Wall Street Breakfast: Must-Know News 11 comments
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Citigroup looks to cut U.S. stake. Sources say Citigroup (C) is working on a plan to pare the government's 34% stake in the bank, including a multibillion-dollar public stock sale followed by a buyback of some of the government's shares. Citi spoke briefly with the Treasury over the weekend, which said it has no objections as long as the bank first raises offsetting capital. Any move would give a clearer picture of how the government plans to balance its desire to wind down financial system intervention against its continued concerns over the health of the banking industry.- Judge blocks $33M settlement. U.S. District Court Judge Jed Rakoff told the SEC and Bank of America (BAC) their proposed $33M settlement over the lack of disclosure of $3.6B in bonuses just before BofA's merger with Merrill Lynch was "neither fair, nor reasonable, nor adequate." Judge Rakoff demanded the case be tried in court, calling their proposed consent judgement "a contrivance designed to provide the S.E.C. with the facade of enforcement and the management of the Bank with a quick resolution of an embarrassing inquiry - all at the expense of the sole alleged victims, the shareholders." (see Judge Rakoff's order (.pdf))
- Obama says they can. Speaking to Wall Street Monday, U.S. President Barack Obama told financial leaders to expect new regulations. Potential new rules include: a new consumer financial protection agency, higher capital requirements for banks and a systemic risk regulator. Obama also said that the necessity for bailouts are waning, and that the financial sector is showing improvement. Still,the president stressed that the lessons from the past year must not be ignored.
- Lacker says bank reforms miss mark. Richmond Fed president Jeffrey Lacker pushed back against proposed changes to financial system regulation, saying in a speech Monday that creating an apparatus for the government to 'resolve' big financial firms without forcing them into bankruptcy could weaken market discipline and lead to greater volatility. "The leading proposals before Congress concentrate almost exclusively on expanding government protection and regulation, but I believe we would be better off placing greater reliance on market-based incentives for prudent risk management," Lacker said.
- Lilly slashes costs, jobs. Eli Lilly (LLY) announced Monday it will cut company costs up to $1B, including eliminating 5,500 jobs over the next two years. The company plans to restructure several of its business units in response to generic competition to its antipsychotic drug Zyprexa, as well as its 2008 purchase of ImClone Systems.
- Avaya takes the call. Nortel’s corporate networking unit will be acquired by privately-owned Avaya for $915M, over Verizon's (VZ) objections. Nortel, which went into bankruptcy in January, decided selling off its main businesses was a better option for creditors than trying to reorganize. The sale follows Ericsson AB's (ERIC) purchase of Nortel's wireless business in July of this year.
- EU wants details on GM loan. The EU Commission has asked Germany for the country's formal plan to inject €3B ($4.38B) in loan gurantees to GM's European Opel unit. Meanwhile, a meeting today between German and European government officials over state aid for the new company is unlikely to produce any results because the buyer, Magna (MGA), has yet to submit a detailed business plan. The turnaround may include cutting over 10,000 jobs.
- So goes the year. Today marks one year following the collapse of Lehman Brothers, and risk appetite is back, with five U.S. banks recently reporting large gains from their trading desks. While some argue that recovery is clearly on the way as China's economy grows, others warn investors should not count on government bailouts for future growth.
- Elan, J&J fix JV. Elan (ELN) dropped the value of its $1.5B deal with Johnson & Johnson (JNJ) by $115M after a ruling earlier this month that its terms violated Elan and Biogen Idec's (BIIB) partnership over their MS drug Tysabri. Under the original deal, J&J had the option of financing Elan's purchase of Biogen's stake in Tysabri under certain circumstances; the new deal eliminates this clause.
- ING hits roadblock on government aid. Shares of ING Group (ING) fell 3.8% in Amsterdam following media reports saying European Competition authorities will reject the Dutch government's €22B guarantee of ING's U.S. Alt-A portfolio over concerns the terms may be too sweet. Analysts say ING could have to pay €1-1.7B more if the deal is rejected.
- Genworth seeks $500M: Genworth Financial (GNW) fell in AH trading Monday after saying it's looking to raise $500M in an offering led by Goldman Sachs (GS), BofA Merrill Lynch (BAC) and Deutsche Bank (DB). Shares will be diluted as a result, but some analysts say after five consecutive quarterly losses, totaling more than $2B, it's a good sign that the company is in the position to issue at all.
Today's Markets
Overseas stocks posted modest gains Tuesday, while U.S. futures are down a drop ahead of today's retail sales data (full calendar).
- Asia: Nikkei +0.15% to 10,218. Hang Seng -0.31% to 20,866. Shanghai +0.23% to 3,034. BSE +1.48% to 16,454.
- Europe at midday: London +0.2%. Paris +0.3%. Frankfurt -0.1%.
- Futures at 7:00: Dow -0.1% at 9542. S&P -0.1% to 1042. Nasdaq -0.1%.
Crude +0.6% to $69.28. Gold flat at $1001. 30-year Tsy -0.08%.
Euro -0.1% vs. dollar. Yen -0.5%. Pound -0.5%.
Tuesday's Economic Calendar
7:45 ICSC Retail Store Sales
8:30 Producer Price Index
8:30 Retail Sales
8:30 Empire State Mfg Survey
8:55 Redbook
10:00 Business Inventories
5:00 PM ABC Consumer Confidence Index
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This article has 11 comments:
In other news, Rachel has been kidnapped by disgruntled bears, who mistook her for "Goldilocks".
Regards,
Mr. Pham
Vietnam
Hearing Obama say "we won't save you again" was like watching the Parent give the spoiled brat the candy at the checkout after they fell on the ground kicking and screaming; "Just this once..." yeah RIGHT!
The taxpayer has been sold down the river, but the government is promising that "we won't do it next time." Again...yeah RIGHT!
NO TRUST continues to be the reality.
If you buy into this cotton candy market you only have yourself to blame.
To: Kerry Grace Benn, Dow Jones Newswires
From: Bill Hoffman
Memo:
I read with interest about Genworth to Offer $500m ..., 9/14/2009!
Likewise, I attended on 9/14/2009- the Genworth LTC Symposium at the US Senate Bldg~
It appears that Genworth has been in-fact manipulating their financials with off the Balance Sheet entries of over $1.8 billion! As well Genworth is lobbying hard against the C.L.A.S.S. Health LTC Act, now being proposed before the Senate and Congress, soon up for a vote! All of which is documented per the enclosed!
I personally gave Senator Ted Kennedy's Aide for the C.L.A.S.S. LTC Public Care Bill, at the 9/14/2009, Dr. Connie Garner! Which she appreciated my enclosed info.
If the C.L.A.S.S. Act is passed, Genworth LTC REVENUES WILL PLUMMET!~ Since Genworth has moved the "Goal Posts" and changed with their LTC insureds, that now only when the Genworth LTC Insureds first pay their own LTC, then maybe if GNW feels allowed then GNW will pay! Now filed vs. GNW and GE and their Auditots KPMG are SEC complaints and request for KPMG CPA Oversight Board to now open complaints against GNW and KBMG!
This story may prove interesting to you, since I've attached GNW and their Parent GE who spun off GNW, to corroborate this information!
Please let me know your opinions now on GNW, with this additional info!
Texas Attorney General Greg Abbott is now investigating GNW for their deceptive Marketing Tactics with Texas, etc. Consumers!
Thank you!
Bill Hoffman
A full text of the above& documentations are available email:
upsidebill@gmail.com
Lacker's ideas for regulation are correct, but they still won't have much beneficial effect as long as banks' campaign contributions make elected officials want to keep those big banks out of bankruptcy.
On Sep 15 07:25 AM User 486355 wrote:
> My only question is - Where is Rachael?
I was struck in his opening remarks on Wall Street yesterday, when he gave credit for the stabilization of the economy to Tim Geithner, Larry Summers, and Christina Romer (Council of Economic Advisors), and (after a pause) "other people". By most measures, the three main players were Ben Bernanke, Hank Paulson, and Sheila Bair - all from the Bush administration. It will be very difficult to find the right answers going forward if it is politically necessary to give all credit to his team and all blame to his predecessor.