JCP ousts Johnson as CEO and brings back Ullman. J.C. Penney (JCP) has fired CEO Ron Johnson following a disastrous 17 months in which sales plummeted and the retailer made big losses. JCP has upset the market, though, by bringing back former CEO Mike Ullman, who was forced out himself, to replace Johnson. Ullman’s task could be to "help to put lipstick on the pig and get it sold," says one observer. Shares were -6% premarket.
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Chinese inflation falls sharply. Chinese CPI slowed to +2.1% on year in March from +3.2% in February – when New Year holiday demand affected prices – and came in below consensus of +2.4%. A softening of rises in food costs helped offset an increase in fuel expenses to bring overall inflation lower and give China’s central bank more flexibility over monetary policy. The news helped boost equity markets across the globe.
Alcoa’s net profit soars 58%. Alcoa (AA) got earnings season off to a half-decent start as net profit jumped 58% to $149M, with adjusted EPS of $0.11 topping forecasts. However, revenue slipped 3% to $5.83B and missed consensus, due to falling aluminum prices and lower production at Alcoa’s European primary metals operations. Still, the company’s earnings benefited from strong demand from the aviation and auto sectors. Shares were -0.4% premarket.
Top Stock News
EU probes MasterCard over fees. The European Commission is investigating MasterCard (MA) over whether its inter-bank fees for non-European cardholders violate the EU’s antitrust regulations. The EC is also looking at MasterCard rules that hurt the ability of merchants to benefit from better terms offered by other banks and force them to accept all types of MasterCard cards.
Ford Focus world’s best-selling car in 2012. The Ford (F) Focus was the best-selling car in the world last year with sales of 1.02M vehicles, the automaker said, citing data from research firm Polk. Ford sold over 25% of Focuses in China, where registrations jumped 51%, while U.S. sales climbed 40%. In addition, the F-Series was the world’s top pickup truck and the Fiesta the leading subcompact.
Fisker poised for Chapter 11. Having fired 75% of its staff on Friday, Fisker Automotive could file for bankruptcy protection this week as the hybrid sports car maker buckles under pressure to repay government loans, $10M of which are due on April 22. Fisker’s board is set to discuss its options today, with some directors still hoping for a sale. The problem is that prospective buyers aren’t willing to assume the terms of the government loans.
Lagardere exits EADS in €2.28B stake sale. French media company Lagardere (LGDDF.PK) has sold its 7% stake in aerospace and defense giant EADS (EADSF.PK) in a private placement for €2.28B, or €37.43 a share. EADS placed an order of €500M in the transaction, which is part of a wider revamp of the company’s ownership structure.
Top Economic & Other News
German imports unexpectedly drop. German imports fell for the third time in four months in February, slumping 3.8% on month vs +3.3% in January and missing consensus of +0.5%. Exports unexpectedly fell as well, while the trade surplus widened to €17.1B from €15.6B. The slide in imports suggests that domestic demand has softened; the hope has been that it will boost German and eurozone growth.
Regulators probe more possible rate rigging. The CFTC is reportedly investigating whether banks have been manipulating ISDAFIX, a benchmark rate for $379T of interest-rate swaps that are used by a wide range of groups, including hedge funds and manufacturing companies, to protect them against fluctuations in funding costs.
Fed policies prompt rise in company borrowing – survey. The Fed’s easy policies have led to increased corporate borrowing, a survey of 450 CFOs indicates, with 45% of firms taking out loans because of low rates. Half of those companies are using the debt to increase capex and 25% to expand their operations, although only 10% for hiring. "Short-term positive, long-term problematic" is how Moody’s describes the situation, especially if firms are borrowing more than they can handle.
In Asia, Japan flat at 13192. Hong Kong +0.7% to 21870. China +0.6% to 2226. India -1.1% to 18226.
In Europe, at midday, London +0.4%. Paris +0.5%. Frankfurt +0.1%.
Futures at 7:00: Dow flat. S&P +0.05%. Nasdaq +0.2%. Crude +0.25% to $93.59. Gold flat at $1571.70.
Today’s economic calendar:
7:30 NFIB Small Business Optimism Index
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
10:00 Wholesale Trade
1:00 PM Results of $32B, 3-Year Note Auction
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