Bird watching: Doves may offer policy hints in testimony, meeting minutes. Fed watchers (a title which nowadays seemingly encompasses nearly every market participant) will be listening closely to Ben Bernanke's testimony before the Joint Economic Committee (10 a.m.) in hopes of gleaning some hint as to the future course of monetary policy, even as the Chairman is likely to reveal little in his remarks. Perhaps more interesting will be minutes from the FOMC's latest policy meeting due, as usual, at 2:00 p.m.
A Dimon by any other name… A bid to strip Jamie Dimon of his chairmanship at JPMorgan (NYSE:JPM) failed Tuesday when "only" one in three shareholders voted for a proposal to split the dual role of chairman and CEO. It appears the considerable time expended by the board over the past several weeks lobbying for votes indeed paid dividends (no pun intended) as support for the split was conspicuously weaker this year than last. In the short-term, Dimon has won the battle, but some described Tuesday's vote as a "Pyrrhic victory." Critics say the fallout from the London Whale fiasco (an event cited by some as evidence that an independent chairman is preferable) cost Dimon some coveted political capital and also claim shareholders might have been better served if the effort and attention devoted to preserving his dual role had been spent running the bank instead.
Top Stock News
Sony weighs Loeb spinoff plan. CEO Kazuo Hirai said Wednesday that Sony's (NYSE:SNE) board is considering a proposal by Third Point's Dan Loeb to spin off the company's entertainment group. Shares of SNE rose sharply in U.S. trading Tuesday after reports surfaced that the company is debating the merits of Loeb's plan. Hirai didn't say whether he supported the idea himself, but noted that the company intends to "build positive relations with its major investors," FT said.
Hewlett-Packard hopes to defy skeptics with earnings. Hewlett-Packard (NYSE:HPQ) is set to report Q2 earnings after the closing bell Wednesday and some analysts are not optimistic. While consensus is for EPS of $0.81 on revenue of $28.08B, Evercore's Rob Cihra sees "almost no way" for the company to hit the Street's top line mark and expresses reservations about the plausibility of HPQ's apparent plan to "cut its way to a sustainable turnaround." Deutsche Bank agrees: "Underlying fundamentals at HPQ remain under significant pressure."
NetApp announces measures to boost shareholder value. Bowing to pressure from Elliot Associates, NetApp (NASDAQ:NTAP) said Tuesday evening it has more than doubled its buyback authorization to $3B (with plans to buy aggressively), initiated a $0.15/share dividend (with plans to increase it), and is planning to cut ~900 jobs. Elliot's Jesse Cohn applauded the new measures, calling the steps "positive" and saying they will improve the enterprise storage giant's "capital and cost structure." NTAP also reported FQ4 earnings that were essentially in-line with expectations. The shares rose 3.74% AH.
Microsoft unveils next generation console. Microsoft (NASDAQ:MSFT) unveiled the Xbox One Tuesday, a 3rd-gen console it pitches as "the ultimate all-in-one entertainment system." The device has a rectangular, set-top box-like shape, a slightly bigger controller, a revamped Xbox Live UI, improved app/game loading and switching times, and fresh voice/gesture controls. AMD is widely believed to provide an integrated CPU/GPU for the system.
Saks hires Goldman, explores alternatives: Report. Shares of Saks (NYSE:SKS) added 19% AH to an already impressive 11.3% regular session gain, after the New York Post said the company has hired Goldman Sachs to assist it in exploring strategic alternatives including a possible sale. Earlier Tuesday, SKS reported Q1 revenues that beat expectations.
Lowe's misses, March weak. Unlike competitor Home Depot (NYSE:HD), Lowe's (NYSE:LOW) missed analysts' Q1 consensus estimates on both the top and bottom line as sales fell 0.5% Y/Y and comps decreased 0.7% during the quarter. Exterior categories were impacted by cool temperatures and "greater precipitation" which "delayed [the] spring selling season." March's performance was "particularly soft." FY13 outlook: sales growth of ~4%, comps growth of ~3.5%, EPS of $2.05 against consensus of $2.08. The shares fell -4% premarket.
BP challenges compensation payouts. Since February, BP has stepped-up challenges to compensation awards stemming from the 2010 Gulf oil spill. The company now objects to 9.3% of awards administered by Patrick Juneau who oversees settlement claims, that's up from just 4% earlier in the year. Recently, BP said some claims are becoming increasingly "absurd" and in a court filing says it is now being "ordered to pay hundreds of millions — soon likely to be billions — for fictitious and inflated losses." The company's lawyers are challenging the way Juneau calculates those losses, although they have so far been unsuccessful. If an appeal of a District Court decision upholding Juneau's interpretation is denied, BP says it will be "irreparably harmed."
Top Economic & Other News
BOJ faces rising bond yields. The Bank of Japan elected to steer (largely) clear of what many view as a no-win situation Wednesday when Governor Haruhiko Kuroda didn't use this week's policy meeting statement to jawbone government bonds higher (NYSEARCA:JGBL), although he did pledge flexibility in asset purchases at the post-statement news conference. Surging yields have underscored concerns that the BOJ's purchases could suck liquidity from the bond market, stoking volatility, but rising yields can also be interpreted as a sign investors expect Kuroda will be successful at reflating the Japanese economy. However, acknowledging this is somewhat counterintuitive as "the whole aim of QE is to keep bond yields down," one economist told CNBC, adding that the BOJ is "damned if they do, damned if they don't." Ultimately, the BOJ left monetary policy unchanged, sounded generally optimistic about the prospects for the economy, and noted that some evidence suggests inflation expectations are rising.
Up or down? Bill Dudley doesn't know. NY Fed President Bill Dudley suggested Tuesday that the rumored QE taper may end up being a QE expansion. "Because the outlook is uncertain, I cannot be sure which way — up or down — the next change will be," he said — touché. Ultimately, he is worried about the potential for investor over-reaction to a "normalization" of policy and suggests the FOMC may need to update what it needs to see in order to move in the direction of tightening. Adding his two cents, St. Louis Fed chief James Bullard said QE should continue as it is simply the best option on the table for reviving the still sluggish U.S. economy.
BOE minutes show King still favors QE expansion. Minutes from the Bank of England's latest policy meeting show the committee's vote to keep rates unchanged was unanimous while three out of nine members (including Mervyn King) voted to increase the size of the central bank's asset purchases by £25B. Sterling (NYSEARCA:FXB) moved 0.44% lower against the dollar following the release to a multi-week low.
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In Asia, Japan +1.6% to 15627. Hong Kong -0.45% to 23261. China -0.12% to 2302. India -0.25% to 20062.
In Europe, at midday, London -0.16%. Paris -0.43%. Frankfurt -0.18%.
Futures at 7:00: Dow +0.12%. S&P +0.17%. Nasdaq +0.17%. Crude -0.93% to $95.81. Gold +0.62% to $1386.00.
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