MF Global set to file for bankruptcy protection. Following marathon weekend talks, MF Global (MF) could file for bankruptcy protection today and sell its assets to discount brokerage firm Interactive Brokers (IBKR) for about $1B in a court-supervised auction, The Wall Street Journal reports. MF's troubles stem from over $6B of trades it made on EU sovereign bonds as CEO Jon Corzine attempted to turn the firm into an investment bank from a brokerage firm, but the bloc's debt crisis hit the company's own ratings and sapped investor confidence.
Yen recovers some losses that followed Japan intervention. The yen has made back some of its losses against the dollar after dropping in the wake of Japanese intervention. The government spent an estimated ¥5T-¥6T ($63B-$76B) to cap a rise in its currency that has hurt exports and saw it hit a post-war high of ¥75.31 to the dollar in Asian trading. While the intervention pushed the greenback to as much as ¥79.55, it was at ¥77.82 midday in Europe. The yen's recovery indicates the government may have to take more action if the impact of its move is to be anything more than temporary.
Eurozone economic gloom continues. Eurozone inflation remained unchanged at a preliminary 3% in October compared with economist estimates of a fall to 2.9% and the ECB's target of just below 2%. Separately, September unemployment rose to 10.2% from 10.1% in August, confounding forecasts of a drop to 10%. To complete the gloomy picture, Spain's economy recorded zero growth in Q3 2011 from the previous quarter as domestic demand continued to contract. It's not a surprise, therefore, that the OECD has slashed its 2012 growth forecast for the eurozone to 0.3% from a prior prediction of 2%.
Panasonic forecasts worst loss in a decade. Panasonic (PC) has predicted that it will make a FY net loss of ¥420B ($5.5B), way worse than the firm's previous forecast for a profit of ¥30B. The expected loss, which would be Panasonic's biggest in ten years, is due to the global economic slowdown, the yen's strength, the Thai floods, and soaring restructuring costs as the company attempts to shake off losses at its TV unit. In FQ2, Panasonic's operating profit slumped to ¥42B from ¥85.2B a year earlier and to below forecasts of ¥50B. Sales slipped 6% to ¥2.08T.
Sony to divide TV ops into three. Sony (SNE) will split its television business into three - LCD TVs, outsourcing, and next-generation TVs - as, like Panasonic (PC), it attempts to turn around the perennial loss-making operations. The idea is to "make clearer the mission and responsibilities" of each division, Sony said. Yesterday, Nikkei reported that Sony wants to sell its nearly 50% stake in its LCD JV with Samsung (SSNLF.PK) to the Korean tech giant. One probable factor for consideration for Samsung is the poor performance of its own panel ops.
Honda pulls FY forecast as Q2 profit plummets. At least Panasonic (PC) can give an FY forecast, because Honda (HMC) can't. The automaker has withdrawn its annual guidance for earnings and global sales, due to the strong yen and floods in Thailand, where car factory operations are suspended indefinitely because of the floods. Honda's FQ2 operating profit slumped 68% to ¥52.5B ($693M) vs. a forecast of ¥63.5B and revenue dropped 16% to ¥1.9T.
Treasury poised to delay further AIG share sales. Due to poor market conditions, the Treasury will probably put off selling more of its 77% stake in AIG (AIG) when the next opportunity arises after the insurer discloses earnings on Thursday, The Wall Street Journal reports. AIG's shares closed on Friday at $26.34, below the government's breakeven point of $28.73 and more than 40% below the company's book value. Officials have sold $5.8B in AIG shares and hope to recoup at least $41.7B from the sale of the government's holding.
Another DOE-backed clean-tech firm fails. Beacon Power (BCON), the operator of a flywheel energy storage plant that received a $43M loan guarantee from the Department of Energy, yesterday filed for bankruptcy. The failure of Beacon, which drew $39M of its government-guaranteed loan, comes two months after the Chapter 11 filing of solar-panel maker Solyndra, which had a $535M guarantee. Unlike in the case of Solyndra, though, Beacon's plant continues to operate. The latter's bankruptcy also follows a White House announcement on Friday of an independent review into the DOE's loan portfolio.
Nabors CEO gets $100M payout. Oil driller Nabors Industries (NBR) is making a $100M severance-style payment to CEO Eugene Isenberg after replacing him with his number two, Anthony Petrello, even though Isenberg is continuing on as Chairman. A board decision last week triggered a clause in Isenberg's contract that entitled the 81-year old to the money, which exceeds Nabors' Q3 2011 net profit of $74.3M. Despite receiving one of the largest executive payouts of recent times, Isenberg, who had been Chairman and CEO since 1987, was apparently not best pleased.
Stock trends follow the script. Despite massive upheavals this year, from the Japan earthquake in March through to the U.S. credit-rating downgrade, wild market gyrations, and the EU's escalating debt problems, stocks have largely followed traditional historical patterns in 2011. "I couldn't have scripted a smoother year," said Jeffrey Hirsch, editor-in-chief of the "Stock Trader's Almanac." October, known as the "bear killer" month, is a case in point, with the Dow rising 12%. Looking ahead, November is historically the third-strongest month and December the second-best, capped by the "Santa Claus" rally at Christmas time.
Bond returns over 30 years top stocks for first time since 1861. Despite the October gains in stocks, large increases in the value of bonds have boosted the three-decade return on Treasuries to above shares for the first time in 150 years. On average, long-term government bonds have gained an annual 11.5% since 1981, exceeding the 10.8% increase in the S&P 500, said Jim Bianco of Bianco Research in Chicago. Factors contributing to the trend include the collapse of Lehman and the financial crisis, the stuttering U.S. economy, and the EU debt debacle, leading investors to put their money into fixed-income assets.
Loews Q3 comes in below expectations. Loews (L) Q3 EPS of $0.40 misses by $0.26. Revenue of $3.43B (-7.1% Y/Y).
In Asia, Japan -0.7% to 8988. Hong Kong -0.8% to 19865. China -0.2% to 2468. India -0.6% to 17705.
In Europe, at midday, London -1.0%. Paris -1.6%. Frankfurt -1.4%.
Futures at 7:00: Dow -0.7%. S&P -0.8%. Nasdaq -0.6%. Crude -0.85% to $92.53. Gold -1.6% to $1719.20.
Monday's economic calendar:
9:45 Chicago PMI
10:30 Dallas Fed Manufacturing Outlook
3:00 PM USDA Ag. Prices
Earnings Results: Companies that beat EPS expectations today include CNA Financial (CNA), Humana (HUM), Weingarten Realty Investors (WRI). Those that missed forecasts include Loews (L). Full real-time earnings coverage here.