- Lehman sues JPMorgan for billions. Lehman Brothers' (LEHMQ.PK) bankruptcy estate sued JPMorgan (JPM), accusing JPMorgan of illegally siphoning off money from Lehman in the days before it filed for bankruptcy. According to the court filing, JPMorgan CEO Jamie Dimon and other top executives used inside knowledge to take advantage of Lehman as its financial state worsened, forcing Lehman to hand over $8.6B in collateral in September 2008 and triggering a liquidity squeeze that contributed to Lehman's collapse. Lehman says those actions cost the Lehman estate "tens of billions of dollars of value" and caused $5B in direct damages. Premarket: JPM +0.8% (7:00 ET).
- BofA, Citi hid debt in 'repos' errors. Bank of America (BAC) and Citigroup (C) both incorrectly hid billions of dollars of debt from investors through classification errors. Over the last three years, the two banks 'accidentally' classified some short-term repurchase agreements, or "repos," as sales instead of borrowing, the same thing Lehman Brothers (LEHMQ.PK) had done before its bankruptcy to improve its balance sheet. Bank of America and Citigroup insist the misclassifications were due to errors, and not an attempt to make themselves look less risky. The disclosures were made in recent filings with securities regulators, but weren't highlighted until now. Premarket: BAC +2.8%, C +4.4% (7:00 ET).
- Shareholders fight Pru's AIA deal amid rumors the deal is off. Shareholders holding up to 15% of Prudential (PUK) shares are preparing to write to the insurer's chairman to protest the planned $35.5B takeover of AIG's (AIG) Asian unit. The group includes some of Pru's largest institutional shareholders, and significantly hurt Pru's chances of getting the 75% approval it needs for the AIA deal. The Treasury, meanwhile, has confirmed that if the Pru-AIA deal is rejected, the original IPO plan for the unit would become a viable option, while rumors that the deal has been called off have sent shares soaring in premarket trading: PUK +10%, AIG +3.5% (7:00 ET).
- AIG eyes sale of consumer finance unit. AIG (AIG) is reportedly considering the sale of American General Finance, its struggling consumer finance unit. Sources said AIG has hired Bank of America Merrill Lynch (BAC) to restructure and sell the unit, and potential buyers have been asked to submit their expressions of interest over the next few weeks. It's unclear how much the unit could fetch in a sale, but AIG insiders insist that a sale at any price would be helpful by eliminating the need to support the unit. Yesterday, AIG CEO Robert Benmosche assured lawmakers that the insurer "is now on a clear path to repaying taxpayers."
- Treasury nets $1.3B on partial Citi sale. The Treasury made a $1.32B profit from the sale of part of its Citigroup (C) stake, offloading 1.5B shares, or around 20% of its stake, and reducing its overall holdings in Citigroup to around 22% from 27%. The Treasury said it plans to sell another 1.5B shares out of the 6.2B it still holds. Premarket: C +4.4% (7:00 ET).
- Icahn keeps pressure on Genzyme board. In a regulatory filing, Carl Icahn said he will ask Genzyme's (GENZ) board to consider removing CEO Henri Termeer from his post as chairman of the board. Icahn is pressing for board seats for himself and three allies when the company meets in three weeks, saying it's time to change the "old guard." After hours: GENZ -3.8%.
- Hawkish Hoenig gets some support. Talking to reporters after a speech in Washington, Jeffrey Lacker, president of the Richmond Federal Reserve, said he's growing uneasy with the "extended period" description of a zero-rate environment. His comments moved him a little closer to the stance of monetary hawk Thomas Hoenig, president of the Kansas City Fed, who for some time now has been the lone FOMC dissenter on monetary policy. Lacker, who is not a voter on the FOMC this year, thinks inflation will rebound by late this year to a 1.5-2% range.
- Disney insider trading plot foiled. In complaints filed yesterday, federal authorities alleged that a Disney (DIS) employee and her boyfriend engaged in a 'brazen' plot to sell insider information. In a March 5 letter to various hedge funds, the duo wrote "I have access to Disney's quarterly earnings report before its release on 05/03/10. I am willing to share this information for a fee that we can determine later." Multiple hedge funds reported the scheme to authorities, and Disney said it is "fully cooperating" with the investigation.
- SEC opts for real time market surveillance. SEC regulators proposed improving market surveillance by tracking stock orders in real time. The proposal had been under development for months but took on new urgency after the May 6 flash crash. "It is shocking that the SEC does not have its own direct access to market data," said SEC Commissioner Luis Aguilar. "Most Americans assume that the SEC already has these tools and is constantly monitoring the market."
- China denies report of euro review. China denied a report that it's reviewing its foreign exchange holdings of euro assets, calling such speculation "groundless." “Europe has been, and will be one of the major markets for investing China’s exchange reserves,” said the State Administration of Foreign Exchange. Euro +1.1% vs. the dollar (7:00 ET).
- Australia cedes ground on mining tax. Just three weeks after unveiling its new mining mega-tax, Australia has signaled it may back down from the controversial proposal, and is preparing to lift the threshold definition of a super profit from 6% to 11-12%. Major mining firms including BHP Billiton (BHP) and Rio Tinto (RTP) rejected the changes, saying "tinkering at the margins" will not stop the risk to investment in the country. Premarket: RTP +7.3%, BHP +6.85% (7:00 ET).
- Lawmakers want more info on Google Street View. After a disclosure earlier this month that Google (GOOG) had accidentally collected private consumer data via its Street View project, lawmakers are pushing for more information. In particular, three lawmakers want to know exactly how much data was collected, what Google plans to do with the information and why it took so long for the company to disclose what had happened.
- Apple edges out Microsoft. At the close of trading yesterday, Apple (AAPL) had edged out Microsoft (MSFT) as the world's largest technology company by market capitalization. Apple's market value was $223B as compared to Microsoft's $219B. Though Apple could easily slide back to second place and the rankings have little practical impact on either company, there's symbolic significance in the relative rankings of the two long-time rivals.
- Big Lots (BIG): Q1 EPS of $0.68 beats by $0.01. Revenue of $1.2B (+8.2%) in-line. (PR)
- Costco (COST): FQ3 EPS of $0.68 beats by $0.02. Revenue of $17.4B (+12%) vs. $17.6B. Comparable sales +4%. (PR)
- Lenovo (LNVGY.PK): Full-year net profit of $129M ($1.42/share) misses consensus of $145M. Sales of $16.6B vs. $14.9B a year ago. (PR)
- Dress Barn (DBRN): FQ3 EPS of $0.60 beats by $0.01. Revenue of $666M (+77.1%) vs. $646M. Shares -1% AH. (PR)
- NetApp (NTAP): FQ4 EPS of $0.50 beats by $0.06. Revenue of $1.17B (+33.2%) vs. $1.09B. Shares +4.2% AH. (PR, earnings call transcript)
- Veriphone (PAY): Q2 EPS of $0.29 beats by $0.03. Revenue of $241M vs. $227M. Shares +4.6% AH. (PR, earnings call transcript)
- In Asia, Japan +1.2% to 9640. Hong Kong +1.2% to 19431. China +1.1% to 2656. India +1.7% to 16666.
- In Europe, at midday, London +2.0%. Paris +2.1%. Frankfurt +2.4%.
- Futures: Dow +2.1%. S&P +2.6%. Nasdaq +2.6%. Crude +2.7% to $73.44. Gold -0.2% to $1211.50.
- 2:40 Fed's Bullard: Economic Policy in the Aftermath of the Crisis
8:30 Q1 GDP
8:30 Initial Jobless Claims
8:30 Current Account
10:30 EIA Natural Gas Inventory
11:00 KC Fed Manufacturing
12:00 PM Chicago Fed Midwest Manufacturing Index
1:00 PM $31B 7-Yr Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet - Notable earnings before Thursday's open: BIG, COST, HNZ, TIF
- Notable earnings after Thursday's close: GES, JCG, NOVL
Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.
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