• E.On to offload American ops. E.On (EONGY.PK) is reportedly looking to sell its American operations, and could get as much as $6B from a sale as Duke Energy (DUK), PPL Energy (PPL), American Electric Power (AEP) and Southern Co. (SO) mull competing bids. E.On wants to shift its focus back to its home market in Europe, though the sale may also be influenced by a desire to get out of coal-fired utilities before any expensive laws take effect.
• Lyondell rebuffs Reliance. LyondellBasell reportedly rejected a $14.5B offer from Reliance Industries, which was seeking a controlling stake in the bankrupt chemicals-maker. A deal would have given India’s Reliance access to chemical plants and refineries in the U.S. and Europe, and Reliance is likely to look for acquisitions elsewhere if it fails to move forward with Lyondell.
• GM joins the recall train. GM is the latest automaker to initiate recalls, targeting 1.3M Chevrolet and Pontiac vehicles in North America over power-steering problems. The recall follows an investigation by U.S. regulators who received more than 1,100 consumer complaints about steering failures. Separately, GM is expected to announce a shake-up of its sales and marketing operations today as it works to expand its U.S. sales.
• CIT posts 2009 losses. CIT Group (CIT) reported yesterday that it lost around $900M in Q4 and around $4B in 2009. The company, which filed for bankruptcy in November and emerged in December, said the losses exclude the impact of the reorganization and accounting adjustments, and that the full-year loss should be "essentially offset" by the company’s restructuring.
• Financial reform inches forward. Lawmakers are said to be close to an agreement on financial reform, with plans to house a new consumer-protection agency in the Federal Reserve. Key senators representing both parties have also reached an agreement that would enable the government to break up large, failing financial firms.
• FDIC lines up mortgage-backed debt sale. In a move widely anticipated by investors, the FDIC is reportedly ready to sell $1.8B of guaranteed debt backed by residential mortgage assets from failed banks. The two-part deal is expected to go through this week, and analysts say the timing is no coincidence: With the Federal Reserve wrapping up its $1.25T guaranteed mortgage bond purchase program, "we need somebody who has a large portfolio, and is a willing seller at a clearing price to move consumer assets in securitized form… This is pretty much timed, part of the replacement plan."
• Kohn to retire from Fed board. Donald Kohn will retire as Federal Reserve vice chairman in June. His decision will give Obama a chance to reshape the Fed since it creates the third vacancy on the Fed’s seven-member board. If the White House and Senate move quickly, they could have replacements on the board in time to influence the timing of an eventual interest rate increase. Possible nominees could include Harvard’s Ken Rogoff, White House economic adviser Christina Romer and San Francisco Federal Reserve Bank President Janet Yellen.
• T-Mobile, Orange okayed for merger. As expected, European regulators approved the merger between France Telecom’s (FTE) Orange U.K. and Deutsche Telekom’s (DT) T-Mobile U.K., creating the U.K.’s largest mobile operator with 38% of the market.
• Sovereign debt risk for U.S. banks. As concerns about Greece’s deficit mount and European contagion fears grow, U.S. Comptroller of the Currency John Dugan says regulators are taking a very careful look at the exposure of U.S. banks to sovereign debt risk. He declined to discuss the specific situations of individual banks.
• Aussie rate hike. Australia raised its key interest rate this morning to 4% from 3.75%, betting that faster-than-expected economic growth will outweigh fears related to European deficits. Governor Glenn Stevens said the increase was a "further step" in bringing the interest rate "closer to average," a level he previously signaled could be 75 basis points higher than where it currently stands.
• Merger Monday returns, for now. Six major deals and offers were announced yesterday, involving companies ranging from insurer AIG (AIG) to drugmaker OSI Pharmaceuticals (OSIP) to risk advisory firm RiskMetrics Group (RISK). Among other takeaways from the flurry of deals is that the U.S. is coming back in favor, with some large foreign firms making big bets on U.S. companies.
• Madoff victims can’t recoup fake profits. A judge ruled yesterday that victims of Madoff’s Ponzi scheme are only owed the initial money they invested and not the fictitious profits they believed they had accrued. The ruling is in line with the approach taken by trustee Irving Picard, who said investors who withdrew more from Madoff’s firm than they put in shouldn’t be entitled to recovered funds.
• Treasury to sell BofA warrants. The Treasury will sell 272M warrants for Bank of America (BAC) stock on Wednesday, with the auctions divided into two classes of warrants.
• Google’s growing appetite to buy. Google (GOOG) bought online photo-editing site Picnik, its third acquisition in around as many weeks. Terms of the deal were not disclosed.

Earnings: Tuesday Before Open

• Staples (SPLS): Q4 EPS of $0.38 misses by $0.01. Revenue of $6.4B (+3.8%) vs. $6.3B. (PR)

Earnings: Monday After Close

• MBIA (MBI): Q4 EPS of -$1.16 misses by $0.05. Revenue of $653M. Shares +1.3% AH. (PR)
• McDermott International (MDR): Q4 EPS of $0.43 beats by $0.02. Revenue of $1.46B (-12%) vs. $1.53B. Shares -2.6% AH. (PR)
• Nutrisystem (NTRI): Q4 EPS of $0.18 beats by $0.05. Revenue of $106M (-7%) vs. $102M. Though good trends in revenue, customer growth, margin should continue, "their impact will be offset in the first quarter by higher media rates and one-time costs related to retail." Shares +0.1% AH. (PR, earnings call transcript)

Today’s Markets

• In Asia, Nikkei +0.5% to 10222. Hang Seng -0.7% to 20906. Shanghai -0.5% to 3073. BSE +2.1% to 16773.
• In Europe at midday, London +0.8% to 5450. Paris +0.7% to 3795. Frankfurt +0.6% to 5750.
• Futures: Dow +0.5%. S&P +0.6%. Nasdaq +0.6%. Crude +0.52% to $79.11. Gold -0.26% to $1121.30.

Tuesday’s Economic Calendar

• Feb. Auto Sales
  7:45 ICSC Retail Store Sales
  8:55 Redbook Chain Store Sales
  1:00 PM Fed’s Rosengren: Financial Interdependence in Post-Crisis Capital Markets
  2:00 PM Fed’s Kocherlakota: Economic Outlook
  5:00 PM ABC Consumer Confidence Index
• Notable earnings before Tuesday’s open: BYD, CSR, DPZ, HERO, SPLS
• Notable earnings after Tuesday’s close: EGLE, HOV, PDLI

Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.

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