- Berkshire's mega-buy: Lubrizol. Berkshire Hathaway (NYSE:BRK.A) announced this morning that it would buy Lubrizol (LZ), a specialty-chemicals company, for around $9B in cash. The $135/share deal marks a 28% premium to Lubrizol's close, and is also one of the largest acquisitions in Berkshire's history. The deal also includes around $700M in net debt.
- Nikkei tumbles, yen whipsaws in quake aftermath. The Nikkei closed -6.2% today to 9,620 on record volume of 4.88B shares, as investors had their first extended opportunity to sell Japanese stocks since the 8.9 magnitude earthquake on Friday. Manufacturers were hit hard, while electric utilities closed limit-down with some 15 nuclear power plants in questionable status. Construction firms were the only gainers on expectations of massive rebuilding initiatives. The yen fell sharply to 79.7 against the dollar earlier today before settling down: -0.1% to 81.93 (6:00 ET). The Bank of Japan overnight offered to inject a record ¥7T ($183B) into money markets, and may further ease its ultra-loose monetary policy. Meanwhile, Moody's said that while Japan isn't facing an immediate fiscal crisis, the earthquake "may have shifted such a potential [fiscal] tipping point a bit forward, unless Japan’s political parties are galvanized by the crisis to also address the country’s long-term fiscal challenges." (More: Video of the explosion at the Fukushima nuclear power plant, and Japan's outlook for financing reconstruction)
- Markets grapple with Japan fallout. Oil futures are trading down for a change, as investors wonder whether the catastrophic damage in Japan caused by the earthquake and subsequent tsunami will send the world's third-largest economy into recession, dragging down oil demand; crude futures -2.4% to $98.74 (6:00 ET). Nuclear reactor companies sank in Europe this morning, including Areva (OTCPK:ARVCF, -7.6% in France), as did utilities committed to large nuclear projects like EDF (OTC:EDFEF, -3.4% in France), RWE (OTCPK:RWEOY, -3.5% in Frankfurt), and GE (GE -2.3% premarket). The market for Treasury bonds could swing either way, as a flight to safety may drive investors to U.S. government bonds while some insurance companies may need to sell their Treasury holdings in order to raise enough cash to cover Japan's disaster costs. Risk modeling company AIR Worldwide said the earthquake could lead to insured damages of at least $35B, making it one of the most expensive catastrophes in history. Markets in Asia actually closed up and European markets are mixed (see details below), suggesting Japan's short-term impact on world markets may be somewhat cushioned. (More: Potential impact on U.S. nuclear industry and comments from lawmakers)
- Hacker group releases BofA emails. A hacker group called Anonymous released emails this morning that reportedly had been obtained from a former Bank of America (NYSE:BAC) employee. The emails, dating from November 2010, appear to show employees at BofA unit Balboa Insurance discussing removing documents from loan files for a group of insured properties. A representative of Anonymous, which is sympathetic to WikiLeaks, said the emails relate to whether BofA improperly foreclosed on homes; BofA said the stolen documents are clerical in nature and not related to foreclosures. It's unclear whether the leaked emails will have any significant impact on BofA, and how much of this is damaging disclosures versus an ex-employee's griping, but shares are falling nevertheless; BAC -1% premarket (7:00 ET). (The leaked documents can be found here, though the link has been working only intermittently.)
- Lehman probe stalls; E&Y still in the hot seat. The investigation of Lehman Brothers' (OTC:LEHMQ) collapse has stalled, according to sources, and may result in no civil or criminal charges ever being filed against the company's former executives. Regulators apparently doubt whether they can prove Lehman's accounting acrobatics violated U.S. laws, and whether they can establish that former Lehman employees, including ex-CEO Richard Fuld, failed to adequately disclose real-estate losses to investors. The brunt of the charges may therefore fall on Lehman auditor Ernst & Young, which is fighting fraud charges filed by regulators in December.
- Piper Jaffray: iPad 2 sold out. Piper Jaffray reports the iPad 2 (NASDAQ:AAPL) has sold-out completely, with its team unable to locate a single available device when calling retailers over the weekend. Analyst Gene Munster is sticking with his estimate that 400K-500K of the new tablet were sold, compared with sales of 300K for the iPad 1 in its debut weekend. Essentially all of those iPad 2 sales occurred in one day, with buyers split almost evenly between Mac and PC users, suggesting Apple is expanding its user base. Premarket: AAPL -0.8% (7:00 ET).
- AT&T to cap data usage. AT&T (NYSE:T) said yesterday that it will begin to cap data usage for its internet customers, and will charge anyone who goes over the limit. Users who exceed a monthly limit of 150 gigabytes of data in three separate months will be charged $10 for every extra 50 gigabytes of data they consume. The new limits go into effect on May 2, and comes as service providers try to manage users' ever-growing demand for high-bandwidth applications.
- HP to pledge double-digit growth. HP (NYSE:HPQ) CEO Leo Apotheker is expected to pledge later today that the company will achieve double-digit EPS growth, although he won't provide long-term financial forecasts. In a speech outlining HP's strategy, Apotheker will say that the firm will increase its focus on cloud computing and consumer products, and may build an app store for third-party business programs. This is Apotheker's first major public pronouncement about his vision since becoming CEO in November, so investors will be looking for him to "instill confidence that he has control of the place and has a plan," says an analyst at Caris & Co.
- Lawmakers push for CFTC probe. Two key Republican lawmakers want a probe of the CFTC, claiming the futures regulator is taking a 'vague and minimalist approach' to analyzing the costs of new rules for swaps traders. The CFTC is in the process of creating new rules for over-the-counter derivatives, a market worth around $600T globally. The lawmakers want the CFTC's Inspector General A. Roy Lavik to review the accuracy of the CFTC's cost estimates for four of its proposed rules by April 15, with the CFTC open to potential legal action if it fails to conduct adequate cost-benefit analyses.
- Tensions grow between BP, TNK-BP. On Saturday, BP (NYSE:BP) blocked an effort by its Russian joint venture, TNK-BP, to join a planned $16B alliance with Rosneft. BP and Rosneft signed a share swap agreement in January, but the Russian partners behind TNK-BP subsequently won a court order temporarily blocking the deal and offered instead to have TNK-BP take BP's place in the Rosneft deal. The continued entrenchment of BP and TNK-BP in their respective positions could spell trouble, as BP is trying hard to raise new revenue and rebuild its reputation after last year's Gulf of Mexico spill. Premarket BP -0.7% (7:00 ET).
- Friday's failures. Two more bank closures on Friday bring this year's failures to 25 so far, and will cost the FDIC's insurance fund an estimated $70M. The two failures included Milwaukee's Legacy Bank, a former TARP recipient. To date, eight TARP recipients have failed or gone bankrupt.
- In Asia, Japan -6.2% to 9620. Hong Kong +0.4% to 23346. China +0.2% to 2939. India +1.5% to 18439.
- In Europe, at midday, London -0.1%. Paris -0.3%. Frankfurt -0.7%.
- Futures at 7:00: Dow -0.4%. S&P -0.4%. Nasdaq -0.7%. Crude -2.1% to $99.03. Gold +0.1% to $1423.30.
Monday's Economic Calendar
- No economic events today.
- No notable earnings scheduled.
The SA Currents team contributed to this post.
Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.