"Profits must come through public confidence, and public confidence is given to any merchant in proportion to the service which he gives to the public."
- James Cash Penny
Market Musings with CNBC Market Master Robert Hum
Recap: Dow 38.16 ( 0.27%) at 14,127.82, S&P 7.00 ( 0.46%) at 1,525.20, Nasdaq 3.412.29 ( 0.39%) at 3,182.03
Closer to a record: Dow has 2nd highest close ever, ends day 38 points shy of an all-time closing high.
Major indices reverse morning losses, turn positive in afternoon, close at session highs S&P 500 has first Monday gain of 2013.
Crude oil falls below 200-day moving average, then drops below $90 for first time since December 26.
The Word on the Street Tonight
Shareholder Trying to Dump Giant JCPenney Stake/CNBC - John Melloy: "A 10 million share block in troubled retailer JCPenney was being shopped Monday by Deutsche Bank's trading desk, according to multiple sources. The asking price of the block owned by Vornado Realty Trust was for a range between $16.40 and $16.60, one source confirmed, valuing the stake between $164 million and $166 million. Bill Ackman's Pershing Square, Vornado Realty Trust and Dodge & Cox were the biggest holders in the stock, each owning more than 20 million shares, according to the latest filings."
J.C. Penney Considered Purchasing MSLO Before Settling on Minority Stake/Ad Age: "It was revealed in court today that J.C. Penney considered buying Martha Stewart Living Omnimedia outright before settling on a 16% stake instead. Ron Johnson resumed his testimony today in the trial between Macy's, J.C. Penney and MSLO. Martha Stewart is expected to take the stand tomorrow. In an email introduced in court, Mr. Johnson played out a variety of scenarios regarding a deal with MSLO. One email from the CEO said, "We could either get [Macy's] to release the agreement prior to purchase...ideal...or we could simply buy Martha and trust that over time they will move somewhere else. Also we could make an offer to Martha..." Ultimately, however, MSLO raised $38.5 million by selling a 16% stake to J.C. Penney, a deal that also provided the retailer with two board seats. It was also revealed that MSLO asked Mr. Johnson to reach out to the CEO of Home Depot, Frank Blake, and let him know about the impending agreement. The planned J.C. Penney line and Home Depot would have some overlap and MSLO wanted J.C. Penney and Home Depot to work together. No such consideration was given to Macy's by MSLO. Mr. Johnson hammered home that, while he went back and forth on the issue of whether he wanted MSLO to be exclusive to J.C. Penney, he ultimately thought it would be better for MSLO products to be available in both Macy's and J.C. Penney. "I hope Macy's stays on as well from her perspective. Winning partners helps us in the long run," wrote Mr. Johnson.
JC Penney Could Wind Up with Empty Shelves/AP: "J.C. Penney, which is struggling with big losses and steep sales declines, could face another challenge: empty shelves. New York State Supreme Court Judge Jeffrey Oing told Penney's attorneys on Monday that the chain took a risk by ordering towels, cookware and other products from the company that home diva Martha Stewart founded. In fact, Oing said he could force Penney to stop the products from heading to the shelves this spring even as they come off the docks. "That's the risk your client took," Oing said. "Ultimately, you guys played it out." Mark H. Epstein, representing Penney, argued that a decision to block the department store from selling goods like towels and bedding that don't carry the Martha Stewart label would be devastating because the company doesn't have a substitute. ... Penney, which started to roll out shops last fall, has been counting on a reinvented home area to attract shoppers. It had planned to use the Martha Stewart brand as the anchor."
Fannie, Freddie to Merge Some Operations/WSJ: "The regulator of Fannie Mae and Freddie Mac, the government-controlled mortgage companies, announced Monday one of the most concrete efforts to date for building a new infrastructure that could ultimately replace Fannie and Freddie. Edward DeMarco, the director of the Federal Housing Finance Agency, said the agency would begin forming a new company that would consolidate some of the "back-office" functions currently replicated individually by each firm. The new company will have its own chief executive and board and for now would be jointly owned by Fannie and Freddie, said Mr. DeMarco, in a speech Monday afternoon before the National Association of Business Economics in Washington, D.C. Fannie and Freddie have operated for decades as independent firms in competition with each other, but last year the FHFA began working with the companies to create a single platform in which home loans could be packaged into securities. The companies were taken over by the U.S. Treasury in 2008 and the FHFA was tasked with conserving the firms' assets until Congress and the White House decided what to do with them."
Heinz CEO's Golden Parachute Set at $56 Million/Reuters: "H.J. Heinz Co Chief Executive William Johnson would receive about $56 million if he gets terminated following the ketchup maker's acquisition by Berkshire Hathaway and 3G Capital, the company said on Monday. ... Heinz spokesman Michael Mullen said Johnson's "golden parachute" payment would reflect his success in building shareholder value over his 15 years as CEO."
U.S. Urges Ban on Drunk Diplomats at UN Budget Debates/Reuters: "The United States called on Monday for a ban on drunk diplomats at budget debates at the United Nations. "We make the modest proposal that the negotiating rooms should in future be an inebriation-free zone," Joseph Torsella, deputy U.S. ambassador to the United Nations for management and reform, told the General Assembly's budget committee. "While my government is truly grateful for the strategic opportunities presented by some recent past practices, let's save the champagne for toasting the successful end of the session, and do some credit to the Fifth Committee's reputation in the process," he said."