- TNK-BP offers to buy BP's Rosneft stake. TNK-BP has offered to buy a 5% stake in BP (BP) for £5B ($8.2B) as the company tries to resolve a dispute over BP's proposed deal with Rosneft. TNK-BP, BP's Russian joint venture, would buy a 5% stake in BP and then swap it for a 10% stake in Rosneft, mirroring BP's deal with Rosneft. As a result, the Rosneft stake would be owned by TNK-BP instead of BP itself, and BP would go home with £5B in cash. Discussions on the matter are planned for Friday, but both Rosneft and BP board members will likely oppose the offer.
- Yahoo in talks to sell Yahoo Japan stake. Yahoo (YHOO) is said to be in talks to possibly sell its stake in Yahoo Japan. Japan's Softbank, the largest shareholder of Yahoo Japan with a 41.9% stake, said this morning that it's not in talks to buy Yahoo's 30% stake in the venture, and sources said a Yahoo stake sale isn't imminent. Still, the talks suggest that Yahoo is increasingly eager to exit the dysfunctional partnership and to free up as much as $8B which could be redirected to fighting off competition from the likes of Google (GOOG) and Facebook. Premarket: YHOO +2.8% (7:00 ET).
- AIG accelerates MetLife sale. AIG (AIG) announced yesterday afternoon that it received permission to sell its MetLife (MET) stake months earlier than expected, a win-win for the two companies as MetLife will get more control over its own shares and AIG will be able to accelerate its repayment of the U.S. government. After the transactions, AIG will be able to pay down $6B-7B of the $18.2B still owed on the government's two special purpose vehicles. Premarket: MET -3.3% (7:00 ET).
- IATA cuts profit outlook. The International Air Transport Association lowered its industry profit forecast this morning, estimating earnings of $8.6B this year vs. the $16B airlines earned in 2010. IATA had previously expected airlines to earn $9.1B in 2011 but a rise in passenger traffic is being more than offset by a rise in fuel prices, and the group now expects average oil prices of $96/barrel this year instead of $84/barrel.
- PPL buys E.On's U.K. network. PPL (PPL) agreed to buy E.On's (OTCQX:EONGY) U.K. power grid for £3.5B ($5.6B) in a deal that will triple PPL's U.K. customer base and create one of the largest electricity distributors in Britain. PPL will assume £500M of debt as part of the acquisition, while E.On moves one step closer to its goal of selling €15B worth of assets.
- Gupta charged with insider trading. The SEC charged former Goldman Sachs (GS) director Rajat Gupta with insider trading. Gupta sat on the board at Goldman and Procter & Gamble (PG) and allegedly provided Galleon founder Raj Rajaratnam with inside information about the quarterly earnings of both companies and about Berkshire Hathaway's (BRK.A) planned $5B investment in Goldman. Gupta resigned as a Goldman director in May 2010, and resigned as a P&G board member yesterday, though Gupta denies any wrongdoing.
- Bombardier seals NetJets deal. Bombardier (OTCPK:BDRAF) inked a deal to sell as many as 120 aircraft to Berkshire Hathaway's (BRK.A) NetJets and could earn more than $6.7B if all the options are exercised. This is Bombardier's largest business aircraft sale to date, and highlights the gradual return of businesses to private planes.
- Ex-UBS trader charged in tax evasion case. U.S. prosecutors filed criminal charges against Christos Bagios, a former UBS (UBS) banker accused of helping as many as 150 Americans evade taxes. According to a criminal complaint unsealed yesterday, Bagios, who was arrested last month, managed up to $500M for U.S. clients who didn't declare their taxes. Bagios currently works for Credit Suisse (CS), which was not cited as part of the enforcement action.
- Two week reprieve for government shutdown. The House of Representatives passed a bill yesterday to fund the government for another two weeks and to cut $4B from last year's federal spending level, and the Senate plans to follow suit on a similar vote as soon as today. The measures postpone to March 18 a potential shutdown of government operations, and give lawmakers an extra 14 days to negotiate a spending plan for the rest of the fiscal year.
- Bernanke: Small inflation risk from oil spike. Testifying before Congress yesterday, Bernanke predicted that rising oil prices will cause only a brief and modest rise in consumer inflation. Lawmakers weren't entirely convinced, and Bernanke did acknowledge that higher prices could shake consumer confidence and reduce consumer spending, but he expects "at most, a temporary and relatively modest increase in U.S. consumer price inflation." He also said the Federal Reserve expects real GDP gains of 3.5-4% in 2011, and that the Fed would begin to roll back QE2 once the recovery is 'self-sustaining,' labor markets are improving and inflation is stable at around 2%.
- Auto sales continue to rise. Automakers relied heavily on incentives in February to lure customers, and to good results; the industry recorded its strongest sales pace in 18 months. Though some of the gains were overstated because sales last year were unusually weak, automakers expressed general confidence in consumers' willingness to spend and the availability of purchase financing. Among the highlights: Toyota (TM) sales +41.8% to 141,846 vehicles. Chrysler (OTCPK:FIATY) +12.6% to 95,102 vehicles. Ford (F) +13.8% to 156,626 vehicles. GM (GM) +45.8% to 207,028 vehicles.
- Goldman issues loss liability estimate. Goldman Sachs (GS) disclosed it could lose as much as $3.4B beyond what it has already planned for due to legal claims associated with the financial crisis. This is the first such loss estimate issued by the bank, which said the estimate is the 'upper end' of losses in matters where the risk is "more than remote but less than likely." Of all banks announcing potential losses in legal proceedings beyond their litigation reserves, only JPMorgan (JPM) has issued a higher figure ($4.5B).
- HSBC halts foreclosures. HSBC (HBC) suspended U.S. foreclosure filings after the OCC noted 'certain deficiencies' in the London bank's processes. JPMorgan (JPM) and Bank of America (BAC) had implemented similar freezes, though both have since resumed most processes. Meanwhile, regulators are reportedly asking some of the largest mortgage servicers to re-examine their foreclosure paperwork ahead of potential enforcement actions against 14 institutions, including BofA, JPMorgan, HSBC, PNC Financial (PNC) and Wells Fargo (WFC).
Earnings: Wednesday Before Open
- BJ's Wholesale Club (BJ): Q4 EPS of $0.95 beats by $0.03. Revenue of $2.9B (+7.4% Y/Y) misses by $0.07B. (PR)
- Costco (COST): FQ2 EPS of $0.79 in-line. Revenue of $20.88B (+11.3% Y/Y) beats by $0.34B. (PR)
- Joy Global (JOYG): Q4 EPS of $0.96 misses by $0.11. Revenue of $870M (+19.2% Y/Y) misses by $11.1M. (PR)
- Staples (SPLS): Q4 EPS of $0.39 misses by $0.01. Revenue of $6.42B (+0.1% Y/Y) misses by $0.05B. (PR)
Earnings: Tuesday After Close
- Dendreon (DNDN): Q4 EPS of -$0.64 misses by $0.15. Revenue of $25M (+% Y/Y) in-line. Shares -0.7% AH. (PR)
- MBIA (MBI): Q4 EPS of $2.24 may not be comparable with consensus of -$0.27. Shares -3.3% AH. (PR)
- McDermott International (MDR): Q4 EPS of $0.19 misses by $0.10. Revenue of $540M (-29% Y/Y) misses by $193M. Shares -1.7% AH. (PR)
- Nektar Therapeutics (NKTR): Q4 EPS of -$0.24 may not be comparable with consensus of -$0.16. Revenue of $45.3M (+16% Y/Y) beats by $3.8M. Shares -0.1% AH. (PR)
- Sina (SINA): Q4 EPS of $0.46 beats by $0.01. Revenue of $110M (+12% Y/Y) beats by $5M. Shares -5.8% AH. (PR)
- TiVo (TIVO): Q4 EPS of -$0.30 misses by $0.02. Revenue of $41.4M (-8.4% Y/Y) in-line. Shares -1.2% AH. (PR, earnings call transcript)
- Veriphone (PAY): FQ1 EPS of $0.43 beats by $0.04. Revenue of $284M (+27% Y/Y) beats by $14M. Shares +4.2% AH. (PR, earnings call transcript)
- In Asia, Japan -2.4% to 10492. Hong Kong -1.5% to 23049. China -0.2% to 2914. India closed.
- In Europe, at midday, London -0.5%. Paris -0.7%. Frankfurt -0.7%.
- Futures at 7:00: Dow +0.2%. S&P +0.2%. Nasdaq +0.25%. Crude +0.3% to $99.95. Gold +0.2% to $1433.60.
Wednesday's Economic Calendar
- 7:00 MBA Mortgage Applications
7:45 Fed's Hoenig: Economic Outlook
7:30 Challenger Job-Cut Report
8:15 ADP Jobs Report
10:00 Hearing: Semi-Annual Monetary Policy Update (Bernanke)
10:30 EIA Petroleum Inventories
2:00 PM Fed's Beige Book
2:10 PM Fed's Lockhart: Economy and Monetary Policy
8:00 PM Bernanke: 'Challenges for State and Local Governments'
- Notable earnings before Wednesday's open: BJ, COST, JOYG, SPLS
- Notable earnings after Wednesday's close: CPRT, CVI, DAR, FL
The SA Currents team contributed to this post.
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