- JPMorgan beats estimates; to buy back $15B in shares. JPMorgan Chase's (JPM) Q1 2011 net income beat estimates as it jumped to $1.28 per share from $0.74 in the same period a year earlier. The bank is also increasing its common stock dividend to $0.25 a share, and it has authorized a new $15B multi-year stock repurchase program, of which up to $8B is approved for this year. Premarket: JPM +1.3% (7:00 ET).
- Silgan to buy Graham Packaging. Silgan Holdings (SLGN), a supplier of consumer-goods packaging products, will buy Graham Packaging (GRM) in a cash-and-stock deal worth $4.1B. The $19.56/share offer is a 17% premium to Graham's closing price yesterday and will help Silgan "significantly broaden its ability to serve these important markets with multiple rigid packaging options." Premarket: GRM +13% to $18.87 (7:00 ET).
- Schneider denies Tyco talks. Schneider Electric (OTC:SBGSY) has said it is not in talks with Tyco (TYC) "regarding a potential strategic transaction." This followed a report that the French company had made a $30B bid for Tyco, with the latter expected to hold out for more money. A trader said Schneider's statement will lift some pressure off the company, whose shares have fallen this week on rumors of the takeover. However, "while Schneider denied holding talks with Tyco, it did not deny it will make an offer," so the speculation is unlikely to disappear, the trader said. Shares in Tyco, whose market cap is around $25B, surged 7.4% yesterday on increasing speculation about the deal, but are -2.7% premarket (7:00 ET).
- Obama to outline deficit reduction plan as IMF questions U.S. credibility. President Obama is to lay out his long-term program for reducing the U.S. deficit this afternoon in a speech at George Washington University, when he is expected to propose cuts in entitlement spending and increases in tax while drawing a contrast with GOP plans. Obama's address comes after the IMF said that the U.S. lacks a 'credible strategy' to stabilize its debt, posing a small but significant risk of a new global economic crisis. The speech also follows yesterday's release of details about Friday's deal for spending cuts of over $38B for the rest of the fiscal year. The EPA will lose $1.6B while reductions will be made to high-speed rail and law enforcement. However, some critics believe the cuts will do little to reduce actual spending, and consist mostly of accounting tricks or changes to future budgets.
- ASML still expects record FY revenue despite Japan earthquake. ASML (ASML) continues to predict record 2011 sales of more than €5B ($7.2B) even though some of its customers have delayed deliveries because of the Japanese earthquake. The Dutch semiconductor-equipment maker said today that Q1 2011 net profit almost quadrupled to €395M from €107M a year earlier, coming in well above forecasts (see details below). ASML, whose revenues jumped to €1.45B from €742M, is indirectly benefiting from the strong demand for the newest chips used in tablet computers and smartphones. Premarket: ASML -0.9% (7:00 ET).
- BP scrambles to save Rosneft deal. BP (BP) is considering selling its 50% stake in TNK-BP as it attempts to save an arctic oil and gas exploration deal with Rosneft, a source says. TNK-BP accounts for a quarter of BP's global oil-and-gas production and almost a fifth of its reserves, and so while such a measure is seen as unlikely, that BP is even thinking of it indicates its desperation to salvage the Rosneft alliance. BP's oligarch partners in TNK-BP have won an injunction blocking the Rosneft partnership because it violates the terms of their JV with the U.K. oil producer. The latter has until tomorrow to persuade the oligarchs to let it go ahead with the Rosneft agreement, which also includes a $16B share swap. Premarket: BP +0.8% (7:00 ET).
- Bullard: Fed may mix asset sales and rate hikes when it tightens. The Fed could simultaneously raise rates and sell the bonds it has accumulated when it eventually tightens monetary policy, St. Louis Fed President James Bullard has said. "The debate about how to exit this loose, uber-easy monetary policy is again coming to the fore," he said. Bullard added that the Fed would probably pause for 'a few meetings' once it wraps up its current $600B bond-buying program in June. It would therefore not be unreasonable to expect a tightening of monetary policy to begin in the winter of 2011-2012. More insight into the factors that affect the Fed's thinking may come this afternoon, when it releases its Beige Book, which provides an update on the state of the economy.
- Unilever and P&G fined for dirty laundry powder cartel. The EU has fined Unilever (UL) and Procter & Gamble (PG) €315.2M ($456M) for fixing washing powder prices in eight countries. Germany's Henkel (OTC:HENKY), which alerted the European Commission to the cartel, was not penalized. The EU reduced the fines by 10% after the two companies admitted taking part in the cartel, which lasted three years.
- Retail sales seen +0.5% in March. Economists estimate that growth in retail sales slowed to 0.5% in March from 1% in February, indicating that higher costs for fuel and food are restraining consumer spending. The figures, from the Commerce Department, are due at 8:30 a.m. At 10 a.m., another report from the department may show that business inventories grew 0.8% in February after a 0.9% rise in January.
- Chrysler to start selling Fiat-made auto parts. Fiat (OTC:FIATY) and Chrysler are expected to unveil a deal today in which the latter's Mopar parts division will this month begin carrying 3,000 repair parts made by Fiat's Magneti Marelli unit. This follows Fiat's increase of its stake in Chrysler to 30% from 25%, which was disclosed yesterday. Fiat aims to raise its holding to 51% by the end of 2011 as it prepares Chrysler for an IPO. The Italian car maker originally received a 20% stake in Chrysler during its bankruptcy and took management control.
- Pfizer and Novartis drugs win FDA advisory backing. An FDA panel of outside advisors has recommended that Pfizer (PFE) and Novartis (NVS) be allowed to expand the marketing of their respective Sutent and Afinitor drugs to treat a rare type of pancreatic cancer, the same type of cancer that was diagnosed in Steve Jobs. The FDA usually follows the advisory committee's recommendations. Premarket: PFE +0.8%, NVS +0.4% (7:00 ET).
Earnings: Wednesday Before Open
- ADTRAN (ADTN): Q1 EPS of $0.52 beats by $0.06. Revenue of $166M (+30% Y/Y) beats by $3M. (PR)
- ASML (ASML): Q1 EPS of €0.90 beats by €0.07. Revenue of €1.45B (-4.5% Q/Q) beats by €0.02B. Company sees Q2 revenue of €1.5B. Shares -1.1% premarket. (PR)
- In Asia, Japan +0.9% to 9641. Hong Kong +0.7% to 24135. China +0.9% to 3050. India +2.3% to 19697.
- In Europe, at midday, London +0.9%. Paris +0.9%. Frankfurt +1.0%.
- Futures at 7:00: Dow +0.5%. S&P +0.5%. Nasdaq +0.6%. Crude +0.2% to $106.47. Gold +0.4% to $1459.60.
Wednesday's Economic Calendar
- 7:00 MBA Mortgage Applications
8:30 Retail Sales
10:00 Business Inventories
10:30 EIA Petroleum Inventories
1:00 PM Results of $21B, 10-Year Note Auction
2:00 PM Fed's Beige Book
- Notable earnings before Wednesday's open: ADTN, ASML, JPM
The SA Currents team contributed to this post.
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