- JPMorgan hit with record fine. JPMorgan's (JPM) London unit was fined a record £33.3M ($48.9M) by the U.K.'s Financial Services Authority for failing to properly separate billions of dollars of client money from the firm's accounts. "This penalty sends out a strong message to firms of all sizes that they must ensure client money is segregated in accordance with FSA rules," the FSA said in a statement. "Firms need to sit up and take notice of this action - we have several more cases in the pipeline.”
- Xstrata shelves projects over Aussie tax. Xstrata (OTC:XSRAF) suspended $5.4B in coal and copper projects in Australia in response to the country's proposed mega-mining tax, which would tax mining profits at a 40% rate. Xstrata's decision brings the value of shelved projects to $20B in just a month. Though the news puts extra pressure on the Australian government to water down its proposal, it could also backfire and hurt Xstrata, which derived nearly 39% of its 2009 net profit from Australian operations.
- Value rises for AIG's Asian unit. AIA, AIG's (AIG) Asian unit, could be worth $34B-36B after an initial public offering, said sources, a substantial rise from earlier estimates of $15B-20B. AIG CEO Robert Benmosche said the company has several options to consider after a deal with Prudential (PUK) fell through, but an IPO for the unit seems the most likely, and could launch as soon as this October. Premarket: AIG +1.45% (7:00 ET).
- BP 'not prepared' for spill, pressure grows. BP (BP) CEO Tony Hayward called it "an entirely fair criticism” to say the company had not been fully prepared for a deep-water oil leak. The firm's latest efforts to contain the Gulf of Mexico leak have not gone well, as a saw became stuck during a risky operation meant to cut the leaking pipe. Meanwhile, political pressure continues to intensify, with two senators calling for BP to suspend dividend payments until the company has a clearer idea of its liability and cleanup costs; analysts believe the spill could ultimately cost BP as much as $37B, and just yesterday BP agreed to pay $360M to construct six sections of a proposed barrier off Louisiana. Premarket: BP +4.1% (7:00 ET).
- Buffett defends ratings agencies. Testifying before the Financial Crisis Inquiry Commission yesterday, Warren Buffett warned lawmakers not to single out the ratings agencies for criticism or to enact overly reactive reforms. Moody's (MCO) managers "made a mistake that 300 million other Americans made" in overestimating housing-related assets, said Buffett, who has held a stake in Moody's since 2000. Moody's CEO Raymond McDaniel also testified, calling his company's inaccurate ratings of mortgage-related investments "deeply disappointing." FCIC Chairman Phil Angelides slammed the ratings service as a "triple-A factory."
- Nasdaq adds new circuit breaker. Hoping to prevent a flash crash repeat, the Nasdaq stock market said it will launch its own circuit breaker system to halt trading when markets crash. "Our performance on May 6 wasn't exemplary to be frank," said a Nasdaq executive. "We want to take responsibility for the fact that there were aberrant executions on our market." While the move will bring Nasdaq more closely in line with the New York Stock Exchange, it could also complicate efforts to create market-wide safeguards.
- AT&T shifts away from unlimited data plans. AT&T (T) announced yesterday that it will no longer sell unlimited internet data plans to new customers with smartphones and iPads (AAPL), opting instead for usage-based pricing that charges heavy bandwidth users more. Analysts said the move will bring some much-needed common sense to the wireless industry, and likely marks the beginning of the end for unlimited data plans. In regular trading yesterday, AT&T +1.85%.
- Car sales regaining health. Carmakers saw major sales gains in May, with several firms posting double-digit growth. Notably, Toyota significantly lagged its peers, suggesting the firm's discounts are attracting far fewer customers. Among the highlights: Chrysler's (OTCPK:FIATY) May sales +33% to 104,819 vehicles, breaking the 100K mark for the first time in more than a year. Ford's (F) sales +21.9%. GM's sales +16.6%. Toyota's (TM) sales +6.7%.
- Wide support for Astellas' tender offer. Japan's Astellas Pharma said investors tendered around 87% of OSI Pharmaceuticals' (OSIP) shares. Shareholder support for Astellas' offer was widely expected after the company sweetened its offer to $4B ($57.50/share) last month. However, Astellas is still 3% short of the stake it needs to complete its purchase, and is therefore opening a second offer period from June 4-7.
- Gerdau Ameristeel soars on Gerdau SA offer. Shares of Gerdau Ameristeel Corporation (GNA) shot up 54% yesterday after Gerdau SA (GGB) offered to acquire the 33.7% of Gerdau Ameristeel shares it doesn't already own for $11/share. The deal values Gerdau Ameristeel at around $1.7B.
- Kindle, coming to a Target near you. Amazon (AMZN) will begin selling its Kindle e-reader in Target (TGT) stores as of this Sunday. Previously, the device was only available via Amazon's website, but increased competition from Apple's (AAPL) iPad and Barnes & Noble's (BKS) Nook likely prompted the move.
Earnings: Thursday Before Open
- Joy Global (JOYG): FQ2 EPS of $1.15 beats by $0.38. Revenue of $896M (-3%) vs. $755M. (PR)
- Suntech Power (STP): Q1 EPS of $0.11 misses by $0.02. Revenue of $588M (+86.3%) in-line. (PR)
Earnings: Wednesday After Close
- Hovnanian (HOV): Q2 EPS of -$0.36 beats by $0.28. Revenue of $319M (-19.9%) vs. $352M. Shares -2.3% AH. (PR)
- In Asia, Japan +3.2% to 9914. Hong Kong +1.6% to 19787. China -0.7% to 2553. India +1.7% to 17022.
- In Europe, at midday, London +1.7%. Paris +2.2%. Frankfurt +1.7%.
- Futures: Dow +0.4%. S&P +0.4%. Nasdaq +0.3%. Crude +0.6% to $73.27. Gold -0.4% to $1217.50.
Thursday's Economic Calendar
- 5:00 Monthly retail same-store sales
6:00 Monster Employment Index
7:30 Fed's Lockhart: Economic Outlook
8:15 ADP Jobs Report
8:30 Initial Jobless Claims
8:30 Productivity and Costs
10:00 ISM Non-Manufacturing Index
10:00 Factory Orders
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
11:15 Fed's Bernanke: Small Business Financing
1:15 PM Fed's Hoenig Speaks to Bartlesville (OK.) Chamber of Commerce
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
8:45 PM Fed's Fisher: Current Issues in Banking
- Notable earnings before Thursday's open: JOYG, STP
- Notable earnings after Thursday's close: SAI
Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.
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