German Finance Minister Wolfgang Schaeuble said in an interview with The Wall Street Journal on Monday that Greece must take the necessary steps to get its economy and finances in order, or euro-zone leaders may not grant it a fresh bailout.
That comes on the heels of weekend reports that Germany wants to appoint a European Union commissioner with veto power over Greece’s finances, a proposal that was subsequently dismissed by Greek Finance Minister Evangelos Venizelos. Also over the weekend, negotiators said an agreement was close over a voluntary debt swap between Greece and its private creditors. Talks are expected to continue this week.
“The fact we’re still at the beginning of 2012 talking about Greece is a sign this problem hasn’t been dealt with,” U.K. Chancellor of the Exchequer George Osborne said in Davos (according to Bloomberg.)
But the big elephant in the room comes from Germany’s Wolfgang Schauble, who took an especially hard stance against Greece. From WSJ:
Germany’s finance minister issued an unusually blunt warning that the euro zone might refuse to grant Greece a fresh bailout, pushing Athens into default unless it persuades Europe it can overhaul its state and economy.
“Greece needs to decide,” Wolfgang Schauble said in an interview with The Wall Street Journal, when asked whether the euro zone would grant or withhold the second bailout package for the country since 2010, expected to be in excess of 130 billion euros ($172 billion).
Europe is “prepared to support Greece” with the new loan package, Mr. Schauble said, but he warned: “Unless Greece implements the necessary decisions and doesn’t just announce them. . .there’s no amount of money that can solve the problem.”
The situation is worth monitoring closely, especially since the sharp rally for stocks to kick off the year appears to be taking a breather. Barclays Capital lays out some key points that will determine whether the rally can continue.
“The extent to which the sharp rally in risky assets year to date can continue in the near term will be brought into sharp focus this week with markets facing three key events/tests: 1) the EU Summit; 2) Tier 1 US economic data; and 3) the China manufacturing PMI,” says Barclays Capital strategists.
So far the EU summit hasn’t yielded any uplifting headlines and the economic data this morning were mixed at best. Personal incomes picked up 0.5% last month, but people elected to save rather than spend as consumer spending was unchanged in December. The savings rate jumped to 4.0% from 3.5%, the fastest rate of growth since August. The timing coincided with the latter part of the holiday season.
Thomas & Betts’ shares were up $22% to $70.70 premarket as the electrical-component maker posted fourth-quarter earnings that rose a better-than-expected 42% because of a consistent run of double-digit revenue growth, aided by strong results in its steel-structures segment. Switzerland’s ABB Ltd. said Monday it has agreed to pay $3.9 billion in cash for Thomas & Betts to increase its exposure to the U.S. low-voltage electrical equipment market. The power and technology group said it is paying $72 a share for Thomas & Betts. Shares of ABB Ltd. were down 2.2% to $20.78 premarket.
U.S. Steel announced an agreement to sell its Serbian unit to the country’s government for a “nominal” price, adding it expects a loss on the sale. News reports last week suggested the nation’s government had agreed to buy back the underperforming unit for $1 to avert major job losses and preserve a key exporter. Shares fell 2.3% to $29.20 premarket.
Wendy’s fourth-quarter earnings fell 30% as charges masked the fast-food chain’s improved same-store sales and stronger-than-expected revenue growth. Shares declined 3.1% to $5.05 in recent premarket trading.
The FDA approved Amylin Pharmaceuticals’s diabetes drug Bydureon after a prolonged regulatory process. The drug, which treats type 2 diabetes, was developed by the company along with its partner Alkermes. Shares of Amylin surged 16% to $14.13 premarket, while shares of Alkermes were up 3.7% to $19.80.
Delta Air Linesis studying US Airways Group as a possible acquisition target, people familiar with the matter said, the latest twist in a swirl of deal strategizing for the industry. Delta, the world’s No. 2 airline by traffic, also has been assessing a similar move for much-larger American Airlines parent AMR Corp. Shares of US Airways gained 7% to $8.75 premarket.
Economics, FedSpeak and Eurozone Foolishness:
EU leaders summit in Brussels
Italy sells bonds
France sells bills
Eurozone confidence indexes for January
Personal income and spending for December
Case-Shiller home prices for November
Chicago ISM for January
Consumer confidence for January
Eurozone PMI for January
Car and truck sales for January
ADP employment index
Philadelphia Fed President Charles Plosser speaks
ISM manufacturing index for January
Construction spending for December
France sells bonds
Weekly jobless claims
Jobs report for January
Factory orders for December
ISM services index for January
Helmerich & Payne
Archer Daniels Midland
C. R. Bard
Illinois Tool Works
Thermo Fisher Scientific
Diamond Offshore Drilling
National Oilwell Varco
Principal Financial Group