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U.S. STOCKS TICK UP; BOND SELLOFF CONTINUES

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US FINANCIAL MARKET
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U.S. STOCKS TICK UP; BOND SELLOFF CONTINUES

  • Crude continues climbing after OPEC agrees to cut oil production.
  • Brent futures rose to a six-week high of $53.34.
  • The yield on the 10-year Treasury note climbed to 2.441% from 2.365% at Wednesday’s close.
  • Dollar General fell 6.4% after the discount retailer reported a surprise drop in third-quarter comparable sales.
  • Express fell 16%, while Guess dropped 13% after the two apparel and accessories retailers cut their full-year profit forecasts.

US FINANCIAL MARKET

Oil Keeps Rising After OPEC Output Deal

  • The agreement will cut output by 1.2 million barrels, though questions over enforcement remain.
  • Brent crude, the global oil benchmark, rose 1.4% to $52.56 a barrel on London’s ICE Futures exchange.
  • On the New York Mercantile Exchange, West Texas Intermediate (WTI) futures were trading up 1.2% at $50.02 a barrel.
  • The cut, representing about 1% of global production, will help to reduce a supply glut that has depressed prices for more than two years.
  • Another wild card is the cooperation of nonOPEC producers, which are expected to decrease production by 600,000 barrels a day.
  • Russia said it would cut production by 300,000 barrels a day, though it isn’t clear how much of that will come from already-expected declines.

Auto Makers’ November Sales on Track for Record

  • Black Friday deals and steep incentives draw shoppers.
  • GM’s sales rose 10.2% to 252,644 new vehicles in November.
  • Ford’s sales rose 5.1% to 196,441 vehicles.
  • Toyota posted a 4.3% rise in sales to 197,645 vehicles.
  • Fiat Chrysler reported sales skidded 14% in the month to 160,827 vehicles.
  • Nissan beat expectations with a 7.5% rise sales to 115,136 vehicles.
  • For the industry, GM expects November sales at 17.9 million on a seasonally adjusted annualized sales rate, which would be short of an annualized rate of 18.25 million reported in November 2015.

Dollar General Reports Surprise Fall in Same-Store Sales

  • The company said same-store sales fell 0.1%.
  • Dollar General reported a third-quarter profit of $235.3 million.
  • In the year-ago period, the company earned $253.3 million.
  • Revenue rose 5% to $5.32 billion though analysts had hoped for $5.37 billion.

Kroger Cuts Outlook Again Amid Pricing Pressure

  • Kroger again lowered its guidance for the year as food-price deflation continues to weigh on the grocer’s top line.
  • Kroger now anticipates 2016 adjusted earnings of $2.10 to $2.15 a share, compared with its previous outlook for $2.10 to $2.20 a share.
  • Kroger reported a profit of $391 million, down from $428 million a year earlier.
  • Revenue rose 5.9% to $25.56 billion.

Guess Cuts Outlook, Posts Disappointing Results

  • Revenue rose just 2.9% to $536 million, well below the 5% to 8% growth, or roughly $554 million, the company had predicted.
  • Sales at stores open at least a year dropped 4.9%, worse than the 4.2% decline in the previous quarter.
  • Guess has logged same-store sales declines since the start of 2011.
  • The company posted a profit of $9.7 million, down from $13.1 million a year earlier.

Express Slashes Outlook Again, Anticipates Weak Holiday Season

  • Express posted a profit of $11.6 million, down from $26.3 million a year earlier.
  • Gross margin dropped 500 basis points to 30% from 35% in the year-ago period, hurt by promotional activity.
  • E-commerce sales — one bright spot for the quarter — increased 15% to $96.3 million.
  • Revenue fell 7.4% to $506.1 million, but not as low as the $497.1 million analysts anticipated.

Glencore to Resume Dividend with $1 Billion Payout Next Year

  • Mining and commodities giant sold off $6.3 billion in assets to pay down debt.
  • The company also said it has completed its divestment program, with total proceeds of at $4.7 billion, putting it on track for $16.5 billion to $17.5 billion in net debt by end of 2016.

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US ECONOMY & POLITICS

U.S. Manufacturing Activity Expanded Steadily in November

  • ISM purchasing managers index (PMI) rose to 53.2 in November from 51.9 a month earlier.

Jobless claims hit five-month high, but layoffs low

  • Initial claims for state unemployment benefits increased 17,000 to a seasonally adjusted 268,000 for the week ended Nov.
  • Despite the increase, claims remained below the 300,000 threshold, which is associated with a healthy labor market, for the 91st straight week. That is the longest run since 1970.

Delinquencies Rise on Growing Volume of Subprime Auto Loans

  • The number of subprime auto loans slipping into delinquency climbed to the highest level since 2010 in the third quarter, and is following a pattern much like the months heading into the 2007-09 recession.
  • New auto loans to borrowers with credit scores below 660 have nearly tripled since the end of 2009.
  • So far in 2016, about $50 billion of new auto loans per quarter have gone to those borrowers.
  • About $30 billion each quarter has gone to borrowers with scores below 620, which are considered bad.
  • Overall, total household debt grew to $12.35 trillion in the third quarter, an increase of $63 billion from the second quarter.
  • The increase was driven by a $32 billion rise in auto loans, as well as smaller increases in student loans and credit card balances.subprime-comback

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EUROPE & WORLD

Airbnb to Enforce Limits on Rentals in London, Amsterdam

  • The deals may provide a template for Airbnb’s efforts to settle disputes with cities around the world.
  • Airbnb agreed for the first time to enforce legal limits on the number of nights a year a host can rent out a home, a major concession as the company is assailed by regulators in the U.S. and Europe.
  • The deal with Amsterdam has a 60-day-a-year limit for most short-term rentals.
  • Airbnb sent to hosts in London and said it will apply the city’s 90-day-a-year limit on rentals.

Citic-Carlyle near deal to buy McDonald’s China assets  

  • A consortium led by private-equity firm Carlyle and Chinese conglomerate Citic has neared a deal to buy McDonald’s stores in China and Hong Kong for up to $3 billion.
  • The deal is likely to be signed before Christmas, the source said.
  • The company hired Morgan Stanley to run the sale of about 2,400 restaurants in China and Hong Kong.

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TODAY in HISTORY

arthurconandoyle_astudyinscarlet_annual

Sir Arthur Conan Doyle’s Sherlock Holmes appeared for the first time in print in the story “A Study in Scarlet” (1887)

Twelve nations, including the United States, signed a treaty setting aside Antarctica as a scientific preserve free from military activity (1959)

Exxon and Mobil agreed to merge, creating the world’s largest corporation (1998)

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This information has been prepared from sources believed to be reliable, but no representation is being made as to its accuracy or completeness. The information provided should be used only as general information and is not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in the material may not develop as predicted. All indices, such as the S&P 500, are unmanaged and may not be invested into directly. Sources: Reuters, Bloomberg, Wall Street Journal.

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