WALL STREET BREAK FAST : MUST KNOW NEWS

February 7, 2012  |  includes: BCS, CS, GLD, GS, KO, MS, ORCL, QQQ, RBS, SAP, SPY, TM, TRP, UBSUSO, XSRAF.PK, XSRAY.PK

Xstrata-Glencore merger to create $90B behemoth. Xstrata (XSRAY.PK) has formally announced that it has agreed to merge with Glencore in an all-share deal that will create a company worth $90B. The tie-up values Xstrata at £39.1B ($61.9B), or £12.90 a share, a 15.2% premium on its stock price before news of the deal emerged last week. However, Standard Life, Xstrata's fourth largest investor, has already said it will vote against the tie-up, as it "undervalues Xstrata's assets and future earnings" potential.

German production plummets. German industrial output plunged 2.9% in December vs. expectations for no change, with the fall coming despite factory orders rising 1.7%. It's the biggest drop in three years and brought output for all of 2011 to +0.9%. It's likely Germany's GDP contracted in Q4, but ING's Carsten Brzeski believes that this will set the bottom for the economy.

Toyota raises full year profit outlook despite fall in FQ3. Toyota's (TM) FQ3 net profit slipped 13.5% to ¥80.9B ($1.05B) but topped analyst forecasts as revenue rose 4.1% to ¥4.865T. The automaker's results were hurt by the usual suspects of the earthquake in Japan, the Thai floods and the strong yen. However, a faster-than-expected recovery in demand and cost cuts prompted Toyota to raise its FY 2012 profit forecast to ¥200B from ¥180B.

UBS net profit slumps 76%. UBS's (UBS) Q4 net profit plummeted 76% to 393M Swiss francs ($427.9M) and came in way below analyst expectations as revenue fell 16% to 5.97B francs. New cash flowing into UBS's wealth management arm failed to offset continued losses in investment banking. The Swiss bank gave a cautious outlook for 2012, although it did say it would pay a dividend of 0.10 franc a share, its first since 2006.

Oracle looks for bigger payout from SAP. Oracle (ORCL) has rejected a $272M award in an IP theft case against SAP (SAP) as it looks for a bigger payout to match an original jury verdict of $1.3B in the case. A new trial between the software rivals could take years to resolve.

Greece agrees to slash 15,000 jobs. Greece has agreed to lay off 15,000 public-sector workers by the end of 2012, which would signal a concession after meetings between PM Lucas Papademos and Greece's political leaders yesterday over a reform program demanded by the country's creditors. Papademos is spending more quality time with party chiefs today following hours of fun with the Troika last night. Meanwhile, Greeks are holding a one-day strike against the austerity.

Who's an active Facebook user? Depends who you ask. Facebook's (FB) definition of an active user appears to be very broad, according to details sifted out of its prospectus by The New York Times. Users that click on the "Like" button or share content are counted as active, as well as anyone that uses their Facebook log-in credentials on other sites. The distinction has important considerations as analysts play around with monetization models based on a hyped-up metric of 483M daily active users.

Senate passes $63B aviation bill. The Senate has approved a sweeping aviation bill authorizing $63B in spending for FAA programs. Also included is a statement opposing the EU's controversial law that makes airlines pay for carbon emissions from their aircraft that fly over Europe.

Coca-Cola aims to double revenues to $200B. Coca-Cola (KO) has given a sweet forecast to a sugar conference in Dubai, saying that it aims to double net revenues to over $200B by 2020 from $100B in 2010. A positive long-term economic outlook, population growth, and a vibrant beverages industry will boost sales, Coca-Cola said, with the firm expecting a major contribution from the BRIC countries.

GOP seeks to reroute passage of Keystone pipeline. House Republicans will to try to push through the approval of the Keystone pipeline using a highway funding bill after President Obama blocked TransCanada's (TRP) $7B project last month. A key House panel will vote on the move today; failing that, the GOP may try to tack it on to the must-pass payroll tax cut legislation instead.

Farmers expected to sow largest acreage since 1984. U.S. farmers will this year sow corn, soybeans and wheat on 226.9M acres of land, up 2.5% from last year and the most since 1984, a Bloomberg survey predicts. Such growth would mean an expansion the size of New Jersey as farmers attempt to exploit the highest agricultural prices in four decades.

Fed to sell more ex-AIG mortgage bonds. The New York Fed is set to auction off another $6B of former AIG mortgage bonds this week, The Wall Street Journal reports, and has invited Barclays (BCS), Credit Suisse (CS), Goldman Sachs (GS), Morgan Stanley (MS) and RBS to participate. Last month, CS bought debt with a principal value of $7B and quickly resold it.

Obama to detail yet another long-term budget. President Obama will next week lay out plans to carry out $3T in deficit cuts over 10 years, including $1.5T in tax hikes for the well-off. If it all sounds overly familiar, that's because the program is based on one that Obama detailed in September. With the GOP dead set against tax rises, nothing is likely to be passed until after the election.