- Televisa takes minority stake in Univision. Mexico's Grupo Televisa (NYSE:TV) will pay $1.2B to help recapitalize rival U.S. broadcaster Univision, and the two firms will extend their programming agreement to 2020 from 2017, with a possible extension to 2025. Under the terms of the deal, Televisa will pay $130M for a 5% stake in privately-held Univision, and the rest of the $1.2B will be convertible debt equivalent to 30% of Univision shares. Televisa will also have the option to acquire another 5% of the company after three years. The deal will help Televisa expand the reach of its programming in the U.S.
- Amex fights DoJ while rivals settle. The Justice Department filed suit against Visa (NYSE:V), MasterCard (NYSE:MA) and American Express (NYSE:AXP), accusing them of violating antitrust laws. Visa and MasterCard agreed to settle, and will let merchants offer discounts to consumers who use cheaper kinds of credit or debit cards. Amex, which could potentially take a profit hit from the lawsuit, has "no intention" of settling and will fight the charges. At yesterday's close, V -0.1%, MA -1%, AXP -6.5%.
- Bernanke backs more asset purchases. Speaking to college students yesterday, Bernanke said additional asset purchases by the Fed could help the economy and called the Fed's $1.7T purchase of Treasurys and mortgage-backed bonds an "effective program." His comments are the latest indication that the Fed is likely to move ahead with more asset purchases, perhaps as soon as next month, if the economic outlook remains weak. Separately, Janet Yellen and Sarah Bloom Raskin were sworn in yesterday by the Federal Reserve Board in Washington, and both are likely to be Bernanke allies on more asset purchases or quantitative easing.
- Surprise rate cut from BOJ. The Bank of Japan surprised markets this morning, cutting its overnight call rate target to a range of 0-0.1% from 0.1%. Labeling its move "comprehensive monetary easing," BOJ pledged to keep its benchmark interest rate at “virtually zero” until deflation has ended, and will set up a ¥5T ($60B) fund to buy government bonds and other assets. The Nikkei closed +1.5%, and the yen fell as much as 1% against the dollar following the announcement, though the dollar's weakening has since erased those losses.
- Aussies hold rate steady. In another rate surprise, the Reserve Bank of Australia kept its key cash rate steady at 4.5% this morning. Analysts had widely expected a 25 bps increase following warnings from policymakers that a rate hike was necessary to head off inflationary pressures. The Aussie dollar is -0.8% vs. the U.S. dollar (7:00 ET).
- Minor boost for BHP's Potash bid. Saskatchewan's advisers urged the Canadian province not to oppose BHP Billiton's (NYSE:BHP) attempted takeover of Potash (NYSE:POT), adding that a possible Chinese bid could hurt their budget even more. The report said that if BHP's bid is successful, it could cost the province C$2B ($1.96B) over ten years in lower royalty payments. However, China's preference to keep potash prices low could make any Chinese-led rival bid much more dangerous, as "a producer that is unhinged from market discipline could potentially wreak havoc on Saskatchewan's finances." Potash is based in Saskatchewan, and the province will play a key role in helping the Canadian government decide whether to approve the BHP bid.
- Obama's comments signal possible tax reform. Obama signaled he's open to lowering the U.S. corporate tax rate from its current 35% level, saying a reduction would help ensure that companies operating overseas "can operate effectively and aren’t put at a competitive disadvantage." Though he stressed that any solution would have to be "revenue neutral," his comments add to speculation that the White House could seek broad-based tax code reform as soon as next year.
- Brookfield Properties, Brookfield Homes create new firm. Brookfield Properties (NYSE:BPO) is combining the North American residential unit of Brookfield Office Properties with Brookfield Homes (BHS) to form a new company called Brookfield Residential Properties Inc. Brookfield Residential will hold $2.5B in assets and have an equity value of $1B, and will apply to trade on the New York and Toronto stock exchanges.
- FCC wants more info from Comcast, NBC Universal. The FCC sent letters to Comcast (NASDAQ:CMCSA) and NBC Universal (NYSE:GE) yesterday, requesting more information about their proposed tie-up. Among other items, the FCC wants details on Comcast's and NBC's distribution agreements and on Comcast's decisions on which programming to carry.
- Global pact needed on currencies. The world's leading countries need to agree on a new currency pact to help rebalance the global economy, according to the Institute of International Finance, which represents more than 420 of the world’s leading banks and finance houses. Failure to do so could lead to increased protectionism, as countries engage in "currency wars" and act unilaterally to keep their currencies artificially low.
- German bank sues Goldman over CDO loss. Germany's Landesbank Baden-Wuerttemberg filed suit against Goldman Sachs (NYSE:GS) over a $37M loss incurred on a collateralized debt obligation composed mostly of subprime and "midprime" mortgages. The complaint said that Goldman, which was the placement agent for the CDO, represented the investment as "safe, secure, and nearly risk free" at the same time that Goldman execs were privately calling it "game over" for subprime lenders and were reducing their mortgage exposure.
- SocGen's Kerviel sentenced to jail. Jerome Kerviel, the former Societe Generale trader whose rogue trading caused the bank a €4.9B ($6.7B) loss, has been given a five-year jail sentence (with two years suspended) after being found guilty of breach of trust. The court also ordered Kerviel to pay €4.9B in damages. Kerviel is expected to appeal.
Earnings: Monday After Close
- Mosaic (NYSE:MOS): FQ1 EPS of $0.67 misses by $0.05. Revenue of $2.2B (+50.2%) vs. $2B. Shares -2.1% AH. (PR)
- In Asia, Japan +1.5% to 9519. Hong Kong +0.1% to 22639. China +1.7% to 2656. India -0.3% to 20408.
- In Europe, at midday, London +0.1%. Paris +0.6%. Frankfurt -0.1%.
- Futures: Dow +0.1%. S&P +0.2%. Nasdaq +0.3%. Crude +0.7% to $82.01. Gold +0.8% to $1327.20.
Tuesday's Economic Calendar
- 7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
9:00 Tsy's Miller: 'Perspectives on the Economy, Financial Markets and Debt Management'
10:00 ISM Non-Manufacturing Index
5:00 PM ABC Consumer Confidence Index
- Notable earnings after Tuesday's close: YUM
Seeking Alpha's Market Currents team contributed to this post.
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