European shares mixed after "Merkozy" meeting. European shares were mixed in midday trading after Angela Merkel and Nicolas Sarkozy yesterday pledged closer fiscal integration with a "real economic government for the eurozone," but ruled out issuing eurobonds and increasing the EU's rescue fund to stem the debt crisis. Merkel called a eurobond a "last resort," although as reporter Faisal Islam noted, the time from "last resort" to signing the check can be measured in weeks. "Merkozy" also proposed a tax on financial transactions, sending shares in banks and stock exchanges lower.
SABMiller goes hostile with $10B Foster's bid. SABMiller (OTCPK:SBMRY) has turned its A$9.51B ($9.97B) offer for Foster's Group (OTC:FBRWY) hostile by making an off-market cash proposal to shareholders. The Australian brewer had rejected SABMiller's A$4.90 a share bid in June for being too low, and its shares closed at A$4.96 in Sidney today. SABMiller's offer is subject to 90% shareholder approval, and the U.K. company will cut the proposal by an amount equal to any dividend payment Foster's may make in the future - analysts are forecasting a 15 cent second half dividend to be announced next week.
Swiss franc rises after SNB disappoints. The Swiss franc is moderately higher after the Swiss National Bank announced further measures to try to curb the strong currency but stopped short of saying it would sell francs or even peg it to the euro despite mounting speculation. The bank will again increase liquidity through expanding banks' sight deposits to 200B francs ($254B) from 120B francs, and reiterated it is prepared to take further measures if necessary, although it didn't specify what these would be.
China to further loosen capital controls. China continues to use Hong Kong as a test bed to gradually ease capital controls and boost the yuan's international role, saying it will soon allow foreign investors to use the currency to buy up to 20B yuan ($3.1B) worth of mainland securities. China also disclosed plans to allow mainland companies other than financial firms to sell bonds in Hong Kong, which could vastly expand the territory as an offshore yuan market.
Dell plunges on reduced revenue guidance. Dell (DELL) shares fell 6.65% premarket after the company cut its FY revenue guidance as it became the latest PC firm to fall foul of slowing sales to consumers, with orders from the U.S. government also weakening. Q2 revenue rose 0.8% to $15.66B and missed analyst forecasts, although EPS excluding items topped expectations and rose to $0.54 from $0.32. Strong demand from corporate customers helped to offset the downward pressures on earnings, while margins grew despite concerns about increased costs.
Staples profit rises and tops the Street. Staples' (NASDAQ:SPLS) Q2 earnings beat analyst estimates as adjusted EPS rose to $0.22 from $0.20 and revenue grew 5.2% to $5.82B. The company also said it expects FY adjusted EPS of $1.39-$1.45, comfortably above predictions of $1.36. Staples' operating income rate decreased 46 basis points to 4.78%, due to investments in labor and marketing in North America to support growth initiatives, although the retailer said these efforts "are building momentum." The fall in the rate was offset by improved product margins in North America and reduced overheads in Europe. Shares +8.3% premarket.
BofA in talks to sell $1B real-estate unit. Bank of America (NYSE:BAC) is reportedly in negotiations to sell its Merrill Lynch real-estate unit to Blackstone (NYSE:BX) for up to $1B. The sale would consist of properties in the U.S., Europe, and South America, and would be part of BofA's strategy of selling non-core assets so that it can focus on corporate borrowers, investment banking and U.S. retail customers. BofA also needs to raise money to comply with new international capital standards and cope with its huge mortgage liabilities.
BofA mortgage deal may omit New York. In an effort to bring a bit more certainty to its mortgage liabilities, Bank of America (BAC) may reportedly come to a settlement over inappropriate foreclosure practices with most state attorneys-general even if any deal omits New York and at least two other states. New York AG Eric Schneiderman opposes the agreement because he doesn't want it to halt his investigation into the bundling and sale of mortgages. In contrast, BofA wants the settlement to free it from liability for loan activities besides servicing, such as securitization and lending.
Property-income ratio falls to 3.3 The ratio of property prices to income has fallen to 3.3 from a peak of 5.1 in 2005, a study from real-estate firm Zillow shows, although the figure is still above the 2.9 average in 1985-2000. Prices in Las Vegas and Detroit in particular have dropped significantly.
Court limits Galaxy ban. Samsung (OTC:SSNLF) yesterday won a small battle in its global patent dispute with Apple (NASDAQ:AAPL) after a German court scaled back a temporary EU-wide ban on Samsung's Galaxy Tab 10.1 tablet computer. The court said it doubted whether it has such a wide jurisdiction over a South Korean company, although the ban is still applicable in Germany. A hearing is set for Wednesday next week.
Judge upholds Rajaratnam convictions. A federal judge has dismissed the request of Galleon Group founder Raj Rajaratnam for a post-trial acquittal and upheld his convictions on 14 counts of conspiracy and securities fraud. Rajaratnamn is due to be sentenced next month, after which he is expected to appeal. Prosecutors are pressing for a sentence of over 24 years in prison.
In Asia, Japan -0.6% to 9057. Hong Kong +0.4% to 20289. China -0.3% to 2601. India +0.7% to 16841.
In Europe, at midday, London -0.5%. Paris +0.7%. Frankfurt -0.3%.
Futures at 7:00: Dow +0.25%. S&P +0.4%. Nasdaq flat. Crude +1% to $87.51. Gold +0.5% to $1793.70.
Wednesday's economic calendar:
7:00 MBA Mortgage Applications
8:30 Producer Price Index
10:30 EIA Petroleum Inventories
1:20 PM Fed's Fisher: Fed functions and monetary policy
Earnings Results: Companies that beat EPS expectations last night and today include Dell (shares -6.65%), Staples (+8.3%), Deere, BJ's Wholesale Club, Abercrombie & Fitch. Those that missed forecasts include Flowers Foods (-5.6%). Full real-time earnings coverage here.