- Financial reform finalized. Lawmakers working into the early hours this morning reached a final agreement on the financial reform bill. They agreed to a modified Volcker rule, allowing banks to invest up to 3% of their equity in hedge funds and private equity funds, and will mandate that banks separate much (but not all) of their derivatives activities. Banks and hedge funds will be disappointed by the inclusion of a $19B fee they will have to pay to cover the costs of financial reform. With the negotiations done, both houses of Congress will proceed with a vote on the full bill next week.
- No extension for unemployment benefits. A third attempt by the Senate to pass an extension to unemployment benefits failed to win the 60 votes needed for cloture, as lawmakers showed increasing concern about the country's fiscal position. As a result, the bill will be shelved and 1.3M unemployed will lose their unemployment assistance by the end of the week. The move will also leave several states with large budget holes they had expected to fill with federal money.
- For sale: Greek Islands. Greece is preparing to sell, or put up for long-term lease, around 6,000 of its islands to help repay its debts, reports the Guardian. The areas for sale include part of Mykonos, one of Greece's top tourist destinations, and the island of Rhodes. Potential investors are said to be predominantly Russian and Chinese.
- BP faces scrutiny on Alaskan well. BP (NYSE:BP) is facing increased regulatory scrutiny over its plans to develop an oil field five miles off Alaska's coast. Though BP plans to create a manmade island as its base for operations, the Interior Department is applying the rules for offshore drillers and has told BP it must provide information on the possibility of a well blowout along with third-party verification that equipment used to stop spills works. In its latest update, BP said it has now spent $2.35B on containment and cleanup costs. Separately, a federal judge rejected the government's request to keep its deepwater drilling moratorium in place while the government appeals an earlier decision overturning the ban. Premarket: BP -6.3% (7:00 ET).
- Lions Gate, MGM in merger talks. Lions Gate Entertainment (LGF) has reportedly held merger talks with studio Metro-Goldwyn-Mayer. Lions Gate had dropped out of the bidding for the debt-laden studio earlier this year, but has now resumed informal talks. Any deal will likely face opposition from Carl Icahn, the activist investor who raised his stake in Lions Gate to 31.8% earlier this month and who has been openly critical of an MGM bid.
- Morgan Stanley settles subprime probe. Massachusetts Attorney General Martha Coakley announced a $102M settlement with Morgan Stanley (NYSE:MS) over charges that the bank took part in "unfair" residential loans contributing to a housing crash in the state. Morgan Stanley neither admitted nor denied wrongdoing. A similar deal was reached with Goldman Sachs (NYSE:GS) last year.
- Hasbro to stay public. Hasbro (NASDAQ:HAS) said it is not involved in talks to potentially sell the company, denying earlier media reports that it is considering a leveraged buyout from private equity firm Providence Equity Partners. The toymaker said it had been approached by a private equity firm regarding a possible transaction, but the board had decided against pursuing it.
- Santander buys Citi auto loans. Santander Consumer USA, an affiliate of Banco Santander (STD), agreed to buy $3.2B of auto loans from CitiFinancial Auto (NYSE:C) at 99% of gross receivables. Santander will also service $7.2B in auto loans that Citi will retain. The deal is part of Citi's ongoing efforts to shed non-core assets.
- Regulators need more info from Comcast, NBC. The FCC said yesterday that Comcast (NASDAQ:CMCSA) and NBC (NYSE:GE) had failed to fully comply with recent information requests regarding their proposed joint venture. As a result, the FCC's 180-day review period will be halted with the effective date of June 11, the date the information was due, and will resume only when the two firms submit the requested documents.
- Hitachi, GE discuss alliance changes. GE (GE) and Hitachi (HIT) are in talks to change the ownership structure of their nuclear-power alliance. Hitachi president Hiroaki Nakanishi said he wants to reevaluate how the partnership works in order to boost sluggish nuclear-power-plant orders outside of the U.S. and Japan. The focus on nuclear power is critical for Hitachi, which is trying to generate more stable earnings by shifting away from its money-losing semiconductor and consumer-electronics operations.
- Boeing grounds test planes. Boeing (NYSE:BA) temporarily grounded a fleet of Dreamliner test planes after discovering a problem in the horizontal tail. Dreamliner spokeswoman Yvonne Leach said the problem was "regrettable but under control," and that the temporary grounding shouldn't further delay the already behind-schedule timeline for testing and delivering the planes. Premarket: BA -0.7% (7:00 ET).
Earnings: Thursday After Close
- Accenture (NYSE:ACN): FQ3 EPS of $0.73 beats by $0.04. Revenue of $5.6B (+8.3%) vs. $5.5B. Shares +2.1% AH. (PR, earnings call transcript)
- H&R Block (NYSE:HRB): FQ4 EPS of $1.46 misses by $0.58. Revenue of $2.3B (-5.2%) in-line. Shares +0.3% AH. (PR, earnings call transcript)
- Oracle (NYSE:ORCL): FQ4 EPS of $0.60 beats by $0.06. Revenue of $9.6B (+39.9%) vs. $9.5B. Shares +4% AH. (PR, earnings call transcript)
- Research In Motion (RIMM): FQ1 EPS of $1.38 beats by $0.04. Revenue of $4.3B (+23.7%) vs. $4.4B. Shares -4.2% AH. (PR, earnings call transcript)
- TIBCO Software (NASDAQ:TIBX): Q2 EPS of $0.15 beats by $0.02. Revenue of $173M (+21.5%) vs. $161M. Shares +6.3% AH. (PR, earnings call transcript)
- In Asia, Japan -1.9% to 9737. Hong Kong -0.2% to 20691. China -0.5% to 2553. India -0.9% to 17575.
- In Europe, at midday, London -0.6%. Paris -0.5%. Frankfurt -0.7%.
- Futures: Dow -0.15%. S&P -0.1%. Nasdaq -0.3%. Crude -0.55% to $76.09. Gold -0.2% to $1243.90.
Friday's Economic Calendar
8:30 GDP Q1
8:30 Corporate Profits
9:55 Reuters/UofM Consumer Sentiment
10:30 ERCI Leading Index
- Notable earnings before Friday's open: KBH
Seeking Alpha's Market Currents team contributed to this post.
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