- U.S. may sell Citi stake sooner than thought. The U.S. may sell its stake in Citigroup (C) sooner rather than later, with media reports pegging a possible sale as soon as this spring. Federal officials had said they plan to unload the government's 27% stake in Citigroup over the next year, but hadn't indicated it could happen on such an accelerated timetable. Citi's shares rose 7.3% yesterday, in part because of strong demand for the bank’s preferred shares. C +1.8% premarket (7:00 ET).
- Apollo to buy Citi unit. Apollo Management has reportedly signed a preliminary deal to buy Citigroup's (C) property investment unit, giving it access to around $12.5B in gross assets and its first exposure to Europe. Apollo will also take on the unit's team of 60 professionals. The two companies declined to comment.
- Barclays is on the prowl again. Barclays (BCS) is said to be in the market for a major retail bank that will boost its U.S. presence and its level of deposits. The bank is examining the impact of new regulations, including a tax that focuses on liabilities other than deposits, and has created an internal team to assess possible targets. Barclays, which scooped up the North American operations of Lehman Brothers at the peak of the financial crisis, may also seek retail operations in Western Europe. BCS -1.5% premarket (7:00 ET).
- New facet to Abbott investment. Abbott Labs (ABT) agreed to buy Facet Biotech (FACT) for $27/share in cash, a net value of about $450M. The deal allows Abbott to shore up its early and midstage pipeline, and to gain access to new drugs, including a potential treatment for multiple sclerosis. The news sent Facet up 67.2% to $27.11.
- Banks told to hold on to cash. Regulators have reportedly told banks not to increase their dividends or buy back shares until the economy is more clearly in recovery and new regulations sorted out. The orders are unwelcome news to investors in the stronger financial firms, such as JPMorgan (JPM) and Goldman Sachs (GS), who have been pushing for a dividend increase or stock buyback.
- Banks face possible wind-down fee. Sources said the Senate is nearing a deal to create a $50B fund by assessing fees on large financial firms, including Goldman Sachs (GS) and Citigroup (C), that are deemed to be a systemic risk. The money would be used in the event one of the institutions failed and needed to be wound down, and the FDIC would get primary responsibility for managing the firm's shutdown.
- Prius incident prompts new probe. Following a report of a sudden acceleration problem in a Prius, which until now had only been subject to recalls for braking-system issues, regulators and Toyota (TM) officials are launching individual probes into what went wrong with the hybrid car. All told, the financial impact on Toyota from its various recalls could surpass $5B in the next year.
- Greek PM meets with White House on debt reduction. Greek Prime Minister George Papandreou met with Obama yesterday to discuss a European proposal to crack down on speculative trading (see details below) and to outline the steps his country will take to reduce its debt. Papandreou said he didn't ask the U.S. for financial help, which is good because the White House says Greece's problems "can and should" be resolved by the EU. The idea of curbing financial speculation will be discussed at the next G-20 meeting, though the U.S. made clear it doesn't believe Greece's primary budget problems stem from market speculators.
- EU discusses ban on speculative trading. The European Commission may ban "purely speculative naked sales on credit default swaps of sovereign debt," and will ask for a similar move globally at the G-20 meeting in June. European officials are pushing the U.S. to join in the crackdown on speculators, with Germany's Merkel saying "quick action is needed" and the U.S. should "make a gesture" to curb the trades in question. Though he didn't go so far as to recommend a ban, Commodity Futures Trading Commission Chairman Gary Gensler said in a speech yesterday that there should be new limits on credit-default swaps.
- Airlines make concessions to clinch alliance. British Airways (OTC:BAIRY), American Airlines (AMR) and Iberia have offered to give up some of their takeoff and landing slots in the U.S. and U.K. in order to secure approval for their proposed alliance. The European Commission is testing the offer with rivals to see if it sufficiently addresses competition concerns.
- Madoff victims take action. Victims of Madoff's Ponzi scheme are teaming up with victims of Allen Stanford's scam to lobby Congress for a law forcing Wall Street firms to pay billions of dollars to cover some of the victims' losses. The groups want brokerage firms to pay an extra $4B to the SIPC fund, and for the SIPC to then compensate each of the victims for up to $500,000 in losses. Separately, Madoff victims unhappy with how a judge ruled on loss calculations will be allowed to turn directly to a federal appeals court.
- Global data round-up. Some winners and losers in various economic data points released today. U.K. factory production fell for the first time in five months, signaling the manufacturing sector is having a difficult time pulling out of the recession. German exports unexpectedly declined, dropping 6.3% from the previous month when economists had expected a 0.5% gain and raising concerns that Germany's recovery may not be as smooth as some hoped. Heading over to Asia, China's exports and imports were better than expected. Economists warned not to over-interpret the figures, which were impacted by the timing of the Lunar New Year holiday, but the basic message still points to growing momentum in China and reinforces the case for an appreciation of the yuan.
- Cisco's faster router has limited impact on surfers. Promising to "forever change the Internet," Cisco (CSCO) introduced a new kind of router yesterday that triples its predecessor's capacity to 322 terabits/second. To put that in perspective, the router has the capacity to stream every movie ever created in less than four minutes. But many felt Cisco failed to live up to the weeks of hype it had created, as consumers won't experience anything near that speed. Even Cisco CEO John Chambers admitted the technology "may not be exciting for the average consumer." Shares were unchanged at the end of trading yesterday.
- No improvement in consumer confidence. ABC's Consumer Comfort Index remained at -49, the same as last week and within the three-point range it has maintained since early January. Positive ratings of personal finances and the national economy held steady at 44% and 8% respectively, while positive thoughts about the buying climate inched up to 25% from 24%.
Earnings: Tuesday After Close
- J. Crew (JCG): Q4 EPS of $0.61 beats by $0.15. Revenue of $461M (+18.7%) vs. $443M. Guides Q1 EPS at upper end of consensus. Shares -0.3% AH. (PR, earnings call transcript)
- Navistar International (NAV): FQ1 EPS of $0.23 may not be comparable to estimate of $0.85. Revenue of $2.8B (-5%) vs. $3.2B. Shares -7.6% AH. (PR)
- Salix Pharmaceuticals (SLXP): Q4 EPS of -$0.13 beats by $0.01. Revenue of $70M (+15.8%) vs. $68M. Guides Q1 EPS, revenue below consensus. Shares -1.5% AH. (PR)
- In Asia, Nikkei flat at 10564. Hang Seng flat at 21208. Shanghai -0.7% to 3049. BSE +0.3% to 17098.
- In Europe at midday, London +0.1% to 5607. Paris +0.3% to 3922. Frankfurt +0.2% to 5900.
- Futures: Dow +0.1%. S&P +0.1%. Nasdaq +0.2%. Crude +0.2% to $81.64. Gold +0.4% to $1126.80.
Wednesday's Economic Calendar
- 7:00 MBA Mortgage Applications
10:00 Wholesale Trade
10:30 EIA Petroleum Inventories
1:00 PM 10-Yr Note Auction
2:00 PM Treasury Budget
- Notable earnings before Wednesday's open: AEO, SOL
- Notable earnings after Wednesday's close: CLNE
Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.
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