Daily Agenda: U.S. Markets Sag Before Year-End

Deutsche Bank posts record loss; Icahn raises Pep Boys bid; Spain’s People’s Party struggles to form government after rejecting Catalonian vote.


Michael Nagle

Thin holiday trading is contributing to a sense of malaise among investors. As trading staggers to an end for 2015, U.S. equity markets appear to be heading to a down finish down for December, bucking a seasonal trend known as the “Santa Claus Rally.” Meanwhile, the yield curve in U.S. treasuries continue to flatten as investors abandon shorter-term bonds in response to anticipated slow and steady Federal Reserve rate increases in 2016.

Icahn raises Pep Boys bid. After the board of Pep Boys-Manny, Moe & Jack announced Monday that it had accepted a $17 a share offer valued at about $947 milllion from Tokyo-based Bridgestone Corp., longtime shareholder activist Carl Icahn tossed in a topping bid. Icahn, who has been battling for the Philadelphia-based auto-parts retailer, bid $18.50 a share, worth over $1 billion. Pep Boys currently operates more than 800 retail auto-parts locations in the U.S.

Record loss at Germany bank. Frankfurt, Germany’s Deutsche Bank announced a third quarter loss on Tuesday that topped some $6.5 billion, the largest quarterly drawdown ever for the country’s largest bank. Revenues fell by more than 7 percent year-over-year after losses from the bank’s Chinese operations.

Whitebox to shutter funds. On Monday Minneapolis-based Whitebox Advisors announced that it will close its mutual funds due to lackluster performance, redemptions and liquidity issues in credit markets. The company was one of several hedge fund managers that entered the liquid-alternative mutual-fund business in recent years.

Toshiba seeks credit line. Executives at Tokyo-based Toshiba Corp. announced that the troubled electronics giant is seeking an additional credit facility of $2.5 billion as the company reorganizes business units. The company is recovering from an accounting scandal as well as setbacks for its core television and computer monitor divisions.

Solar company priced at a fraction of former value. A regulatory filing by Beijing-based Hanergy Thin Film Power Group relating to a sale of shares by the company’s chairman indicates that the once high-flying solar company now values itself at slightly more than $1 billion. The company’s market capitalization exceeded $20 billion prior to a halt in trading in May when Chinese equity markets corrected sharply.

No new government yet for Spain. Prime Minister Mariano Rajoy’s People’s Party has been unsuccessful in establishing a coalition thus far after the socialist party rejected any agreement that allowed for a referendum on Catalonian independence. Far left party Podemos, which supports the referendum, won 69 seats in the national election.

Chinese property sale. On Tuesday, Evergrande Real Estate Group, based in Guangdong, China, announced the acquisition of property developments totaling more than $3 billion in price from companies controlled by the family of Cheng Yu-Tung, the aging billionaire who built New World Development, a major real estate developer with extensive holdings in Hong Kong and Macau. The purchase follows a series of recent buyouts by Evergrande as it bulks up while other developers shed assets in the maturing Chinese real estate market.

Olmert sentenced to jail. The Israeli High Court of Justice today upheld the conviction of former Prime Minister Ehud Olmert on bribary charges, sentencing him to a reduced sentence of 18 months imprisonment. Olmert, who maintains his innocence, will report to prison in February.