- BofA looks to repay TARP this year. After raising $13.5B in a share sale this week, Bank of America (NYSE:BAC) plans to pay back its $45B in TARP loans by year-end, much earlier than many expected. BofA has already raised more than half of the $34B capital shortfall it needs to cover before the Treasury will allow it to exit TARP; it plans to raise the rest through sales of non-core assets and by converting preferred shares.
- S&P demotes U.K. S&P downgraded the U.K. economy to Negative from Stable, a move that embarrassed the British Treasury and sent sterling reeling. S&P worries the government debt burden could approach 100% of GDP and remain there for some time. Yesterday, IMF concluded its week-long stay in the U.K. by issuing its own blistering report, saying more banks may still be nationalized as "further shocks will lead to an erosion of capital buffers."
- Feds to inject another $7B+ into GMAC. The Treasury is poised to inject another $7B into GMAC, and may invest another $7B over time, a move which could give the government a majority stake in the car lender and its half-parent GM (NYSE:GM). Earlier this month, stress-test results pegged GMAC's capital shortfall at $11.5B. What began last December as a $20B batch of emergency loans to the auto industry now looks likely to balloon well beyond $50B, and could approach $100B by the end of 2009.
- Fed mulled larger debt buyback. Some officials favored increasing the Fed's $300B program to buy U.S. Treasurys in order to keep interest rates low and capital markets well oiled, minutes from the FOMC's April 28-29 meeting released yesterday showed. The Fed also lowered its outlook for this year (-1.3% to -2% vs. -0.5% to -1.3%) and next, saying GDP would contract more sharply (9.2% to 9.6% vs. 8.5% to 8.8%) and unemployment would be worse than its January projections. The thought of increasing the Treasury buyback plan - which Pimco's Bill Gross thinks is inevitable - sent Treasury futures sharply higher, with yields on the 10-year dropping to 2.5% from 3% earlier in the day.
- Greenspan bearish on banks. Despite the recent drop in borrowing costs, Former Fed chief Alan Greenspan says we're not out in the clear, and worries a lack of capital at banks may choke any economic recovery. Greenspan thinks recent stress tests underestimated banks' capital needs: "There is still a very large unfunded capital requirement in the commercial banking system in the United States and that's got to be funded," he said yesterday, and noted the mortgage crisis will not abate until home prices bottom.
- Geithner sees healing. Testifying before the Senate Banking Committee yesterday, Treasury chief Tim Geithner outlined to lawmakers how TARP money has been allocated and how much is left (see table), and said banks have raised about $56B following the stress tests. But some economists are worried TARP repayments are not the beginning of the end of government crutches, but rather the end of the beginning. Geithner says he sees signs of healing in the financial system, but warned it's still too early to be thinking about an exit. In the Q&A, Democrats called out the Treasury for not being firm enough with aid recipients, while Republicans argued recent steps have become too intrusive. (read Geithner's prepared comments)
- Sony slashes suppliers. In another ominous sign things may not be as rosy as hoped for the tech sector, Sony (NYSE:SNE) said it will halve its parts suppliers to slash buying costs by $5.3B, or about 20%. Sony will reduce equipment suppliers to about 1,200. On Tuesday, Hewlett-Packard (NYSE:HPQ) surprised analysts with hefty layoffs and a downbeat outlook.
- Google Times, not. Google (NASDAQ:GOOG) did toy with the idea of buying newspapers, and of using its charitable arm to prop up papers seeking non-profit status, but ultimately decided against both, CEO Eric Schmidt says, responding to speculation Google might look to save New York Times (NYSE:NYT) or others. In an interview with the FT, Schmidt says Google is "trying to avoid crossing the line" between technology and content, but that it's working with Washington Post (WPO) and others to help them improve their online offerings.
Earnings: Before Open
- Barnes & Noble (NYSE:BKS): Q1 EPS of -$0.04 beats by $0.11. Revenue of $1.1B (-4.4%) in-line. Sees Q2 EPS of $0.05-0.15 vs. $0.03 consensus. Sees full-year EPS of $1.10-1.40 vs. $1.07. (PR)
- Bon-Ton Stores (NASDAQ:BONT): Q1 EPS of -$2.67 beats by $0.77. Revenue of $644M (-8%) vs. $1.05B. Reaffirms full-year guidance. (PR)
- Brocade Communications Systems (NASDAQ:BRCD): FQ2 EPS of $0.11 beats by $0.02. Revenue of $506M (+42.7%) vs. $476M. (PR)
- Buckle (NYSE:BKE): Q1 EPS of $0.58 beats by $0.08. Revenue of $200M (+24.6%) vs. $195M. (PR)
- Children's Place (NASDAQ:PLCE): Q1 EPS of $0.80 beats by $0.05. Revenue of $402M (+0.4%) in-line. Comps +1%. (PR)
- GameStop (NYSE:GME): Q1 EPS of $0.42 in-line. Revenue of $1.98B (+9.2%) in-line. Sees Q2 EPS of $0.28-0.33 vs. $0.40 consensus. New software sales -2.8%; used products +31.9%, "illustrating that value is becoming more important to our customers." Shares -9.9% premarket. (PR)
- Hormel Foods (NYSE:HRL): Q1 EPS of $0.59 beats by $0.09. Revenue of $1.6B vs. $1.68B. Sees full-year EPS at upper end of $2.15-2.25 vs. consensus of $0.24. Says consumers seek value in retail channels while foodservice sales remain soft. (PR)
- MF Global (MF): FQ4 EPS of $0.04 misses by $0.04. Revenue of $257M (-37.1%) vs. $302M. (PR)
- Navios Maritime (NYSE:NM): Q1 EPS of $0.12 beats by $0.03. Revenue of $147M (+56.5%) vs. $139M. (PR)
- New York & Company (NYSE:NWY): Q1 EPS of -$0.08 in-line. Revenue of $233M (-13.8%) vs. $240M. Comps -15%. Sees comps down similarly in Q2. (PR)
- Ross Stores (NASDAQ:ROST): Q1 EPS of $0.72 in-line. Revenue of $1.69B (+8.7%) in-line. Sees Q2 EPS of $0.60-$0.63 vs. $0.54 consensus, and full-year EPS of $2.62-$2.72 vs. $2.54. Shares +3.9% premarket. (PR)
- Stage Stores (NYSE:SSI): Q1 EPS of $0.02 beats by $0.01. Revenue of $334M (+5.6%) in-line. Sees Q2 EPS of $0.20-0.27 vs. $0.09. (PR)
- Stein Mart (NASDAQ:SMRT): Q1 EPS of $0.38 beats by $0.22. Revenue of $320M (-9.2%) vs. $316M. "Despite a very difficult sales environment, first quarter earnings improved due to tightly controlled inventories that enhanced merchandise margins, and significant expense reductions." (PR)
- Suntech Power (NYSE:STP): Q1 EPS of $0.01 vs. consensus of -$0.06. Revenue of $316M (-27.4%) vs. $351M. (PR)
- Tech Data (NASDAQ:TECD): Q1 EPS of $0.63 beats by $0.29. Revenue of $4.99B (-17.7%) in-line. Gross margin 5.28% vs. 4.86% a year ago. Sees sales down in Q2 due to decline in IT spending and strength of dollar. (PR)
- Toro Company (NYSE:TTC): FQ2 EPS of $1.00 beats by $0.10. Revenue of $500M (-21.7%) vs. $508M. Sees full-year EPS in line, and revenue down 18%. Shares +0.75% premarket. (PR)
Earnings: Wednesday After Close
- Advance Auto Parts (NYSE:AAP): Q1 EPS of $1.02 beats by $0.10. Revenue of $1.7B (+10.3%) vs. $1.6B. (PR)
- Computer Sciences (NYSE:CSC): FQ4 EPS of $1.53 beats by $0.06. Revenue of $4.1B (-8.3%) vs. $4.2B. (PR)
- Gymboree (NASDAQ:GYMB): Q1 EPS of $0.74 beats by $0.03. Revenue of $228M (-4.6%) vs. $233M. (PR)
- Hot Topic (NASDAQ:HOTT): Q1 EPS of $0.03 beats by $0.01. Revenue of $175M (+10.1%) in-line. (PR)
- Intuit (NASDAQ:INTU): FQ3 EPS of $1.68 beats by $0.07. Revenue of $1.4B (+9.2%) in-line. Issues in-line guidance for FY '09, sees EPS of $1.78-1.82, revenue of $3.155-3.185B. (PR)
- Limited Brands (LTD): Q1 EPS of $0.01 beats by $0.04. Revenue of $1.7B (-10.4%) in-line. Issues in-line guidance for Q2, sees EPS of $0.11-0.16. Sees FY '10 EPS of $0.67-0.87 vs $0.74 consensus. (PR)
- NetApp (NASDAQ:NTAP): FQ4 EPS of $0.31 beats by $0.08. Revenue of $880M (-6.2%) vs. $856M. (PR)
- PetSmart (NASDAQ:PETM): Q1 EPS of $0.37 beats by $0.07. Revenue of $1.3B (+9.4%) in-line. (PR)
- Synopsys (NASDAQ:SNPS): FQ2 EPS of $0.45 beats by $0.05. Revenue of $337M (+3.8%) vs. $336M. (PR)
Overseas markets moved lower Thursday after U.S. stocks sold off at the end of Wednesday's session. Futures have followed suit.
- Asia: Nikkei -0.86% to 9,264. Hang Seng -1.58% to 17,199. Shanghai -1.54% to 2,611. BSE -2.31% to 13,737.
- Europe at midday: London -2.1%. Paris -1.5%. Frankfurt -1.5%.
- Futures: Dow -0.6% to 8348. S&P -0.6% to 894. Nasdaq -0.6%. Crude -1.9% to $60.87. Gold +0.3% to $940. Treasurys are flat. Euro +0.1% vs. dollar. Yen -0.2%. Pound -0.7%.
Thursday's Economic Calendar
8:30 Jobless Claims
10:00 Leading Indicators
10:00 Philly Fed Business Outlook
10:00 Geithner testifies before Subcommittee on Financial Services
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
7:00 PM Fed's Plosser speaks on the economic outlook
7:00 PM Fed's Rosengren speaks
- Notable earnings before Thursday's open: BKE, BKS, BONT, PLCE, GME, HRL, MF, NM, NWY, PDCO, ROST, SOL, SSI, SMRT, STP, TECD, TTC
- Notable earnings after Thursday's close: ARO, ALKS, ARUN, ADSK, BRCD, CRM, DBRN, EXM, FL, GPS, LDK, PSUN, ZUMZ
Seeking Alpha editor Rachael Granby contributed to this post.
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