Investors give thumbs down to $48B BAE-EADS merger. BAE Systems (OTCPK:BAESF) dropped 6.2% and EADS (OTCPK:EADSF) 8.65% in European trading following news yesterday that they're in advanced talks to merge in a deal that would create a company worth $48B and supersede Boeing (NYSE:BA) as the world's largest aerospace and defense firm. Reuters reports that the U.S. is unlikely to block the deal, although the FT reckons it could face much regulatory aggravation.
Not everyone gasping for the Fed's liquidity rush. After a failed QE1, then a failed QE2, legendary investor Jim Rogers isn't sure why the Fed wants to announce a QE3 after the FOMC's policy meeting today. "They'll look like fools," he exclaims. Add into the mix that Europe is also bent on initiating its own version of QE, the Western world has just guaranteed itself "unanimity towards mutual destruction," Rogers says. "We're all going to pay a horrible price for this in a year or two or three."
Top Stock News
iPhone to go on pre-order sale tomorrow. Apple (NASDAQ:AAPL) will start taking pre-orders for the iPhone 5 tomorrow after introducing the smartphone yesterday at a launch that contained few surprises and even lacked the "wow" factor. Still, analysts reckon 10M-12M will be snapped up this month alone. The device will ship a week from tomorrow in the U.S., U.K. and several other countries, and hit 100 nations by the year-end, the fastest roll-out for an iPhone so far.
Ford, GM mull European factory closures. As it looks to return to profitability in Europe, Ford (NYSE:F) is preparing to restructure its operations in the region and close a factory, possibly a 4,000-staff facility in Genk in Belgium, the WSJ reported yesterday. Meanwhile, GM (NYSE:GM) is in talks with labor unions about shutting an aging plant in Bochum in Germany as it also struggles to turn around major losses.
StanChart nears U.S. settlement over Iran. Treasury Department lawyers have recommended a preliminary settlement between federal and state prosecutors and Standard Chartered (OTCPK:SCBFF) over its dealings with Iran, the NYT reports. However, the fine the bank will face is far less than the $340M it has agreed to pay New York's Department of Financial Services.
Freddie Mac to recover up to $3.4B more over bad loans. Freddie Mac (OTCQB:FMCC) will get back an additional $2.2B-$3.4B from banks over soured mortgages after scrutinizing the way it had originally assessed loans that were candidates for repurchase requests. Freddie had reached a $1.35B settlement with Bank of America (NYSE:BAC) in January 2011 over the issue, but undertook the review at the behest of the FHFA inspector general, who found Freddie's original methodology lacking.
JPM continues to reshuffle. JPMorgan (NYSE:JPM) is reorganizing its corporate and investment banking division for the second time in three months. The unit will now be divided between banking and market, and investor services, an internal memo says. The restructure is the latest in a series of changes following JPM's massive London whaling loss.
FDA OKs second multiple sclerosis pill. Sanofi (NYSE:SNY) has won FDA approval for its Aubagio pill for multiple sclerosis, making it the second such oral therapy that will be available in the U.S. The drug will compete with Novartis' (NYSE:NVS) Gilenya, which was authorized in 2010.
Corzine meets the DOJ. Jon Corzine met Justice Department investigators last week over the $1.6B in client cash that went missing when MF Global (OTC:MFGLQ) collapsed, the WSJ reports. Assistant treasurer Edith O'Brien is still refusing to talk until she gets immunity from prosecution.
Top Economic & Other News
Pro-euro parties sweep Dutch election. Holland's pro-European parties won the majority of the seats in the country's election yesterday, with the right-of-center Liberals retaining power after edging out the left-wing Labour party by 41-39 seats in the 150-member lower house of parliament. The result has sidelined the anti-austerity and anti-bailout groups, thereby reducing their ability to cause mischief.
China tries to dampen stimulus expectations. While markets yearn for China to throw huge amounts of cash at its slowing economy, the state-backed Xinhua news agency has published an editorial warning that such spending could be "detrimental" given the large local-government debt and the bad loans that are still left over from the country's previous stimulus in 2008.
Draghi's planned bond-buying scheme has desired effect, so far. Yields dropped at an Italian auction of €6.5B of government paper today, including €4B of 3-year debt which carried a rate of 2.75%. That's down from 4.65% in July and the lowest since October 2010. The falling yields were attributed to the ECB's planned bond-buying scheme, but it's early days yet to see how long Italian yields will stay low, not to mention those of Spain.
In Asia, Japan +0.4%. Hong Kong -0.1%. China -0.8%. India +0.1%.
In Europe, at midday, London flat. Paris -0.7%. Frankfurt -0.3%.
Futures at 7:00: Dow -0.15%. S&P -0.2%. Nasdaq -0.3%. Crude +0.2% to $97.17. Gold flat at $1733.20.
Today's economic calendar:
8:30 Jobless Claims
8:30 Producer Price Index
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
11:30 Results of $13B, 30-Year Note Auction
12:30 PM FOMC Announcement
1:45 PM Sarah Raskin:'Exploring the Link Between Civic Engagement and Employment'
2:00 PM FOMC Forecast
2:00 PM Treasury Budget
2:15 PM Bernanke Press Conference
4:30 PM Fed Balance Sheet
4:30 PM Money Supply
Notable earnings before today's open: PIR
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