- Rumors of a Merkel resignation. German officials flatly deny rumors that German Chancellor Angela Merkel is going to resign, but the euro is being heavily sold off and was recently down 0.8% vs. the dollar.
- Google fails to find allies. Google (GOOG) reportedly reached out to peers to draw attention to the cyber-attack in China, but was rebuffed. Three other companies - Adobe Systems (ADBE), Juniper Networks (JNPR) and Rackspace Hosting - have now conceded they too were targeted, but their initial silence underscores the pressure firms are feeling to protect their business in China. The U.S. government said it may take formal measures against China over the cyber-attack, while Chinese officials played down concerns, saying the affair wouldn't affect U.S. trade ties. Meanwhile, Microsoft (MSFT) confirmed the hackers had used an Internet Explorer security vulnerability to carry out the attack.
- Shiseido buys U.S. cosmetic firm. Shiseido (OTCPK:SSDOY), Japan's largest cosmetic firm, agreed to buy U.S.-based Bare Escentuals (BARE) for $1.7B in a deal that marks a 43% premium to Bare Escentuals' last closing price. Shiseido, which is struggling with a shrinking home market as Japan's population ages, is using the deal to help it break into the fast-growing natural-ingredient cosmetics market in North America. Shares of Shiseido closed up 6% in Tokyo trading.
- CF Industries drops hostile bid. CF Industries (CF) backed out of its year-long hostile bid for Terra Industries (TRA) yesterday, bringing a three-way battle for control of the North American fertilizer business much closer to resolution. The development may help Agrium (AGU), which is trying to advance a hostile bid for CF, but CF has sworn to fight the bid, and rising valuations in the fertilizer industry could make it difficult for Agrium to pursue the offer.
- Obama: Show me the money. As expected, Obama announced his plans for a bank levy yesterday, which will bring in at least $90B from 50 top financial firms over the next ten years. Speaking of "obscene bonuses" and "twisted logic," Obama said "we want our money back, and we're going to get it."
- FCIC widens its net. Phil Angelides, chairman of the Financial Crisis Inquiry Commission, said he is widening his probe beyond just bankers and plans to investigate the actions of regulators as far back as the Clinton administration. Angelides said Bernanke and former Fed Chairman Alan Greenspan would likely be called to testify, and that he wants to find out "what did the FBI, the Fed, the Department of Justice and others know about subprime lending; when they knew it, and why didn't they act?"
- Monsanto faces antitrust probe. The Justice Department launched a formal antitrust investigation into Monsanto (MON) in connection to its Roundup Ready soybean, the nation's most popular genetically-modified crop. Around 90% of all the soybeans grown in the U.S. contain this Monsanto gene, which helps the crops survive a chemical weedkiller. The seed loses patent protection in four years, and Monsanto has been pushing farmers to switch to a newer, pricier model that will still be protected.
- Motorola reconsiders breakup. Motorola (MOT) is said to be reconsidering its breakup plan, and has put an auction of its largest business unit on hold. The company is facing lower-than-expected offers for its home and networks mobility division, with bids in the $3-4B range vs. the $4-5B Motorola was hoping for.
- Oil demand surging. The International Energy Agency said (.pdf) this morning that global oil demand in 2010 will reach the highest level since 2007, fueled by faster growth in emerging economies in Asia. After its upward revision of 10K barrels/day, the IEA now expects demand to increase by 1.4M barrels/day in 2010.
- Dodd may pull support from consumer protection agency. Sen. Christopher Dodd, chairman of the Senate Banking Committee, may scrap the creation of an independent Consumer Financial Protection Agency, with sources saying Dodd has discussed abandoning the idea as a way to secure bipartisan support for financial reform legislation. Instead, Dodd is reportedly asking Republicans to support a strengthened consumer-protection division within another federal agency.
- China FDI surges. China continues to heat up, reporting this morning that foreign direct investment more than doubled in December from the year before. December's FDI was $12.1B, marking the fifth consecutive month of growth. Total 2009 FDI was down 2.3% to $90B, but that's still a fairly good showing considering the state of the global economy over the past year.
- INTC results tell story of possible tech rebound. Intel (INTC) posted better than expected quarterly results (details below), suggesting that tech demand, and specifically corporate demand, may be bouncing back. (Read Intel's earnings call transcript)
- Starwood adds new claims to Hilton suit. Starwood Hotels (HOT) stepped up its battle against Hilton Worldwide, adding new allegations to a lawsuit filed last April over corporate-espionage charges. Starwood claims Hilton stole over 100,000 commercially sensitive documents and used them to pursue a rival to Starwood's successful "W" hotel chain. The newest allegations say that Hilton's misconduct reached the highest level of Hilton's management, including its CEO Christopher Nassetta.
- Kodak sues Apple, RIMM. Kodak (EK) filed a lawsuit against Apple (AAPL) and Research in Motion (RIMM) over alleged patent violations in the iPhone and BlackBerry. Kodak hasn't specified how much it's seeking in damages, but said the patent in question was found to be valid and enforceable in a case that Kodak won against Samsung.
- Hershey ramps up bid preparation. Hershey (HSY) is accelerating its preparations for a Cadbury (CBY) bid, and has been in talks with credit-ratings companies about how to structure the bid without damaging its investment-grade rating. Sources say Hershey has also drafted commitment letters with lenders JPMorgan (JPM) and Bank of America (BAC) to secure a multi-billion-dollar loan package.
- JAL draws on credit line as bankruptcy nears. Japan Airlines announced this morning that it has received the ¥145B ($1.59B) remaining from a state bank credit line. A bankruptcy filing is expected as soon as Tuesday.
- Retail sales disappoint. Retail sales declined 0.3% in December, a downside surprise from the +0.5% expected and from +1.8% in November (revised from +1.3%). Excluding automobiles, sales were down 0.2% vs. +0.3% expected and +1.9% prior (revised from +1.2%).
- Jobless claims inch up. Jobless claims rose 11K to 444K, higher than the 430K expected. Continuing claims -211K to 4,596,000.
- Inventories grow. Business inventories grew 0.4% in November to $1.31B, slightly beating expectations of +0.3% and matching October's revised figure of +0.4%. Sales were up 2% to $1.03B. The inventory/sales ratio fell to 1.28 from prior 1.30, and is down from 1.43 a year ago.
Earnings: Friday Before Open
- Carter's (CRI): FQ3 EPS of $0.84 beats by $0.18. Revenue of $481M (+10.7%) vs. $451M. Sees full year EPS of $2.10 vs. $1.85 consensus. (PR)
- JPMorgan (JPM): Q4 EPS of $0.74 beats by $0.13. Revenue of $23.16B vs. $26.8B. Adds $1.9B to consumer loan loss reserves, resulting in firmwide credit reserves of $32.5B and loan loss coverage ratio of 5.5%. "Though these results showed improvement, we acknowledge that they fell short of both an adequate return on capital and the firm’s earnings potential... While we are seeing some stability in delinquencies, consumer credit costs remain high, and weak employment and home prices persist. Accordingly, we remain cautious." (PR)
Earnings: Thursday After Close
- Intel (INTC): Q4 EPS of $0.40 beats by $0.10. Revenue of $10.6B (+28%) vs. $10.2B. Gross margin of 65%. Sequential revenue gains in PC Client Group (up 10%), Data Center Group (up 21%), Other Intel Architecture Group (up 22%). Atom processor and chipset revenue up 6% sequentially. Sees Q1 revenue of $9.3B-10.1B vs. $9.4B. Shares +0.9% AH. (PR)
Asia stocks were mixed Friday. Europe is mostly lower, and U.S. stock futures are under some pressure after JPMorgan (JPM) sounded a cautious note in its Q4 earnings release.
- Asia: Nikkei +0.7% to 10982.1. Hang Seng -0.3% to 21654. Shanghai +0.3% to 3224. BSE -0.2% to 17554.
- Europe at midday: FTSE +0.1% to 5505. CAC -0.5% to 3998. DAX -0.6% to 5955.
- Futures at 7:00: Dow -0.4% to 10620. S&P -0.5% to 1139. Nasdaq -0.5%.
30-year Tsy +0.19% to 117-00. 10-year +0.15%.
March crude -0.7% to $79.33. Gold -0.8% to $1,133.50.
Euro -0.9% vs. dollar. Yen +0.3%. Pound -0.2%.
Friday's Economic Calendar
- 8:30 Consumer Price Index
8:30 Empire State Mfg Survey
9:15 Industrial Production
9:55 University of Michigan Consumer Sentiment
12:30 PM Fed's Lacker: Economic Outlook
- Notable earnings before Friday's open: CRI, JPM
Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.
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