Wall Street Breakfast: Must-Know News
| by: SA Editor Rachael Granby December 01, 2010 | about: AIG / BA / BAC / C / COCO / EADSY.PK / GE / GLD / IBM / NOV / NYT / OVTI / QQQQ / SPY / STT / USO
* Fed to disclose emergency aid recipients. Under orders from Congress, the Federal Reserve will disclose today the names of the institutions which received a total of $3.3T worth of emergency aid during the financial crisis. The information, which will be posted on the Fed website at midday, covers six loan programs, currency swaps with other central banks, purchases of mortgage-backed securities and the rescues of Bear Stearns and AIG (AIG). The disclosures are expected to heighten scrutiny of both the Fed and the aid recipients.
* WikiLeaks worries drag on BofA shares. Shares of Bank of America (BAC) closed down 3.2% yesterday, after WikiLeaks' founder Julian Assange said his website will release tens of thousands of documents from a major U.S. bank in early 2011. He wouldn't say which bank, but Assange had previously mentioned that his group was sitting on 5GB of data from a BofA executive's hard drive. Assange said the documents will expose an "ecosystem of corruption... that turns a blind eye to and supports unethical practices: the oversight that’s not done, the priorities of executives, how they think they’re fulfilling their own self-interest.” Premarket: BAC +0.7% (7:00 ET). (More: Read the transcript of Forbes' interview with Assange)
* SEC wanted quick end to BofA/Merrill probe. In a report by the SEC Inspector General, SEC attorneys are described as having 'felt pressure' to bring a swift resolution over Bank of America's (BAC) buyout of Merrill Lynch "because of the internal interest in the case and its high-profile nature." The report also stated that the SEC gave BofA favorable treatment because it was a bailout recipient, and that NY Attorney General Andrew Cuomo was not fully forthcoming with information he had at his disposal. This is the first analysis by the SEC's own watchdog over the agency's performance during its investigation of BofA's disclosure violations related to the Merrill purchase.
* NYT looks to sell Red Sox stake. The New York Times Co. (NYT) is in active discussions with several potential buyers to sell its stake in the Red Sox, said CEO Janet Robinson, and the company expects to turn a profit on the baseball team. In April, NYT had sold a small piece of its stake in New England Sports Ventures, the parent company of the Red Sox, and was left with a 16.6% stake which it said it would look to sell whole or in parts. At one point, speculation over the price of the stake had gone as high as $200M, but that was before the economic downturn and analysts now expect a price tag closer to $100M. The Times paid $75M for its 17.75% stake in 2002.
* Wellstream in talks with GE, Nat'l Oilwell. British oilfield services firm Wellstream has reportedly entered into formal talks with GE (GE) and National Oilwell Varco (NOV) over a potential deal that will likely be worth more than £755M ($1.2B). Sources said Wellstream has allowed both GE and National Oilwell to look at its books as it tries to negotiate a higher offer price; GE had disclosed in October that Wellstream had rejected its 750 pence/share, or £755M, bid. Analysts suspect a successful deal will take place between 775 and 800 pence per share, and probably closer to the 800 pence mark.
* State Street to cut 1,400 jobs. State Street (STT) announced it will cut 1,400 jobs, or 5% of its workforce, as part of a massive restructuring designed to save $575M-$625M by the end of 2014. This is the second major round of cuts for the company, after laying off around 1,700 employees early last year.
* Corinthian falls after CEO switch. Shares of Corinthian Colleges (COCO) fell 5% in after-hours trading following the announcement that the company had asked CEO Peter Waller to leave the top slot, and planned to replace him with chairman Jack Massimino. The company said it had no disagreement with Waller but was forced to take action as it restructures its business in the face of an uncertain regulatory environment. Massimino will assume his new role immediately.
* Bernanke concerned about jobless rate. Speaking to business leaders yesterday, Bernanke said job creation is the most important issue facing the U.S., and the pace of growth has not been fast enough to bring down the high unemployment rate. He said he's especially worried that more than 40% of those currently unemployed have been out of work for six months or more, and "this is very unusual and very worrisome because people who are out of work for an extended period, their skills tend to erode." Bernanke asked the business leaders in attendance what policymakers could do to help them create jobs, and IBM's (IBM) Sam Palmasino provided an answer many present seemed to agree with: "Clarity. Regulation is fine, just tell me what they are."
* States to face tighter finances. States may have to make additional spending cuts over the next couple of years or else face the possibility of deteriorating financial health as tax revenues recover at a slow pace and support from the federal government dwindles. A new report from the National Governors Association and the National Association of State Budget Officers warned of "extremely tight fiscal conditions for states," and at least 23 states are already anticipating budget deficits totaling $40.5B in 2012.
* Airbus taps engine upgrades as competition heats up. Airbus (EADSY.PK) plans to invest just over €1B ($1.3B) to upgrade the engines on its A320 passenger jets in order to offer clients greater fuel savings. The new engines, part of the improved 'A320neo' family, are slated for delivery in spring 2016 and will save 15% in fuel costs and cut harmful emissions and noise. The move comes as Airbus faces increased pressure to grab marketshare from Canada's Bombardier, China, Russia, and, of course, arch-rival Boeing (BA).
* More suits from Madoff trustee. Madoff trustee Irving Picard filed more than 100 lawsuits yesterday as he tries to claw back money for Madoff victims. Picard, who faces a legal deadline of Dec. 11 to file such clawback lawsuits, has gotten more aggressive with his targets; he previously focused mostly on feeder funds but has now turned to 'net winners' as well, or individual investors who withdrew more from their accounts with Madoff than they had initially put in.
* Revolving door continues. Citigroup (C) is rumored to be in advanced talks to hire Peter Orszag, who served as budget director for the Obama administration until he stepped down in July 2010. Sources said Orszag might take a job in Citi's I-banking division and an announcement could come as soon as today. Citigroup, which is still recovering from its $45B bailout, would be only the latest in a long string of companies that have poached workers from the political sector, and of employees who have bounced back and forth between regulating (directly or indirectly) financial firms and then working for them.
Earnings: Tuesday After Close
* OmniVision Technologies (OVTI): FQ2 EPS of $0.58 beats by $0.05. Revenue of $240M (+30.7%) vs. $232M. Shares +4.3% AH. (PR, earnings call transcript)
Today's Markets
* In Asia, Japan +0.5% to 9988. Hong Kong +1.1% to 23250. China +0.1% to 2823. India +1.7% to 19850.
* In Europe, at midday, London +1.6%. Paris +0.4%. Frankfurt +1.8%.
* Futures at 7:00: Dow +1.1%. S&P +1.2%. Nasdaq +1%. Crude +1.55% to $85.41. Gold +0.6% to $1393.90.
Wednesday's Economic Calendar
* Auto sales
7:00 MBA Mortgage Applications
7:30 Challenger Job-Cut Report
8:15 ADP Jobs Report
8:30 Productivity and Costs
9:30 Hearing: Mortgage Servicing Problems
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:30 EIA Petroleum Inventories
2:00 PM Fed's Beige Book
2:10 PM Fed's Yellen: Fiscal Responsibility and Global Rebalancing
5:00 PM Fed's Fisher: Economic update
* Notable earnings after Wednesday's close: ARO, PSS
Seeking Alpha's Market Currents team contributed to this post.
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