• Sprint dashes into Ericsson deal. After watching its subscriber base slip, Sprint Nextel (S) signed a seven-year, $5B deal with Ericsson (ERIC) in which Sprint will turn over day-to-day operations of its network to Ericsson in order to focus on developing new products and improving customer retention. Sprint will move about 6,000 workers to Ericsson sometime in Q3.
• China continues push against dollar. China launched its highest-profile criticism of the dollar, raising the issue in talks with G-8 leaders. Without directly naming the dollar, Chinese state councillor Dai Bingguo unequivocally called for the world to diversify its reserve system and to aim for relatively stable exchange rates between leading currencies. The remarks caused concern among many of the G-8 leaders present, who fear that even discussion of the issue could destabilize markets and undercut an economic recovery.
• Treasury sets warrant prices too high... too low. The Treasury let 11 smaller banks repurchase stock warrants from the government at just 66% of their market value, essentially giving away $10M of taxpayer profits, said a government watchdog. If the Treasury accepts similar warrant valuations from other bailed out banks, the government could lose as much as $2.1B. Meanwhile, JPMorgan Chase (JPM) and several other large banks are complaining that the Treasury is demanding too high a price on the warrants and has rejected most valuation proposals from banks. JPMorgan has therefore waived its right to buy the warrants, which will now be auctioned by the Treasury into the public market.
• From Old GM to New GM in 40 days. General Motors is on track to exit bankruptcy protection today, after a speedy 40 days in bankruptcy court. Taxpayers will own 60.8% of the 'new GM,' worth between $63B and $73B. GM will hold a press conference at 9am to discuss its plans going forward.
• Geithner: Time to curb derivatives. Testifying in Congress later today, Geithner will urge lawmakers to rein in the $592T derivatives market with new 'difficult to evade' laws. According to his prepared testimony, the complexity of over-the-counter derivatives allowed firms to take on too much risk, causing a 'very damaging wave of deleveraging' that compounded the global credit crisis. Geithner wants to see standardized contracts move onto exchanges and regulate all derivatives dealers. (Watch Geithner testify at 10:00am)
• UBS defiant ahead of court date. Continuing the recent escalation between the U.S. government, Swiss officials and UBS (UBS), UBS CEO Oswald Grubel sent a memo to top executives saying the bank could not and would not follow a U.S. request to disclose the names of 52,000 account holders. Doing so "would require UBS to violate Swiss criminal law, and we simply cannot comply." UBS will face federal prosecutors in court on Monday.
• FDIC withholds CIT debt guarantees. The FDIC is reportedly unwilling to guarantee CIT Group's (CIT) bond sales because the lender's credit quality is worsening and an FDIC guarantee would put taxpayer money at risk. Sources said the FDIC is in talks with CIT about how to strengthen the lender's financial position in order to get approval, as its efforts to improve credit quality thus far, including by transferring assets to its bank, have seemingly been deemed insufficient.
• Obama pushes for more mortgage mods. The Obama administration is pressing mortgage-servicing companies to increase their efforts at modifying more troubled loans, expressing frustration at the pace of mortgage mods thus far. Geithner sent a letter to 25 mortgage-servicing firms yesterday urging them "to devote substantially more resources to this program for it to fully succeed and achieve the objectives we all share."
• Citi plays management musical chairs. Citigroup shook up its management team yesterday, with a reshuffling that included replacing finance chief Ned Kelly after less than four months on the job and announcing the departure of Gary Crittenden, chairman of Citi Holding. The surprise move came a week before Q2 results, and amid reports of strong pressure from FDIC's Bair, who has repeatedly said CEO Vikram Pandit and his team don't have enough commercial banking expertise.
• Exxon's nat-gas find looks big. After scouring the globe for natural gas locked inside shale formations, ExxonMobil (XOM) says it may have a world-class find in Canada. Results from the first four wells lead Exxon to believe each well can produce 16-18M cubic feet of gas a day, five times the size of average wells in Texas's Barnett shale and comparable to big wells in Louisiana's Haynesville shale - two major shales that have already moved the U.S. natural-gas market from scarcity to abundance.
• DoJ probes Nuance acquisition. The Justice Department is investigating Nuance Communication's (NUAN) 2008 acquisition of a rival speech recognition software firm from Royal Philips Electronics. Antitrust officials usually examine acquisitions before they are completed but in this case, Nuance wasn't required to report the purchase because Philips had limited sales in the U.S. Justice Department officials declined to comment on the nature of the review, or on whether Nuance might be told to divest the Philips unit.
• British Airways, unions face off over cuts. British Airways (BAIRY.PK) inched closer to its first major strike in over a decade as CEO Willie Walsh continued to press unions representing 22,000 cabin crew and ground staff to accept 4,000 jobs cuts. Walsh says the cuts are necessary to reduce costs and weather the recession, but four weeks of direct negotiations have failed, as have two days of government-funded arbitration.
• NYT may charge for web access. The New York Times (NYT) may start charging a $5 monthly fee for access to its website, and polled print subscribers to see whether they'd be willing to pay a discounted $2.50 per month for online access. The New York Times website, the most visited of the newspapers' sites, is currently free, but Times Co. is looking for additional ways to boost revenue as internet ad spending slows.
• Jobless claims fall. Initial jobless claims came in at 565,000, down 52,000 from a week ago (revised), better than the 603,000 consensus and the lowest since January. Continuing claims rose 159,000 to a record 6.88M. Analysts said the decline resulted partly from technical factors since auto layoffs that normally take place in early July, as factories are retooled to build the next year's models, occurred in the spring when General Motors and Chrysler implemented sweeping restructuring plans.

Earnings: Friday Before Open

• Infosys Technologies (INFY): FQ1 EPS of $0.55 beats by $0.08. Revenue of $1.12B (-2.9%) vs. $1.07B. Sees FQ2 EPS of $0.50-0.51 vs. $0.47, and full-year EPS of $1.97-2.00 vs. $1.92. (PR)

Earnings: Thursday After Close

• Lawson Software (LWSN): FQ4 EPS of $0.10 in-line. Revenue of $186M (-20%) vs. $177M. Sees Q1 EPS of $0.05 vs. $0.08 and Q1 revenue of $160M-165M vs. $165M. (PR)
• Shaw Group (SGR): FQ3 EPS of $0.57 misses by $0.03. Revenue of $1.8B (unchanged) in-line. Sees FY09 EPS of $2.00 vs. $2.22. (PR)

Today's Markets

• Asia markets suffered moderate losses. Europe stocks are lower and U.S. futures are under pressure.
• Asia: Nikkei -0.04% to 9,287. Hang Seng -0.46% to 17,708. Shanghai -0.29% to 3,114. BSE -1.84% to 13,504.
• Europe at midday: London -0.6%. Paris -0.7%. Frankfurt -0.5%.
• Futures: Dow -0.8% to 8070. S&P -0.7% to 872.50. Nasdaq -0.6%.
  30-year Tsy bond +0.62%. 10-year +0.41%. 5-year +0.3%. 2-year +0.06%.
  Crude -1.3% to $59.64. Gold -0.8% to $908.50. Euro -1% vs. dollar. Yen +0.3%. Pound -1%.

Friday's Economic Calendar

• 8:30 International Trade
  8:30 Import/Export Prices
  9:55 University of Michigan Consumer Sentiment
  10:00 Geithner testifies on derivatives regulation
• Notable earnings before Friday's open: PGR

Seeking Alpha editor Eli Hoffmann contributed to this post.

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• PPIP finally launched. The Treasury unveiled its scaled-back Public-Private Investment Program, committing $30B of equity and debt to match $10B from private investors, down from an initial plan of buying up to $1T in toxic assets. As expected, BlackRock (BLK), Angelo Gordon and Invesco were named among the nine fund managers. Pimco, the world's largest bond manager and an early supporter of PPIP, withdrew its application because of 'uncertainties' about the plan's design.
• EMC wins Data Domain battle. NetApp (NTAP) dropped out of the bidding war for Data Domain (DDUP), terminating its merger agreement with the company following EMC's (EMC) improved bid earlier this week. Data Domain subsequently signed a definitive agreement to be acquired by EMC for $33.50/share, and paid NetApp a $57M break-up fee.
• AIG talks to MetLife on Alico sale. AIG (AIG) is in talks to sell key business American Life Insurance Company, or Alico, to rival MetLife (MET). A deal could help AIG raise more than $15B to repay the government, but sources say talks are still preliminary and could fall apart, as they did earlier this year, over a disagreement on price.
• G-8 diverge on future stimulus needs. G-8 leaders said the global economic recovery is still too weak to consider reversing stimulus efforts, but disagreed on when exactly those efforts should end. Obama wants to keep the door open for a second stimulus package, while Germany's Merkel is trying to shift the focus to deficit reduction. G-8 leaders agreed to cut greenhouse gases by 80% by 2050, while China and India led developing nations in pledging to set a 2050 goal by December, after balking at calls to set a 50% target without delay. Draft statements from the summit have not yet made direct reference to the dollar or currency exchange.
• OPEC cuts investment forecast. Projecting a steep fall in demand, OPEC cut its five-year forecast for oil investment by around a third, and expects members to invest $110-120B in exploration and production from 2009-2013 instead of the $165B it initially predicted. The International Energy Agency has warned that such a steep cut in oil-development spending could lead to a supply crunch by 2013, and 'huge investment is needed' to meet strong future demand in Asia.
• IMF brightens outlook. The IMF updated its world economic outlook, forecasting a 1.4% contraction this year vs. a previous estimate of -1.3%, and 2.5% growth in 2010 vs. a previous estimate of 1.9%. Though 'vulnerabilities remain,' overall "financial conditions have improved, as unprecedented policy intervention has reduced the risk of systemic collapse and expectations of economic recovery have risen."
• Alcoa loss narrower than expected. Alcoa (AA) kicked off the earnings season with its third consecutive quarterly loss (see details below), but still managed to beat analysts' expectations thanks to cost cutting. CEO Klaus Kleinfeld said there are 'some pockets of growth' despite a challenging global market and there are signs that weak aluminum demand might be easing. Despite the hopeful outlook, Alcoa still expects a 7% decline in global aluminum demand this year.
• Best Buy ties up with TiVo. Best Buy (BBY) is teaming up with TiVo (TIVO) on a multi-year advertising partnership. Best Buy will heavily promote TiVo products in its 1,100 U.S. stores, while TiVo will develop a version of its digital video recorder that will let Best Buy advertise its products and services to TiVo customers using the set-top box at home. Financial details of the deal haven't been disclosed.
• U.K. wants new risk council. As expected, the U.K.'s Darling proposed tighter regulation for the U.K. banking industry, including the creation of a new council including the Treasury, the Bank of England and financial regulator FSA to deal with risks in the market and at specific firms. Darling said the goal is to "inspire trust on the part of businesses and consumers" and "provide effective mechanisms to deal with failures if they occur."
• Consumer credit declines. Consumer debt fell for the fourth month in a row, declining $3.2B, or an annualized 1.5%. Credit-card debt experienced the biggest drop, falling $2.9B. (Fed's release)

Earnings: Wednesday After Close

• Alcoa (AA): FQ2 EPS of -$0.26 beats by $0.12. Revenue of $4.2B (-41%) vs. $3.9B. (PR)

Today's Markets

Asian stocks were mixed, while European markets and U.S. futures are firmly in positive territory.

• In Asia, Nikkei -1.4% to 9,291. Hang Seng +0.4% to 17,791. Shanghai +1.4% to 3,123. BSE -0.1% to 13,757.
• In Europe at midday, London +0.7%. Paris +0.9%. Frankfurt +1.2%.
• Futures: Dow +0.6%. S&P +0.8%. Nasdaq +0.6%. Crude +1.8% to $61.20. Gold +0.5% to $914.

Thursday's Economic Calendar

• 6:00 Chain Store Sales
  8:00 Fed's Duke speaks at FDIC interagency conference
  8:30 Jobless Claims
  10:00 Wholesale Inventories
  10:30 EIA Natural Gas Inventory
  2:30 PM Fed's Stern speaks on the response to the financial crisis
  4:30 PM Fed Balance Sheet
  4:30 PM Money Supply
• Notable earnings before Thursday's open: COMS
• Notable earnings after Thursday's close: INFY, LWSN, SGR

Seeking Alpha editor Eli Hoffmann contributed to this post.

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• Swiss prepared to protect UBS data. The Swiss government said it would seize UBS (UBS) data to keep information about 52,000 American account holders out of the hands of the U.S. Justice Department. Claiming that any disclosures would force UBS to violate Swiss law, the Swiss government said it "will use its legal authority to ensure that the bank cannot be pressured to transmit the information illegally, including if necessary by issuing an order taking effective control of the data at UBS."
• SEC uncovers new Ponzi scheme. The SEC charged Dallas-based Provident Royalties LLC and its three principals with running a $485M oil-and-gas Ponzi scheme, promising more than 7,700 investors returns of up to 18%. In light of the SEC's lawsuit, a federal judge agreed to freeze Provident's assets and appoint a receiver.
• Rio workers detained in China. Rio Tinto (RTP) said four of its Shanghai-based employees have been detained by Chinese authorities, and at least one is being investigated on suspicions of espionage and stealing state secrets. Rio said it is "not aware of any evidence that would support such an investigation," and found the allegations 'surprising.' The four employees, including the general manager for China operations at Rio Tinto's iron-ore division, have been held since Sunday. Separately, Australian packaging group Amcor (AMCRY.PK) is reportedly nearing an agreement to buy some of Rio's assets in a deal that could be valued at up to $2.4B. RTP -14.3% premarket (7:00 ET).
• NRG snubs Exelon bid. NRG Energy's board unanimously rejected an unsolicited bid from Exelon (EXC), saying the offer is "not in the best interest of NRG stockholders in that it continues to substantially undervalue NRG." Last week, Exelon raised its all-stock offer 12.4%, to $7.73B.
• Boeing buys plant to speed Dreamliner. As rumored last week, Boeing (BA) has agreed to pay $580M for the Vought Aircraft Industries plant that makes sections of the 787 Dreamliner. When Boeing first announced plans for its distributed supply chain, it was praised for moving some of the risk off of its books, but the company now hopes its strategy reversal will give it greater control over the heavily-delayed project. Some analysts are less optimistic; Boeing may be underestimating the time it will take for FAA certification, delaying the plane into 2011.
• SEC eyes Jobs' health disclosures. The SEC is reportedly looking into Apple's (AAPL) disclosures about Steve Jobs' health, trying to determine how Jobs' condition went from 'relatively simple' to 'more complex' in the span of nine days. At question is how much Apple's board knew about Jobs' real condition at the time of his two January announcements, and whether Apple or Jobs misled investors with their disclosures. The SEC and Apple declined to comment.
• Google OS takes aim at MSFT. In a direct challenge to Microsoft (MSFT), Google (GOOG) announced on its blog that it has begun development of an open-source operating system based on Chrome. The software, which will be available in the second half of 2010, will initially target netbooks but the company hopes to scale the software up to regular PCs as well. Meanwhile, Gmail and several other Google products finally dropped their beta label, which could help Google achieve wider corporate adoption.
• AIG loses case with ex-CEO. A jury ruled that AIG's (AIG) case against former CEO Maurice 'Hank' Greenberg was 'weak' and that Greenberg didn't steal billions from a retirement fund. AIG had taken Starr International, a private company run by Greenberg, to court in an attempt to collect $4.3B in damages over millions of shares held and sold by Starr. AIG -4.9% premarket (7:00 ET).
• Antitrust fines for E.ON, GDF Suez. E.ON (EONGY.PK) and GDF Suez were each fined €553M ($768M) for violating EU antitrust rules by colluding on natural gas sales. The gas-transport agreements "deprived customers of more price competition and more choice of supplier in two of the largest gas markets in the EU," said Competition Commissioner Neelie Kroes, so "the commission has no alternative but to impose high fines."
• Tighter rules for U.K. banks. The U.K.'s Darling plans to outline tighter regulation for the British banking industry today, sources said, including a requirement that banks keep instructions on file for how to unwind their own businesses in order to assist regulators in the event of a potential rescue.
• Sony joins netbook crowd. Late to the game, Sony (SNE) said it will enter the netbook market with a new laptop to be launched in August that will sell for around $500. With the exception of Apple (AAPL), nearly every other major PC maker has already rolled out a netbook.
• MBA apps rise. Mortgage applications rose 10.9% last week, MBA reported. The average interest rate on 30-year fixed-rate mortgages was unchanged at 5.34%.
• Retail sales. Chain store sales fell 4.3% in the five weeks of June, Redbook said, worse than the -4.1% expected. According to ICSC, weekly sales were up 0.1% vs. last week.

Earnings: Wednesday Before Open

• Family Dollar Stores (FDO): Q3 EPS of $0.62 beats by $0.03. Revenue of $1.8B (+8.3%) in-line. (PR)
• Pepsi Bottling Group (PBG): Q2 EPS of $0.78 beats by $0.05. Revenue of $3.3B (-7%) vs. $3.4B. (PR)

Earnings: Tuesday After Close

• Ruby Tuesday (RT): FQ4 EPS of $0.28 beats by $0.09. Revenue of $317M (-7%) vs. $304M. Same-store sales decreased 3.2% at company-owned restaurants and 6.9% at franchised stores. Sees FY10 EPS of $0.50-0.65 vs. $0.55. (PR)

Today's Markets

• In Asia, Nikkei -2.35% to 9,421. Hang Seng -0.8% to 17,721. Shanghai -0.3% to 3,081. BSE -2.8% to 13,769.
• In Europe at midday, London -0.05%. Paris -0.6%. Frankfurt -0.2%.
• U.S. futures: Dow flat. S&P flat. Nasdaq +0.1%. Crude -0.7% to $62.47. Gold -0.9% to $920.50.

Wednesday's Economic Calendar

• 7:00 MBA Mortgage Applications
  10:30 EIA Petroleum Status
  12:55 PM Fed's Evans speaks on non-traditional monetary policy
  1:15 PM FDIC's Bair speaks at interagency conference
  3:00 PM Consumer Credit
• Notable earnings before Wednesday's open: FDO, PBG
• Notable earnings after Wednesday's close: AA

Seeking Alpha editor Eli Hoffmann contributed to this post.

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• DoJ probes telecoms. The Justice Department is investigating whether large U.S. telecommunications companies have abused their market power. The probe isn't a formal investigation of any specific company, but firms like AT&T (T) and Verizon (VZ) may have reason to worry nonetheless; the Obama administration is taking a tougher approach to antitrust enforcement, and the probe may focus in part on whether large wireless carriers are hurting competition through exclusivity agreements with handset makers.
• CFTC considers position limits. The Commodity Futures Trading Commission will hold hearings this summer to consider imposing position limits for "all commodities of finite supply," including oil, natural gas and possibly other commodities. The CFTC will also review whether or not swap dealers, index traders and ETF managers should be allowed to bypass those limits through special hedge exemptions. Any limits on energy and other commodities would mark a major change from the CFTC's relatively hands-off approach.
• Goldman's stolen codes. No damages were caused at Goldman Sachs (GS), a source said, after a computer programmer who quit the firm last month was arrested and charged with stealing proprietary trading codes. The programmer, Sergey Aleynikov, was arrested on Friday but the story didn't break right away, nor did the authorities or Goldman move on Aleynikov right away, even though they were aware of the breach weeks ago. Goldman could lose millions of dollars if the software ends up in the wrong hands, a distinct possibility since the codes were transferred to a computer server in Germany where others may have had access to them. Separately, the New York Stock Exchange said there was no connection between the security breach at Goldman and an error that dropped the investment bank from a trading report the exchange issued last week.
• EMC ups its DDUP offer. EMC (EMC) raised its offer for Data Domain (DDUP) by 11% to $2.2B, or $33.50/share, the fourth offer in a bidding war between EMC and NetApp (NTAP). EMC's previous all-cash offer, for $1.9B, was rejected by Data Domain, which cited its binding agreement with NetApp, and the uncertainty of an EMC acquisition. NetApp, whose current offer stands at $30/share in cash and stock, plans to review its options in light of the new bid.
• More chatter about stimulus II. Economists and lawmakers are starting to weigh in on calls for a second stimulus, after Vice President Joe Biden said earlier this week a second stimulus isn't out of the question. Obama adviser Laura Tyson called the $787B package approved in February 'a bit too small' and suggested lawmakers should consider drafting a second stimulus bill, though she stressed that she was speaking for herself and not the White House. However, some economists fear public impatience will "lead to the adoption of policies that will not only fail to reduce unemployment this year, but could stoke inflation in the not-too-distant future."
• California's rating cut, again. California was dealt another blow yesterday as Fitch Ratings further cut the state's rating on its long term bonds to BBB, just two notches above junk status. Fitch kept the debt on watch, suggesting California, which last week began paying some bills with IOU notes (creating the possibility of a secondary market for the notes, and push-back from banks), could see additional downgrades. S&P and Moody's may soon issue downgrades as well, a move that could potentially raise California's borrowing costs at a time when it's already facing a $26.3B budget shortfall.
• Telefonica wins Pre deal. Telefonica's (TEF) O2 and Movistar won exclusive rights to sell Palm's (PALM) Pre smartphone in Britain, Ireland, Germany and Spain. Palm said the Pre will be available in the specified European countries in time for the Christmas shopping season.
• Nokia looks to Android. Nokia (NOK) is reportedly developing a smartphone based on Google's (GOOG) Android operating platform. The decision to use Android's open source software is a reversal of Nokia's previous smartphone strategy, but the company has seen its market share slip over the last two years and is trying to create new growth. A Nokia spokesman disputed the report, but insiders say the new touchscreen phone will be unveiled in September.
• ISM service index inches up. The ISM Non-Manufacturing Survey rose 3% in June to 47% vs. consensus of 46%. The index remained below 50%, indicating contraction, but respondents said they're seeing signs of stabilization.

Today's Markets

Asia closed mostly down, but Europe gets off to a strong start and U.S. futures inch into positive territory.

• In Asia, Nikkei -0.3% to 9,648. Hang Seng -0.65% to 17,862. Shanghai -1.1% to 3,089. BSE +0.9% to 14,170.
• In Europe at midday, London +0.8%. Paris +0.7%. Frankfurt +1%.
• U.S. futures: Dow +0.1%. S&P +0.2%. Nasdaq +0.4%. Crude +1.1% to $64.74. Gold +0.2% to $926.50.

Tuesday's Economic Calendar

• 7:45 ICSC Retail Store Sales
  8:55 Redbook
  5:00 PM ABC Consumer Confidence Index
• Notable earnings after Tuesday's close: RT

Seeking Alpha editor Eli Hoffmann contributed to this post.

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• Rio continues divestment. Rio Tinto (RTP) sold part of its Alcan packaging unit to Bemis (BMS) for $1.2B. The deal significantly boosts Bemis' role in many foods and beverages purchased in U.S. supermarkets, and helps Rio further cut its debt load.
• GM sale approved. General Motors won approval to sell most of its assets to a new government-run company, with the bankruptcy judge saying the proposed sale was the only option available. A group including bondholders and unions had objected, claiming the 'new GM' is just the 'old GM' without the liabilities. The government will get 60% of new GM in return for $50B in bailout loans. Separately, GM said Beijing Automotive Industry Holding submitted a bid for Opel. The non-binding proposal presents a back-up option for GM if talks with Magna International (MGA) fall apart.
• Paris Re bought by Partner. Reinsurer PartnerRe (PRE) will buy Paris Re Holdings in a multi-step stock transaction valued at around $2B. The combined company will have about $5.5B of common shareholder equity capital, bumping it to the 'top end of midsized reinsurers,' said PartnerRe CEO Albert Benchimol.
• China: Time to replace dollar. Chinese officials said this morning that the economic crisis has shown the weaknesses of a dollar-led global economy and that the world should look to displace the dollar, even though that may be a slow process. China may push for the IMF's Special Drawing Right to be used as a dollar alternative.
• Pouring into Porsche. Three more bidders have expressed interest in acquiring a Porsche stake, including both a Chinese and a Russian sovereign wealth fund. The new interests rival an investment plan presented by Qatar last week.
• Second stimulus? "We misread how bad the economy was," said Vice President Joe Biden, acknowledging the administration was too optimistic when it forecast unemployment would peak at 8%. Biden didn't rule out a second stimulus, but said the first one is just starting to pick up speed. (Read the transcript of Biden's interview)
• SocGen sees small profit. Societe Generale (SCGLY.PK) expects to post a small profit in Q2, as improved operating performance at its corporate and investment bank slightly outweighs credit-default losses and debt write-downs. The statement was issued ahead of a meeting today when shareholders will vote on whether CEO Frederic Oudea should assume the chairman position as well.
• AIG gets plenty of bids. Around 10 firms have submitted bids to buy AIG's (AIG) Taiwanese insurance unit, including private equity firms Kohlberg Kravis Roberts and MBK Partners. The deal could bring in over $2B.
• UBS to shake up U.S. unit. After deciding not to sell UBS' (UBS) U.S. brokerage business, CEO Oswald Grubel is reportedly looking for a new leader to shake up the unit's top management. It's unclear if the new hire will replace Marten Hoekstra, the head of UBS’ wealth management operations in the Americas, or work with him. The reports come as Bank of America (BAC) knocks UBS out of the top spot for world's largest private-banking group. Shares -3.4% premarket (7:00 ET).
• Seven more banks shuttered. Going into the holiday weekend, U.S. regulators closed another seven banks, bringing this year's total to 52 failures. The seven closures will cost the FDIC around $314M.

Today's Markets

Asian markets closed broadly lower, and European indices are trading down. Coming off the holiday weekend, U.S. futures get off to an ugly start.

• In Asia, Nikkei -1.4% to 9,681. Hang Seng -1.2% to 17,979. Shanghai +1.2% to 3,125. BSE -5.8% to 14,043.
• In Europe at midday, London -1.3%. Paris -1.8%. Frankfurt -1.7%.
• U.S. futures: Dow -1.1%. S&P -1.2%. Nasdaq -0.9%. Crude -4.3% to $63.86. Gold -1% to $921.40.

Monday's Economic Calendar

• 10:00 ISM Non-Manufacturing Survey

Seeking Alpha editor Eli Hoffmann contributed to this post.

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• PPIP managers to be named. The Treasury is expected to name as many as nine fund managers for its Public-Private Investment Program (PPIP) from the more than 100 applications it received. The list, which could be announced as soon as today, will likely include Pimco, BlackRock (BLK), billionaire investor Wilbur Ross and private investor Angelo Gordon & Co.
• Boeing in supply chain talks. Boeing (BA) is reportedly in negotiations to buy the operations of one of its main suppliers, a Vought Aircraft facility that makes some parts of the much-delayed 787 Dreamliner. This would be a major shake-up of its supply chain and likely the first step toward an anticipated second production site for the aircraft. Vought is owned by private-equity firm Carlyle Group, and terms of the possible deal are still unknown.
• China urges dollar stability. China reiterated its call for a stable dollar and for the need to diversify the international monetary system. The largest holder of foreign currency reserves, China has reportedly asked to debate proposals for a new global reserve currency at next week's G-8 summit, though some officials deny the claims.
• Auto sales fall. U.S. auto sales fell 28% in June. Though the decline, the narrowest in nine months, indicated increased stability, automakers said it's too soon to point to a turnaround. Here's the breakdown:
  -Ford (F): -10.9% to 148,153 units vs. consensus of -17%. Market share +3% from a year ago. June inventories totalled 343K, or 60-days supply. 'Tightly controlled' inventory level leaves it room to increase Q3 production to 485K vehicles.
  -General Motors: -33.6% to 176,571 units. Chevrolet sales -33.3% to 106,712 vehicles, and Cadillac -40.9% to 8,473.
  -Chrysler: -42% to 68,297 units. Market share up 1% vs. last year. Fleet sales down 95% from a year ago.
  -Honda (HMC): -29.5% to 100,420; company sees 'signs of strength' in light truck segments.
  -Toyota (TM): -34.6% to 131,654 units. Toyota division sales were down 36.3%; Lexus sales fell a milder 20%.
  -Nissan (NSANY): -23.1% to 58,298. Company saw "better traffic and an increase in the quality of customers during May and June."
  -Daimler (DAI) Mercedes-Benz: -26.5% to 16,271.
• Lear goes bankrupt. As expected, auto-seat maker Lear (LEA) filed for Chapter 11 bankruptcy, the eighth major auto-part supplier to do so since 2005. The company obtained $500M in bankruptcy financing, and its restructuring plan is supported by key lenders and bondholders.
• GMAC becomes a corporation. GMAC converted to a corporation from a limited liability company, a move that could allow it to sell shares to the public, though it wasn't clear when or if GMAC might choose to do so.
• SEC employee warned about Madoff in '04. A lawyer working for the SEC warned about irregularities at Madoff's financial management firm as early as 2004, sending emails to her supervisors that information provided during a review didn't add up and suggesting additional investigation. Several of the questions she raised turned out to be directly related to the fraud Madoff was running. At the time, however, the SEC was under pressure to investigate the mutual fund industry and told the lawyer to focus on a different probe.
• Strong Rio sale eases debt. Rio Tinto (RTP) saw strong demand for the U.K. part of its $15.2B rights offer, while results for its Australian offer are not yet available but are likely to be similar. Chinalco (ACH) took up its full entitlement and will remain Rio's largest shareholder. The sale will help ease Rio's heavy debt burden, but analysts say the company still needs to sell non-core assets to bring its debt down further.
• LogMeIn's IPO win. Software company LogMeIn (LOGM) marked another successful initial public offering for the tech sector, closing at $20.02 after initially pricing at $16. LogMeIn specializes in remote-access software, allowing users to log in and control any internet-connected device regardless of where it's located.
• Firing announcements fall... According to Challenger's job-cut report, firing announcements fell 33% in June to 74,393, the fifth month in a row of job cuts declines and the lowest level since March 2008. Announcements were down 9% Y/Y, the first year-on-year decline since Feb. 2008. Job cuts in Q2 were down 45% from Q1.
• ...and employment improves from Q1 (.pdf). ADP private sector employment fell -473K in June vs. -485K in May (revised from 532K). Employment improved notably over Q1, but will likely "decline for at least several more months, although perhaps not as rapidly as during the last six months."
• Manufacturing contracts. The ISM Manufacturing Index came in at 44.8 in June vs. 45 consensus, its 17th consecutive month of contraction. Petroleum & Coal Products and Printing & Related Support Activities reported growth. Apparel, Leather & Allied Products, and Furniture led the laggards.
• Construction spending drops (.pdf). Construction spending was down 0.9% in May M/M vs. -0.5% consensus and -11.6% from the year prior period. The decline followed two straight monthly increases. For the first five months of the year, construction spending was down 11.7% Y/Y.
• Home sales inch up. May's Pending Home Sales were +0.1% from April to 90.7. Prior sales were revised to +7.1% from +6.7%. It's the fourth straight monthly gain; the last time that happened was in 2004. The National Association of Realtors continues to push for relaxing appraisal rules.

Today's Markets

• In Asia, Nikkei -0.6% to 9,876. Hang Seng -1.1% to 18,178. Shanghai +1.7% to 3,060. BSE +0.1% to 14,658.
• In Europe at midday, London -0.85%. Paris -1.2%. Frankfurt -1.7%.
• U.S. futures: Dow -0.7%. S&P -0.7%. Nasdaq -0.6%. Crude -2.1% to $67.84. Gold -0.85% to $933.30.

Thursday's Economic Calendar

• 7:45 ECB Announcement
  8:30 Non-farm payrolls
  8:30 Jobless Claims
  10:00 Factory Orders
  10:30 EIA Natural Gas Inventory
  4:30 PM Fed Balance Sheet
  4:30 PM Money Supply

Seeking Alpha editor Eli Hoffmann contributed to this post.

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• SEC eyes tighter exec pay rules. The SEC may change how companies are required to disclose stock options given to executives, a change that could profoundly affect the reporting of executive pay. As an example, Citigroup (C) reported CEO Vikram Pandit received $10.8M in compensation in 2008, a number that would have risen to $38.2M under the potential new rule. Meeting later today, the SEC will also propose giving investors a greater say in setting executive compensation levels at firms that received TARP funds.
• FDIC gets tougher on bank buyers. The FDIC is expected to propose stricter guidelines today for private-equity firms looking to buy failed banks. The FDIC has to walk a fine line on the issue, reducing the agency's potential cost of bank failures by encouraging more types of investors while simultaneously preventing largely unregulated private-equity firms from acting too aggressively. The guidelines could include a mandatory investment period to prevent firms from buying and flipping banks, and could require private-equity investors to hold higher capital reserves than traditional banks in the same situation.
• Finra probes muni bond sales. The Financial Industry Regulatory Authority is 'conducting sweeps' of firms involved in several recent municipal bond collapses, and may initiate formal investigations along with possible disciplinary actions. Finra is gathering information from firms that underwrote securities tied to derivatives that were sold to municipalities and firms that sold so-called municipal gas bonds and are now distressed securities.
• Morgan, MUFG get cozy. Morgan Stanley (MS) and Mitsubishi UFJ Financial Group (MTU) unveiled more details of their planned $100B loan-marketing tie-up in which MUFG will share its lending expertise while Morgan gives clients capital-markets service and advice. The venture will start in the U.S., with plans to expand into Canada and Latin America, and MUFG will have final say on when to loan money to Morgan investment-banking clients. The two firms will also refer customers to each other in Europe and Asia (excluding Japan), and operate a limited employee exchange program to 'share knowledge.' The venture is a de facto admission by Morgan that having a strong balance sheet is crucial to success in the post-crisis economy.
• China postpones internet filter. Industry groups welcomed China's surprise announcement that it will delay enforcement of a rule requiring new computers be sold with web filtering software. The government didn't set a new deadline for installing the software but also didn't close the door on resurrecting the plan sometime in the future.
• Lukewarm bids for BoA asset manager. Bank of America (BAC) is getting lower than expected bids for Columbia Management, its asset management unit, and may break Columbia into two pieces to boost results. Bank of America, which has been trying to sell the unit since the beginning of the year, is hoping to get at least $3B but bids have been closer to $2B after BlackRock (BLK), the most likely suitor, closed a major deal earlier this month to buy Barclays' (BCS) BGI investment unit instead.
• Citi hikes credit card rates. Citigroup (C) has sharply raised interest rates on as many as 15M credit card accounts, months before new legislation curbing these increases goes into effect. In a statement, Citi said the changes "reflect the dramatically higher cost of doing business in our industry as we work to preserve the broad availability of credit." Separately, Citi reached a deal to sell NikkoCiti Trust and Banking Corp. to Nomura Trust & Banking Co. (NMR) for ¥19B ($197M).
• Toyota credit rating cut. Toyota (TM) had its credit rating lowered two notches by Fitch, to A+ from AA. Fitch director Jeong Min Pak said it could take "several years for Toyota to approach previous levels of profitability," and that "decision making and management reaction to the crisis seems to be faster at its rivals." Toyota is expecting a ¥550B ($5.7B) annual loss for the fiscal year ending in March, its second unprofitable year in a row.
• GM wind-down costs rise. Testifying at General Motors' bankruptcy hearing, CEO Fritz Henderson said the $950M set aside by GM and the government to wind the company down could fall short of what's actually needed. Taking into account environmental liabilities, Henderson said the costs may be closer to $1.2B. GM restructuring chief Albert Koch, who will run 'old GM,' put the number a little higher, forecasting the wind-down could cost "slightly in excess of $1.25B."
• California: We'll pay you later. After failing to balance its budget by the start of its fiscal year this morning, California will suspend payments to the state's vendors and local agencies and will issue 'IOU' notes instead. It's the first time in 17 years that California, the nation's most populous state, has been forced to rely on such drastic measures.
• Iraq oil auction disappoints. Iraq's first international oil tender since 1972 was called a 'disappointment,' as a consortium including BP (BP) and China National Petroleum made the only foreign deal - for the 17B barrel Rumaila oilfield, Iraq's biggest. The government's tough terms discouraged bidders for the other seven fields on offer and forced BP to lower the fee on its deal. The tender results left some questioning the wisdom of BP's move, wondering why the company agreed to terms that Exxon Mobil (XOM) and others rejected.
• Freddie picks new CEO. Freddie Mac's (FRE) board picked Charles E. "Ed" Haldeman Jr. as its choice for CEO. The expected appointment needs to be approved by the Federal Housing Finance Agency and the Treasury.
• Monster employment dips (.pdf). Monster's online employment index inched down in June, falling one point to 117 to reflect a seasonal lull in online recruitment activity. The year-on-year growth rate improved slightly over the previous two months.
• Retail sales. Chain store sales fell 4.4% in the first four weeks of June, Redbook said, worse than the -4.1% expected. According to ICSC, weekly sales were up 1.6% vs. last week, though sales are still on track for a 'tough month.'
• Home prices down but not out (.pdf). The S&P/Case-Shiller 20-City Home Price Index came in at -18.1% in April vs. last year, narrower than last month's 18.7% drop, and the third straight monthly improvement. "While one month’s data cannot determine if a turnaround has begun; it seems that some stabilization may be appearing in some of the regions," David Blitzer said.
• NY business activity drops. New York City business activity contracted in June after expanding in May, NAPM reported. The Current Business Conditions index fell to 44.8 from 61.3, but purchasing and supply management executives still think a recovery could happen this year.
• Consumer confidence. Conference Board's Consumer Confidence Index came in at 49.3, down from 54.8 last month, after jumping there from 40.8 in April. Expectations dropped slightly to 65.5 from 71.5. The decline "continues to imply that conditions, while not as weak as earlier this year, are nonetheless weak." The ABC Consumer Confidence Index rose to -51, up 2 from last week, but (unsurprisingly) on pace for its worst year in 23 years of polls. Just 39% of Americans rate their personal finances positively.
• Investor confidence rises. The State Street Investor Confidence Index rose 7 points to 115.5 in June, the third increase in as many months, as "institutional investors continue to endorse the long-run outlook." Confidence jumped in Europe but still lags North America.
• MBA apps fall. Mortgage applications fell 18.9% last week, MBA reported. The average interest rate on 30-year fixed-rate mortgages fell to 5.34% from 5.44%.

Earnings: Wednesday Before Open

• General Mills (GIS): FQ4 EPS of $0.86 beats by $0.05. Revenue of $3.6B (+5%) vs. $3.7B. Issues upside EPS guidance for FY '10 of $4.20-4.25, assuming no mark-to-market impact in FY '10. (PR)

Earnings: Tuesday After Close

• Sealy Corp. (ZZ): FQ2 EPS of $0.07 beats by $0.02. Revenue of $299M (-21%) in-line. (PR)

Today's Markets

Asian markets closed mixed, but Europe is getting off to a strong start and U.S. futures are inching up.

• In Asia, Nikkei -0.2% to 9,940. Hang Seng closed. Shanghai +1.65% to 3,008. BSE +1.05% to 14,645.
• In Europe at midday, London +1.4%. Paris +1.7%. Frankfurt +1.4%.
• Futures: Dow +0.5%. S&P +0.6%. Nasdaq +0.8%. Crude +2.1% to $71.33. Gold +0.45% to $931.60.

Wednesday's Economic Calendar

• Motor Vehicle Sales
  6:00 Monster Employment Index
  7:00 MBA Mortgage Applications
  7:30 Challenger Job-Cut Report
  8:15 ADP Jobs Report
  10:00 ISM Manufacturing Index
  10:00 Construction Spending
  10:00 Pending Home Sales
  10:30 EIA Petroleum Status
  11:15 Fed's Evans speaks on the credit crunch
• Notable earnings before Wednesday's open: GIS, STZ

Seeking Alpha editor Eli Hoffmann contributed to this post.

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• Enterprise/Teppco tie-up. After years of merger rumors, Enterprise Products Partners (EPD) agreed to buy Teppco Partners (TPP) for $3.3B in stock, forming a $26B energy partnership that will be one of the largest natural gas producers in the U.S. The combined firm will own nearly 48,000 miles of pipeline. The deal must be approved by Teppco shareholders.
• Jury tells Abbott to pay up. A federal jury ordered Abbott Laboratories (ABT) to pay $1.67B in a patent suit brought by Johnson & Johnson (JNJ) over its arthritis treatment. J&J had alleged Abbott's Humira arthritis therapy infringed on a patent for J&J's rival treatment Remicade. Abbott plans to appeal the ruling.
• Broadcom broadens Emulex offer. Broadcom (BRCM) sweetened its hostile takeover offer for Emulex (ELX), raising its bid 19% to $912M and promising to give up its attempts by July 14 if Emulex doesn't indicate support for the deal by then. Emulex said it will review the new terms 'in due course,' and urged shareholders not to take action in the meantime.
• BG moves into U.S. shale market. BG Group (BRGYY.PK) will pay $655M for a 50% stake in EXCO Resources' (XCO) U.S. shale gas project, and will pay another $400M to fund capital development. This is the latest in a series of BG acquisitions, and follows similar moves by other international oil companies interested in the U.S. oil shale sector.
• Cablevision wins DVR court fight. The Supreme Court ruled that Cablevision (CVC) can bypass set-top digital video recorders and allow its customers to record programs straight onto its servers. Comcast (CMCSA) and Time Warner Cable (TWC) had previously said they would launch similar services if Cablevision's approach was upheld as legal. The news pushed TiVo (TIVO) shares down 4.1%, but the potential impact of the ruling on the DVR set-top firm isn't entirely clear.
• State Street may face SEC charges. State Street (STT) said its State Street Bank & Trust Co. unit may face SEC charges over some fixed-income trading strategies it used in the run up to the subprime crisis. State Street will have a chance to present its defense before any formal decision is made on a civil enforcement action.
• RHJ may steal Magna's Opel deal. RHJ International is apparently close to a deal to pick up General Motors' Opel unit, squeezing out auto parts firm Magna International (MGA). Magna reached an agreement with GM in May, but talks have stalled since then, while RHJ has improved its bid and is being taken 'very seriously' by GM.
• DoJ objects to airline cooperation. The Department of Justice belatedly objected to plans by United Airlines (UAUA) and Continental (CAL) to cooperate on some global routes, and recommended that the airlines form a more limited trans-Atlantic deal instead. The Transportation Department gave the deal preliminary approval three months ago, but the Justice Department said the deal would likely result in higher fares and less competition. Though the Justice Department technically has no jurisdiction over international aviation agreements, its ruling could prompt the DoT to reverse its decision.
• Elpida wins Japanese aid. Elpida (ELPDF.PK), the world's third-largest maker of memory chips, received a ¥30B ($313M) injection from the Japanese government, bringing its total aid to $1.7B. Elpida, which is struggling to compete with larger South Korean rivals, is the first Japanese firm to qualify for a new program which makes public funds available to businesses hit by the global financial crisis.
• Chinalco to buy Rio shares. After being snubbed by Rio Tinto (RTP) over a planned $19.5B investment, Chinalco (ACH) plans to participate in Rio's $15.2B rights issue. Chinalco currently owns a 9% stake in Rio, and intends to subscribe to the rights issue to prevent a dilution of its holdings.
• IEA trims oil outlook. The International Energy Agency slashed its medium-term outlook for global oil demand by 3.7%, forecasting demand of 87.9M barrels per day in 2013, down from a previous 90.25M, and 6.25M lower than its original forecast last July. "The global financial crisis has turned the economic landscape upside down, with huge implications for the oil and gas sector," IEA's Nobuo Tanaka said.
• Madoff heads to prison. As expected, Madoff received an effective life sentence for orchestrating a $65B Ponzi scheme. The judge, who called Madoff's crimes 'extraordinarily evil,' invoked the maximum sentence of 150 years in jail. Sources say another ten people will face federal charges before the investigation is completed.
• U.K. GDP tumbles. The U.K. economy shrank 2.4% in Q1, the largest contraction in over fifty years. The revised figure is considerably weaker than the earlier estimate of a 1.9% decline.

Earnings: Monday After Close

• Apollo Group (APOL): FQ3 EPS of $1.26 beats by $0.14. Revenue of $1B (+26%) in-line. (PR)
• H&R Block (HRB): FQ4 EPS of $2.10 beats by $0.05. Revenue of $2.5B (-3%) in-line. Sees FY10 EPS $1.60-1.80 vs. $1.66. (PR)

Today's Markets

Asian markets closed mostly down, and European markets are modestly lower.

• In Asia, Nikkei +1.8% to 9,958. Hang Seng -0.8% to 18,379. Shanghai -0.5% to 2,959. BSE -2% to 14,494.
• In Europe at midday, London -0.1%. Paris -0.1%. Frankfurt -0.03%.
• U.S. futures: Dow +0.2%. S&P +0.3%. Nasdaq +0.3%. Crude +0.3% to $71.69. Gold +0.01% to $940.80.

Tuesday's Economic Calendar

• 7:45 ICSC Retail Store Sales
  8:55 Redbook
  9:00 S&P/Case-Shiller Home Price Index
  9:00 NAPM NY Report
  9:45 NAPM Chicago Business Barometer
  10:00 Consumer Confidence
  10:00 State Street Investor Confidence Index
  12:00 PM Fed's Bullard speaks on Fed exit strategies
  4:10 PM Fed's Hoenig speaks on bankruptcy and the economic crisis
  5:00 PM ABC Consumer Confidence Index
  9:00 PM Fed's Yellen speaks on the economy
• Notable earnings after Tuesday's close: ZZ

Seeking Alpha editor Eli Hoffmann contributed to this post.

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• Novartis, Elan in talks. Novartis (NVS) is reportedly in talks to buy parts of Elan (ELN), including its key multiple sclerosis drug Tysabri and Alzheimer's disease drug pipeline, but a final deal is still 'some way off.' Earlier this year, Elan said it was open to a merger or sale, and on June 10 said it expects to complete a strategic transaction 'in the near term.' Premarket: NVS -1.4%, ELN +1.9% (7:00 ET).
• Anglo seeks merger defenses. Sources say Anglo American (AAUK) is building its defenses against a merger offer from Xstrata (XSRAF.PK) by engaging in early stage negotiations with Chinalco (ACH) and at least one unidentified Middle Eastern investor to inject hundreds of millions of dollars into Anglo's Brazilian iron ore business. Anglo is also reportedly renewing its efforts to bring Sir John Parker in as its new chairman.
• UBS nearing tax settlement? According to Swiss newspaper reports, UBS (UBS) will pay 3-5B Swiss francs ($2.77-4.62B) in the next two weeks to settle a U.S. tax probe, and is under pressure by the Swiss central bank to sign the deal in order to bring stability back to the Swiss banking sector. However, some following the case are skeptical the U.S. government would drop its probe without major concessions from Switzerland. Shares -2.8% premarket (7:00 ET).
• Vodafone mulls T-Mobile bid. Vodafone (VOD) is reportedly considering a bid to buy T-Mobile UK (DT) in a move that would shake up the U.K. mobile phone market and potentially face resistance from regulators. The deal would create a company with around 35M subscribers, or about half of the U.K. mobile market. T-Mobile UK has underperformed for several years, and JPMorgan has been appointed to advise parent company Deutsche Telekom on strategic options for the business.
• DoJ extends Oracle-Sun review. The Department of Justice extended its review of Oracle's (ORCL) proposed acquisition of Sun Microsystems (JAVA). The government's 30-day period to review the deal expired Friday, but the Justice Department requested both companies provide more information before it gives any sort of acquisition approval. Though the extension is unusual, an Oracle representative said the investigation is expected to end soon and that discussions with the Justice Department had been positive.
• GM accepts product liability. Under pressure from more than a dozen state attorneys general and several consumer-advocacy groups, General Motors agreed to assume legal responsibility for injuries caused by vehicle defects after GM emerges from bankruptcy. Under GM's original bankruptcy plan, future car-accident victims seeking to sue GM would have been treated as unsecured creditors and forced to fight over GM's old bankruptcy estate. Car-accident victims with pending lawsuits and those who won damages against GM before it filed for bankruptcy will still be unable to bring claims against the new GM.
• GM holds back-up talks on Opel. Belgian and Chinese bidders may sign non-binding agreements to buy General Motors' Opel unit as a fallback to the carmaker's proposed deal with Magna International (MGA). RHJ International and Beijing Automotive Industry Holding Co. have gotten involved as the Magna talks slow down.
• Watson Wyatt/Towers Perrin merger. Consulting firms Towers Perrin Forster & Crosby and Watson Wyatt Worldwide (WW) plan to merge in an all-stock deal valued at around $3.5B, seeking to cut costs as clients pare back discretionary spending. Watson Wyatt shareholders will get 50% of the shares in the combined company, to be named Towers Watson & Co. Watson CEO John Haley will be chairman and CEO of the combined company, while Tower CEO Mark Mactas will serve as president and COO.
• Porsche claims VW blackmail. Porsche's chairman Wolfgang Porsche accused Volkswagen (VLKAY.PK) of attempting to blackmail the debt-ridden company into accepting a reworked merger plan, reigniting an ongoing dispute between the two firms. Porsche rejected the Monday deadline he claimed Volkswagen had imposed, saying "ultimatums do not belong in the 21st century. We won’t be blackmailed." Volkswagen denied it had issued an ultimatum.
• Madoff faces the music. Madoff goes to court today to be sentenced, and is expected to receive an effective life term. On Friday, the judge in Madoff's criminal case ruled Madoff's multiple houses and apartments will be sold to raise money to pay back victims of his $65B Ponzi scheme, along with Madoff's Mercedes Benz and VW cars, boats and trailers. Ruth Madoff will retain $2.5M and give up her claims to more than $80M in assets.
• Five more failed banks. Five more banks were seized by regulators, bringing this year's total failures to 45. All told, the five banks held assets worth around $1.04B.

Today's Markets

• In Asia, Nikkei -1% to 9,783. Hang Seng -0.4% to 18,529. Shanghai +1.6% to 2,975. BSE +0.1% to 14,786.
• In Europe at midday, London +0.6%. Paris +1.3%. Frankfurt +1.2%.
• U.S. futures: Dow +0.3%. S&P +0.4%. Nasdaq +0.4%. Crude +1% to $69.82. Gold +0.2% to $942.30.

Monday's Economic Calendar

• 3:00 PM Farm Prices
• Notable earnings after Monday's close: APOL, HRB

Seeking Alpha editor Eli Hoffmann contributed to this post.

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• Truth still murky after Bernanke testimony. Testifying before Congress, Bernanke faced open hostility from lawmakers over his handling of the financial crisis and the Federal Reserve's role in pushing through Bank of America's (BAC) acquisition of Merrill Lynch. In particular, lawmakers grilled Bernanke on whether he threatened to force out Bank of America CEO Ken Lewis, accusing Bernanke of inconsistencies in his statement and of withholding information from other agencies. At the end of the hearing, lawmakers were still uncertain as to how much force was applied to Bank of America. (Read Bernanke's prepared testimony, or a live blog of the hearing)
• Fed starts to scale back. The Federal Reserve extended five of its liquidity programs (AMLF, CPFF, PDCF, TSLF, and currency swaps with other central banks) by three months to Feb. 1, 2010, but will let one of its emergency programs expire (MMIFF) and trimmed two programs (TAF, TSLF), marking the Fed's first steps in scaling back its unprecedented market interventions. The changes were not announced with the FOMC statement because the Fed needed to coordinate the swap line extension with other central banks. (Read the Fed's press release)
• Tallying TARP. Around $369B of TARP funds have been invested in companies, loans and other types of assistance. Around $329B remains for use, though part of that money has already been committed. Roughly $142B has yet to be allocated.
• UBS sells shares, faces quarterly loss. UBS (UBS) raised around 3.8B Swiss francs ($3.5B) in a share sale, and said it expects to face a Q2 loss. UBS said the capital increase was aimed at increasing confidence in the bank, and that the Q2 loss is mostly because of reorganization costs and charges on the company's own debt. The moves will raise UBS' Tier 1 capital ratio to over 11.9% at the end of the month from 10.5% in March, with another 50 basis points boost expected in Q3. Shares -3.6% premarket.
• Sanctions for Citi. Japan's Financial Services Agency will reportedly sanction Citigroup (C) today over lax money-laundering controls and demand that the bank suspend some of its retail business operations. The severity of the sanction is unknown, but will be detailed later today in a press conference and is connected to money laundering by a Japanese criminal syndicate.
• California gets cut. Fitch downgraded California's credit rating to A- from A on the expectation of continuing strained finances through fiscal year 2010 and beyond, regardless of the outcome of its current budget battle. Outstanding bonds are Rating Watch Negative because of short-term concerns over the state's liquidity crisis.
• GM racing through Ch. 11. In a speedy 15 minute hearing, General Motors received court approval for $33B in bankruptcy financing. GM filed for bankruptcy June 1 with the goal of emerging from Chapter 11 within 60-90 days. However, if the automaker's progress through bankruptcy proceedings continues apace, the new GM could surface by mid-July. In a separate development, the Treasury is in talks with over a dozen state attorneys to change two key features of GM's bankruptcy plan. If those efforts are successful, GM might have to take on product-liability claims and compensate dealers more than it planned, making the company less attractive to a private buyer when the government tries to sell its stake.
• Looming Lear bankruptcy. Auto parts supplier Lear (LEA) is preparing to file for bankruptcy as soon as next week. The world's largest maker of auto seats, Lear warned in March it may have to file for Chapter 11 protection and since then has been exploring alternatives to restructure its debt outside of bankruptcy. Shares fell 39% Thursday to $0.54 and are down another 19% premarket to $0.44.
• Brazil's IPO winner. VisaNet, the Brazilian affiliate of Visa (V) raised 8.4B reais ($4.27B) in its initial public offering, marking the world's biggest IPO this year. In comparison, the U.S. had just 10 IPOs totaling $2.03B in Q2, and it's likely that the U.S. will lose the top spot in world stock market offerings for the first time since 1995.
• Stanford pleads innocence. Accused financier Allen Stanford pleaded not guilty to charges of fraud and was approved to be released on bail before the trial. At the hearing, prosecutors alleged Stanford, who is facing charges of conspiracy, fraud, obstruction and money laundering, also bribed the firm auditing his bank using funds from a secret bank account located in Switzerland.
• Palm handily beats expectations. Though Palm (PALM) posted a wider quarterly loss as revenue dropped ahead of its Pre smartphone release, results still beat analysts' expectations (see numbers below). CEO Jon Rubinstein said Pre sales are "strong and growing... I couldn't be happier with our launch," and expects gross margins to eventually top 30%. Shares +13.8% premarket to $15.95.
• Boston Sci gets new chief. Boston Scientific (BSX) announced the unexpected resignation of CEO Jim Tobin, and said he will be replaced by former Zimmer CEO Ray Elliot. Analysts said the change is likely to be positive for the stock, given both Elliot's track record and Tobin's; Tobin helped orchestrate Boston Scientific's $27.5B purchase of Guidant in 2006, which Fortune dubbed the 'second-worst deal ever.' Shares gained 5.1% to $10 Thursday.
• Another lost order for Boeing. Qantas canceled half its 30-plane order for Boeing's (BA) 787 Dreamliner amid falling demand for air travel. Boeing has already lost orders for 58 Dreamliners this year. Earlier this week, Jet Airways deferred delivery of nine Boeing planes, while Virgin Atlantic turned to Airbus to keep its fleet growing while waiting for the long-delayed Dreamliners.
• Final GDP numbers. Final numbers for Q1 GDP came in at -5.5% vs. the consensus and preliminary estimate of -5.7%. The GDP price index rose 2.8%, in line with estimates. In Q4, GDP was -6.3%.
• Jobless claims rise. Initial Jobless Claims came in at 627K, vs. last week's 612K (revised) and consensus of 613K. Continuing claims rose by 29K to 6.74M.

Earnings: Thursday After Close

• Accenture (ACN): FQ3 EPS of $0.68 beats by $0.04. Revenue of $5.5B (-16%) vs. $5.2B. Sees Q4 revenue $5B-5.2B vs. $5.3B. Raises FY09 guidance to $2.67-2.70 vs. $2.64. (PR)
• Micron Technology (MU): FQ3 EPS of -$0.36 beats by $0.07. Revenue of $1B (-26%) in-line. (PR)
• Palm (PALM): FQ4 EPS of -$0.40 beats by $0.22. Revenue of $87M (-70%) vs. $81M. Q4 smartphone shipments down 62% to 351,000. (PR)
• Tibco Software (TIBX): FQ2 EPS of $0.11 beats by $0.02. Revenue of $143M (-5%) vs. $139M. (PR)

Today's Markets

Asian and European markets moved higher Friday after Thursday's strong U.S. performance. Futures have traded in a tight range.

• Asia: Nikkei +0.83% to 9,877. Hang Seng +1.78% to 18,600. Shanghai +0.11% to 2,928. BSE +2.92% to 14,765.
• Europe at midday: London +0.3%. Paris +0.1%. Frankfurt +0.3%.
• Futures: Dow -0.2% to 8398. S&P -0.2% at 915. Nasdaq -0.2%.
  Treasurys are flat. Crude +0.7% to $70.75. Gold +0.7% to $946.
  Euro +0.8% vs. dollar. Yen +0.4%. Pound +0.7%.

Friday's Economic Calendar

• 8:30 Personal Income and Outlays
  9:55 University of Michigan Consumer Sentiment
• Notable earnings before Friday's open: KBH

Seeking Alpha editor Eli Hoffmann contributed to this post.

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• SEC targets money market funds. The SEC wants to tighten regulation on money-market funds. Proposed changes include keeping a minimum percentage of assets in cash or its equivalent, limiting funds' ability to invest in Tier II securities, periodic stress tests, monthly reports and new tools to unwind a fund that breaks the buck. However, the SEC didn't make any definitive proposals on the highly contentious issue of whether funds should no longer be allowed to maintain stable $1/share net asset values. (Read the SEC's proposals)
• Fed accused of BoA/Merrill cover-up. Bernanke will testify in Congress today on the Bank of America (BAC) acquisition of Merrill Lynch, following accusations yesterday by a top Republican lawmaker that the Federal Reserve "engaged in a cover-up and deliberately hid concerns and pertinent details regarding the merger from other federal regulatory agencies." New details of the acquisition continue to come to light, including that regulators tightened their grip on Bank of America with a secret agreement that contributed to the ongoing turnover of its directors and executives.
• FOMC: slowing contraction, subdued inflation. As expected, the FOMC left interest rates unchanged at 0-0.25%, and rates will likely remain low 'for an extended period.' The pace of economic contraction is slowing, and financial markets have 'generally improved' over the last few months. The FOMC statement predicted "inflation will remain subdued for some time," as compared to its previous statement that "inflation will remain subdued." There were no indications of how or when the Federal Reserve plans to exit its unprecedented credit programs, and there were no changes to the Fed's Treasury buyback program. (Read the FOMC press release)
• Crisis in California. Republican lawmakers in California rejected a Democratic plan to cut $11B in state spending, saying the cuts aren't large enough considering the state faces a $24B budget shortfall. State Controller John Chiang warned he'll start issuing IOUs to local governments, private contractors and state vendors as of July 2 if lawmakers can't find another solution, a move that would further jeopardize California's shaky credit rating.
• IPO approved for AIG units. AIG (AIG) received approval from the Federal Reserve for an initial public offering of its American Life Insurance Company and American International Assurance. Before the IPO, AIG will contribute the equity of ALICO and AIA to a special purpose vehicle in which the Federal Reserve will receive preferred interests of $9B and $16B respectively.
• China blocks Google. As of last night, Google's (GOOG) global website was blocked in China, seemingly by internet censors, marking a major escalation in China's battle with the search engine company. The move came after Google apparently resisted an earlier order to restrict access to foreign websites via its local website, and after government officials continued to accuse Google of displaying links to pornographic websites. After Google received reports that "most users cannot access Google.com in China," the company said "we are investigating the matter and hope that the service will be restored soon."
• ECB's major loans. The European Central Bank lent a staggering €442B ($619B) to 1,121 banks at 1% in its first-ever one-year tender. It was the largest sum ever allotted in a single ECB auction; many banks don't believe rates are going any lower, and viewed this as one of their last chances to lock in low rates. Euribor fell to a record low 1.57%.
• Sprint spared nationwide suit. A judge ruled Sprint Nextel (S) will not have to face a nationwide class-action lawsuit because plaintiffs failed to prove a nationwide suit would be preferable or even manageable. The lawsuit claimed Sprint overcharged customers for taxes and refused refunds.
• KKR to list. Private equity firm Kohlberg Kravis Roberts announced plans to merge into its Amsterdam-listed fund, a backdoor way of gaining a European listing and allowing for a possible switch to the New York Stock Exchange at some point in the future, possibly by late 2010. KKR has been trying to become a publicly traded company for two years, following similar moves by Blackstone (BX) and Fortress Investment Group (FIG).
• New Yahoo. Yahoo (YHOO) is reportedly planning a major rebranding campaign to repair a tarnished public image and focus consumers on what defines the company. Sources say the rebranding efforts could be built around Yahoo's latest relaunch of its home page design, and the idea that Yahoo is "your home on the Web." Yahoo holds its annual meeting today, but investors will likely hear few details of the new marketing plan.
• Durable goods rise. Durable Goods Orders rose 1.8% in May vs. consensus of -0.5% and last month's +1.8% (revised). Net of transportation, orders were up 1.1% vs. last month's +0.8%.
• Home sales dip down. New Home Sales came in at 342K in May, down 0.6% from April, vs. consensus of 360K. Sales are down 32.8% vs. last year. The median home price of $221,600 was up from April's $212,600. Inventory of 292K homes represents a 10.2 month supply, down from 10.4 months in April.

Earnings: Thursday Before Open

• Lennar (LEN): FQ2 EPS of -$0.76 misses by $0.12. Revenue of $892M (-20.9%) vs. $597M. (PR)
• McCormick & Company (MKC): FQ2 EPS of $0.38 misses by $0.03. Revenue of $757M (-0.9%) vs. $781M. (PR)

Earnings: Wednesday After Close

• Bed Bath & Beyond (BBBY): Q1 EPS of $0.34 beats by $0.09. Revenue of $1.69B (+2.8%) in-line. Same-store sales down 1.6%. (PR)
• Nike (NKE): FQ4 EPS of $0.99 beats by $0.03. Revenue of $4.7B (-7%) vs. $4.72B. Says worldwide futures orders down 12% to $7.8B. (PR)
• Paychex (PAYX): FQ4 EPS of $0.32 misses by $0.02. Revenue of $495.9M (-4.5%) vs. $510.5M. Sees FY '10 revenue decreasing 1%-4%. (PR)
• Red Hat Inc. (RHT): Q1 EPS of $0.15 beats by $0.01. Revenue of $174M (+11%) vs. $171.8M. (PR)

Today's Markets

Asian markets closed mostly up. European markets and U.S. futures are off to a weak start.

• In Asia, Nikkei +2.15% to 9,796. Hang Seng +2.1% to 18,275. Shanghai +0.1% to 2,925. BSE -0.5% to 14,346.
• In Europe at midday, London -0.75%. Paris -1.3%. Frankfurt -1.4%.
• U.S. futures: Dow -0.1%. S&P -0.04%. Nasdaq -0.2%. Crude +0.6% to $69.07. Gold -0.1% to $933.40.

Thursday's Economic Calendar

• 8:30 GDP Q1 (final)
  8:30 Jobless Claims
  8:30 Corporate Profits
  10:00 Bernanke testifies on Merrill Lynch acquisition
  10:30 EIA Natural Gas Inventory
  4:30 PM Fed Balance Sheet
  4:30 PM Money Supply
• Notable earnings before Thursday's open: CAG, LEN, MKC
• Notable earnings after Thursday's close: ACN, MU, PALM, TIBX

Seeking Alpha editor Eli Hoffmann contributed to this post.

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• Salary bumps at Citigroup. Citigroup (C) plans to raise base salaries by as much as 50% to compensate for a sharp reduction in annual bonuses. Investment bankers and traders will see the biggest increases, while workers in consumer banking, credit cards, legal and risk management will see smaller salary adjustments. Citigroup is following similar moves by Morgan Stanley (MS) and UBS (UBS). Separately, Citigroup temporarily suspended loan applications at one of its mortgage units after a quality-control review found some property appraisals and income-verification documents were missing, and will use the next few weeks to change its procedures.
• China faces WTO complaint. The U.S. and EU filed a WTO complaint against China over export restraints on raw materials. China plans to contest the complaint, saying its export policy aims to protect the environment and natural resources and 'is in accordance with WTO rules.' This is the third joint complaint brought by the U.S. and EU against China, and the first brought by the Obama administration.
• Bank 'tricks' necessitate new agency. A government watchdog will urge lawmakers to create a new government agency aimed at protecting consumers from the 'tricks and traps' set by banks. In prepared remarks, Elizabeth Warren, chairwoman of the oversight panel, said "We can help fix the broken credit market. And I can sum it up in four words: Consumer Financial Protection Agency." Bank industry groups, unsurprisingly, oppose the move, saying it will be costly and won't better protect consumers.
• Bad news Boeing. Just one week after a top executive said the 787 Dreamliner was ready to fly, Boeing (BA) postponed the plane's first flight after tests indicated the need for reinforcement to the jet's body, sending shares down 6.5%. The Dreamliner is already two years behind schedule, and it will be several weeks before a new delivery timetable is available. Along with its 787 delay, satellite-launch service provider Sea Launch (40% owned by Boeing) filed for bankruptcy, Congress urged the Pentagon to review substandard Iraq results from the V-22 Osprey (developed and built by Boeing and Textron (TXT)) and some airlines are either deferring delivery of Boeing planes or turning to rival Airbus in the interim.
• Madoff investor seeks SEC damages. The SEC rejected a Madoff investor's claim that the agency pay her $1.7M to cover her losses from the fraud. The legal action is believed to be the first by an investor trying to hold the SEC responsible for the fraud, and the SEC's rejection of her claims sets the stage for a federal lawsuit.
• Banks reach Huntsman settlement. Credit Suisse (CS) and Deutsche Bank (DB) settled their lawsuit over the busted buyout of Huntsman (HUN). The two banks will pay Huntsman $632M and extend a $1.1B loan on favorable terms. The settlement is an economic win for Credit Suisse and Deutsche Bank: the banks face lower costs in the settlement than the losses that would have accompanied the $15.4B of debt originally committed to the deal, and don't have to worry about a costly and unpredictable legal verdict.
• Oracle beats despite tech slowdown. Oracle (ORCL) posted better than expected quarterly earnings (see details below), but also reported a revenue decline for the first time since 2002. Oracle, which does over half its business overseas, was hurt in part by a strong dollar; in constant currency, its revenue climbed 4% and income was up 5%. Oracle's numbers were also hurt by the many companies holding off from making large technology purchases during the recession.
• Sinopec buys Addax. Sinopec (SNP) agreed to buy Swiss explorer Addax Petroleum (ADXTF.PK) for $7.3B in cash, gaining access to oil reserves in Iraq's Kurdish region and Africa. The deal marks a 47% premium on Addax's closing price in Toronto on June 5, the day before takeover talks were announced.
• OECD ups outlook. The OECD raised its outlook for its 30 member nations for the first time in two years on signs the U.S. recession is easing. The combined economy of OECD nations will shrink 4.1% this year and grow 0.7% in 2010, vs. earlier projections of a 4.3% contraction in 2009 and a 0.1% contraction in 2010. The organization expects the U.S. economy to shrink 2.8% this year and grow 0.9% next year.
• Retail sales fall. Chain store sales fell 4.4% in the first three weeks of June vs. last month, Redbook reported, worse than the -4.1% expected. According to ICSC, weekly sales were flat vs. last week, as the recession and bad weather continued to hurt June sales.
• Home sales rise. May Existing Home Sales rose 2.4% to 4.77M per year, just short of the 4.82M consensus. Prices fell 0.1% in April, vs. consensus of -0.4% and a 1.4% drop in March.
• MBA apps rise. Mortgage applications rose 6.6% last week, MBA reported. The average interest rate on 30-year fixed-rate mortgages fell to 5.44% from 5.5%.
• Richmond Fed inches up. The Richmond Fed Manufacturing Index came in at 6 vs. May's 4. Activity in Central Atlantic advanced 'somewhat faster' on expanded new orders, factory shipments that grew at slightly slower rate and moderate weakness in unemployment. Manufacturers softened their outlook for the next six months, expecting slowdown in shipments, new orders and utilization.
• Consumer confidence weakens. ABC's Consumer Confidence Index fell to -53, down 4 this week and just a point off its all-time low from Jan. 25. The long-term average is -12. Only 39% of Americans rate their own finances positively, the lowest in 23 years of weekly polls.

Earnings: Wednesday Before Open

• Monsanto (MON): FQ3 EPS of $1.25 beats by $0.08. Revenue of $3.2B (-10.7%) vs. $3.4B. (PR)
• Rite Aid (RAD): Q1 EPS of -$0.11 beats by $0.02. Revenue of $6.5B (-1.2%) in-line. (PR)

Earnings: Tuesday After Close

• Darden Restaurants (DRI): FQ4 EPS of $0.90 beats by $0.04. Revenue of $1.98B (+8%) in-line. The company declared a quarterly dividend of 0.25, a 25 percent increase. Sees FY10 EPS of $2.59-$2.85 vs. $2.71. (PR)
• Jabil Circuit (JBL): FQ3 EPS of $0.04 beats by $0.01. Revenue of $2.62B in-line. Sees FQ4 EPS of $0.02-0.12 vs. $0.09 and revenue of $2.5-2.7B vs. $2.7B. Remains cautious on overall economy and possible impact on its performance. (PR)
• Oracle (ORCL): FQ4 EPS of $0.46 beats by $0.02. Revenue of $6.9B vs. $6.47B. Operating margin +2.4 points to 51%. Says it took market share from rival SAP AG (SAP) in every region. (PR)

Today's Markets

Asian markets closed up. European markets and U.S. futures start the day in positive territory as well.

• In Asia, Nikkei +0.4% to 9,590. Hang Seng +2% to 17,892. Shanghai +1% to 2,922. BSE +0.7% to 14,423.
• In Europe at midday, London +0.2%. Paris +0.7%. Frankfurt +0.9%.
• U.S. futures: Dow +0.4%. S&P +0.4%. Nasdaq +0.3%. Crude -0.7% to $68.75. Gold +0.6% to $929.70.

Wednesday's Economic Calendar

• 7:00 MBA Mortgage Applications
  8:30 Durable Goods Orders
  10:00 New Home Sales
  10:30 EIA Petroleum Status
  2:15 PM FOMC Announcement
• Notable earnings before Wednesday's open: MON, RAD
• Notable earnings after Wednesday's close: BBBY, NKE, PAYX, RHT

Seeking Alpha editor Eli Hoffmann contributed to this post.

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• Xstrata offer rebuffed. Anglo American's (AAUK) board unanimously rejected a merger offer from Xstrata (XSRAF.PK) due to "totally unacceptable" terms. Xstrata would have been the 'best fit' for Anglo American, say some analysts, but rival bids may emerge from companies like Vale (VALE). A 'disappointed' Xstrata may also make another bid, though its limited capacity to take on more debt could prevent it from offering Anglo American a premium. AAUK +0.5% premarket (7:00 ET).
• 3 banks suspend TARP dividends. At least three small, cash-strapped banks have stopped paying TARP dividends to the government. Pacific Capital Bancorp (PCBC), which received $180.6M in November, has since posted net losses of $49.7M and suspended dividend payments as part of a wider effort to save $8M per quarter. The other two banks - Seacoast Banking Corp. of Florida, which received $84.8M, and Midwest Banc Holdings, which received $50M - pointed to industry turmoil and a desire to strengthen their balance sheets as the reasons for suspending the dividend payments. Treasury said it "respects the contractual rights of [TARP recipients] to make decisions about dividend distributions, and that banks are best positioned to decide how to manage their own capital base."
• SEC wants OTC regulatory power. Testifying in the Senate, SEC's Mary Schapiro told lawmakers the SEC should get expanded authority over security-based swaps and certain non-banking derivatives dealers that offer securities-related over-the-counter products. The SEC currently has only antifraud authority over security-based swaps, which makes investigations 'far more difficult and time-consuming.' According to Schapiro, the Commodity Futures Trading Commission would handle oversight of foreign exchange, interest-rate and commodity swaps, and the Federal Reserve would oversee banks that also deal in derivatives. (Read Schapiro's testimony)
• UBS settlement likely. Amid a fierce lobbying campaign by UBS (UBS) and Swiss officials, and following a recent tax treaty signed with Switzerland, sources say the U.S. Justice Department may be nearing a decision to drop a closely watched tax evasion case against UBS. The complaint could be dropped by July 13, when a federal judge is expected to hold a short trial on the issue.
• Ford, Nissan to tap retooling loans. The White House is expected to announce this morning that Ford (F), Nissan (NSANY) and Tesla Motors are among the first recipients in a $25B loan program to help automakers retool their factories. The loans are designed to help automakers revamp plants in order to produce new models at least 25% more fuel-efficient than vehicles made in 2005.
• Intel lands Nokia deal. Intel (INTC) will reportedly sell processors to Nokia (NOK) for mobile devices, marking a major breakthrough in Intel's efforts to expand into the phone market. Intel's microprocessors run over 80% of the world's PCs, but the company has been working for a decade to crack into the market for mobile-phone chips. An announcement of the deal is expected today. INTC +0.6% premarket (7:00 ET).
• More fraud lawsuits in Madoff case. Three Madoff-related lawsuits were filed yesterday, providing new details about who might have helped perpetuate the long-running Ponzi scheme. The SEC filed civil fraud charges against money manager Stanley Chais, one of Madoff’s earliest investors, accusing Chais of deceiving his clients and ignoring obvious signs of fraud. A civil fraud case was also filed against three senior executives of brokerage firm Cohmad Securities Corporation, alleging they knowingly helped finance and conceal the scheme for years. The third suit named Cohmad and several of its executives and employees, and seeks to recover millions of dollars in fees and profits the defendants received from Madoff.
• Google phones coming soon. Verizon Wireless (VZ) and T-Mobile USA (DT) are planning to launch Motorola (MOT) smartphones based on Google's (GOOG) Android operating system by the end of the year. Motorola has bet heavily on Android as a way to regain traction in the cellphone market, but the new handsets will be released into a market already flooded with new offerings by Apple (AAPL) and Palm (PALM).

Earnings: Monday After Close

• Smith & Wesson (SWHC): FQ4 EPS of $0.14 beats by $0.02. Revenue of $99.5M (+20%) vs. $97.8M. (PR)

Today's Markets

Asian markets closed broadly down, but European markets are pushing into positive territory.

• In Asia, Nikkei -2.8% to 9,550. Hang Seng -2.9% to 17,538. Shanghai -0.1% to 2,893. BSE -0.02% to 14,324.
• In Europe at midday, London +0.3%. Paris -0.15%. Frankfurt +0.5%.
• U.S. futures: Dow +0.2%. S&P +0.3%. Nasdaq +0.2%. Crude -0.4% to $67.20. Gold +0.15% to $922.40.

Tuesday's Economic Calendar

• FOMC Meeting
  7:45 ICSC Retail Store Sales
  8:55 Redbook
  10:00 Existing Home Sales
  10:00 State Street Investor Confidence Index
  10:00 Richmond Fed's Manufacturing Index
  5:00 PM ABC Consumer Confidence Index
• Notable earnings before Tuesday's open: CMC, KR
• Notable earnings after Tuesday's close: DRI, JBL, ORCL

Seeking Alpha editor Eli Hoffmann contributed to this post.

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• Xstrata proposes Anglo American merger. Xstrata (XSRAF.PK) proposed a 'merger of equals' with Anglo American (AAUK), noting the pair's 'complementary assets.' Analysts say a tie up would be very compelling, and could save the combined firm $750M a year while creating a world leader in base metals, platinum, ferrochrome and coal. Anglo American has thus far been resistant to the idea, and characterized merger talks as 'preliminary.' AAUK +5.6% premarket (7:00 ET).
• Jobs' liver transplant leak. The Wall Street Journal reported over the weekend, without citing any sources, that Apple (AAPL) CEO Steve Jobs received a liver transplant two months ago. Jobs didn't comment on the story and an Apple spokeswoman would only say that Jobs is expected to return to work by the end of June. However, the report raises questions about who leaked the story, whether it was planned by Apple executives to lower expectations and to what degree Jobs should have to disclose his past and present medical problems once he returns to work. Shares -1% premarket (7:00 ET).
• U.S. calls for China talks over internet filter. The U.S. has called for talks with China over Chinese plans to require web-filtering software on personal computers, voicing concerns about the possible effect on trade and freedom of expression. Direct U.S. intervention over internet freedom is rare, but the issue has become an increasingly important one between the two countries over the years and U.S. technology companies see it as a back-door way of keeping them out of the Chinese market. Chinese officials have also taken aim at Google (GOOG), and asked the company to stop showing some results from foreign websites through its Chinese website.
• Swiss pressure for a UBS deal. After the U.S. and Switzerland agreed to a double taxation treaty last week, Swiss officials said the U.S. might be willing to cut a deal with UBS (UBS) over allegations of tax fraud and evasion. Officials reiterated that without some sort of deal, the Swiss government could have trouble getting the new tax agreements ratified in a possible referendum.
• Fed weighs repo market changes. The Federal Reserve is considering major changes to the repurchase markets where banks raise overnight dollar loans, including plans to create a utility to replace the clearing banks that handle transactions. Fed officials plan to meet with market participants next month to discuss the changes. JPMorgan Chase (JPM) and Bank of New York Mellon (BK) are the largest intermediaries.
• Looser rules urged for Fannie/Freddie. Two lawmakers want Fannie Mae (FNM) and Freddie Mac (FRE) to relax recently tightened standards for new condominium mortgages, saying the tighter rules could threaten the viability of some projects and 'may be too onerous' for a weak housing market. In March, Fannie said it won't guarantee mortgages on condos where less than 70% of the units have been sold, up from 51%. It also won't buy mortgages in buildings where 15% of owners are delinquent on condo dues or where one owner has more than 10% of the units. Freddie plans to implement similar rules.
• World Bank cuts outlook. The World Bank lowered its outlook for global growth, forecasting a 2.9% contraction this year vs. a previous forecast of -1.7%. Growth in 2010 will reach 2%, down from 2.3%. Impoverished economies will lag rich ones in an eventual recovery, while a flight of capital from developing economies will contribute to a spike in the number of poor and unemployed.
• Bye, bye banks. Regulators closed three more banks on Friday, bringing this year's total number of failures to 40. Georgia-based Southern Community Bank's closure will cost the FDIC $114M. North Carolina-based Cooperative Bank's closure will cost the FDIC $217M. Kansas-based First National Bank of Anthony's closure will cost the FDIC $32.2M.

Earnings: Monday Before Open

• Walgreen (WAG): FQ3 EPS of $0.53 misses by $0.03. Revenue of $16.2B (+8%) in-line. (PR)

Today's Markets

Asian markets closed mostly up, but Europe is deep in the red and U.S. futures are heading down as well.

• In Asia, Nikkei +0.4% to 9,826. Hang Seng +0.8% to 18,060. Shanghai +0.55% to 2,896. BSE -1.35% to 14,326.
• In Europe at midday, London -1.2%. Paris -1.7%. Frankfurt -1.3%.
• U.S. futures: Dow -0.7%. S&P -0.8%. Nasdaq -0.6%. Crude -1.7% to $68.36. Gold -1.2% to $925.20.

Monday's Economic Calendar

• No events scheduled.
• Notable earnings before Monday's open: WAG
• Notable earnings after Monday's close: SWHC

Seeking Alpha editor Eli Hoffmann contributed to this post.

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• Financial reforms snag non-banks. Obama wants industrial loan companies [ILCs], firms which face less scrutiny than banks but can still offer credit cards, make loans, etc., to register as bank-holding companies and be subject to stricter regulation. For ILCs like Target (TGT), Harley-Davidson (HOG), Pitney Bowes (PBI) and dozens of others that routinely pitch loans and other financial products, bank-holding status could potentially be so restrictive that the firms will opt instead to give up their ILC status altogether, closing down another source of consumer credit. Also facing a regulatory problem is General Electric (GE), whose GE Capital will almost certainly be classed as systemically important. Since tighter regulations would be applied to GE as a whole, the shift could potentially force a spin off of the capital unit.
• SEC dives into dark pools. SEC's Schapiro is concerned trading on private electronic markets could present 'emerging risks,' and may require firms to disclose more information about their transactions. The lack of transparency in these so-called 'dark pools' could promote price fluctuations and give some traders an unfair advantage, said Schapiro, and "the commission will be taking a serious look at what regulatory actions may be warranted."
• EU leaders agree on supervision. Wrapping up a summit, EU leaders agreed to tighten financial supervision, create three pan-European watchdogs to help prevent another global economic crisis and to establish a new European Systemic Risk Board to monitor risks to stability. Lawmakers stopped short of giving the new regulators the power to force national governments to bail out companies. Jose Manuel Barroso's bid for a second five-year term as president of the EU's executive European Commission received unanimous support.
• Merrill trio discussed buyback. Three former Merrill Lynch executives approached Bank of America (BAC) CEO Ken Lewis to discuss buying back some or all of their old company, but were turned down. The trio - made up of Dan Tully, former Merrill CEO; Launny Steffens, former head of Merrill’s private client business; and Winthrop Smith Jr., son of one of Merrill’s co-founders - met with Lewis two months ago to float the idea.
• Switzerland mulls bank shrinkage. Switzerland's central bank is examining whether to force banks like UBS (UBS) and Credit Suisse (CS) to shrink down in order to limit risks imposed by their size. "There can be no more taboos, given our experiences of the last two years," said one official, and the bank could impose "direct and indirect measures to limit [large banks’] size."
• FDA approves Novartis genetic drug. The FDA approved the sale of a Novartis (NVS) drug called Ilaris, the company's first drug in its push to focus on the genetic triggers of disease. As opposed to blockbuster drugs marketed to millions of patients, Ilaris treats a rare disorder affecting only a few thousand people worldwide, and represents a shift in the industry towards developing drugs for niche diseases through genetics-focused research.
• Scrushy slammed with $2.88B fine. A judge ordered Richard Scrushy, former chairman and CEO of HealthSouth Corp. (HLS), to pay a staggering $2.88B in damages for helping to artificially inflate HealthSouth's earnings for at least six years through an accounting scam uncovered in 2003. The civil suit was brought by shareholders and the judgment against Scrushy appears to be the largest financial penalty ever levied against a single executive.
• Alcatel-Lucent, H-P team up. Alcatel-Lucent (ALU) and Hewlett-Packard (HPQ) signed a ten-year partnership to develop and market communications and computing products. As part of the deal, Alcatel-Lucent will outsource its IT infrastructure to Hewlett-Packard, saving the company about €750M ($1.05B) and transferring around 1,000 employees to Hewlett-Packard in the process.
• FCC reviews cellphone exclusivity deals. The FCC has begun to investigate wireless handset exclusivity arrangements such as AT&T's (T) deal with the iPhone (AAPL) or Sprint's (S) deal to offer the Pre (PALM). The investigation comes in response to lawmakers' concerns that the deals may be hurting consumers and distorting industry competition.
• New iPhone and more competition. Apple (AAPL) releases a new iPhone today, hoping to lure customers with the promise of faster speed and more features as the smartphone market grows increasingly crowded with offerings from Research in Motion (RIMM - see earnings below), Palm (PALM) and others. An older version of the iPhone is now selling for $99, half the original price, which could boost iPhone sales to 18M this year and 28M next year.
• Tweaking Libor. In order to keep Libor as representative of borrowing costs as possible, the British Bankers' Association has started letting banks outside London contribute quotes. The change could increase the number of lower-rated institutions included in the Libor panel, potentially driving up the average cost of borrowing money. Libor is used as a price reference on around $350T of financial contracts worldwide.
• Jobless claims. Initial Jobless Claims came in at 608K vs. consensus of 604K. Claims from the prior week were revised to 605K from 601K. Continuing claims fell by 130K to 6.69M.
• Leading indicators improve. Conference Board's Leading Indicators rose 1.2% in May, vs. +1% consensus, the second increase in as many months. Vendor performance, interest rate spread, real money supply, stock prices, consumer expectations, and building permits all made positive contributions to the index.
• Philly Fed outlook surges up. Philly Fed's Business Outlook came in at -2.2 in June, up from -22.6 in May and the highest since Sep. 08, which was the only month out of the last 19 that the index was positive. The six-month outlook surged by 12.6 points to 60.1 - close to a 15-year high. The survey noted "declines in the region's manufacturing sector diminished significantly this month. Indicators for general activity, new orders, and shipments are suggesting steadier levels of activity, in contrast with the series of continuous large declines suggested in previous surveys."

Earnings: Thursday After Close

• Research In Motion (RIMM): FQ1 EPS of $0.98 beats by $0.04. Revenue of $3.42B (+52.7%) in line. Sees FQ2 EPS of $0.94-1.03, in line, and revenue of $3.45-$3.7B. (PR)

Today's Markets

Overseas markets moved higher Friday and futures are up in tandem as stocks try to stage a late-week comeback - but there's still a ways to go.

• Asia: Nikkei +0.85% to 9,786. Hang Seng +0.81% to 17,921. Shanghai +0.93% to 2,880. BSE +1.8% to 14,522.
• Europe at midday: London +1.8%. Paris +1.05%. Frankfurt +0.3%.
• Futures at 7:00: Dow +0.5% to 8540. S&P +0.7% to 919. Nasdaq +0.8%.
  Crude +1.15% to $72.74. Gold +0.1% to $935.50.

Friday's Economic Calendar

• No events scheduled.
• Notable earnings before Friday's open: KMX
• Notable earnings after Friday's close: FMCN

Seeking Alpha editor Eli Hoffmann contributed to this post.

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• Obama rolls out financial reforms. Obama laid out his vision for overhauling financial regulation, promising to end 'a cascade of mistakes... over the course of decades' that led to the current crisis. As expected, his plan calls for increased capital cushions at banks, regulation of over-the-counter derivatives, a new agency to regulate financial products for consumers and greater power for the Federal Reserve over systemic risk. However, it only partially addresses a promised top-to-bottom overhaul of regulatory agencies, and stops short of proposing a merger of the SEC and CFTC. The plan now goes to Congress, with Obama pushing to get the legislation signed into law by the end of the year. (Read Obama's statement, White Paper (.pdf), and fact sheets I, II, III, IV, V (.pdf))
• Reactions to the reforms. While some Wall Street veterans were relieved the reforms weren't more draconian, banks oppose provisions to create a new consumer agency, saying it will stifle innovation and make loans more expensive, and are expected to vigorously lobby lawmakers on that point. Hedge funds and industry groups were also quick to point out provisions they don't like. The Federal Reserve, despite gaining new powers over systemic risk, plans to oppose parts of Obama's plan because the creation of a new consumer protection agency will strip some of its powers, while a review of the 12 regional Fed banks risks compromising Fed independence.
• For 10 banks, TARP-free at last. The government received $68B yesterday from 10 financial firms that paid back TARP funds, with some of the firms promising to immediately start negotiating the repurchase of government warrants. Despite the TARP escape, financial shares didn't see a relief rally, with all ten stocks closing down for the day, at least partially because of S&P downgrades (see below). TARP escapees: JPMorgan Chase (JPM), Morgan Stanley (MS), Goldman Sachs (GS), American Express (AXP), Capital One Financial (COF), BB&T (BBT), U.S. Bancorp (USB), Bank of New York Mellon (BK), Northern Trust (NTRS) and State Street (STT).
• S&P cuts banks' ratings... S&P downgraded 18 U.S. banks, and pushed five of them into junk territory, noting conditions 'will become less favorable' with greater volatility and tighter regulations. Among the downgrades were Capital One Financial (COF), BB&T (BBT), U.S. Bancorp (USB) and Wells Fargo (WFC).
• ...and reaffirms U.S. rating. S&P said a change to the U.S.'s AAA sovereign credit rating is unlikely in the near-term. Despite bulging deficits and a weak economy, S&P noted that strengths - including the dollar's reserve status and America's free-trade friendliness - continue to outweigh weaknesses.
• MUFG eyes U.S. expansion through MS. Mitsubishi UFJ Financial Group (MTU) is hoping to capitalize on its relationship with Morgan Stanley (MS) to grow its corporate lending business in the U.S. The two firms are expected to announce a broad global alliance by the end of the month, covering such areas as corporate finance, commodities and pan-Asian business.
• NYSE plans derivatives clearinghouse. NYSE Euronext (NYX) signed a deal with Depository Trust & Clearing Corp. to establish a clearinghouse for U.S. fixed-income derivatives. The 50-50 venture, to be called New York Portfolio Clearing, will coincide with a regulatory push to clear and disclose more over-the-counter derivative positions.
• Google, Microsoft clash. As Microsoft (MSFT) goes on the offensive with Bing, it's also taking issue with Google's (GOOG) new Apps Sync software, arguing it disables the search capabilities of Microsoft's Outlook email program. Google acknowledged there's an issue with its software but disputed the severity of the problem. Meanwhile, General Electric (GE) has said it will use Microsoft technology to sell commercial time on its TV networks, an area in which eBay (EBAY) and Google have also tried to find traction.
• Bauer bows to debt load. As widely expected, Eddie Bauer Holdings (EBHI) filed for bankruptcy protection. The company has an agreement to be acquired by private-equity firm CCMP Capital Advisors for $202M, though CCMP can still be outbid at auction.
• CPI inches up. May's Consumer Price Index rose 0.1% vs. consensus of +0.3% and a flat April. Core CPI was up 0.1%, in line with consensus. Since last year, consumer prices are 1.3% lower, while core prices (net of energy and food) are up 1.8%.
• Deficit shrinks. The Q1 Current Account Deficit came in at $101.5B from $154.9B in Q4 (revised), the smallest deficit since Q4 2001. Goods exports decreased to $249.4 from $290.6B, while imports decreased to $373.4B from $469.4B.

Earnings: Thursday Before Open

• J.M. Smucker Company (SJM): FQ4 EPS of $1.02 beats by $0.39. Revenue of $1.1B (+81.1%) vs. $997M. (PR)

Today's Markets

European markets are following Asian markets into the red, while U.S. futures are mostly flat.

• Asian markets closed mostly down. Nikkei -1.4% to 9,704. Hang Seng -1.7% to 17,777. Shanghai +1.6% to 2,854. BSE -1.8% to 14,266.
• In Europe at midday, London -0.7%. Paris -0.4%. Frankfurt -0.2%.
• Futures: Dow flat. S&P flat. Nasdaq -0.4%. Crude -0.2% to $70.89. Gold +0.2% to $937.80.

Thursday's Economic Calendar

• 8:30 Jobless Claims
  9:30 Geithner speaks before the Senate Banking Committee
  10:00 Leading Indicators
  10:00 Philly Fed Business Outlook
  10:30 EIA Natural Gas Inventory
  4:30 PM Fed Balance Sheet
  4:30 PM Money Supply
• Notable earnings before Thursday's open: CCL, DFS, SJM
• Notable earnings after Thursday's close: RIMM

Seeking Alpha editor Eli Hoffmann contributed to this post.

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• Obama draws a line on auto aid. The White House rejected a request by auto-parts suppliers for up to $10B in new aid, saying the government shouldn't get more involved in the industry's contraction and signaling there's a limit to how much taxpayer money can be sent to the auto industry. Suppliers are now turning to Congress for the money.
• Bidders for First Republic. Carlyle, Blackstone (BX) and TPG are reportedly leading a group of bidders in talks to buy Bank of America's (BAC) First Republic Bank. Bank of America inherited First Republic in its acquisition of Merrill Lynch, and could get as much as $700M for the San Francisco-based bank.
• Morgan bucks TARP. Sources say Morgan Stanley (MS) will repay its TARP money today, returning all $10B in loans. Today is the first day eligible banks can begin repaying government aid. Separately, Morgan is also planning to revamp its prime-brokerage unit to lure back hedge-fund clients that left the firm. As part of the changes, hedge-fund clients will be able to hold part of their assets in a Morgan-owned trust company rather than in the firm's brokerage units.
• Quotables. "Wall Street seems to maybe have a shorter memory about how close we were to the abyss than I would have expected." -Obama, ahead of today's release of financial overhaul plans. (Read a draft of the reforms (.pdf) )
• Virus shuts down Genzyme plants. Genzyme (GENZ) is shutting down production at its main U.S. plants for several weeks, after discovering a virus in one of the vats used to develop drugs. The closed plants include the only facility which produces two of Genzyme's best-sellers, and company officials said they expect to face shortages of both drugs as a result. This is the latest in a series of manufacturing missteps for Genzyme, and could cost the company $100-300M in lost revenue.
• Reynolds safe on patents. R.J. Reynolds (RAI) won a high-stakes patent case against Star Scientific (STSI) over a new method of curing tobacco that reduces certain cancer-causing toxins. Star had been seeking several hundred million dollars in patent-infringement damages, but the court ruled that Reynolds didn't infringe Star's curing patents and that the patents were invalid. Star plans to file a motion for a new trial. STSI -78.7% premarket (7:00 ET).
• BlackRock gets BGI. Barclays (BCS) accepted BlackRock's (BLK) $13.5B cash-and-stock offer for its Barclays Global Investors asset-management business, closing the door on any counterbids. Barclays will pay CVC Capital Partners $175M as compensation for exercising an option to reject CVC's earlier bid.
• Investors bet on BHP purchase. Credit-default swaps on BHP Billiton (BHP) rose 16% yesterday, the most in almost 8 months, on speculation the mining company is planning a large acquisition. Shareholders are eager for growth and are looking for a deal much bigger than the recent $5.8B venture signed with Rio Tinto (RTP). Merrill Lynch recently estimated the company could spend as much as $40B on any future acquisition. Shares -1.7% premarket (7:00 ET).
• Nuclear heats up. Power companies UniStar Nuclear Energy, NRG Energy (NRG), Scana Corp (SCG) and Southern Co. (SO) are expected to split $18.5B in federal financing to build the next generation of nuclear reactors. The government has not yet formally announced its picks, but sources say these four firms are the likely winners from a group of seventeen companies that applied for federal loan guarantees.
• Travel websites face payments over damages, taxes. Expedia (EXPE) and other online travel companies may have to pay millions of dollars in damages and uncollected taxes under recent court rulings in Georgia and Washington state. Expedia is also being sued in Texas, as is rival Orbitz Worldwide (OWW).
• Buy Chinese. Just a few months after slamming a proposed 'Buy American' clause in the U.S. economic rescue package, China has introduced a 'Buy Chinese' policy as part of its stimulus program, amplifying trade tensions and raising the possibility of retaliation. The policy, released jointly by nine government departments, says government procurement must use only Chinese products or services unless they're not available or can't be bought on reasonable terms.
• U.K. gets tougher on banks. U.K. Treasury chief Darling plans to tell banks they need to improve their governance and hold more capital against losses. The changes will move the U.K. farther away from the 'light touch' regulation that made it a magnet for banking activity.
• Retail sales fall. Chain store sales fell 4.5% in the first two weeks of June vs. last month, Redbook reported, worse than the -4.1% expected. According to ICSC, weekly sales were down 0.6% vs. last week as consumers faced rising gas prices and unfavorable weather.
• MBA apps fall. Mortgage applications fell 15.8% last week, MBA reported, as prospective buyers wait to see if interest rates will come back down. The average interest rate on 30-year fixed-rate mortgages fell to 5.5% from 5.57%.
• Housing starts beat expectations (.pdf). May Housing Starts of 532,000 came in above the 500K consensus. April starts were revised to 454K from 458K. Permits, an indication of future starts, were 518K. Starts were down 45.2% from last year's 971K.
• PPI inches up. May's Producer Price Index rose 0.2% from April, vs. consensus of +0.6% and +0.3% last month. Core PPI -0.1% vs. consensus of +0.1% and prior +0.1%. PPI is -5% vs. a year ago, while core PPI is +3% Y/Y.
• Industrial production dips down. May Industrial Production came in at -1.1% vs. consensus of -1% and last month's -0.7% (revised from -0.5%). Capacity utilization was 68.3% vs. last month's 69%.

Earnings: Wednesday Before Open

• FedEx (FDX): FQ4 EPS of $0.64 beats by $0.13. Revenue of $7.85B (+23.3%) vs. $8.32B. Sees FQ1 EPS of Q1, sees EPS of $0.30-0.45 vs. consensus of $0.68. (PR)

Earnings: Tuesday After Close

• Adobe (ADBE): FQ2 EPS of $0.35 in-line. Revenue of $705M (-20.5%) vs. $695M. Sees FQ3 EPS of $0.30-0.37, in-line, and revenue of $665-715M vs. $676M consensus. (PR)

Today's Markets

Asian markets closed mixed, but Europe is heading down while U.S. futures try to gain some traction.

• Asian markets: Nikkei +0.9% to 9,841. Hang Seng -0.45% to 18,085. Shanghai +1.2% to 2,810. BSE -2.9% to 14,523.
• In Europe at midday: London -1.1%. Paris -1.2%. Frankfurt -1.1%.
• Futures: Dow -0.2%. S&P -0.2%. Nasdaq +0.1%. Crude -0.85% to $69.87. Gold -0.2% to $930.30.

Wednesday's Economic Calendar

• Bernanke and FDIC's Bair speak at financial literacy summit
  7:00 MBA Mortgage Applications
  8:30 Consumer Price Index
  8:30 Current Account
  10:30 EIA Petroleum Status
• Notable earnings before Wednesday's open: FDX

Seeking Alpha editor Eli Hoffmann contributed to this post.

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• Ramp up to financial reform. Details continue to emerge on Obama's financial reform plan, due to be released tomorrow. Among other changes, the plan will urge stronger consumer and investor protections, more power for the Federal Reserve, larger bank capital cushions and more robust lending standards. It will also call for the originator of a securitization to retain a financial interest in its performance. Still unknown is how the plan will approach executive pay and streamlined bank supervision. (Read the WaPo op-ed by Geithner and Summers)
• Crunch time for California. Democrats and Republicans in California's legislature are gearing up for battle as they try to close a $24B deficit that could leave the state unable to pay its bills next month. Democrats are calling for higher taxes and fees while Republicans are pushing for $16B in program cuts. Top state officials approached the White House for emergency aid but were rebuffed; the Obama administration is concerned a California bailout would set off a wave of requests from other states.
• So long, Saab. General Motors reached a deal to sell its Saab unit to Swedish luxury carmaker Koenigsegg. Compensation details haven't been released yet, but the deal is tied to a $600M loan backed by the Swedish government.
• Cash for clunkers. The House of Representatives votes today on a 'cash-for-clunkers' bill that would let consumers collect up to $4,500 on car trade-ins. The $1B subsidy, which will likely be approved, is meant to encourage Americans to switch their old cars for new, more fuel-efficient models, and automakers have thrown their full support behind the measure as a way to get consumers into showrooms.
• Raising the stakes on Data Domain bids. Data Domain (DDUP) recommended shareholders reject EMC's (EMC) unsolicited all-cash $1.9B bid, pointing to a binding agreement with NetApp (NTAP) and the uncertainty of an EMC acquisition. It's unlikely that EMC will be deterred, and a bidding war between EMC and NetApp is likely.
• Extended Stay in bankruptcy. In one of the current recession's largest real-estate bankruptcies, Extended Stay Hotels filed for Chapter 11 protection yesterday. The hotel chain, with over 680 properties in 44 states, ended last year with $7.1B in assets and $7.6B in debt. The top holders of secured debt are Wachovia (WFC) and Bank of America (BAC).
• Glaxo is Reddy for emerging mkts. GlaxoSmithKline (GSK) teamed up with Indian drug maker Dr. Reddy's Laboratories (RDY) to focus on emerging markets, excluding India. Under the agreement, products will be manufactured by Dr. Reddy's and licensed and supplied by Glaxo in countries in Africa, the Middle East, Asia Pacific and Latin America. For Glaxo, this is just the latest in a series of moves designed to expand the company's emerging markets presence. GSK +2.5% premarket (7:00 ET).
• ECB sees more writedowns. In its Financial Stability Review, the European Central Bank said it expects eurozone banks will need to write down another $283B by the end of next year, with total crisis-related losses for the region at $649B vs. an IMF forecast of $904B. Risks to eurozone financial stability 'remain high' despite some signs of stabilization in the economy.
• Credit card defaults soar. Credit card defaults reached a record high in May as consumers remained under severe stress. In particular, Bank of America (BAC) experienced a steep deterioration in its lending portfolio, with its default rate jumping to 12.5% from April's 10.47%. Delinquency rates fell across the industry, but analysts said the drop was because of a seasonal trend and the numbers will likely rise again in the coming months.
• IMF raises U.S. outlook. The IMF issued a new outlook for U.S. economic growth, forecasting a 2.5% contraction this year and a 0.75% expansion in 2010. It's not exactly the makings of a robust recovery, but beats earlier forecasts of -2.8% growth in 2009 followed by a stall in 2010. Unemployment is expected to peak at around 10% next year. (Read the IMF report)
• BoJ cautious on outlook (.pdf). Bank of Japan kept its overnight lending rate at 0.1%, and indicated it's unlikely to wind down extraordinary policy steps anytime soon because there's no guarantee the economy's revival will be sustained. Despite the caution, the bank noted that Japan's recession is easing as exports and factory output improve.
• NY manufacturing declines. The New York Fed's Empire State Manufacturing index fell to -9.4, a five-point drop vs. consensus of -2, as conditions deteriorated at a moderately faster pace than in May. Technology and capital spending indexes were positive for the first time since October. Future indexes continued to rise.
• Treasury International Capital. Net foreign purchases of long-term securities were $11.2B in April, well short of $60B consensus and a fraction of last month's $55.4B (revised). Private investors were net buyers of $18.3B, and foreign institutions bought another $16B, while U.S. investors took in $23B of long-term foreign securities.
• Housing index dips down. NAHB/Wells Fargo's Housing Market Index dropped 1 point to 15, the first decline since January, vs. consensus of 17. The index indicates about one in six homebuilders think the market is "good." Headwinds include "the expiration of the tax credit at the end of November; a recent upturn in interest rates; and especially the continuing lack of credit for housing production loans."

Earnings: Tuesday Before Open

• A-Power Energy Generation Systems (APWR): Q1 EPS of $0.04 misses by $0.08. Revenue of $31.2M (-3.4%) vs. $51.2M. Sees FY '09 revenue of at least $320M vs. $335.2M consensus, prior guidance $290M. Sees FY '09 net income of at least $32M vs. prior guidance of $29M. (PR)
• Best Buy (BBY): FQ1 EPS of $0.42 beats by $0.08. Revenue of $10.1B (+12.3%) in-line. (PR)
• Smithfield Foods (SFD): FQ4 EPS of -$0.55 beats by $0.05. Revenue of $2.85B (-0.6%) vs. $3.1B. (PR)

Today's Markets

Asia markets slipped Tuesday after yesterday's U.S. selloff, but Europe stocks are carrying modest gains. Futures are slightly higher in light overnight trading.

• Asia: Nikkei -2.86% to 9,753. Hang Seng -1.8% to 18,165. Shanghai -0.48% to 2,776. BSE Sensex +0.55% to 14,958.
• Europe at midday: London +0.5%. Paris +0.4%. Frankfurt +0.3%.
• Futures: Dow +0.1% at 8529. S&P +0.1% to 916. Nasdaq +0.2%.
  30-year Tsy +0.08%. 10-year -0.15%. 5-year -0.14%. 2-year -0.05%.
  Euro +0.7% vs. dollar. Yen +1%. Pound +0.9%.
  Crude +1.7% to $71.80. Gold +0.8% to $935.

Tuesday's Economic Calendar

• 7:45 ICSC Retail Store Sales
  8:30 Housing Starts
  8:30 Producer Price Index
  8:55 Redbook
  9:15 Industrial Production
  5:00 PM ABC Consumer Confidence Index
• Notable earnings before Tuesday's open: BBY, SFD
• Notable earnings after Tuesday's close: ADBE

Seeking Alpha editor Eli Hoffmann contributed to this post.

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• G-8 discuss stimulus exit strategies. The G-8 finance ministers began drawing up plans to roll back stimulus measures and budget deficits amid continued signs of economic recovery. Officials said it's prudent to consider a 'credible exit strategy,' though the ministers agreed that putting any plans into effect now would be premature, with Geithner and the U.K.'s Darling the most vocal in warning officials not to move too soon. The G-8 ministers also issued their most upbeat outlook since Lehman's collapse in September. (Read the G-8 finance ministers' statement)
• Citi teams up with IFC. Citigroup (C) launched a $1.25B funding tie-up with the International Finance Corporation, the private sector arm of the World Bank. Under the deal, Citi will provide $750M to banks in Asia, the Middle East, Africa and Latin America over three years. The partnership is part of a $50B global trade finance initiative announced by the World Bank in April, and shows the increased willingness by banks to finance trade in emerging markets.
• Unrest in Iran. Clashes broke out in Iran after President Mahmoud Ahmadinejad claimed re-election victory amid allegations of vote-rigging. Ahmadinejad's main challenger, former premier Mir Hossein Mousavi, urged crowds to stay 'calm' despite 'obvious violations' in the voting process which saw Ahmadinejad win 63% of the vote vs. Mousavi's 34% in what was expected to be a tight race.
• Icahn eyes Delphi. Activist investor Carl Icahn is reportedly considering making another attempt to take over bankrupt auto parts supplier Delphi. A bankruptcy judge told Delphi last week to open the sale of its assets to other potential bidders to compete with an offer by Platinum Equity. Icahn's auto-parts company, Federal-Mogul Corp, had held recent discussions with Delphi before the Platinum deal was announced.
• Pfizer looks to emerging mkts. Pfizer (PFE) is looking to reach deals in 'the next few months' to help it raise its share of the $80B drug industry in emerging markets. Pfizer's redirected attentions are part of a larger trend as pharmaceuticals face tougher conditions in more mature markets.
• IBM has its head in the clouds. IBM will begin rolling out some initial products and services for tailored cloud computing this week. Though many large firms and government agencies have thus far been reluctant to go for cloud computing because of security and reliability concerns, IBM hopes to attract customers with the promise of a 70% reduction in PC power needs and a 40% reduction in technical support costs.
• BRIC wants beefed up role. Leaders from Brazil, Russia, India and China will meet this week for their first formal summit. BRIC countries will discuss ways to reshape the world's financial system and ideas for a new reserve currency, with an eye towards playing a larger role on the global stage.
• Cemex's concrete sale. Swiss cement maker Holcim agreed to buy the Australian operations of Mexican rival Cemex (CX) for 2.02B Australian dollars ($1.64B). The deal will close after regulatory approval and a due diligence process.
• Eurozone joblessness rises. Eurozone employment fell 0.8% in Q1, the third quarter in a row of falling employment and the largest decline since records began in 1991. Spain did the worst, with employment falling 3.1% on the quarter and 6.4% Y/Y.

Today's Markets

Overseas markets were mostly weaker Monday.

• Asia: Nikkei -0.95% to 10,040. Hang Seng -2.07% to 18,499. Shanghai +1.67% to 2,790. BSE -2.38% to 14,876.
• Europe at midday: London -1.6%. Paris -1.8%. Frankfurt -2%.
• Futures: Dow -1.2% to 8637. S&P -1.2% to 929. Nasdaq -1.1%.
  Crude -1.3% to $71.11. Gold -0.7% to $934.
  30-year Tsy +0.25%. 10-year +0.22%. 5-year +0.17%. 2-year +0.13%.
  Euro -1.1% vs. dollar. Yen +0.2%. Pound -0.7%.

Monday's Economic Calendar

• 8:30 Fed's Evans speaks on the financial crisis
  8:30 Empire State Mfg Survey
  9:00 Treasury International Capital
  1:00 PM NAHB Housing Market Index

Seeking Alpha editor Eli Hoffmann contributed to this post.

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• BlackRock reaches Barclays deal. BlackRock (BLK) agreed to buy Barclays' (BCS) investment unit for $13.5B, transforming itself into the world's largest money manager with $2.7T in assets under management. BlackRock will pay $6.6B in cash and the rest in stock, and Barclays will hold a 19.9% stake in the combined company.
• Lewis testimony on the Fed and Merrill. Testifying in Congress yesterday, Bank of America (BAC) CEO Ken Lewis acknowledged publicly for the first time that the government threatened to remove him and other executives if the bank pulled out of the Merrill Lynch deal, but said he didn't feel federal officials acted improperly. Lewis' hearing, and inconsistencies in his testimony, left many questions unresolved, and lawmakers will likely call in officials from the Federal Reserve and Treasury to testify. (Read Lewis' testimony (.pdf) and the collection of Fed emails in question (.pdf))
• Mixed message on Fed power. Sources say Obama's planned financial overhaul will see the Federal Reserve emerge as the regulatory agency with the most power, including the responsibility to oversee firms considered too big to fail. However, there is rising skepticism among lawmakers about whether the Fed used its powers appropriately during the current crisis, and Congress may try to limit the Fed's authority going forward.
• Tobacco under FDA control. As expected, the Senate passed a bill giving the FDA authority to regulate the tobacco industry, and legislation will be presented to Obama in the near future. Approved by an overwhelming margin, the bill will put severe restrictions on packaging and advertising, mandate industry fees to pay for the FDA regulation and could potentially undo business plans based on smokeless tobacco products. Tobacco companies are weighing their responses, and could tie down the legislation for some time with lawsuits.
• Rambus settles antitrust case. Rambus (RMBS) reached a tentative settlement with EU antitrust regulators over accusations of 'patent ambush' - failing to disclose the scope of its patents and then later demanding 'unreasonable royalties.' Under the proposed settlement, Rambus won't pay a fine or be found liable for wrongdoing, but the company will cut its patent royalty rates for some products. The U.S. Federal Trade Commission dropped the remainder of its case against Rambus last month.
• Lilly sued over drug marketing. According to unsealed internal company documents, Eli Lilly (LLY) urged doctors to prescribe Zyprexa for elderly patients with dementia, an unapproved use for the antipsychotic, even though the drugmaker had evidence the medicine didn’t work for such patients. The documents also revealed Lilly 'ghostwrote' medical articles to market Zyprexa, with Lilly officials writing up the studies and then asking doctors to put their names on it. Lilly is facing lawsuits from insurers, pension funds and 12 states over its Zyprexa marketing practices.
• Saab deal imminent. General Motors is close to selling its Saab unit, and an announcement could come as soon as today. A deal would take care of a critical loose end in GM's global restructuring plan.
• MSFT backs down on web browser. Facing antitrust concerns in Europe, Microsoft (MSFT) will release its new Windows 7 operating system in the region without a web browser and will instead offer Internet Explorer "separately and on an easy-to-install basis to both computer manufacturers and users." EU regulators were surprised by the decision, noting "rather than more choice, Microsoft seems to have chosen to provide less," and will 'shortly decide' the outcome of their case.
• Mobile phone sales slide. Global mobile phone sales fell by 11.9% in Q1 vs. the year-earlier period, and were down 20% from Q4, itself a weak quarter. Cash-strapped consumers are realizing "many of the features they desire are already in the handset they currently use, and are willing to forego an upgrade until they have more confidence in their own futures," ABI Research's Kevin Burden said. Still, while cell-phone makers must learn to cope with the new reality, a recent study found our attachment to the devices isn't waning: 40% of users say they'd rather lose their wallet than their phone.
• Northrop contract cancelled. The Pentagon terminated Northrop Grumman's (NOC) missile-defense program, once valued at $6.3B, despite a push by the company to carry out a key test of the technology in September. The cancellation is part of a restructuring of missile-defense efforts under the proposed fiscal 2010 budget. Northrop had carried out about $1.2B of work under its contract.
• WHO declares flu pandemic. The World Health Organization declared the first influenza pandemic of the 21st century, and advised governments to prepare for a long-term battle against an unstoppable flu virus. The pandemic status reflects the fact that the disease is spreading geographically, but doesn't indicate how virulent it is.
• Retail sales tick up. May Retail Sales rose 0.5% from April to $340B, but were down 9.6% vs. a year ago, in line with consensus estimates. April's sales were revised to -0.4% from -0.2%.
• New high for continuing claims. Initial Jobless Claims came in at 601,000 vs. last week's 625,000 (revised) and consensus of 625,000. However, continuing claims reached a record high, rising 59K to 6.82M.
• Business inventories. April Business Inventories: -1.1% vs. -1% consensus. March was revised to -1.3% from -1%. While it's encouraging to see bloated inventories starting to clear out, the rate of decline is still far slower than the pace at which they ballooned in late 2008.

Earnings: Thursday After Close

• National Semiconductor (NSM): FQ4 EPS of -$0.28 beats by $0.10. Revenue of $281M (-39.2%) vs. $273M. Sees FQ1 revenue $285-305M vs. consensus of $282M. "Business conditions improved through the quarter. We saw increasing orders from our wireless handset customers as they began ramping production of new smartphone models." (PR)

Today's Markets

Overseas stocks were mixed Friday and futures are flat in a quiet overnight session.

• Asia: Nikkei +1.55% to 10,136. Hang Seng +0.52% to 18,890. Shanghai -1.91% to 2,744. BSE -1.13% to 15,238.
• Europe at midday: London -0.1%. Paris -0.05%. Frankfurt -0.3%.
• Futures at 7:00: Dow flat at 8702. S&P flat at 936. Nasdaq +0.2%.
  Crude -1.5% to $71.63. Gold -1.1% to $951.
  30-year Tsy +0.45%. 10-year +0.3%. 5-year +0.19%. 2-year +0.06%.
  Euro -0.45% vs. dollar. Yen -0.55%. Pound -0.6%. $Cdn -1.4%.

Friday's Economic Calendar

• 8:30 Import/Export Prices
  9:55 University of Michigan Consumer Sentiment

Seeking Alpha editor Eli Hoffmann contributed to this post.

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