- Wary China may review BHP's Potash bid. Nervous about market concentration, China may launch an antimonopoly probe into BHP Billiton's (NYSE:BHP) $39B bid for Potash (NYSE:POT), sources said. BHP, which declined to comment, is only seeking regulatory clearance in the U.S. and Canada. China is also said to be planning to review the merger of two Russian potash firms because of the impact these deals could have on the country, though it's unclear what practical steps China can take if it opposes either of the bids. In related news, China's Sinochem has reportedly hired HSBC (HBC) to advise it on its options regarding Potash (POT), though sources said the move is preliminary and doesn't mean a counteroffer is necessarily forthcoming.
- Petrobras, Brazil reach controversial oil deal. Brazil's state-controlled Petrobras (NYSE:PBR) agreed to pay the federal government $42.5B in stock in exchange for five billion barrels of deepwater reserves. The deal is a controversial one, as investors say Petrobras is paying more than the oil is actually worth, and shares of Petrobras have already fallen significantly this year as investors worried just such a scenario would occur. Petrobras also plans to sell new shares to the public to raise an additional $25B as part of the plan.
- Lilly scores court victory on generics. Eli Lilly (NYSE:LLY) scored a victory yesterday after an appeals court upheld a ban preventing Teva (NYSE:TEVA) from selling a generic version of Evista, Lilly's osteoporosis drug. Evista sales were $259.5M in the second quarter, and the patents are valid through March 2014.
- Connecticut AG probes First Niagara-NewAlliance deal. Connecticut is investigating First Niagara Financial's (NASDAQ:FNFG) proposed $1.5B takeover of NewAlliance Bancshares and has asked the banks to justify the merger. Connecticut Attorney General Richard Blumenthal said the state may choose to only approve bank mergers that benefit Connecticut's economy and the public, and that the First Niagara deal "raises significant and far-reaching legal and public policy issues." If approved, the tie-up will be the largest U.S. bank deal in nearly two years.
- FDIC loses closely-watched bank case. A closely watched court decision found the FDIC is not entitled to the $900M that it had demanded from Colonial BancGroup, the parent company of failed Colonial Bank. The FDIC had argued that Colonial Bank had signed a 2008 memorandum of understanding in which it said it would try to increase its capital, and the $900M represented the capital shortfall at Colonial Bank when it was seized in the biggest bank failure of 2009. However, the judge found that the memorandum of understanding didn't represent a commitment, a ruling that will undoubtedly be seized upon by other holding companies that ended up in bankruptcy after regulators closed their lending operations.
- GE preps for possible spending spree. General Electric (NYSE:GE) could spend up to $30B on takeovers in the next two to three years, said John Rice, one of the company's four vice chairmen, but would do so in a way that's compatible with plans to boost its dividend and buy back shares. The comments signal GE is pulling away from the defensive position it took during the recession, with one analyst calling it a "sea change" in the company's thinking. Shares of GE closed up 3.7% yesterday.
- SEC investigates quote stuffing. The SEC is reportedly looking into "quote stuffing," the practice of placing an unusually large number of buy or sell orders for stocks in a fraction of a second, and then canceling the orders almost immediately. Regulators are concerned the practice is putting some investors at a disadvantage because it distorts stock prices, and are also checking if quote stuffing may have played a role in May's flash crash.
- Vale loses auction for copper smelter. Brazil's Vale (NYSE:VALE) said it failed to acquire base metals and fertilizers holding company Paranapanema SA in an auction because the number of shares tendered was below the minimum threshold. Vale had been hoping to pick up Paranapanema, Brazil's only copper smelter, for about $1.13B to provide cost-savings in its growing copper business.
- Two Lehman units face failure. In a bankruptcy court filing yesterday, Lehman Brothers (OTC:LEHMQ) said two of its units are struggling, and they need hundreds of millions of dollars to prevent a failure that could cost Lehman billions. The two units, Aurora Bank and Woodlands Commercial Bank, are struggling to meet capital requirements because of restrictions from regulators, including a limited ability to issue new CDs. Lehman estimates that failure to resolve the units' capital issues would result in losses of $1.2B-3.6B.
- November IPO likely for GM. General Motors reportedly plans to start wooing investors for its initial public offering after the midterm elections on Nov. 2, and will likely price its IPO on Nov. 17. The plan is subject to change based on the performance of the U.S. stock market.
- Auto sales show weakness. U.S. auto sales fell 21% in August compared to a year ago, although the comparison is a bit skewed as August 2009 was a strong month for sales thanks to the government's cash-for-clunkers program. One of the few firms to post gains was Chrysler, which saw sales rise 7% because of increased orders from corporate fleets. Ford (NYSE:F) sales were down 11%, GM's sales were down 25%, and Toyota's (NYSE:TM) were down a sharp 34%. Despite the precipitous year-on-year drop in sales, car companies remain confident that the industry's steady recovery is still on track.
- Mixed reviews on Apple upgrades. As usual, plenty of hype surrounded Apple's (NASDAQ:AAPL) annual fall media event yesterday. In the end, the company unveiled a new line of iPods and a smaller, cheaper version of Apple TV for streaming movies and TV shows over the internet and into the living room. Gadgeteers generally liked the iPod updates, including a touch-screen nano, but said the "closed-minded" Apple TV is little more than a "Netflix (NASDAQ:NFLX) streaming box." Shares of Netflix jumped 7.5% yesterday thanks to its new key role in Apple TV. Apple closed up 3%.
Earnings: Wednesday After Close
- SAIC (SAI): Q2 EPS of $0.42 beats by $0.09. Revenue of $2.8B (+1.6%) in-line. Shares +1.3% AH. (PR, earnings call transcript)
- In Asia, Japan +1.5% to 9063. Hong Kong +1.2% to 20869. China +1.3% to 2656. India +0.2% to 18238.
- In Europe, at midday, London -0.1%. Paris -0.1%. Frankfurt -0.3%.
- Futures: Dow -0.2%. S&P -0.2%. Nasdaq -0.1%. Crude -0.2% to $73.77. Gold flat at $1247.90.
Thursday's Economic Calendar
Chain Store Sales
6:00 Monster Employment Index
7:45 ECB Announcement
8:30 Initial Jobless Claims
8:30 Productivity and Costs
9:00 FCIC Hearing: Too Big To Fail (Bernanke, Bair)
9:00 Fed Conference: REO & Vacant Properties
10:00 Factory Orders
10:00 Pending Home Sales
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
- Notable earnings before Thursday's open: DLM
- Notable earnings after Thursday's close: FNSR, HRB
Seeking Alpha's Market Currents team contributed to this post.
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