by Rachael Granby and the Market Currents team
Positive chatter on Greek bailout progress. The rumors about Greece keep coming, with the most recent suggesting eurozone finmins are on track to approve the next bailout package on Monday, while the debt swap deal will apparently be completed over the weekend. Sources said yesterday that Greece has found the additional €325M in savings required by the Troika. Separately, German sources nixed chatter of a bridge loan to get Greece past the March 20 debt redemption date, but kept alive the idea of an escrow account to make sure bailout money goes to repaying debt. Should a deal be finalized on Monday, there will supposedly be a list of 24 "prior actions" Greece must undertake by month's end to receive funding.
German president resigns. German President Christian Wulff announced his resignation today amid an ongoing home loan scandal, the second presidential resignation during Angela Merkel's time in office. The position of president is largely symbolic, but Wulff's resignation is a blow for Merkel, who supported his candidacy and who must now deal with a major domestic distraction as she grapples to bring an end to Greece's bailout saga and the region's wider debt problems.
Applied Materials rises after earnings beat. Applied Materials (NASDAQ:AMAT) beat both earnings and revenue expectations in its FQ1 report yesterday, sending shares +5.6% in after-hours trading. The company expects FQ2 sales of $2.3B-2.52B and EPS of $0.20-0.28, better than Street estimates of $2.08B and $0.16. After falling hard in recent quarters, chip equipment orders rose 53% Q/Q, boosted by foundry demand and the acquisition of Varian. However, total backlog fell by $230M to $2.2B, due to continued weakness in display and solar equipment orders.
Bidders line up for London Metal Exchange. NYSE Euronext (NYSE:NYX), CME Group (NASDAQ:CME) and IntercontinentalExchange (NYSE:ICE) have each submitted bids for the London Metal Exchange, sources say, valuing the commodities business at up to £1B. At least seven companies participated in the first round of bidding that closed on Wednesday, with the LME due to consider its offers on Feb. 23.
BofA mulls emergency responses. More details are filtering out on the emergency-planning list BofA (NYSE:BAC) submitted to the Fed last year. In the event of a market shock or severe downturn that necessitates capital raising, BofA would reportedly consider selling its retail-branch network in Texas and its U.S. Trust wealth-management unit. However, executives might also choose to issue common stock before letting go of key chunks of the business.
Evidence grows in Libor probe. A bank said to be UBS (NYSE:UBS) has told Canada's regulators that traders and brokers successfully manipulated the yen Libor rate between 2007 and 2010, affecting loan rates around the world, all to increase trading profits. No criminal charges yet, but evidence is still adding up - along with firings and suspensions.
Icahn pursues CVR Energy. Just days after pushing for a sale, Carl Icahn announced yesterday a tender offer for all outstanding shares of CVR Energy (NYSE:CVI) at $30 each, a 35% premium to the Jan. 12 close, when he first took a stake. The offer includes a "contingent value right" that would entitle shareholders to an additional payment if CVR is eventually sold for more than $30/share. Shares rose 5.8% yesterday, and are up another 2.6% premarket to $29.95 (7:00 ET).
Ally Financial IPO on the rocks. Ally Financial is reportedly considering a sale of all or part of its auto lending and banking businesses; an IPO is still a possibility, but is looking increasingly remote. Logical buyers for the various pieces include JPMorgan (NYSE:JPM), Toronto-Dominion (NYSE:TD), Wells Fargo (NYSE:WFC) and GM (NYSE:GM).
Microsoft rises on comments from CFO, analyst. Microsoft rose to the highest level since at least 2010 after Morgan Stanley analyst Adam Holt suggested Microsoft's weighting in the S&P 500 will likely be increased. The change, which would force index funds to increase their Microsoft holdings, could happen in the fall. Also boosting shares yesterday were comments from CFO Peter Klein suggested Microsoft may lift its dividend should the tax situation for offshore cash change. He also claimed it will eventually be possible for older Windows apps to be rewritten for ARM-based (NASDAQ:ARMH) systems - a point of concern for developers. Shares closed +4.1% to $31.28.
"Mark to market" takes a hit. Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) have reduced their use of "mark to market," shielding themselves from swings in the values of some loans. According to sources and financial filings, months of internal discussions have culminated in a decision to change the accounting affecting a portion of corporate loans with a combined value of over $100B.
WaMu moves closer to bankruptcy exit. WaMu reached a deal yesterday with preferred shareholders, and will now get the approval from creditors that it needs to exit bankruptcy. To help sweeten the deal, WaMu increased preferred shareholders' stake in the reorganized post-bankruptcy company to 75% from 70%.
Yelp unveils IPO details. Yelp (NYSE:YELP) will be pricing its IPO in the range of $12-14, and plans to sell 7.15M shares in the offering, according to its latest S-1. Based on its price range, Yelp will sport an IPO market cap of $718M-838M.
In Asia, Japan +1.6% to 9384. Hong Kong +1.0% to 21492. China flat at 2357. India +0.8% to 18289.
In Europe, at midday, London +0.3%. Paris +1.0%. Frankfurt +0.8%.
Futures at 7:00: Dow +0.1%. S&P flat. Nasdaq flat. Crude +0.3% to $102.65. Gold +0.3% to $1733.40.
Friday's economic calendar:
8:30 Consumer Price Index
8:30 Real Earnings
10:00 Leading Indicators
Earnings Results: Companies that beat EPS expectations last night and today include Heinz (HNZ), SunPower (NASDAQ:SPWR) and Demand Media (DMD).
For full real-time earnings coverage, please click here.
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