- Canada splits on BHP's Potash bid. A Canadian government agency has reportedly recommended approval for BHP Billiton's (NYSE:BHP) $40B hostile bid for Potash (NYSE:POT), despite the objections of Saskatchewan's provincial government. The approval, first reported in the National Post, has conditions attached, including government monitoring. The final decision on the matter now rests with Canada's Prime Minister Stephen Harper, who has said he will make an announcement no later than Wednesday. Meanwhile, recent options trading in Potash suggests investors are expecting a higher bid, either in the form of a sweetener from BHP or a higher bid from a rival. Premarket: BHP +1.45%, POT +1.2% (7:00 ET).
- BBVA bets on Turkey's banking sector. BBVA (NYSE:BBVA) reached a deal to buy a 24.9% stake in Turkey's fast-growing Garanti bank for $5.84B. BBVA is buying the stake from Dogus Holding and GE (NYSE:GE), and will finance it with a €5B ($6.9B) rights offering. The deal will help BBVA reduce its dependence on the weak Spanish domestic market, while giving it a foothold in Turkey's relatively resilient banking sector. Premarket: GE +0.9% (7:00 ET).
- BP's profit spill. BP (NYSE:BP) reported its Q3 net profit fell 66.5% to $1.79B after paying another $7.7B in charges related to the Gulf of Mexico oil spill. BP's total charges linked to the spill have risen to $39.9B. Still, the company believes its 2011 capital expenditure will not be derailed by the high cost of the spill and should “exceed the $18B previously indicated.” Third-quarter replacement cost profit was $1.9B. Bob Dudley, the company's new CEO, said "these results demonstrate that BP is well on track for recovery after the tragic accident on the Deepwater Horizon drilling rig and subsequent oil spill." Premarket: BP +1% (7:00 ET). (See also: BP bills Mitsui $1.9B for spill)
- Australia's unexpected rate hike. Worried about strong growth leading to inflation, the Reserve Bank of Australia unexpectedly raised its benchmark interest rate by a quarter percentage point to 4.75%, strengthening its currency toward parity with the U.S. dollar. The move was predicted by only seven of 24 economists surveyed by Bloomberg News. Australia’s jobless rate of 5.1% in September is about half the level of unemployment in the U.S. and euro zone, which helps explain why its currency is up some 11% against the U.S. dollar this year. As of 7:00 ET, the Aussie dollar is +1.1% vs. USD.
- India raises rates too. India also raised its benchmark rates this morning, though the move was expected. The Reserve Bank of India raised the repurchase rate by 25 bps to 6.25%, and raised the reverse repurchase rate by a similar margin to 5.25%. It's India's sixth rate hike this year as the country tries to pull inflation under control, though the bank said "the likelihood of further rate actions in the immediate future is relatively low."
- CNOOC, GNPC rebuffed by Kosmos. Kosmos Energy rejected a $5B joint bid by CNOOC (NYSE:CEO) and Ghana National Petroleum Corp. for its 23.5% stake in Ghana's Jubilee field, a site thought to contain 1.5B barrels of crude. A GNPC official said that Kosmos, majority-owned by Blackstone (NYSE:BX) and Warburg Pincus, "has now decided to remain [in Ghana]. That is for sure," but declined to elaborate. Analysts think both sides may be playing games, with CNOOC and GNPC using the media to pressure Kosmos into a deal, and Kosmos rejecting an offer superior to bids it has received in the past in hopes of juicing the bid price higher.
- Taxpayers to give AIG another $22B to restructure. The Treasury said AIG (NYSE:AIG) will receive up to $22B in government aid to facilitate its restructuring and ahead of an eventual government exit. Assuming the restructuring goes to plan, the government expects to make an overall profit on its AIG bailout, which totalled as much as $180B at one point. AIG had announced early yesterday morning that it had completed the $16.2B sale of Alico to MetLife (NYSE:MET) and would use the proceeds to help close down a $20B credit facility extended by the NY Fed.
- GM IPO details due today. Details of GM's planned IPO have begun to leak out, ahead of an official announcement expected later today. Sources said the closely-watched offering will likely be priced in the $26-29 share range, with a specific price chosen around the middle of the month and a day ahead of the actual sale. The government will cut its stake to around 35% from 50%, but shares may need to rise as much as 60% from their initial level for the U.S. to break even on the rest of its stake.
- FDIC files suit against failed bank's execs. The FDIC is getting more aggressive in its efforts to recover as much as $2B in losses suffered by its deposit insurance fund during the financial crisis. The agency filed suit yesterday against 11 former executives of a failed Illinois bank, accusing them of gross negligence and breach of fiduciary duty. An FDIC spokesman said the agency has authorized the pursuit of lawsuits against more than 70 officers and directors of failed banks.
- Fortinet denies IBM rumor. Fortinet (NASDAQ:FTNT) denied reports that it's in talks to sell itself to IBM (NYSE:IBM), saying it's "focused on building a strong independent company and is not in acquisition discussions with IBM." Fortinet's denial helped erase much of the 22% gain its shares registered on Monday following reports of IBM's interest, but investors obviously still anticipate some sort of development, as FTNT closed +6.3% yesterday.
- SEC probes JPMorgan, hedge fund deal. ProPublica reported yesterday that the SEC is investigating whether JPMorgan (NYSE:JPM) allowed the Magnetar hedge fund to improperly select assets while also betting against them in a $1.1B deal backed by subprime mortgages. It's unclear how advanced the SEC's investigation is, or whether the SEC will end up taking any action, as there are several complications in the case, including the fact that JPMorgan was the biggest loser by far in the deal being investigated.
- First Horizon subpoenaed over loan securitization. First Horizon (NYSE:FHN) disclosed it had been subpoenaed by the Federal Housing Finance Agency, the conservator for Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC), in connection to six loan securitizations and whether the representations and warranties on those securitizations were breached. First Horizon said it "is unable to estimate any liability for this matter" and, as of Sept. 30, had not set aside any money as a reserve for "repurchase of loans arising from [breach and damage] claims." Shares of FHN closed -6.7% in yesterday's trading.
- Google sues the government. Google (NASDAQ:GOOG) filed suit against the U.S. Interior Department, alleging the agency wrote procurement requirements for a new e-mail system to favor Microsoft (NASDAQ:MSFT) over Google Apps. Google claims the Interior's decision to only consider Microsoft's productivity suite is "unduly restrictive of competition" and violates the Competition in Contracting Act. The Interior Department had no comment about the contract, which is estimated to be worth $59M over five years.
- Mortgage insurer Ambac may be underwater. Shares of Ambac (ABK) closed down 50.15% yesterday after the bond insurer decided to skip an interest payment on senior notes due in 2023 and said it may declare bankruptcy by the end of the year. The move may be an attempt to force Ambac’s debtholders to negotiate a prepackaged bankruptcy in order to avoid a drawn-out court battle over the firm’s assets.
- QE2 expected to total $500-$750B. A survey conducted by Blue Chip Financial Forecasts of leading economists showed 47.9% expect the Fed to buy between $500B and $750B of government bonds in the plan likely to be announced tomorrow. An overwhelming 93% say the market impact is largely priced in. Critics say financial gains from QE2 are just “fool’s gold” to spur consumers into spending more when their net savings rate is already negative. Thus, QE postpones “the necessary rebalancing of the U.S. economy.”
Earnings: Tuesday Before Open
- Dollar Thrifty Automotive Group (NYSE:DTG): Q3 EPS of $1.51 beats by $0.03. Revenue of $443M (+1%) vs. $456M. (PR)
- Fresh Del Monte Produce (NYSE:FDP): Q3 EPS of $0.22 misses by $0.05. Revenue of $793M (+3.5%) vs. $798M. (PR)
- Genesee & Wyoming (NYSE:GWR): Q3 EPS of $0.53 beats by $0.03. Revenue of $157M (+14.7%) vs. $158M. (PR)
- Medco Health Solutions (NYSE:MHS): Q3 EPS of $0.91 beats by $0.03. Revenue of $16.3B (+10.3%) vs. $16.1B. (PR)
- Mednax (NYSE:MD): Q3 EPS of $1.06 beats by $0.01. Revenue of $351M (+6%) vs. $356M. (PR)
- Newmont Mining (NYSE:NEM): Q3 EPS of $1.08 beats by $0.13. Revenue of $2.6B (+26.7%) vs. $2.4B. Shares +0.4% premarket. (PR)
- Nicor (NYSE:GAS): Q3 EPS of $0.30 misses by $0.02. Revenue of $352M (+8.3%) vs. $326M. (PR)
- NYSE Euronext (NYSE:NYX): Q3 EPS of $0.46 beats by $0.03. Revenue of $599M (-3.5%) vs. $592M. (PR)
- Overseas Shipholding Group (NYSE:OSG): Q3 EPS of -$0.89 beats by $0.17. Revenue of $260M (+6.7%) vs. $233M. (PR)
- Talisman Energy (NYSE:TLM): Q3 EPS of $0.02 misses by $0.09. Revenue of $1.7B (+11.4%) vs. $1.6B. (PR)
- Teva Pharmaceutical Industries (NYSE:TEVA): Q3 EPS of $1.30 beats by $0.03. Revenue of $4.3B (+19.7%) vs. $4.4B. Shares +1.7% premarket. (PR)
Earnings: Monday After Close
- American Financial Group (NYSE:AFG): Q3 EPS of $1.07 beats by $0.06. Shares -0.6% AH. (PR)
- Anadarko (NYSE:APC): Q3 EPS of $0.21 misses by $0.07. Revenue of $2.6B (-11.1%) in-line. Shares -1.2% AH. (PR)
- Axis Capital (NYSE:AXS): Q3 EPS of $1.22 beats by $0.07. Shares +1.9% AH. (PR)
- Brigham Exploration Company (BEXP): Q3 EPS of -$0.01 misses by $0.11. Revenue of $44.4M (+133.7%) vs. $44.7M. Shares -5.6% AH. (PR)
- Brookdale Senior Living (NYSE:BKD): Q3 EPS of -$0.14 misses by $0.05. Revenue of $559M (+10.4%) vs. $551M. Shares +0.1% AH. (PR)
- Cognex (NASDAQ:CGNX): Q3 EPS of $0.43 beats by $0.10. Revenue of $75M (+82%) in-line. Shares +7.6% AH. (PR)
- Comstock Resources (NYSE:CRK): Q3 EPS of -$0.09 misses by $0.01. Revenue of $79.7M (+18.2%) vs. $87.6M. Shares -1.7% AH. (PR)
- Forest Oil (NYSE:FST): Q3 EPS of $0.37 misses by $0.08. Revenue of $210M (+18.6%) vs. $238M. Shares -1.1% AH. (PR)
- Herbalife (NYSE:HLF): Q3 EPS of $1.17 beats by $0.14. Revenue of $688M (+14.7%) vs. $687M. Shares -2.6% AH. (PR)
- MEMC Electronic Materials (WFR): Q3 EPS of $0.08 may not be comparable with consensus of $0.13. Revenue of $503M (+12.2%) vs. $531M. (PR, earnings call transcript)
- PAREXEL International (NASDAQ:PRXL): FQ1 EPS of $0.30 beats by $0.02. Revenue of $296M (-3.8%) vs. $303M. Shares -2.9% AH. (PR)
- Principal Financial Group (NYSE:PFG): Q3 EPS of $0.68 beats by $0.05. Revenue of $2B (+1.3%) vs. $2.2B. Shares -1.7% AH. (PR)
- Post Properties (NYSE:PPS): Q3 EPS of $0.82 may not be comparable with consensus of $0.31. Revenue of $72.9M (+5%) vs. $68.5M. (PR)
- Sanmina-SCI (NASDAQ:SANM): FQ4 EPS of $0.46 beats by $0.08. Revenue of $1.7B (+24.7%) in-line. Shares -3.8% AH. (PR, earnings call transcript)
- Texas Roadhouse (NASDAQ:TXRH): Q3 EPS of $0.19 beats by $0.01. Revenue of $246M (+8.5%) vs. $241M. (PR)
- WMS Industries (NYSE:WMS): Q3 EPS of $0.37 beats by $0.01. Revenue of $188M (+13.4%) vs. $179M. (PR)
- In Asia, Japan +0.1% to 9160. Hong Kong +0.1% to 23671. China -0.3% to 3045. India -0.1% to 20346.
- In Europe, at midday, London +0.9%. Paris +0.2%. Frankfurt +0.5%.
- Futures at 7:00: Dow +0.2%. S&P +0.4%. Nasdaq +0.3%. Crude +0.5% to $83.33. Gold +0.6% to $1358.50.
Tuesday's Economic Calendar
FOMC Meeting, Day 1
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
- Notable earnings before Tuesday's open: ABC, ADM, AMSC, BBG, BP, CAB, CAM, CFN, CLX, CVLT, DGI, DTG, EME, EMR, EMS, EXPD, FDP, GAS, GET, GWR, HAR, HCP, IPXL, JOE, K, KDN, MA, MD, MHS, MLM, MMP, MPEL, MRO, NEM, NUS, NYX, OSG, OZM, PFE, PRGO, RBA, RDC, SHOO, SPR, TEVA, THC, TLM, UAM, VNO, VSH, WST
- Notable earnings after Tuesday's close: ACAS, AGII, ASIA, BIO, BLKB, BRE, CBL, CECO, CTRP, DCT, DEI, DISCA, EOG, ERTS, HIG, HTZ, INT, JKHY, LNC, MASI, MRH, MYGN, OKE, OKS, OPEN, ORA, PBI, PLT, PRI, SFSF, SM, SRX, SVR, TGI, TIE, TRMB, UNM, WTS, WYNN, XCO, XL
Seeking Alpha's Market Currents team and Jason Kelly contributed to this post.
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