- British Airways, Iberia tie the knot... British Airways (OTC:BAIRY) and Spain's Iberia (OTC:IBRLF) announced a definitive merger agreement this morning, in line with the memorandum of understanding both companies signed in November. The companies expect to complete the merger in late 2010, creating one of the world's largest airline groups with 408 aircraft, 200 destinations and more than 58M passengers per year. The deal is structured to "take advantage of further consolidation in the global aviation industry" (see more below).
- ...while United, US Airways mull their own merger. United Airlines (UAUA) and US Airways (LCC) are reportedly in talks to merge into one of the world's largest airlines, a move that would put significant pressure on rivals American Airlines (AMR) and Continental (NYSE:CAL). Both United and US Airways have gone on the record in the past about the need for greater industry consolidation in response to falling revenues. Though an announcement could still be several weeks away and union opposition may be a problem, the airlines are apparently "deep" in negotiations. In after hours trading, UAUA -1%, LCC +20.4%
- Peabody fights Macarthur's Gloucester vote. Peabody Energy (BTU) isn't letting go of its Macarthur Coal bid quietly. The U.S. coal miner has asked Australia's Takeovers Panel to intervene on behalf of its $3.3B bid for Macarthur and to order a delay of the April 12 meeting in which Macarthur shareholders will vote on a plan to acquire Gloucester Coal. Macarthur said it "is disingenuous for Peabody to now seek to delay the shareholder meeting in circumstances where it has not made a binding offer to Macarthur shareholders."
- Geithner's surprise visit to China. Geithner is heading for China today ahead of next week's meeting between Obama and Chinese President Hu Jintao. The previously unscheduled trip suggests the two countries may be close to reaching an understanding over the valuation of the yuan. However, analysts caution that any Chinese shift over the yuan will be timed to avoid the appearance that Beijing caved in to pressure.
- GM to repay gov't, may turn a profit. In SEC filings (I, II), General Motors said it lost $3.4B in Q4 2009, but struck an upbeat tone on the future, noting it may report a profit as soon as this year. The company also said it will repay the government's loans by June, five years ahead of schedule. Among other signs of a turnaround for the company: Much of Q4's loss was on one-time items, the company took in $1B more than it spent in the period, and GM started 2010 with $36B in cash and $60B in debt, a strong improvement from the $14B in cash and $104B in debt it had at the start of 2009.
- SEC votes for new ABS rules. The SEC voted 5-0 yesterday to propose sweeping new securitization rules. Under the proposal, issuers of asset-backed securities will have to disclose more information about the underlying loans, and will be required to keep 5% of the credit risk in some circumstances. SEC's Mary Schapiro said the "changes are both necessary and critical components of restoring investor confidence" following the role that securitized subprime mortgages played in the financial crisis.
- Greenspan saddled with subprime blame. Alan Greenspan testified before Congress yesterday on the subprime crisis, telling lawmakers "the house price bubble... was caused by lower interest rates but... it was long-term mortgage rates that galvanized prices, not the overnight rates of central banks, as has become the seeming conventional wisdom." Skeptical lawmakers subjected Greenspan to a rare public mauling, accusing him of causing, or at least failing to prevent, the country's economic meltdown.
- Bernanke: Major jobs rebound still MIA. Bernanke said yesterday that the economic recovery has yet to produce a significant rebound in jobs, indicating an interest rate increase is unnecessary for now. The labor market contains “some of the toughest problems” for the economy, and Bernanke is "particularly concerned" about the number of people who have been out of work for six months or more. In a separate speech, New York Federal Reserve President William Dudley seconded Bernanke's message, saying "we are not getting the job gains we would like to get... What that tells us is that monetary policy needs to be on a very easy setting." Voicing his dissent, Kansas City Fed President Thomas Hoenig said the central bank should start to raise the fed funds rate “sometime soon” to about 1% to prevent asset bubbles from emerging.
- Constellation ends Australian Vintage talks. Constellation Brands (NYSE:STZ), the U.S. wine and spirits maker, ended talks with Australian Vintage to merge their Australian and British wine operations. Constellation has been whittling down its portfolio, closing facilities and cutting jobs to try to reduce its debt load.
Earnings: Thursday Before Open
Earnings: Wednesday After Close
- Bed Bath & Beyond (NASDAQ:BBBY): Q4 EPS of $0.86 beats by $0.13. Revenue of $2.24B (+16.7%) vs. $2.11B. Sees Q1, FY11 EPS above consensus. Shares +4.3% AH. (PR, earnings call transcript)
- In Asia, Nikkei -1.1% to 11168.2. Hang Seng -0.3% to 21867. Shanghai -0.9% to 3119. BSE -1.4% to 17714.
- In Europe at midday, London -1% to 5703. Paris -1.5% to 3968. Frankfurt -1% to 6160.
- Futures: Dow -0.3%. S&P -0.3%. Nasdaq -0.2%. Crude -0.55% to $85.41. Gold -0.45% to $1147.80.
Thursday's Economic Calendar
Monthly Retail Same-Store Sales
7:00 BoE Announcement
7:45 ECB Announcement
8:30 Initial Jobless Claims
8:30 Fed's Duke: 'The Importance of Financial Education'
9:00 RBC CASH Index
10:30 EIA Natural Gas Inventory
4:00 PM Fed's Kohn: Economic Outlook
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
8:30 PM Fed's Bernanke: 'Economic Policy: Lessons from History'
- Notable earnings before Thursday's open: PIR
Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.
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