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Moody’s reviews muni debt. Moody’s is looking at thousands of U.S. municipal sector obligations linked to 26 banks currently under review for downgrades. The results of Moody’s evaluations could cause turmoil in the $3.7T muni bond market that has so far managed to chug along without too many problems.

Citi may face hefty writedown. Citigroup (C) is facing a potential multibillion-dollar writedown as it begins unwinding its minority investment in the Morgan Stanley Smith Barney brokerage. Accounting complications and a reduced valuation could leave Citi facing an after-tax hit of up to $1.8B, more than it earned in Q4.

Dell disappoints on outlook. Dell (DELL) reported Q4 EPS yesterday afternoon of $0.51, missing expectations by $0.01, and revenue of $16.03B, beating by $70M. The company expects FY13 EPS to exceed $2.13 (consensus is for $2.04) but it expects FQ1 revenue to fall 7% Q/Q (implied level of $14.9B, below $15.2B consensus). Sales were boosted by 12% Y/Y growth in services, and 60% Q/Q growth in proprietary storage. Server & networking sales rose 6% Y/Y, but that’s down from FQ3′s 13%. Business sales were healthy, but public and consumer revenue fell slightly. Asia-Pac and EMEA sales rose, while the Americas fell by 3%. Gross margin fell 150 bps Q/Q to 21.1% – that’s likely to be a point of concern. Shares slid AH, and are currently -6.6% premarket (7:15 ET).

J&J chief to step down. Johnson & Johnson (JNJ) CEO Bill Weldon announced his retirement, following an embarrassing stretch of product recalls and speculation in winter 2010 that he would step down within the year. Alex Gorsky, head of medical devices and diagnostics, will succeed him.

Shell to buy Cove Energy. Shell (RDS.A) offered to buy African explorer Cove Energy (CNVGF.PK) for £994.4M ($1.6B) to expand its footprint in Mozambique and Kenya. The 195 pence/share offer is a 26% premium to Cove’s closing price in London yesterday. Cove’s board expects to recommend the acquisition. Cove +24.6% in London trading (7:00 ET).

Peugeot, GM in alliance talks. PSA Peugeot Citroen (PEUGY.PK) is in advanced alliance talks with GM (GM), according to French online newspaper LaTribune.fr, with sources saying the two could join forces on development and production in Europe. The alliance wouldn’t be a merger and probably wouldn’t involve an exchange of shares. PSA confirms it’s in alliance talks but didn’t name its potential partners. Peugeot +15.2% in French trading (7:00 ET).

Tensions grow over Iran. The IAEA says it failed to win access to Iran’s suspected nuclear-related military base during two days of talks that ended yesterday. Meanwhile, Iran said it would consider preemptive action if it felt threatened, underscoring the real possibility of a military conflict in a region holding half the world’s oil reserves.

Fannie, Freddie need to cut costs. With no end in sight to Fannie Mae (FNMA.OB) and Freddie Mac’s (FMCC.OB) drain on taxpayers, the two mortgage giants need to rein in their rising legal costs, according to a watchdog report released today. At present, Fannie and Freddie are spending tens of millions of dollars defending former execs facing private lawsuits and government investigations. Separately, the FHFA released a new plan to unwind the GSEs and help strengthen the private mortgage market. One possibility: Each could hire an outside investment firm to manage their portfolios, but a BlackRock or Pimco would charge hefty fees that could exceed any savings from laying off staff.

Wells buys BNP loan portfolio. Wells Fargo (WFC) agreed to buy an energy loan portfolio with a face value of $11B from BNP Paribas (BNPQY.PK). Only $4B of the loans have thus far been drawn by borrowers. The deal is part of a broader effort by BNP to reduce its balance sheet by ~10% by year’s end. Many other European banks are also conducting asset sales.

Ford bolsters pension plan. Ford (F) is going to pump $3.8B into its global pension plan this year and invest the plan’s assets more heavily in bonds as the automaker tries to minimize its pension risks in a shaky market. To put that figure in perspective, Ford contributed $1.5B last year.

BoE strongly favored easing. Bank of England minutes released this morning show members voted 9-0 to keep rates unchanged at the most recent policy meeting, and voted 7-2 to increase bond purchases by £50B. Two members had sought a £75B increase. Sterling -0.56% to $1.5692 (7:00 ET).

Consumers still fretting the economy. Despite recent signs of improvement in the U.S. economy, more consumers feel financially insecure than they did a year ago, largely because of their lack of savings to cushion a job loss or other problems, according to a Bankrate.com poll. Just 54% of consumers have more emergency savings than credit card debt, the survey finds.

Beer brewers eye StarBev. Anheuser-Busch (BUD), on the lookout for assets in faster-growing markers, is eying up Czech brewer StarBev in a deal that could be valued as high as $3B. The brewer is owned by CVC Capital Partners, which took it private in late 2009. Others with interest: SABMiller (SBMRY.PK), Heineken (HINKY.PK), and Molson Coors (TAP).

Alibaba maneuvers for Alibaba.com. Alibaba (ALBCF.PK) bid as much as HK$19.6B ($2.5B) to take Alibaba.com private, offering minority shareholders HK$13.50/share for the 27% of shares it doesn’t already own. Gaining control of Alibaba.com would make it easier for Alibaba to reorganize its assets, a flexibility that could be useful in Alibaba’s negotiations with Yahoo (YHOO).

Today’s Markets:
In Asia, Japan +1.0% to 9554. Hong Kong +0.3% to 21549. China +0.9% to 2404. India flat at 18145.
In Europe, at midday, London -0.5%. Paris -0.6%. Frankfurt -1.1%.
Futures at 7:00: Dow -0.15%. S&P -0.2%. Nasdaq -0.2%. Crude -0.3% to $105.89. Gold -0.2% to $1755.60.

Wednesday’s economic calendar:
7:00 MBA Mortgage Applications
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
10:00 Existing Home Sales
1:00 PM Results of $35B, 5-Year Note Auction

Earnings Results: Companies that beat EPS expectations last night and this morning include Range Resources (RRC) and Brocade Communications (BRCD).

Those that missed forecasts include Toll Brothers (TOL) and Chesapeake Energy (CHK).

Notable earnings before Wednesday’s open: BRKR, CHS, CLH, CNK, DCI, DLTR, EV, GAS, GRMN, IDA, LAMR, MGM, PWR, TJX, TOL, TX, WIN, YNDX

Notable earnings after Wednesday’s close: ADI, AUY, AVGO, AWAY, CIM, CLR, CXO, DRYS, ESRX, ESV, FLR, FLS, HPQ, HTZ, KBR, LBTYA, LTD, OAS, ONXX, PAAS, PPO, QCOR, QEP, QIHU, SM, SNPS, WLL, WMB, WPZ

spotlight
• Dow touches 13K. The Dow briefly pushed past 13,000 yesterday, the highest point since May 2008, before losing some steam to close +0.1% at 12,965.69.

• Fitch cuts Greece. Fitch downgraded Greece to C from CCC this morning, saying the Greek bond swap would be a restricted default. “It’s difficult to fathom what the market cares less about now,” tweets economist Jeremy Cook, “Greece or ratings agencies.” European shares and the euro hardly blink in response to the downgrade, with the Stoxx 50 -0.8% and the euro flat and buying $1.3228 (7:10 ET).

• Comcast takes aim at Netflix. Comcast (CMCSA) announced Streampix, a subscription-based VOD service aimed at Netflix (NFLX). News of the service took a bite out of Netflix’s shares yesterday, which gave up gains to close -3.65%. Comcast’s service will be offered free or for $4.99 depending on a subscriber’s particular Comcast package, but a subscription to Comcast’s TV and broadband services will be required. Credit Suisse suggests the impact on Netflix will be limited because Streampix will be limited to Comcast’s existing subscribers.

Greek bailout not yet a shoo-in. Although Greece approved further austerity on Sunday, key elements of the country’s bailout are still to be decided, including the contribution of eurozone governments to reducing Greece’s debt. The EU also wants the nation to find an extra €325M ($429M) of budget cuts and further assurances from party leaders about the austerity package. The demands give credence to those who believe the EU is trying to force Greece out the euro, especially with Q4 GDP plumetting 7%.

U.S., EU OK Google’s purchase of Motorola. U.S. and EU regulators have approved Google’s (GOOG) $12.5B acquisition of Motorola (MMI) but said they would ensure that IP that is vital to the telecom sector would be licensed at fair prices. In a series of authorizations yesterday, the Department of Justice also approved the purchase of patents by an Apple (AAPL) led group from bankrupt Nortel, and the tech giant’s acquisition of former Novell IP.

COF again left in limbo over $9B purchase of ING ops. The Fed has again postponed a decision on whether to approve Capital One Financial’s (COF) proposed $9B acquisition of ING’s (ING) U.S. online bank, the second delay within a week. The Fed considered the deal yesterday and promised a decision soon. It’s the first M&A the Fed is looking at under new Dodd-Frank rules.

BOJ eases further, sets inflation goal. The Bank of Japan is expanding its asset-purchasing program by ¥10T and has maintained its near-zero interest rate target, while it has also set an inflation target of 1%. Although there was pressure to set the price goal, it may not be enough to keep the government from intervening further in monetary policy.

Eurozone production falls but Germans regain confidence. Eurozone industrial output contracted by a monthly 1.1% and an annualized 2% in December, which were both worse than expected. German production fell 2.7%, making it even more of a surprise that the ZEW gauge of investor sentiment in the country unexpectedly turned positive in February, rising to +5.4 from -21.6 in January and coming in well above forecasts of -11.6.

GOP moves on payroll tax cut extension. Reluctant to be seen as holding up a tax break for American workers, House Republican leaders said they will put forward a new proposal to extend the payroll tax cut, giving up for now on their earlier requirement that it must be paid for. Speaker John Boehner and others said their backup plan could come for a vote as soon as this week, well before the break expires on February 29.

Today’s Markets:

In Asia, Japan +0.6% to 9052. Hong Kong +0.1% to 20918. China Shanghai -0.3% to 2345. India +0.4% to 17849.
In Europe, at midday, London +0.2%. Paris +0.3%. Frankfurt +0.4%.
Futures at 7:00: Dow +0.1%. S&P +0.1%. Nasdaq +0.2%. Crude +0.5% to $101.39. Gold -0.3% to $1719.60.

Tuesday’s economic calendar:

7:30 NFIB Small Business Optimism Index
7:45 ICSC Retail Store Sales
8:30 Retail Sales
8:30 Import/Export Prices
8:45 Fed’s Plosser: Economic Outlook
8:55 Redbook Chain Store Sales
9:00 Ceridian-UCLA Pulse of Commerce Index
10:00 Hearing: President’s Budget for FY 2013 (Geithner)
10:00 Business Inventories
5:40 PM Fed’s Lockhart: Economic Outlook

Earnings Results:

Companies that beat EPS expectations last night and today include Fidelity National Information Services (FIS), Health Management Associates (HMA), Regal Entertainment Group (RGC), Omnicom Group (OMC), Fossil (FOSL), Asbury Automotive Group (ABG), Goodyear Tire & Rubber Company (GT).

Those in line include Host Hotels & Resorts, Inc. (HST), United Stationers (USTR).

Those that missed forecasts include Avon (AVP), Masco (MAS).

Notable earnings before Tuesday’s open: AVP, BWA, FOSL, GT, HCP, HSP, HST, KORS, MMC, OMC, TRP, UTHR, VAL, WPI

Notable earnings after Tuesday’s close: ACAS, ACC, ACGL, FTI, MET, SKT, STR, WSH, WTW, ZNGA

spotlight
• Moody’s warns on U.K.’s AAA rating. Moody’s yesterday cut the outlooks for the U.K., France and Austria to negative, though each country keeps its AAA rating for now. The agency also downgraded Spain by two notches, and Italy, Portugal, Slovakia, Slovenia, and Malta by one notch. However, where once such a move would have caused panic, EU stocks shrugged a little today before moving higher. “Normal” has changed.

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• BHP, Rio signal confidence in copper with $4.5B investment. BHP (BHP) and Rio Tinto (RIO) are to invest a combined $4.5B to expand the Escondida mine in Chile, the world’s largest copper mine, as they look to boost output to meet the growing demands from China and other emerging nations. BHP also plans to reopen its idled Pinto Valley mine in Arizona.

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• Airline group warns that carbon tax could cut profits 30%. The EU’s controversial carbon emissions tax could erode more than 30% of the airline industry’s profits, IATA chief Tony Tyler has warned. The first year of implementation could cost $1.2B, with worldwide profit pegged at $3.5B this year; there’s also the possibility that costs could “balloon” in future years. Tyler did not comment on the imporvements to the environment, if any, that the tax may bring.

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