- SEC files insider trading charges. The SEC filed civil charges for insider trading against six people associated with expert network firms. Four consultants allegedly leaked inside information about various tech firms (including AMD (AMD), Apple (AAPL) and Dell (DELL)) to hedge fund managers and others, and two employees at Primary Global Research connected the money managers to executives for a fee. Since late last year, eight people have been criminally charged as part of the agency's ongoing insider trading probe.
- Coinstar tumbles on Q1 guidance. Shares of Coinstar (CSTR) fell 10% in after-hours trading, following the company's Q4 earnings report (details below). Though earnings were in-line with consensus estimates and revenue rose 31% from the year-earlier period, the company issued a much weaker-than-expected outlook for the first quarter. Coinstar expects Q1 EPS of $0.15-0.25 on a fully diluted basis, while analysts had expected $0.57 and the previous two quarters saw earnings per share of $0.66-0.68. The weakness comes from a miscalculation about Redbox's DVD inventory, and a slow adjustment to the new 28-day delay period Redbox agreed to with Hollywood. Redbox was also mum on its long awaited streaming video service.
- Bernanke rejects inflation claims. Speaking to the National Press Club yesterday, Fed Chairman Bernanke said stronger hiring is needed for the recovery to be truly 'established,' but noted there's reason for optimism as the economy gradually rebounds and amid 'broad-based' consumer spending. Despite increases in 'highly visible' prices like gasoline, overall inflation is closer to 1.2% and wage growth has slowed. Bernanke's stance on inflation is a rejection of claims by China and other developing countries that U.S. policies are driving up global prices, adding it's "really up to emerging markets to find appropriate tools to balance their own growth."
- BNY in the hot seat on fake trades. According to recently unsealed court documents, BNY Mellon (BK) currency traders used a foreign-exchange system to create fake trades and overcharge Virginia pension funds by at least $20M. Unrelated to the court documents, Florida Attorney General Pam Bondi intervened yesterday in an existing whistleblower lawsuit against BNY Mellon and plans to file a formal complaint 'in the near future;' Virginia had intervened in the same case, and California has intervened in a whistleblower claim against State Street (STT). The revelations are part of a widening probe by state prosecutors into whether banks routinely shortchanged public pension funds during currency transactions and profited from the difference. Both BNY Mellon and State Street denied wrongdoing and plan to fight legal actions against them. In yesterday's trading, BK -1.2%, STT -1.5%.
- JPMorgan failed to report Madoff. Newly unsealed court documents from a lawsuit filed by Bernie Madoff trustee Irving Picard show that JPMorgan Chase (JPM) bank executives were highly suspicious of Madoff’s accounts as early as 18 months before the Ponzi scheme collapse. Executives even went so far as to steer clients away from Madoff, yet failed to alert regulators as to their suspicions. The suit also details how the bank earned hundreds of millions of dollars from its continued relationship with Madoff's firm. JPMorgan said it disputes the claims and will 'vigorously' challenge them in court.
- Clamp-down on cotton speculators. IntercontinentalExchange (ICE), the top cotton-futures exchange, is trying to clamp down on speculation amid near-panic buying. ICE is worried speculators may try to take advantage of cotton mills ahead of the impending expiration of the March contract, moving to buy cotton and causing a squeeze by driving prices ever higher. As a result, ICE has taken the rare step of requiring buyers of cotton to prove it 'economically appropriate' should they wish to purchase more than 300 contracts. March cotton futures reached a new intraday high of $1.812/lb. yesterday.
- Quant fund fined for hiding glitch. AXA Rosenberg, a unit of French insurer AXA (OTC:AXAHY), agreed to pay $242M to settle fraud accusations by the SEC that the unit had hid from clients for nearly a year a serious software glitch in a quantitative investment model. The settlement is the first of its kind against a quant investment fund, and the hefty payment consists of a $25M fine and $217M in reimbursements to investors who lost money because of the glitch. AXA Rosenberg neither admitted nor denied wrongdoing.
- Bullish sign for real estate? Blackstone (BX) expects to start fundraising this year for its latest real estate fund, which could take in as much as $10B. Blackstone, which has been active in buying distressed commercial real estate, said it's seeing a recovery in the office and hospitality real estate sectors, and that concerns about inflation are increasing investor interest in real estate.
- Ally Financial picks underwriters. Ally Financial has reportedly picked four banks to lead its planned IPO, which could bring in as much as $5B. The banks are said to be Citigroup (C), Goldman Sachs (GS), JPMorgan (JPM) and Morgan Stanley (MS).
Earnings: Friday Before Open
- Aetna (AET): Q4 EPS of $0.63 beats by $0.01. Revenue of $8.51B (-2.1% Y/Y) beats by $0.11B. (PR)
- AmerisourceBergen (ABC): FQ1 EPS of $0.57 beats by $0.03. Revenue of $19.89B (+2.9% Y/Y) beats by $0.02B. (PR)
- Aon Corporation (AON): Q4 EPS of $0.84 beats by $0.02. Revenue of $2.91B (+40.3% Y/Y) beats by $0.17B. (PR)
- Constellation Energy Group (CEG): Q4 EPS of $0.42 misses by $0.17. Revenue of $3.47B (+2.1% Y/Y) misses by $2.88B. (PR)
- Simon Property Group (SPG): Q4 EPS of $1.75 beats by $0.01. (PR)
Earnings: Thursday After Close
- CareFusion (CFN): FQ2 EPS of $0.44 beats by $0.07. Revenue of $1B (-1.7% Y/Y) in-line. (PR, earnings call transcript)
- CB Richard Ellis Group (CBG): Q4 EPS of $0.36 beats by $0.02. Revenue of $1.7B (+27% Y/Y) beats by $0.08B. Shares +2.2% AH. (PR)
- Coinstar (CSTR): Q4 EPS of $0.68 in-line. Revenue of $391M (+31% Y/Y) misses by $2M. Shares -10.3% AH. (PR)
- JDS Uniphase (JDSU): FQ2 EPS of $0.29 beats by $0.10. Revenue of $477M (+16% Y/Y) beats by $39M. Shares +11.2% AH. (PR, earnings call transcript)
- Las Vegas Sands (LVS): Q4 EPS of $0.42 beats by $0.03. Revenue of $2B (+57% Y/Y) misses by $0.05B. Shares -5.6% AH. (PR, earnings call transcript)
- Life Technologies (LIFE): Q4 EPS of $0.90 beats by $0.03. Revenue of $932M (+7% Y/Y) beats by $3M. Shares -1.5% AH. (PR, earnings call transcript)
- NCR (NCR): Q4 EPS of $0.55 beats by $0.04. Revenue of $1.4B (+5% Y/Y) in-line. Shares +2.4% AH. (PR, earnings call transcript)
- Power-One (PWER): Q4 EPS of $0.49 beats by $0.09. Revenue of $366M (+157% Y/Y) beats by $14M. (PR)
- Silicon Image (SIMG): Q4 EPS of $0.07 beats by $0.04. Revenue of $52M (-14% Y/Y) beats by $5M. Shares +11.2% AH. (PR, earnings call transcript)
- Sunoco (SUN): Q4 EPS of $0.11 beats by $0.03. Revenue of $10.2B (+18% Y/Y) beats by $4.5B. Shares +0.2% AH. (PR)
- Vertex Pharmaceuticals (VRTX): Q4 EPS of -$0.74 beats by $0.19. Revenue of $65.5M (+93% Y/Y) beats by $27.5M. Shares -0.1% AH. (PR)
- In Asia, Japan +1.1% to 10544. Hong Kong closed. China closed. India -2.4% to 18008.
- In Europe, at midday, London +0.3%. Paris +0.4%. Frankfurt +0.3%.
- Futures at 7:00: Dow +0.1%. S&P flat. Nasdaq flat. Crude +0.1% to $90.67. Gold -0.2% to $1349.90.
Friday's Economic Calendar
- Monster Employment Index
8:30 Nonfarm payrolls
10:00 Hearing: Commercial Real Estate and Bank Stability
10:30 ECRI Leading Index
- Notable earnings before Friday's open: ABC, AET, AON, BPOP, CEG, CLX, PHM, PPL, SPG, TE, TSN, WY
The SA Currents team contributed to this post.
Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.