Wall Street Breakfast: Must-Know News 19 comments
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- Chrysler's court wins. The Supreme Court cleared the way for a group led by Fiat to buy most of Chrysler's assets, rejecting the appeal requests of a group of creditors. The Court said creditors hadn't met the legal standard for emergency intervention to block the transaction. Separately, Chrysler won bankruptcy court approval to drop 789 dealership agreements when the judge rejected dealers' claims that their experience and sales figures would be an asset to the reorganized company.
- Ten to exit TARP trap. As expected, ten banks were approved to repay TARP, including JPMorgan Chase (JPM) and Goldman Sachs (GS). The Treasury didn't name the banks, but all of them quickly stepped forward to say they were cleared to return the money. The other eight approved banks: American Express (AXP), Bank of New York Mellon (BK), BB&T Corp (BBT), Capital One Financial (COF), Morgan Stanley (MS), Northern Trust (NTRS), State Street (STT) and U.S. Bancorp (USB). All ten will soon be free of federal restrictions that included curbs on executive pay, dividend payments, hiring practices and spending on conferences and retreats. Wells Fargo (WFC) said it would like to repay TARP "at the earliest practical date" but had not yet applied for permission to do so.
- New pay restrictions. The White House is preparing to unveil new restrictions on executive pay for firms receiving government aid, and to appoint a 'pay czar' with the power to reject compensation plans. However, it is dropping plans to cap salaries at firms receiving federal aid because they are already subject to congressionally imposed limits on bonuses. The White House will also seek new powers for the SEC to force all financial firms to give shareholders a vote on executive pay packages. Geithner will meet with SEC's Schapiro, the Federal Reserve's Daniel Tarullo and other compensation experts later today to discuss bank pay, and the new rules will be outlined sometime this week.
- House to subpoena Fed over BoA/Merrill. A House of Representatives Committee plans to subpoena the Federal Reserve to gain access to documents regarding the Fed's role in Bank of America's (BAC) takeover of Merrill Lynch. In testimony prepared for a hearing later this week, Bank of America CEO Ken Lewis said he wanted to declare the size of Merrill's losses when he first learned about them but "Treasury and Federal Reserve representatives asked us to delay any such action, and expressed significant concerns about the systemic consequences."
- Ford asks gov'ts for money. Ford (F) has avoided a U.S. bailout, but is still trying to secure hundreds of millions of dollars in direct loans and loan guarantees from governments around the world. The company says the money is to aid its credit arm and comply with environmental regulations, and stresses "industry-government partnerships to drive green investments and free up consumer credit" shouldn't be confused with emergency bailouts.
- Cuomo targets mortgage mod firms. New York Attorney General Andrew Cuomo is suing American Modification Agency, one of New York's largest loan modification firms, and has subpoenaed information from 14 similar companies as part of a nationwide investigation. "The entire industry is a scam, in my opinion," Cuomo said. He accused American Modification Agency of charging upfront fees in violation of state law and falsely promoting a 90-100% success rate in mortgage modifications.
- Tobacco law poised for approval. The Senate is set to approve legislation today putting the tobacco industry under the regulation of the FDA, following the House's approval of a similar bill in April. The legislation comes as good news to dominant industry player Philip Morris USA (MO) and its Marlboro cigarettes because it includes restrictions on advertising and packaging that will make it difficult for other brands to gain attention. Smaller firms like Lorillard (LO) and Reynolds American (RAI) have cried foul, with Lorillard dubbing the bill "the Marlboro Monopoly Act."
- DoJ steps up Google scrutiny. The Justice Department sent formal demands to Google (GOOG) and book publishers seeking information about a deal that would let Google make millions of books available online. The demands are the strongest sign yet that DoJ will try to force a renegotiation of the settlement, or block the deal altogether.
- New GM's new chairman. Edward Whitacre, former chairman and CEO of AT&T, will become chairman of the restructured GM later this summer. Sources say Whitacre was the first choice of both GM and the Treasury.
- E*Trade looks for aid. E*Trade Financial (ETFC) is working with hedge-fund firm Citadel Investment Group, its largest shareholder, to bolster its financial position. Citadel CEO Kenneth Griffin is also joining the finance and risk-oversight committee of E*Trade's board, leading some analysts to suggest Citadel, which committed $1.75B to E*Trade in late 2007, will soon invest more money in the struggling firm.
- Retail sales. Chain store sales fell 4.3% in the first week of June vs. last month, Redbook reported, as Wal-Mart (WMT) is no longer included in the readings. Economists expected a 4.1% fall. According to ICSC, weekly sales were up 0.2% vs. last week.
- Mortgage apps fall. Mortgage applications fell 7.2% last week, MBA reported. The average interest rate on 30-year fixed-rate mortgages rose to 5.57% from 5.25%.
Earnings: Tuesday After Close
- NCI Building Systems (NCS): FQ2 EPS of -$0.37 misses by $0.01. Revenue of $225M (-46%) vs. $255M. "To date, we have not seen any indication of a pick-up in demand... While there is some anecdotal evidence of increased activity due to seasonal factors, there is no discernible trend to report." (PR)
- Sina (SINA): Q1 EPS of $0.23 beats by $0.01. Revenue of $74M (+3.5%) vs. $75M. (PR)
Today's Markets
Markets are buoyant this morning, with Asia locking in solid gains and European markets and U.S. futures following suit.
- In Asia, Nikkei +2.1% to 9,991. Hang Seng +4% to 18,786. Shanghai +1% to 2,816. BSE +2.25% to 15,467.
- In Europe at midday, London +2.2%. Paris +2.2%. Frankfurt +2.5%.
- U.S. futures: Dow +1.4%. S&P +1.6%. Nasdaq +1.1%. Crude +1.9% to $71.34. Gold +0.8% to $962.60.
Wednesday's Economic Calendar
- 7:00 MBA Mortgage Applications
8:30 International Trade
9:30 Fed's Evans speaks on the economic crisis
10:00 Quarterly Services Survey
10:30 EIA Petroleum Status
2:00 PM Fed's Beige Book
2:00 PM Treasury Budget
Seeking Alpha editor Eli Hoffmann contributed to this post.
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This article has 19 comments:
I fear that this is simply another milestone in the road to the destruction of our nations financial well being and moral standing.
Well, TARP will be paid back as the banks and their friends managed to ramp their stock prices enough to sell lots of new stock at exhorbitant prices. A victory for some, but not for the general population, who continue to lose homes, jobs and pensions. Still, what does Obama and his government, the bankers/financiers and all their cronies care. They'll be ok whatever happens.
I think it's doubled in the last 120 days...
He should just change his screen name to POTMAGOOG.
On Jun 10 08:52 AM AndrewBaker wrote:
> Wonder if the blogger above has been on here under another name?
>
>
> Well, TARP will be paid back as the banks and their friends managed
> to ramp their stock prices enough to sell lots of new stock at exhorbitant
> prices. A victory for some, but not for the general population, who
> continue to lose homes, jobs and pensions. Still, what does Obama
> and his government, the bankers/financiers and all their cronies
> care. They'll be ok whatever happens.
On Jun 10 09:08 AM Gravity404 wrote:
> How many "Czars" do we have now?
>
> I think it's doubled in the last 120 days...
The government has done exactly what the subprime lenders did - make loans ( and worse, guarantees) without even checking to determine whether the borrowers can pay it back.
Japan redux. How many lost decades will it cost US ???
This is, of course, the promise Rham Emmanuel made in private when he thought there were no mikes around. He promised that if elected the new administration would appoint new czars for every part of the economy and private sector to control it.
And so, here it is.
Treasury yields going up, China is selling and buying gold.
Inflation on its way.
Kelo decision = you don't own anything
Obama administration = government/corporate ownership and collusion at the expense of citizens and investors.
Higher taxes, inflation, more foreclosures and defaults.
Not the time to be speculating on equities.
Jamie Dimon planted "moles" in Wamu??? JPMorgan committed corporate fraud???
www.kccllc.net/documen...
Wamu's claims against JPMorgan/Chase;
wmish.com/doc/gov/0603...
wamustory.com/
wamuqd.com/
www.wamu-shareholders-...
wamuequity.org/history...
The use of eminent domain has also been around ever since the beginning of the country. I don't believe eminent domain has been used by the administration. What they have used is the power of the purse and public opinion to pressure creditors into agreeing to less favorable terms than they might receive in a bankruptcy court. This is hardly new, either. Prosecutors routinely pressure defendants into accepting plea bargains rather than chancing a court decision.
The troubling expansion of eminent domain into the area of contracts I belive has taken place over the past 10 years, but it has nothing to do with TARP, TALF, GM, Chrysler, AIG, or any other of the federal interventions into the economy recently.
Where I first heard of eminent domain in contract law was a case about 5 years ago where a mall developer wanted to void specific clauses in tenant's leases in order to proceed with expansion plans. The local government sided with the developer, and the courts upheld the contract modifications. These abominable events happened before Obama was a national figure and not in Illinois.
On Jun 10 08:53 AM robert.b.ferguson wrote:
> doubleguns: Greetings. I fear you are correct. There is a disturbing
> pattern emerging of Uncle sugar picking winners and loosers. They
> apearently can decide which laws apply to whom as well looking at
> the tobacco and google decissions. The cost of borrowing money has
> just gone up due to increased risk in the corporate bond market.
> There will be multiple unforseen and unintended consequences from
> this none of them will be good. I'm cashing in my bonds before team
> Obama comes for them. How long until the IRAs and 401K accounts are
> nationalized in the name of the greater good. Emminant domain now
> means no private property rights at all. Buy gold and bury it if
> you still have a yard to bury it in.
This guy is destroying this country all he cares about is votes. Thats the reason GM got handout after handout, to protect the union and their workers that were forced to vote for him. The same union that has detroyed the company. He's doing the same thing with this country. Rewarding and protecting the people who make no contribution to this country and stiffing the ones that have build it.
On Jun 10 02:28 PM ScroogeMcduck wrote:
> IMPEACH OBAMA!
> Thats the reason GM got handout after handout, to protect the union
> and their workers that were forced to vote for him.
On Jun 10 04:01 PM grh1212 wrote:
> You need to lay off the coffee or mind altering drugs you may consume.
> I have been a member of two unions, one of them the UAW while i worked
> on the GM assembly line in Torrance, CA - Buicks, Oldsmobiles, and
> Pontiacs in summer of 1955. Paid good money. Nobody ever made me
> vote for anyone. Ever hear of the secret ballot? It's a US tradition.
> Cheers to all.