By Yigal Grayeff and the Market Currents team
JP Morgan hits profit expectations, misses on revenues. JPMorgan (JPM) has reported Q4 EPS of $0.90, which was in line with estimates, although revenue slumped 17% to $22.2B and missed forecasts. Fixed income revenue, investment banking fees and mortgage-loan originations all fell sharply. Shares were -1.7% premarket.
NY Fed may renew ex-AIG bond sale with $7B auction. The New York Fed may reportedly auction $7B worth of mortgage bonds it obtained when it rescued AIG in 2008 after receiving an approach from a potential buyer. A group of up to five dealers, including Goldman Sachs (GS), may be asked to bid. The Fed suspended sales in June after dealers blamed the auctions for a fall in the markets.
iPhone 4S China debut goes awry. Apple (AAPL) has aborted retail sales of the iPhone 4S in China after customers queuing overnight in freezing temperatures became aggressive in a botched debut that saw the flagship store fail to open, while other stores sold out of the phone in one day. Not quite what China Unicom (CHU) had in mind when it said it planned to aggressively promote the iPhone 4S.
BofA could scale back in the U.S. if problems worsen. Bank of America (BAC) has reportedly told U.S. regulators it's willing to withdraw from some parts of the country if its financial problems deteriorate. Sources say a potential retreat was on a list of emergency scenarios submitted by BofA executives to the Fed last year. The list also included a possible sale of a separate class of shares tied to the performance of Merrill Lynch.
Novartis to chop 2,000 jobs in the U.S. Novartis (NVS) will cut nearly 2,000 positions in the U.S. ahead of the patent loss of top-selling blood pressure drug Diovan, and will take a $900M Q4 charge after a clinical trial showed patients taking blood-pressure pill Rasilez actually did worse. Rasilez had previously been expected to bring in over $1B in annual sales. Shares were -1.8% premarket.
Pepsi backs CEO Pepsi's (PEP) months-long strategic review is most likely to result in a renewed marketing push for its core soft drinks business and a cost-cutting effort, rather than a dramatic restructuring of the company or a rebuke of CEO Indra Nooyi, who's been under pressure due to Pepsi Cola's falling market share and due to profit warnings. Results of the review will be announced in February.
Rivals circle AMR. US Airways (LCC) has reportedly joined Delta Air Lines (DAL) and TPG as a potential bidder for American Airlines (AAMRQ.PK), although Deal Journal reckons Delta might have trouble getting any deal past foreign regulators due to its plans for AMR's global alliances.
Greece, hedge funds face off over debt. Recalcitrant private bondholders may have no choice but to accept big haircuts on their Greek debt, with the government set to reportedly submit a law that would force the minority of lenders to accept terms agreed to by the majority. However, hedge funds such as York and Marathon are betting differently, scooping up Greek debt that matures in March at deep discounts in the hope that they can scupper or limit any deal, that the Troika will give in, and that they can then receive full payment on the paper.
Kodak prepares for final frame. Fallen giant Eastman Kodak (EK) is said to be in advanced talks with Citigroup (C) to obtain financing in the event of a bankruptcy filing. Sources say Kodak is also lining up a stalking horse to be the lead bidder for a patent portfolio that may be auctioned as part of the bankruptcy.
TPG, Sony eye Olympus investment. Private equity firm TPG Capital is willing to pump $1B into scandal-stricken Olympus (OCPNY.PK) in a joint deal with Sony (SNE) or another suitor, sources say. TPG has reportedly reached out to executives at Canon (CAJ), Fujifilm (FUJIY.PK) and Panasonic (PC), as well as Sony, about the possibility of a joint approach.
Judge lets lawsuit vs. GE proceed. A federal judge has refused to throw out a lawsuit that accuses GE (GE) and its CEO of misleading investors about the firm's financial health and exposure to risky debt during the financial crisis. The lawsuit covers investors who owned GE stock from September 2008 to March 2009, when the company lost $150B in value.
Transcripts show how Fed failed to forecast the housing storm. Transcripts from Fed meetings in 2006, released yesterday, show how its top policy makers mostly failed to anticipate the mortgage-bond crisis, with Ben Bernanke and others expecting a "healthy" cooling of the housing sector that would have little impact on the financial system and the broader economy.
Government to raise debt ceiling by $1.2T. With the government just $25M under its $15.194T borrowing limit on Tuesday, the White House yesterday notified Congress that it plans to raise the ceiling by $1.2T. There won't be a repeat of the summer's fun and games, though, as even if legislators try to block the increase, President Obama can override them under the deal agreed to in August.
In Asia, Japan +1.4% to 8500. Hong Kong +0.6% to 19204. China -1.3% to 2245. India +0.7% to 16155.
In Europe, at midday, London +0.1%. Paris +1.0%. Frankfurt +0.3%.
Futures at 7:00: Dow -0.1%. S&P -0.15%. Nasdaq flat. Crude flat at $99.08. Gold -0.4% to $1640.80.
Friday's economic calendar:
8:30 Trade Balance
8:30 Import/Export Prices
9:55 Reuters/UofM Consumer Sentiment
11:10 Duke: 'Regulations and Credit Availability'
12:45 PM Fed's Lacker: Economic Outlook
1:00 PM Fed's Evans: Economic Outlook
1:15 PM Fed's Bullard: 'U.S. Economy and Monetary Policy'
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