- BP caves on dividend, escrow account. Following a White House meeting, BP (BP) announced it will suspend its dividend for the rest of the year, revisiting the issue in 2011. The company also agreed to a $20B fund to cover costs related to the Gulf spill, as well as a 10% cut in 2010 capital spending and a $10B asset sales program to help fund the account. Kenneth Feinberg, better known as the pay czar, will be in charge of assessing claims drawing on the escrow account. The concessions prompted Obama to say BP is a "strong and viable company, and it is in all of our interests that it remains so." However, political pressure on the company is likely to continue as BP CEO Tony Hayward heads to Congress today to testify on the spill. Premarket: BP +1.1% (7:00).
- Regulators want to keep deepwater drilling ban. In a court filing, regulators called the current six-month ban on deepwater drilling essential to public safety and said the ban shouldn't be lifted. Over a dozen offshore service and supply companies, led by Hornbeck Offshore Services (HOS), had sued Interior Secretary Kenneth Salazar, the head of the Minerals Management Service, and both agencies last week, arguing the drilling suspension will cause them irreparable economic harm.
- SEC drops probe against AIG's Cassano. Lawyers for Joseph Cassano said the SEC has dropped its probe of the former AIG (AIG) executive. Cassano, who led AIG's Financial Products unit, was under investigation for potentially misleading clients over AIG's exposure to mortgage losses, but the case began to fall apart after regulators found Cassano did make key disclosures. The Justice Department told Cassano last month that he wouldn't face criminal charges; the SEC has a lower bar in pursuing civil charges, but decided it still didn't have enough evidence to put together a compelling case.
- Icahn reaches 31% Lions Gate stake. Carl Icahn said that 12.5% of Lions Gate Entertainment's (LGF) shares were tendered in response to his $7/share offer, effectively giving him a 31% stake in the studio. Though nowhere near a majority stake, Icahn's holdings allow him to trigger a technical default in the company's $340M credit facility. "This is a problem of the company's making and they should have dealt with it weeks ago," Icahn said.
- JPMorgan cleared to buy RBS Sempra unit. JPMorgan (JPM) received EU regulatory clearance today for its $1.7B planned purchase of the non-U.S. parts of RBS Sempra's (RBS, SRE) commodities unit. The European Commission said the combined company would continue to face strong rivals with significant market shares.
- AT&T nears Verizon deal approval. Following an extended review period, AT&T (T) is close to getting regulatory approval for its planned $2.35B purchase of Verizon's (VZ) rural U.S. wireless licenses. A vote in favor of the deal could come within weeks, but the drawn-out approval process comes as the FCC's relationship with major telecom firms has begun to deteriorate.
- First test of circuit breakers. The SEC's new market circuit breakers had their first test yesterday after three equity orders pushed Washington Post Co. (WPO) up 99% in less than a second. The three orders, which were later canceled, triggered a five-minute halt. The stock, which had jumped as high as $929.18, eventually closed the day +0.1% to $458.19.
- U.K. abolishes FSA. U.K. chancellor George Osborne unveiled a major regulatory overhaul yesterday, announcing the abolishment of the Financial Services Authority and a major increase in the Bank of England's authority. In addition to monetary policy, the Bank of England will now be tasked with preventing the build-up of risk in the financial system, or, as BoE's Mervyn King put it, "turn[ing] down the music when the dancing gets a little too wild." The changes will undo the regulatory system set up by Gordon Brown in 1997.
- U.K. bonus tax bites U.S. banks' earnings. As a consequence of the U.K.'s new tax on bankers' bonuses, U.S. banks will face a $2B bill in their Q2 results. The charge could significantly reduce earnings at some major financial firms, including Citigroup (C), JPMorgan (JPM) and Bank of America (BAC), possibly by 10% or more.
- Fujitsu, Toshiba merge mobile units. Fujitsu (FJTSY.PK) and Toshiba (TOSBF.PK) announced plans to merge their cellphone businesses in October, creating the second largest cellphone maker in Japan. This is the latest mobile phone merger deal as the fragmented industry consolidated to better compete with players like Apple (AAPL).
- UBS data deal moves forward. Both houses of Swiss parliament have approved a measure that would allow UBS (UBS) client data to be turned over to U.S. authorities as part of a tax evasion investigation. Lawmakers' eventual decision not to hold a public referendum on the issues means Swiss authorities will be able to turn over details on 4,450 UBS accounts before the U.S.'s deadline, avoiding possible retaliation from the U.S. for breaching a joint tax treaty.
- Fannie, Freddie fall on delisting news. After yesterday's announcement of their pending delisting from the NYSE, shares of Fannie Mae (FNM) and Freddie Mac (FRE) plummeted. The mortgage giants closed -39.15% and -38.3%, respectively.
- In Asia, Japan -0.7% to 9999.4. Hong Kong +0.4% to 20138. China -0.4% to 2560. India +0.9% to 17617.
- In Europe, at midday, London +0.8%. Paris +0.9%. Frankfurt +0.5%.
- Futures: Dow +0.3%. S&P +0.3%. Nasdaq +0.3%. Crude -0.3% to $77.44. Gold +0.35% to $1234.80.
Thursday's Economic Calendar
- 8:30 Consumer Price Index
8:30 Initial Jobless Claims
8:30 Current Account
8:30 Real Earnings
9:00 Fed's Consumer Advisory Council meet
10:00 Hearing: Role of BP in the Gulf Spill [BP CEO Hayward]
10:00 Leading Indicators
10:00 Philly Fed Business Outlook
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
- Notable earnings before Thursday's open: KR, SFD, SJM
Seeking Alpha's Market Currents team contributed to this post.
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