- Thain back in the spotlight as CIT chief. Former Merrill Lynch chief John Thain was tapped to lead CIT Group (CIT), the lender that emerged from bankruptcy in December. CIT said Thain will become chairman and chief executive effective immediately. The company still needs to fill several other key positions, including a chief financial officer and a risk manager.
- Toyota recall likely. An apology to consumers by Toyota (TM) President Akio Toyoda helped lift Toyota's U.S. shares 4% on Friday, but the rise may be short-lived as sources say the company is planning to recall its 2010 Prius hybrids in Japan this week to repair a problem with the braking system. The company is expected to take similar steps in the U.S. and elsewhere. It's also considering a recall for its Sai and Lexus hybrids that use the same braking system as the Prius. Among other questions generated by this fiasco is why Toyota waited to fix sticky accelerator pedals in the U.S. when it rolled out a fix in Europe nearly half a year ago. Shares -1% premarket (7:00 ET).
- G-7 finmins wrap up talks. G-7 finance ministers wrapped up talks this weekend in Iqaluit, Canada, returning to informal straight talk among countries with similar economic problems rather than talking with outsiders and crafting official communiques. Officials made the case for continued economic stimulus but promised to save later, and tried to reassure markets (unsuccessfully) that the debt problems in southern Europe are control. They also pledged to force banks to improve the quality and quantity of the capital they hold, played down differences on banking reform and talked about the importance of more exchange-rate flexibility.
- SAP surprises with new CEOs. SAP (SAP) announced yesterday that CEO Leo Apotheker had resigned after his contract was not renewed, and the company will return to a structure with two co-chief executives. SAP said the board reached a "mutual agreement" on the matter, but both SAP's board and Apotheker declined to elaborate on the surprise move. Bill McDermott, head of field organization, and Jim Hagemann Snabe, head of product development, will take over as co-CEOs. Shares -2.5% premarket (7:00 ET).
- Citi looks to sell car loans. Citigroup (C) is said to be in talks to offload up to $3B in car loans as it tries to remove billions of dollars of troubled assets from its balance sheet. To make the sale more attractive, Citigroup is believed to have offered potential buyers a few years worth of financing. Though bankers said the initial response from bidders has been encouraging, some hedge funds and private equity groups said the securitization market’s failure to recover makes the assets less attractive.
- Geithner defends U.S. AAA rating. Geithner said the U.S. isn't at risk of losing its triple-A bond rating, following a warning from Moody's last week. The fact that investors turned to U.S. Treasury securities and the U.S. dollar during the financial crisis "is a very, very important sign of basic confidence in our capacity as a country to work together" to fix problems including a growing budget deficit.
- Goldman's involvement in mortgage market meltdown. According to a New York Times report, U.S. regulators are investigating whether the mortgage insurance market was improperly distressed in 2008 because of demands that Goldman Sachs (GS) and other banks made on AIG (AIG). A Goldman spokesman said "this is the New York Times' third attempt to develop a conspiracy theory about Goldman Sachs and AIG. The theories are disgracefully contradictory and the 'facts' don't stand up to serious scrutiny."
- Fed to outline tightening plan. Starting this week, Bernanke will begin to lay out the Federal Reserve's plan to tighten credit once the Fed decides the economy is sufficiently strong. Though any moves are still at least several months away, one of the Fed's primary tools will be the interest on excess reserves. Currently set at 0.25%, it's the interest rate the Fed pays banks on money they leave on reserve at the central bank, and it will be raised when the Fed is ready to hit the brakes.
- JAL sticks with OneWorld. Japan Airlines has opted to stay in the OneWorld alliance with American Airlines (AMR) and will end talks with Delta (DAL), according to local media reports. JAL management decided switching partners was too risky and could hurt the airline's chances of a quick turnaround. An official announcement is expected this week.
- Kirin, Suntory end merger talks. Japan's Kirin Holdings (OTCPK:KNBWY) and Suntory Holdings called off ambitious merger talks this morning after failing to agree on fundamental points such as who would own and manage the combined food-and-beverage giant. The two firms had been in negotiations for months and would have created a company with ¥3.8T ($43B) in annual revenue.
- BofA hopes for SEC settlement approval. Bank of America (BAC) returns to court today to find out if Judge Jed Rakoff will approve a revised $150M settlement agreement with the SEC. Rakoff had rejected an earlier deal, and it's unclear if he'll sign off on the new one since it fails to address some of the concerns he had with the initial settlement.
- Lloyds talks to P-E firms over unit. Lloyds (LYG) is reportedly in talks to sell a controlling stake in its Integrated Finance division. Several private equity firms, including 3i, Advent International and Coller Capital, have expressed interest in the troubled unit, but a drop in asset values has made a deal more difficult.
- IBM unveils new, faster chip. IBM (IBM) is announcing its Power7 chip today, hoping that its next generation of microprocessor chips and systems will help extend its recent lead in the market for midrange servers. The chip is four times faster than its predecessor, and its debut comes as rival Intel (INTC) is expected to introduce a long-delayed version of its high-end Itanium chip today.
- Santander mulls U.K. listing. Banco Santander (STD), the eurozone's largest bank, is reportedly considering an IPO for its U.K. arm alongside a wider deal such as the acquisition of another bank. A Santander spokesman declined to comment and sources say such a move is possible but unlikely in the short-term. A listing of Sovereign Bancorp, the bank's U.S. arm, "isn't even being considered." Shares -1.7% premarket (7:00 ET).
- Vodafone signs deal with Oracle. Vodafone (VOD) reached a four-year agreement with Oracle (ORCL) to provide voice, data and management services to employees in the European, Middle East and Africa region. Vodafone didn't specify how much the contract was worth, but said its "revolutionary per user pricing model" gives Oracle the potential for significant savings and cost efficiencies. Premarket: VOD -1.3%, ORCL +0.7% (7:00 ET).
- Small businesses could drag down recovery. Small businesses helped lead the economy out of the four recessions since 1980, but are now threatening the country's economic recovery as they continue to cut capital spending and fire employees. Another 3,000 jobs were eliminated from small businesses in January; if the trend continues, improvement in the national unemployment rate, which dropped to 9.7% in January from 10.1% in December, could stall and economic growth could fall short of the 2.7% annual rate forecast.
- Friday's failure. Regulators closed First American State Bank of Minnesota on Friday, bringing this year's tally of failures to 16. The move is estimated to cost the FDIC's insurance fund $3.1M.
Earnings: Monday Before Open
- Hasbro (HAS): Q4 EPS of $1.09 beats by $0.28. Revenue of $1.37B (+11.7%) vs. $1.33B. (PR)
- Loews Corp (L): Q4 EPS of $0.94 misses by $0.01. Revenue of $3.8B (+39.3%) vs. $3.5B. (PR)
- In Asia, Nikkei -1.05% to 9,952. Hang Seng -0.6% to 19,551. Shanghai -0.1% to 2,935. BSE +0.1% to 15,936.
- In Europe at midday, London flat. Paris +0.2%. Frankfurt +0.5%.
- Futures: Dow -0.1%. S&P -0.1%. Nasdaq -0.1%. Crude +0.4% to $71.48. Gold +1.6% to $1,069.50.
Monday's Economic Calendar
- 10:00 Employment Trends Index
- Notable earnings before Monday's open: CVS, GOLD, HAS, HMY, L, LO, LRY, NDAQ, NVE
- Notable earnings after Monday's close: AINV, ATML, AXS, CIM, CPT, ERTS, HIG, LNC, NUAN, PFG, PPDI, QGEN, TCK, TWTC, VECO, VMC, WRB
Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.
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