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  • Canada blocks BHP's Potash bid. Canada decided to block BHP Billiton's (BHP) $40B bid for Potash (POT), a victory for the province of Saskatchewan and Potash management which had opposed the deal, but a blow to investors and free-trade sentiment in Canada. The highly-anticipated ruling leaves little room for a modified offer, and BHP investors think the company's next move will be to abandon the pursuit and return capital to shareholders through a stock buyback or expand its interests in oil and gas. Finding a new feasible acquisition target may not be easy, as "BHP is of a size now where just about anything it wants to do of any substance is going to get blocked on regulatory grounds." Premarket: POT -3.8%, BHP +4.2% (7:00 ET).
  • Bernanke rolls out QE2. Investors and central banks alike tuned in to hear yesterday's FOMC announcement in which the Fed launched a second round of quantitative easing via $600B in purchases of longer-term Treasurys by the end of June, at the rate of around $75B/month. Continued POMO reinvestments could total $250B-300B during the same period, and the Fed reserved the right to take more action if growth and inflation don't pick up. The vote was 10-to-1, with Kansas City Fed's Thomas Hoenig saying the risks of QE2 outweigh the benefits. The FOMC maintained near-zero rates and expects to do so for an "extended period." (More: Bernanke's op-ed in today's Washington Post)
  • Markets, analysts react to QE2. KC Fed's Hoenig isn't alone in his skepticism of QE2 (see above). Many see QE2 as an "inevitably blunt instrument for the difficult task of restoring growth and generating jobs" during what the Fed called a 'disappointingly slow' economic recovery. Emerging markets were equally unimpressed, pledging to come up with new measures to curb capital inflows stemming from the Fed's easing; their opposition to QE2 means next week's G-20 meeting is very unlikely to produce any sort of meaningful compromise on global imbalances and currencies. The size and duration of the QE2 plan were largely in-line with expectations, and the move had largely been priced in to markets before the announcement itself: S&P closed +0.4%, and the 10-year Treasury sank, pushing the yield up to 2.634%. Asian and European markets are seeing strong gains today, as are U.S. futures (details below).
  • U.K. intervenes on News Corp's BSkyB offer. U.K. Business Secretary Vince Cable has asked the country's communications regulator to examine whether News Corp's (NWS) offer for BSkyB goes against the public interest. A report on the matter will be submitted by Dec. 31. EU competition regulators will also take a closer look at the bid, deciding by Dec. 8 whether to approve it or not. News Corp is offering £7.8B ($12.5B) for the 61% of the British satellite broadcaster it doesn't already own.
  • GM files for IPO at last. General Motors filed its long-awaited IPO, and will offer 365M shares at $26-29 each. The move will cut the Treasury's stake in the carmaker to 43% from 61%. GM also plans to sell around $3B of preferred shares that would convert to common shares under mandatory provision. The IPO values GM at just over $41B at the midpoint of the pricing range, not quite the $70B valuation that would allow taxpayers to break even on the company's bailout.
  • Swiss Re pays back Buffett. Swiss Re (OTC:SWCEY) reached a deal to repay Berkshire Hathaway (BRK.A) for a multi-billion franc bond that provided a crucial lifeline for the world's No. 2 reinsurer during the financial crisis. Paying back the original 3B Swiss franc ($3.1B) bond plus interest payments will result in a $1B pretax charge in Q4, but analysts view the repayment as a sign that Swiss Re has regained its financial footing. That view was further solidified as Swiss Re also announced today that net profit rose to $618M in the most recent quarter, up from $314M the year before. With the repayment of the loan, Swiss Re is expected to look at returning money to shareholders through a buyback or dividend.
  • BNP Paribas is world's No. 1 bank. France's BNP Paribas (OTCQX:BNPQY) is the world's No. 1 bank, with a 34% increase in assets over the last three years to €2.24T ($3.2T), the same size as Bank of America (BAC) and Morgan Stanley (MS) combined. However, analysts say BNP may also have one of the lowest capital ratios among major European banks under the new Basel III rules, and French regulators are doing very little to rein in the bank; last month, Bank of France Governor Christian Noyer said "if banks in some countries have very risky profiles and regulators ask them to hold more capital, it’s their problem. Don’t conclude that everyone has to do exactly the same thing." After reporting a 46% rise in Q3 net profit today, BNP acknowledged that the Basel rules will have "a significant, but manageable impact on the group's risk-weighted assets." In Paris trading, shares +4.3% (7:00 ET).
  • SEC bans naked access. The SEC voted to prohibit brokers from granting "naked access" to high-frequency traders, a move aimed at preventing bad trades from potentially disrupting markets. Naked access trading has grown rapidly, and as much as 30% of market activity is conducted this way. However, the vote will have limited impact on the largest HFT firms because they are broker-dealers with their own direct access to the markets.
  • Wal-Mart eyes Indonesian hypermarkets. Wal-Mart (WMT) has reportedly joined the list of suitors interested in buying Indonesian retailer Matahari's hypermarket business. Carlyle Group and South Korea's Lotte Shopping are also expected to participate in the auction, which could run up to $1B. Wal-Mart is betting on acquisitions in emerging markets to help compensate for sluggish domestic sales.
  • Qantas grounds Airbus fleet after engine failure. Qantas Airways will ground its six Airbus A380 super-jumbo jets after a mid-air engine failure today; the plane made an emergency landing and there were no injuries. Airbus parent EADS (OTCPK:EADSY) and engine-maker Rolls-Royce (OTCPK:RYCEY) will work with Qantas to identify the problem.
  • Car sales pick up. U.S. car sales rose 13.4% in October from the year before, totalling 950,165 vehicles. Perhaps more tellingly, October's seasonally adjusted, annualized selling pace came to 12.26M vehicles, the best showing since the government's 'cash for clunkers' program prompted a spike in auto purchases in August 2009. Among the highlights:
    Toyota (TM) Oct. U.S. sales: -4.4% to 145,474 vehicles.
    Ford (F): +19.2% to 157,935 vehicles, vs. Edmunds expectations of +14%.
    Chrysler (OTCPK:FIATY): +37% to 90,137 vehicles, vs. Edmunds expectations of +40% - a seventh straight month of sales gains.
    GM: +3.5% to 183,759 vehicles vs. Edmunds expectations of -4.2%, with core brands up 13%.
  • New sheriff in town for Fannie, Freddie. Spencer Bachus, the Republican expected to take over chairmanship of the House Financial Services Committee, said yesterday that mortgage giants Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) should be in liquidation, not conservatorship. Bachus said reforming the two GSEs is at the top of his priorities list.
  • MGM files for bankruptcy. Beleaguered studio Metro-Goldwyn-Mayer filed for bankruptcy, bringing an end to a takeover bid by Lions Gate Entertainment (LGF) after coming to terms with Carl Icahn, who will get a chance to elect a director. The plan will extinguish $4B in debt and install managers from Spyglass Entertainment.

Earnings: Thursday Before Open

  • Canadian Natural Resource (CNQ): Q3 EPS of $0.55 beats by $0.10. (PR)
  • Macerich (MAC): Q3 EPS of $0.66 beats by $0.02. Revenue of $191M (-5%) vs. $177M. (PR)
  • MetroPCS Communications (PCS): Q3 EPS of $0.22 beats by $0.01. Revenue of $1B (+14%) in-line. (PR)
  • MF Global (MF): FQ2 EPS of $0.02 misses by $0.02. Revenue of $240.3M (-4.6%) vs. $253M. (PR)
  • Suncor Energy (SU): Q3 EPS of $0.42 beats by $0.01. (PR)
  • Time Warner Cable (TWC): Q3 EPS of $1.00 beats by $0.11. Revenue of $4.7B (+5.2%) in-line. (PR)

Earnings: Wednesday After Close

  • Amdocs (DOX): FQ4 EPS of $0.62 beats by $0.03. Revenue of $762M (+7.7%) vs. $764M. Shares -5% AH. (PR)
  • Avis Budget Group (CAR): Q3 EPS of $0.78 beats by $0.02. Revenue of $1.5B (+3.2%) in-line. Shares +0.3% AH. (PR)
  • Charles River Laboratories International (CRL): Q3 EPS of $0.45 misses by $0.04. Revenue of $276M (-7.2%) vs. $289M. Shares -0.2% AH. (PR)
  • Chesapeake Energy (CHK): Q3 EPS of $0.70 beats by $0.06. Revenue of $2.6B (+42.5%) vs. $2.3B. Shares -1.5% AH. (PR)
  • Health Care REIT (HCN): Q3 EPS of $0.79 misses by $0.02. Revenue of $176M (+25.7%) vs. $167M. Shares +1.3% AH. (PR)
  • Intrepid Potash (IPI): Q3 EPS of $0.16 beats by $0.06. Revenue of $91.5M (+37.8%) vs. $71.7M. Shares +1.3% AH. (PR)
  • Kimco Realty (KIM): Q3 EPS of $0.28 beats by $0.02. (PR)
  • Kinross Gold (KGC): Q3 EPS of $0.16 in-line. Revenue of $736M (+26.3%) vs. $667M. Shares +1.7% AH. (PR)
  • Liberty Global (LBTYA): Q3 EPS of $0.99 may not be comparable with consensus of -$0.09. Revenue of $2.2B (+16.4%) in-line. Shares -0.4% AH. (PR)
  • Murphy Oil (MUR): Q3 EPS of $1.05 misses by $0.05. Revenue of $6.1B (+17%) vs. $6.3B. Shares -0.6% AH. (PR)
  • ON Semiconductor (ONNN): Q3 EPS of $0.25 in-line. Revenue of $601M (+27%) vs. $599M. Shares -2.7% AH. (PR, earnings call transcript)
  • Prudential Financial (PRU): Q3 EPS of $2.12 beats by $0.71. Revenue of $7.9B (+15.9%) vs. $7.5B. Shares +0.7% AH. (PR)
  • Qualcomm (QCOM): FQ4 EPS of $0.68 beats by $0.09. Revenue of $3B (+9.7%) vs. $2.8B. Shares +7.2% AH. (PR, earnings call transcript)
  • Transocean (RIG): Q3 EPS of $1.15 may not be comparable with consensus of $1.36. Revenue of $2.3B (-18.2%) vs. $2.5B. Shares -0.4% AH. (PR)
  • ValueClick (VCLK): Q3 EPS of $0.16 beats by $0.02. Revenue of $107M (+1.5%) vs. $103M. Shares +4.4% AH. (PR)
  • Verisk Analytics (VRSK): Q3 EPS of $0.36 beats by $0.02. Revenue of $287M (+11.3%) vs. $286M. (PR)
  • Whole Foods Market (WFMI): FQ4 EPS of $0.33 beats by $0.05. Revenue of $2.1B (+14.7%) in-line. Shares +7.3% AH. (PR, earnings call transcript)
  • Yamana Gold (AUY): Q3 EPS of $0.16 beats by $0.02. Revenue of $454M (+36%) vs. $421M. Shares +2 AH. (PR)

Today's Markets

  • In Asia, Japan +2.2% to 9359. Hong Kong +1.6% to 24536. China +1.9% to 3087. India +2.1% to 20894.
  • In Europe, at midday, London +1.7%. Paris +1.9%. Frankfurt +1.5%.
  • Futures at 7:00: Dow +0.6%. S&P +0.65%. Nasdaq +0.55%. Crude +1.2% to $85.70. Gold +1.8% to $1361.90.

Thursday's Economic Calendar

Seeking Alpha's Market Currents team contributed to this post.


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