- Winners and losers in Obama budget. Obama unveiled his $3.8T budget proposal for the coming fiscal year, and made no meaningful mention of deficit-reduction measures as he looked to borrow another $1.3T in 2011. The plan includes a $970B tax increase over the next decade on high-income earners, and a $400B tax increase on large businesses. Other groups hurt by the budget proposal include hedge-fund and private equity employees, and fossil-fuel companies. The budget boosts SEC funding by 11% to $1.23B to help the agency get tougher on fraud. Notably, the budget proposal assumes the U.S. economy will experience six years of above-average growth with no complications from high inflation or interest rates.
- Volcker pushes for bank curbs. White House adviser Paul Volcker will testify before Congress today on the importance of curbing banks' high-risk activities and of preventing cases of "too-big-to-fail." According to prepared testimony, he'll provide more details on the so-called "Volcker rule" proposal, suggesting banks' proprietary and speculative activities shouldn't be protected by the government.
- BNY Mellon/PNC strike $2.3B deal. Bank of New York Mellon (NYSE:BK) inked a $2.3B all-cash deal to acquire PNC's (NYSE:PNC) Global Investment Servicing unit, which provides back-office processing for financial advisers, fund managers and brokers. The deal will make BNY Mellon the No. 2 U.S. provider of fund accounting, administration and transfer agency, and adds $855B to its $22.3T in assets under administration. The unit, which employs 4,450, represents 8% of PNC's workforce, and earned just $63M in profits in 2009. PNC will likely use the funds to pay down some of the $7.6B in TARP funds it owes.
- Aussie rate decision surprises markets. Australia surprised markets by holding its cash rate target steady at 3.75%, saying it needed time to evaluate the effect of rate rises in late 2009. Economists had widely expected a rate increase to 4%, and the central bank did indicate a resumption of its tightening policy is likely in the coming months. The announcement buoyed Australian shares while sharply dragging down the Australian dollar.
- Burkle bent on Barnes & Noble buy. In a letter disclosed yesterday in an SEC filing, activist investor Ron Burkle formally asked the board of Barnes & Noble (NYSE:BKS) to let him acquire up to 37% of the company's shares without triggering "poison pill" provisions that kick in at 20%. Burkle, who currently holds a 19% stake, also blasted the company for having two sets of anti-takeover rules: one for insiders and one for outsiders. News of the filing sent Barnes & Noble shares up 18% in after-hours trading.
- Shelling out for Brazilian ethanol. Royal Dutch Shell (NYSE:RDS.A) announced it will contribute $1.63B over two years to form a joint venture with Brazilian sugar and biofuels giant Cosan (NYSE:CZZ). The deal is the biggest foreign investment in Brazil's ethanol industry to date, and could give Shell access to one of the world's largest biofuel markets. Several other rivals have made investments in Brazil's ethanol sector, including a deal by BP (NYSE:BP) in 2008. Shell -0.7% premarket (7:00 ET).
- Moody's warns on debt risks. In Moody's annual report on risks, the rating firm warned nearly 1,000 companies with a junk rating will face significant refinancing needs over the next several years, with around $700B of debt coming due between 2012 and 2014. "Longer-term maturities are vulnerable if the economic recovery doesn't continue to take hold," said Kevin Cassidy, a senior credit officer at Moody's. If unemployment and credit conditions worsen, "things could get tough pretty quick for some companies."
- Amcore raises going concern doubts. Along with reporting a Q4 loss, troubled lender Amcore Financial (AMFI) said it's in default of its credit agreement with lender JPMorgan Chase (NYSE:JPM), and that failure to attract new capital this year may affect its ability to continue as a going concern.
- Citigroup settles with NY AG over checking fees. Citigroup (NYSE:C) reached a settlement with New York Attorney General Andrew Cuomo on checking account fees, and will suspend its plans to charge fees on the accounts of more than 1M customers. Cuomo said Citigroup failed to adequately disclose information about the charges and hadn't offered free checking for long enough before implementing the fees.
- Third-party Google store coming. Google (NASDAQ:GOOG) is gearing up to launch a store that will sell online business software designed by outside developers and meant to integrate and add capabilities to Google Apps. Sources say the store could be announced as soon as next month as Google advances its battle with Microsoft (NASDAQ:MSFT).
- Boston Sci settles J&J patent dispute. Boston Scientific (NYSE:BSX) reached a deal to pay Johnson & Johnson (NYSE:JNJ) $1.73B to settle two long-running patent disputes over cardiac stent products. The surprisingly pricey settlement could impede Boston Scientific's ability to make the deals it needs to shore up its product pipeline and boost sales. Other litigation between the two companies continues.
- BP profits on higher oil. BP (BP) posted a Q4 net profit of $4.3B (see details below), in part from higher oil prices and increased production, although the company's refining performance was weaker than expected. CEO Tony Hayward said the economic recovery this year will be "slow and gradual" so BP will work to improve performance and cut costs. Shares -4.7% premarket (7:00 ET).
- Bidders shortlisted for Morgan's CCIC stake. Three private equity firms are on the shortlist to bid for Morgan Stanley's (NYSE:MS) stake in China International Capital Corp. Kohlberg Kravis Roberts, Bain Capital and TPG Capital are all competing for the $1B-plus stake that Morgan Stanley bought for just $37M in 1995. Morgan Stanley has been trying to sell its one-third stake for more than two years, and could receive up to $1.5B from a sale.
- France Telecom ready for new CEO. France Telecom (FTE) is set to announce Stephane Richard as its new CEO, accelerating the planned timetable for a leadership change as it tries to overcome recent controversy over employee suicides. Richard is already the head of the company's domestic operations and could take the helm as soon as March 1.
- Medco buys DNA Direct. Medco Health Solutions (NYSE:MHS) announced its acquisition of DNA Direct, a privately held genetic testing services company. The deal will help Medco, a pharmacy benefit manager, significantly expand its involvement in personalized medicine. Terms of the deal weren't disclosed.
- MetLife merges China ventures. MetLife (NYSE:MET) is merging its two life-insurance joint ventures in China to help it gain marketshare in the country's fast-growing insurance sector. The move is in compliance with a plan by China's insurance regulator to have foreign insurers focus their business in a single venture.
Earnings: Tuesday Before Open
- Archer Daniels Midland (NYSE:ADM): FQ2 EPS of $0.88 beats by $0.16. Revenue of $15.9B (-4.6%) vs. $16.5B. (PR)
- BP (BP): Q4 EPS of $1.37 misses by $0.14. Revenue of $M in-line. Shares -4.7% premarket. (PR)
- Dow Chemical (NYSE:DOW): Q4 EPS of $0.18 beats by $0.07. Revenue of $12.4B (+15%) vs. $11.8B. (PR)
- Emerson Electric Company (NYSE:EMR): FQ1 EPS of $0.56 beats by $0.14. Revenue of $5B (-7.5%) vs. $4.6B. (PR)
- Entergy (NYSE:ETR): Q4 EPS of $1.75 beats by $0.20. Revenue of $2.5B (-17%) vs. $3.7B. (PR)
- Hershey Foods (NYSE:HSY): Q4 EPS of $0.63 beats by $0.03. Revenue of $1.4B (+2.2%) in-line. (PR)
- Patriot Coal (PCX): Q4 EPS of $0.12 beats by $0.52. Revenue of $503M (-7%) vs. $525M. (PR)
- Pepsi Bottling Group (PBG): Q4 EPS of $0.59 beats by $0.16. Revenue of $3.8B (-0.1%) vs. $3.83B. (PR)
- Suncor Energy (NYSE:SU): Q4 EPS of C$0.21 misses by C$0.18. (PR)
- Whirlpool (NYSE:WHR): Q4 EPS of $1.24 misses by $0.08. Revenue of $4.8B (+13%) vs. $4.4B. (PR)
Earnings: Monday After Close
- Anadarko (NYSE:APC): Q4 EPS of $0.04 beats by $0.01. Revenue of $2.4B (-17%) in-line. Shares -0.46% AH. (PR)
- Crown Holdings (NYSE:CCK): Q4 EPS of $0.27 beats by $0.04. Revenue of $1.92B (+2%) vs. $1.96B. "We expect 2010 to be another solid year of improving performance ... Demand in our mature packaging markets of North America and Western Europe is expected to recover from 2009 levels and operating improvements and cost reductions are anticipated to continue throughout 2010." Shares +5.3% AH. (PR)
- Hologic (NASDAQ:HOLX): FQ1 EPS of $0.29 beats by $0.03. Revenue of $412M (-4%) vs. $404M. Sees Q2 revenue of $410M-415M vs. $406M. Shares +3.2% AH. (PR, earnings call transcript)
- MannKind (NASDAQ:MNKD): Q4 EPS of -$0.53 misses by $0.13, on no revenue. Total operating expenses declined 31% to $55.8M. Shares +0.1% AH. (PR, earnings call transcript)
- Plum Creek Timber (NYSE:PCL): Q4 EPS of $0.19 beats by $0.03. Revenue of $258M (-44%) vs. $250M. Sees Q1 EPS of $0.34-0.39 vs. $0.14. Shares +1.3% AH. (PR, earnings call transcript)
- In Asia, Nikkei +1.6% to 10,371. Hang Seng +0.1% to 20,272. Shanghai -0.2% to 2,935. BSE -1.2% to 16,163.
- In Europe at midday, London +0.4%. Paris +0.7%. Frankfurt +0.8%.
- Futures: Dow +0.3%. S&P +0.3%. Nasdaq +0.2%. Crude +1.1% to $75.27. Gold +0.8% to $1,113.40.
Tuesday's Economic Calendar
Jan. Auto sales
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
10:00 Pending Home Sales
10:00 Geithner: Budget Testimony
2:30 PM Paul Volcker: Prohibiting High-Risk Investment Activities
5:00 PM ABC Consumer Confidence Index
- Notable earnings before Tuesday's open: ADM, ADP, AMB, ARM, ARTG, BP, CMI, COCO, DHI, DOW, EMR, ETR, HSY, KFT, LXK, MPEL, MRO, PBG, SU, UPS, WHR
- Notable earnings after Tuesday's close: ACE, AFL, CHRW, CTRP, EXM, FISV, JDSU, MEE, MET, MTW, MYGN, NWSA, PXD, TSO, UNM, VRSN
Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.
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