FHFA to sue banks for billions over mortgage bonds. The Federal Housing Finance Agency could today file lawsuits seeking billions of dollars in compensation from over a dozen large banks for misrepresenting the quality of mortgage bonds they sold during the housing bubble, sources say. The suits will argue that the banks, which include Bank of America (NYSE:BAC), JPMorgan (NYSE:JPM), Goldman Sachs (NYSE:GS) and Deutsche Bank (NYSE:DB), didn't undertake the due diligence required by law. Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) - and ultimately taxpayers - lost over $30B as a result of the deals.
Fed presses BofA on contingency options. With its potential legal liabilities piling up, Bank of America (BAC) has received a request from the Fed about what it could do if its financial situation worsens. BofA has provided a number of options, including issuing a separate class of shares tied to the performance of Merrill Lynch, the bank's most profitable unit. The move would raise cash but is only theoretical - for now.
Netflix shares plummet after Starz breaks off talks. Liberty Media's (LSTZA) Starz has halted contract-renewal talks with Netflix (NASDAQ:NFLX) over differences in pricing and packaging, saying it will end programming as of March 2012. The move came the day an unpopular Netflix price rise took effect and will deprive the online video service of a key source of newer movies and original Starz shows such as "Spartacus." While Netflix said it will look for alternative programming, industry observers believe a deal could still be struck. Notwithstanding, Netflix shares plunged 8.5% after hours.
AstraZeneca's Crestor no more effective than Lipitor. AstraZeneca's (NYSE:AZN) blockbuster cholesterol drug Crestor has failed to significantly beat Pfizer's (NYSE:PFE) Lipitor in a head-to-head study. The result is likely to cap any benefits AstraZeneca might gain after Lipitor loses its patent in November and cheap generics hit the market. With full results not due till November 15, RBS notes that AstraZeneca set a high 0.65% PAV differential to demonstrate "statistical significance" but that 0.5% might be enough to impress cardiologists.
More gloom expected in jobs report. Employment data for August is due out this morning, with reduced confidence about the economy expected to have caused a slowdown in hiring. Nonfarm payrolls are estimated to have increased by 68,000, sharply down from a 117,000 rise in July. Unemployment is predicted to have held steady at 9.1%, marking 26 out of the last 28 months it has been at least 9%. The White House said yesterday that it expects the rate to stay above this level into 2012.
AT&T may have to sell 25% of T-Mobile to save deal. AT&T (NYSE:T) could have to sell up to 25% of T-Mobile's (OTCQX:DTEGY) business, including airwaves and customers, to overcome government antitrust fears about the carriers' tie-up, sources say. While AT&T is preparing for a court fight with the DOJ, it's also formulating an offer to salvage the $39B deal. However, former antitrust enforcer Bob Doyle said it would be difficult to reach a settlement as any divestitures at a national level - which would be to Verizon (NYSE:VZ) or Sprint (NYSE:S) - would also raise competition concerns.
Judge quashes Oracle's $1.3B award againt SAP. A U.S. judge has overturned Oracle's (NASDAQ:ORCL) $1.3B verdict against SAP for theft of intelletual property, saying that the amount was "grossly excessive" and that the maximum value of the damages proved is just $272M. Oracle can now accept the lower amount or fight for more money at a new trial.
Japan names little-known Jun Azumi as Finance Minister. New Japanese Prime Minister Yoshihiko Noda has appointed Jun Azumi to replace him as Finance Minister. Azumi, a legislator from the earthquake-devastated north east, has apparently not shown much interest in economics and finance in the past, and little is known about his views. However, he is known for his efforts to improve relations between government and opposition parties, so could prove important in helping Noda to push through unpopular tax rises to help pay for post-quake reconstruction.
Greece, troika talks suspended over further austerity. Discussions between Greece and a delegation from the IMF, EU and ECB have been temporarily halted over the country's deficit target. The government has cut its GDP forecast for the year and now believes the economy will contract 4.5%-5.3%, which means the deficit could exceed 8.5% of GDP compared with a goal of 7.6%. The troika wants yet more austerity, but Greece's finance minister believes the cuts approved in June should be enough - if they're implemented. At stake is an €8B ($11.4B) tranche of Greece's rescue package.
Major exporters bar Syngenta GM grain. Cargill and other major U.S. agribusinesses have increased restrictions on accepting Syngenta's (NYSE:SYT) popular Agrisure Viptera corn as part of curbs against genetically modified grain not yet approved in major foreign markets such as China and the EU. Archer Daniels Midland (NYSE:ADM) and Bunge North America (NYSE:BG) have taken similar actions, which come just weeks before the U.S. harvest, when the corn would enter the market. The grain firms are worried that any trace of unsanctioned biotech products in their shipments could close export markets.
LSE in talks to acquire LCH.Clearnet. The London Stock Exchange (OTCPK:LDNXF) said it is in early discussions to buy LCH.Clearnet in a deal that the FT reported could value the clearing house at €1B ($1.43B). The negotiations pit LSE against market-data firm Markit, while Nasdaq OMX (NASDAQ:NDAQ) has also shown interest in the past.
Amazon to California: Jobs for tax reprieve. Amazon (NASDAQ:AMZN) has offered to invest in Californian distribution centers and create 7,000 full-time jobs by 2015 in exchange for a reprieve from the state's new Internet sales tax law until 2014. In response, Bill Dombrowski of the California Retailers Association said that while Amazon might hire more people, "how many (jobs) do we lose in bricks and mortar retail by 2014?" Amazon's proposal to California comes as it battles with states around the country over the collection of sales tax.
In Asia, Japan -1.2% to 8951. Hong Kong -1.8% to 20213. Shanghai -1.1% to 2528. India +0.9% to 16821.
In Europe, at midday, London -1.9%. Paris -2.5%. Frankfurt -2.8%.
Futures at 7:00: Dow -0.8%. S&P -0.9%. Nasdaq -0.9%. Crude -0.8% to $88.18. Gold +1.5% to $1856.50.
Friday's economic calendar:
6:00 Monster Employment Index
8:30 Nonfarm Payrolls
Earnings Results: Companies that beat EPS expectations last night and today include Finisar (FNSR shares +6.9%), H&R Block (HRB -4.8%). Those that missed forecasts include Esterline Technologies (ESL -8.6%), Quiksilver (ZQK +2.2%). Full real-time earnings coverage here.