Tuesday's Early Headlines
- Three Banks Suspend Their TARP Dividends. - At least three small, cash-strapped banks have stopped paying the U.S. government dividends that they owe because they got $315.4 million in capital infusions under the Troubled Asset Relief Program, or TARP, according to a report in The Wall Street Journal. Pacific Capital Bancorp (PCBC) , Seacoast Banking Corp. of Florida (SBCF) - Get Report, and Midwest Banc Holdings (MBHI) each suspended dividend payments, a sign of the deepening misery for large swaths of the U.S. banking industry, according to the report.
- SEC Chair Wants More Power Over OTC Derivatives. - Securities and Exchange Commission Chairman Mary Schapiro told a panel of U.S. senators Monday that she believes the SEC should get expanded authority over security-based swaps and certain nonbanking derivatives dealers that offer securities-related OTC products, according to The Wall Street Journal.
- DOJ to Drop Case against UBS. - The Justice Department may drop a closely watched legal case aimed at forcing the Swiss bank UBS (UBS) - Get Report to divulge the names of 52,000 wealthy American clients suspected of offshore tax evasion, The New York Times reported Monday, citing a U.S. official briefed on the matter. The move, which would halt an unusually aggressive effort to force Switzerland to lift its veil of banking secrecy, could happen by mid-July, the report said.
- Intel to Sell Mobile Chips to Nokia. - Intel (INTC) - Get Report will sell processors to Nokia (NOK) - Get Report for mobile devices, according to Bloomberg. The deal will be announced on a conference call Tuesday, according to the report, with Anand Chandrasekher, senior vice president of Intel's ultra-mobility group, set to deliver the news.
- Ford, Nissan to Receive Government Loans. - The Obama administration is expected to disclose that Ford (F) - Get Report, Tesla Motors and Nissan will be among the first beneficiaries of a $25 billion loan program created by Congress to help auto makers retool their factories to produce advanced-technology vehicles, according to The Wall Street Journal. Energy Secretary Steven Chu plans an announcement Tuesday at 9:15 a.m. EDT in Dearborn, Michigan.
- Motorola Smart Phones to Run On Android. - Verizon Wireless and T-Mobile USA plan to launch Motorola (MOT) smart phones based on Google's (GOOG) - Get Report Android operating system before the end of the year, according to a report in The Wall Street Journal.
- Iran Election Won't Be Nullified. - In geopolitical news, CNN reports that Iran's Guardian Council ruled out the possibility of nullifying the results of the country's disputed presidential election, saying irregularities were reported before the balloting, not during or after. Iranian President Mahmoud Ahmadinejad will be sworn in for a second term sometime between July 26 and August 19, the report said.
Earnings and Economic News
- Existing Home Sales, Fed Meeting on Tap - At 10 a.m. EDT, the National Association of Realtors will post existing home sales data for May, with economists expecting sales to have increased to 4.82 million annualized units last month from 4.68 million units in April. Tuesday also marks the first of a two-day meeting for the Federal Reserve. A rate decision won't come until Wednesday at 2:15 p.m. EDT, although economists do not expect the central bank to change the fed funds rate and instead will focus on the phrasing of the Fed's statement.
- Oracle, Darden to Report Earnings Later Tuesday - Oracle (ORCL) - Get Report and Darden Restaurants (DRI) - Get Report are expected to release earnings after Tuesday's close.
- Upgrades and Downgrades - Barrington Research upgraded Sirius XM (SIRI) - Get Report to outperform from market perform and assigned a stock price target of 70 cents. Citigroup upgraded BHP Billiton (BHP) - Get Report to buy from hold. Deutsche Bank downgraded Marvell Technology (MRVL) - Get Report to hold from buy.