By Yigal Grayeff and the Market Currents team
States, banks on verge of foreclosure abuse deal. Officials are on the verge of announcing an agreement worth $26B-$39B - depending on which report you read - between more than 40 states and the nation's top mortgage banks over foreclosure abuse, with an announcement possible this morning. The key to the deal has been obtaining the agreement of holdout states California and New York, which relented after long-standing opposition. The five banks involved are Bank of America (BAC), Ally Financial, JPMorgan (JPM), Wells Fargo (WFC) and Citigroup (C).
Chances of Greek default go up as leaders fail to agree on austerity. Greece's political chiefs have failed to agree on a reform and austerity program after an hours-long meeting, felled by disputes on pension cuts. As a result, Greek finance minister Evangelos Venizelos heads to a Brussels summit today without the domestic support seen as key to the receipt of additional bailout funds. Meanwhile, figures show that Greece's jobless rate hit a new record of 20.9% in November, while December industrial production dropped 11.3% year on year. "This is what a death spiral looks like," writes Ambrose Evans-Pritchard.
Cisco tops expectations as recovery continues. Cisco's (CSCO) FQ2 provided further evidence that the company's making good progress in its recovery as earnings beat Wall Street estimates. Adjusted EPS came in at $0.47 vs. EPS of $0.27 a year ago, while revenue climbed 10.6% to $11.5B. The company gave guidance that was in line or above analyst forecasts and said it hit its "billion-dollar expense reduction a quarter early." Translation (h/t ZH): "We fired a ton of people early."
BP in talks to settle massive pollution claims on Gulf spill. BP (BP) is reportedly in negotiations with U.S. officials to settle pollution claims related to the Deepwater Horizon spill. The government is seeking fines of up to $4,300 for each of the 4.1M barrels spilled, which could leave BP liable for as much as $17.6B. BP is also said to be in settlement talks with other firms tied to the disaster.
SEC plans lawsuits against banks over mortgage bonds. The SEC reportedly plans to send Wells notices to several major banks over mortgage-related bonds linked to the financial crisis. It's unclear which banks are being targeted, though sources say the focus of the civil investigation includes Bank of America (BAC) (who else?), Citigroup (C), Deutsche Bank (DB) and Goldman Sachs (GS).
Stryker CEO steps down. Stryker (SYK) CEO Stephen MacMillan has resigned due to family reasons, the firm said yesterday, adding that CFO Curt Hartman will take over on an interim basis until a successor is found. MacMillan's exit "is not good news," says Collins Stewart's Tao Levy. "He’s navigated the company well during some very difficult market times."
Groupon plummets following net loss. Groupon (GRPN) shares were -15.5% premarket after the company yesterday said it made a Q4 net loss of $0.02 a share, although revenue jumped 194% to $506.5M and surpassed predictions. Groupon's loss is evidence its business doesn't scale well, said SA author Paulo Santos. While Facebook generated $3.7B in 2011 revenue with just 3,200 employees, and Google $37.9B with 32,000, Groupon needed over 10,000 to earn $1.6B. The reason? Groupon needs to keep adding to its "army of salesmen" to produce more deals.
House poised to ban insider trading in Congress. The House is today expected to pass its version of the Stock Act, which will ban insider trading in Congress and require public officials to reveal their stock dealings within weeks rather than once a year, as is now the case. The Senate passed a similar measure last week, although the House bill removes a key provision on disclosure for people who scour Washington for market-moving information.
United Tech mulls asset sales to pay for Goodrich deal. United Technologies (UTX) is considering selling its pump- and compressor-making division, which would be worth at least $2B, to raise money for the proposed $16.5B acquisition of Goodrich (GR), Bloomberg reports. United Tech is also looking for a buyer for Rocketdyne, a unit that makes rocket engines and could bring in $400M+.
China inflation rises more than expected. China's consumer prices rose 4.5% in January from a year earlier vs. expectations of +4%, although the figure is somewhat distorted because of a week-long holiday. The unexpected acceleration in inflation puts pressure on officials to hold back on any immediate additional cut in banks' reserve requirements.
U.S., 5 EU countries reach tax-evasion agreement. The Treasury and five European nations reached a broad agreement yesterday on a plan to prevent U.S. citizens from evading taxes through the use of foreign accounts. Officials also proposed regulations to implement a 2010 law requiring foreign financial firms to report detailed information about U.S. account holders or face penalties. Notably missing from the list of five nations: Switzerland.
In Asia, Japan -0.1% to 9002. Hong Kong flat at 21010. China +0.1% to 2350. India +0.7% to 17831.
In Europe, at midday, London +0.3%. Paris +0.3%. Frankfurt +0.6%.
Futures at 7:00: Dow -0.1%. S&P -0.2%. Nasdaq -0.2%. Crude +0.6% to $99.33. Gold +0.2% to $1734.10.
Thursday's economic calendar:
7:00 BOE Rate Decision
7:45 ECB Rate Decision
8:30 Initial Jobless Claims
10:00 Wholesale Trade
10:30 EIA Natural Gas Inventory
1:00 PM Results of $16B, 30-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
Earnings Results: Companies that beat EPS expectations last night and today include Andersons (The) (ANDE), Cisco Systems (CSCO), Cincinnati Financial (CINF), FMC Corp. (FMC), Groupon (GRPN - revenue), News Corp (NWSA), O'Reilly Automotive (ORLY), Plains All American Pipeline (PAA), Prudential Financial (PRU), Whole Foods Market (WFM), Visa (V), Lorillard (LO), Pepsico (PEP), Bunge (BG).
For full real-time earnings coverage, please click here.
Notable earnings after Thursday's close: ATR, ATVI, CCJ, DCT, EXPE, GDI, HME, ITMN, LNKD, NUAN, NXPI, PBI, RSG, SUN, XL
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