- Judge holds up BoA settlement. A judge is refusing to allow Bank of America (BAC) to pay a $33M settlement to the SEC in connection to allegations that it made false statements about bonuses in its acquisition of Merrill Lynch, even though both the SEC and Bank of America asked for the settlement to be approved. Judge Jed S. Rakoff said permitting the payment without a hearing would leave the public in the dark about a critical part of the financial sector bailout. Rakoff set a hearing date for Monday.
- AIG soars on short squeeze. AIG (AIG) shares skyrocketed yesterday, climbing nearly 63% to $22.00. Analysts said the spike was likely a result of a short squeeze on the stock, as investors with short positions before a recent 20-1 reverse stock split rushed to buy scarce shares to cover their positions. Some of the movement could also have been speculative trading ahead of AIG's Q2 earnings report tomorrow. Shares +4.8% premarket (7:00 ET).
- SEC to sue former AIG chief? The SEC may file a civil suit against former AIG (AIG) Chairman and CEO Hank Greenberg on allegations of accounting fraud, said sources familiar with the matter. Greenberg has been the subject of investigation for more than four years, though he flatly denies any claims of misconduct. The lawsuit could be filed as soon as today.
- Fannie, Freddie could face major reform. The White House is considering a plan that would strip hundreds of billions of dollars in troubled assets from Fannie Mae (FNM) and Freddie Mac (FRE). The assets would be placed in a government-backed 'bad bank,' leaving Fannie and Freddie with healthy balance sheets while the 'bad bank' would try to collect as much of the outstanding loan balances as possible. A White House spokesman said "it should come as no surprise that the administration is thinking through [government-sponsored enterprises] reform," but no final decisions have been made. Premarket: FNM +4.1%, FRE +7.5% (7:00 ET).
- BNY Mellon bids TARP adieu. Bank of New York Mellon (BK) became the sixth big lender to exit TARP by paying $136M to buy back its government warrants. The repurchase price was below the $160M estimated by the Congressional Oversight Panel, but by the bank's calculations, the government received a 12% annualized return on its investment.
- Google ogles web video. Google (GOOG) agreed to acquire On2 Technologies (ONT) in an all-stock deal worth $106.5M. Google, which already owns popular web video site YouTube, hopes the deal will bring it closer to its goal of being an innovator in web video. Separately, Google sold its radio-ad placement technology to WideOrbit Inc., a small San Francisco company. Terms of the deal were not disclosed.
- CF sweetens offer. CF Industries (CF) raised its all-stock offer for Terra Industries (TRA) to $3.7B, a 29% premium to Terra's Wednesday close, and said it's prepared to return at least $1B in cash to Terra's shareholders if the deal goes through. Agrium (AGU) said it remains committed to acquiring CF Industries.
- SEC plans to muscle up. The SEC is planning to issue more subpoenas and provide individuals with greater incentives to cooperate with investigations, in part by submitting more requests for immunity. As part of its efforts to increase financial oversight, the SEC also plans to create a new office to monitor incoming tips, and to create new units to investigate cases involving asset management, foreign corrupt practices, market abuses, municipal securities and public pensions, and structured products.
- News Corp. still waiting for recovery. News Corp. (NWS.A) posted a quarterly loss (see details below), hurt by a fall in advertising and charges related to its MySpace site. Though CEO Rupert Murdoch told investors 'the worst may be behind us,' he also warned that "there are no clear signs yet of a fast economic recovery" and the next few months will be difficult. Murdoch also said News Corp. plans to charge for all its news websites: "Quality journalism is not cheap, and an industry that gives away its content is simply cannibalizing its ability to produce good reporting."
- Treasury tips towards TIPS. The Treasury will increase the sale of TIPS, inflation-protected bonds, in response to growing demand from China and other investors. The decision is part of a broader effort to make sure the U.S. can finance its burgeoning budget deficit.
- Taylor Bean stops lending. Taylor Bean & Whitaker, which was suspended earlier this week from making Federal Housing Administration loans, will cease operations and won't fund mortgages in its pipeline. The failure of Taylor Bean, the country's 12th-largest mortgage lender, further consolidates an industry that is coming to be dominated by a handful of large banks.
- Bank of England boosts buyback plan. The Bank of England maintained its target rate at 0.5%, and increased its asset purchase program by £50B to £175B. Commenting on the inflation/deflation paradox, the central bank noted two conflicting sets of forces: "On the one hand, there is a considerable stimulus still working through from the easing in monetary and fiscal policy... On the other hand, the need for banks to continue repairing their balance sheets is likely to restrict the availability of credit, and past falls in asset prices and high levels of debt may weigh on spending."
- Monster employment dips down (.pdf). Monster's online employment index inched down in July, falling three points to 114 to reflect a seasonal dip in hiring patterns. Year on year, the index fell by 27%, the least in four months, indicating an improvement in underlying employer demand.
- Jobless data worse than expected. ADP employment was -371,000 in July vs. consensus of -350K. June's losses were revised to -463K. According to the Challenger, Gray & Christmas job report, firing announcements rose 31% in July to 97,373, marking the first monthly increase since January after June's 'surprisingly low' numbers. "While there are signs that the economy is stabilizing and the pace of layoffs slowing, we are still a long way from a full recovery."
- Factory orders inch up. June's Factory Orders rose +0.4% to $349B vs. -0.8% consensus. Last month orders were up 1.1%. Shipments increased 2.3% to $358B, the first gain in 11 months. Inventories decreased another 1.2% to $318B, the sixth straight month of shrinkage.
Earnings: Thursday Before Open
- Ameren (AEE): Q2 EPS of $0.75 beats by $0.08. Revenue of $1.7B (-6%) vs. $2B. (PR)
- Biovail (BVF): Q2 EPS of $0.50 vs. $0.34 consensus (may not be comparable). Revenue of $193.5M (+4%) vs. $191M. (PR)
- Brinker International (EAT): FQ4 EPS of $0.52 beats by $0.03. Revenue of $829M (-23%) vs. $853M. Issues downside EPS guidance for FQ1 of $0.12-0.14 vs. $0.29 consensus. Shares -7.3% premarket (8:00 ET). (PR)
- Canadian Natural Resource (CNQ): Q2 EPS of $1.18 beats by $0.08. Revenue of $2.5B (-43%) vs. $1.7B. (PR)
- Canadian Solar (CSIQ): Q2 EPS of $0.49 beats by $0.58. Revenue of $114M (-46%) vs. $94M. Shares +16.4% premarket (7:40 ET). (PR)
- Comcast (CMCSA): Q2 EPS of $0.33 beats by $0.07. Revenue of $8.9B (+4.5%) in-line. (PR)
- Continental Resources (CLR): Q2 EPS of $0.16 beats by $0.06. Revenue of $152M (-50%) vs. $131M. (PR)
- Delta Petroleum (DPTR): Q2 EPS of -$0.89 vs. -$0.14 consensus (may not be comparable). Revenue of $23M (-72%) vs. $25M. Shares -4% premarket (8:20 ET). (PR)
- Diana Shipping (DSX): Q2 EPS of $0.39 misses by $0.01. Revenue of $60M (-31%) vs. $57M. (PR)
- DirecTV Group (DTV): Q2 EPS of $0.40 misses by $0.03. Revenue of $5.2B (+9%) in-line. (PR)
- El Paso (EP): Q2 EPS of $0.25 beats by $0.04. Revenue of $973M (-16%) vs. $1.1B. (PR)
- Fuqi International (FUQI): Q2 EPS of $0.45 beats by $0.14. Revenue of $101M (+51%) vs. $93M. Shares +10.4% premarket (8:10 ET). (PR)
- GLG Partners (GLG): Q2 EPS of $0.26 beats by $0.22. Revenue of $86M (+263%) vs. $90M. (PR)
- Hospitality Properites Trust (HPT): Q2 EPS of $0.96 beats by $0.02. Revenue of $267M (-21%) vs. $278M. Shares -4.5% premarket (8:10 ET). (PR)
- Huntsman (HUN): Q2 EPS of -$0.27 misses by $0.14. Revenue of $1.9B (-36%) vs. $2B. Shares -4.9% premarket (8:10 ET). (PR)
- IAMGOLD Corp. (IAG): Q2 EPS of $0.15 beats by $0.05. Revenue of $225M (+0.1%) vs. $206M. (PR)
- King Pharmaceuticals (KG): Q2 EPS of $0.32 beats by $0.06. Revenue of $445M (+12%) vs. $438M. (PR)
- Lamar Advertising Company (LAMR): Q2 EPS of -$0.13 vs. consensus of -$0.12 (may not be comparable). Revenue of $275M (-15%) in-line. (PR)
- Lexington Realty Trust (LXP): Q2 EPS of $0.35 beats by $0.01. Revenue of $99M (-21%) vs. $98M. (PR)
- Linn Energy LLC (LINE): Q2 EPS of $0.45 beats by $0.06. "We believe that the Company is poised to continue to deliver positive results and to grow through additional acquisition opportunities." (PR)
- Melco Crown Entertainment Ltd. (MPEL): Q2 EPS of -$0.30 misses by $0.17. Revenue of $216M (-44%) vs. $256M. Shares -3.9% premarket (8:10 ET). (PR)
- MetroPCS Communications (PCS): Q2 EPS of $0.07 misses by $0.07. Revenue of $860M (+27%) vs. $862M. (PR)
- MF Global (MF): FQ1 EPS of -$0.10 misses by $0.14. Revenue of $271.5M (-27.5%) vs. $271.3M. (PR)
- NASDAQ (NDAQ): Q2 EPS of $0.47 in-line. Revenue of $367M (-13%) vs. $369M. (PR)
- Plains Exploration & Production Company (PXP): Q2 EPS of $0.37 beats by $0.05. Revenue of $279M (-62%) vs. $326M. Shares -0.9% premarket (8:00 ET). (PR)
- Sirius XM Radio (SIRI): Q2 EPS of -$0.01 in-line. Revenue of $608M (+1.2%) in-line. Says cash operating expenses are 28% lower since the merger. Increases full-year income from operations guidance to $400M from $350M. (PR)
- Teradata (TDC): Q2 EPS of $0.36 beats by $0.11. Revenue of $421M (-7.5%) vs. $414M. (PR)
- Tetra Technologies (TTI): Q2 EPS of $0.24 beats by $0.05. Revenue of $218M (-28.4%) vs. $229M. Shares +0.75% premarket (8:10 ET). (PR)
- Wendy's/Arby's Group (WEN): Q2 EPS of $0.06 in-line. Revenue of $913M (+192%) vs. $928M. Shares +1% premarket (8:30 ET). (PR)
- Western Refining (WNR): Q2 EPS of -$0.11 beats by $0.04. Revenue of $1.6B (-53%) in-line. Shares -7.9% premarket (7:10 ET). (PR)
- Williams Companies (WMB): Q2 EPS of $0.24 beats by $0.08. Issues in-line EPS guidance for FY '09 of $0.70-0.90 vs. $0.83 consensus. (PR)
- Windstream (WIN): Q2 EPS of $0.21 misses by $0.02. Revenue of $753M (-6%) vs. $754M. (PR)
Earnings: Wednesday After Close
- Activision (ATVI): Q2 EPS of $0.08 beats by $0.01. Sees Q3 EPS of $0.03 vs. $0.10. Sees Q3 revenue of $700M vs. $909M. Sees full-year EPS of $0.63 vs. $0.66 and revenue of $4.5B vs. $4.9B. Delaying launch of Singularity and Starcraft II into 2010. Revenue of $1B (+195%) vs. $801M. (PR)
- Allstate (ALL): Q2 EPS of $0.72 misses by $0.40. Revenue of $8.5B (+15%) vs. $8.2B. (PR)
- Amerco (UHAL): FQ1 EPS of $1.01 misses by $0.14. Revenue of $521M (-4%) vs. $515M. (PR)
- AmeriCredit (ACF): FQ4 EPS of $0.23 beats by $0.18. Revenue of $454M (-24%) vs. $413M. (PR)
- Atwood Oceanics (ATW): FQ3 EPS of $1.05 beats by $0.23. Revenue of $149M (+6%) vs. $142M. (PR)
- Brigham Exploration Company (BEXP): Q2 EPS of -$0.12 misses by $0.06. Revenue of $10.5M (-58%) vs. $15.2M. (PR)
- Career Education (CECO): Q2 EPS of $0.07 misses by $0.12. Revenue of $441M (+6%) vs. $419M. Increases stock buyback by $200M to $255.5M. (PR)
- CardioNet (BEAT): Q2 EPS of $0.11 beats by $0.06. Revenue of $38.3M (+30%) vs. $38.5M. (PR)
- Cisco Systems (CSCO): FQ4 EPS of $0.31 beats by $0.02. Revenue of $8.5B (-18%) in-line. (PR)
- Cooper Tire & Rubber (CTB): Q2 EPS of -$0.22 misses by $0.26. Revenue of $773M (+22%) vs. $659M. (PR)
- Corrections of America (CXW): Q2 EPS of $0.30 beats by $0.02. Revenue of $413M (+6%) vs. $411M. (PR)
- Eagle Bulk Shipping (EGLE): Q2 EPS of $0.26 in-line. Revenue of $53M (+42%) vs. $52M. (PR)
- General Cable (BGC): Q2 EPS of $1.02 beats by $0.20. Revenue of $1.1B (-17%) vs. $1.2B. Sees Q3 EPS of $0.45-0.55 vs. $0.72. (PR)
- Great Plains Energy (GXP): Q2 EPS of $0.26 beats by $0.13. Revenue of $481M vs. $495M. (PR)
- Health Care REIT (HCN): Q2 EPS of $0.80 in-line. Revenue of $142M (+10%) vs. $140M. (PR)
- ION Geophysical (IO): Q2 EPS of -$0.05 in-line. Revenue of $101M (-44%) vs. $145M. Sees full-year EPS of -$0.09 to -$0.19 vs. -$0.05. Sees full-year revenue of $450M-500M vs. $534M. (PR)
- MBIA (MBI): Q2 EPS of $4.30 not comparable to consensus of -$0.92. (PR)
- Murphy Oil (MUR): Q2 EPS of $0.83 may not be comparable to consensus $0.65. Revenue of $4.6B (-45%) vs. $4B. (PR)
- Nationwide Health Properties (NHP): Q2 FFO of $0.61 beats by $0.02. Revenue of $97M (+5%) vs. $94M. (PR)
- News Corp. (NWS.A): FQ4 EPS of -$0.08 misses by $0.26. Revenue of $7.7B (-11%) vs. $7.6B. (PR)
- ON Semiconductor (ONNN): Q2 EPS of $0.09 beats by $0.07. Revenue of $420M (-25%) vs. $406M. Sees Q3 revenue of $445M-455M vs. $428M. (PR)
- Orient-Express Hotels (OEH): Q2 EPS of -$0.04 misses by $0.14. Revenue of $132M (-26%) vs. $138M. (PR)
- Prudential Financial (PRU): Q2 EPS of $1.88 beats by $0.68. Revenue of $6.3B (-8%) vs. $6.6B. Sees full-year EPS of $5.00-5.20 vs. $4.72. (PR)
- Redwood Trust (RWT): Q2 EPS of $0.10 misses by $0.13. Net interest income of $35M. (PR)
- Regency Centers (REG): Q2 FFO before impairments of $0.61 beats by $0.32. Net loss attributable to common stockholders of $17.2M. (PR)
- Service International (SCI): Q2 EPS of $0.12 beats by $0.05. Revenue of $514M (-6%) vs. $494M. Raises full-year EPS guidance to $0.36-0.42 from $0.26-0.36 vs. $0.32. (PR)
- Sunoco (SUN): Q2 EPS of -$0.27 misses by $0.15. Revenue of $7.5B (-51%) vs. $12B. (PR)
- Sunstone Hotel Investors (SHO): Q2 FFO of $0.22 misses by $0.11. Revenue of $187M (-23%) vs. $196M. (PR)
- Vertex Pharmaceuticals (VRTX): Q2 EPS of -$0.99 misses by $0.16. Revenue of $19M (-73%) vs. $33M. (PR)
Asian markets closed mixed but European markets are starting the day in the black. U.S. futures, once again, are sending no clear signals.
- In Asia, Nikkei +1.3% to 10,388. Hang Seng +2% to 20,899. Shanghai -2.1% to 3,356. BSE -2.45% to 15,514.
- In Europe at midday, London +0.8%. Paris +0.8%. Frankfurt +0.7%.
- Futures: Dow +0.1%. S&P flat. Nasdaq -0.3%. Crude -0.4% to $71.69. Gold -0.4% to $962.70.
Thursday's Economic Calendar
- 6:00 Chain Store Sales
6:00 Monster Employment Index
7:00 BoE Announcement
7:45 ECB Announcement
8:30 Jobless Claims
9:00 RBC CASH Index
10:30 EIA Natural Gas Inventory
4:30 PM Fed Balance Sheet
4:30 PM Money Supply
- Notable earnings before Thursday's open: AEE, ARE, BVF, BX, CLR, CMCSA, CNQ, CSE, CSIQ, CTL, DPTR, DSX, DTV, EAT, EP, FTO, FUQI, GLG, GNA, HPT, HUN, IAG, KG, LAMR, LINE, LXP, MF, MPEL, NDAQ, PCS, PXP, SIRI, TDC, TTI, WEN, WIN, WMB, WNR
- Notable earnings after Thursday's close: AGO, ALKS, BZH, CBS, CROX, CSC, DCT, ELX, EOG, HANS, HURN, IPI, LEAP, MCHP, ME, MXIM, NVDA, POM, PSA, ROVI, SAPE, SD, SQNM, VRSN, WR
Seeking Alpha editor Eli Hoffmann contributed to this post.
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