- Citi's embarrassing share sale. Citigroup (NYSE:C) confirmed late Wednesday it priced a massive 5.4B share sale at $3.15, generating net proceeds of $17B. The Treasury, which was slated to sell $5B in stock concurrently, shelved its plans after pricing was lower than the $3.25/share it paid, extended the lock-up period on its 7.7B share stake to 90 days from 45, and said it expects to exit its stake over the coming 12 months. Analysts said the disappointing showing casts doubt on the wisdom of Citi's rush to exit TARP; Dick Bove called it "a terrible deal for shareholders," and said it proves the interests of Citi's management team (removing pay restrictions) are not aligned with those of shareholders. Shares --8.1% to $3.17 premarket.
- BofA's new boss. Bank of America (NYSE:BAC) ended its protracted search to replace Ken Lewis, tapping Brian Moynihan, head of its retail operations, to take the reins at year-end. With key outsiders reluctant to entertain the job, Moynihan's most serious competition was BofA's chief risk officer Gregory Curl, who was recently tagged by NY State AG Andrew Cuomo in a probe of the bank's courtship and acquisition of Merrill Lynch. Moynihan, 50, a lawyer by background, will be the first CEO in recent times not to have worked at BofA's predecessor, North Carolina National Bank; he joined the bank during a 2004 acquisition of FleetBoston Financial. In BofA's statement, Chairman Walter Massey said Moynihan "offered the advantage of a smooth transition," while Moynihan offered his first vision for the company: "What we need to do now is very simple... We need to execute." Shares -0.4% premarket.
- More upbeat Fed keeps lid on rates. As expected, the Fed kept its overnight target at 0-0.25% and pledged to keep rates low for "an extended period," but expressed growing optimism on the U.S. economy as job losses slow and housing markets improve. "Economic activity has continued to pick up," the Fed said. "Deterioration in the labor market is abating." Underscoring confidence in credit markets, the Fed stood by plans to shutter most of its emergency lending facilities on Feb. 1. After the Fed's decision, traders pared bets on a rate hike: just 48% expect a quarter-point raise by mid-2010, down from 58% before the statement.
- FTC sues Intel for foul play. The FTC sued Intel (NASDAQ:INTC) for anticompetitive conduct, alleging Intel "has waged a systematic campaign to shut out rivals’ competing microchips by cutting off their access to the marketplace," and, in the process, has "deprived consumers of choice and innovation." The suit comes one month after Intel settled an antitrust suit brought by rival AMD by paying AMD $1.25B and agreeing to stop doing things it asserts it never did - making it clear regulators aren't about to drop the matter. Beside the standard complaints that Intel set up a system of "threats and rewards" with PC makers (DELL, HPQ, IBM), and designed compilers so that its own chips would perform better than its rivals', Wednesday's suit also accused Intel of trying to establish a monopoly in the market for graphics processors (GPUs), which sent shares of Nvidia (NASDAQ:NVDA) soaring 8%. Also yesterday: INTC -2.1%. AMD +3.7%. (See also: Intel's response; Timeline: Intel and antitrust)
- Banks face tighter capital standards. The Basel Committee on Banking Supervision unveiled proposals for tighter bank capital requirements Thursday, introducing stricter limits on what counts as top-level assets and on risk exposure from trading in derivatives and securities. But the announcement contained little detail on the size of a planned global leverage ratio which would limit banks' ability to lend, which BIS said would take until late 2010 to settle on, with the aim of implementation by end-2012. (graphic: world banks' capital strength)
- Ominous dip in U.K. retail sales. U.K. retail sales fell unexpectedly in November, dropping at their fastest pace since May. Retail sales volume fell 0.3% month-on-month, confounding expectations for a rise of 0.4%, even as October sales were revised up to +0.6% from +0.4%. The pound weakened more than a full cent on the news to hit a two-month low against the dollar. "It doesn't really derail hopes of GDP growth resuming in Q4, but it does suggest, as with the disappointing industrial production figures, that growth is going to be pretty sluggish. We are not going to see a strong rebound in the final quarter," RBS economist Ross Walker said. (ETF: EWU)
- House OKs $155B job stimulus. The House narrowly approved (217-212) a $155B bill that seeks to create jobs and help cash-strapped states avoid layoffs of public employees. Leftover TARP funds will cover $75B of the bill's price tag. The bill, which will be considered by the Senate in early 2010, approves $48.3B in spending for "shovel-ready" infrastructure projects, $27.5B for highway construction, and gives states $23B for teachers and school improvements. President Obama hopes to bring unemployment down below 10% before the November 2010 congressional elections.
- FUN day for Apollo. Private-equity firm Apollo Management agreed to acquire theme-park operator Cedar Fair (NYSE:FUN) for $635M, in a deal worth $2.4B including the refinancing of outstanding debt. Shareholders will receive $11.50/share in cash, a 27% premium to Wednesday's close. Ohio-based Cedar Fair owns and operates 11 amusement parks, seven water parks and five hotels.
- Anti-fracking law could confound XTO deal. ExxonMobil (NYSE:XOM) said Wednesday it could renege on its $30B takeover of XTO Energy (XTO) if lawmakers pass a bill restricting or outlawing hydraulic fracturing ("fracking"), a controversial drilling technique used to tap oil and gas fields. Fracking injects a mixture of water, sand and chemicals into rock formations at high pressure to force out oil and natural gas; critics say fracking chemicals can cause cancer and other serious illnesses, while the oil and gas industry insists the practice is well regulated and safe.
- Obama's $2B broadband initiative. The government will award $2B in grants and loans over the next 75 days as part of a $7.2B plan to dramatically expand Americans' broadband internet access and create tens of thousands of jobs. VP Biden will give details today of an initial $182M investment, including the names of beneficiary companies. The initiative aims to link remote communities to the internet backbone.
- Boyd boosts bid for Vegas rival. Boyd Gaming (NYSE:BYD) raised its bid for control of bankrupt rival Station Casinos to $2.45B in cash and debt assumption, after its $950M offer for a portion of the company was rebuffed earlier this year. Neither of the two operate casinos on the tourist-heavy Las Vegas Strip, competing instead for the gambling business of locals. Boyd has access to $2B in credit that was earmarked for a now-halted development on the Strip. Station has resisted Boyd's advances while it attempts to work its way out of Chapter 11.
- National Australia Bank trumps AMP's bid to Buy Axa Asia. National Australia Bank made a surprise A$13.3B ($12B) bid for Axa Asia Pacific ((NYSE:AAP)), trumping a joint bid from AMP Ltd. and AAP parent AXA (AXA), and winning approval from the wealth manager's board. The deal is conditional on Axa's agreement to buy AAP's units in eight Asian countries, giving France's largest insurer full control of its Asia operations - where wealth is growing faster than in any other region.
Earnings: Thur. Before Open
- General Mills (NYSE:GIS): FQ2 EPS of $1.54 beats by $0.09. Revenue of $4.08B (+1.7%) in-line. (PR)
- Pier 1 Imports (NYSE:PIR): Q3 EPS of $0.37 vs. consensus of -$0.05. Revenue of $327M (+8.7%) vs. $322M. Comps: +13.7%. Merchandise margin: 56.6% from 52.5% last year. (PR)
- Winnebago Industries (NYSE:WGO): FQ1 EPS of -$0.05 beats by $0.02. Revenue of $81M (+16.7%) vs. $108M. (PR)
Earnings: Wed. After Close
- Hovnanian (NYSE:HOV): FQ4 EPS of -$3.21 misses by $1.81. Revenue of $437M (-39%) vs. $454M. Shares -9.5% AH. (PR
- Paychex (NASDAQ:PAYX): FQ2 EPS of $0.35 beats by $0.02. Revenue of $496.6M (-5%) vs. $496.4M. Sees full-year revenue down 2-5%. Shares +3.1% AH. (PR)
Shanghai led Asian markets lower Thursday. Europe stocks are under pressure at midday, U.S. futures are lower following an active overnight session, and the dollar is strongly higher, as are Treasurys.
- Asia: Nikkei -0.1% to 10163.8. Hang Seng -1.2% to 21348. Shanghai -2.3% to 3179. BSE -0.1% to 16894.
- Europe at midday: FTSE -0.9% to 5272. CAC -0.6% to 3854. DAX -0.7% to 5864.
Futures: Dow -0.45% to 10343. S&P -0.6% to 1099. Nasdaq -0.6%.
Jan. crude -0.8% to $72.07. Feb. gold -1.3% to $1,121.
30-year Tsy +0.61% to 118-07. 10-year +0.36%. 5-year +0.24%. 2-year +0.12%.
Euro -1.3% vs. dollar. Yen flat. Pound -1.3%. Loonie -0.7%.
Thursday's Economic Calendar
8:30 Initial Jobless Claims
9:30 Bernanke reappointment vote
10:00 Leading Indicators
10:00 Philly Fed Business Outlook
10:30 EIA Natural Gas Inventory
1:00 PM Fed's Fisher: State of Global Economy
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
- Notable pre-market earnings: ATU, DFS, FDX, GIS, PIR, RAD, WGO
- Notable post-market earnings: ACN, DRI, NKE, ORCL, PALM, RIMM, TTWO
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