Wall Street Breakfast: Must-Know News
Cyprus seeks salvation in Russia and the Church. Cypriot President Nicos Anastasiades has been holding emergency meetings with party leaders and troika representatives after the country's parliament rejected a proposal to tax bank deposits as part of an EU bailout. Salvation could come from Cyprus's orthodox church, which has offered to mortgage its considerable assets in order to invest in government bonds. Meanwhile, Finance Minister Michael Sarris is in Moscow to see if he can get a deal out of the Russians.
American Realty offers $5.7B for Cole Credit Property Trust. American Realty Capital Properties (ARCP) has offered to acquire Cole Credit Property Trust for $5.7B in cash and stock, or over $9B including debt, in a deal that would create the biggest publicly traded REIT in the net lease sector. American Realty has also asked Cole to end the purchase of its external adviser, Cole Holdings.
Visa could be forced to buy Visa Europe for up to $11B. The European banks that own Visa Europe are reportedly considering exercising a put option to sell the company to Visa (V) in a deal that would be worth $3-11B, depending on various factors. A transaction would add scale to Visa and enable it to enter new markets, although the company would also be exposed to Europe's wretched economy and its regulations, while the selling banks could create a rival company.
Top Stock News
Stocks brush off Cyprus worries. European shares and U.S. stock futures were solidly higher at the time of writing despite the continued chaos surrounding Cyprus. Traders reckon that because the sums involved are relatively small, a solution will be found. Expectations that the FOMC will keep the money printing machines going at full pelt when it meets for a second and final day today could also be supporting sentiment.
Freddie Mac sues 15 banks over Libor. Freddie Mac (FMCC.OB) has sued Bank of America (BAC), JPMorgan (JPM), Citigroup (C) and 12 other banks for losses caused by the manipulation of the Libor rate. Freddie, which invested in mortgage bonds and swaps tied to U.S. dollar Libor, is seeking a whole gamut of damages. The FHFA has already calculated that Freddie and Fannie Mae (FNMA.OB) lost a combined $3B because of the Libor manipulation.
Adobe bolts higher after earnings. Adobe Systems' (ADBE) shares rose 5.4% premarket after the company's FQ1 earnings beat forecasts and it raised its full fiscal-year EPS guidance to above Street expectations. Net profit fell to $65.1M from $185.2M as revenue slipped 4% to $1B, but what is pleasing the company and investors alike is the growth in Adobe's subscription-based model for its online Creative Cloud service. Meanwhile, CTO Kevin Lynch is leaving Adobe to join Apple (AAPL).
Ryanair could order up to 200 more 737 jets. Ryanair (RYAAY) could become the "lead customer" for Boeing's (BA) more fuel-efficient 737 Max jets by making an order later this year for 100-200 of the planes in a deal that could top $20B, Ryanair CEO Michael O'Leary said yesterday. O'Leary was speaking after his airline sealed what he called "an interim order" for 175 737-800s in a deal worth $15.6B at list prices.
JPMorgan agrees to $546M deal with MF trustee. JPMorgan (JPM), one of MF Global's primary clearing banks, has reached a $546M settlement with James Giddens, the trustee who is overseeing the liquidation of the brokerage. Under the deal, JPM will pay MF $129M and release claims on $417M that it had already returned to Giddens. Meanwhile, the trustee plans to request court authorization for payments of $300M to former MF customers.
Oracle's earnings seen edging up. Oracle's (ORCL) FQ3 earnings are due out after the bell, with analysts forecasting that EPS rose to $0.66 from $0.62 and that revenue increased 4.1% to $9.37B. Oracle is expected to have benefited from an increase in its sales staff over the last 18 months and from fairly stable demand. "After talking with our Oracle contacts, it sounds like FQ3 was solid," Pacific Crest's Brendan Barnicle says, while Citigroup's Walter Pritchard sees "positive product catalysts ahead."
H-P board to face threats to directors. H-P (HPQ) is due to hold its annual meeting this afternoon, when Chairman Ray Lane and four other directors will have to fight opposition to their re-election. The board has come under fire most recently for its handling of the ill-fated acquisition of Autonomy and the tenure of former CEO Leo Apotheker. Lane and Silicon Valley investor Marc Andreessen are expected to survive, but others might not be so lucky.
Top Economic & Other News
BOE voted 6-3 to reject more QE. The Bank of England's monetary policy committee voted unanimously to keep interest rates on hold at a meeting earlier this month and 6-3 against more quantitative easing. As in February, Governor Mervyn King was among those wanting the bank to increase the program by another £25B to £400B. The pound jumped vs the dollar following the news and was +0.3% premarket. Next up very soon is the U.K.'s budget announcement.
Fannie, Freddie could repay bailout earlier than expected. Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) could repay the Treasury for their 2008 bailout sooner than initially planned, due to a change in the terms of the rescue, the FHFA has said. Previously, the firms had to pay a 10% quarterly dividend even if they lost money, and would even borrow money from the Treasury to do so; now they pay a dividend only if they make a profit.
In Asia, Japan closed. Hong Kong +1% to 22256. China +2.7% to 2317. India -0.7% to 18884.
In Europe, at midday, London +0.1%. Paris +0.5%. Frankfurt +0.5%.
Futures at 7:00: Dow +0.25%. S&P +0.35%. Nasdaq +0.6%. Crude +0.6% to $92.74. Gold flat at $1610.60.
Today's economic calendar:
7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
2:00 PM FOMC Announcement
2:00 PM FOMC Forecast
2:15 PM Bernanke Press Conference
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