- U.S. gets three more weeks to avoid default. The Treasury will begin to take 'extraordinary measures' on Friday that, along with better-than-expected tax revenues, will extend by three weeks the date at which the U.S. will hit its $14.29T debt ceiling. Despite the measures, which include suspending the sale of bonds to finance state and local infrastructure projects, if Congress doesn't increase the limit, the U.S. will face the threat of default. With the new deadline on August 2, one economist doesn't expect Congress to act until the last moment. "I suspect that, as usual, negotiators will simply dither until we get close to the drop-dead date," he said.
- Nasdaq/ICE takes bid to NYSE shareholders, sort of. Nasdaq OMX (NASDAQ:NDAQ) and IntercontinentalExchange (NYSE:ICE) will take their $11B bid for NYSE-Euronext (NYSE:NYX) directly to shareholders with a tender offer later this month. The move follows the NYSE board twice rejecting the Nasdaq-ICE offer in favor of a $10.2B deal with Deutsche Boerse (OTCPK:DBOEY). The Nasdaq-ICE bid includes several conditions, including the canceling of the Deutsche Boerse merger, which essentially means Nasdaq-ICE needs the support of NYSE's board to succeed, leading some to believe it's unlikely the offer will be executed.
- Bin Laden bounce fizzles. After initially spiking on news of Osama bin Laden's death, stocks lost momentum and closed lower Monday as investors shifted their focus to other issues. Short-term, the U.S. must brace for the possibility of retaliation, while oil markets could see increased volatility. SA contributor Research Recap said a boost to President Obama's public image could generate a knock-on effect for domestic policy, substantially reducing the chance of a prolonged standoff over fiscal consolidation.
- Inflation hits 2.5-year high. Consumer price inflation in developed economies hit 2.7% in March, OECD said this morning, fueled by a 3.2% rise in food prices and a 12.4% jump in energy prices - up from 10.2% just a month ago. Core inflation, which factors out food and energy, rose 10 points to 1.4%.
- Investors move back into cash. Investors pulled out of stocks in April, moving into bonds and cash, according to a survey of leading international investment houses. Equity exposure fell to 51.3% from 52.6% in March; bonds rose to 34.6% from 34%; while cash holdings jumped to 5.1% from 4.6% a month earlier - the highest exposure to cash since pre-QE2. Poll participants said high energy prices combined with the seasonally weak May-June period for stocks have fund managers on guard.
- Another 25M Sony accounts hit. The woe continues for Sony (NYSE:SNE) after hackers stole data from a further 24.6M accounts, adding to 77M accounts already breached. The latest break-in may also include the theft of 10,700 direct debit records and 12,700 credit or debit card numbers, increasing the pressure on CEO Howard Stringer over Sony's handling of the crisis. Some are now calling for his resignation.
- Tenet falls as Community Health raises bid to $4.1B. Tenet Healthcare's (NYSE:THC) shares fell 3.5% to $6.69 as investors doubted whether it would accept Community Health Systems' (NYSE:CYH) increased $4.1B offer. Nonetheless, Tenet said it would review the $7.25/share proposal - up from $6 - but has so far fiercely opposed Community Health's advances, rejecting two previous offers and taking its campaign to court. Community Health said its new bid was its "best and final offer," and has given Tenet a week to respond.
- Conservatives win majority in Canada. Canada's Conservative party appears to have won a majority of seats, giving party leader and Prime Minister Stephen Harper a mandate to fund tax cuts with curbs on spending. The victory ends seven years of minority governments and instability, and may make it easier for Harper to open up industries to foreign investment. Throughout the campaign, Harper said he needed a majority to secure the country's economic recovery. Economists expect the shift will be positive for Canadian businesses.
- Banks more willing to lend but consumers not biting. The willingness of banks to make loans rose more than it has in 17 years, but consumer demand is patchy, the Fed's latest Senior Loan Officer Opinion Survey showed. While big banks eased lending standards and businesses sought more loans in the first quarter, consumer demand for credit cards and other installment loans remained flat, while mortgage demand continued to slide. The trend has limited banks' revenue growth, leading to sector underperformance over the past year. The revenue squeeze has also hit a key measure of bank profitability, net interest margin.
- Korean police raid Google over location data. South Korean police have raided Google's (NASDAQ:GOOG) Seoul office on suspicion that its AdMob unit had illegally collected location data without consent. The raid comes as U.S. legislators target Google and Apple (NASDAQ:AAPL) over their use of consumer data from cellphone applications, including location information. In an email from last year but reported yesterday, a Google product manager said the collection of such data is "extremely valuable" to the company's future business.
- NYSE Arca and Nasdaq cancel trades in over 50 stocks. Nasdaq (NDAQ) and NYSE Arca (NYX) have cancelled bad after-hour trades in over 50 stocks, including in Pfizer (NYSE:PFE) and Merck (NYSE:MRK). The exchanges annulled all transactions 30% away from the prior consolidated price. A source said the trades, which were mostly in healthcare stocks, were made in a purchase of an entire portfolio of shares that were sold together, like in a basket. Other affected stocks included Aetna (NYSE:AET), Boston Scientific (NYSE:BSX), Johnson & Johnson (NYSE:JNJ), UnitedHealth Group (NYSE:UNH) and Zimmer Holdings (ZMH).
- Pfizer's net profit rises 10%. Pfizer's (PFE) Q1 net profit increased 10% to $2.2B even as revenues were flat $16.5B, with the company reaffirming its full-year 2011 guidance and 2012 financial targets. The firm has bought back $2.2B in stock this year and expects to repurchase $5B-$7B in 2011.
- Parexel plunges after profit warning. Shares in Parexel International (NASDAQ:PRXL) plummeted 18% in post-market trading after the pharmaceutical research contractor reported below-forecast FQ3 earnings and cut its profit and revenue forecasts for fiscal 2011. Q3 EPS grew 23% to $0.26 as revenue increased 3% to $301.4M, but the company plans to restructure the early-stage part of its clinical research service business in response to the results.
Earnings: Tuesday Before Open
- Cognizant Technology Solutions (NASDAQ:CTSH): Q1 EPS of $0.71 beats by $0.07. Revenue of $1.37B (+43% Y/Y) beats by $0.01B. (PR)
- MetroPCS Communications (PCS): Q1 EPS of $0.15 misses by $0.04. Revenue of $1.19B (+23% Y/Y) beats by $0.07B. (PR)
- Suncor Energy (NYSE:SU): Q1 EPS of $0.65 beats by $0.02. (PR)
- Mylan Laboratories (NASDAQ:MYL): Q1 EPS of $0.44 in-line. Revenue of $1.43B (+12.4% Y/Y). (PR)
- NiSource (NYSE:NI): Q1 EPS of $0.72 in-line. Revenue of $1.05B (-1.5% Y/Y) misses by $0.92B. (PR)
- Spectra Energy (NYSE:SE): Q1 EPS of $0.54 beats by $0.02. Revenue of $1.61B (+9% Y/Y) misses by $0.02B. (PR)
Earnings: Monday After Close
- Advanced Energy Industries (NASDAQ:AEIS): EPS of $0.43 beats by $0.08. Revenue of $138M (+97.6% Y/Y) in-line. Sees Q2 EPS of $0.36-0.44 vs. $0.38 consensus and revenue of $148-160M vs. $144M consensus. Shares +11% AH. (PR)
- Anadarko (NYSE:APC): Q1 EPS of $0.72 beats by $0.14. Revenue of $3.3B (+4% Y/Y) beats by $0.2B. Shares -0.9% AH. (PR)
- Automatic Data Processing (NASDAQ:ADP): FQ3 EPS of $0.85 in-line. Revenue of $2.73B (+14% Y/Y) in-line. Shares -0.1% AH. (PR)
- Chesapeake Energy (NYSE:CHK): Q1 EPS of $0.75 beats by $0.05. Revenue of $1.6B (-42% Y/Y) misses by $1.1B. Shares -3.5% AH. (PR)
- Cognex (NASDAQ:CGNX): EPS of $0.32 beats by $0.07. Revenue of $74. 4M (+16.3% Y/Y) beats by $2.7M. Sees Q2 revenue of $79-82M vs. $77.4M consensus. Shares +11.5% AH. (PR)
- Comstock Resources (NYSE:CRK): Q1 EPS of $0.05 vs. concensus of -$0.12. Revenue of $88M (-17% Y/Y) beats by $3M. (PR)
- CyberDefender (CYDE): EPS of -$0.22 vs. consensus of -$0.09. Revenue of $15.4M beats by $0.10M. Sees full-year gross sales of at least $100M vs. $71M consensus. Shares +22% AH. (PR, earnings call transcript)
- Davita (NYSE:DVA): EPS of $0.96 beats by $0.01. Revenue of $1.6B (+3% Y/Y) in-line. Shares +5.8% AH. (PR)
- DCT Industrial Trust (NYSE:DCT): Q1 EPS of $0.09 in-line. Revenue of $63M (+8% Y/Y) beats by $3M. (PR)
- Dendreon (NASDAQ:DNDN): Q1 EPS of -$0.77 misses by $0.07. Revenue of $28M (+34% Y/Y) misses by $1M. Shares -1.3% AH. (PR)
- Forest Oil (NYSE:FST): Q1 EPS of $0.19 misses by $0.14. Revenue of $203M (-9% Y/Y) misses by $22M. Shares -0.45% AH. (PR)
- Hartford Financial (NYSE:HIG): Q1 EPS of $1.16 beats by $0.21. Revenue of $2.5B (+3% Y/Y) misses by $3.5M. Shares +2.9% AH. (PR)
- Hologic (NASDAQ:HOLX): FQ2 EPS of $0.30 beats by $0.02. Revenue of $439M beats by $6M. Shares +2.6% AH. (PR, earnings call transcript)
- KKR Financial (KFN): Q1 EPS of $0.51 vs. concensus of $0.38. Revenue of $135M (+13% Y/Y) beats by $3M. Shares +0.8% AH. (PR, earnings call transcript)
- Local.com (NASDAQ:LOCM): EPS of $0.00 in-line. Revenue of $16.8M beats by $0.50M. Sees Q2 EPS of -$0.12 vs. consensus of $0.07 and revenue of $17M vs. consensus of $19.2M. Shares -11% AH. (PR, earnings call transcript)
- Massey Energy Company (NYSE:MEE): Q1 EPS of -$0.07 vs. consensus of $0.58. Revenue of $950M (+38% Y/Y) beats by $43M. (PR)
- NetLogic Microsystems (NASDAQ:NETL): Q1 EPS of $0.39 beats by $0.03. Revenue of $99M (+14% Y/Y) beats by $1M. Shares -2.5% AH. (PR)
- Principal Financial Group (NYSE:PFG): Q1 EPS of $0.71 in-line. Revenue of $2.04B (+4% Y/Y) in-line. (PR)
- Vivus (NASDAQ:VVUS): EPS of $0.24 beats by $0.28. Shares +6% AH. (PR)
- ZipRealty (NASDAQ:ZIPR): EPS of -$0.29 misses by -$0.13. Revenue of $19.7M (-23.6% Y/Y) misses by -$0.13M. Shares +30.7% AH. (PR)
- Asia: Japan closed. Hong Kong closed. China closed. India -2.4%.
- Europe at midday: London -0.1%. Paris -0.6%. Frankfurt -0.9%.
- Futures at 7:00: S&P -0.5%. 10-yr +0.1%. Euro -0.2% vs. dollar. Crude -0.8% to $112.65. Gold -0.9% to $1542.60. Silver -5.2% to $43.67.
Tuesday's Economic Calendar
- Auto sales Auto sales
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
10:00 Factory Orders
- Notable earnings before Tuesday's open: ADM, AMT, ANR, ARCC, AVP, CIE, CTSH, DRH, DUK, EMR, FE, FIS, FWLT, HCN, HCP INCY, LM, LVLT, MFA, MRO, MYL, NI, PCS, PFE, RDC, SE, SIRI, SU, TAP, THC, VNO, VSH
- Notable earnings after Tuesday's close: ACAS, AMMD, AUY, BEXP, CAR, CBS, CENX, CEPH, CMCSA, CRL, DEI, DGI, EXEL, FSLR, GMCR, GNK, GNW, GXP, HRS, JAZZ, JKHY, KGC, LVS, MCK, MOLX, MOTR, NYGN, OPEN, PEET, PLT, PXD, QSFT, SONS, TE, THOR, THQI, UNM, VCLK, VRTX, XCO, XL
The SA Currents team contributed to this post.
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