Tuesday's Early Headlines
- Citigroup CEO Sees Tighter Credit Environment. - At a summit convened by the Detroit Economic Club, Citigroup (C) - Get Report CEO Vikram Pandit said borrowers should accept a new world of tighter, more expensive credit as financial institutions recover from months of bad loans, failed banks and foreclosed homes. Pandit said he anticipates less credit that is more costly even as financial markets show signs of recovery. He also expects more corporate restructurings across different industries.
- Nomura Bidding for Citi Japan Unit. - Nomura Holdings (NMR) - Get Report and insurer T&D Holdings are among the firms in the second round of bidding for Citigroup's Japanese asset management arm in a deal likely to exceed $1 billion, Reuters reports, citing sources
- GM to Sell Saab to Swedish Carmaker. - General Motors (GMGMQ) said Tuesday it reached a memorandum of understanding to sell its Saab division to a consortium led by Koenigsegg Automotive AB, a Swedish automaker. The sale, expected to close by the end of the third quarter, includes an expected $600 million funding commitment from the European Investment Bank and is guaranteed by the Swedish government. The price of the deal wasn't disclosed.
- More Details on White House Plan for Regulation Surface. - Treasury Secretary Timothy Geithner and White House economic adviser Lawrence Summers penned op-ed pieces for The Washington Post Monday, saying the Obama administration will target critical weaknesses in the troubled U.S. financial system, such as thin bank capital cushions and eroded lending standards, when it proposes an overhaul of financial regulation on Wednesday. The plan will also urge stronger consumer and investor protections and new powers for the Federal Reserve.
- "Cash-for-Clunkers" Legislation Up for a Vote. - U.S. consumers may be able to collect as much as $4,500 by September on vehicle trade-ins under "cash-for-clunkers" legislation up for a vote in the House of Representatives, according to Bloomberg. The provision gives vouchers to encourage Americans to swap older cars and light trucks for new, more fuel-efficient models.
Earnings and Economic News
- Best Buy Reports Quarterly Profit. - Best Buy (BBY) - Get Report reported a fiscal first-quarter profit that fell to $153 million, or 36 cents a share, compared to a profit of 43 cents a share on sales of about $9 billion in the year-ago quarter and earnings of $1.61 a share on revenue of $14.72 billion in the previous quarter. Excluding restructuring charges, profit would have been 42 cents a share. Analysts expect the electronics retail giant will report a profit of 34 cents a share on sales of $10.1 billion, according to Thomson Reuters. Best Buy maintained its full-year profit forecast of $2.50 to $2.90 a share.
- Housing Starts and Building Permits. - At 8:30 a.m. EDT, housing starts and building permits are expected to have risen to 485,000 and 508,000 in May from 458,000 and 498,000 in the prior month, respectively, showing a mild improvement in the housing sector.
- Producer Price Index Also Due. - The Labor Department will post the producer price index for May, which is expected to show inflation ticked higher at the producer level. The PPI is expected to have risen 0.6% in May, while the core number, which excludes food and energy, should increase 0.1%.
- News from the Federal Reserve. - Later in the morning, at 9:15 a.m. EDT, the Federal Reserve will post industrial production and capacity utilization data for May, with both expected to decline slightly from April's levels. In related central bank news, Fed governor Kevin Warsh will speak Tuesday on economic policy in New York.