- Geithner denies departure. Tim Geithner says he'll remain in his post for the "foreseeable future," playing down reports that he's considering stepping down as Treasury Secretary once a deal is reached to raise the $14.3T national debt limit. Sources say the White House believes it has until July 22 to strike a budget deal, which would give legislators a week to draft a bill and get it through both houses before the Aug. 2 deadline.
- Global manufacturing dries up. Global manufacturing, a key driver of economic growth, slowed for a second consecutive month (infographic). In China, PMI dropped to a 2.5-year low of 50.9, increasing concerns over a potential "hard landing." South Korea and Taiwan also posted 7-month lows, and India fell to a 9-month trough. Meanwhile, euro-area new orders fell for the first time in almost two years, and exports continue to drop.
- UBS taps Weber as chairman. UBS (UBS) tapped Axel Weber to join its board in 2012 and become chairman in 2013. Weber, formerly Germany's chief central banker, will be the firm's first non-Swiss chairman, and his appointment is likely to be followed by other top management moves. The move is a setback for Deutsche Bank (DB) CEO Josef Ackermann, who had hoped to place Weber in a senior role.
- Kodak plunges on negative ITC ruling. Kodak (EK) plunged 14.8% in post-market trading after the International Trade Commission ruled Apple (AAPL) and Research In Motion (RIMM) didn't violate its image-preview technology patents. A favorable ruling could have brought $1B in royalties, and though Kodak may prevail with other claims, a large settlement is now unlikely. Kodak, which is struggling to regain profitability, relies on patent licensing for an ongoing revenue stream.
- Paulson pushed BofA to shaft mortgage investors. Renowned hedge-fund manager John Paulson, a major Bank of America (BAC) shareholder, pushed senior executives to fight investors' claims that the bank sold them toxic mortgage debt - which BofA ultimately settled Wednesday with an $8.5B pact. CEO Brian Moynihan's pledge last fall to fight investors with "hand-to-hand combat" was an attempt to placate Paulson and others, but management now believes settling the claims "will rejuvenate the company and put the worst of its crisis-era problems behind it." Paulson reportedly exited "a substantial portion" of his 124 million-share stake in BofA in the two months prior to the settlement.
- RIM looks at splitting co-CEO jobs. RIM (RIMM) conceded to investor pressure, agreeing to study the possibility of splitting up its co-chair and co-CEO roles, which many blame for the company's woeful performance. In response, activist investor Northwest & Ethical Investments withdrew a proposed vote on the issue at RIM's July 12 annual meeting, although critics say the move is no more than a 'band-aid solution.' RIM's management structure was also questioned in a critical letter published yesterday by an anonymous senior insider.
- Apple-led group buys Nortel patents for $4.5B. A consortium of tech giants won Nortel's auction, agreeing to pay $4.5B for a portfolio of over 6,000 patents and patent applications. By buying the patents together, the companies (Apple (AAPL), Microsoft (MSFT), Sony (SNE), RIM (RIMM), Ericsson (ERIC) and EMC (EMC)) should avoid licensing negotiations and protracted legal disputes. The main loser is Google (GOOG), whose $900M stalking horse bid was trounced.
- NY Fed halts mortgage bond auction. AIG (AIG) may be feeling some Schadenfreude after the NY Fed suspended auctions of the remaining mortgage bonds in Maiden Lane II, citing low demand amid a retreat from riskier assets. In March, AIG offered to buy back the assets for $15.7B, but the Fed rejected the offer in favor of an auction. Maiden Lane II was created in the 2008 bailout of AIG to rescue some of its sub-prime bonds and stem its cash bleed.
- Japan business confidence falls but CPI, jobless encourage. Business confidence in Japan (ETF: EWJ) fell to its lowest level in over a year, but the future outlook improved as parts shortages ease and factories steadily restore capacity following the devastating earthquake. Meanwhile, May core CPI came in above expectations at 0.6%, which is encouraging for a country that has had years of deflation, and suggests domestic demand may be rebounding. Japan's jobless figure was also better than expected, falling to 4.5% from 4.7% in April.
- Corn futures extend losses following USDA report. Corn futures (ETF: CORN) extended Thursday's losses in overnight trading following a USDA report that showed inventories and acreage planted were much higher than the expected despite wet weather. The harvest month December corn contract dropped over 5%, taking the contract's two-day fall to nearly 10%. An Aug. 11 survey may provide a clearer picture of actual planted acreage.
- Borders gets $215M opening bid. Borders Group (OTC:BGPIQ) has chosen Direct Brands, which owns Book of the Month Club, as the opening bidder in an upcoming bankruptcy auction after it made a $215.1M offer for the retailer's assets. The fate of the U.S.'s second-largest bookstore chain and over 11,000 jobs are riding on the result of the auction; Borders could be forced to accept a bid from liquidators if they were to provide a better deal for creditors.
- Oshkosh jumps on Icahn buy. Activist investor Carl Icahn sent shares in Oshkosh (OSK) 8.1% higher in extended trading after disclosing he'd bought a 9.5% stake in the 'undervalued' specialty truck and vehicle manufacturer for $129.5M. Oshkosh's stock is down around 17% this year, and Icahn intends to meet with the company's management to see how shareholder value can be enhanced.
- Citi in exclusive talks to sell OneMain. Sources say Citigroup (C) is in exclusive talks with the team of Leucadia National (LUK) and Centerbridge Capital over the long-delayed sale of its OneMain (AKA CitiFinancial) consumer-financial services unit. OneMain has assets of $10B and a book value of $2B. A deal could bring in as much as $1B.
Earnings: Thursday After Close
- Apollo Group (APOL): FQ3 EPS of $1.51 beats by $0.18. Revenue of $1.23B (-7.3% Y/Y) beats by $0.02B. Shares -1.6% AH. (PR, earnings call transcript)
- Darden Restaurants (DRI): FQ4 EPS of $1.00 in-line. Revenue of $1.99B (+7% Y/Y) in-line. Shares -2.13% AH. (PR)
- In Asia, Japan +0.5% to 9868. Hong Kong closed. China -0.1% to 2759. India -0.4% to 18763.
- In Europe, at midday, London +0.4%. Paris flat. Frankfurt +0.1%.
- Futures at 7:00: Dow +0.2%. S&P flat. Nasdaq +0.2%. Crude -0.75% to $94.70. Gold -0.7% to $1492.
Friday's Economic Calendar
Seeking Alpha editors contributed to this post.
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