An ECB rate cut on Thursday may not be the central bank's last as it battles a prolonged period of inflation well below target. Policy makers are reportedly debating a cut of 10-15 basis points in both the benchmark lending and deposit rates, which - for the deposit rates - would take the level into negative territory. Economists expect the ECB to lower its inflation forecast significantly from March's 1% estimate, and this wouldn't even take into account yesterday's May data which showed inflation slowing to its lowest level in four years.
Worried about multi-billion dollar penalties being tossed about like nickels and dimes - the latest being BNP Paribas facing a $10B hit - the ECB is considering adding the impact of fines to its stress tests, according to the WSJ. At issue is whether the banks have set enough aside in reserves for the payouts. Should the lenders be found wanting, it could mean the need for additional capital raises. In the case of BNP, the bank in February said it had $1.1B reserved for the U.S. penalty, but two months later warned this may not be nearly enough. Now it's up to $10B and executives at banks everywhere are watching nervously.
Dai-ichi Life Insurance snaps up Alabama-based Protective Life (NYSE:PL) for about $5.7B, or $70 per share in cash in what would be the largest-ever purchase of a foreign company by a Japanese life insurer. The price represents a 34% premium to Friday's close. The deal comes as Japanese life insurers - facing demographic issues back home - look overseas for expansion, and apparently are willing to pay quite a premium for it. Protective Life CEO John Johns says Dai-ichi management has encouraged the team at Protective to continue to look for acquisitions of smaller targets in the U.S. Protective is ahead 16.8% premarket to $68.55.
Hillshire Brands closed 9.5% higher at $58.65 yesterday as investors bet yet another offer will be made to top Pilgrim Pride's (NYSE:PPC) $55 bid. Analysts believe Tyson Foods (NYSE:TSN) - when it originally jumped in with a $50 bid - thought it could nab Hillshire (NYSE:HSH) for $55, meaning anything above that figure would be a stretch.
Along with announcing a major revamp of iOS and Mac OS X's Spotlight search tool - integrated local/Web search, location-specific results, and more content-specific search results being some of the new features - Apple (NASDAQ:AAPL) quietly disclosed it's dropping Google (NASDAQ:GOOG) as Spotlight's Web search provider in favor of Bing (NASDAQ:MSFT). Google does remain the default search provider in Safari, but the Spotlight switch is still a noteworthy loss given the feature's tight integration with Apple's platform. As for Bing, the deal is a notable win for a search engine estimated to have just a 5.48% global mobile/tablet search share.
Wal-Mart employees plan nationwide strikes in at least 20 cities and online today, according to Organization United for Respect at Walmart (OUR Walmart), which is backed by the United Food and Commercial Workers Union. The protestors want Wal-Mart (NYSE:WMT) to raise wages to at least $25K per year and stop what they describe as illegal retaliation against those employees who speak out about wage and benefit inequality. The protests come ahead of Wal-Mart's annual meeting on Friday.
Speaking to shareholders at the annual meeting, Tesla (NASDAQ:TSLA) CEO Elon Musk said he plans to remain in that post for at least four to five more years. "It's quite difficult to be CEO at two companies," said Musk in response to a shareholder question. "I will stay four or five years, then it's TBD after that." For now Musk is committed to be in charge through the start of high-volume production of Tesla's coming 3rd-generation car. Initial production is hoped to begin in late 2016.
The Manhattan district attorney's office is investigating whether former KCG Holdings (NYSE:KCG) technology executive Raymond Ross stole the firm's trading code for the benefit of his new company, Clearpool Group. Now CTO at Clearpool, Ross called any suggestion of theft of any property from Knight "outrageous." Code-theft cases have proliferated as banks and trading firms seek to protect the technology driving operations and profits, and prosecutors have had mixed results in taking them on. Among the pending cases for the Manhattan DA is one against Sergey Aleynikov, who is charged with stealing high-frequency trading code from Goldman Sachs (NYSE:GS).
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In Asia, Japan +0.2% to 15068. Hong Kong -0.6% to 23152. China -0.7% at 2025. India -0.5% to 24814.
In Europe, at midday, London -0.3%. Paris -0.6%. Frankfurt -0.4%.
Futures at 6:20: Dow -0.1%. S&P -0.1%. Nasdaq -0.1%. Crude +0.7% to $103.42. Gold +0.1% to $1246.
Ten-year Treasury Yield -2 bps to 2.58%
Today's economic calendar:
7:00 MBA Mortgage Applications
8:15 ADP Jobs Report
8:30 Gallup U.S. Job Creation Index
8:30 International Trade
8:30 Productivity and Costs
9:45 PMI Services Index
10:00 ISM Non-Manufacturing Index
10:30 EIA Petroleum Inventories
2:00 PM Fed's Beige Book
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