- Dubai World in debt restructuring talks. Dubai World broke six days of silence by saying late Monday it is in "constructive" talks with lenders to begin restructuring $26B in debt, and that the rest of its liabilities are on "a stable financial footing." The disclosure, which was less than half the $59B that the government of Dubai said it would freeze last week, sparked a final-hour rally in U.S. stocks. Dubai World also hired well-known dealmaker Ken Moelis to advise on the debt restructuring; Moelis noted there had been confusion between debt for Dubai World and debt issued by Dubai itself, and emphasized the firm was "doing private transactions with private money." In its statement (.pdf), Dubai World promised "a policy of regular communication" going forward.
- GE/Vivendi deal clears path to NBC sale. GE (NYSE:GE) and Vivendi (OTC:VIVDY) have forged a tentative $5.8B deal for Vivendi's 20% stake in NBC Universal, clearing the key obstacle to GE selling a 51% stake in NBCU to Comcast (NASDAQ:CMCSA) at a valuation of about $30B. Sources say the pair plan to announce a tentative deal - that will allow GE to offload a net loser, and give Comcast more control over the programs coming across its network - on Thursday.
- AIG pares debt with equity swaps. AIG (NYSE:AIG) said Tuesday it closed two transactions that reduce its debt with the NY Fed by $25B using two debt-for-equity swaps. The NY Fed will receive preferred shares with a liquidation preference worth $16B in American Life Insurance (Alico) and $9B in American International Assurance (NYSEARCA:AIA), which will be placed in special purpose vehicles (SPV). The SPVs will help prepare the two subsidiaries for an IPO or third-party sale, AIG said. In a separate statement, AIG said it was moving forward with the separation of Alico. The liquidation preference is an undisclosed percentage of the estimated fair market value of the units; AIG would benefit should their market valuation exceed $25B. AIG also said that as of Tuesday, its outstanding principal balance under the NY Fed credit facility was about $17B, and the total amount available under the facility had been reduced to $35B from $60B.
- Nokia joins AT&T in suing LCD makers. Nokia (NYSE:NOK) sued Samsung, LG Displays (NYSE:LPL), AU Optronics (NYSE:AUO) and other LCD makers accusing them of price fixing, a suit that mirrors claims made by AT&T (NYSE:T) last month. The conspiracy "artificially inflated the price of liquid crystal displays ultimately incorporated into LCD products purchased by Nokia, causing Nokia to pay higher prices," the complaint said.
- Government turns up the heat on home lenders. The Treasury and HUD unveiled their Mortgage Modification Conversion Drive Monday, hoping to increase pressure on mortgage lenders to permanently reduce monthly payments for troubled homeowners. In a statement, the administration said 375K of the current 650K trial modifications are slated to convert to permanent modifications by year-end. The Treasury has complained that banks and mortgage lenders have been slow to process modifications, and hopes the new initiative will turn up the pressure by forcing mandatory reporting of progress and denials, and sanctions for non-compliant services.
- Fed furthers triparty reverse repo test. The New York Fed said Monday it is expanding its test of triparty reverse repurchases to include small real-value transactions. In a reverse repo, the Fed pledges mortgage-backed securities and Treasurys it bought as collateral for short-term loans, thereby draining cash from the financial system. Reverse repos are normally the domain of the 18 primary dealers; triparty repos expand the facility to the $2.5T money-market mutual fund business. The Fed emphasized the move remains an exercise in operational preparedness, and "does not represent any change in the stance of monetary policy," adding that, "no inference should be drawn about the timing of any change in the stance of monetary policy in the future."
- SEC settlement challenged. The SEC will come under judicial fire Tuesday after a District Court judge reopened a civil case following complaints SEC staff had evidence of inside trading before settling out of court. U.S. District Judge Harold Baer Jr. ordered lawyers for the SEC and accused trader Khaled Mohammed Sharif Al Sayed Al Hashemi to provide "more information relating to the settlement and the facts underlying this case" to "determine whether a final judgment on consent is appropriate." Hashemi agreed to pay a total of $875K, including allegedly improper gains he made on shares of Nova Chemicals Corp. plus a penalty.
- Euro area joblessness remains elevated. Euro area unemployment was unchanged at 9.8% in October, Eurostat said (.pdf) Tuesday, but companies continued to cut jobs even as the area emerged from the deepest recession since WWII. Eurostat revised September unemployment to 9.8% from a previous 9.7%. 134,000 people lost their jobs, leaving 15.6M unemployed in the 16-country region. The rise is likely to have continued in November; a survey of manufacturing companies (.pdf) released this morning found they continued to reduce payrolls.
- Japan offers more liquidity. The Bank of Japan agreed at a hastily-assembled meeting Tuesday to pump another ¥10T ($116B) into the economy using 0.1%, three-month funds - an attempt to address growing concern that deflation and a surging yen could derail Japan's fragile economic recovery. The new facility should "further enhance easy monetary conditions" and is designed to "encourage a further decline in longer term interest rates," the BOJ said in a statement (.pdf). Analysts called the move "better than nothing," but said it was "relatively weak" compared to market expectations.
- Irish banks buy into bailout. The Bank of Ireland (NYSE:IRE) and Allied Irish Banks (AIB) said Monday they will start transferring about €40B in risky loans to Ireland's government, signaling their intent to take part in a bailout - and warning that if they don't, full nationalization could be the result. Shares of the pair were off about 3.5% Monday.
- IBM buys Guardium. IBM (NYSE:IBM) confirmed it acquired privately-held database security startup Guardium, to be integrated into its information management division. Guardium's product lets companies give customers and partners access to their corporate applications, while ensuring that the databases used by those applications remain shielded. Financial terms were not disclosed, but the price was thought to be about $225M.
Earnings: Tues. Before Open
- Staples (NASDAQ:SPLS): Q3 EPS of $0.39 beats by $0.01. Revenue of $6.5B (-6%) in-line. "With North American Retail growing again, improving trends in our Catalog businesses, solid profitability in our European office products portfolio, and record free cash flow, we're increasingly optimistic about the future." (PR)
Earnings: Mon. After Close
- Guess (NYSE:GES): Q3 EPS of $0.69 beats by $0.18. Revenue of $523M (-1%) vs. $483M. Sees Q4 EPS of $0.77-0.80 vs. $0.69, on revenue of $585M-605M vs. $564M. Sees full-year EPS of $2.45-2.48 vs. $2.19. Shares +7.4% AH. (PR)
- OmniVision Technologies (NASDAQ:OVTI): FQ2 EPS of $0.27 beats by $0.11. Revenue of $183M (+12%) vs. $164M. Sees FQ3 revenues of $145M-160M vs. $169M. Shares -6.2% AH. (PR)
Asia markets posted gains Tuesday and Europe stocks were broadly higher as Dubai World fears receded. Futures indicate a strong open for U.S. stocks.
- Asia: Nikkei +2.4% to 9572.2. Hang Seng +1.3% to 22113. Shanghai +1.3% to 3235. BSE +1.6% to 17198.
- Europe at midday: FTSE +1.6% to 5274. CAC +2% to 3754. DAX +2% to 5737.
- Futures: Dow +0.8% to 10411. S&P +0.8% to 1104. Nasdaq +0.95%. Jan. crude +1.4% to $78.35. Feb. gold +1.1% to $1,195.70. Mar. 30-year Tsy -0.46% to 122-05. 10-year -0.18%. Euro +0.4% vs. dollar. Yen -0.5%. Pound +0.7%.
Tuesday's Economic Calendar
12:05 BoJ Meeting
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
10:00 Pending Home Sales
10:00 Construction Spending
10:00 ISM Manufacturing Index
10:00 Results of $25B, 42-Day TAF Auction
12:00 PM Nov. Auto sales
12:20 PM Fed's Plosser: Economic outlook
5:00 PM ABC Consumer Confidence Index
- Notable premarket earnings: SPLS
- Notable post-market earnings: GAME, SNDA
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