- GM sees high demand in IPO. General Motors (GM) priced its initial public offering at $33 and sold around 478M common shares as well as $4.35B in preferred shares; if underwriters exercise options to cover overallotment, GM's IPO could reach $18.1B, the second-largest in U.S. history. The Treasury sold 358M shares, raising $11.8B and reducing its stake to just under 37%; exercising the overallotment option could bring the total Treasury sale to 412M shares for $13.6B and a stake reduction to 33.3%. The Treasury now reportedly plans to reduce, though not eliminate, its oversight role, and has agreed to a six-month lockup, which will dictate whether it will break even on a $40B investment. The performance of GM's stock as it begins trading today will be telling.
- Fed orders new stress tests. The Federal Reserve plans to do another round of stress tests on top U.S. banks, and requested the top 19 banks submit capital plans by early next year showing their ability to withstand losses under 'adverse' circumstances. Officials said the tests haven't been prompted by any specific concerns and instead the Fed is just trying to step up bank supervision, and plans to perform such reviews 'on a regular basis.' The central bank also laid out guidelines for firms that want to return cash to shareholders through dividend hikes or buybacks, specifying firms must have sufficient capital cushions to withstand losses over the next two years and meet tougher capital requirements. The banks subject to the stress tests are: AXP, BAC, BK, BBT, COF, C, FITB, GJM, GS, JPM, KEY, MET, MS, PNC, RF, STT, STI, USB, WFC.
- Tie-up talks for Walter Energy, Western Coal. Walter Energy (WLT) is in talks to acquire Western Coal (OTC:WTNCF) for C$11.50 in cash and stock per share, or C$3.3B ($3.2B) total. The proposed deal price represents a 56% premium to Western Coal's close on the Toronto Stock Exchange yesterday. If deal talks are successful, the combined firm will be one of the world's biggest providers of metallurgical coal.
- OECD: Global recovery slowing. The global recovery is slowing down, according to the OECD's twice-yearly report, as the U.S. recovery lags and emerging-market growth moderates. Global currency tensions and Europe's debt woes also contributed to the possibility that the global economic outlook may be downgraded further. At present, the OECD expects world growth of 4.2% in 2011, down from an earlier forecast of 4.5%, and growth of 4.6% in 2012. For the U.S., the OECD expects growth of 2.7% in 2010, 2.2% in 2011, and 3.1% in 2012; the prior forecast had been for 3.2% growth in both 2010 and 2011.
- Mortgage servicers meet with state AGs. Citigroup (C), Wells Fargo (WFC) and GMAC Mortgage are said to be meeting with state attorneys general this week as both bankers and state officials indicate a settlement may be beginning to take shape over faulty foreclosure paperwork. Representatives of the 50-state probe have already held two meetings with Bank of America (BAC), and stressed that a possible settlement is "not a done deal by any means." Among the ideas that have been discussed is a nationwide fund to help homeowners who suffered wrongful foreclosures. Separately, Citi said yesterday it would refile around 4,000 foreclosure affidavits, but 'there is no reason' to suspend foreclosures.
- Consumers catch the shopping spirit. As many as 138M U.S. shoppers could hit the stores next week looking for Black Friday bargains, according to a survey released today by the National Retail Federation. This figure consists of nearly 60M consumers who definitely plan to go shopping, and another 78M who might partake. The total is 4M higher than last year's forecast, and a positive sign for retailers who count on Black Friday sales to kick off the holiday shopping season.
- Irish loan talks begin. Talks between the Irish government and EU and IMF officials are set to begin today over Ireland's troubled banks and the possible need for an aid package. While Ireland continues to insist that no bailout is necessary, Central Bank of Ireland Governor Patrick Honohan believes Ireland is likely to tap a loan worth 'tens of billions' of euros, adding that there would otherwise be no reason for the IMF and ECB to send a large technical team to the country. Honohan expects the interest rate charged on the loan to be around 5%, similar to previous IMF loans.
- BHP, Atlas Iron discuss port access deal. BHP Billiton (BHP) and Australia's Atlas Iron are in talks about cooperating on iron ore haulage and port access in Australia's Pilbara region. If talks are successful, it would be the first time BHP has opened up its proprietary rail network and could be a significant step in reducing export bottlenecks in the region. The rail networks in question were built by BHP and Rio Tinto (RIO) over the past 30 years, and by Fortescue Metals Group (OTCPK:FSUMF) since 2006.
- Rolls-Royce to replace up to 40 engines. Rolls-Royce (OTCPK:RYCEY) may need to replace as many as 40 of its Trent 900 jet engines currently installed in Airbus (OTCPK:EADSY) A380 planes, according to Qantas CEO Alan Joyce. That would mean switching out as many as half the company's engines currently used by Qantas and two other carriers. Rolls-Royce has declined to provide any information on what the cost of the swaps and repairs will be, saying only that it expects the work to slightly impact earnings this quarter.
Earnings: Thursday Before Open
- Helmerich & Payne (HP): FQ4 EPS of $0.77 beats by $0.07. Revenue of $559M (+56%) vs. $510M. (PR)
- Staples (SPLS): Q3 EPS of $0.41 beats by $0.01. Revenue of $6.5B (+0.3%) in-line. (PR)
Earnings: Wednesday After Close
- Applied Materials (AMAT): FQ4 EPS of $0.36 beats by $0.05. Revenue of $2.9B (+88.9%) vs. $2.6B. Shares +0.3% AH. (PR,earnings call transcript)
- Aruba Networks (ARUN): FQ1 EPS of $0.12 beats by $0.01. Revenue of $83.1M (+44.4%) vs. $81M. Shares -4% AH. (PR,earnings call transcript)
- DryShips (DRYS): Q3 EPS of $0.38 beats by $0.13. Revenue of $222M (-1.4%) vs. $217M. Shares +4.8% AH. (PR)
- Limited Brands (LTD): Q3 EPS of $0.18 beats by $0.01. Revenue of $2B (+11.6%) in-line. Shares +3.5% AH. (PR)
- NetApp (NTAP): FQ2 EPS of $0.52 beats by $0.03. Revenue of $1.2B (+32.6%) in-line. (PR,earnings call transcript)
- PetSmart (PETM): Q3 EPS of $0.38 in-line. Revenue of $1.4B (+7.2%) in-line. Shares -1.4% AH. (PR)
- In Asia, Japan +2.1% to 10014. Hong Kong +1.8% to 23637. China +0.9% to 2865. India +0.3% to 19931.
- In Europe, at midday, London +1.4%. Paris +2.4%. Frankfurt +1.4%.
- Futures at 7:00: Dow +0.9%. S&P +1.1%. Nasdaq +1.25%. Crude +1.6% to $81.76. Gold +1.5% to $1356.40.
Thursday's Economic Calendar
- 8:30 Initial Jobless Claims
10:00 Leading Indicators
10:00 Hearing: Robo-Signing and Other Mortgage Issues
10:00 Philly Fed Business Outlook
10:30 EIA Natural Gas Inventory
1:00 PM Fed's Warsh: The Future of Financial Markets
1:30 PM Fed's Kocherlakota speaks to the Nat'l. Tax Association
3:30 PM Treasury's Wolin: Financial Reform
4:15 PM Treasury's Warren: Banking and Finance
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
4:30 PM Fed's Plosser: Asset Bubbles and Monetary Policy
- Notable earnings before Thursday's open: AEO, DLTR, GME, HP, ROST, SPLS, WSM
- Notable earnings after Thursday's close: ADSK, BCSI, CRM, DELL, FL, GPS, INTU, MRVL
Seeking Alpha's Market Currents team contributed to this post.
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