- Citi falls on Treasury sale plan. Shares of Citigroup (C) closed down 5.1% yesterday following the Treasury's announcement that it plans to sell up to 1.5B of its Citigroup shares "in an orderly fashion under a pre-arranged written trading plan." The Treasury owns 7.7B Citigroup shares, and additional sales are expected to follow. At present, the Treasury's overall stake is valued at around $36B, giving taxpayers an $11B paper profit. Premarket: C -1.1% (7:00 ET).
- Goldman hit by shareholder lawsuit. It was a question of when, not if, but Goldman Sachs (GS) has finally been hit with a shareholder lawsuit. A firm named Robbins Geller Rudman & Dowd filed suit against Goldman and three of its top executives for failing to disclose the SEC's investigation prior to the SEC's suit. The lawsuit asks for class-action status on behalf of shareholders. Separately, Goldman CEO Lloyd Blankfein and trader du jour Fabrice Tourre will testify before lawmakers this morning in a hearing that could have repercussions for the broader financial sector. Blankfein plans to say that the firm didn't consistently short the housing market and didn't bet against its own clients, while lawmakers allege the firm misled investors, made billions of dollars at their expense and did so in not one but a series of complex deals. Premarket: GS -0.35% (7:00 ET).
- Setback for financial reform. All the Senate's Republicans (and one Democrat) voted against a key procedural motion which would have opened up the debate on financial reform legislation to the full Senate. Democrats will move to bring another procedural vote on the debate as soon as Wednesday, hoping to round up the extra three votes they need to get the motion approved. In the meantime, lawmakers are heading back to the negotiating table to try to reach a bipartisan deal. Those on Wall Street are following the bill's progress apprehensively, concerned it will hurt business, though many agree on the need for reform. Off of Wall Street, non-financial firms from confectioners to online retailers to manufacturers are concerned their businesses will be hurt too because the legislation is overly broad.
- Chloride rejects Emerson bid. The U.K.-based Chloride Group rejected a $1.1B offer from Emerson Electric (EMR) as major shareholders urged Chloride to hold out for a higher bid. "It's a strategic asset, a major player in Europe and it's an important piece of the jigsaw in this growth industry," said one shareholder. "Any offer would have to be substantially higher than three pounds to have any chance of success." Emerson's current offer is equivalent to £2.75 per share.
- Bias suit against Wal-Mart moves forward. A federal appeals court ruled yesterday that a class-action gender discrimination lawsuit against Wal-Mart (WMT) could go to trial, potentially exposing the company to billions of dollars in legal damages. The lawsuit alleges that Wal-Mart pays women less than men for the same jobs and that female employees receive fewer promotions. Wal-Mart plans to appeal to the Supreme Court.
- Supreme Court to rule on videogames. The Supreme Court agreed to decide whether a California law that will ban the sale of violent videogames to minors is constitutional. California has argued that violent videogames are "a new, modern threat to children" that cause psychological harm and can predispose minors to be violent or behave aggressively. A ruling could affect videogame makers such as Activision Blizzard (ATVI) and Take-Two Interactive (TTWO), which produce "Call of Duty" and "Grand Theft Auto" respectively. It could also impact the broader entertainment industry and the production of violent movies and television shows.
- Google scuttles Verizon, Nexus One tie. Google (GOOG) has decided not to make its Nexus One smartphone compatible with Verizon Wireless (VZ), telling customers waiting for the device that they should buy another Google-based smartphone instead. The company didn't explain the decision, which deals a major blow to its ambitions to reshape the cellphone market. Sources suggest lackluster sales of the compatible version prompted the reversal.
- Greek pressure continues to rise. Market relief over Greece's aid request last Friday has been short-lived. The cost of insuring Greek debt against default jumped to a new record yesterday and rising yields neared double digits. Worries about a eurozone contagion are also growing, with some economists suggesting that Portugal could become the next Greece. The euro has continued to slide, and is -0.7% against the dollar (7:00 ET).
- I-banking lifts Deutsche profit. Deutsche Bank (DB) reported a 48% increase in its Q1 profit, as gains at the investment bank outweighed a loss from asset and wealth management. Net income rose to €1.76B ($2.35B), beating estimates of €1.33B and the €1.19B from the year-earlier period. Shares -1.9% premarket (7:00 ET) as analysts suggest the strong result is unsustainable since it's almost entirely due to investment banking, and "the results of the other divisions leave something to be desired."
- BP profits on higher oil prices. BP (BP) posted better-than-expected results this morning, with net profit more than doubling in Q1 to $6.08B. Revenue rose 55% to $74.41B. The results were helped by higher average oil prices and a strong operational performance. However, the earnings report was overshadowed by the continuing oil spill from a BP well in the Gulf of Mexico; the oil is expected to reach land by Saturday. Premarket: BP -1.3% (7:00 ET).
- Mortgage fraud still alive and kicking. Mortgage fraud has continued to rise, increasing 7% last year according to a new report. Florida had the highest incidence of fraud by far, followed by New York, California, Arizona and Michigan. Though the 7% increase is an improvement from the 26% jump seen the year before, the slower growth rate isn't just because of better reporting and policing of fraud activity; the report warns that more scammers are using technology to access information and remain anonymous, and those in the industry must "ready themselves for more complex schemes in order to continue the fight against mortgage fraud."
- Cities angry as investors bet on defaults. Financially struggling U.S. cities now have a new problem to grapple with: investors who are buying derivatives that bet on a municipal default. Credit default swaps on municipal debt became available a few years ago and are still thinly traded, but their proliferation is angering cities which claim the derivatives send a negative message and can potentially raise borrowing costs at a time when municipalities need all the help they can get.
Earnings: Tuesday Before Open
- Ashland (ASH): Q2 EPS of $0.25 may not be comparable to consensus. Revenue of $2.2B (+13%) vs. $2.1B. (PR)
- Autoliv (ALV): Q1 EPS of $1.39 beats by $0.07. Revenue of $1.7B (+86.9%) in-line. Shares -5.7% premarket. (PR)
- BP (BP): Q1 EPS of $0.30 beats by $0.05. Revenue of $73.1B (+54.5%) vs. $73.7B. Shares -1.3% premarket. (PR)
- CIT Group (CIT): Q1 EPS of $0.49 may not be comparable to consensus -0.25. Shares +1.3% premarket. (PR)
- DuPont (DD): Q1 EPS of $1.24 beats by $0.18. Revenue of $8.4B (+23.5%) vs. $8.1B. Shares +0.1% premarket. (PR)
- Entegris (ENTG): Q1 EPS of $0.15 beats by $0.04. Revenue of $160.5M (+172%) vs. $153.5M. (PR)
- Enterprise Products Partners L.P. (EPD): Q1 EPS of $0.50 beats by $0.08. Revenue of $8.6B (+74.9%) vs. $7.8B. (PR)
- Kinetic Concepts (KCI): Q1 EPS of $0.91 misses by $0.05. Revenue of $486M (+3.3%) vs. $492M. (PR)
- Newmont Mining (NEM): Q1 EPS of $0.83 beats by $0.04. Revenue of $2.2B (+46%) in-line. (PR)
- Nexen (NXY): Q1 EPS of $0.35 misses by $0.04. Revenue of $1.5B (+43.2%) vs. $1.4B. (PR)
- Tyco International (TYC): Q2 EPS of $0.59 beats by $0.04. Revenue of $4.2B (+0.5%) in-line. (PR)
Earnings: Monday After Close
- Ameriprise Financial (AMP): Q1 EPS of $0.81 in-line. Revenue of $2.3B (+30.4%) vs. $2.2B. Shares -1.1% AH. (PR)
- Axis Capital (AXS): Q1 EPS of $0.67 beats by $0.19. Revenue of $1.2B (+6.9%) in-line. (PR)
- Boston Scientific (BSX): Q1 EPS of $0.16 beats by $0.08. Revenue of $2B (-2.5%) in-line. Shares -2.3% AH. (PR)
- Emulex (ELX): Q3 EPS of $0.30 beats by $0.14. Revenue of $102.2M (+33.4%) in-line. Shares -7.6% AH. (PR)
- Health Management Associates (HMA): Q1 EPS of $0.19 beats by $0.02. Revenue of $1.3B (+10.3%) in-line. Shares +2.3% AH. (PR)
- Masco (MAS): Q1 EPS of -$0.02 misses by $0.02. Revenue of $1.9B (+3.1%) vs. $1.8B. Shares -0.2% AH. (PR)
- Pharmaceutical Product Development (PPDI): Q1 EPS of $0.14 in-line. Revenue of $347M (-4.8%) vs. $324M. Shares +7.6% AH. (PR)
- Plum Creek Timber (PCL): Q1 EPS of $0.47 beats by $0.09. Revenue of $317M (-32.6%) vs. $298.6M. (PR)
- Sanmina-SCI (SANM): Q2 EPS of $0.29 beats by $0.04. Revenue of $1.5B (+27.5%) in-line. Shares -2.7% AH. (PR)
- Texas Instruments (TXN): Q1 EPS of $0.52 beats by $0.01. Revenue of $3.2B (+53.6%) vs. $3.1B. Shares +0.4% AH. (PR)
- Universal Health Services (UHS): Q1 EPS of $0.73 beats by $0.04. Revenue of $1.4B (+2.7%) in-line. (PR)
- Veeco Instruments (VECO): Q1 EPS of $0.49 beats by $0.01. Revenue of $163.2M (+159.9%) vs. $163.9M. Shares +4.6% AH. (PR)
- WMS Industries (WMS): Q1 EPS of $0.49 misses by $0.01. Revenue of $197.5M (+9.2%) vs. $202.7M. Shares -4.7% AH. (PR)
- In Asia, Nikkei +0.4% to 11213. Hang Seng -1.5% to 21262. Shanghai -2.1% to 2908. BSE -0.3% to 17691.
- In Europe at midday, London -1.1% to 5688. Paris -1.6% to 3932. Frankfurt -0.8% to 6281.
- Futures: Dow -0.2%. S&P -0.4%. Nasdaq -0.2%. Crude -1% to $83.33. Gold -0.2% to $1152.20.
Tuesday's Economic Calendar
- FOMC Meeting, Day 1
7:45 ICSC Retail Store Sales
9:00 S&P/Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 State Street Investor Confidence Index
10:00 Richmond Fed's Manufacturing Index
10:00 Bernanke: Achieving Fiscal Sustainability
10:00 Hearing: Wall Street and the Financial Crisis (Lloyd Blankfein, Fabrice Tourre)
12:00 PM Chicago Fed's Manufacturing Index
12:30 PM Geithner: Middle Class Task Force
5:00 PM ABC Consumer Confidence Index
- Notable earnings before Tuesday's open: ADP, AGCO, ALV, ASH, AVY, BP, CCE, CE, CIT, CMI, CVG, DD, ECL, EL, ELNK, ENTG, EPD, F, FPL, HCP, KCI, KSU, LCC, LXK, MHP, MMM, NEM, NOV, NXY, ODP, SWK, TLAB, TSM, TYC, UAUA, UPS, VLO, WU, X
- Notable earnings after Tuesday's close: AFL, AMKR, ARRS, BRCM, BXP, CENX, DTE, DWA, EWBC, FIS, FLEX, FR, LIFE, MTW, NSC, PFWD, PMTC, RFMD, RHI, RRC, STR
Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.
Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.