- Citigroup management under the spotlight. The FDIC is skeptical of the positive conclusions given to some of Citigroup's (NYSE:C) management team in an outside review of bank’s actions during the financial crisis, sources say. Management skill is one of the factors used by regulators to determine financial-health ratings of U.S. banks.
- Less bearish on demand. The International Energy Agency turned more optimistic, projecting Friday that world oil demand will rise at a better-than-expected rate by the end of this year and in 2010 as economic activity picks up. After the close Thursday, Chevron (NYSE:CVX) said it expects upstream earnings to increase significantly in Q3 on higher crude prices. Downstream results are expected to be relatively flat. Shares rose 0.3% after hours Thursday.
- Murdoch to aggregators: Pay up! News Corp.'s (NASDAQ:NWS) Rupert Murdoch and Tom Curley from The Associated Press indicated plans to charge more for news content at the World Media Summit in Beijing. Google (NASDAQ:GOOG), Yahoo (NASDAQ:YHOO) and Microsoft's MSN (NASDAQ:MSFT) already license content from AP and other news providers. "The aggregators and plagiarists will soon have to pay a price for the co-opting of our content," Murdoch said. "But if we do not take advantage of the current movement toward paid content, it will be the content creators - the people in this hall - who will pay the ultimate price and the content kleptomaniacs who triumph."
- Wynn Macau on a roll in IPO debut. Shares of the Macau unit of Wynn Resorts (NASDAQ:WYNN) spiked 13% in debut trading in Hong Kong on Friday. Wynn Macau raised $1.63B last week in one of the biggest IPOs of this year. Rival casino operator Las Vegas Sands (NYSE:LVS) is planning to list its Asian assets in Hong Kong later this year. More rights issues are ahead: New World China Land, the Chinese property arm of New World Development, is planning to raise more than $600M.
- Infosys raises revenue projections. Outsourcer Infosys (NYSE:INFY) kicked off the Indian earnings season with a 7.5% rise in Q2 profit to $330M. Under U.S. accounting norms, Infosys's profit fell 0.9% on revenue of $1.15B. Shares rose over 4% on the Mumbai stock exchange before easing on the day. "We await fresh annual budgets (for U.S. clients) to see how things will go from here,” the CEO said. But the appreciating rupee may damper sentiment for the stock, analyst Rajesh Jain warned.
- Higher interest rates are in the air, fuelling the dollar higher overnight, but few central banks are ready to follow Australia's lead in actually tightening credit. The Bank of Korea on Friday left its key policy interest rate unchanged at a record low of 2%. The European Central Bank and the Bank of England on Thursday left their key rates stand, at 1% and 0.5% respectively. ECB President Jean-Claude Trichet said the euro-zone economy is stabilizing, but cautioned: "We have ahead of us a bumpy road, even if we are out of this period of free fall." Markets remain sensitive to hints of higher rates. The dollar soared 1.1% to 89.34 yen overnight on a hawkish tone from Fed chief Ben Bernanke, who on Thursday said Fed will reverse policy "when the economic outlook improves sufficiently." The Bank of Australia on Wednesday became the first of G20 central banks to raise rates to head off inflation.
- Health insurers threatened by windfall tax. House Speaker Nancy Pelosi says lawmakers are considering levying a windfall profits tax on health insurers to help finance reform. The revenue would help make up for a proposed tax on high-income Americans, which is being scaled back. Health insurer stocks dropped Thursday after the Senate's reform bill got a boost from a Congressional Budget Office report saying the bill would cut the budget deficit by $81B over 10 years.
- Bearish on oil prices and oil companies. British fund manager Neil Woodford sold his stakes in BP (NYSE:BP) and Shell (NYSE:RDS.A); the positions totaled 8% of his £18B funds. It's "getting increasingly expensive to find new oil and gas reserves, and when you look at the cash-flow dynamics, you see that at the sort of oil prices we are now seeing, both Shell and BP fail to generate enough cash to cover both their capital expenditure and their dividends." His guarded view of a recovery has oil prices possibly coming down from the current $65-to-$70-a-barrel range.
- Back in the game? Zoe Cru, the former Morgan Stanley co-president, is working on plans to launch a hedge-fund firm, the Wall Street Journal reports. She plans to call the firm Voras Capital Management.
- Mainframes are sexier than we thought. Why is IBM (NYSE:IBM) facing an antitrust probe in its mainframe business – a market seen in decline, clipped by the sleeker servers? It could be that the mainframes are cheaper to run than servers, which makes them more relevant to cutting-edge computing than meets the eye, Susan Eustis of WinterGreen Research says. She’s spent three years comparing the costs of servers and mainframes.
- Who's in the lead with lithium car batteries? The technology is poised to become a "major disruptive force" for the auto and electronics industries. CLSA analyst Kanehide Yahata says it's too soon to declare victory for the Korean and Chinese producers. "Some automakers, such as Mitsubishi, have missed the point by creating commercially unviable electric vehicles. In contrast, Nissan's (OTCPK:NSANY) Leaf shows great promise. Honda (NYSE:HMC) is fretting about what to do while Toyota (NYSE:TM) is quietly treading water. GM is on the wrong scent with the Volt and Chrysler's plan is just a bluff," he says.
- And then there’s Hummer. GM is nearing an agreement to sell its Hummer SUV business to China's Sichuan Tengzhong Heavy Industrial Machinery Co. for about $150M, sources say.
- Japanese core machinery orders edged up a seasonally-adjusted 0.5% in August from July, far short of expectations for a rise of 2.2%. The Friday data suggests companies continue to delay capital spending.
- Wholesale Inventories shrunk by 1.3% in August to $381.2B, more than the 1% decline expected. Wholesale sales climbed 1% to $317.9B, the fourth straight monthly increase. The inventory-to-sales ratio narrowed to 1.2 from 1.23 in July.
- Initial Jobless Claims fell a more than expected 33K to -521,000, the lowest level since January. Economists were expecting -540K. Continuing claims declined by 72K to 6,040,000.
- In Asia, China played catchup after being closed for a week of solid global gains. Tokyo was also up a lot, but India markets dipped. Europe stocks are down a drop at midday, and U.S. futures are also off slightly.
- Asia: Shanghai +4.76% to 2,912. Nikkei +1.87% to 10,016. Hang Seng +0.03% at 21,499. BSE -1.19% to 16,643.
- Europe at midday: London -0.1%. Paris -0.2%. Frankfurt -0.2%.
- Futures at 7:00: Dow and S&P are -0.05%. Nasdaq -0.3%. Crude -0.4% to $71.40. Gold -0.5% to $1,050.80. 10-year Tsy -0.09%. Euro -0.1% vs. dollar. Yen -0.4%. Pound -0.5%.
Friday's Economic Calendar
- 8:30 Trade Balance
8:30 USDA World Agricultural Supply and Demand Estimates
8:30 Atlanta Fed: Short Selling: Costs and Benefits
8:30 Fed: Key Developments in Monetary Economics, Day 2
9:30 Senate Banking Committee: Restoring Credit to Manufacturers
10:00 Job Openings and Labor Turnover
- Notable earnings before Friday's open: INFY
Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.