- Crude bounces after plunging on IEA release. Crude oil prices have made back some of their losses from yesterday, rising 0.5% to $91.48 on concerns that the release of 60M barrels of oil reserves by the International Energy Agency may limit the ability to respond to supply disruptions in future. “The more stocks you use now, the less of a buffer you have for any supply shock in the future," said an economist at National Australia Bank. SocGen predicted that if crude neared $90, OPEC "will start talking about cutting production." Prices plummeted 4.6% yesterday after the IEA said it would release the reserves to make up for supplies choked by the Libyan uprising. The U.S. will provide 30M barrels, European members 20M and Asian nations the remainder.
- EU to provide Greece with funds. The EU and IMF have pledged to provide Greece with a €12B tranche of its bailout to stop it from defaulting in July after refusing to allow the country to soften its austerity measures. Greek Prime Minister George Papandreou now needs to get the program passed through parliament on Thursday next week. EU heads of government, who have been meeting in Brussels, are also nearing approval of a new rescue package to take Athens until the end of 2014. In addition, the leaders have authorized the creation of a permanent eurozone bailout fund from June 2013 and the strengthening of the existing temporary rescue fund.
- Trading in Italian banks halted. Trading in Italian bank stocks has been suspended following steep drops after Moody's yesterday put them on negative outlook. A spokeswoman for Borsa Italiana said the suspension was temporary and was triggered by "technical problems about volatility." Unicredit (OTCPK:UNCFF) -8%. Other European lenders are dropping as well.
- EU confirms Draghi as head of ECB. EU leaders have formally appointed Italy's Mario Draghi as the next President of the ECB to replace Jean-Claude Trichet, who will step down in October after eight years in the job. Draghi's mandate will last until 2019.
- Google hit with antitrust probes. The FTC and state attorney generals in California, Ohio and New York are investigating whether Google (NASDAQ:GOOG) uses its dominance of Internet search to favor its own services over those of rivals in the results it provides, sources said. The probes add to an inquiry from the European Commission, which began investigating Google in November. An analyst said the main problems for Google with the probes are not just financial. "The issue comes down to management distraction, that's a real cost," he said. Another problem is that the investigations are hampering one of Google's best options to grow - the ability to move into adjacent markets.
- Battle for Southern Union heats up as Williams bids $4.9B. Shares in Southern Union (NYSE:SUG) jumped 14.8% to $34.15 in post-market trading after it received an unsolicited $4.9B cash bid from Williams Companies (NYSE:WMB). The $39 a share proposal for the gas pipeline company tops a $33 a share all-stock merger agreement between Southern Union and Energy Transfer (NYSE:ETE), which is worth $4.1B. With Southern Union owning over 20,000 miles of pipelines, the victor will become the largest natural gas pipeline company in the U.S. An analyst at East Shore Partners said the premium on Williams' bid would force Southern Union to either accept the proposal or persuade Energy Transfer to increase its offer.
- Oracle down on weak hardware sales. Oracle's (NYSE:ORCL) FQ4 net profit beat expectations and rose to $3.21B from $2.36B a year earlier as revenues climbed to $10.8B from $9.51B, but shares tumbled 4.1% in premarket trading on disappointment with the hardware servers division. Revenues at the business, which was formerly Sun Microsystems, were flat at $1.83B, with income from computers sold dropping 6%. Oracle's strategy has been to ignore low-margin deals even at the expense of overall sales. More encouragingly for the company, revenue from new software licenses - a key measure for predicting future income - came in at the high end of its previous forecast. Oracle's FQ1 EPS guidance of $0.45-$0.48 was in line with analyst estimates of $0.46 a share. (Earnings call transcript)
- Micron plunges on dismal Q3. Shares in Micron (NASDAQ:MU) dropped 12.9% in post-market trading after the chip maker reported that FQ3 net profit fell to $75M from $939M a year earlier while revenue declined 6.5% to $2.14B, with both metrics falling well short of analyst expectations. Although the FQ3 2010 figure was boosted by a one-time $488M gain, the company still suffered this year from a fall in the price of memory chips as demand from computer manufacturers remained sluggish. Orders are also slowing for chips used in inexpensive mobile phones, pushing prices down in this market as well. (Earnings call transcript)
- Chinese premier Wen Jiabao: Inflation to fall. Despite China's inflation hitting a 34-month peak of 5.5% in May, the country's premier, Wen Jiabao, believes prices will soon be under control and 'drop steadily.' In recent months, Beijing has been tightening credit conditions, including raising interest rates on four occasions. Sharply higher food prices have been a main driver of inflation, but writing in the Financial Times, Wen pointed to an abundant supply of grain and main industrial products, while imports are growing fast. Many analysts forecast that inflation will peak soon before declining, although one from HSBC said food prices are likely to remain high because of recent floods in southern China.
- Republicans leave budget talks over taxes. President Obama, GOP House Speaker John Boehner and Senate Democratic Leader Harry Reid have been left to forge an agreement to reduce the deficit and raise the U.S.'s $14.3T debt ceiling after talks between Joe Biden and legislators broke down. Negotiators had reached tentative agreement on over $2T in cuts, a source said, but Republicans walked out over the insistence of Democrats of including tax hikes in any deal. "It is time for the president to speak clearly and resolve the tax issue," said Eric Cantor, who had represented House Republicans. Congress has until August 2 to raise the debt limit or risk the U.S. defaulting.
- House passes patent bill. The House yesterday approved a bill that favors inventors who file their patent applications first as opposed to the current system that operates on a first-to-invent basis. The change will bring the U.S. into line with Europe and Japan. The legislation also takes steps to help the underfunded U.S. patents office deal with a backlog of 1.2M pending applications, which forces inventors to wait three years for a decision. The House now has to reconcile its bill with that of the Senate after the latter approved similar measures in March.
Earnings: Thursday After Close
- Accenture (NYSE:ACN): FQ3 EPS of $0.93 beats by $0.04. Revenue of $6.7B (+21% Y/Y) beats by $0.3B. Shares +3.1% AH. (PR, earnings call transcript)
- H&R Block (NYSE:HRB): FQ4 EPS of $2.14 beats by $0.02. Revenue of $2.32B (-0.6% Y/Y) beats by $0.01B. (PR, earnings call transcript)
- Micron Technology (MU): FQ3 EPS of $0.07 misses by $0.10. Revenue of $2.13B (-7% Y/Y) misses by $0.24B. Shares -12.9% AH. (PR, earnings call transcript)
- Oracle (ORCL): FQ4 EPS of $0.75 beats by $0.04. Revenue of $10.78B (+12% Y/Y) beats by $0.04B. Shares -6.3% AH. (PR, earnings call transcript)
- TIBCO Software (NASDAQ:TIBX): FQ2 EPS of $0.21 beats by $0.03. Revenue of $216M (+25% Y/Y) beats by $18M. Shares +0.6% AH. (PR, earnings call transcript)
- In Asia, Japan +0.8% to 9679. Hong Kong +1.9% to 22172. China +2.2% to 2746. India +2.9% to 18241.
- In Europe, at midday, London +0.8%. Paris +1.0%. Frankfurt +0.9%.
- Futures at 7:00: Dow +0.2%. S&P +0.1%. Nasdaq +0.4%. Crude +0.5% to $91.48. Gold -0.2% to $1518.10.
Friday's Economic Calendar
Friday's economic calendar:
8:30 Durable Goods
8:30 GDP Q1
8:30 Corporate Profits
10:30 ECRI Leading Index
4:00 PM Geithner: Leading Voices in Politics and Policy
The SA Currents team contributed to this post.
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