- Obama aims to cut $4T in 12 years. President Obama has laid out his vision for cutting $4T off the deficit in 12 years, with $2T to come from reduced spending, $1T from revenue increases, and the rest from lower interest payments on the national debt. Obama reiterated his backing for overhauling the tax code to lower rates while closing loopholes and ending some breaks, and vowed to eliminate Bush-era tax cuts for the highly paid. To reach his targets, the president proposed a 'debt failsafe' that would trigger spending cuts and tax changes if the debt-to-GDP ratio hasn’t stabilized by 2014. Administration officials said the government would create savings across the board, including in defense, agriculture, domestic programs, Medicare and Medicaid.
- Check Point shares rise as Q1 beats forecasts. Shares in Check Point (CHKP) are +3.9% premarket after the security software provider's Q1 2011 earnings beat expectations, boosted by sales growth in high-end network security products. Check Point said that net EPS excluding items rose to $0.64 from $0.55 in the same period a year earlier while revenue grew 15% to $281.3M.
- Senate panel report slams Goldman and Deutsche. A hard-hitting Senate panel report has heavily criticized Goldman Sachs (GS) and Deutsche Bank (DB) for their actions before, during, and - in Goldman's case - after the financial crisis. The Permanent Subcommittee on Investigations, headed by Carl Levin, accused Goldman of selling collateralized debt obligations that misled investors and created conflicts of interest as the company built short positions before the housing market collapsed. He also condemned Goldman executives for misleading the subcommittee during testimony last year, and said he would refer the evidence to the Justice Department for possible perjury charges. In addition, the panel faulted Deutsche Bank for creating a $1.1B CDO with assets that its traders described as garbage, and then attempting to sell the instrument before the market fell 'off a cliff.' The bank sold $700M of the CDO, which subsequently lost most of its value within 17 months. The credit ratings agencies didn't escape the wrath of the Senators either, with the panel saying that the crisis was triggered by Moody's (MCO) and S&P (MHP) being forced to downgrade the inflated ratings they had given mortgage backed securities. Premarket: GS -1%, DB -2% (7:00 ET).
- Mortgage servicers to pay foreclosure victims. The 14 largest mortgage servicers have come to an agreement with banking regulators and other authorities to pay back homeowners for losses they suffered from foreclosures or loans that were mishandled following the housing collapse. The authorities, which also include the Justice Department, the Department of Housing and 10 state attorneys, are now discussing potential fines and whether the servicers should be required to reduce the principal on some home loans. Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) are among the servicers affected. The agreement comes as data from RealtyTrac shows that repossessions fell 17% year on year to 215,046 homes in Q1 2011. Premarket: BAC -1%, C -0.4% (7:00 ET).
- Glencore unveils $11B IPO. In what is set to be the U.K.'s biggest ever IPO, Glencore plans to raise $6.8B-$8.8B in London and another $2.2B in Hong Kong by selling a 15%-20% stake. If an over-allotment option is exercised, the world's biggest commodities trader will receive as much as $12.1B. The pricing of the IPO may take place in mid-May. Glencore's filing to list comes in the same week that Goldman Sachs said that the risks of investing in commodities outweigh potential gains, and dropped its recommendation to buy a basket of raw materials including crude oil, copper, cotton and platinum.
- Reckitt shares drop on CEO retirement. Reckitt Benckiser (OTC:RBGPF) shares have fallen 6.7% in London after the household goods company said that CEO Bart Becht will retire and be replaced by company veteran Rakesh Kapoor. The announcement comes just six months after Reckitt said that CFO Colin Day was standing down. Under Becht, Reckitt's shares have gained almost sixfold since 2000. The company's brands include Nurofen, Airwick fresheners and Vanish stain removers.
- Arcos and Zipcar to debut after pricing IPOs above range. Arcos Dorados (ARCO), McDonald's (MCD) largest franchisee, and car-sharing service Zipcar (ZIP) will debut this morning on the NYSE and Nasdaq respectively after pricing IPOs above their expected ranges. Arcos and existing shareholders sold 73.5M shares at $17 each, giving the deal a total value of $1.25B. The Argentina-based company operates 1,755 McDonald's in Latin America and the Caribbean. In Zipcar's IPO, 9.7M shares were sold at $18, raising $174M.
- Rosneft gives BP another month. Just hours before it was due to expire, BP (BP) and Russia's Rosneft have extended by a month the deadline to complete an arctic oil and gas exploration deal that also includes a $16B share swap. To secure the partnership, BP needs to come to an agreement with its oligarch partners in its TNK-BP joint venture. They have obtained an injunction against the BP-Rosneft alliance because it violates the terms of the TNK-BP JV. Despite the deadline extension, one analyst remained skeptical. "There's no light yet at the end of the tunnel. This is like every Russian deal we see," he said.
- Nokia and Siemens consider selling NSN control. Nokia (NOK) and Siemens (SI) are considering selling a controlling stake in their Nokia Siemens Network joint venture, which could be worth $2B based on a 51% holding, sources said. NSN has continuously lost money since its founding in 2007, weighing down its parent companies, while its customer base is also shrinking. Nokia and Siemens aren't yet actively shopping the company to potential buyers, although private equity firms have been circling and even held talks last year about taking a minority stake of up to 30% in exchange for a cash infusion of at least $1B. A spokesman said that Nokia and Siemens are committed to the JV until 2013.
- Warner Music to sell itself in one piece. Live Nation (LYV), Sony (SNE) and BMG Rights look set to miss out after Warner Music (WMG) decided to sell itself as one entity rather than in parts, sources said. The three suitors only bid for sections of the company, whereas Ron Burkle's Yucaipa, industrialist Len Blavatnik and private-equity firm Platinum Equity were among those that bid for the whole firm. Warner, whose market cap is about $1.2B, received the offers in the second round of an auction last week. The bids for all of the company were worth about $3B, including the assumption of debt. Warner could seal an agreement within weeks.
- Roche Q1 revenues fall on franc's strength and lower Avastin sales. Roche's (OTC:RHHBY) Q1 2011 sales dropped 9% year on year to 11.1B Swiss francs ($12.4B), due to the strengthening of the franc and a fall in revenue from Roche's Avastin tumor drug. In December, the FDA moved to withdraw marketing permission for Avastin in breast tumors while European regulators limited its use in such malignancies. Roche, the world's biggest maker of cancer drugs, nevertheless forecast today that revenue and EPS excluding some items and currency shifts will rise in the single-digit range this year.
Earnings: Thursday Before Open
- Check Point Software (CHKP): Q1 EPS of $0.64 beats by $0.02. Revenue of $281.3M (+14.8% Y/Y) beats by $4.6M. (PR)
- Hasbro (HAS): Q1 EPS of $0.12 misses by $0.05. Revenue of $672M (-0.1% Y/Y) beats by $11.62M. (PR)
- In Asia, Japan +0.1% to 9654. Hong Kong -0.5% to 24014. China -0.2% to 3043. India closed.
- In Europe, at midday, London -1.0%. Paris -1.2%. Frankfurt -0.8%.
- Futures at 7:00: Dow -0.4%. S&P -0.5%. Nasdaq -0.7%. Crude -0.4% to $106.70. Gold +0.2% to $1458.50.
Thursday's Economic Calendar
- 7:45 Annual Bertelsmann Foundation Conference
8:30 Initial Jobless Claims
8:30 Producer Price Index
9:00 Fed's Duke: Credit Conditions for Small Businesses
10:00 Hearing: 'Oversight of the Financial Stability Oversight Council'
10:30 EIA Natural Gas Inventory
1:00 PM Results of $13B, 30-Year Note Auction
1:30 PM Fed's Plosser: 'Strengthening Our Monetary Policy Framework'
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
- Notable earnings before Thursday's open: CHKP, FCS, HAS, PGR, SVU
- Notable earnings after Thursday's close: GOOG
The SA Currents team contributed to this post.
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