- Cargill to shed Mosaic stake. Privately-held Cargill announced plans to spin off its 64% stake in fertilizer producer Mosaic (MOS) in a tax-free transaction worth more than $24B. Left without a majority shareholder, Mosaic could be more attractive to potential acquirers, which could include BHP Billiton (BHP), Vale (VALE) or Potash (POT). However, some analysts believe the Cargill transaction signals an outside acquisition of Mosaic is unlikely, as the company probably explored its strategic alternatives before settling on this option.
- Four banks picked for AIG sale. Four lucky banks have been selected to jointly lead AIG's (AIG) highly anticipated secondary share offering, sources said, offering cut-rate fees in exchange for the opportunity to participate in the lucrative offering. The banks are rumored to be JPMorgan (JPM), Goldman Sachs (GS), Bank of America (BAC) and Deutsche Bank (DB), and they have been asked to accept a fee of around 0.5%, below the 0.75% charged last year on GM's (GM) IPO. Even with the reduced rate, a $25B share sale would translate into $125M in fees for the banks.
- Green light for Comcast-NBC deal. As expected, the FCC and Department of Justice both approved Comcast's (CMCSA) tie-up with NBC Universal (GE). The approvals carried several conditions, including a requirement that Comcast give up day-to-day control of video website Hulu (jointly owned by News Corp. (NWS), Disney (DIS) and NBC Universal) and that Comcast make NBC Universal programs available to streaming services other than Hulu. Many of the other conditions will remain in place for seven years, longer than regulators usually require, over concerns that this deal will give Comcast unprecedented power over both content and distribution for television shows and movies. With the conditions set, the deal could close in the next two weeks.
- Citi to name new president. Citigroup (C) is set to name John Havens as president and chief operating officer, part of a structural overhaul aimed at helping the bank's expansion efforts and moving past the legacy of the financial crisis. CEO Vikram Pandit briefed the board on the appointment yesterday, with sources saying the new lineup will cut by half the number of people reporting directly to Pandit and speed decision-making. Both the president and COO posts are currently empty. Premarket: C +1.5% (7:00 ET).
- Apple shines on earnings beat. Apple's (AAPL) Q1 earnings report handily beat estimates (see details below), with the company showing strong demand for its iPhones, Macs and iPads. Apple COO Tim Cook said he believes "Apple is doing its best work ever," and the company gave a strong forecast for the current quarter, pointing to EPS of $4.90 on revenue of $22B vs. consensus estimates of $4.43 on $20.6B. Still, the bullish numbers and sentiment couldn't entirely erase the lingering sentiment that CEO Steve Jobs' sudden medical leave does not bode well for the company. Premarket: AAPL +1.1% (7:00 ET).
- Regulators to choose 'systemically important' firms. Regulators expect to start choosing as soon as this summer the financial firms that are 'systemically important,' and non-bank financial firms receiving that label will be subject to extra Fed supervision. The comments by an unnamed Treasury official were made after the newly formed Financial Stability Oversight Council met yesterday, and proposed six categories it will use to select which institutions may threaten the financial system. The council also released a study on the Volcker Rule suggesting bank CEOs be required to testify in writing that their firms are adhering to new limits on speculative trading.
- FDIC approves rule on creditors. The FDIC voted to approve regulation that outlines how the government will treat creditors in situations where large, failing financial firms have been seized and liquidated. While holders of subordinated debt, long-term bondholders and shareholders will receive no additional payments, there are some circumstances under which short-term creditors might, raising objections among banking industry groups.
- SEC eyes ABS quality. The SEC is reportedly finalizing a draft of new rules that would require issuers of asset-backed securities to more thoroughly review the securities' underlying assets and better inform investors as to the quality of those assets. Sources said the SEC is set to adopt the new rules on Thursday.
- JPMorgan at fault on military foreclosures. JPMorgan (JPM) admitted it had wrongly foreclosed on 14 active-service military families and overcharged thousands more on their mortgages. According to the Servicemembers Civil Relief Act, the mortgage rate for active-duty military families can't exceed 6%, and they can't be foreclosed upon. JPMorgan, which has resolved 13 of the 14 foreclosures and is refunding $2M to overcharged families, said "Any customer mistake is regrettable. We feel particularly badly about the mistakes we made here."
Earnings: Wednesday Before Open
- Bank of New York Mellon (BK): Q4 EPS of $0.55 misses by $0.02. Revenue of $3.74B (+13.2% Y/Y) beats by $0.17B. (PR)
Earnings: Tuesday After Close
- Apple (AAPL): FQ1 EPS of $6.43 beats by $1.07. Revenue of $26.7B beats by $2.3B. iPhones sold: 16.24M (+86% Y/Y). Macs: 4.13M (+23%). iPods: 19.45M (-7%). iPads: 7.33M, well ahead of expectations. (PR, earnings call transcript)
- Cree (CREE): FQ2 EPS of $0.55 misses by $0.03. Revenue of $257M (+29% Y/Y) misses by $20M. Shares -10.2% AH. (PR, earnings call transcript)
- Fulton Financial (FULT): Q4 EPS of $0.16 in-line. Shares +0.4% AH. (PR)
- IBM (IBM): Q4 EPS of $4.18 beats by $0.10. Revenue of $29B (+6.6% Y/Y) beats by $800M. Shares +2.5% AH. (PR, earnings call transcript)
- Linear Technology (LLTC): FQ2 EPS of $0.62 beats by $0.04. Revenue of $384M (+50% Y/Y) beats by $5M. Shares -3.8% AH. (PR)
- Western Digital (WDC): FQ2 EPS of $0.96 beats by $0.38. Revenue of $2.5B (-5.5% Y/Y) beats by $125M. Shares +2.8% AH. (PR, earnings call transcript)
- In Asia, Japan +0.4% to 10557.1. Hong Kong +1.1% to 24420. China +1.9% to 2759. India -0.6% to 18978.
- In Europe, at midday, London -0.4%. Paris -0.2%. Frankfurt -0.1%.
- Futures at 7:00: Dow -0.1%. S&P -0.2%. Nasdaq -0.05%. Crude +0.4% to $91.77. Gold +0.2% to $1371.50.
Wednesday's Economic Calendar
- 7:00 MBA Mortgage Applications
7:45 ICSC Retail Store Sales
8:30 Housing Starts
8:55 Redbook Chain Store Sales
- Notable earnings before Wednesday's open: ASML, BK, GS, HCBK, NTRS, STT, USB, WFC
- Notable earnings after Wednesday's close: EBAY, FFIV, SLM, STX, XLNX
The SA Currents team contributed to this post.
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