To all Wall Street Breakfast readers:
After two and a half years, my tenure as WSB's editor is drawing to a close. It has been a privilege to get to know many of you and to participate in the ongoing conversation about the markets during these past few tumultuous years. I'll be working on building out Seeking Alpha's Market Currents (and guest authoring WSB from time to time), and leave you in the very capable hands of Yigal Grayeff.
You can continue to reach me via the site's direct messaging system.
Wishing you all the best,
- Gov't shutdown would hit Wall Street. A government shutdown, which is looking increasingly likely, would halt basic Wall Street functions such as IPOs and new bond issues, and it would curtail mergers and scale back SEC functions. The Fed would continue as normal, because it doesn't rely on Congressional funds. The impact of the last shutdown in 1995-6 was modest and stocks actually rose, although the semiconductors, software, tech equipment and other sectors fell. Another meeting between GOP House Speaker John Boehner, Democrat Senate Majority Leader Harry Reid and President Obama last night again failed to bring a deal on the fiscal 2011 budget. The sides have until midnight tonight to cement an agreement.
- Expedia shares fly on TripAdvisor spin-off plan. Expedia (EXPE) shares jumped 13.9% in post-market trading after the travel website said it intended to split into two publicly traded companies through a spin-off of its TripAdvisor unit. Some analysts said the move would enable Expedia to create shareholder value, with one at Deutsche Bank saying that TripAdvisor could be worth as much as $4B. Others suggested the spin-off would enable both entities to focus on their different businesses. Expedia is a travel agency while TripAdvisor provides travel reviews and advice on hotels, restaurants, flights and vacation packages. However, S&P and Fitch weren't impressed, and both placed Expedia on watch for a downgrade.
- NXP in takeover talks with Intel, Qualcomm and Broadcom. Dutch chip maker NXP Semiconductors (NXPI) is in takeover talks with Intel (INTC), Qualcomm (QCOM) and Broadcom (BRCM), a Dutch newspaper reports, citing a banker. NXP specializes in chips used for payments with mobile phones, making it an attractive target. The company, which was partly listed by its private equity owners last August, has a market capitalization of over $8.2B.
- Portugal to dominate meeting of euro finance ministers. European finance ministers meeting today and tomorrow in Hungary will try to work out the size and terms of a rescue loan for Portugal after the country submitted an official request for help last night. However, with an election scheduled for June, uncertainty exists over how much austerity the caretaker government in Lisbon can offer. The meeting comes a day after the ECB raised interest rates to 1.25% from 1% and indicated that it might do so again to limit inflation. Higher rates, though, could exacerbate the debt crisis afflicting Portugal and other eurozone nations.
- Google nears authorization for ITA Software purchase. Google (GOOG) may receive clearance as early as today to buy airline fare tracker ITA Software in a $700M deal, a source says. However, Google may have to accept antitrust monitoring of a part of its operations for the first time, which could set a benchmark for the company's future acquisitions. The oversight is to ensure Google doesn't unfairly use its control of ITA's airline data to put rivals at a disadvantage. The purchase would give Google control over software that powers the reservation systems of most major U.S. airlines and many popular online fare-comparison services, including Kayak, TripAdvisor (EXPE) and Hotwire.
- Seagate shares rise on forecast, dividend news. Seagate Technology (STX) shares +7.6% premarket after the company forecast that FQ3 revenue and margins will come in at the higher end of its previous guidance and after it reinstated its quarterly dividend. Seagate, which makes a range of disk drives for computers and external storage devices, expects revenue of $2.7B and margins of 18%-19%. It will pay a dividend of $0.18 a share, or $75M in total.
- Hercules turns villain as shares weaken on bribery probe. Shares in Hercules (HERO) plunged 12.4% in after-hours trading following news that the shallow-water drilling company is being investigated for bribery in international dealings. The SEC has subpoenaed documents related to possible violations of the Foreign Corrupt Practices Act, and the Justice Department is also looking into the company's activities. Hercules has international operations in Mexico, Nigeria, India, Malaysia and Saudi Arabia.
- U.S. involves HSBC in tax probe. The U.S. Justice Department has asked a federal court to force HSBC (HBC) to disclose the names of U.S. customers suspected of having secret bank accounts in India. HSBC allegedly told prospective clients that as a foreign bank, HSBC's India operations wouldn't disclose their accounts to the IRS. The IRS said the summons request "is focused on obtaining more information to help us determine if additional actions are needed." Thousands of U.S. taxpayers of Indian origin have opened up accounts with HSBC in India since 2002.
- Toyota to restart all Japan plants from April 18. Toyota (TM) will resume car production at all its Japanese plants at half capacity on April 18 following an improvement in the supply of parts. The car maker had halted manufacturing after the March earthquake and tsunami caused shortages of power as well as parts. However, the car maker is unclear about when it will return to full production in Japan. Meanwhile, Honda (HMC) CEO Takanobu Ito hopes his company will be able to return to pre-quake output in two-to-three months.
- China to let yuan trade against more currencies. China will allow the yuan to be traded against a larger number of currencies, the country's central bank said today, although it didn't specify which ones. The yuan is now tradeable against seven currencies, including the U.S. dollar, the euro and sterling, with traders believing that the greenback accounts for 70% of the Chinese nominal effective exchange rate. Increasing the number of currencies traded against the yuan will gradually help reduce the dollar's weight in determining the yuan's value, traders said.
- Rio Tinto finally snags Riversdale. Rio Tinto (RIO) has gained control of Riversdale Mining (OTC:RFLMF) after stockholders representing more than 50% of the company's shares accepted Rio's $3.9B takeover offer. Rio already has three representatives on the board of the Africa-focused coal producer and expects to appoint more. This will "help clear the way for the development of Riversdale's assets as quickly as possible," said Doug Ritchie, head of Rio's energy division. The company first bid for Riversdale in December last year. Premarket: RIO +1.3% (7:00 ET).
- SEC mulls new stock rules for private companies. The SEC is considering a relaxation of limitations on share issues by private companies in a review that could alter how they raise capital. Changes could include increasing the maximum number of shareholders a firm can have before it has to open its books (currently the limit is 499), and also making it easier for firms to publicize share offerings. The changes could fuel the fast-growing market in private shares of technology companies such as Facebook, Twitter and Zynga, although they could also delay or derail IPOs by firms that want to grow but don't want to disclose vast amounts of information.
- In Asia, Japan +1.9% to 9768. Hong Kong +0.5% to 24396. China +0.7% to 3030. India -0.7% to 19451.
- In Europe, at midday, London +0.8%. Paris +0.8%. Frankfurt +0.5%.
- Futures at 7:00: Dow +0.3%. S&P +0.4%. Nasdaq +0.25%. Crude +1.2% to $111.60. Gold +0.8% to $1470.80.
Friday's Economic Calendar
- 8:00 Fed's Lockhart: Economic Outlook
10:00 Wholesale Trade
10:15 Fed's Fisher: 'Monetary and Fiscal Policy'
10:30 ECRI Leading Index
The SA Currents team contributed to this post.
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