- P-E firms target Morgan Stanley fund. Various private equity firms have expressed interest in buying a stake in Morgan Stanley's (MS) real estate funds management business. Sources said KKR (KKR) and TPG Capital, both of which have limited exposure to the property market, have expressed tentative interest. Colony Capital is also said to be interested. The potential suitors are proposing relatively low valuations because the unit's recent $8.8B fund is unlikely to return fees or profits. Premarket: MS -1% (7:00 ET).
- Wells Fargo pays out on overdraft fees. A California judge ordered Wells Fargo (WFC) to pay more than $200M in compensation to customers who were improperly charged millions of dollars in overdraft fees. The class-action ruling found that Wells Fargo generated extra overdraft fees by manipulating the order in which transactions were posted, a practice that many big banks have employed for years.
- Fed to keep securities holdings stable. There were no major surprises from the FOMC, though the Fed did make its first attempt to bolster the economy in more than a year, saying it would reinvest principal payments from mortgage assets into longer-term Treasurys. The committee maintained its "extended period" language on rates, with Kansas City Fed's Hoenig remaining the lone dissenter. The pace of the recovery is "more modest" than anticipated and spending, which is up slightly at households and businesses, is being constrained by tight credit, continuing unemployment and related factors. Underlying inflation measures have trended lower and inflation should be "subdued for some time."
- CVB slides on SEC subpoena news. CVB Financial (CVBF) saw its shares plummet 22% yesterday after disclosing it had received an SEC subpoena for information about its accounting of troubled loans. The parent company of Citizens Business Bank said it will also need to provide information on how it graded loans and the process for making provisions for loan and credit losses. The company subsequently decided to use yesterday's "extraordinary market activity" as an opportunity to repurchase common stock, and is authorized to buy back up to 10M shares.
- Florida sues LCD makers. Following New York's lead, Florida Attorney General Bill McCollum is suing major LCD screen manufacturers over allegations of price-fixing. McCollum said records subpoenaed by his office indicate the defendants organized the conspiracy "at the highest level of their organizations in various secret meetings and telephone conversations over a period of years." Defendants include Samsung (OTC:SSNLF), Hitachi (HIT), Sharp (OTCPK:SHCAY) and Toshiba (OTCPK:TOSBF).
- Toyota investigation finds no new flaws, driver error. Five months into a government investigation of Toyota (TM) vehicles' safety issues, officials haven't found any new defects aside from the ones the company already reported. In more than half of the crashes blamed on sudden vehicle acceleration, data shows the drivers weren't stepping on the brakes, suggesting driver error was at fault. Officials stress the probe is ongoing, but the results thus far support Toyota's claim that electronic defects in its cars aren't to blame.
- States get $26B in aid. Obama signed into law a $26B plan that Democrats said will help cash-strapped state governments preserve the jobs of thousands of teachers, police and firefighters; states are facing an $84B budget shortfall. Obama signed the bill just hours after the House approved the measure in a 247-161 vote.
- Blackstone doubles as sale adviser and suitor. Blackstone (BX) is said to be in early talks to buy Polymer Group (POLGA.OB), a non-woven materials maker, from majority owner MatlinPatterson, a private equity firm. The situation is unusual because Blackstone was reportedly hired in April to advise on the sale, and is acting as both adviser and potential acquirer. Premarket: BX -2.5% (7:00 ET).
- Dell hopes for winning streak with tablet. Dell (DELL) has joined the tablet craze, announcing plans to begin selling its own tablet computer to U.S. customers later this week. The Streak will be available for $299 with a new two-year AT&T (T) service contract and for $549 without one. Dell is the first major competitor to get a product to market against Apple's (AAPL) successful iPad.
- ING beats profit forecasts. ING (ING) reported a better-than-expected Q2 profit of €1.1B ($1.4B), up from a €71M profit in the year-earlier period. A decline in loan-loss provisions helped the banking division swing back to a profit, but the insurance arm reported a €16M loss after last year's €191M gain because of the "sharp decline in equity markets." Premarket: ING -2.6% (7:00 ET).
- Disney delivers quarterly profit. Disney (DIS) beat expectations for its FQ3 earnings (see details below) with net income of $1.3B. The results were helped by an improvement in the advertising climate and by a series of hit movies and sports events. Theme parks continued to struggle as the broader economy remained weak. Disney acknowledged that, like all other studios, demand for DVDs, its most profitable product, is waning; as a result, the company is shifting to a movie strategy that lends itself to sequels and tie-ins like toys, clothes and theme-park attractions. Shares gained 0.9% in after-hours trading.
- U.K. growth moderating. The U.K.'s economic recovery is likely to continue at a slower pace than previously expected, said the Bank of England in its quarterly Inflation Report, peaking at a 3% annual pace instead of at 3.6%. Inflation will be somewhat higher than previously forecast, and will likely remain above the 2% target through the end of 2011 before dropping below the target in 2012. The pound is -1.1% against the dollar (7:00 ET).
Earnings: Tuesday After Close
- A123 Systems (AONE): Q2 EPS of -$0.33 misses by $0.06. Revenue of $22.6M (+14.7%) vs. $25.5M. Shares -4.7% AH. (PR)
- CareFusion Corporation (CFN): FQ4 EPS of $0.38 beats by $0.01. Revenue of $1B (+19.4%) in-line. Shares +3.5% AH. (PR)
- Cree (CREE): FQ4 EPS of $0.55 beats by $0.04. Revenue of $264M (+79%) in-line. Shares -7.7% AH. (PR, earnings call transcript)
- Disney (DIS): Q2 EPS of $0.67 beats by $0.09. Revenue of $10B (+16.4%) vs. $9.4B. Shares +0.9% AH. (PR, earnings call transcript)
- Myriad Genetics (MYGN): FQ4 EPS of $0.54 may not be comparable to consensus of $0.33. Revenue of $93.9M (+9%) vs. $93.5M. Shares -3.3% AH. (PR)
- SunPower Corporation (SPWRA): Q2 EPS of $0.15 beats by $0.05. Revenue of $384M (+28.4%) vs. $401M. Shares +3.2% AH. (PR, earnings call transcript)
- In Asia, Japan -2.7% to 9293. Hong Kong -0.8% to 21295. China +0.5% to 2608. India -0.8% to 18070.
- In Europe, at midday, London -1.6%. Paris -1.6%. Frankfurt -1.6%.
- Futures: Dow -1.2%. S&P -1.5%. Nasdaq -1.5%. Crude -0.9% to $79.51. Gold +0.1% to $1198.90.
Wednesday's Economic Calendar
- 7:00 MBA Mortgage Applications
8:30 Trade Balance
10:00 Job Openings and Labor Turnover
10:30 EIA Petroleum Inventories
1:00 PM Results of $24B, 10-Year Note Auction
2:00 PM Treasury Budget
- Notable earnings before Wednesday's open: AVT, CSC, IAG, M
- Notable earnings after Wednesday's close: AAP, CSCO, SLW
Seeking Alpha's Market Currents team contributed to this post.
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