial stocks, a condition known in market circles as no correlation.
  • Since Mr. Trump’s victory, however, that has changed. Highly rated bonds and the shares of banks, insurers and other intermediaries have taken on a strong negative correlation, with bank shares and related indexes gaining sharply and bond prices tumbling in the clearest expression of expectations that the new administration’s policies will result in a sharp increase in U.S. growth and inflation.
  • This suddenly charged relationship is only the clearest example of how Mr. Trump’s election win has reshuffled markets in a way not seen since the financial crisis.

sp500-returns

Activist Elliott Management Calls for Change at Cognizant

  • Investor wants the IT outsourcing firm to implement $2.5 billion buyback, start paying a dividend.
  • Elliott owns more than 4% of the company.

Marlboro Black Lures Millennials Who Shunned Cowboy Image

  • In the five years since the lower-priced cigarette was introduced, it has boosted Philip Morris USA’s sales to young adults.
  • The lower-priced cigarette offers what the company calls a “bold, modern take” on Marlboro—think tattoos, black jeans and motorcycles instead of Stetsons, bluejeans and horses.
  • In the five years since Marlboro Black was introduced, it has done a lot to help Philip Morris USA with its millennial problem.
  • About 85% of young adults don’t smoke. Many who do smoke don’t like Marlboro.
  • Its market share plunged 9 percentage points to 43% between 2005 and 2011.
  • But Black has breathed life into Marlboro.
  • Since grabbing more than 1% of U.S. cigarette market share in its first year, the brand has helped Marlboro reach an all-time high of 44.1% market share.

popular-with-youth

Apple iPhone With Curved Screen Could Come as Soon as Next Year

  • Apple’s Asia suppliers have been asked to increase output of thinner organic light emitting diode displays.
  • Apple will likely rely on Samsung for most of its initial OLED needs but it wants LG Display, Japan Display and Sharp to ramp up production to have supplies ready for 2018.

Energy Firms Step Up Business Investment

  • U.S. oil and gas companies are slowly stepping up investment in wells and other industry building blocks for the first time in more than two years.
  • The number of rigs drilling for oil in the U.S., a proxy for activity in the sector, has climbed by 50% to 474 since bottoming out in May.
  • Pioneer Natural Resources earlier this year raised its 2016 capital budget to $2.1 billion from $2 billion to cover the cost of five new rigs.
  • Devon Energy gave its capital budget a small boost in mid-2016 to as much as $1.3 billion.

drilling-down

Time Inc rejects bid from billionaire Bronfman Jr.: NY Post

  • Billionaire investor Edgar Bronfman Jr. offered $18 per share, the Post reported, representing a premium of 30% to Time’s Friday close and valuing the publisher at $1.78 billion.
  • Bronfman, who is a managing partner of private equity firm Accretive LLC, made the bid along with Russian-born billionaire Leonard Blavatnik, the founder of holding company Access Industries, and Israeli businessman Ynon Kreiz, the Post reported.

Bank Stocks Have Gained $300 Billion in 25 Days Thanks to Trump

  • Banks and insurers have jumped 12 percent since Trump’s victory, almost double the next best performer in the S&P 500.

U.S. shoppers spend less over holiday weekend amid discounting

  • Early holiday promotions and a belief that deals will always be available took a toll on consumer spending over the Thanksgiving weekend as shoppers spent an average of 3.5 percent less than a year ago.
  • The NRF said its survey of 4,330 consumers, conducted on Friday and Saturday by research firm Prosper Insights & Analytics, showed that shoppers spent $289.19 over the four-day weekend through Sunday compared to $299.60 over the same period a year earlier.
  • The survey found that 154 million people made purchases over the four days, up from 151 million a year ago.
  • However, there was a 4.2 percent rise in consumers who shopped online and a 3.7 percent drop in shoppers who purchased in a store.
  • Separate research released on Saturday by Adobe Digital Insights showed Thanksgiving and Black Friday online sales were $5.27 billion, up 18 percent from a year earlier and higher than its estimate of $5.05 billion.

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US ECONOMY & POLITICS

New Milestone: The U.S. Is Now a Net Exporter of Natural Gas

  • The U.S. has exported an average of 7.4 billion cubic feet a day of gas in November, more than the 7 billion cubic feet a day it has imported.
  • U.S. will be the world’s third-largest producer of liquefied natural gas for export by 2020, according to the Energy Department.

going-abroad

Small Businesses Lament There Are Too Few Mexicans in U.S., Not Too Many

  • Many business owners who rely on low-skilled labor say the real trouble is too few Mexicans heading north, not too many.
  • Annual inflows of undocumented immigrants from Mexico have slowed to about 100,000 a year since 2009, from about 350,000 a year in the mid-2000s and more than half a million in the late 1990s and early 2000s.changing-mix

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EUROPE & WORLD

Italy to Hold Referendum on Constitutional Overhaul Dec. 4

  • Prime Minister Matteo Renzi, who has dubbed the changes “the mother of all reforms,” has pledged to resign in the case of a “no” vote.
  • The referendum could send the country into political upheaval given that Mr. Renzi’s approval rating has fallen steadily.
  • The overhaul would cut the number of senators by roughly two-thirds to 100, while allowing many bills to be approved by the lower house only.
  • Both houses of parliament would only need to approve some types of legislation, such as electoral or constitutional changes.
  • In the last Italian legislature, it took, on average, a year to approve a bill, compared with the 264-day average for national parliaments across the European Union.

China Issuing ‘Strict Controls’ on Overseas Investment

  • The State Council, China’s cabinet, will soon announce new measures that subject many overseas deals to reviews of “strict control”.
  • Targeted for particular scrutiny by the pending measure are “extra-large” foreign acquisitions valued at $10 billion or more per deal, property investments by state-owned firms above $1 billion and investments of $1 billion or more by any Chinese company in an overseas entity unrelated to the investor’s core business.

Lufthansa cancels 1,700 flights due to pilots’ strike

  • Last week, the German carrier canceled nearly 2,800 flights during a four-day walkout from Wednesday that affected more than 350,000 passengers, the 14th walkout in a dispute that since early 2014 has cost the carrier hundreds of millions of euros.
  • Lufthansa has offered to increase the pilots’ pay by 4.4 percent in two installments and make a one-off payment worth 1.8 months’ pay over a six year period.
  • Union Vereinigung Cockpit (VC) wants an average annual pay rise of 3.7 percent for 5,400 pilots over a five-year period backdated to 2012.

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TODAY in HISTORY

magellan

Portuguese explorer Ferdinand Magellan passed through the strait which bears his name to the Pacific ocean (1520)

Churchill, Roosevelt, and Stalin met in Tehran for their first meeting during World War II (1943)

The U.S. spacecraft Mariner 4 launched—on its way to the first successful mission to Mars (1964)

Margaret Thatcher resigned as prime minister of Great Britain; John Major took over (1990)

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