- Citi to sell P-E unit. Citigroup (C) has reportedly agreed to sell its private equity unit to Lexington Partners for more than $900M, marking one of the largest secondary transactions ever and a further move by Citi away from private equity. The $900M-plus price tag is a slight discount to the portfolio's net asset value and a small premium to its holding value. Premarket: C +0.8% (7:00 ET).
- HSBC eyes South Africa's Nedbank. HSBC (HBC) is said to be in the early stages of evaluating a bid for South Africa's Nedbank (OTCPK:NDBKY), and has appointed Lazard (LAZ) to advise on a takeover that would cost several billion pounds. Insurer Old Mutual, which owns roughly 54% of Nedbank, is not yet in talks with potential buyers. If it goes through, the deal will help HSBC bulk up its presence in Africa's largest economy and give it a strong foothold to expand in the fast-growing continent. Premarket: HBC -1% (7:00 ET).
- Disney nears Miramax deal. Disney (DIS) is close to a deal to sell its Miramax film studio to construction tycoon Ron Tutor and investment firm Colony Capital for up to $700M in cash. An agreement is expected within a week, bringing an end to Disney's months-long attempt to sell the studio to various bidders.
- IMF raises outlook. The IMF raised its global growth forecast, and expects the world economy to expand 4.6% this year vs. an April projection of 4.2%. The revision reflects stronger-than-expected growth in the first half of the year, with Canada and the U.S. leading advanced economies, but the IMF also warned that financial markets pose a continued risk to global recovery. The growth forecast for 2011 is unchanged at 4.3%, making the IMF the most recent agency, but certainly not the first, to foresee slowing growth next year as the recovery loses some steam.
- Court sides with Telefonica on Vivo. Telefonica (TEF) got a boost in its bid for Vivo (VIV) after Europe's highest court ruled against Portugal's "golden share" in Portugal Telecom (PT). The Portugese government had used its golden share to block Telefonica's €7.15B ($9.04B) bid for PT's stake in Vivo, the firms' Brazilian mobile joint venture. PT shareholders had voted in favor of the deal. Following the ruling, Portugal is expected to divest its shares, but it could take months to implement the ruling. Premarket: TEF -0.5%, PT -1.8% (7:00 ET).
- Liquidators sue Carlyle Group. Carlyle Group is being sued by liquidators of the buyout firm's hedge fund Carlyle Capital Corp. [CCC], which collapsed in March 2008 following poorly-timed investments in the mortgage-bond market. The liquidators hope to recover more than $1B representing capital losses at CCC. Carlyle called the suit "without merit" and plans to contest the charges.
- WaMu faces fraud suit. Holders of $1B of securities issued by Washington Mutual (WAMUQ.PK) are suing the firm to invalidate an eve-of-bankruptcy forced exchange of their investment. As part of WaMu's September 2008 seizure, regulators ordered that $4B of outstanding trust preferred securities that had been issued by a special purpose entity of WaMu be exchanged for preferred stock of WaMu. Holders of $1B of those securities are claiming fraud, trying to undo the exchange and alleging that JPMorgan Chase (JPM) knew about WaMu's misrepresentations about the soundness of its bank.
- GM sells steering unit. General Motors (OTC:MTLQQ) will sell Nexteer Automotive, its steering-parts operation, to Beijing-based Pacific Century Motors. It's the largest move by a Chinese company into the U.S. auto-parts industry, and the sale will help GM refocus on its core auto business. Terms of the deal were not disclosed, but the deal is expected to total more than $450M.
- BP accelerates relief well timeline. BP (BP) has set July 27 as its new target for plugging the leaking Gulf well, said company officials, weeks ahead of the deadline the company has discussed in public. The accelerated timeline is meant to show investors that the company has capped its growing financial liabilities. However, BP is also preparing several backup plans, partly at the urging of the U.S. government, in case its current operations fail.
- Drilling ban goes to court. The oil industry will go head-to-head with the White House in court today over the government's six month deepwater drilling moratorium. The government is asking an appeals court to reinstate the ban, which had previously been blocked by a federal judge, and says drillers won't suffer permanent damage. However, the government's own energy forecasting unit said a drilling ban would reduce crude output by an average of 82,000 barrels per day next year, more than previously estimated.
- EU sets stress test criteria. European regulators released details of the closely-watched stress tests now underway on European banks. The tests will cover 91 banks accounting for 65% of the region's banking assets and will assess potential bank losses in the event that Europe returns to recession or in the face of a sovereign shock that would generate losses on government bond portfolios. Additional details, including what would be considered a satisfactory minimum capital base for banks, were not provided. Results of the tests will be released on July 23.
- Another delay for financial reform. Lawmakers itching to get the financial reform bill approved in the Senate may have to wait for more than just the end of the July 4 recess. West Virginia Governor Joe Manchin decided yesterday to delay naming a successor for the late Senator Robert Byrd until the state's attorney general gives an opinion on the state's election law. Manchin hopes the opinion will be delivered sometime next week, but a delay in replacing Byrd could complicate Democratic efforts to muster up the 60 votes needed, and would likely necessitate winning the support of at least three moderate Republicans.
- Bank bailouts turns a profit. The government has thus far turned a profit on the bank bailout part of TARP, according to a report by investment bank Keefe, Bruyette & Woods. Returns have averaged 10% on the initial investment in 61 banks that have fully repaid their TARP aid. Around $137B of aid has already been paid back, with $65B still outstanding, so it's "pretty clear that unless the economy just craters, the bank portion of TARP will be profitable."
- In Asia, Japan +2.8% to 9536. Hong Kong +1.0% to 20051. China -0.3% to 2415. India +1.0% to 17652.
- In Europe, at midday, London +1.4%. Paris +1.2%. Frankfurt +0.5%.
- Futures: Dow flat. S&P -0.1%. Nasdaq -0.1%. Crude +0.9% to $74.76. Gold flat at $1199.
Thursday's Economic Calendar
- Monthly retail same-store sales
7:00 BoE Announcement
7:45 ECB Announcement
8:30 Initial Jobless Claims
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
3:00 PM Consumer Credit
4:30 PM Fed Balance Sheet
4:30 PM Money Supply
- Notable earnings after Thursday's close: LWSN
Seeking Alpha's Market Currents team contributed to this post.
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