EU big four mull using rescue funds to buy government debt. Leaders from France, Germany, Italy and Spain will discuss on Friday using the €750B in the EU's two rescue funds to bail out the latter two countries by buying up their debt on the financial markets in an attempt to push down borrowing costs. If Germany agrees, it would mark a substantial shift in policy.
P&G falls after it cuts outlook. Procter & Gamble (PG) shares were -1.9% premarket after the company cut its FQ4 guidance, citing slower-than-expected growth in developed markets and forex fluctuations. P&G forecast adjusted EPS of $0.75-$0.79 vs. prior guidance of $0.79-$0.85 and consensus of $0.82. CEO Bob McDonald said the company won't lower spending on R&D and advertising, nor exit any emerging markets due to the slowdown.
Adobe drops on weak guidance. Adobe's (ADBE) FQ2 earnings beat Street forecasts but shares were -5.1% premarket after the company provided guidance that was mostly below expectations due to weakness in Europe. Net profit dropped to $223.9M from $229.4M, adjusted EPS was $0.60 and revenue climbed 10% to $1.12B. This was the first report that included revenues from subscriptions, which will hit sales by $10M a quarter for the foreseeable future.
Top Stock News
Lockheed Martin fears the edge of the fiscal cliff. Lockheed Martin (LMT) could face hundreds of millions of dollars in business claims from suppliers if $500B in additional defense spending cuts take effect in January as mandated, CEO Bob Stevens has warned. The near-term industry horizon is "completely obscured by a fog of uncertainty," he said, calling it a "fiction" that the U.S. defense industry was robust enough to survive such cuts.
Rio Tinto to invest $4.2B in iron ore. Rio Tinto (RIO) will commit $4.2B to develop its tier one iron ore business, focusing on projects "that will generate the most attractive returns for shareholders and are resilient under any probable macroeconomic scenario."
RIM confirms job cuts as it looks to save $1B. RIM (RIMM) has confirmed its rumored layoffs, saying "headcount reductions" are part of its strategy for cutting $1B in operating expenses. RIMM previously said it would save the money by cutting the number of manufacturing sites. Some analysts expect a cull of 2,000-3,000 jobs, although sources previously suggested that the number could hit 6,000.
Insight looks to outbid Dell for Quest with $2.2B offer. Insight has increased its offer for Quest Software (QSFT) to $25.75 a share from $23 prior, and above a $25.50 bid that reportedly came from Dell (DELL). Quest has accepted Insight's proposal, which values it at $2.17B, with Vector Capital joining the buyout group.
News Corp. bids $2B for Aussie TV company. News Corp. (NWS) has offered $2B to acquire Consolidated Media Holdings in a deal that would boost the company's stake in Australia's dominant pay-TV business Foxtel to 50%, and give it 100% of Fox Sports. James Packer, who owns 50.1% in CMH, has indicated he will accept the offer unless a higher bid is made. Packer is the son of Rupert Murdoch's great rival Kerry.
Apple and Google to return to court over Motorola. Apple (AAPL) will today try to salvage its high-profile case against Google's (GOOG) Motorola Mobility unit, arguing before a federal judge why it should be able to seek an order barring the sale of some Motorola phones. The judge's decision could affect Apple's ability to negotiate favorable licensing agreements in its legal fights against Motorola and other competitors.
Top Economic & Other News
To ease or not to ease - BOE split down the middle. The Bank of England's monetary policy committee voted 5-4 earlier this month against increasing the bank's bond-buying program, the minutes show, with Governor Mervyn King on the losing side. Most MPC members believe further stimulus will be needed in the future to meet the bank's 2% inflation target even though CPI has consistently overshot that goal.
Japan records first ever deficit with the EU. Japan's trade deficit widened to ¥907.3B ($11.47B) in May from ¥520.3B in April and came in well above consensus. Exports rose 10% on year and imports 9.3%. Most notable was Japan's ¥11.1B deficit with the EU, the first since records began in 1979, highlighting the global impact of the recession in the region. Shipments to the bloc fell 0.9% but jumped 38% to the U.S.
Zip Codes highlight bumpy housing recovery. An analysis by Zillow of house prices using Zip Code data underscores the uneven nature of the recovery in the sector, even in neighborhoods that are close by to each other. Overall, almost 94% of Phoenix and 90% of Denver ZIP Codes enjoyed an increase in values in the 3 months to April, but in Washington, 40% of areas saw prices decline.
In Asia, Japan +1.1%. Hong Kong +0.5%. China -0.3%. India +0.2%.
In Europe, at midday, London +0.5%. Paris -0.1%. Frankfurt +0.2%.
Futures at 7:00: Dow flat. S&P +0.1%. Nasdaq +0.2%. Crude flat at to $84.02. Gold -0.6% to $1613.
Today's economic calendar:
7:00 MBA Mortgage Applications
10:00 Mass Layoffs
10:30 EIA Petroleum Inventories
12:30 PM FOMC Announcement
2:00 PM FOMC Forecast
2:15 PM Bernanke Press Conference
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