Takeover Tuesday; Brexit speech; Watching the World Economic Forum

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1. Takeover Tuesday: Two of the world's biggest cigarette companies are being rolled into one.

British American Tobacco (BTI) said Tuesday that it's agreed to pay $49.4 billion to take control of Reynolds American (RAI), the No. 2 U.S. tobacco company.

The two cigarette giants hold some of the biggest selling brands on the planet, including Pall Mall, Camel and Newport.

There's also takeover news in the energy sector: Noble Energy (NBL) said it's agreed to buy Clayton Williams Energy (CWEI) for $2.7 billion in stock and cash. Both companies are based in Texas.

2. Brexit speech: British Prime Minister Theresa May is set to give a speech outlining her plans for the U.K.'s exit from the European Union.

She's expected to say that the country will "not seek to hold on to bits of [EU] membership as we leave." That kind of message rattles traders because they worry that the U.K. will lose its free access to the giant trading bloc.

The pound had been declining in the lead up to the speech, but it's now stabilized above $1.21.

Over the past year, the pound has dropped by 13% or more versus every other major global currency as investors worry about the impact that Brexit will have on the U.K. economy.

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3. Rolls Royce settlements: Shares in Rolls Royce (RYCEY) are surging by 6% in London after the British engineering giant said it reached settlements with authorities in the U.K., the U.S. and Brazil over bribery allegations.

The agreements -- which are yet to be finalized -- total £671 million ($813 million), the company announced.

4. Global market overview: It's shaping up to be a gloomy day in the stock markets and a good day for gold.

U.S. stock futures are pointing lower and European markets are declining in early trading. But gold is rising by about 1.5% to trade around $1,215 per ounce.

Traders tend to put money in gold when they're feeling nervous about stocks.

Asian markets are closing the day with mixed results.

5. Davos watch: Top business and political leaders from around the world are convening in Davos, Switzerland, to kick off the annual World Economic Forum.

IMF Director Christine Lagarde, Facebook (FB) COO Sheryl Sandberg, Chinese President Xi Jinping and Alibaba (BABA) founder Jack Ma will be among those in attendance.

6. Earnings: Morgan Stanley (MS) and UnitedHealth (UNH) are releasing earnings before the open Tuesday.

United Continental (UAL) is set to announce earnings after the close.

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7. Coming this week:

Tuesday - World Economic Forum begins in Davos, Switzerland; Morgan Stanley (MS) earnings
Wednesday - U.S. Senate hearing to examine Wilbur Ross nomination for Commerce Secretary; Earnings from Citigroup (C), Goldman Sachs (GS) and Netflix (NFLX)
Thursday - ECB interest rate decision; IBM (IBM) and American Express (AXP) earnings
Friday - Inauguration Day for President-elect Donald Trump

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