U.S. makes $12.4B profit on AIG bailout. The government and the Fed have made a minimum profit of $12.4B on the $182.3B bailout of AIG (NYSE:AIG) after the Treasury raised $18B by selling 554M shares at $32.50 each, with the insurer purchasing about $5B. As the government still owns a 21.5% stake in AIG, it should make even more of a return. However, Neil Barofsky, the former special inspector general for TARP, hotly disputes the Treasury's accounting.
Deutsche Bank looks to save €4.5B a year by 2015. Deutsche Bank's (NYSE:DB) co-CEOs have unveiled their plans to deliver return to shareholders in a lousy macro environment for investment banking, promising €4.5B in annual savings by 2015 - greater than the €3B floated two months ago. No report is made on whether the two will take down bank leverage. It's TBTF on steroids in Germany, where DB's assets exceed Tier 1 capital by more than 40X. Shares were +2.6% premarket.
German court to rule on ESM as scheduled. Germany's Constitutional Court will provide a verdict tomorrow morning on the legality of the eurozone's ESM rescue fund and the fiscal compact, as scheduled. The court had received a request to delay the ruling from euroskeptic legislator Peter Gauweiler, who said the ESM should only be implemented after the ECB has rowed back from its bond-buying plan.
Top Stock News
Morgan Stanley gains victory over brokerage valuation. Morgan Stanley (NYSE:MS) has scored a victory after consultant Perella Weinberg valued Morgan Stanley Smith Barney at below $15B, reports the NYPost. Morgan Stanley owns 51% of Smith Barney and Citigroup (NYSE:C) the rest, with Morgan Stanley exercising its right to acquire an additional 14%. A figure of $15.5B would have marked the midpoint between the banks' valuations.
Companies raise $19B in debt in one day. Walgreen (NYSE:WAG), Merck (NYSE:MRK) and Oneok (NYSE:OKE) led 14 companies in selling nearly $19B worth of debt yesterday, making it the biggest day for investment-grade bond issuance since September 8, 2010, and the third busiest on record. With last week's market-moving turbulence behind them and more possibly in store later this week, companies took advantage of the peace and quiet, and low rates, to borrow in a big way.
Qatar Holdings keeps Glencore guessing on Xstrata. Qatar Holdings today said it has yet to decide on whether it will support Glencore's (OTCPK:GLCNF) $36B offer for Xstrata (OTC:XSRAY) despite an apparent rapprochement last week in which Glencore increased its offer. Reuters reports that Qatar, a key Xstrata shareholder, doesn't feel the need to immediately decide and could wait for a statement from the company's board on September 24.
Philips deepens cost and job cuts. Philips Electronics (NYSE:PHG) has increased its cost-savings goal to €1.1B from €800M as it looks to address inefficiency at its healthcare and lighting divisions. The conglomerate will also slash another 2,200 jobs on top of the 4,500 cuts it announced last year. Philips disclosed the action ahead of an investor day today.
Pentagon frustration at F-35 delays grows. The Pentagon has refrained from authorizing a plan for operational testing of Lockheed Martin's (NYSE:LMT) F-35 Joint Strike Fighter program, Reuters reports, with officials expressing frustration at the pace of development in a "very painful" review on Friday. Of particular concern are the problems afflicting the F-35 helmet, which is being developed by Rockwell Collins (NYSE:COL) and Israel's Elbit Imaging (NASDAQ:EMITF).
Barclays could take axe to tax unit. Barclays (NYSE:BCS) could significantly shrink its controversial tax structuring unit, which at its peak earned up to 75% of the profits at the company's investment banking operations, as the firm looks to restore its reputation. However, new CEO Antony Jenkins last night reaffirmed Barclays' commitment to the investment-bank arm despite speculation to the contrary.
Zynga executive losses border on the surreal. Less than 24 hours after news broke that its infrastructure CTO had left, Zynga (NASDAQ:ZNGA) yesterday announced that chief marketing and revenue officer Jeff Karp has become the latest in a long line of executives to leave. While Zynga's cratering stock price has much to do with the defections, the scope of the departures can't reflect well on the company's culture or CEO Mark Pincus, with both having been frequently criticized.
Moody's stays negative on British banks. Moody's has kept its negative outlook on U.K. banks, due to the travails of the British and eurozone economies. The agency said the likes of RBS (NYSE:RBS), Lloyds (NYSE:LYG) and Barclays (BCS) could also be hit by high regulatory costs following various scandals and write-downs on their exposure to foreign real estate.
Will Zuckerberg address botched IPO at TechCrunch? Mark Zuckerberg is due to speak at a TechCrunch conference in San Francisco today in a rare public appearance since Facebook's (NASDAQ:FB) bungled IPO in May, following which shares have plummeted and communication has been scarce. Issues of interest to investors include heavy insider selling and how Facebook can better monetize its user base, especially in mobile.
Ancestry.com continues sale talks. Ancestry.com (NASDAQ:ACOM) is still talking with three P-E firms about a buyout, Reuters reports, but bidders continue to balk at the company's demand for an acquisition price above $35 a share ($1.5B). Ancestry, which closed yesterday at $30.98, is expected to make a decision by the end of the month.
Spectra, BG Group to build $8.2B gas pipeline. Spectra Energy (NYSE:SE) is teaming up with BG Group (OTCPK:BRGXF) to build a new 525-mile natural gas pipeline in British Columbia to take as much as 4.2B cubic feet a day from the north east of the province to a proposed LNG-export facility in Prince Rupert. SE does not yet have a firm capital budget for the project, but it could cost as much as $8.2B.
Digital Domain files for Chapter 11. Digital Domain (DDMG) has filed for bankruptcy protection after last week defaulting on debt repayments of $35M in senior notes, and following the resignation of Chairman and CEO John Textor. The company, whose founders include James Cameron and which produced the special effects for "Titanic," has total debt of $214.M and assets of $205M.
Top Economic & Other News
Trade deficit seen widening. U.S. trade data for July is due out this morning, with economists estimating that the deficit widened to $44B from $42.9B in June in what would be the first increase since March. While rising oil prices may have caused imports to grow, weakening economies in Europe and China, as well as other emerging markets, may have sapped U.S. exports.
U.K. banking group expressed Libor fears in 2008. The then CEO of the British Bankers' Association, Angela Knight, told Bank of England officials as early as April 2008 that Libor had become too large for her organization to manage, the WSJ reports. However, Knight's concerns led nowhere, with regulators resisting increased oversight and BBA member banks wanting to retain control.
In Asia, Japan -0.7%. Hong Kong +0.1%. China -0.7%. India +0.5%.
In Europe, at midday, London -0.4%. Paris -0.5%. Frankfurt -0.1%.
Futures at 7:00: Dow +0.2%. S&P +0.2%. Nasdaq +0.1%. Crude +0.1% to $96.60. Gold +0.1% to $1732.90.
Today's economic calendar:
7:30 NFIB Small Business Optimism Index
7:45 ICSC Retail Store Sales
8:30 Trade Balance
8:55 Redbook Chain Store Sales
10:00 Consumer Confidence
1:00 PM Results of $32B, 3-Year Note Auction
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