#PreMarket Primer: Tuesday, July 15: Citigroup Settles Mortgage Probe

On Monday, Citigroup settled the U.S. government’s probe into whether or not the firm misled investors and sold them faulty mortgages in the time leading up to the financial crisis.

The lender agreed to pay $7 billion in fines, which includes a $4 billion penalty, $2.5 million in consumer relief and $500 million to the Federal Deposit Insurance Corp.

The issue might not be over yet, though; Citigroup and some of its employees who knowingly participated could be facing criminal charges, though no there has been no word on whether the government will pursue the charges.

Top News

In other news around the markets:

• AbbVie moved closer to closing a deal with Shire that will help the drug maker avoid high corporate taxes in the U.S. as well as expand its product line. AbbVie was finally able to get Shire’s attention after numerous attempts with a 31 billion pound offer, which Shire has agreed to recommend to its shareholders. Now, the two sides are in talks to iron out the finer points of the deal before it becomes official.
• On Tuesday, North Korea released photos showing Kim Jong Un supervising missile launches, which violate U.N. sanctions because of their proximity to the South Korean border. The fact that the nation itself released the pictures to prove the event took place shows that it was a direct act of defiance on North Korea’s part.
• Bloomberg reported that Microsoft is expected to announce a large round of job cuts this week as the company takes on Nokia Oyj’s handset business. The layoffs will likely be the company’s largest cutback in five years and will include workers whose jobs are made redundant because of the new handset unit as well as marketing and engineering employees.
• On Tuesday, data from China showed that Chinese banks made loans worth 1.08 trillion yuan in June, proving that the nation’s policymakers were working to inject cash into China’s economy in order curb its slowdown. The figure was 20 percent higher than analysts were expecting, but many still believe Beijing will have to do more to maintain a stable recovery.

Asian Markets

Asian markets were mixed; the Shanghai and Shenzhen composites lost 0.26 percent and 0.30 percent, respectively, while the NIKKEI gained 0.59 percent, the KOSPI rose 1.03 percent and the Hang Sheng index rose 0.27 percent.

European Markets

European markets were lower; the FTSE fell 0.14 percent, the STOXX 600 was down 0.20 percent, the DAX and the CAC 40 lost 0.50 percent, and the MIB was down 1.38 percent.

Commodities

Energy futures were mixed; Brent futures were down 0.26 percent, but WTI futures gained 0.02 percent. Gold and silver gained 0.17 percent and 0.20 percent, respectively, and industrial metals were mostly higher with the exception of copper, which lost 0.38 percent. Aluminum was up 0.05 percent, zinc gained 0.17 percent and tin rose 0.27 percent.

Currencies

Currency markets were quiet on Tuesday; the euro lost 0.03 percent against the dollar, but gained 0.03 percent against the pound and remained flat against the yen. The dollar gained 0.05 percent against the yen, 0.06 percent against the pound and 0.19 percent against the Australian dollar.

Earnings

Notable earnings released on Monday included:

• Citigroup Inc. C reported second quarter EPS of $1.24 on revenue of $19.38 billion, compared to last year’s EPS of $1.34 on revenue of $20.48 billion.
• Wintrust Financial Corporation WTFC reported second quarter EPS of $0.76 on revenue of $203.28 million, compared to last year’s EPS of $0.69 on revenue of $199.82 million.
• Bank of the Ozarks OZRK reported second quarter EPS of $0.34, compared to last year’s EPS of $0.29 on revenue of $62.45 million.

Premarket Movers

Stocks moving in the Premarket included:

• Boeing BA was up 0.83 percent in premarket trade after gaining 1.12 percent on Monday.
• Goldman Sachs GS gained 0.46 percent in premarket trade after rising 1.33 percent in premarket trade.
• Michael Kors KORS lost 0.93 percent in premarket trade after falling 6.02 percent over the past week.
• Facebook FB was down 0.28 percent in premarket trade after rising 2.35 percent on Monday.
• Earnings

Notable earnings releases expected on Tuesday include:

• JP Morgan Chase JPM is expected to report second quarter EPS of $1.29 on revenue of $23.76 billion, compared to last year’s EPS of $1.60 on revenue of $25.96 billion.
• Johnson & Johnson JNJ is expected to report second quarter EPS of $1.54 on revenue of $18.86 billion, compared to last year’s EPS of $1.48 on revenue of $17.88 billion.
• Intel Corporation INTC is expected to report second quarter EPS of $0.52 on revenue of $13.68 billion, compared to last year’s EPS of $0.39 on revenue of $12.81 billion.
• Goldman Sachs GS is expected to report second quarter EPS of $3.05 on revenue of $7.97 billion, compared to last year’s EPS of $3.70 on revenue of $8.61 billion.
• Johnson & Johnson JNJ is expected to report second quarter EPS of $1.54 on revenue of $18.86 billion, compared to last year’s EPS of $1.48 on revenue of $17.88 billion.
• Yahoo! (NASDAQ: YHOO) is expected to report second quarter EPS of $0.38 on revenue of $1.09 billion, compared to last year’s EPS of $0.35 on revenue of $1.07 billion.

Economics

Notable economic releases expected on Tuesday include the U.S. Redbook, U.S. oil inventory data, U.S. retail sales, Germany’s ZEW survey, British PPI, British CPI and Italian CPI.

For a recap of Monday’s market action, click here.

Tune into Benzinga’s #PreMarket Prep today to hear Nolan Watson, Serge Berger, Rick Ackerman & Nic Chahine by clicking here!