- PayPal sues Google over mobile payments. Google (GOOG) has unveiled a service that allows consumers to pay for items with their mobile phones, only to be promptly sued by PayPal for allegedly stealing its technology. The eBay (EBAY) unit is also suing the two Google executives who led the launch, Osama Bedier and Stephanie Tilenius, both of whom worked at PayPal. The company accuses Bedier of transferring documents outlining its mobile payment strategies to his own computer just before leaving for Google. While the lawsuit highlights the intensifying battle to gain share in a market described as $1T opportunity, analysts said replacing wallets with smartphones is still a long way off.
- Oil magnate: Traders' actions normal practice. Norwegian billionaire John Fredriksen has said oil trades placed in 2008 by firms he owns, and which are now the subject of a $150M CFTC lawsuit, were standard practice at the time. "It is quite normal. It is the same for Glencore, and Vitol, and these other guys... It is nothing," he said. The CFTC alleges two traders made $50M by amassing large physical positions to boost oil prices and then dumping their holdings, causing prices to slump and allowing them to profit from short positions they had taken in the futures markets.
- EU banks could get break in Basel III. An unreleased draft from the EU could give European banks a break on some of the new Basel III rules by allowing them to count more of the capital in their insurance subsidiaries and letting them issue hybrid capital for longer than expected. The moves would 'disproportionately' benefit Lloyds (LYG), Societe Generale (OTCPK:SCGLY) and BNP Paribas (OTCQX:BNPQY). A regulator involved in the Basel process said if the exceptions stand, “it would be a violation of the global agreement” and would undermine the international effort to make banks safer.
- Goldman fund restructures $1.42B of hotel debt. Goldman Sachs' (GS) Whitehall Real Estate Funds has restructured $1.42B of debt on one of its largest hotel portfolios. Sources said Abu Dhabi Investment Authority is injecting $475M in return for preferred equity and Deutsche Bank (DB) is providing a loan of $975M. While most of the debt was coming due by April 2012, a $650M senior mortgage had been delinquent since coming due without payment last month. The portfolio covers over 160 hotels and carries several brands such as Courtyard by Marriott and Fairfield Inn. The refinancing shows how property owners are working through some of their most problematic assets as the market recovers.
- Security problems at Lockheed? Lockheed Martin (LMT), the top supplier to the Pentagon, has been hit by a major disruption to its computer systems that could be related to a network security problem, sources said. The slowdown appears to have begun on Sunday after security experts detected a network intrusion that involved the use of SecurID tokens that allow employees to access Lockheed's network from outside its firewall. The tokens are made by EMC (EMC), which disclosed in March that hackers broke into its network and stole information that could be used to reduce the SecurID's effectiveness.
- Japan CPI rises for first time in over two years. Higher commodity prices helped Japan's inflation increase 0.6% in April, the first rise since December 2008, although core prices fell 0.1%. The trend in core CPI, which excludes food but not oil products, suggests Japan has some way to go to combat deflation. "Japan still remains in a deflationary environment, and particularly the labor market is still weak and corporations are not hiring," said SocGen's chief Japan economist. Meanwhile, retail sales fell 4.8% in April, although the decline was smaller than expected and the pace of decline slowed from March. The economist attributed the trend to supply constraints rather than a big drop in demand.
- Nasdaq's "fox in a henhouse" admits insider-trading. A former Nasdaq (NDAQ) managing director, Donald Johnson, has pleaded guilty to one count of securities fraud in which he used information entrusted to him because of his position to make $640,000 from insider trading. The Justice Department said Johnson bought and sold shares of five Nasdaq-listed companies from 2006-2009, including in United Therapeutics (UTHR), often making the trades from his work computer. "A fox in a henhouse," is how one prosecutor described Johnson, who faces a maximum 20 years in prison.
- Milk no longer oil as Obama looks to slash red tape. Thirty U.S. agencies are seeking to eliminate or change regulations 'that stifle job creation' in an effort to save billions of dollars in compliance costs. The proposals are the result of a review President Obama ordered in January, and include simplifying and streamlining exports of 'low-risk' national security technology. The dairy industry has already benefited, receiving an exemption from EPA rules that defined milk as 'oil' and subjected farmers to regulations designed to cover oil spills. This will save the sector $1.4B over 10 years in clean-up costs and hopefully reduce the amount of crying over spilled milk.
- California may review AT&T's bid for T-Mobile. The California Public Utilities Commission has directed its staff to prepare a proposal for investigating AT&T's (T) $39B purchase of T-Mobile USA (OTCQX:DTEGY). If the commissioners go ahead with a review, California would become the second state after Louisiana to officially scrutinize the deal. The commission may file comments with U.S. authorities looking at the deal, although it can’t order the companies to give up airwaves or customers. In Washington, House legislators said they are concerned the transaction may thwart competition and raise prices.
- G8 pledges sustainable finances. Leaders from the Group of Eight have agreed to ensure their public finances are sustainable as they wrap up a two-day summit in France today. In a communique, the U.S., Japan, five European nations and Canada also said the global economic recovery was becoming more "self-sustained," although higher commodity prices were hampering further growth. In addition, the G8 promised to give $20B of aid to help 'Arab spring' nations Egypt and Tunisia.
Earnings: Friday Before Open
- Seadrill (SDRL): Q1 EPS of $1.84 may not be comparable to consensus of $0.67. Revenue of $1.11B (-5% Y/Y) beats by $0.08B. Shares -1% premarket. (PR)
Earnings: Thursday After Close
- Marvell Technology Group (MRVL): Q1 EPS of $0.29 misses by $0.01. Revenue of $802M (-6% Y/Y) misses by $24M. Shares +8.9% AH. (PR, earnings call transcript)
- OmniVision Technologies (OVTI): FQ4 EPS of $0.66 beats by $0.01. Revenue of $258M (+64% Y/Y) beats by $3M. Shares -5.9% AH. (PR)
- In Asia, Japan -0.4% to 9522. Hong Kong +0.9% to 23118. China -1.0% to 2710. India +1.2% to 18266.
- In Europe, at midday, London +0.8%. Paris +0.9%. Frankfurt +0.3%.
- Futures at 7:00: Dow -0.1%. S&P +0.1%. Nasdaq flat. Crude +0.35% to $100.58. Gold +0.3% to $1526.80.
Friday's Economic Calendar
- 8:30 Personal Income and Outlays
9:55 Reuters/UofM Consumer Sentiment
10:00 Pending Home Sales
10:30 ECRI Leading Index
The SA Currents team contributed to this post.
Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.