- Peabody raises Macarthur bid. Peabody Energy (BTU) raised its offer for Australia's Macarthur Coal by 14% to $3.8B, marking Peabody's third offer in two weeks. The deal is contingent on Macarthur not going ahead with an April 19 vote to take over smaller rival Gloucester Coal. Australian rival New Hope, which is also angling for Macarthur, had earlier revised its bid as well, but the improved terms were rejected by Macarthur.
- Simon tries new approach for GGP. Simon Property Group (SPG) changed its strategy in its pursuit of General Growth Properties (GGP), offering to replace Brookfield Asset Management (BAM) in GGP's bankruptcy exit plan and to match its terms while forgoing the hefty payment of GGP warrants that Brookfield had demanded. Simon, which had previously tried to buy GGP outright, has pledged to invest $2.5B in reorganizing GGP, including $1B from hedge fund Paulson & Co. GGP is considering the offer, with a focus on whether Simon's partial investment would still raise antitrust concerns, and Simon said it's still willing to fully acquire GGP.
- Mazda's recalls. Mazda (OTCPK:MZDAF) is recalling nearly 90,000 cars in Japan, and may recall another 191,000 worldwide, because of a potential problem with the oil hose. The model being recalled is not sold in the U.S., and Mazda said it will decide how to repair the model in Europe and in other markets on a country-by-country basis.
- Drama continues in new Lehman documents. Newly released documents on Lehman Brothers' (OTC:LEHMQ) failure provide additional insight into the company's descent into bankruptcy, but key parts of the investigation are still sealed, including the depositions of former CEO Richard Fuld and other executives. Examiner Anton Valukas said the depositions will never be released for "a multitude of reasons," but declined to elaborate. The documents also provided previously censored details of a $2B auction of Lehman collateral, showing that the auction caused $1.2B in losses and that Lehman may have grounds to sue Goldman Sachs (GS) and Barclays (BCS).
- More on Lehman. Late yesterday, Lehman Brothers (OTC:LEHMQ) filed court documents providing the first complete look at how the company plans to end the largest bankruptcy case in U.S. history. Unsecured creditors would receive 15-27% of their $1T in claims, and Lehman plans to "accelerate recoveries to creditors and avoid the potential enormous costs" of extended litigation over creditor issues. Separately, Lehman is suing the U.S. government over $110M it says it overpaid in taxes and penalties in 1999-2000.
- H-P execs face bribery probes. German and Russian officials are reportedly investigating whether Hewlett-Packard (HPQ) executives broke the law by paying millions of dollars in bribes to win a Russian contract. Sources said Russian investigators raided H-P's Moscow offices yesterday in connection with the incident, in which the executives allegedly paid around €8M ($10.9M) in bribes to secure a €35M contract. H-P responded that "this is an investigation of alleged conduct that occurred almost seven years ago, largely by employees no longer with H-P. We are cooperating fully with the German and Russian authorities and will continue to conduct our own internal investigation."
- GMAC denies ResCap sale struggle. GMAC denied a New York Post story claiming the company was having difficulties selling Residential Capital, its troubled mortgage unit, and that another bailout may therefore be necessary. GMAC, which has already received three separate bailouts totaling $17.2B, called the story "absolute nonsense," noting the "meaningful progress" that's been made with ResCap to date.
- Bernanke sees moderate recovery. In congressional testimony on the economic outlook, Bernanke pointed to a "moderate" recovery, telling lawmakers that "significant restraints on the pace of the recovery remain, including weakness in both residential and non-residential construction and the poor fiscal condition of many states and local governments." The slowdown in inflation has been broadly based and shows little indication of picking up any time soon. His statement made no direct reference to the outlook for benchmark interest rates.
- SEC targets high-frequency traders. The SEC voted unanimously for a plan to give high-frequency traders individual ID numbers and to require them to report next-day transaction data. The move that would give regulators a much better look at whether the traders' activities skew the markets or disadvantage retail investors, as critics allege. The SEC is also looking at capping option fees at $0.30 a contract.
- UPS earnings go up. Disclosing its quarterly earnings two weeks early, UPS (UPS) said first quarter earnings per share rose to $0.53 from $0.40 the year before, with adjusted EPS of $0.71 beating expectations of $0.58. The company raised its full-year EPS guidance to $3.03-3.30 from $2.70-3.05. "We expected the first quarter to be the most challenging of 2010 as the economic recovery gathered steam through the year," said CFO Kurt Kuehn. "As it turned out, revenue was stronger than we expected due to international volume gains, increased yields in the U.S. and growth in forwarding and logistics." Shares closed +4.7% in after hours trading.
- Lawmakers struggle with financial reform. The White House sparred with Republican lawmakers yesterday over a Democratic plan in the Senate to reform financial regulation. Republicans warn the reform bill will protect big banks, hurt small banks and guarantee "endless taxpayer bailouts of Wall Street," while Democrats called the attacks "completely unhinged from reality." A vote on financial reform is expected in the Senate soon, while a derivatives reform bill is due out today that would require banks to spin off their swaps desks.
- Beige Book shows economic uptick. The Federal Reserve's Beige Book, released yesterday, showed that overall economic activity has "increased somewhat" in all Fed districts except for St. Louis, which reported "softened" conditions. Districts generally reported increases in retail sales and vehicle sales, and many saw increased activity in housing markets from low levels. Activity in the banking and finance sector was mixed, as loan volumes and credit quality decreased.
- China heats up. China reported its GDP rose 11.9% in the first quarter, roughly in line with expectations and outstripping the 10.7% increase in Q4. It was the fastest growth in almost three years, and the risk of overheating may prompt Chinese officials to loosen the yuan's peg to the dollar. Consumer prices were 2.4% higher from the previous year, slightly less than the 2.6% expected, while producer prices were up 5.2%.
Earnings: Wednesday After Close
- J.B. Hunt Transport (JBHT): Q1 EPS of $0.29 beats by $0.02. Revenue of $845M (+16.9%) vs. $793M. Shares +1.5% AH. (PR)
- Yum! Brands (YUM): Q1 EPS of $0.59 beats by $0.06. Revenue of $2.35B (+5.8%) vs. $2.26B. Reaffirms FY10 EPS growth outlook. Shares +2.4% AH. (PR)
- In Asia, Nikkei +0.6% to 11274. Hang Seng +0.2% to 22158. Shanghai flat at 3165. BSE -1.0% to 17639.
- In Europe at midday, London flat at 5799. Paris +0.1% to 4060. Frankfurt flat at 6278.
- Futures: Dow -0.1%. S&P -0.2%. Nasdaq -0.3%. Crude -0.2% to $85.65. Gold -0.5% to $1154.20.
Thursday's Economic Calendar
- 8:30 Empire State Mfg Survey
8:30 Initial Jobless Claims
9:00 International Capital Flow
9:00 Fed's Fisher: 'The Global Financial Crisis: Where Do We Stand'
9:15 Industrial Production
10:00 Philly Fed Business Outlook
10:30 EIA Natural Gas Inventory
10:30 Fed's Lacker: 'The Credit Markets in Transition: Positioning for Recovery'
12:15 PM Fed's Bullard: 'Containing Risks in the New Global Financial Landscape'
1:00 PM NAHB Housing Market Index
1:40 PM Fed's Lockhart: Economic Outlook
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
8:30 PM Fed's Yellen: Economic Outlook
- Notable earnings before Thursday's open: FCS, PPG
- Notable earnings after Thursday's close: AMD, GOOG, PBCT
Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.
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