Wall Street Breakfast: Must-Know News

• Bush, Obama ask for TARP's part II. Pres. Bush has requested the second half of TARP funds from Congress, after being asked to do so by Obama. Worried about a 'still fragile' economy, Obama felt "it would be irresponsible for me... to enter into the administration without any potential ammunition should there be some sort of emergency or weakening of the financial system." Obama's team is already working to satisfy the concerns of lawmakers on the use of TARP funds, as many Republicans and some Democrats are expected to oppose releasing the money. A vote could come as early as Friday.
• Satyam shakedown continues. After gaining nearly 45% in India yesterday on hopes of a government rescue, Satyam (SAY) shares are falling again as reality sinks in (-9.2% as of 5:30 ET). The new government-appointed board acknowledged it would take time to get the company back on track, and said one of its top priorities is appointing an independent accountant. In the meantime, non-Indian computer-service providers like IBM (IBM) and Accenture (ACN) are in a stronger position to pick up new contracts as investors worry about India's corporate governance.
• Elan considers merger, sale. Drugmaker Elan (ELN) has hired Citigroup Global Markets (C) to review the company's strategic options, including a possible merger or sale. Elan's shares lost 72% last year on concerns about its ability to pay back $1.15B in debt and the safety of its Tysabri multiple sclerosis drug, and then gained over 25% last week on rumors, later proved to be untrue, that the company was in talks with Pfizer (PFE). Shares +10.6% in Ireland (5:30 ET).
• Spain opens Madoff probe. Spanish prosecutors are investigating how Banco Santander (STD), Europe's second-largest bank, managed to lose €2.3B ($3.1B) of its clients' money by investing with Madoff. Two-thirds of the losses came from the Latin America, a market where Santander does almost a third of its business and wants to expand. Santander itself lost just €17M. Officials are trying to find out what exactly was the nature of Santander's relationship with Madoff's firm, and when the bank first realized there were any problems with the investments. Until this scandal, Santander had provided a rare beacon of stability in otherwise tumultuous financial markets.
• RBS cashing out of China? Royal Bank of Scotland (RBS) is said to be selling a stake in Bank of China Ltd. With 10.8B shares, RBS is Bank of China's second largest shareholder. The move would follow the leads of UBS (UBS), which cashed out its 1.6% stake in Bank of China at the end of December, and Bank of America (BAC), which last week sold $2.8B of shares in China Construction Bank (previously I, II). Details of the sale could be announced as early as today.
• AIG asset sales. Sources say AIG (AIG) is in talks to sell its Canadian life insurance unit to Bank of Montreal (BMO). An agreement could be reached as soon as today.
• Infosys sees record profits. Infosys (INFY), India’s second-largest computer-services provider, posted record Q3 profits as more companies turned to outsourcing to cut their costs. The company stands to win additional orders as clients defect from rivals Satyam (SAY) and Wipro (WIT). Net income rose 33%, the fastest rate in six quarters, reaching 16.4B rupees ($336M) vs. 15.4B consensus. (more details below)
• U.K. reaches for bailout #2. The U.K. government is getting ready to roll out another giant bailout plan totaling billions of pounds, aimed at saving companies and jobs. Sources say the plan could be announced in the next ten days, or possibly as soon as tomorrow. The U.K. economic outlook has continued to deteriorate rapidly, despite a £500B ($758B) bailout package already in place.
• German stimulus grows. In its second attempt to address Germany's worst recession since World War II, Angela Merkel's coalition agreed last night to spend an extra €50B ($66B) over two years to help the economy. The plan includes measures such as lowering health insurance payments, investing in schools and roads, reducing the lowest income-tax rate and €100 checks for each child. "If we’d failed to do what we did last night, we’d have risked the collapse of parts of our industrial base...," said one lawmaker. "We’re in an exceptional situation."

Earnings: Tuesday Before Open

• Infosys Technologies (INFY): Q3 EPS of $0.56 beats by $0.01. Revenue of $1.17B (+8.0%) vs. $1.18B. (PR)

Earnings: Monday After Close

• Alcoa (AA): Q4 EPS of -$0.28 misses by $0.18. Revenue of $5.69B (-19.1%) vs. $5.26B. (PR)

Today's Markets

• Asia markets closed down on a bleak earnings outlook. Nikkei -4.8% to 8,414. Hang Seng -2.2% to 13,668. Shanghai -1.95% to 1,863. BSE -0.4% to 9,071.
• In Europe at midday, London -2.2%. Paris -2.5%. Frankfurt -2.2%.
• U.S. futures: Dow -0.8%. S&P -0.9%. Nasdaq -1.0%. Crude -2.0% to $36.83. Gold -0.2% to $819.30.

Tuesday's Economic Calendar

• 7:45 ICSC Retail Store Sales
  8:00 Bernanke speaks on the crisis and policy response
  8:30 International Trade
  8:55 Redbook
  2:00 PM Treasury Budget
  5:00 PM ABC Consumer Confidence Index
  5:00 PM Fed's Lacker speaks on the economic outlook
• Notable earnings before Tuesday's open: INFY

Seeking Alpha editor Eli Hoffmann contributed to this post.

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Comments

[axelrod608:]

>> "Bush, Obama ask for TARP's part II." >> If there was any doubt that the "change" in DC will be nothing more than names on the doors and desks, here's the evidence.

While the vast majority of Americans are angry, no, FURIOUS about the many bailout programs, they will be ignored The government of by, and for big business and special interests will continue intact. The government of, by and for the people that the voters thought they were getting back was just an illusion.

Corporate welfare is job one in DC, just as it has been for decades. "Too big to fail" is their mantra.

It makes one wonder. If the voters can't spot the lies in a 3 year campaign, I guess they deserve the deception.

The proles will get another $5 or $10 in their paychecks and the bloated, ineptly managed megabusinesses will get $Billions each, totalling $Trillions.

Yes, letting the dinosaurs fail would be painful. Better them in bankruptcy than the entire nation.

Jan 13 10:04 AM

[notsosmart:]

its too late.the sheeples will continue to get fleeced as the scammers,scoundrels,&a... crooks play musical chairs & cover each other for the fraud & mismanagement.

Jan 13 11:13 AM

[bobbobwhite:]

The military/industrial complex warned of by Eisenhower has, in 50 short years, morphed into the gov't/military/industr... complex of today. This unchecked and unbalanced triad runs everything and everyone in this country for its own benefit, with little to no concern for "we, the people".

As gov't public service for a term or two for previously accomplished professionals has also morphed into lifetime poiltical carreers for nearly all gov't elected officials, our gov't has truly changed from being one of short term service of public good to one of career deal making, power building, empire building, enemy busting, personal enriching, and doing anything and everything it takes to keep these lifetime entitlements coming in uninterrrupted until far after typical retirement age for the people they supposedly serve.

If we, the sheep, continue to allow this practice without some form of revoulution to correct it, it will continue to progress to the point where these types don't even try to conceal their selfish purposes, as thereby become as overt and even more harmful than terrorists, the mafia, drug lords, and street gangs combined. Do the names of Hitler, Stalin, and Hussein bring any fear to mind? Are our "elected officials" to this point already?

Jan 13 11:24 AM

[vinny chase:]

Great site for investing investorsunderground.c...

Jan 13 12:20 PM

[bbowen7:]

Lots of political nihilism for just a week before the messiah takes over. I would note that over 90% of incumbents in congress were reelected despite an approval rating for the institution of less than 15%. At least the 8 year drumbeat of NYT criticism of President Bush will shortly be over .

Jan 13 12:31 PM

[xmichaelx:]

On Jan 13 12:31 PM Right in San Francisco wrote:

> I would note that over 90% of incumbents in congress were reelected
> despite an approval rating for the institution of less than 15%.

As I pointed out yesterday (don't you read your own threads?), the number isn't "over 90%" -- it's 86%, and the number of eligible incumbents really wasn't that large, comparatively.

The 2nd Repub bloodbath in 2 elections can easily be read as a vote for Congressional sea change. (Not that it will happen; just that it's the clear will of the people.)

I look forward to your post tomorrow, in hopes that it will be identical to the one from today and yesterday. At this point, you're one step away from notsosmart, who consistently uses the 6th-grade term "sheeples" as though this were Fark or 4Chan rather than Seeking Alpha.

Jan 13 01:19 PM