BP nears oil-spill settlement with DOJ. BP (BP) and the Justice Department are close to a deal to resolve the company's civil and criminal liabilities arising from 2010's Deepwater Horizon spill, the WSJ reports. However, the sides are still about $6B apart on a final figure, with BP concerned that an amount that's too big could imply negligence, thus encouraging plaintiffs with pending lawsuits to seek higher damages.
S&P downgrades Spain to just above junk status. S&P yesterday cut its credit rating on Spain to BBB- from BBB+, just one notch above junk status, and maintained its negative outlook on the country. "The deepening economic recession is limiting the Spanish government's policy options," S&P explained. The move initially caused Spanish shares to drop sharply and yields on the country's 10-year bonds to spike, but markets have since calmed down.
Sprint surges on Softbank acquisition report. Sprint (S) soared 23% premarket following a report that Japan's Softbank is mulling taking more than a two-thirds stake in the company for about $13B. Softbank said it is "checking the facts of the Nikkei report."
Top Stock News
Citigroup confident on American shares. Citigroup has upgraded U.S. equities to "Overweight," citing "the combination of strong EPS momentum and a very aggressive central bank." The S&P 500 will score a 12% gain by the year-end, predicts Tobias Levkovich. The bank also downgraded Japan to "Underweight," due to a disappointing bounce in profits.
Alaska Air poised for major Boeing 737 order. Alaska Air (ALK) is ordering 50 Boeing (BA) 737 jets, the WSJ reports, with the airline set to announce the deal today. The booking is expected to include the current generation of 737 planes and the new 737 Max-8 and Max-9 aircraft. There's no word on price, but the deal is likely to be worth billions of dollars.
Emails show cozy relations between P-E firms. "We would much rather work with you guys than against you," Blackstone (BX) President Tony James wrote to KKR co-founder George Roberts in an email. "Together we can be unstoppable but in opposition we can cost each other a lot of money," James wrote. "Agreed," replied Roberts. The exchange and other emails are evidence in a lawsuit against 10 firms alleging that they conspired to keep the cost of buyouts down.
St. Jude knew about defibrillator problems for years. St. Jude Medical (STJ) only sent a warning to doctors in December 2010 about insulation problems with the wires used with its Riata defibrillators, at least five years after the company first encountered the flaws and two years after an internal audit had specifically identified the issue, the WSJ reports. Riata was withdrawn in 2011.
RBS raises £787M in Direct Line IPO. RBS (RBS) has raised £787M in an IPO of its Direct Line Insurance unit after selling 450M shares, or 30%, at 175 pence each. The price is below the midpoint of a range of 160-195 pence and gives Direct Line a market cap of £2.63B, far less than the £3.4B valuation put on the unit last month by Commerzbank, one of the IPO's managers.
Global PC shipments plummet as Lenovo takes top spot. PC shipments fell a stunning 8.3% on year in Q3 vs. just -0.1% in Q2, Gartner estimates, as weak back-to-school sales and cautious retailer orders added to the damage wreaked by tablet sales. Gartner also says that Lenovo (OTCPK:LNVGY) has passed H-P (HPQ) to become the world's top PC OEM, although IDC believes that the latter remains on top for now. The research firm estimates that industry shipments fell 8.6%.
McGraw-Hill attracts strong interest for $3B education unit. McGraw-Hill's (MHP) education unit is expected to draw final bids later this month from P-E firms Bain Capital and Apollo Global (APO), as well as rival college textbook publisher Cengage Learning, in a deal that could fetch $3B, Reuters reports. McGraw-Hill wants to get more than $3B and could still decide against a sale if the bids fail to meet its expectations.
ING confirms sale of Malaysian ops to AIA for €1.3B. ING's (ING) divestment of global assets to meet EU directives continued apace today as the Dutch bank confirmed that it's selling its Malaysian life-insurance operations to Hong Kong's AIA Group (OTC:AAIGY), with the deal worth €1.3B and providing ING a net gain of €780M. ING is now continuing the process of selling other Asian insurance and investment management businesses.
Moynihan warns on BofA job cuts. Expect continued substantial headcount reductions at Bank of America (BAC), CEO Brian Moynihan has reiterated to Bloomberg, saying, "It's really based on demand." Noting the bank's flat revenues amidst the flat yield curve and flat economy, he said, "When I talk to our clients...they don't expect to hire a lot more people."
GM unveils big plans for Chevrolet. General Motors (GM) plans to introduce 13 new models for its Chevrolet brand in 2013, including refreshed versions of the Silverado pickup, Tahoe SUV and Spark electric vehicle. The company said more younger buyers are considering buying Chevrolet vehicles after being off the radar for years.
AMR asks to borrow $1.5B. American Airlines parent company AMR (AAMRQ.PK) has asked a bankruptcy court to borrow up to $1.5B in order to refinance current debt. The carrier said it will secure the loans with its fleet of aircraft.
Kodak forges agreement with retirees. Eastman Kodak (EKDKQ.PK) has reached a deal to resolve the bankrupt company's retiree health care and survivor benefits liabilities, which exceed $1.2B and cost the firm $10M a month. Kodak will provide the retirees committee with a $7.5M cash payment, a $635M unsecured claim, and a $15M administrative claim to make payments to the former employees. The deal has the support of Kodak's creditors committee.
Oil companies seek to void rule on government payments. The oil industry has filed a lawsuit to overturn an SEC rule forcing companies to disclose payments to foreign governments, arguing that the information hurts their competitiveness, the WSJ reports. The companies say the SEC went beyond its authority and what was necessary to support transparency when it adopted the rule, ignoring their suggestions for limiting its cost.
Top Economic & Other News
Japan wants talks with China over islands dispute. Japanese PM Yoshihiko Noda has called for talks to limit the economic fallout from his country's dispute with China over islands in the East China Sea, although he reiterated that the territories belong to Japan. While Japanese car sales have suffered, the nation is also China's second-largest provider of foreign direct investment. At stake in the row are fishing rights and access to up to 160B barrels of oil.
Lagarde says Greece should get two more years. IMF Managing Director Christine Lagarde has backed Greece's request for two more years to meet its fiscal targets. "This is what we advocated for Portugal...for Spain, and it's what we're advocating for Greece," Lagarde said at the fund's annual meeting. The IMF also reportedly wants Greek debt held by eurozone governments to be written down.
In Asia, Japan -0.6%. Hong Kong +0.4%. China -0.8%. India +0.9%.
In Europe, at midday, London +0.6%. Paris +0.6%. Frankfurt +0.8%.
Futures at 7:00: Dow +0.3%. S&P +0.4%. Nasdaq +0.5%. Crude +0.9% to $92.10. Gold +0.4% to $1772.90.
Today's economic calendar:
8:30 Trade Balance
8:30 Initial Jobless Claims
8:30 Import/Export Prices
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
12:30 PM Fed's Plosser: Economic Outlook
1:00 PM Results of $13B, 30-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
Notable earnings after today's close: JBHT
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