- New proposals to rein in banks. With its healthcare reform under siege, the White House is once again taking aim at the banking sector. Obama will propose new rules today to limit the size of financial firms and their trading activities, specifically addressing firms’ proprietary trading in order to reduce excessive risk-taking. Sources say the new regulations will be reminiscent of Depression-era curbs, and could significantly impact big banks' bottom lines.
- JPMorgan edges in on RBS Sempra. JPMorgan (JPM) is reportedly in exclusive talks to buy the RBS Sempra (RBS, SRE) commodities joint venture. JPMorgan, Deutsche Bank (DB) and Australia's Macquarie (OTCPK:MQBKY) had all submitted bids of around $4B, but JPMorgan was reportedly willing to pay the most and RBS is looking for a transaction that can close quickly. A deal would make JPMorgan the fourth key bank in commodities trading, along with Goldman Sachs (GS), Morgan Stanley (MS) and Barclays (BCS).
- Sun shines on Oracle deal. EU antitrust regulators unanimously approved Oracle's (ORCL) purchase of Sun Microsystems (JAVA) this morning, saying they're "satisfied that competition and innovation will be preserved on all the markets concerned" and "Oracle's acquisition of Sun has the potential to revitalise important assets and create new and innovative products." Premarket: ORCL +1%, JAVA +0.2% (7:00 ET).
- More on AIG's data non-disclosure. New details continue to surface about AIG's (AIG) non-disclosure of counterparty payments. Apparently, the insurer submitted four rounds of regulatory filings over the course of six months, with more than 1,000 redactions, as the New York Federal Reserve pushed AIG to withhold data. The final version included more than 400 redactions, with the omitted data sealed until 2018. Meanwhile, the New York Fed has provided over 250,000 pages of documents in response to a subpoena, but lawmakers say the submission is "incomplete" and is missing key documents on AIG's credit-default swaps.
- Alcon fights back on Novartis deal. Alcon's (ACL) directors publicly slammed Novartis' (NVS) offer to acquire remaining Alcon shares, calling the proposal "grossly inadequate" and "offensive." Under the terms of the offer, Novartis would pay Nestle (OTCPK:NSRGY) 20% more for its Alcon stake than minority shareholders would receive for theirs. A prolonged battle will likely ensue.
- Gen Re pays up for AIG fraud. The SEC charged reinsurer General Re (BRK.A) for its role in accounting frauds by AIG (AIG) and Prudential Financial (PRU). General Re will pay $12.2M to settle the charges, $19.5M to a fraud fund as part of a non-prosecution agreement and $60.5M to settle a class-action lawsuit on behalf of injured AIG shareholders. General Re will also forfeit $5M in fees it received for helping AIG falsify its financial statements.
- Buffett unhappy with Cadbury deal. Warren Buffett came out staunchly against Kraft's (KFT) $19.6B acquisition of Cadbury (CBY), calling it a "bad deal" and raising questions about how Kraft CEO Irene Rosenfeld planned to pay for it. Buffett plans to maintain Berkshire Hathaway's (BRK.A) 9.4% stake in Kraft, but said Kraft's recent moves have left him feeling "poorer."
- Pension fund takes aim at corporate governance failures. A pension fund that campaigns against corporate governance failures is taking aim at some high profile companies, including Citigroup (C), Goldman Sachs (GS) and IBM (IBM). All told, the pension fund will attend the upcoming annual shareholder meetings of 33 firms and has submitted proxy proposals on issues including bank bonuses, splitting the chairman and CEO positions and giving shareholders a "say on pay" for executives.
- World Bank sees mixed forecast. In its latest report (.pdf), the World Bank acknowledged that the global economy is recovering more quickly than anticipated but warned a double-dip recession is possible "if the private sector continues to save in order to restore balance sheets." The global growth forecast for 2010 was raised to 2.7% from 2%, with the 2011 forecast left unchanged at 3.2%. Estimates of the contraction in 2009 were lowered to 2.2% from 2.9%.
- NYT: No longer free. The New York Times (NYT) unveiled a plan to start charging readers for online content using a metered model, in which readers can access several free articles per month but must pay a monthly or annual fee for additional access. The plan, which will go into effect in 2011, is potentially risky, as a rise in subscription revenue may be overshadowed by a fall in viewers and, by extension, a fall in advertising revenue.
- China's economy boils and bubbles. China's economy grew 10.7% in Q4 from the year before, while consumer prices accelerated rapidly, rising 1.9% in December Y/Y vs. a 0.6% increase in November. Overall, the economy grew 8.7% in 2009, beating the 8% target Beijing had set. The new data points make it more likely that Chinese officials will crack down to keep the economy from overheating.
- iPhone may dump Google for MSFT. Apple (AAPL) is reportedly in talks with Microsoft (MSFT) to replace Google (GOOG) as the default search engine on the iPhone. Sources say the two firms have been negotiating for weeks, a reflection of the growing rivalry between Apple and Google.
- Icahn bets on Las Vegas. Activist investor Carl Icahn made the winning bid to purchase the bankrupt and unfinished Fontainebleau Las Vegas Resort. Icahn offered $156.5M, betting that the Las Vegas Strip will eventually experience a turnaround.
- Exxon deal raises concerns. Exxon Mobil (XOM) has come under fire for its planned $30B purchase of XTO Energy (XTO). Lawmakers are concerned about reduced-competition issues and a possible increase in the controversial technique of hydraulic fracturing, a method that would be central to the combined company's efforts.
- Nokia: Never get lost again. Taking a cue from Google (GOOG), Nokia (NOK) will begin offering free maps on its cellphones, including turn-by-turn directions covering 74 countries in 46 languages. The move is bad news for makers of personal navigation devices, but a Nokia executive said simply that "having this as a free functionality is inevitable for the industry."
- MGM mulls bankruptcy. MGM has received several first-round bids to sell itself, but is considering a prepackaged bankruptcy along with the sale to help clean up a balance sheet weighed down by $3.7B in debt. Initial bids, which are non-binding, have come in under $2B.
- Russia diversifies into Canadian dollar. Russia's central bank announced yesterday that it has begun buying Canadian dollars and securities as part of its efforts to diversify its foreign exchange reserves. Analysts believe other emerging market central banks may follow suit in diversifying away from the U.S. dollar and into other commodity-linked currencies and assets, including the Australian dollar. As of December, Russia's forex reserves stood at $439B and were evenly split between dollars and euros.
- Housing starts decline. Housing Starts fell 4% in December to 557K, short of the 573K expected and the 574K registered last month. Permits rose 10.9% to 653K vs. 590K expected and 589K last month.
- Producer prices inch up. The Producer Price Index rose 0.2% in December vs. 0% expected and +1.8% in November. The Core PPI was flat vs. +0.1% expected and +0.5% last month.
Earnings: Thursday Before Open
- Continental (CAL): Q4 EPS of -$0.03 beats by $0.04. Revenue of $3.2B (-8%) in-line. Shares +0.6% premarket (7:00 ET). (PR)
- Fifth Third Bancorp (FITB): Q4 EPS of -$0.20, may not be comparable to first call consensus of -$0.31. Tangible common equity ratio of 6.45%. Tier 1 common ratio of 7%. (PR)
- Knight Capital Group (NITE): Q4 EPS of $0.33 beats by $0.02. Revenue of $302M (-4%) vs. $293M. (PR)
- UnitedHealth (UNH): Q4 EPS of $0.81 beats by $0.08. Revenue of $21.7B (+6.5%) in-line. (PR)
Earnings: Wednesday After Close
- eBay (EBAY): Q4 EPS of $0.44 beats by $0.04. Revenue of $2.4B (+16%) vs. $2.3B. Payments business unit grows revenue 28%; Marketplaces unit +15%. Sees 2010 EPS of $1.63-1.68 vs. $1.60. (PR)
- Logitech (LOGI): FQ3 EPS of $0.32 beats by $0.05. Revenue of $617M (-2%) vs. $603M. "Improved sell-through in all of our retail regions ... We are also very pleased with our return to year-over-year profitability growth in Q3, driven by the substantial improvement in gross margin." (PR)
- Seagate Technology (STX): FQ2 EPS of $1.03 beats by $0.38. Revenue of $3B (+33%) vs. $2.85B. (PR)
- Skyworks Solutions (SWKS): FQ1 EPS of $0.27 beats by $0.02. Revenue of $245M (+17%) vs. $241M. Sees FQ2 EPS of $0.21 vs. $0.19, on revenue of $225M vs. $215M. (PR)
- SLM (SLM): Q4 EPS of $0.60 may not be comparable to estimate of $0.44. Net interest income after provision for loan losses of $320M (+99%). (8-K)
- Starbucks (SBUX): Q4 EPS of $0.32 beats by $0.04. Revenue of $2.7B (+4%) vs. $2.6B. Raises 2010 EPS outlook to $1.05-1.08. “Solid comparable store sales growth, combined with our continuing focus on controlling operating costs, drove significant operating margin improvement in both our U.S. and International business segments.” (PR)
- Total System Services (TSS): Q4 EPS of $0.31 beats by $0.01. Revenue of $431M (flat) vs. $435.5M. Sees FY10 EPS of $0.95-0.97 vs. $1.21, on revenues of $1.61B-1.65B vs. $1.76B. (PR)
- Xilinx (XLNX): FQ3 EPS of $0.38 beats by $0.03. Revenue of $513M (+12%) vs. $492M. Sees Q4 revenue up 3% to down 1%. (PR)
- In Asia, Nikkei +1.2% to 10,868. Hang Seng -2% to 20,863. Shanghai +0.2% to 3,159. BSE -2.4% to 17,051.
- In Europe at midday, London +0.1%. Paris +0.5%. Frankfurt +0.3%.
- Futures: Dow -0.1%. S&P flat. Nasdaq -0.15%. Crude -0.05% to $77.70. Gold -0.8% to $1,103.10.
Thursday's Economic Calendar
- 8:30 Jobless Claims
10:00 Leading Indicators
10:00 Philly Fed Business Outlook
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
4:30 PM Fed Balance Sheet
4:30 PM Money Supply
- Notable earnings before Thursday's open: APH, CAL, CMA, ESI, FCS, FITB, FNFG, GS, KEY, LM, LUV, NITE, PCP, PNC, PPG, SBIB, TCB, UNH, UNP, XRX
- Notable earnings after Thursday's close: ACS, AMD, AXP, BNI, BXS, COF, ED, ELX, GOOG, IGT, ISRG, PBCT, WDC
Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.
Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.