"Fortress" IBM beats profit forecasts again. IBM's (IBM) Q2 net profit rose 6% to $3.9B as EPS of $3.51 beat expectations despite revenue slipping 3% to $25.78B and missing consensus. Revenues were hit by economic problems in some markets, reduced hardware sales and the effect the strengthening dollar. IBM also raised its 2012 EPS guidance from $15 to $15.10, above Street forecasts as well. "Fortress IBM" is how a Sanford C Bernstein analyst describes the IT powerhouse. Shares rose 2.6% in after-hours trading.
Nokia jumps despite massive loss. Nokia's (NOK) shares jumped 8.7% premarket after the company said it sold a better-than-expected 4M Lumia phones in Q2. However, Nokia's net loss widened to €1.41B from €369M a year ago and revenue plunged 24% to €14.8B, although it did rise on quarter. "We believe the Windows Phone 8 launch will be an important catalyst for Lumia," said CEO Stephen Elop.
Corn surges to record. Corn and soybean prices reached record highs earlier today as the worst drought since 1956 shows no signs of abating, with corn futures hitting $8.055 a bushel and benchmark soybeans $17.115. The forecast is for even higher temperatures in the central and western Midwest from early next week. "If I had a rain prayer or a rain dance I could do, I would do it," says Agriculture Secretary Tom Vilsack.
Top Stock News
Libor probe focuses on links between banks. Regulators are focusing on HSBC (HBC), Deutsche Bank (DB), Societe Generale (SCGLY.PK) and Credit Agricole (CRARY.PK) in their Libor investigation, the FT reports. Investigators are checking the links between traders at those four banks and one at Barclays who apparently orchestrated the manipulation effort.
GM to sell assets in pension plan for $1.5B-$2B. GM (GM) has reached a deal to sell the illiquid private-equity assets in its underfunded pension plan to the Chinese government for $1.5B-$2B, the FT reports. GE's pension plan has $109B in assets and $134B in obligations, making its funding liability one of the largest risks to the company.
Co-op to buy Lloyds branches for £750M. The Co-operative Group has provisionally agreed to acquire 632 of Lloyds' (LYG) branches for £750M, even less than the already-reduced whisper number; Lloyds needs to sell the branches to meet EU state aid rules. Co-op will pay £350M upfront, and additional "earn-out" sums from completion until 2027, subject to performance.
United Tech closing in on Rocketdyne sale. United Technologies (UTX) is in final discussions to sell its Rocketdyne business to Gencorp (GY), Reuters reports, as United Tech works to divest non-core units so it can close its $16.5B Goodrich acquisition. A deal for Rocketdyne, which makes rocket engines and could bring in $400M+, could be finalized this week or early next.
Google, Microsoft results could be a study in contrasts. Google (GOOG) and Microsoft (MSFT) are due to report earnings after the bell that could contrast how Google is still very much a growth story while Microsoft appears to be treading water. Google's Q2 EPS is expected to have risen to $10.04 from $8.74 a year earlier and revenue 21.6% to $8.41B. Microsoft's FQ4 EPS is estimated to have fallen to $0.62 from $0.69 despite its revenue growing 4.4% to $18.13B.
Top Economic & Other News
U.S. faces "postal cliff" on August 1. While many are counting on Congress to avert the "fiscal cliff" in January, it also needs to get its act together by August 1 to avoid a "postal cliff." That's when the Postal Service is due to pay $5.5B into a health-benefits fund for future retirees. Without Congressional action, the service will default for the first time ever.
Beige Book paints "modest to moderate" picture. The Fed's Beige Book reported "modest to moderate" expansion, a change from the last report, which just used the label "moderate." New York, Philadelphia and Cleveland saw weaker activity. All District housing markets were largely positive, rental markets continued to strengthen, and retails sales increased slightly in most areas. The Book doesn't sound like the sort of report suggesting the need for further monetary easing.
In Asia, Japan +0.8%. Hong Kong +1.7%. China +0.7%. India +0.6%.
In Europe, at midday, London +0.3%. Paris +0.6%. Frankfurt +1.1%.
Futures at 7:00: Dow +0.5%. S&P +0.4%. Nasdaq +0.6%. Crude +1.2% to $90.96. Gold +1% to $1586.30.
Today's economic calendar:
8:30 Initial Jobless Claims
9:45 Bloomberg Consumer Comfort Index
10:00 Existing Home Sales
10:00 Philly Fed Business Outlook
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
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