- Banks get back to foreclosures. Bank of America (BAC) said it's applying new signatures to foreclosures in 23 states and will resubmit for court approval new affidavits for 102,000 pending foreclosure actions. Foreclosure sales are expected to resume as soon as November, with sales in the other 27 states to resume after a review is completed "on a state by state basis." BofA noted that it found "no cases" of foreclosures that shouldn't have gone through and foresees delays on fewer than 30,000 foreclosure sales nationwide. GMAC Mortgage also said it's pushing ahead with an unspecified number of foreclosures. The moves are an important first step for lenders as they try to fight the perception that "the mortgage market is severely flawed" and foreclosures have been forced through unlawfully.
- Another Tylenol recall from J&J. Johnson & Johnson (JNJ) has once again issued a recall for certain Tylenol caplets after some consumers reported nausea, stomach pain and other symptoms after taking pills or smelling a moldy or musty odor on the bottles. The company believes the odor is due to trace amounts of a chemical called 2,4,6-tribromoanisole, a chemical the company had previously said was on wooden shipping pallets it stopped using after January 15. This is J&J's 13th recall this year, and its fifth on over-the-counter medicines because of consumer complaints about an unpleasant odor.
- Massey Energy considers a sale. Massey Energy (MEE) is said to be considering strategic alternatives, including a possible sale of the company or the acquisition of another company. Massey's board of directors formed a committee last week to assess the company's options, sources said, and could "be in detailed due diligence with one of the multiple options" by mid-November. Shares of Massey, the nation's sixth-largest coal miner, are down more than 15% year-to-date as the company has dealt with fallout from a mining disaster in April, safety violations and quarterly losses. Shares rose 7.7% in after-hours trading.
- Companies push for tax amnesty. U.S. multinational firms, such as GE (GE) and Cisco (CSCO), are pushing for a tax holiday in order to repatriate billions of dollars “trapped” overseas but have been rebuffed by the White House. Research suggests that 30-40% of the nearly $1T in cash held by non-financial S&P 500 companies is being held abroad; for some companies, the trapped cash accounts for more than 75% of their cash balances, but bringing the money back to the U.S. for domestic use would force the firms to pay tax on the money, usually of 25-35%. Corporations say bringing the money back would be good for the U.S. economy, but the White House feels it would raise expectations of future tax holidays, that the repatriated money might be paid to shareholders instead of used for job creation and that a lack of investment is not the most pressing economic problem.
- China cuts rare earth export quotas, again. The Chinese government plans to cut its rare earth export quotas by up to 30% next year. China, which mines 95% of the world's rare earths, has already cut 2010 export quotas by 40%. Officials insist the quotas are necessary to prevent over-exploitation of the precious metals, which are used in a wide-range of items from mobile phones to missiles, but countries dependent on China's rare earth exports are crying foul and the U.S., EU and Japan may bring a case before the WTO. In the meantime, miners with rare earth properties in the U.S. are getting a boost: Shares of junior miner Rare Element Resources (REE) jumped nearly 26% yesterday on speculation the company is a prime takeover target.
- Japan cuts economic outlook. Japan's government cut its economic outlook for the first time since February 2009, saying "economic movements appear to be pausing recently" and reiterating that the economy is in a mild deflationary phase. A rising yen and slowing exports are threatening Japan's economic recovery, and the government warned a further slowdown is possible if the global economy loses steam or if there are swings in share prices and foreign exchange rates.
- Morgan Stanley gets CICC stake sale approval. Morgan Stanley (MS) received initial regulatory approval to sell its 34.3% stake in Chinese investment bank China International Capital Corp (OTCQB:CICC), according to a report in the Shanghai Securities News. Official approval is expected by the end of this month, and the stake could be sold for more than $1B.
- Buffett raises Munich Re stake. Berkshire Hathaway's (BRK.A) Warren Buffett increased his stake in German reinsurer Munich Re to over 10% and plans to buy more voting rights in the next twelve months. Munich Re reiterated that Buffett doesn't plan to influence the company's management or dividend policy.
- SKF buys Lincoln Industrial. Sweden's SKF (OTCPK:SKFRY) will buy U.S.-based Lincoln Industrial for $1B, giving the firm a larger North American presence and adding almost $400M in annual sales. SKF, the world's largest producer of industrial bearings, also raised its financial forecasts after posting strong Q3 results, and expects even more orders in Q4 as the markets get back to pre-crisis levels.
- CMBS make a comeback. Sources said Goldman Sachs (GS) and Bank of America (BAC) are expected to sell in the next two weeks $3B of senior debt left over from the 2007 purchase of Hilton Worldwide by Blackstone Group (BX); the two banks had provided $20B of financing for the deal but were stuck holding the loans when debt markets froze. The offering will likely be followed by a $2B deal involving the Extended Stay hotel chain that recently exited bankruptcy. Taken together, the two deals would mark the largest issuance of commercial mortgage-backed securities since the financial crisis, reflecting a resurgence in the CMBS market.
- Apple beats, shares dip. Apple (AAPL) posted better than expected earnings (see details below) but shares sank over 5% in after-hours trading because iPad sales came in below target and the company provided Q1 EPS guidance of $4.80, significantly lower than consensus of $5.07. CEO Steve Jobs dismissed the threat of rivals, calling Google's (GOOG) approach to Android "closed" rather than Apple's "integrated" approach to its own software and saying he doesn't see BlackBerry-maker RIM (RIMM) "catching up with us in the foreseeable future." Apple's results make it the second-most profitable U.S. tech firm - Microsoft (MSFT) takes the No. 1 spot - and underscore the degree to which consumers, not business, are now driving technological innovation.
- Microsoft parts with cloud-computing visionary. In an internal memo, Microsoft (MSFT) disclosed that Ray Ozzie, the company’s chief software architect, plans to leave the company, though no reason for the departure was provided. Ozzie drove much of Microsoft’s move into cloud computing, but the company's success in the area has been mixed. Ozzie's departure is the latest in a turnover of Microsoft's top ranks.
- SEC preps say-on-pay rules. The SEC opened for comment its proposed "say-on-pay" rules which would give shareholders of public companies a non-binding vote on executive compensation packages. The new rules, which were mandated as part of the financial reform bill, could be adopted as soon as the 30-day comment period ends.
- Lehman bankruptcy bill nears $1B. Lehman Brothers' (OTC:LEHMQ) bankruptcy was the largest in U.S. history, and now looks like it will become the most expensive as well. In documents filed with the SEC yesterday, Lehman disclosed $49M in payments in September to its lawyers, consultants and advisers. That brings the cost-to-date of unwinding Lehman to $982M, a number that will surely keep climbing.
Earnings: Tuesday Before Open
- Bank of America (BAC): Q3 EPS of $0.27 beats by $0.11. Revenue of $26.98B (+2.3%) vs. $27.15B. Shares +1.1% premarket (6:45 ET). (PR)
- Bank of New York Mellon (BK): Q3 EPS of $0.51 misses by $0.03. Revenue of $3.43B (+3.1%) vs. $3.39B. (PR)
- UnitedHealth (UNH): Q3 EPS of $1.14 beats by $0.30. Revenue of $23.37B (+9.1%) vs. $23.31B. (PR)
Earnings: Monday After Close
- Apple (AAPL): FQ4 EPS of $4.64 beats by $0.56. Revenue of $20.3B vs. $18.9B. Apple sold 3.9M Macs (+27%); 14.1M iPhones (+91%); 9M iPods (-11%); 4.1M iPads during Q4. Shares -5.7% AH. (PR, earnings call transcript)
- Crown Holdings (CCK): Q3 EPS of $0.85 beats by $0.02. Revenue of $2.2B (-3.4%) vs. $2.3B. Shares +0.5% AH. (PR)
- IBM (IBM): Q3 EPS of $2.82 beats by $0.07. Revenue of $24.3B vs. $24.1B. Shares -2.6% AH. (PR, earnings call transcript)
- Infinera Corp (INFN): Q3 EPS of $0.18 beats by $0.09. Revenue of $130M (+56%) vs. $126M. Shares -20.1% AH. (PR, earnings call transcript)
- Lincare (LNCR): Q3 EPS of $0.47 in-line. Revenue of $419M (+6.6%) in-line. Shares -2.2% AH. (PR)
- Steel Dynamics (STLD): Q3 EPS of $0.09 misses by $0.01. Revenue of $1.6B (+35%) vs. $1.5B. Shares +0.3% AH. (PR)
- VMware (VMW): Q3 EPS of $0.39 beats by $0.04. Revenue of $715M (+45.8%) vs. $698M. Shares -5.7% AH. (PR, earnings call transcript)
- In Asia, Japan +0.4% to 9539. Hong Kong +1.3% to 23764. China +1.6% to 3002. India -0.9% to 19983.
- In Europe, at midday, London +0.3%. Paris +0.3%. Frankfurt +0.4%.
- Futures at 7:00: Dow +0.1%. S&P -0.1%. Nasdaq -0.9%. Crude -0.7% to $82.52. Gold -0.3% to $1368.20.
Tuesday's Economic Calendar
- 7:45 ICSC Retail Store Sales
8:30 Housing Starts
8:55 Redbook Chain Store Sales
9:30 Fed's Dudley: National and Regional Housing Trends
9:40 Fed's Evans: Economic Outlook
11:30 Fed's Lockhart: Economic Outlook
12:50 PM Fed's Fisher speaks at NYABE luncheon
7:00 PM Fed's Duke: 'Come With Me to the FOMC'
- Notable earnings before Tuesday's open: AEP, BAC, BK, BTU, DRH, EMC, FRX, GS, HOG, ITW, JNJ, KO, LMT, MTG, NYT, OMC, OXY, PH, STT, SVU, UNH, WFT
- Notable earnings after Tuesday's close: ALTR, BSX, CREE, FULT, GILD, JNPR, SLM, SYK, TPX, URI, WDC, YHOO
Seeking Alpha's Market Currents team contributed to this post.
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