Seeking Alpha
Profile| Send Message|
( followers)  

  • BoA's growing capital shortfall. Bank of America (NYSE:BAC) reportedly needs around $34B in new capital, significantly more than the $5-10B shortfall expected for Citigroup (NYSE:C), while JPMorgan Chase (NYSE:JPM) apparently won't need more capital at all. Last month, CEO Ken Lewis told analysts "we absolutely don't think we need additional capital," but the bank is now considering selling part of its stake in China Construction Bank immediately to raise around $8B. Since the size of the shortfall could exceed what the bank can raise through asset sales or a public share offering, Bank of America could potentially be left with no choice but to convert the government's preferred shares into common stock. For its part, Citigroup is trying to accelerate a brokerage venture with Morgan Stanley (NYSE:MS) to lock in a $5.8B gain. BAC -11.2%, C -1.8% premarket (7:00 ET).
  • Basel may call for larger bank reserves. Independent of the U.S. stress tests, banks worldwide may be asked to raise minimum capital reserves by several percentage points to better position themselves for the next financial crisis. Nout Wellink, chairman of the Basel Committee on Banking Supervision, believes current requirements are 'still not enough' and said the Basel proposal may be completed in the first half of next year.
  • TARP exit guide. U.S. officials will soon lay out guidelines for how banks can repay TARP funds. One key condition will likely be that banks must be able to participate in credit markets without the help of government facilities, such as the FDIC's debt guarantee program. Other repayment conditions are still unclear, as Geithner previously said repayment policies must take into account "the soundness of the entire financial sector." An announcement could come as soon as today.
  • Bernanke is cautiously hopeful. Speaking before Congress, Bernanke said he expects "economic activity to bottom out, then to turn up later this year... Even after a recovery gets under way, the rate of growth of real economic activity is likely to remain below its longer-run potential for a while..." He made a cautious prediction of 2% GDP growth in 2010 and 4% in 2011, under the assumption that financial markets stabilize and strengthen. On the issue of Bank of America's (BAC) silence over its Merrill Lynch acquisition, Bernanke said he "absolutely did not in any way ask Mr. [Ken] Lewis to obscure any disclosures or fail to report information he should be reporting." (Read Bernanke's prepared testimony)
  • Chrysler bankruptcy plan approved. A bankruptcy court approved Chrysler's plan to auction most of its assets by May 27 with an offer from Fiat as the lead bid. The judge also approved a $35M breakup fee for Fiat if it's outbid. However, the judge rejected a claim by Chrysler's lenders that their safety was at risk because of anger over the bankruptcy. The lenders, who had requested secrecy, must reveal their identities today.
  • GM's shareholders wipe-out. General Motors (NYSE:GM) detailed plans to issue up to 60B new shares in a bid to pay off debt to the government, bondholders and UAW union. The move would essentially wipe out the holdings of remaining shareholders, leaving them with just 1% of the equity in a restructured automaker. The unusual plan would need only the approval of the Treasury to proceed, since the government would be the majority shareholder of the new GM. Shares -17.3% premarket (7:00 ET).
  • Fed eyes derivatives regulation. For the first time, the Federal Reserve signaled it plans to break Wall Street's hold over the $684T over-the-counter derivatives market and to increase the market's regulation and transparency. Theo Lubke, the Federal Reserve Bank of New York official responsible for oversight of the market, called it 'simply unacceptable' that the OTC derivatives market 'can be controlled by a handful of large dealers,' and said the lack of transparency 'is not something that can continue.'
  • SEC gets more aggressive. The SEC accused the father-and-son team that managed the Reserve Primary Fund of securities fraud, alleging the two had lied to investors, the fund's board and rating agencies after the flagship fund 'broke the buck' last fall. The civil lawsuit also seeks an order to distribute the fund's remaining $62B of assets to investors. Separately, the SEC brought its first-ever case alleging insider trading in credit default swaps.
  • Aid recipients gained from subprime lenders. A newly released study revealed that 21 of the 25 largest subprime lenders were owned or financially supported by Citigroup (C), Wells Fargo (NYSE:WFC) and other lenders that received U.S. aid. The watchdog group that released the report said it showed "mega-banks that funded the subprime industry were not victims of an unforeseen financial collapse, as they have sometimes portrayed themselves. These banks were deliberate enablers that bankrolled the type of lending that’s now threatening the financial system."
  • Boston Globe reaches union deal. The Boston Globe (NYSE:NYT) reportedly reached a tentative deal with its largest union early this morning, with the union agreeing to a substantial pay cut, unpaid furloughs, and modifications to the lifetime job guarantee provisions that cover nearly 200 employees. The Globe now has the $20M in concessions its parent company demanded a month ago. Details of the negotiations will be released tomorrow.
  • Wal-Mart expands in China. Wal-Mart (NYSE:WMT) said it launched a pilot program to open convenience stores in China, hoping to boost its presence in the fast-growing retail market. The company opened three convenience stores in a south China city in December and will analyze market acceptance and customer preferences before deciding on future plans.
  • Europe retail sales plunge. Euro-area retail sales suffered their largest drop on record in March, falling 4.2% from a year ago, worse than the -2.6% expected. Economists say growing unemployment is crimping spending, and consumer confidence remains near record lows. "This adds to other signs that the recession is still in full swing in the euro zone," economist Jennifer McKeown said. "It is difficult to be very optimistic about the future."
  • More underwater mortgages. U.S. home values continued to fall in Q1, and nearly 22% of homeowners are now underwater on their mortgages. Real estate website Zillow.com reported home values fell 14.2% Y/Y, leading to a $704B drop in value in Q1.
  • Retail sales. Retail chain store sales rose 0.7% from a week ago, ICSC said, and fell 0.8% Y/Y. Sales got a lift from drug stores, department stores, discounters, wholesale clubs, electronic stores and office supply. According to Redbook, chain store sales rose 0.3% in the first four weeks of April, and rose 0.5% Y/Y.
  • Non-mfg contraction moderates. Economic activity in the non-manufacturing sector contracted in April, registering 43.7% on the ISM Index vs. March's 40.8%. This is the seventh month in a row of contraction, though the contraction was at a more moderate pace.
  • Mortgage apps rise. Mortgage applications rose 2% from a week ago, MBA said. The average interest rate on 30-year fixed-rate mortgages inched up to 4.79% from 4.62%.

Earnings: Wednesday Before Open

  • Agrium (NYSE:AGU): Q1 EPS of $0.04 misses by $0.20. Revenue of $1.75B (+58.4%) vs. $1.2B. Issues downside guidance for Q2, sees EPS of $2.00-2.40 vs. $2.77 consensus. (PR)
  • American Capital (NASDAQ:ACAS): Q1 EPS of $0.31 misses by $0.06. Revenue of $195M (-33.2%) vs. $186M. (PR)
  • Aqua America (NYSE:WTR): Q1 EPS of $0.14 in-line. Revenue of $154.5M (+10.9%) vs. $151M. (PR)
  • The Blackstone Group (NYSE:BX): Q1 EPS of -$0.07 beats by $0.03. Revenue of $47M (-31.2%) vs. $64M. Shares +2.2% premarket (8:00 ET). (PR)
  • Boyd Gaming (NYSE:BYD): Q1 EPS of $0.15 beats by $0.07. Revenue of $435M (-7.7%) in-line. Shares +3.9% premarket (7:10 ET). (PR)
  • Devon Energy (NYSE:DVN): Q1 EPS of $0.48 beats by $0.20. Revenue of $2.0B (-31.8%) vs. $1.8B. (PR)
  • Diana Shipping (NYSE:DSX): Q1 EPS of $0.47 beats by $0.01. Revenue of $63M (-20.5%) vs. $61M. (PR)
  • Fortress Investment Group LLC (NYSE:FIG): Q1 EPS of -$0.71 misses by $0.66. Revenue of $122M (-39.1%) vs. $87M. Shares +10.5% premarket (7:20 ET). (PR)
  • Foster Wheeler (NASDAQ:FWLT): Q1 EPS of $0.59 misses by $0.09. Revenue of $1.3B (-29.6%) vs. $1.5B. (PR)
  • Garmin (NASDAQ:GRMN): Q1 EPS of $0.25 misses by $0.17. Revenue of $437M (-34.2%) vs. $532M. Shares -1.8% premarket (7:20 ET). (PR)
  • Marsh & McLennan Companies (NYSE:MMC): Q1 EPS of $0.42 misses by $0.01. Revenue of $2.6B (-13.5%) vs. $2.9B. (PR)
  • Petrohawk Energy (NYSE:HK): Q1 EPS of $0.02 in-line. Revenue of $263.5M (+22.6%) vs. $247M. (PR)
  • Quanta Services (NYSE:PWR): Q1 EPS of $0.11 beats by $0.01. Revenue of $738.5M (-12.5%) vs. $796M. Issues downside EPS guidance for Q2 of $0.14-0.15 vs. $0.22 consensus, sees Q2 revenue of $850-890M. (PR)
  • Quicksilver Resources (NYSE:KWK): Q1 EPS of $0.16 beats by $0.07. Revenue of $186M (+18%) vs. $184M. (PR)
  • R.R. Donnelley & Sons Company (NASDAQ:RRD): Q1 EPS of $0.24 misses by $0.14. Revenue of $2.46B (-18.1%) vs. $2.47B. (PR)
  • Senior Housing Properties Trust (NYSE:SNH): Q1 EPS of $0.44 misses by $0.01. Revenue of $69M (+38.4%) vs. $67M. (PR)
  • TETRA Technologies (NYSE:TTI): Q1 EPS of $0.15 beats by $0.06. Revenue of $195M (-13.3%) vs. $198M. Shares +1.7% premarket (7:45 ET). (PR)
  • Transocean (NYSE:RIG): Q1 EPS of $3.75 beats by $0.24. Revenue of $3.1B (+0.3%) in-line. (PR)
  • Western Refining (NYSE:WNR): Q1 EPS of $0.86 beats by $0.02. Revenue of $1.4B (-46.4%) vs. $3.0B. (PR)

Earnings: Tuesday After Close

  • American Capital Strategies (ACAS): Q1 EPS of $0.31 misses by $0.06. Revenue of $195M (-33.2%) vs. $186M. (PR)
  • ArvinMeritor (ARM): FQ2 EPS of -$0.12 vs. consensus of -$0.68. Revenue of $1.1B (-38.2%) vs. $1.24B. Total exposure to Chrysler: $7M. +10.4% AH. (PR)
  • Atmel (NASDAQ:ATML): Q1 EPS of $0.04 beats by $0.08. Revenue of $271.5M (-34%) vs. $289M. Sees Q2 revenue growth of 1-4% sequentially. Shares -3.4% AH. (PR)
  • Centex (CTX): FQ4 EPS of -$3.26 vs. consensus of -$1.27. Revenue of $823M (-64.4%) vs. $895M. Shares -3.5% AH. (PR)
  • Charles River Laboratories International (NYSE:CRL): Q1 EPS of $0.58 beats by $0.05. Revenue of $301M (-10.7%) in-line. Shares +8.4% AH. (PR)
  • Cephalon (NASDAQ:CEPH): Q1 EPS of $1.47 beats by $0.20. Revenue of $520M (+17.3%) vs. $533M. Shares -2.9% AH. (PR)
  • Disney (NYSE:DIS): FQ2 EPS of $0.43 beats by $0.03. Revenue of $8.09B (-7.2%) in-line. "We had a difficult second quarter due to the weak economy and other factors... At the same time, we remain focused on our core business strategy and believe our creativity, brands and businesses will serve us well as the economy recovers." Shares +4.1% AH. (PR)
  • Electronic Arts (ERTS): FQ4 EPS of -$0.37 beats by $0.06. Revenue of $609M (-33.7%) vs. $632M. Reaffirms full-year guidance. Shares -3.3% AH. (PR)
  • Exco Resources (NYSE:XCO): Q1 EPS of $0.19 beats by $0.02. Revenue of $189M (-43.1%) vs. $279M. Shares flat AH. (PR)
  • Harris (NYSE:HRS): FQ3 EPS of $1.02 beats by $0.02. Revenue of $1.36B (+2.4%) vs. $1.21B. Sees 2010 full-year EPS of $3.10-3.40 vs. $3.92. Shares -8.3% AH. (PR)
  • HCC Insurance (NYSE:HCC): Q1 EPS of $0.73 beats by $0.03. Revenue of $601M vs. $587M. (PR)
  • Helix Energy Solutions (NYSE:HLX): Q1 EPS of $0.50 beats by $0.35. Revenue of $571M (+29.2%) vs. $463M. Shares +9.9% AH. (PR)
  • Kinross Gold (NYSE:KGC): Q1 EPS of $0.11 misses by $0.02. Revenue of $533M (+61.3%) vs. $492M. Margin per ounce of gold a best ever $478. Shares -0.7% AH. (PR)
  • Las Vegas Sands (NYSE:LVS): Q1 EPS of $0.01 beats by $0.03. Revenue of $1.08B (+0%) in-line. Shares -3.9% AH. (PR)
  • Lincoln National (NYSE:LNC): Q1 EPS of $0.66 misses by $0.05. Revenue of $2.25B (-13.4%) vs. $2.54B. Shares +5.5% AH. (PR)
  • Pioneer Natural Resources (NYSE:PXD): Q1 EPS of -$0.13 beats by $0.13. Revenue of $484M (-17.3%) vs. $349M. (PR)
  • Pitney Bowes (NYSE:PBI): Q1 EPS of $0.55 misses by $0.08. Revenue of $1.38B (-12.3%) vs. $1.47B. Sees full-year EPS of $2.40-2.60 vs. $2.63. Shares -5% AH. (PR)
  • Stone Energy (NYSE:SGY): Q1 EPS of -$0.20 misses by $1.00. Revenue of $134M (-11.3%) vs. $132M. Shares -11% AH. (PR)
  • TheStreet.com (TSCM): Q1 EPS of -$0.10 misses by $0.07. Revenue of $90.3M (-25.9%) vs. $90.9M. Shares -0.4% AH. (PR)
  • Titanium Metals (TIE): Q1 EPS of $0.11 beats by $0.02. Revenue of $203M (-30.7%) vs. $239M. Shares flat AH. (PR)
  • True Religion Apparel (NASDAQ:TRLG): Q1 EPS of $0.32 beats by $0.04. Revenue of $63.6M (+19.1%) vs. $58.7M. Reaffirms full-year guidance. Shares +6.7% AH. (PR)
  • UDR Inc. (NYSE:UDR): Q1 FFO of $0.37 beats by $0.04. Sees full-year FFO in-line with consensus. Shares +7.8% AH. (PR)
  • ValueClick (VCLK): Q1 EPS of $0.22 beats by $0.10. Revenue of $135M (-20.2%) vs. $130M. Shares +4.4% AH. (PR)
  • Yamana Gold (NYSE:AUY): Q1 EPS of $0.12 beats by $0.06. Revenue of $224 vs consensus of $231. Shares +2.4% AH. (PR)

Today's Markets

Asia markets were higher Tuesday. In Europe, stocks are up modestly. Futures are in the red, and sit in the middle of their overnight range.

  • Asia: Hang Seng +2.46% to 16,835. Shanghai +0.98% to 2,593. BSE -1.47% to 11,953. Nikkei closed.
  • Europe at midday: London +0.3%. Paris +0.9%. Frankfurt flat.
  • Futures: Dow -0.3% to 8355. S&P -0.6% to 898. Nasdaq -0.4%. Crude +0.5% to $54.09. Gold +0.1% to $905. 30-year Tsy -0.26% to 122-07. Euro flat vs. dollar. Yen +0.6%.

Wednesday's Economic Calendar

Seeking Alpha editor Eli Hoffmann contributed to this post.


Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.

After you finish reading Wall Street BreakfastSeeking Alpha's Market Currentswill keep you current all day long.
Source: Wall Street Breakfast: Must-Know News