Burger King to return to the Big Board. Burger King is set for a new NYSE listing through a deal with investment vehicle Justice Holdings (and co-founder Bill Ackman) just a year and a half after it was taken private for $4B. The combined firm will trade on the Big Board after Justice suspends its London listing and the deal closes in 60-90 days. The announcement late yesterday came after Burger King also launched the biggest menu expansion in its history as it seeks to claw back market share.
Spanish, Italian yields surge after disappointing bond auction. Spanish and Italian bond yields were sharply higher midday in Europe after Spain moved just €2.6B in paper at an auction, having hoped to raise €3.5B. It was Spain's first bond sale since laying out a 2012 budget that showed public debt soaring to a record. Spanish 10-year yields were +22 bps to 5.67% and Italian 10-years were +19 bps to 5.34%.
Brazil increases its attack on Chevron and Transocean. A Brazilian federal prosecutor has launched his second 20B Real lawsuit ($10.9B) against Chevron (CVX) and Transocean (RIG), this time relating to an oil leak discovered in Chevron's offshore Frade field in March. The new suit also seeks to prevent the two companies from operating in Brazil, transferring profits or equipment from the country, and obtaining government financing.
Top Equities News
GE fires back after Moody's downgrade. Moody's has lowered its credit rating for GE (GE) and its financing subsidiary, pointing to risks connected to the company's lending unit. GE, whose senior unsecured debt was cut one notch to Aa3, fired back by pointing out that it has more than $80B in cash and a healthy balance sheet. "Moody's actions are based on a change in their own methodology rather than our credit position, which has only improved in the past few years," GE said.
CFTC to charge JPMorgan over Lehman role. The CFTC is expected to file civil charges against JPMorgan (JPM) this week for its actions during the collapse of Lehman Brothers. In a case with similarities to that of MF Global - in which JPMorgan is also involved - the accusations will include improperly counting Lehman’s customer money as belonging to the firm. JPMorgan is expected to settle and escape with a fine of just $20M.
Yahoo to cut 2,000 jobs. Yahoo (YHOO) will lay off up to 2,000 employees today, or roughly 1/7 of all workers, reports AllThingsD's Kara Swisher, who adds that the move is "just the tip of the proverbial iceberg." While all units will be affected, the cuts will be especially hard on the product development, local content, marketing, and research divisions. The future of Yahoo's ad tech and search businesses is still being discussed. SA author Matt Schilling discusses whether the layoffs could "mean better things ahead."
US Airways: AMR merger would bring $1.5B in revenues and savings. US Airways (LCC) has reportedly told some American Airlines (OTC:AAMRQ) creditors that a merger of the two firms could yield $1.5B in synergies. US Airways is trying to pull together support for a tie-up, but its stepped-up campaign could end up complicating and prolonging American's bankruptcy proceedings.
Credit Suisse dumps Fitch over rating dispute. New Fitch CEO Paul Taylor has started his job with some fighting words, saying Credit Suisse (CS) dumped the firm's rating on a mortgage-backed security after Fitch took a "materially different" (i.e. harsher) view than two rivals who assigned triple-A ratings. Taylor said Fitch plans to issue more reports that will raise concerns which its rivals may play down.
Roche presses on with Illumina bid. Roche (OTC:RHHBY) has again appealed directly to Illumina's (ILMN) shareholders with a letter that says its $51 a share offer "represents a significant premium to where Illumina would likely trade on a standalone basis, and provides certainty of value through an all-cash payment to Illumina's shareholders."
"Systemically important" category to be extended to non-banks. The Financial Stability Oversight Council yesterday voted to adopt a rule that will classify some non-bank financial firms as "systemically important" and put them under stronger supervision. The council will now start the process of deciding which firms fit the bill. Possible contenders include BlackRock (BLK), GE Capital (GE) and Berkshire Hathaway (BRK.A).
Top Economic & Other News
Rehn: EU should be ready to offer more help to Portugal. The EU should be prepared to provide "some kind of bridge" to Portugal when it returns to the markets, Economics Commissioner Olli Rehn has told a TV station in Finland, which is probably one of the last places that would want to hear that. One assumes Rehn didn't mean Portugal might need another bailout.
FOMC gets more hawkish over QE. Fed policy makers expressed less interest in another round of bond buys at their March 13 meeting, with only a couple of members suggesting more easing could become necessary if the economy lost momentum. Members thought the economy was a "bit stronger" but not in a meaningful way. The more hawkish tone prompted a sell-off in long-term Treasurys. SA author Axel Merk says the Fed's "actions speak louder than words."
Why gasoline prices will continue rising. While the price of Brent and gasoline have tracked each other closely, the performance of WTI is much less correlated and the spread between that and Brent is rising. Relief at the pump won't happen, Bespoke says, unless something helps break the relentless run in Brent prices.
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In Asia, Japan -2.3%. Hong Kong +1.3%. China +0.5%. India -0.6%.
In Europe, at midday, London -1.2%. Paris -1.6%. Frankfurt -1.8%.
Futures at 7:00: Dow -0.8%. S&P -0.9%. Nasdaq -0.85%. Crude -0.6% to $103.34. Gold -2.35% to $1632.70.
Wednesday's economic calendar:
7:00 MBA Mortgage Applications
7:30 Challenger Job-Cut Report
8:15 ADP Jobs Report
10:00 ISM Non-Manufacturing Index
10:30 EIA Petroleum Inventories