- Geithner pushes regulatory overhaul. Testifying before Congress later today, Geithner is expected to ask for large hedge funds, private-equity firms and derivatives markets to be brought under federal supervision for the first time. Under his proposal, the government would be empowered to seize and wind down any financial company large enough to destabilize the banking system. Geithner acknowledged yesterday that public anger over taxpayer-financed financial rescues has created a "broad-based will to change things that people did not want to change in the past." Officials said the Treasury will also call for stronger anti-fraud protection, an elimination of gaps in oversight and closer coordination with international counterparts. Details on those plans will be unveiled in the coming weeks.
- MUFG, Morgan merge units. As speculated, Morgan Stanley (MS) and Mitsubishi UFJ Financial Group (MTU) will merge their Japanese securities businesses to create the country's third-largest brokerage. The two units will be combined into a new venture by March 31 of next year, with the ownership split 60% to Mitsubishi UFJ and the rest to Morgan Stanley. Morgan CEO John Mack said the agreement is "one of many areas of collaboration that we are pursuing with MUFG," and "underscores our strong commitment to Japan."
- Roche to delist Genentech. Roche (OTC:RHHBY) has secured more than 96% of Genentech's (DNA) shares, effectively completing its $46.8B buyout of the biotech company. Remaining holders of Genentech will get $95/share. Roche plans to make Genentech a wholly owned subsidiary as soon as possible and will delist the company from the New York Stock Exchange following the merger.
- More auto aid likely. Obama's auto task force will begin announcing its decisions in the next few days, and looks set to grant more loans with extra strings attached. Interviews with members of the task force suggest the White House doesn't want General Motors (GM) or Chrysler to slip into bankruptcy protection. Instead, the task force will likely say it sees a viable future for both firms, but only if there are sacrifices made by management, unions and GM's bondholders. Though the task force will likely agree to grant more aid, it may not disburse the funds immediately, choosing instead to hold on to the money as leverage. Separately, a document from the Original Equipment Suppliers Association suggests Citigroup (C) may become the 'third-party servicer' chosen to supply $5B in aid to auto-parts suppliers.
- BoA folds Premier into Merrill unit. Bank of America (BAC) will fold its Premier Banking unit into Merrill Lynch Global Wealth Management and fire several hundred workers. The bank once hailed the division as a potential driver of growth and profit, but now says the shift will better position BoA as a wealth manager for 'mass affluent' clients. As a result, Premier's client managers will become 'banking specialists' and assist the firm's 18,000 financial advisers, most of whom came from Merrill, with recommendations on banking products.
- BoA faces lawsuit. Five public pension funds are seeking lead status in a class-action lawsuit against Bank of America (BAC). The funds allege that BoA made 'untrue statements' in the run-up to its Merrill Lynch purchase and withheld material information from shareholders. The five pension funds claim to have lost $274M on their BoA investments between July 21, 2008 and Jan. 20, 2009.
- Geithner goof briefly hits dollar. Geithner briefly caused a sharp drop in the dollar when he appeared willing to entertain China's call for an international currency to replace the dollar as the world's standard. Answering questions, Geithner said he was 'quite open' to the idea, immediately sending the euro up over 1% against the dollar. The dollar also fell against the yen. Later asked to clarify his view, Geithner said "the dollar remains the world's dominant reserve currency. I think that's likely to continue for a long period of time." The clarified remarks calmed markets, and by late Wednesday the dollar was just modestly weaker against the euro and yen.
- Goldman holds onto ICBC shares. Goldman Sachs (GS) pledged to keep 80% of its ICBC shares, sending the Chinese bank up 15%. Goldman's lock-up agreement on the shares will be extended one year, to April 28, 2010.
- IBM shifting jobs abroad. Sources say IBM (IBM) plans to lay off around 5,000 U.S. employees and transfer many of the jobs to India. The cuts will target the company's global business-services unit, and are part of IBM's efforts to steadily build up its foreign workforce. Foreign workers accounted for 71% of IBM's employees at the start of the year, up from 65% in 2006.
- Durable goods rise. Durable Goods Orders rose 3.4% in February, while economists were expecting -2.5%. January's orders were revised to -7.3% from -5.2%, which accounts for some of the difference. Inventories -0.9% after -1.1% in January.
- Home sales are up. New home sales in February rose 4.7% to an annualized 337,000, better than the 315K consensus. January was revised to 322K from 309K. The Median price was $200,900. At the current sales rate, there's 12.2 months of supply.
Earnings: Thursday Before Open
- Dr Pepper Snapple Group (DPS): Q4 EPS of $0.39 beats by $0.02. Revenue of $1.4B (-0.9%) vs. $1.3B. (PR)
Earnings: Wednesday After Close
- Paychex (PAYX): FQ3 EPS of $0.36 in-line. Revenue of $529M (-0.7%) vs. $537M. (PR)
- Red Hat (RHT): Q4 EPS of $0.22 beats by $0.02. Revenue of $166M (+17.5%) vs. $167M. (PR)
- SAIC (SAI): Q4 EPS of $0.30 beats by $0.01. Revenue of $2.52B (+8%) in-line. (PR)
- Asian markets posted strong gains. Nikkei +1.8% to 8,636.33. Hang Seng +3.6% to 14,108.98. Shanghai +3.1% to 2,361.70. BSE +3.5% to 10,003.10.
- In Europe at midday, London +0.2%. Paris -0.2%. Frankfurt +0.5%.
- U.S. futures: Dow +0.8%. S&P +0.9%. Nasdaq +1.1%. Crude +1.1% to $53.36. Gold -0.1% to $934.50.
Thursday's Economic Calendar
- 5:00 Fed's Lockhart joins panel on 'Food, Water, Inflation and Monetary Policy'
8:30 GDP Q4 (final)
8:30 Jobless Claims
8:30 Corporate Profits
10:00 Geithner testifies on financial regulation
10:30 EIA Natural Gas Report
12:00 PM Fed's Fisher speaks on current economic issues
12:40 PM Fed's Lacker speaks on the economic outlook
1:00 PM Fed's Stern discusses 'too big to fail'
4:30 PM Money Supply
- Notable earnings before Thursday's open: BBY, CAG, DPS, GME
- Notable earnings after Thursday's close: ACN, ERJ, TIBX
Seeking Alpha editor Eli Hoffmann contributed to this post.
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