Toyota recalls 7.4M vehicles. In the biggest recall since one involving 8M Ford (F) vehicles in 1996, Toyota (TM) is recalling 7.43M cars worldwide due to a possible fire risk with power window switches that can melt if lubricants are misapplied. The recall includes 2.47M vehicles sold in the U.S., and takes in Toyota’s Camry, Corolla and RAV4 SUV models.
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UPS’s €5.2B TNT acquisition faces major EU objections. The EU could issue a "statement of objections" by next week to UPS’s (UPS) proposed €5.2B acquisition of TNT Express unless the U.S. firm offers concessions that would assuage antitrust concerns, the FT reports. The EU is worried that the deal will leave just three "global integrators" that can provide a full range of delivery services by road and air.
FedEx targets $1.7B "profitability improvement." FedEx (FDX) is aiming to increase its profitability by $1.7B over the next three years, with much of the improvement to come through cost cuts at the company’s U.S. Express air operation. The measures include modernizing the aircraft fleet and a voluntary buyout plan for some staff. FedEx will provide details today, day two of its annual meeting.
Top Stock News
Time running out for EADS and BAE merger. EADS (EADSF.PK) and BAE Systems (BAESF.PK) have until 5 pm U.K. time (12 noon ET) to decide whether to ask British regulators for more time to finalize their $45B merger plans or to scrap the deal. Doubts are growing about German backing for the transaction, with Reuters reporting that Angela Merkel opposes it, although it’s not clear why.
Alcoa earnings hit by bribery settlement. Alcoa (AA) swung to a net loss of $143M in Q3 from a profit of $172M a year earlier, due to charges of $175M related to a legal settlement with a Bahraini smelter over bribery allegations and other special items. Alcoa’s adjusted EPS of $0.03 was down from $0.15 a year ago, but beat forecasts, as did revenue of $5.83B, which was down 9%. Alcoa cut its 2012 global aluminum demand forecast to 6% from 7%.
Costco profit beats forecasts, revenue misses. Costco’s (COST) FQ4 net profit jumped 27% to $609M as sales climbed 14% to $31.52B, boosted by an 18% rise in membership fee revenue. The sales figure missed consensus, although EPS of $1.39 topped forecasts. Same-store sales rose 5%, hit by forex fluctuations and rising gasoline prices. Costco intends to open 14 warehouses by the end of calendar 2012, adding to the 608 it already has. Shares were +2.1% premarket.
Yum net profit jumps 23%. Yum Brands’ (YUM) Q3 net profit soared 23% to $471M, boosted by the continued improvement at its Taco Bell, Pizza Hut and KFC chains in the U.S., although growth in China was restrained by the economy. Adjusted EPS of $0.99 beat consensus, and while revenue climbed 9% to $3.57B, the figure missed Street forecasts. Yum increased its guidance for FY EPS growth to 13% from a previous prediction of 12%. Shares were +2.1% premarket.
AIA to buy ING Malaysian insurance ops for $1.5B-$1.7B. AIA Group (AAIGF.PK) has agreed to acquire ING’s (ING) Malaysian insurance unit for $1.5B-$1.7B, Reuters reports, adding that an announcement could be made tomorrow as long as last-minute regulatory approvals don’t cause a delay. ING is also bundling its Thai business with its larger Japanese and Hong Kong operations and selling the combined entity to another buyer.
Danaher, Cooper sell Apex Tool to Bain for $1.6B. Danaher (DHR) and Cooper Industries (CBE) have agreed to sell Apex Tool Group, their jointly owned hand and power tools unit, to Bain Capital for $1.6B. Apex provides Crescent wrenches, Lufkin measuring tapes and hand tools for Sears’ (SHLD) Craftsman brand.
Complaints over Chinese telco gear flood in. The House’s Intelligence Committee has received "dozens and dozens" of calls about suspicious behavior by Huawei and ZTE equipment following the panel’s report recommending that the Chinese companies be shut out of the U.S. market for security reasons. Meanwhile, Canada has indicated it won’t allow Huawei to help construct a secure government communications network, also because of security risks.
Top Economic & Other News
IMF: EU banks face massive deleveraging. The European banking system may have to deleverage by $4.5T by the end of 2013, the IMF has said, upping its "weak policies" asset sale scenario from $3.8T in a forecast in April. The result would knock four percentage points off GDP growth in the periphery next year. "Intensification of the crisis has manifested itself in capital outflows…at a pace typically associated with currency crises or sudden stops," the IMF said.
Beijing snubs Tokyo at IMF. The Governor of the People’s Bank of China, Zhou Xiaochuan, will skip this week’s IMF annual meeting in Japan, where he was scheduled to give a keynote speech. The two countries remain embroiled in a territorial dispute that’s gone way beyond a war of words – see Japan’s plummeting Chinese auto sales.
In Asia, Japan -2%. Hong Kong -0.1%. China +0.2%. India -0.9%.
In Europe, at midday, London -0.4%. Paris -0.3%. Frankfurt -0.3%.
Futures at 7:00: Dow -0.1%. S&P -0.1%. Nasdaq -0.1%. Crude -0.4% to $92.02. Gold -0.05% to $1764.10.
Today’s economic calendar:
7:00 MBA Mortgage Applications
10:00 Wholesale Trade
1:00 PM Results of $21B, 10-Year Note Auction
2:00 PM Fed’s Beige Book
2:00 PM Treasury Budget
4:30 PM Daniel Tarullo speaks on Financial Stability Regulation.
4:45 PM Fed’s Fisher: ‘Europe’s Crisis and the Welfare State: Lessons for the United States’
Notable earnings after today’s close: OCZ
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