- CME weighs its CBOE options. CME Group (NASDAQ:CME) - the largest futures market in the world - is reportedly in early talks to fold Chicago Board Options Exchange (NASDAQ:CBOE) into its empire. Sources say a deal could be worth up to $5B, or a 50% premium to CBOE’s current worth, and would give CME the biggest share of trading in listed U.S. options – a market growing at lightening speed. Analysts say any deal could still be months off, however, due to issues over how CBOE's membership interests would be divided.
- C'mon, Ben! Barron's magazine's Andrew Bary urged Ben Bernanke to hike interest rates to a "more normal" 2%, or risk fostering another financial bubble. Barron's says with the economy recovering, the dollar falling, and commodities on the rise, keeping rates near zero will only fuel speculation and anger America's economic partners and foreign creditors - and potentially stoke inflation. Bary worries the Fed is failing to distinguish between normal accommodative monetary policy and crisis accommodative policy.
- Earnings rule the day. Markets will be closely watching a fresh battery of earnings this week - including consumer-related companies such as Apple (NASDAQ:AAPL), McDonald’s (NYSE:MCD), Whirlpool (NYSE:WHR) and Hasbro (NASDAQ:HAS) - looking to see just how healthy the consumer is, and by extension the economic recovery. Last week Bank of America (NYSE:BAC), Citigroup (NYSE:C), and General Electric (NYSE:GE) disappointed, reporting heavy consumer-related losses, which stomped out a rally kindled earlier in the week.
- Citigroup might lose Mexican unit. Citigroup (C) could be forced to sell its highly-prized Mexican subsidiary, Banamex. A case being decided by Mexico's Supreme Court this week will rule on whether the Citigroup arm is in breach of Mexican law that bans foreign governments from owning a stake in domestic banks; some claim an earlier ruling allowing the "transitory" stake was unconstitutional. Banamex accounts for about 15% of Citi's global profits, and has an estimated worth of about $20B. Other banks with Mexican operations that could be affected by the ruling include AIG (NYSE:AIG), Bank of America (BAC) and Bank of New York Mellon (NYSE:BK).
- Vivendi to GE: pay up. GE (GE) and Vivendi are at odds to the tune of about $500M over what Vivendi should get for its 20% stake in NBC Universal. The sale is critical to a deal that GE has reportedly been negotiating with Comcast (NASDAQ:CMCSA). GE, which owns 80% of NBC Universal, and Comcast are in the midst of due diligence. Vivendi wants to be paid at least book value for its stake, or about $6.3B. sources say. If Vivendi and GE reach an agreement, a deal on the Comcast-NBC Universal transaction could come as soon as next month.
- Drug companies to benefit from healthcare bill. Some healthcare industry executives believe drug companies stand to profit more handsomely than insurance companies from the government’s healthcare overhaul, as coverage extends to some 29M more Americans. Senate Democrats meet this week to write the bill they plan to bring to the floor. With a surge in coverage, drug companies, pharmacies and hospitals would be protected from carrying the cost of customers who can’t afford to pay up. In contrast, insurance companies would no longer be able to reject those with pre-existing illnesses – which could prove costly.
- CIT throws sop to bondholders. Hoping to crank up bondholder support for its debt exchange plan, CIT Group (NYSE:CIT) said late Friday night that it sweetened terms of the proposed deal. Some junior bondholders will get more stock in exchange for their bonds and higher interest on new debt. The pool of eligible exchange participants will also be enlarged. CIT, one of the largest lenders to small and mid-sized companies, is looking to slash its $31B in bonds by at least $5.7B and to extend debt maturities. Bondholders will have to choose between the exchange offer and a possible prepackaged bankruptcy plan.
- Wall Street insider crackdown coming. The arrest of billionaire hedge-fund chief Raj Rajaratnam late last week could be the tip a much larger sting operation about to strike Wall Street, sources say. The Fed crackdown, brewing for two years, targets large institutional investors such as hedge-fund managers, lawyers and other Wall Street players. Rajaratnam's ring, extending to the likes of IBM (NYSE:IBM) executive Robert Moffat, a close confidant of IBM's CEO, allegedly reaped some $20M in profits from trading on insider information.
- U.S. customers: beware of UBS mail. U.S. clients of Swiss investment bank UBS (NYSE:UBS) could be nailed for tax evasion simply by opening their mail. UBS is reportedly warning U.S. clients, via registered mail, that their account details are being sent to U.S. tax authorities. This could give U.S. authorities an early leg up in tracing customers on their tax evasion hit list – well before such details are due to be shared under a U.S.-Swiss double taxation agreement – and in potential violation of Swiss secrecy laws, sources say. In August, Switzerland handed over details of 4,450 U.S. accounts at UBS to settle the tax evasion furor.
- Stagecoach gallops to National's rescue. Just days after being abandoned by CVC Capital, Britain's National Express Group said Stagecoach Group has stepped forward with a preliminary all-share bid valued at £1.7B ($2.8B). The U.K. rail operator said it was considering a share sale over the next few weeks to reduce debt after CVC dropped its £765M bid.
Earnings: Mon. Before Open
- BB&T (NYSE:BBT): Q3 EPS of $0.23 beats by $0.01. Revenue +16.1%. Provision for credit losses almost doubled to $709M. "Our earnings continue to be negatively affected by a significant provision for credit losses and other costs related to the credit environment." Shares -2.1% premarket. (PR)
- Eaton (NYSE:ETN): Q3 EPS of $1.21 beats by $0.29. Revenue of $3.03B vs. $3.13B. Sees Q4 EPS of $1.15-1.25 vs. $1.06. (PR)
- Hasbro (HAS): Q3 EPS of $0.99 beats by $0.06. Revenue of $1.28B (-1.8%) in-line. “We believe we can grow revenues in 2009 if our consumer retail takeaway continues to improve in line with recent fourth quarter trends." (PR)
- Weatherford International (NYSE:WFT): Q3 EPS of $0.13 in-line. Revenue of $2.15B (-15.4%) in-line. North America rig count -52%; international rig count -11%. Shares +1.4% premarket. (PR)
Asia markets posted strong gains to kick off the week. Europe stocks are higher at midday, and futures look poised to carry solid gains into the open.
- Asia: Nikkei -0.21% to 10,237. Hang Seng +1.23% to 22,200. Shanghai +2.07% to 3,038. BSE +0.02% to 17,326.
- Europe at midday: London +0.7%. Paris +1.2%. Frankfurt +1.3%.
- Futures at 7:00: Dow +0.5% to 9972. S&P +0.6% at 1088.50. Nasdaq +0.7%. Crude -0.5% to $78.65. gold +0.4% to $1,055.70. 30-year bond -0.37%. Euro +0.2% vs. dollar. Yen flat. Pound -0.35%.
Monday's Economic Calendar
Monday's economic calendar:
11:00 Bernanke: Asia and the Global Crisis
12:00 PM CATO Institute: Which Way Forward for Fannie and Freddie?
1:00 PM NAHB Housing Market Index
- Notable pre-market earnings: BPOP, BBT, ETN, GCI, HAS, JEF, MMR, WFT
- Notable post-market earnings: AAPL, ATHR, BSX, JDAS, LNCR, PKG, STLD, TXN, UDR, VLTR, WERN, ZION
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