Market News: Eurozone Inflation, Morgan Stanley's CDS, DOJ Into Chinese Books, Bofa Card Cost, Mortgage Rates, IBM Passes Microsoft

Eurozone inflation picks up. The EU's statistics office estimates the eurozone's inflation rate has risen to 3% in September - up from 2.5% in August, ahead of economist expectations for a 2.5% rate, and representing the largest increase in consumer prices since October 2008. The data makes it even less likely the ECB will cut interest rates at its October 6 meeting, given its mandate of keeping inflation below 2%.

Morgan Stanley's CDS spread soars. The cost of acquiring credit-default swaps to insure Morgan Stanley's (MS) debt has soared to 456bp, higher than the cost of buying swaps for some major French and Italian banks. Morgan Stanley's CDS spread is still well below a post-Lehman peak of 1300bp, but nonetheless at its highest level since March 2009, as fears of French bank exposure heighten investor caution.

S&P and DJIA under one roof? Standard & Poor's owner McGraw-Hill (MHP) and CME Group (CME), owner of Dow Jones Indexes, are in advanced talks to combine their index businesses for the first time, in a joint venture of which MHP would own 75%. McGraw-Hill is in the process of breaking into two, and one institutional investor had recommended that S&P indexes be further split into a separate business.

Justice looks into Chinese books. The Justice Department is investigating accounting irregularities at Chinese companies listed on U.S. exchanges, enforcement director Robert Khuzami confirms. The department's involvement adds firepower to the SEC and the FBI, which have been probing Chinese companies for more than a year.

... And more China gloom. Adding to bad news from the Middle Kingdom was a Bloomberg survey that indicated more than half of investor respondents expected growth in China to slow to less than 5% a year by 2016. Shares of U.S.-based retail firms with exposure to China, such as Tiffany (TIF) and Coach (COH), took a pounding.

BofA's new card cost. In a move likely to be followed by other banks, Bank of America (BAC) will soon charge most of its customers a new $5 fee for any month in which they use a BofA debit card to make a purchase. The bank, like others, is considering new ways to recover debit card revenue that is going away because of Dodd-Frank regulations.

Apotheker's H-P takeaway. Hewlett-Packard (HPQ) agreed to pay ousted CEO Leo Apotheker $7.2 million in severance over the next 18 months, and millions more in bonuses and stock - the culmination of a stormy 11-month tenure during which the company lost $38 billion in market value. New CEO Meg Whitman will take a $1 salary, but with options on nearly 1.9 million shares and a target 2012 bonus of $2.4 million.

Ford talks U.S. jobs. Depending on estimates, Ford Motor (F) plans to add between 7,000 and 10,000 jobs in the U.S., part of talks with the United Auto Workers. CEO Alan Mulally is in Thailand, where the company is investing heavily, but some 4,000 U.S. jobs could come from shifting Fusion production to the U.S. from Mexico.

Micron posts a loss. Micron Technology (MU) fell more than 3% after hours Thursday after posting a surprise loss of $135 million (or $0.14 a share), a swing from the prior year's profit of $0.32 a share. Falling DRAM prices - the result of oversupply and a tech spending slowdown - were largely the cause, along with a drop in NAND chip prices.

CEO views darken. Chief executives' outlooks on the economy are growing worse, as the Business Roundtable's latest quarterly survey found 24% expecting to cut jobs during the next six months, up from Q2's 11%. The number expecting company sales to rise fell to 65% from 87%, and the number forecasting higher capital spending slipped to 32% from 61%.

New record lows for mortgages. Freddie Mac reported 30-year fixed mortgage rates are at record lows, falling to 4.01% in the weekly survey from a previous mark of 4.09%. Lenders in the Western part of the U.S. reported the lowest average of the five regions polled, checking in at 3.95%. Fifteen-year fixed rates averaged 3.28%.

IBM Passes Microsoft. IBM's market cap has surpassed Microsoft's (MSFT) for the first time since 1996. While Big Blue's profits have steadily increased as the company abandoned low-margin hardware businesses, and focused its attention on higher-margin services and software operations, Microsoft has been weighed down by slowing PC industry growth and massive losses at its online division.

Market News: German Vote, Amazon Fire, Motorola deal, HP Hires Goldman, AMD trimmed, Short-sale ban, Eastman Kodak fading

Germany backs expanded ESFS. The German parliament approved increasing the size and flexibility of the ESFS. The winning margin in the Bundestag was a comfortable 523 to 85, while three members abstained. The vote marks an important victory for German Chancellor Angela Merkel, as she faces internal and external criticism over Germany's bailout efforts.

Targeting iPad: Ready, aim, Fire. Amazon.com (AMZN) unveiled its much-anticipated Kindle Fire tablet, featuring a 7-inch display and costing only $199 - $50 less than the Nook Color (BKS) and $300 less than the cheapest iPad (AAPL). The tablet will run on Android (GOOG), but nonetheless act like a "souped-up Kindle." Amazon also will roll out a basic $79 version of its traditional Kindle e-reader and touchscreen versions at $99 and $149, which might prime it to take a bite out of Apple.

A longer look at Motorola deal. The Justice Department's antitrust division asks Google (GOOG) and Motorola Mobility (MMI) for more information regarding their proposed $12.5 billion merger - which may delay a closing set for around the end of 2011. The antitrust reviews are separate from the FTC's ongoing look at whether Google has monopoly power over Internet search. Google's shares are down 11% year-to-date.

H-P girds with Goldman. Preparing for the prospect of activist investors who might want to make some changes, Hewlett-Packard (HPQ) has reportedly hired defense expert Goldman Sachs (GS) to guard the company from attacks - which means strategies like poison pills could be in the offing. One target of criticism: new CEO Meg Whitman.

Reebok fire back. Adidas' (ADDYY.PK) Reebok unit responds to FTC claims of false advertising, saying a $25 million settlement with the regulator does not mean the company agrees with an allegation it misrepresented the health effect of its "toning shoes" to consumers. The FTC action rattled shares of other shoe companies making health-related claims including Skechers (SKX), Crocs (CROX), and Steve Madden (SHOO).

Targets trimmed at AMD. Advanced Micro Devices (AMD) fell 9.4% in after-hours trading after warning its Q3 revenue will increase only 4%-6% from the prior quarter, compared with prior guidance of 8%-12%. The company also said it expects its gross margin to come in at 44%-45%, below guidance of 47%. AMD primarily blamed the weakness on manufacturing issues related to its 32nm technology. Intel (INTC) ramped 32nm production in early 2010.

UAW OK with new GM pact. The United Auto Workers ratified a four-year collective bargaining agreement with General Motors (GM), saying the contract will create 6,400 new jobs in the U.S., including positions for new hires as well as laid-off workers. CFO Dan Ammann estimated the new agreement will increase its hourly labor costs by 1% annually, the slimmest amount of any contract in the past four decades. GM expects 14% of 10,000 skilled trade workers to take buyout deals, which would be "extremely beneficial in keeping our fixed cost in line as industry demand improves."

Fed chairman frets jobs, deflation. Ben Bernanke delivered a largely academic speech about "lessons from emerging market economies" that avoided comments on U.S. monetary policy, but the Q&A session afterward was a bit more interesting. Bernanke bemoaned a weak labor market as "a national crisis," noting "we've had close to 10% unemployment now for a number of years, and of the people who are unemployed, about 45% have been unemployed for six months or more... This is unheard of," and called for policies "that could help them find work, train for work and retain their skills." If inflation falls too far, "that would be something we have to respond to because we do not want deflation," he added.

Online ad revenues still clicking. The Internet Advertising Bureau estimated U.S. online ad revenues rose 23% in the first half to a record $14.9 billion, a major ramp in growth from the 11% and $12.1 billion reported for 1H 2010. Google (GOOG) and ValueClick (VCLK) investors could be pleased to know search and display ad sales both rose 27%, and video sales 42%. But a 2% decline in classified sales might not sit well with New York Times (NYT) and Washington Post (WPO) investors.

Short-sale bans go on. Italy and Spain extended their bans on short-selling due to ongoing volatility, according to European regulator ESMA. Italy extended until Nov. 11, while Spain didn't set a date, saying its decision was based on "protracted instability in European securities markets." The extensions seemed to coincide with the start of yesterday's late selloff in stocks and commodities.

Kodak's picture fading. Fitch Ratings followed up on Moody's Tuesday downgrade of Eastman Kodak's (EK) credit rating with its own cut to CC - a level signifying "default of some kind appears probable." It's been a horrendous week for shares - down 38% in three days - kickstarted when the firm surprised investors with a $160 million draw on its credit facility due to dwindling cash flows

Market News: iPhone5, Greek fate, Housing market, Euro banks...

Risk on, then off, then on... Stocks surged Tuesday but gave back half of their gains in the final hour following reports of a split in the eurozone over terms of the next Greece bailout (more below). Treasury prices continued their slide, sending 10-year yields back to 2%. It was risk-on in commodities, as gold and oil rose sharply. Shaking off early weakness, futures point to a strong open.

Troika audit to decide Greek fate. Greece faces a new test today as troika auditors head for Athens, which could lead to parts of Greece's €109B rescue being reopened: "We have to wait and see what the troika finds," German Chancellor Merkel said, "it will tell us (whether) we will have to renegotiate or not." Greece's second bailout would impose a 21% loss on private bondholders, but many economists believe a 50% loss is necessary to make the country's debt viable. The FT reported yesterday that seven eurozone states are demanding private creditors take a bigger haircut on Greek holdings.

EU's Barroso calls for fiscal stimulus. European Commission president Jose Manuel Barroso urged euro-area members who "have fiscal space available" to "explore it" in order to boost growth, a tack not likely to sit well with Germany, who believes austerity is the only way to solve the debt crisis. Barroso also said that deeper euro-zone integration was necessary before he'd consider jointly underwritten EU bonds.

Redemptions pound huge hedge fund. Shares of U.K. hedge fund Man Group (MNGPF.PK) fell 19% in London after it said AUM fell 8% to $65B despite record fund sales. Redemptions shaved $2.6B off the total; negative performance another $1.5B; and a stronger dollar (vs. euro and aussie) drove AUM down $1.9B. The drop underscores how volatile markets are eroding AUM at hedge funds and other asset managers.

Euro banks innovate. With European banks' unsecured debt being shunned, and covered bonds - backed by mortages and high-quality loans - limited by regulators, banks have begun floating "quasi-covered bonds" - backed by a revolving pool of collateral including stocks and ETFs. They're also increasingly using "collateral swaps" - in which banks trade assets with insurers or pension funds in exchange for government debt.

Cautious Fed nixes bank buybacks. Sources say the Fed is pushing back against U.S. banks that have approached it recently seeking approval for additional or accelerated stock buybacks. Buybacks are a temptation given the steep decline in bank shares in recent weeks, but with higher capital requirements and expectations of ugly Q3 earnings, regulators are exercising caution.

Small signs of a housing uptick. The "shadow inventory" of foreclosed or seriously delinquent homes fell by 0.3M Y/Y in July, to 1.6M. The total supply of homes for sale now stands at 8.4 months, down from 11 months a year ago. And a recent survey found the percentage of consumers who think now is a good time to buy a home bounced back strongly in September.

Rough IPO market. IPOs are having their worst quarter since Q2 2009, with 71% of offerings trading below their issue prices, and total new issue volume down 58% Y/Y. There are still 330 deals in the pipeline for i-banks to eventually collect fees on, but the current environment is driving many companies to delay going public. And things are equally bad overseas: In Hong Kong, the world's biggest IPO market, $4.5B of deals were pulled last week.

iPhone 5 on Oct. 4? Apple on Tuesday invited reporters to a "Let's talk iPhone" event on Oct. 4, widely expected to be the much-anticipated iPhone 5 launch, although Cupertino would be an unusual location to do so. Sources say the new model will have a bigger touch screen and 8-megapixel camera; will have some serious voice-control features; and will be fully compatible with iCloud.

Earnings: Titan International, Actuant, Family Dollar, McCormick, AMD

  Inline Guidance

Titan International Raises Guidance to be Closer to Estimates Wednesday, September 28, 2011  6:25:00 PM ET   View:   Complete Article | Historical Guidance Titan International Inc. (TWI) said it now expects 2011 revenue of approximately $1.40 billion. The company's previous guidance was revenue of $1.20 billion to $1.35 billion and the current consensus revenue estimate is revenue of $1.45 billion for the year ending December 31, 2011. Actuant Sees First Quarter Revenue Below Estimates Wednesday, September 28, 2011  7:30:01 AM ET   View:   Complete Article | Historical Guidance Actuant Corp. (ATU) said it expects first quarter earnings of $0.40 to $0.45 per share on revenue of $365.0 million to $375.0 million. The current consensus earnings estimate is $0.44 per share on revenue of $387.9 million for the quarter ending November 30, 2011. The company also said it expects 2012 earnings of $1.80 to $2.00 per share on revenue of $1.60 billion to $1.65 billion. The current consensus earnings estimate is $1.92 per share on revenue of $1.63 billion for the year ending August 31, 2012. Family Dollar Stores Guides In-line Wednesday, September 28, 2011  7:00:01 AM ET   View:   Complete Article | Historical Guidance Family Dollar Stores, Inc. (FDO) said it expects first quarter earnings of $0.65 to $0.73 per share and fiscal 2012 earnings of $3.50 to $3.75 per share. The current consensus earnings estimate is $0.66 per share for the quarter ending November 30, 2011 and $3.59 per share for the year ending August 31, 2012. McCormick & Co Reaffirms Wednesday, September 28, 2011  7:00:01 AM ET   View:   Complete Article | Historical Guidance McCormick & Co Inc (MKC) said it continues to expect 2011 earnings of $2.74 to $2.79 per share. The current consensus earnings estimate is $2.79 per share for the year ending November 30, 2011.

  Negative Guidance

AMD Lowers Guidance Wednesday, September 28, 2011  4:25:44 PM ET   View:   Complete Article | Historical Guidance Advanced Micro Devices, Inc. (AMD) said it now expects third quarter revenue of $1.64 billion to $1.67 billion. The company's previous guidance was revenue of $1.70 billion to $1.76 billion and the current consensus estimate is revenue of $1.72 billion for the quarter ending September 30, 2011. Camelot Information Systems Lowers Guidance Wednesday, September 28, 2011  8:00:00 AM ET   View:   Complete Article | Historical Guidance Camelot Information Systems Inc. (CIS) said it expects third quarter revenue of approximately $57.0 million. The company's previous guidance was revenue of approximately $63.0 million and the current consensus estimate is revenue of $61.6 million for the quarter ending September 30, 2011. The company also said it expects 2011 revenue of approximately $235.0 million. The company's previous guidance was revenue of approximately $244.0 million and the current consensus estimate is revenue of $242.8 million for the year ending December 31, 2011.

Source: Earnings Whispers