Wall Street Breakfast: Must-Know News 18 comments
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- Sprint dashes into Ericsson deal. After watching its subscriber base slip, Sprint Nextel (S) signed a seven-year, $5B deal with Ericsson (ERIC) in which Sprint will turn over day-to-day operations of its network to Ericsson in order to focus on developing new products and improving customer retention. Sprint will move about 6,000 workers to Ericsson sometime in Q3.
- China continues push against dollar. China launched its highest-profile criticism of the dollar, raising the issue in talks with G-8 leaders. Without directly naming the dollar, Chinese state councillor Dai Bingguo unequivocally called for the world to diversify its reserve system and to aim for relatively stable exchange rates between leading currencies. The remarks caused concern among many of the G-8 leaders present, who fear that even discussion of the issue could destabilize markets and undercut an economic recovery.
- Treasury sets warrant prices too high... too low. The Treasury let 11 smaller banks repurchase stock warrants from the government at just 66% of their market value, essentially giving away $10M of taxpayer profits, said a government watchdog. If the Treasury accepts similar warrant valuations from other bailed out banks, the government could lose as much as $2.1B. Meanwhile, JPMorgan Chase (JPM) and several other large banks are complaining that the Treasury is demanding too high a price on the warrants and has rejected most valuation proposals from banks. JPMorgan has therefore waived its right to buy the warrants, which will now be auctioned by the Treasury into the public market.
- From Old GM to New GM in 40 days. General Motors is on track to exit bankruptcy protection today, after a speedy 40 days in bankruptcy court. Taxpayers will own 60.8% of the 'new GM,' worth between $63B and $73B. GM will hold a press conference at 9am to discuss its plans going forward.
- Geithner: Time to curb derivatives. Testifying in Congress later today, Geithner will urge lawmakers to rein in the $592T derivatives market with new 'difficult to evade' laws. According to his prepared testimony, the complexity of over-the-counter derivatives allowed firms to take on too much risk, causing a 'very damaging wave of deleveraging' that compounded the global credit crisis. Geithner wants to see standardized contracts move onto exchanges and regulate all derivatives dealers. (Watch Geithner testify at 10:00am)
- UBS defiant ahead of court date. Continuing the recent escalation between the U.S. government, Swiss officials and UBS (UBS), UBS CEO Oswald Grubel sent a memo to top executives saying the bank could not and would not follow a U.S. request to disclose the names of 52,000 account holders. Doing so "would require UBS to violate Swiss criminal law, and we simply cannot comply." UBS will face federal prosecutors in court on Monday.
- FDIC withholds CIT debt guarantees. The FDIC is reportedly unwilling to guarantee CIT Group's (CIT) bond sales because the lender's credit quality is worsening and an FDIC guarantee would put taxpayer money at risk. Sources said the FDIC is in talks with CIT about how to strengthen the lender's financial position in order to get approval, as its efforts to improve credit quality thus far, including by transferring assets to its bank, have seemingly been deemed insufficient.
- Obama pushes for more mortgage mods. The Obama administration is pressing mortgage-servicing companies to increase their efforts at modifying more troubled loans, expressing frustration at the pace of mortgage mods thus far. Geithner sent a letter to 25 mortgage-servicing firms yesterday urging them "to devote substantially more resources to this program for it to fully succeed and achieve the objectives we all share."
- Citi plays management musical chairs. Citigroup shook up its management team yesterday, with a reshuffling that included replacing finance chief Ned Kelly after less than four months on the job and announcing the departure of Gary Crittenden, chairman of Citi Holding. The surprise move came a week before Q2 results, and amid reports of strong pressure from FDIC's Bair, who has repeatedly said CEO Vikram Pandit and his team don't have enough commercial banking expertise.
- Exxon's nat-gas find looks big. After scouring the globe for natural gas locked inside shale formations, ExxonMobil (XOM) says it may have a world-class find in Canada. Results from the first four wells lead Exxon to believe each well can produce 16-18M cubic feet of gas a day, five times the size of average wells in Texas's Barnett shale and comparable to big wells in Louisiana's Haynesville shale - two major shales that have already moved the U.S. natural-gas market from scarcity to abundance.
- DoJ probes Nuance acquisition. The Justice Department is investigating Nuance Communication's (NUAN) 2008 acquisition of a rival speech recognition software firm from Royal Philips Electronics. Antitrust officials usually examine acquisitions before they are completed but in this case, Nuance wasn't required to report the purchase because Philips had limited sales in the U.S. Justice Department officials declined to comment on the nature of the review, or on whether Nuance might be told to divest the Philips unit.
- British Airways, unions face off over cuts. British Airways (BAIRY.PK) inched closer to its first major strike in over a decade as CEO Willie Walsh continued to press unions representing 22,000 cabin crew and ground staff to accept 4,000 jobs cuts. Walsh says the cuts are necessary to reduce costs and weather the recession, but four weeks of direct negotiations have failed, as have two days of government-funded arbitration.
- NYT may charge for web access. The New York Times (NYT) may start charging a $5 monthly fee for access to its website, and polled print subscribers to see whether they'd be willing to pay a discounted $2.50 per month for online access. The New York Times website, the most visited of the newspapers' sites, is currently free, but Times Co. is looking for additional ways to boost revenue as internet ad spending slows.
- Jobless claims fall. Initial jobless claims came in at 565,000, down 52,000 from a week ago (revised), better than the 603,000 consensus and the lowest since January. Continuing claims rose 159,000 to a record 6.88M. Analysts said the decline resulted partly from technical factors since auto layoffs that normally take place in early July, as factories are retooled to build the next year's models, occurred in the spring when General Motors and Chrysler implemented sweeping restructuring plans.
Earnings: Friday Before Open
- Infosys Technologies (INFY): FQ1 EPS of $0.55 beats by $0.08. Revenue of $1.12B (-2.9%) vs. $1.07B. Sees FQ2 EPS of $0.50-0.51 vs. $0.47, and full-year EPS of $1.97-2.00 vs. $1.92. (PR)
Earnings: Thursday After Close
- Lawson Software (LWSN): FQ4 EPS of $0.10 in-line. Revenue of $186M (-20%) vs. $177M. Sees Q1 EPS of $0.05 vs. $0.08 and Q1 revenue of $160M-165M vs. $165M. (PR)
- Shaw Group (SGR): FQ3 EPS of $0.57 misses by $0.03. Revenue of $1.8B (unchanged) in-line. Sees FY09 EPS of $2.00 vs. $2.22. (PR)
Today's Markets
- Asia markets suffered moderate losses. Europe stocks are lower and U.S. futures are under pressure.
- Asia: Nikkei -0.04% to 9,287. Hang Seng -0.46% to 17,708. Shanghai -0.29% to 3,114. BSE -1.84% to 13,504.
- Europe at midday: London -0.6%. Paris -0.7%. Frankfurt -0.5%.
- Futures: Dow -0.8% to 8070. S&P -0.7% to 872.50. Nasdaq -0.6%.
30-year Tsy bond +0.62%. 10-year +0.41%. 5-year +0.3%. 2-year +0.06%.
Crude -1.3% to $59.64. Gold -0.8% to $908.50. Euro -1% vs. dollar. Yen +0.3%. Pound -1%.
Friday's Economic Calendar
- 8:30 International Trade
8:30 Import/Export Prices
9:55 University of Michigan Consumer Sentiment
10:00 Geithner testifies on derivatives regulation - Notable earnings before Friday's open: PGR
Seeking Alpha editor Eli Hoffmann contributed to this post.
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This article has 18 comments:
Hopefully, this will give the current administration an additional "nudge" in making NG a larger part in their plans for enviromental improvements, as well as their stated goal of energy independence....but somehow, I won't hold my breath.
The man is a genius I tell you.
Obama's getting his bit in with his public rousting of the mortgage companies, so everyone is busy telling us today how much they are helping as they don't want us to forget it or them over the weekend. Trouble is, there's not many that believe it anyway and not many either that think they're doing a very good job.
You might ask why this is important to the US?
The reason: If the world's number 2 economy has $484B extra capacity to produce ever cheaper manufactured goods for the next two years, this will put a huge strain on US businesses. It may keep them from recovering as quickly. It may cause deflation to occur in the US. The US already has that with the housing market. Ditto for Western Europe.
July 10th, 2009 at 1:33 am by Bill Steffen under Bill's Blog, Weather
We’re on track right now to have the coolest July ever in Grand Rapids. We have now had 11 consecutive days with below average temperatures (which may end today - Friday - because of a warmer than average nighttime low). The first nine days of July were 5.6 degrees cooler than average. The average temperature for those nine days was 64.8 (an average of the nine high and nine low temperatures). The coolest July ever in G.R. (1992) had an average temperature of 67.2 degrees. To get back to even, the rest of July would have to be 2.3 degrees warmer than average and that isn’t going to happen. What’s interesting is that the four (I’m including this year) coolest Julys (1992 - 1996 - 2000 - 2009) have ALL occurred in recent years (the last 17 years). The 10 warmest Julys ALL occurred BEFORE 1956, while eight of the ten COOLEST Julys have occurred SINCE 1956. We have a climate record of 120 years in Grand Rapids. The average July temperature in Grand Rapids for 1900-1952 was 73.6 degrees. The average July temperature from 1970-1999 was 72.5 degrees. The data clearly shows that it is NOT getting warmer in July in Grand Rapids. The temperature record clearly shows that it’s been getting cooler. Other July departures from normal through the 9th: S. Ste Marie -6.7, Marquette -7.2, Kalamazoo -7.8.
Our "leaders" are too busy clamoring for another "stimulus package" to notice.
On Jul 10 10:56 AM axelrod608 wrote:
> XOM's big NG find begs the question - in a massive glut of NG oversupply,
> why isn't LNG for auto fuel a national priority ??
>
> Our "leaders" are too busy clamoring for another "stimulus package"
> to notice.
On Jul 10 10:56 AM axelrod608 wrote:
> XOM's big NG find begs the question - in a massive glut of NG oversupply,
> why isn't LNG for auto fuel a national priority ??
>
> Our "leaders" are too busy clamoring for another "stimulus package"
> to notice.
On Jul 10 08:43 AM AndrewBaker wrote:
> More games with money and markets from our treasury and political
> masters. To be seen to be tough on the banks yet fair, small banks
> are supposedly being asked to pay a lower amount to redeem their
> warrents, and the big banks are complaining. This is just so much
> hogwash. The government and the Fed are in bed with the big banks
> and bankers, and this show is just that: a display designed to fool
> us that tough firm measures are being taken whilst the small guy
> is being considered. I'm not taken in.
>
> Obama's getting his bit in with his public rousting of the mortgage
> companies, so everyone is busy telling us today how much they are
> helping as they don't want us to forget it or them over the weekend.
> Trouble is, there's not many that believe it anyway and not many
> either that think they're doing a very good job.
On Jul 10 09:50 AM bbowen7 wrote:
> Why isn't the media trumpeting Obama's great successes at the Group
> of 8 meeting? There must have been some way to spin the rejection
> of his global warming program, China's continued calls to reduce
> the dollar's role, and a lack of interest in further stimulus. Maybe
> we've seen the last of these international confabs for awhile.
On Jul 10 10:56 AM axelrod608 wrote:
> XOM's big NG find begs the question - in a massive glut of NG oversupply,
> why isn't LNG for auto fuel a national priority ??
>
> Our "leaders" are too busy clamoring for another "stimulus package"
> to notice.