- Lundin, Inmet agree to copper mega-merger. Lundin Mining (OTC:LUNMF) and Inmet Mining (OTC:IEMMF) agreed to a 'merger of equals' that would see the creation of a Canadian copper miner with a market value of around C$9B ($9.1B). The combined company will be called Symterra, and Inmet shareholders will receive 3.4918 shares of Symterra. The deal comes as copper trades near record highs, and reflects recent consolidation in the Canadian mining industry.
- News Corp. mulls MySpace options. News Corp. (NWS) is considering strategic options for its MySpace social networking site, including a sale or a spinoff. News Corp. paid $580M for MySpace in 2005, but the site has failed to keep up with the likes of Facebook, and earlier in the week, the unit cut its staff by 47%. Sources said a spinoff appears to be the most logical option.
- Banks compete for role in AIG stake sale. Several banks, including BofA (BAC), JPMorgan (JPM) and Morgan Stanley (MS), will reportedly vie today for the right to sell the Treasury's stake in AIG (AIG). That stake will top out at a weighty 92.1% after a recapitalization deal closes tomorrow, following AIG's repayment and termination of a $21B credit facility from the NY Fed, the issuance of warrants to private shareholders and the exchange of the Treasury's preferred shares into common stock. Sources expect a large secondary share offering, in the range of $10B-plus, to happen sometime in the second half of May. The company and the government are expected to treat that sale much like an IPO, and AIG is reportedly hoping to attract significant interest from institutional investors.
- Taxpayers should expect loss on GM. The U.S. is unlikely to recover its full $50B investment in GM (GM), according to a report by the Congressional Oversight Panel, at least partly because the government chose to unload a large block of shares at $33 apiece during the company's IPO rather than waiting for a higher price. The government's stake is currently down to 26.5% on a fully-diluted basis from a one-time high of 61%, and has thus far recovered around $23B of the bailout funds extended to GM. Shares of GM, which closed at $38.62 yesterday, would have to reach around $53 for the government to break even.
- Floods hit Rio Tinto output. Rio Tinto's (RIO) Alcan division declared a force majeure event impacting the supply of aluminum from Boyne Smelters Ltd. in Australia as a result of severe flooding. The company said it's currently unable to provide an estimate of the full impact of the disruption or its duration, and that the floods have cut off road and rail access and are preventing deliveries to some domestic and international customers.
- Beige Book: Modest signs of improvement. In the Fed's most recently released Beige Book, businesses in most Fed districts were upbeat but cautious about the outlook. Labor markets appeared to be 'firming somewhat,' while there was evidence that the economy expanded moderately through the end of the year, led by improved conditions in manufacturing, retail and non-financial services. However, activity in residential real estate and new home construction remained slow across all Fed districts, with a majority characterizing local housing markets as 'weak and sluggish.' High levels of existing home inventories were reported, though some districts mentioned pick-ups in multifamily construction.
- South Korea's surprise rate hike. Bank of Korea raised its key interest rate 25 bps to 2.75%. Economists had expected the bank to leave its rates unchanged. BOK said it expects inflationary pressures to persist in the coming months in an improving economy and against a backdrop of higher international commodity prices.
- Commerzbank to raise capital levels. Commerzbank (OTC:CRZBY) announced plans for a capital increase to bolster its financial strength, but said the German government will retain its 25% stake. Commerzbank plans to issue as many as 118M shares, raising its capital by just under 10%, and said its core tier 1 capital will rise as well, though it didn't specify by how much. In Frankfurt trading, shares -3.2% (7:00 ET).
- Crop forecast falls short. The U.S. Department of Agriculture surprised investors yesterday by cutting stock forecasts for key crops, sending corn and soybean prices to 30-month highs. Agricultural analysts warn the latest downward revision means there's no longer a buffer against potential weather problems, while the USDA has warned that the ratio of global stocks-to-demand would fall later this year to 'levels unseen since the mid-1970s.' Companies that may benefit from the revised numbers include Archer Daniels Midland (ADM), Bunge (BG), Deere (DE), and Potash (POT), all of which posted gains yesterday. Foodmakers such as Nestle (OTC:NSRGY) and Kraft (KFT) could take a hit as they struggle to pass on higher crop prices to consumers.
- Bank repossessions top 1M. Banks repossessed more than 1M homes in 2010, according to a RealtyTrac report, the highest annual figure since 2005. A total of 2.9M homes received foreclosure filings last year, the equivalent of one in every 45 U.S. households. However, the ugliest figures are likely to belong to 2011, when foreclosures and repossessions are expected to peak.
Earnings: Thursday Before Open
- Infosys Technologies (INFY): FQ3 EPS of $0.69 beats by $0.02. Revenue of $1.59B (+28.7% Y/Y) beats by $0.04B. FY'11 EPS guidance of $2.60-2.61, revenue $6.04B-6.06B. Shares -5.3% premarket (6:30 ET). (PR)
- In Asia, Japan +0.7% to 10590. Hong Kong +0.5% to 24239. China +0.2% to 2828. India -1.8% to 19183.
- In Europe, at midday, London -0.3%. Paris +0.3%. Frankfurt -0.1%.
- Futures at 7:00: Dow flat. S&P flat. Nasdaq flat. Crude -0.2% to $91.65. Gold -0.5% to $1378.60.
Thursday's Economic Calendar
- 8:30 Trade Balance
8:30 Producer Price Index
8:30 Initial Jobless Claims
10:30 EIA Natural Gas Inventory
1:00 PM FDIC Small Business Conference (Fed's Bernanke, FDIC's Bair...)
1:00 PM Results of $13B, 30-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
- Notable earnings after Thursday's close: INFY
- Notable earnings after Thursday's close: INTC
The SA Currents team contributed to this post.
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