- Goldman faces criminal probe. Federal prosecutors have reportedly opened a criminal probe into whether Goldman Sachs (GS) or its employees committed securities fraud connected to mortgage trading. The investigation is still in preliminary stages, but raises the legal stakes for Goldman and is said to focus on different evidence than that being used in the SEC's civil case. Meanwhile, sources said Goldman may soon settle its fraud case with the SEC. The SEC has an "unlimited supply of ammunition" in the form of e-mails and records it could release, and Goldman doesn't want those documents aired in public. Premarket: GS -3.6% (7:00 ET).
- Wheels up for United, Continental merger. United Airlines (UAUA) and Continental (CAL) are expected to announce on Monday that they have reached a merger deal to create the world's largest airline. Sources said United's board is meeting today, and Continental's board is meeting today and Sunday, to discuss final terms of the deal.
- Banks must defend against bid rigging charges. A judge ruled that Goldman Sachs (GS), Citigroup (C) and several other high-profile banks will have to defend themselves against allegations that they conspired to rig bids for municipal investment contracts and derivatives. Fifteen California cities and counties brought the suit against more than 40 corporate defendants. AIG's (AIG) financial arm and a GE (GE) unit were among several companies that won a dismissal of the civil lawsuits brought in 2008.
- Greece accepts new austerity measures. Greece has reportedly agreed to the outline of a €24B ($31.9B) austerity package in exchange for its multi-billion euro bailout from the eurozone and the IMF. Details are still being finalized, but include a three-year wage freeze for public sector workers and an increase in the value-added tax. The measures are aimed at slashing Greece's budget deficit by 10-11% of GDP over the next three years. European Commission President Jose Manuel Barroso said this morning that the package will be finalized within days, and will be sufficient to prevent a European debt contagion.
- IntercontinentalExchange buys carbon bourse. IntercontinentalExchange (ICE) agreed to buy U.K.-based Climate Exchange Plc (CXCHF.PK) for around £395M ($604M) to create a single trading platform for environmental contracts worldwide. The deal represents a 57% premium over yesterday's closing price for Climate Exchange, the world's largest carbon bourse. ICE already owned a 4.8% stake in the exchange.
- FDA approves Dendreon cancer treatment. The FDA approved Dendreon's (DNDN) novel prostate cancer treatment yesterday, sending shares of the biotech firm flying up. It will be the first 'therapeutic vaccine' for cancer to reach the market after decades of efforts by pharmaceutical firms and researchers, and works by prompting the body to attack prostate tumors. At $93,000 per patient, however, the treatment is expensive, and some insurers may balk at covering those costs. Dendreon closed +26.6% at $50.18.
- Fallout continues from BP oil spill. The oil spill from the Transocean (RIG) rig in the Gulf of Mexico continues to expand, hurting shares of Transocean, as well as BP (BP), which is responsible for paying for the clean up, and Cameron International (CAM), which made the blowout preventers for the rig that caught fire and sank. BP is about to start drilling a relief well to try to reduce the leak's flow, and said its costs will rise beyond $6M per day. Meanwhile, the spill could potentially cost local industries billions of dollars in lost revenue and may prompt the administration to rethink its offshore drilling plans. The companies involved (including Halliburton (HAL)) are bracing themselves as the lawsuits begin to trickle in. In yesterday's trading, RIG -7.45%, BP -8.3%, CAM -13%, HAL -5.25%.
- Barclays I-banking unit falls short. Barclays' (BCS) investment banking unit saw revenue fall 26% in Q1 to £3.8B ($5.8B), missing consensus estimates of £4.9B. Overall, Barclays' net income rose to £1.07B from £826M in Q1 2009. Money set aside for impairment charges and loan defaults declined to £1.51B from £2.31B the year before. Premarket: BCS -5.2% (7:00 ET).
- Investors flock to Omaha to hear from Buffett. Berkshire Hathaway (BRK.A) holds its annual meeting on Saturday, with 40,000 shareholders expected to attend. Warren Buffett declined to detail the discussion topics that might come up at the meeting, but shareholders will almost certainly ask some tough questions about Berkshire's investment in Goldman Sachs (GS) and its position on proposed derivatives regulation.
- More delays in store for AIG's Taiwan deal. AIG's (AIG) stalled deal to sell its Taiwan unit Nan Shan Life for $2.2B may face further delays. Taiwan's financial services regulator was originally supposed to rule on the deal in mid-May, but a top official said this morning that "there is lots of paperwork they have not been able to sufficiently provide. It would be tough to make a decision." The companies have a mid-June deadline to complete the transaction, after the deal application was turned down in January and resubmitted.
- Morgan Stanley fined over metals trading. The Commodity Futures Trading Commission assessed $39M of fines on Morgan Stanley (MS) and hedge fund Moore Capital yesterday for allegedly breaching rules in the precious metals and oil markets. The fines are among the largest ever levied by the CFTC.
- TBTF kicks off financial reform debate. After several political delays, the Senate finally opened up debate on the financial reform bill yesterday. Hoping to start on a bipartisan note, the first amendment up for discussion was a ban on the use of taxpayer funds to wind down too-big-to-fail financial firms in the future. By midday, more than 100 amendments were circulating, and the debate is expected to last at least two weeks.
- New U.S. duties on Chinese goods. The U.S. Commerce Department initiated additional preliminary anti-dumping duties on hundreds of millions of dollars of Chinese paper products. The duties range from 30.82% to 135.8%. The Commerce Department also placed a 10.62% duty on Indonesian paper products.
- BOJ forecasts end of deflation. The Bank of Japan left its interest rates unchanged at 0.1%, as expected, and said it will consider ways to provide more money to private financial institutions in order to spur economic growth. The bank forecast that consumer prices will turn positive next fiscal year, with the core consumer price index expected to rise 0.1%.
Earnings: Friday Before Open
- Aon (AON): Q1 EPS of $0.83 beats by $0.02. Revenue of $1.9B (+3.1%) in-line. (PR)
- Constellation Energy Group (CEG): Q1 EPS of $1.43 beats by $0.37. Revenue of $3.6B (-16.6%) vs. $4.3B. (PR)
- Coventry Health Care (CVH): Q1 EPS of $0.49 beats by $0.17. Revenue of $2.9B (-11.8%) in-line. (PR)
- Newell Rubbermaid (NWL): Q1 EPS of $0.25 beats by $0.07. Revenue of $1.3B (+8.5%) vs. $1.2B. (PR)
Earnings: Thursday After Close
- Agnico-Eagle Mines (AEM): Q1 EPS of $0.14 vs. consensus of $0.29. Shares -0.6% AH. (PR)
- Anworth Mortgage Asset (ANH): Q1 EPS of $0.27 beats by $0.01. Revenue of $37.2M (+7.8%) vs. $36.8M. Shares 1.2% AH. (PR)
- Applied Micro Circuits (AMCC): Q4 EPS of $0.09 beats by $0.04. Revenue of $58M (+40.5%) vs. $56M. Shares 4.9% AH. (PR)
- Bally Technologies (BYI): Q3 EPS of $0.39 misses by $0.12. Revenue of $191M (-3.2%) vs. $196M. Shares -0.1% AH. (PR)
- BioMarin Pharmaceutical (BMRN): Q1 EPS of $0.01 beats by $0.01. Revenue of $84.9M (+14.9%) vs. $89.5M. Shares -1.5% AH. (PR)
- Brigham Exploration Company (BEXP): Q1 EPS of $0.08 beats by $0.03. Revenue of $32.6M (+76.2%) vs. $26.9M. Shares +5.7% AH. (PR)
- Callaway Golf Company (ELY): Q1 EPS of $0.25 in-line. Revenue of $303M (+11.4%) vs. $302M. Shares -0.5% AH. (PR)
- CommScope (CTV): Q1 EPS of $0.26 beats by $0.01. Revenue of $722M (-2.7%) vs. $717M. Shares +1.1% AH. (PR)
- CyberSource (CYBS): Q1 EPS of $0.23 beats by $0.02. Revenue of $77M (+26.6%) vs. $74M. Shares +0.3% AH. (PR)
- Expedia (EXPE): Q1 EPS of $0.20 misses by $0.02. Revenue of $718M (+12.9%) vs. $722M. Shares -0.5% AH.(PR)
- Fiserv (FISV): Q1 EPS of $0.95 misses by $0.02. Revenue of $1B (-1.5%) in-line. Shares -5.8% AH. (PR)
- Genworth Financial (GNW): Q1 EPS of $0.30 beats by $0.04. Shares -0.8% AH. (PR)
- Hartford Financial (HIG): Q1 EPS of $0.14 beats by $0.03. Revenue of $2.5B vs. $2.4B. Shares +0.2% AH. (PR)
- Human Genome Sciences (HGSI): Q1 EPS of -$0.26 misses by $0.07. Revenue of $46M (-73.8%) vs. $41M. Shares +0.5% AH. (PR)
- Ingram Micro (IM): Q1 EPS of $0.41 beats by $0.02. Revenue of $8.1B (+20%) vs. $7.9B. Shares +1.1% AH. (PR)
- InterMune (ITMN): Q1 EPS of -$0.66 misses by $0.08. Revenue of $6.1M (-11.6%) vs. $6.7M. (PR)
- KLA-Tencor (KLAC): Q3 EPS of $0.41 beats by $0.06. Revenue of $478M (+54.2%) vs. $472M. Shares +1.9% AH. (PR)
- Maxim Integrated Products (MXIM): Q3 EPS of $0.27 in-line. Revenue of $509M (+7.5%) vs. $512M. Shares -3.6% AH. (PR)
- McAfee (MFE): Q1 EPS of $0.60 misses by $0.03. Revenue of $503M (+12.3%) vs. $513M. Shares -10.7% AH. (PR)
- MEMC Electronic Materials (WFR): Q1 EPS of -$0.02 misses by $0.06. Revenue of $438M (+104.5%) vs. $390M. Shares -6.7% AH. (PR)
- MetLife (MET): Q1 EPS of $1.01 beats by $0.04. Revenue of $13.2B (+18.4%) vs. $12.8B. Shares -0.4%% AH. (PR)
- Monster Worldwide (MWW): Q1 EPS of -$0.14 beats by $0.02. Revenue of $215M (-15.4%) vs. $212M. Shares -10.8% AH. (PR)
- NetLogic Microsystems (NETL): Q1 EPS of $0.31 beats by $0.03. Revenue of $86.3M (+24.2%) vs. $85.3M. Shares -5.9% AH. (PR)
- Oclaro (OCLR): Q3 EPS of $0.00 misses by $0.01. Revenue of $101M (+145.6%) in-line. Shares +0.7% AH. (PR)
- Protein Design Labs (PDLI): Q1 EPS of $0.15 vs. consensus of $0.23. Revenue of $62.1M (-0.9%) vs. $72.3M. Shares -0.5% AH. (PR)
- QLogic (QLGC): Q4 EPS of $0.28 beats by $0.02. Revenue of $146M (+11.6%) vs. $143M. Shares -5.5% AH. (PR)
- Regal Entertainment Group (RGC): Q1 EPS of $0.11 beats by $0.05. Revenue of $720M (+8.1%) vs. $710M. Shares +0.1% AH. (PR)
- Republic Services (RSG): Q1 EPS of $0.41 beats by $0.04. Revenue of $2B (-5%) in-line. (PR)
- Skyworks Solutions (SWKS): Q1 EPS of $0.24 beats by $0.01. Revenue of $238M (+37.6%) vs. $232M. Shares +3.2% AH. (PR)
- Southwestern Energy (SWN): Q1 EPS of $0.49 beats by $0.03. Shares -1.9% AH. (PR)
- Sunoco (SUN): Q1 EPS of -$0.14 misses by $0.04. Revenue of $8.2B (+37.6%) vs. $8.5B. Shares +0.1% AH. (PR)
- Tesoro (TSO): Q1 EPS of -$0.97 misses by $0.11. Revenue of $4.61B (+40.5%) vs. $4.43B. Shares -3.7% AH. (PR)
- Wynn Resorts (WYNN): Q1 EPS of $0.26 beats by $0.12. Revenue of $909M (+22.8%) vs. $850M. Shares +2% AH. (PR)
- In Asia, Japan +1.2% to 11057.4. Hong Kong +1.6% to 21109. China +0.1% to 2871. India +0.3% to 17559.
- In Europe, at midday, London -0.4%. Paris -0.5%. Frankfurt +0.3%.
- Futures: Dow flat. S&P flat. Nasdaq +0.2%. Crude +0.6% to $85.65. Gold +0.5% to $1174.90.
Friday's Economic Calendar
- 8:30 GDP Q1 (Advance)
8:30 Employment Cost Index
9:45 Chicago PMI
9:55 University of Michigan Consumer Sentiment
3:00 PM Farm Prices
- Notable earnings before Friday's open: AGN, AIV, AON, AVP, CEG, CVH, CVX, DHI, DISCA, ENDP, ITT, NDAQ, NWL, PAG, SPG
Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.
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