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Pre-Market: Citigroup Leads Bank Earnings; Shire Will Recommend AbbVie's Fifth Offer


The sixth BRICS meeting begins in Brasilia, Brazil.

Stock futures pointed toward a higher open on Monday. Before the opening bell, Dow Jones (INDEXDJX:.DJI) futures rose 0.46% to 16,958. Nasdaq (INDEXNASDAQ:.IXIC) futures moved higher, rising 0.48% to 3,917.25.  Futures on the S&P 500 (INDEXSP:.INX) were up 0.43% to 1,970.80.


Citigroup (NYSE:C) reported earnings of $0.03 per share thanks to a confirmed $7 billion settlement with the US government over an investigation into the bank's lending practices leading up to the 2008 financial crisis. The fine caused Citigroup's profits to fall by 96%. Had the New York City-based bank avoided the fine, it would have easily beat analyst estimates of $1.05 per share, excluding special charges. Without the $7 billion loss, Citigroup would have posted a net income of $3.93 billion, or $1.24 per share, versus $3.89 billion, or $1.25 billion per share a year earlier. Citigroup will hold its Q2 earnings call at 10:00 a.m. The New York City-based bank kicks off a week of earnings reports from US banks, including JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC), and Goldman Sachs (NYSE:GS). Meanwhile, Shares of Citigroup rose 1.36% in pre-market trading.

After rejecting four previous offers from Chicago-based pharmaceutical company AbbVie (NYSE:ABBV), Shire PLC (NYSE:SHPG) says its ready to recommend a fifth bid, increased to $53 billion, to its shareholders. The revised bid comes after Shire, which makes the popular ADHD medication Adderall, reportedly told AbbVie to raise its offer to $91 per share. AbbVie wants to buy Shire not only to diversify its product line, but to cut down its tax bill. That's an apparently popular motivating factor among US-based pharmaceutical companies. Pfizer (NYSE:PFE), for instance, whose recent failed bid for London-based AstraZeneca (NYSE:AZN), was motivated in part by the possibility of a tax shelter. AbbVie was down 2.02% ahead of the opening bell. Shire rose by 1.59%.

A month after leaving the hedge fund market, KKR (NYSE:KKR) is back in the game. The San Francisco-based financial company closed a deal on Friday for a 24.9% stake in Houston-based BlackGold Capital Management LP. BlackGold is focused on the natural resources and energy sectors. The terms of the deal have not been disclosed, but BlackGold's founders have said they plan to reinvest most of the proceeds from the sale and operate independently from KKR.

American Airlines (NASDAQ:AAL) has picked CFM International, a joint venture between General Electric (NYSE:GE) and France's Safran SA (OTCMKTS:SAFRY), to provide engines for its 100 Airbus A32ONEO jets. The order is worth $2.6 billion at list price. Airbus Group (OTCMKTS:EADSY) plans to spend over $1.4 billion on the upgrade of its A330 passenger jets, as it attempts to double the lifespan of the world's top-selling wide-body airplane. Airbus plans to deliver its new planes by late 2017. Shares of American Airlines rose 0.82% in pre-market trading.


Besides the announcements of the 4-week, 3-month, and 6-month Treasury bill auctions, there are no events scheduled on today's economic calendar. Investors can look ahead to two back-to-back speeches from Federal Reserve Chairperson Janet Yellen this week on Tuesday and Wednesday. Industrial production and the the housing market index are reported on Wednesday. The Philadelphia Fed Survey arrives Thursday. On Friday, consumer sentiment and leading indicators are reported.

Global Markets

Stocks rose across the globe on Monday, as Portugal's 10-year bond yield fell eight basis points to 3.79%, continuing a 19-basis point drop over the past two days of trading. Asian stocks were led higher by telecom companies, including SoftBank (OTCMKTS:SFTBF), which gained 2.3% in Tokyo. The two-day BRICS summit begins in Brasilia, Brazil, today, where representatives from Brazil, Russia, India, China, and South Africa will meet to discuss issues including the creation of a new development bank. In Europe, news from Shire and Airbus helped to sustain broader market gains. Gold dropped after just falling short of a four-month high, and silver followed suit.

Twitter: @brokawbrokaw
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