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  • SEC demands mortgage data from JPMorgan. The SEC has subpoenaed JPMorgan Chase (JPM) over failed mortgages, a source said, as part of investigations by authorities into the actions of banks from before the financial crisis. The move comes after a court in January unsealed allegations made about the practices of Bear Stearns, which JPMorgan bought in 2008. Last week, Credit Suisse (CS) received an SEC subpoena, according to information in a court filing by MBIA Insurance yesterday. The bond insurer, along with peer Ambac Assurance, has said that Credit Suisse and Bear Stearns demanded refunds from originators that sold the banks the loans that they packaged into bonds, and then failed to use those settlement amounts to fulfill their own contractual promises on the debt.
  • Visa profit jumps, but new regulation looms. Visa's (V) FQ2 earnings beat expectations as net profit jumped to $881M from $713M a year earlier and revenue rose 15% to $2.25B, with the credit card company benefiting from a recovery in consumer spending on travel and other discretionary items. During the quarter, Visa bought back $630M in shares and authorized a new $1B repurchase program. Despite the strong performance, shares fell 1.2% after hours. Investors are concerned about the company's ability to grow under upcoming regulation that will restrict the fees that merchants pay on credit card transactions. (Earnings call transcript)
  • Natural disasters, bailout costs hurt AIG. AIG's (AIG) Q1 2011 net income slumped to $269M from $1.8B; ongoing operations lost more than $1B after the insurer took a $2.4B charge over an early loan repayment to the NY Fed. The company also incurred $1.7B in catastrophe losses from disasters, including the Japan and New Zealand earthquakes and the massive flooding in Australia. In its filing, AIG also laid out a list of 'aspirational' goals meant to lure investors ahead of a large share offering this month. These include earning $4B-$5B more in annual pretax operating income in five years, and increasing return on equity to 10% by 2015 from 6% last year. Shares fell 1.7% in after-hours trading.
  • Kraft net falls but beats forecasts. Kraft's (KFT) Q1 2011 net income fell to $802M from $1.88B a year earlier, when the sale of its frozen pizza operations boosted its profit. Excluding items, Q1 2011 EPS was $0.52, beating analyst forecasts of $0.47, while net revenue rose 11% to $12.6B. Earnings benefited from Kraft increasing prices and its commodity hedging, which helped insulate the company from price volatility. While Kraft expects to raise prices again, the world's number two food company lowered its full-year forecast to reflect the loss of its contract to distribute Starbucks (SBUX) coffee in U.S. supermarkets. Shares rose 1.1% after hours. (Earnings call transcript)
  • Metals gain some polish after rout. Silver and gold prices have rebounded after a big sell-off this week attracted bargain hunters. In just four days, spot silver plummeted 30% from a record peak of $49.51 an ounce, and gold dropped more than $100. However, silver rose 2.5% to $35.54 in Asian trading today, while gold gained 0.5% to $1,489.40. In contrast, crude oil prices were -2.3% at $97.50 a barrel at 6:40 ET after falling below $100 yesterday. This, along with the drop in other commodities, has been attributed to speculators. Worse-than-expected U.S. payroll figures today could cause further weakness in silver and oil on fears about the economy, although gold could benefit as a safe haven.
  • Unemployment seen holding at 8.8%. April employment figures are due out this morning, with economists estimating that the jobless rate held steady at 8.8% but the rate of hiring cooled as companies curbed spending in the face of rising raw-material costs. Payrolls are expected to have risen by 185,000 workers last month compared with a 216,000 advance in March. The figures come a day after weekly initial jobless claims unexpectedly spiked by 43,000 to 474,000 compared with a consensus of 410,000.
  • Vale profit jumps fourfold. A doubling of iron-ore prices due to increased demand from China and India, and the sale of assets, helped boost Vale's (VALE) Q1 2011 net profit more than fourfold to a record $6.83B. Net sales at the world's largest producer of iron ore doubled to $13.2B, with the company also benefiting from the increased output of nickel and copper. “The performance of the base-metals unit surprised positively,” said an analyst. “Structurally, this business remains quite attractive." Vale posted a $1.5B gain in the quarter after it sold its bauxite and alumina assets to Norwegian aluminum producer Norsk Hydro (OTCQX:NHYDY).
  • CVS receives SEC subpoena; net profit falls CVS Caremark (CVS) received a subpoena from the SEC in February requesting information about public disclosures it made in 2009 on its struggling Caremark pharmacy-benefits-management division and its Medicare Part D business. The SEC also asked for information about ownership and transactions in CVS securities by company employees. CVS made the disclosure yesterday after reporting that Q1 2011 net profit fell 7.5% to $713M due to higher costs and that net revenues increased 8.9% to $25.9B. Analysts say healthcare reform should "open up a big opportunity for the company." (Earnings call transcript)
  • HSBC to unveil strategy next week. HSBC (HBC) CEO Stuart Gulliver plans to announce a strategic revamp next week aimed at exploiting the potential of a bank dragged down by high expenses and the aftermath of the subprime crisis. HSBC needs to tackle inefficiencies at its U.K. retail banks and decide what kind of a presence it should have in the U.S., where the poorly timed acquisition of Household International saddled it with massive losses. HSBC is also expected to provide more information on how much new capital and liquidity rules could eat into profits.

Earnings: Friday Before Open

  • Constellation Energy Group (CEG): Q1 EPS of $0.63 beats by $0.33. Revenue of $3.57B (-0.5% Y/Y) misses by $0.55B. (PR)

Earnings: Thursday After Close

  • AIG (AIG): Q1 EPS of -$0.35 vs.consensus of $-0.15. Shares -1.6% AH.(PR)
  • Canadian Natural Resource (CNQ): Q1 EPS of $0.21 misses by $0.20. Revenue of $3B (-9% Y/Y) beats by $0.7B. Shares -1.9% AH. (PR)
  • CF Industries (CF): Q1 EPS of $3.82 beats by $0.65. Revenue of $1.2B (+134% Y/Y) . Shares +5.8% AH. (PR)
  • Consolidated Edison (ED): Q1 EPS of $0.99 misses by $0.01. (PR)
  • Eldorado Gold (EGO): Q1 EPS of $0.10 misses by $0.02. Revenue of $218M (+20% Y/Y) misses by $1M. Shares -0.9% AH. (PR)
  • Fluor (FLR): Q1 EPS of $0.78 in-line. Revenue of $5.1B misses by $0.5B. Shares -0.1% AH. (PR)
  • Hansen Natural (HANS): Q1 EPS of $0.59 beats by $0.10. Revenue of $408M (+50.6% Y/Y) beats by $84M. (PR)
  • Kodiak Oil (KOG): Q1 EPS of $0.01 beats by $0.01. Revenue of $13M (+135% Y/Y) misses by $4M. Shares +0.3% AH. (PR)
  • Kraft Foods (KFT): Q1 EPS of $0.52 beats by $0.05. Revenue of $12.6B beats by $0.30B. Shares +1.2% AH. (PR)
  • Live Nation (LYV): Q1 EPS of -$0.27 beats by $0.15. Revenue of $849M (+17% Y/Y) beats by $85M. (PR)
  • Matrix Service Company (MTRX): FQ3 EPS of $0.21 beats by $0.01. Revenue of $335M (+82% Y/Y) misses by $7M. Shares +0.8% AH.(PR)
  • Microchip Technology (MCHP): FQ4 EPS of $0.59 beats by $0.02. Revenue of $380M (+37% Y/Y) beats by $6M. (PR)
  • Mohawk Industries (MHK): Q1 EPS of $0.42 in-line. Revenue of $1.3B in-line. (PR)
  • PerkinElmer (PKI): Q1 EPS of $0.34 beats by $0.03. Revenue of $448M (+14% Y/Y) beats by $23M. (PR)
  • Priceline.com (PCLN): Q1 EPS of $2.66 beats by $0.20. Revenue of $809M beats by $30M. Shares -1.5% AH. (PR)
  • QLogic (QLGC): Q1 EPS of $0.37 beats by $0.03. Revenue of $152M (+5% Y/Y) beats by $1M. Shares -1.1% AH. (PR)
  • SandRidge Energy(SD): Q1 EPS of -$0.02 misses by $0.04. Revenue of $313M (+48% Y/Y) beats by $10M. Shares -2.5% AH. (PR)
  • Sapient (SAPE): Q1 EPS of $0.12 beats by $0.05. Revenue of $241M (+32% Y/Y) beats by $10M. (PR)
  • Sunoco (SUN): Q1 EPS of -$1.01 vs. consensus of -$0.07. Shares -0.4% AH.(PR)
  • Tenaris (TS): Q1 EPS of $0.54 beats by $0.01. Revenue of $2.3B (+42% Y/Y) beats by $0.1B. Shares +0.2% AH. (PR)
  • Visa (V): FQ2 EPS of $1.23 beats by $0.03. Revenue of $2.2B in-line. Authorizes new $1B share buyback program. Shares -1.5% AH. (PR)
  • Youku.com (YOKU): Q1 EPS of -$0.07 beats by $0.01. Revenue of $20M (+63% Y/Y) beats by $3M. Shares -1.8% AH. (PR)

Today's Markets

  • In Asia, Japan -1.4% to 9859.2. Hong Kong -0.4% to 23159. China -0.3% to 2864. India flat at 18519.
  • In Europe, at midday, London -0.3%. Paris +0.4%. Frankfurt +0.6%.
  • Futures at 7:00: Dow +0.2%. S&P +0.3%. Nasdaq +0.3%. Crude -1.9% to $97.88. Gold +0.3% to $1485.70.

Friday's Economic Calendar

The SA Currents team contributed to this post.


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