Wall Street Breakfast: Must-Know News
Top StoriesSpain to issue new debt to save Bankia. Spain intends to recapitalize Bankia by issuing new debt and not by injecting bonds into the company, Reuters reports. The government's options appear to be limited, as forcing bond investors or preferred shareholders to take losses could hit ordinary depositors. PM Mariano Rajoy yesterday ruled out an external bank rescue even though Spain is "finding it very difficult to finance itself." Opinion: Undervalued global banks.
Greece injects banks with €18B. Greece has provided over €18B to recapitalize its four largest banks - via bonds from the EFSF bailout fund - allowing them to regain access to ECB funds. While that fire has been doused, former Greek technocrat PM Lucas Papademos has warned that the country's finances could collapse unless the election on June 17 produces a stable government. Opinion: Greece: The unvarnished truth.
BP could face more criminal charges over Gulf spill. Federal investigators are looking into whether BP (BP) representatives lied to Congress when providing estimates of how much oil was leaking after the Deepwater Horizon disaster, Reuters reports, and whether engineers tried to withhold data. The probe could lead to additional criminal charges.Opinion: Don't miss BP's upswing.
Top Stock News
Reuters: JPM sold $25B in assets to offset CIO trades. Reuters calculates that JPMorgan (JPM) has offloaded $25B of profitable securities in order to boost its Q2 earnings following the massive losses at its CIO. As a basis, Reuters uses Jamie Dimon's assertion that the bank made a $1B profit on the asset sales and JPM's historical return of below 4% from such transactions. However, taxes will eat up $380M of the gains. Discussion: Why do the TBTF banks even exist?
Top Stock News
Reuters: JPM sold $25B in assets to offset CIO trades. Reuters calculates that JPMorgan (JPM) has offloaded $25B of profitable securities in order to boost its Q2 earnings following the massive losses at its CIO. As a basis, Reuters uses Jamie Dimon's assertion that the bank made a $1B profit on the asset sales and JPM's historical return of below 4% from such transactions. However, taxes will eat up $380M of the gains. Discussion: Why do the TBTF banks even exist?
Gavilon to turn Japanese for $3.6B. Japanese trading house Marubeni (MARUY.PK) will buy U.S. grain and energy trader Gavilon for $3.6B. Gavilon's owners include George Soros and hedge fund manager Dwight Anderson. Japanese trading houses have been acquiring foreign assets in order to secure commodities and other natural resources, with Marubeni spending about $11B since the start of 2011. Opinion: Commodities in a free fall.
RIM could cut up to 6,000 more jobs. As part of its restructuring, RIM (RIMM) is planning across-the-board layoffs that will cover at least 2,000 employees, The Globe & Mail reports. RIM, which has 16,500 employees - down from a peak of 20,000 - plans to announce the news around June 1, and has been quietly conducting layoffs in advance. A source tells Reuters the job cuts could eventually total 6,000. Opinion: Mixed news for RIM.
Problems pile up for BP at Russian JV. Mikhail Fridman has quit as the head of TNK-BP amidst a further break-down in the relationship between BP (BP) and the four Soviet-born tycoons - including Fridman - who are the U.K. company's partners in the joint venture. The oligarchs have lost faith in BP, Reuters reports. Opinion: Closed-end funds for playing Russia.
Panasonic mulls more job cuts as well. Panasonic (PC) may further reduce its headcount and is thinking about restructuring its operations, news that sent shares +3.9% in Tokyo. The TV maker shed 36,000 jobs last fiscal year. Opinion: Is there money in flash memory alternatives?
Citigroup terminates detox committee. Citigroup (C) last month dismantled the panel in charge of overseeing its disposal of toxic and unwanted assets, a company spokeswoman has confirmed. At the time, around $200B of such assets remained in Citi Holdings, down from $600B when the unit was created following the bank's near-collapse in 2008.Opinion: Citigroup is the best opportunity from JPM's disaster.
Top Economic & Other News
Japanese unemployment rises but so do retail sales. Japanese unemployment suprisingly rose to 4.6% in April from 4.5% in March, although retail sales climbed 5.8% on year and household spending increased 2.6%, suggesting domestic demand may be finally starting to pick up. Yesterday, Bank of Japan minutes showed that policy makers are worried about a "misunderstanding" that the BOJ will automatically increase the size of its bond buying until it reaches its 1% inflation target. Opinion: Japan's mysterious economy.
Top Economic & Other News
Japanese unemployment rises but so do retail sales. Japanese unemployment suprisingly rose to 4.6% in April from 4.5% in March, although retail sales climbed 5.8% on year and household spending increased 2.6%, suggesting domestic demand may be finally starting to pick up. Yesterday, Bank of Japan minutes showed that policy makers are worried about a "misunderstanding" that the BOJ will automatically increase the size of its bond buying until it reaches its 1% inflation target. Opinion: Japan's mysterious economy.
Moody's warns on EU leveraged buyout deals. Moody's has warned that at least a quarter of 254 unrated European leveraged buyout deals with debts totaling €133B could default because of refinancing burdens exacerbated by the eurozone debt crisis. However, one question is whether anyone's listening to the ratings agencies any more: a Moody's downgrade of three Nordic banks last week was followed by rising bond and share prices. Opinion: The euro crisis, in quotes.
Regulation hits shadow banking. The size of the shadow banking system has more than halved to $9.5T at the end of Q1 from $20.7T in early 2008, a Deloitte study shows. Succinctly defined as "bank-like products without the protection," regulatory changes have been the key influence over the sector's size, says Deloitte's Adam Schneider. Opinion:Beware the rebirth of the shadow banking system.
Yen-Yuan trade to begin on Friday. Direct trade of the yen and the yuan between Japan and China will begin on June 1, Japanese Finance Minister June Azumi said today. The new policy will allow traders to avoid the need to first swap into dollars, thereby saving on transaction costs and settlement risk. Opinion: Memorial Day forex recap.
Today's Markets:
In Asia, Japan +0.7%. Hong Kong +1.4%. China +1.2%. India +0.1%.
In Europe, at midday, London +0.2%. Paris +0.5%. Frankfurt +0.8%.
Futures at 7:00: Dow +0.6%. S&P +0.6%. Nasdaq +0.8%. Crude +0.4%to $91.25. Gold +0.3% to $1573.10.
Today's economic calendar:
8:30 Chicago Midwest Mfg. Index
9:00 S&P Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 State Street Investor Confidence Index
10:30 Dallas Fed Manufacturing Outlook
Notable earnings before today's open: BNS
Today's Markets:
In Asia, Japan +0.7%. Hong Kong +1.4%. China +1.2%. India +0.1%.
In Europe, at midday, London +0.2%. Paris +0.5%. Frankfurt +0.8%.
Futures at 7:00: Dow +0.6%. S&P +0.6%. Nasdaq +0.8%. Crude +0.4%to $91.25. Gold +0.3% to $1573.10.
Today's economic calendar:
8:30 Chicago Midwest Mfg. Index
9:00 S&P Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 State Street Investor Confidence Index
10:30 Dallas Fed Manufacturing Outlook
Notable earnings before today's open: BNS
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