- 'Paradigm shift' in health care? Blue Shield of California announced that it will cap its profits at 2% of revenue, return $180 million to policyholders, hospitals and others, and begin to give annual credits to customers. CEO Bruce Bodaken called the plan a way to "solve the seemingly intractable problem of rising healthcare costs."
- Borders brings bidders. Another distressed investor is picking around bankrupt bookseller Borders Group (OTC:BGPIQ), as Najafi Cos. starts competing with Gores Group for a bid to keep the chain going. Gores says it would shift toward a more online business model and use 200-plus remaining stores to support that; Borders has lost more than $150 million in the past two months.
- OPEC likely to hike output. An argument among OPEC ministers about production quotas started to look increasingly settled on the side of an output increase - the first change to quotas since January 2009 - after the cartel's committee recommended as much, and the EIA unexpectedly forecast still-tight crude markets through 2012. Most members are already at production capacity, though, and Iran and Iraq are opposed to an increase. The meeting is under way in Vienna, with an announcement due at 10 a.m. Eastern time.
- Bernanke bums out markets. Speaking in Atlanta, the Fed chairman acknowledged recent surprising weakness in the economy, but gave no hint of QE3, instead expecting growth and hiring to accelerate later this year. The speech included a spirited defense of Fed policy and a detailed explanation of how QE isn't responsible for surging commodity prices. The Q&A session featured a query from Jamie Dimon in which the JPMorgan (NYSE:JPM) CEO suggested a harsh new bank regulatory environment is to blame for the sluggish economy. Earlier, Dallas Fed President Fisher told CNBC he sees no reason for QE3, a view seconded by the Chicago Fed's Evans in a WSJ interview
- Consumer credit rises again. Consumer borrowing in April rose for a seventh straight month, by $6.25 billion, higher than an expected $5 billion. Nonrevolving debt - including auto and student loans - led the way, rising $7.19B, but that was before an increase in gas prices likely killed some car demand. Revolving debt including credit cards dropped $944 million, reversing the prior month's $37 million increase.
- Temple-Inland rebuffs IP offer. Temple-Inland (NYSE:TIN), maker of corrugated paper and building products, began mounting a sturdy defense to a $30.60/share ($3.4 billion in cash) offer from International Paper (NYSE:IP) despite its 46% premium to Monday's closing price. Analysts say the industry's headed for consolidation, so TIN's stockholder rights plan aims for fair treatment for shareholders if a takeover comes to pass. TIN rose 40.4% Tuesday.
- Clouds ahead for solar. Struggles could be ahead for solar companies, as LDK Solar (NYSE:LDK) and SunPower (SPWRA) each offered downbeat warnings about the current quarter. LDK reported Q1 revenue well ahead of last year but warned that Q2 would miss analysts' estimates, seeing revenue of $710 million to $760 million vs. an expected $772 million. SunPower raised revenue expectations, but lowered EPS estimates to $1.20-$1.70, below the $1.80 average estimate. Recent changes to subsidies in Italy, which has crimped some funding for solar installations, are having effects across the industry. (LDK Solar transcript; SunPower outlook)
- Silicon Valley rings bells for AT&T deal. Eight tech giants - Facebook, Microsoft (NASDAQ:MSFT), Yahoo (NASDAQ:YHOO), Oracle (NYSE:ORCL), Research In Motion (RIMM), Qualcomm (NASDAQ:QCOM), Brocade (NASDAQ:BRCD) and Avaya - and 10 venture capital firms have filed letters with the FCC expressing support for AT&T's (NYSE:T) proposed $39 billion takeover of T-Mobile USA (OTCQX:DTEGY). The firms say that soaring demand calls for increased capacity that the merger would bring - a position vocally opposed by competitors like Sprint Nextel (NYSE:S); Google (NASDAQ:GOOG) and Apple (NASDAQ:AAPL) have yet to weigh in.
- In Asia, Japan +0.1%. Hong Kong -0.9%. China +0.2%. India -0.6%.
- In Europe, at midday, London -0.9%. Paris -0.7%. Frankfurt -1.1%.
- Futures at 7:00: S&P -0.51%. 10-yr +0.2%. Euro -0.44% vs. dollar. Crude -0.9% to $98.20. Gold -0.63% to $1534.30.
Wednesday's Economic Calendar
- Wednesday's economic calendar:
7:00 MBA Mortgage Applications
10:00 Quarterly Services Report
10:30 EIA Petroleum Inventories
12:20 PM Fed's Hoenig: Economic Outlook
1:00 PM Results of $21B, 10-Year Note Auction
2:00 PM Fed's Beige Book
- Notable earnings before Wednesday's open: CIEN
The SA Currents team contributed to this post.
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