JPM whaling loss could jump to $9B. JPMorgan's (JPM) trading loss could reach $9B, the NYT reports, with red ink piling up as JPM moves faster than expected to exit its money-losing positions. Jamie Dimon was way off when he warned in May that the initial $2B loss could double in the coming quarters. JPM will disclose more details in its July 13 earnings report. Shares were -5.4% premarket.
Barclays Libor deal could lead to massive lawsuits. Barclays was -8.6% premarket as the fallout from its $452M settlement over Libor fixing only just begins. The deal gives immediate credibility to lawsuits worldwide against banks for buying financial instruments based on a manipulated rate. The sums are potentially huge as Libor is used to price pretty much everything rate-related. Meanwhile, U.K. politicians have called for CEO Bob Diamond to go.
Germany isolated ahead of EU summit. Spanish 10-year bond yields have touched 7% ahead of another major EU summit today in which nothing much is expected to be achieved. It's basically Germany vs. almost everybody else over Angela Merkel's refusal to countenance debt sharing or other options, with even Austria saying the ESM rescue fund should be allowed to borrow from the ECB. "Nein! No! Non!" screams the Handelsblatt business daily.
Top Stock News
Glencore mulls abandoning $58B Xstrata merger, for now Glencore (OTCPK:GLCNF) is ready to walk away from its $58B mega-merger with Xstrata (OTC:XSRAY) if the Qatari sovereign wealth fund doesn't drop its demand for a 16% increase in the deal's premium, the FT reports. With the SWF not backing down, Glencore believes that the higher premium overvalues Xstrata and that it could return with a fresh bid later.
News Corp. set to announce split. News Corp.'s (NWS) board has approved a plan to split the company in two, the WSJ reports, separating the entertainment operations from the publishing business. The news is expected to be formally announced today.
AMR labor contract to go for union vote. The board of AMR's (AAMRQ.PK) pilots union has approved by 9-7 to put the bankrupt carrier's final concessionary contract offer to a membership vote. The move brings to a halt a court case over whether to let the airline abrogate the current contract so it can impose terms on its pilots.
Vodafone pinches T-Mobile exec in EU revamp. Vodafone (VOD) has reorganized its European ops into two groups, Northern & Central Europe and Southern Europe. The company has appointed Philipp Humm as CEO of the northern division following his defection from T-Mobile USA and Paolo Bertoluzzo as head of the southern ops. Bertoluzzo will also stay as CEO of Vodafone Italy.
RIM earnings: "Terrible With a Scoop of Worse". Expect more woe when RIM (RIMM) releases its FQ1 report later, with the BlackBerry maker expected to swing to a net loss per share of $0.03 from a profit of $1.33, and revenue to plunge to $3.1B from $4.9B. RIM yesterday received more harsh commentary from analysts, with Wedge Partners skeptical that the company will find a buyer anytime soon and saying that the BB10 OS has no chance.
Keystone to be absent from transport funding bill. "Keystone is out," a top Democrat Senate aide has said as a proposal forcing quick approval of the TransCanada's (TRP) oil pipeline will not be part of a massive transportation funding bill that Congress is trying to pass by the end of the week. Language barring EPA regulation of coal-ash waste also appears to have been dropped from the bill.
Veolia progresses in debt-cutting plan with £1.24B sale. Veolia Environnement (VE) has agreed to sell 90% of its regulated water unit in the U.K. for £1.24B ($1.92B) to Rift Acquisitions, a joint venture between Prudential (PUK) and Morgan Stanley (MS). The sale is part of Veolia's strategy to quit half the 70 countries it operates in and sell assets worth €5B by 2013 as it seeks to cut its debt to below €12B.
The difficulties in seeking alpha. Seeking alpha is getting harder and harder as correlations near 1 (or -1). Graphs posted on twitter provide a little "overnight symmetry": S&P futures vs. 10-year Treasury futures.
Top Economic & Other News
Supreme Court set to rule on Obamacare. Having not done so on Monday, the Supreme Court is expected to today rule on the constitutionality of the Patient Protection & Affordable Care Act. "This is the biggest policy uncertainty in the S&P," says Deutsche Bank's David Bianco. "I just don’t know what’s going to happen." You can follow the court's live blog here, with a verdict possible at 10 am ET.
German unemployment creeps up. Germany's unemployment rate in June was unchanged at 6.8%, although the number of people without work crept up by 7,000 and now stands at 2.88M. "Signs are increasing that the resilience of the German labor market is slowly cracking up," says ING economist Carsten Brzeski.
Japan's retail sales continue to slow. Japanese retail sales rose 3.6% on year in May, which was below the 5.8% increase in April and further extended the slowing growth trend the sector has been mired in.
In Asia, Japan +1.6%. Hong Kong -0.8%. China -0.9%. India +0.1% to 16991.
In Europe, at midday, London -1.0%. Paris -0.5%. Frankfurt -1.6%.
Futures at 7:00: Dow -0.5%. S&P -0.45%. Nasdaq -0.4%. Crude -0.2% to $80.06. Gold -0.6% to $1569.00.
Today's economic calendar:
8:30 Initial Jobless Claims
8:30 GDP Q1
8:30 Corporate Profits
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
1:00 PM Results of $29B, 7-Year Note Auction
3:00 PM USDA Ag. Prices
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
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