- BoA to consumers: Feel free to sue... Bank of America (BAC) is dropping a requirement that forced consumers with disputes on credit cards or other accounts to enter into arbitration. The move, which comes as the government pushes for stronger consumer financial protection, is considered a win for consumers, as many faulted the arbitration process for being biased. Consumers will now be able to file lawsuits directly against the bank if they suspect unfair or illegal practices. American Express (AXP) and JPMorgan Chase (JPM) both say they're evaluating changes to their policies on resolving consumer disputes as well.
- ...and BoA does some suing of its own. Bank of America (BAC) won a restraining order preventing Colonial BancGroup (CNB) from selling or disposing of more than $1B in cash and loans held by Colonial. Following an announcement by Colonial that it may be put into receivership, Bank of America had filed suit earlier in the week, alleging the funds are being held in custodianship for Ocala Funding, the commercial-paper vehicle backed by Taylor, Bean & Whitaker. Bank of America also filed a lawsuit against Shelbourne Development Group, which has stopped construction on a 150-floor Chicago condominium tower, alleging the company has defaulted on a loan.
- Fed demands CIT plan. CIT Group (CIT) signed an agreement giving the Federal Reserve strong oversight over its operations, and pledging to submit a recapitalization plan and to strengthen its management and operational controls. CIT has 15 days to craft its plan for raising capital and meeting its debt obligations, and 60 days to review how it manages credit risk. CIT must also get permission from the Fed before paying dividends or pursuing other transactions. (Read the Fed agreement (.pdf))
- China opens its internet dam. China has given up its controversial plans to force filtering software to be installed on all computers produced or sold in the country. A government minister said "we will fully respect everyone’s freedom of choice and will absolutely not force the installation on all PCs sold," although the filter, called Green Dam/Youth Escort, will still be installed on computers in schools, internet cafes and other public spaces.
- That's all, Volks! After nearly a year of takeover attempts and negotiations, Volkswagen (OTCQX:VLKAY) will pay around €3.3B ($4.7B) for a 42% stake in Porsche's core sports-car division, ahead of a full merger to take place in 2011. To help pay for the purchase, Volkswagen will issue new preferred shares in the first half of next year. The combined automaker's operating profit is expected to rise by €700M annually.
- Conflicting stories on Opel deal. Magna International (MGA) said it reached an agreement in principle with General Motors to buy 55% of Opel. Magna co-CEO Siegfried Wolf said some changes were made in the more than 600-page-long offer but "roughly speaking there are no unresolved issues with management any more." GM's top negotiator denied Magna's assertions and said no deal has yet been reached.
- Ford ups production on rising demand. Ford (F) plans to increase its Q3 production by 10,000 vehicles to 495,000 as cash-for-clunkers drives demand. Ford's production will be 18% higher than the same quarter in 2008, and the company set a Q4 production target of 570,000 vehicles, which would be a 33% increase on the previous year. Meanwhile, the White House loosened the cash-for-clunkers rules yesterday, allowing consumers to apply vouchers to cars that are out of stock.
- No new frontiers for Southwest. Southwest Airlines (LUV) lost its bankruptcy auction bid for Frontier Airlines to smaller company Republic Airways Holdings (RJET), losing an opportunity to operate flights outside the U.S. for the first time. Southwest said a 'key reason' it lost the bid was because it wouldn't drop its requirement that Frontier's pilot union reach an agreement with Southwest's pilots.
- Retail sales miss. July's retail sales came in at -0.1% vs. consensus of +0.8%. Excluding automotive, sales were down 0.6% vs. +0.1% consensus. Gas station sales were down 32.5% from a year ago (-2.1% M/M). Building material and garden equipment sales were 14.7% lower (-2.1% M/M). Health and personal sales (+4.1%) and restaurants (+1%) were the only retail components to post positive sales growth over the past year. Overall, sales are 8.3% lower than a year ago.
- Jobless claims rise. Initial jobless claims were 558K, up 4K from a week ago, and worse than the 545K consensus. Continuing claims fell 141K to 6.202M.
- Import prices drop. July's Import Price Index fell 0.7% vs. consensus of -0.5%, primarily due to a fall in petroleum prices. Import prices are down 19.3% vs. a year ago. Export prices fell 0.3%.
Earnings: Friday Before Open
- Abercrombie & Fitch (ANF): Q2 EPS of -$0.30 vs. consensus of -$0.07. Revenue of $648M (-23.3%) in-line. (PR)
Earnings: Thursday After Close
- American Apparel (APP): Q2 EPS of $0.06 beats by $0.03. Revenue of $136M (+2%) vs. $140M. Sees full-year revenue of $540M-555M vs. $568M and expects to open 25-30 new stores. (PR)
- Autodesk (ADSK): Q2 EPS of $0.24 beats by $0.05. Revenue of $415M (-33%) vs. $414M. (PR)
- Blockbuster (BBI): Q2 EPS of -$0.19 misses by $0.07. Revenue of $1B (-22%) vs. $1.1B. (PR)
- Darling International (DAR): Q2 EPS of $0.14 in-line. Revenue of $155M (-30%) vs. $160M. (PR)
- DeVry (DV): FQ4 EPS of $0.51 in-line. Revenue of $396M (+43%) vs. $377M. (PR)
- Elizabeth Arden (RDEN): FQ4 EPS of -$0.07 beats by $0.01. Revenue of $213M (-10%) in-line. Sees FY10 EPS of $0.50-0.65 vs. $0.72. (PR)
- Nordstrom (JWN): Q2 EPS of $0.48 in-line. Revenue of $2.1B (-6%) in-line. Same-store sales down 12.3%. Raises full-year EPS guidance to $1.50-1.65 from $1.25-1.50 vs. consensus of $1.48. Sees full-year same-store sales down 9-12%. (PR)
- Red Robin Gourmet Burgers (RRGB): Q2 EPS of $0.41 beats by $0.04. Revenue of $201M (-3%) vs. $206M. (PR)
- SatCon Technology (SATC): Q2 EPS of -$0.13 misses by $0.05. Revenue of $9M (-31%) vs. $15M. (PR)
- Ticketmaster (TKTM): Q2 EPS of $0.20 misses by $0.04. Revenue of $312M (-18%) vs. $396M. (PR)
Overseas markets were mostly higher Friday, while U.S. futures have traded in a tight range.
- Asia: Nikkei +0.76% to 10,597. Hang Seng +0.15% to 20,893. Shanghai -2.98% to 3,047. BSE -0.69% to 15,412.
- Europe at midday: London +0.3%. Paris +0.4%. Frankfurt +0.2%.
- Futures at 7:00: Dow -0.15% to 9374. S&P -0.1% to 1012.50. Nasdaq -0.3%. Crude +0.45% at $70.84. Gold +0.2% to $958.40. Treasury futures are flat, as is the dollar.
Friday's Economic Calendar
- 8:30 Consumer Price Index
9:15 Industrial Production
9:55 University of Michigan Consumer Sentiment
- Notable earnings before Friday's open: ANF, JCP
Seeking Alpha editor Eli Hoffmann contributed to this post.
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