Monday, July 2, 2012


Wall Street Breakfast: Must-Know News

July 2, 2012  |  AMLN, AMZN, AZN, BCS, BMY, CRM, DELL, EADSY.PK, ED, LNAGF.PK, LNCR, MU, NFLX, QQQ,QSFT, SPY



Wall Street Breakfast pictureTop Stories
Barclays chairman falls on his sword. Barclays (BCS) Chairman Marcus Agius has resigned in the wake of the Libor scandal, saying "the buck stops with me." The Bank of England could get sucked into the affair, as Barclays managers believed they were making false submissions under the instruction of Deputy Governor Paul Tucker. Meanwhile, the British government has ordered an independent review into the workings of interbank lending rate.
Germany's Linde to buy Lincare for $4.6B. Germany's Linde (LNAGF.PK), an industrial gas producer, has agreed to pay $4.6B to buy Lincare Holdings (LNCR), a provider of oxygen and respiratory services to in-home patients. The $41.50-a-share deal represents a 22% premium to Lincare's close on Friday. It may seem like a strange match but industrial gas suppliers have been pushing into the homecare market, which is growing 6%-9% annually.
Bristol-Myers, AstraZeneca to acquire Amylin in $7B deal. Bristol-Myers Squibb (BMY) and AstraZeneca (AZN) have won the battle for Amylin (AMLN), agreeing to buy the diabetes drug maker for $31 a share - equivalent to a 10% premium to Friday's close. The total size of the deal is $7B and includes about $3.4B from AstraZeneca, which will expand its diabetes collaboration with Bristol-Myers. Amylin shares were +8.5% premarket.
Top Stock News
Micron to buy Elpida for $750M plus $1.75B debt. Micron Technology (MU) has agreed to acquire Elpida Memory for about $750M. Under the deal, Micron will also pay the creditors of the bankrupt Japanese chipmaker $1.75B in annual installments until 2019. Micron shares were +1.6% premarket.
Dell seen confirming Quest offer. Dell (DELL) is set to announce as soon as this morning that it's buying Quest Software (QSFT), the WSJreports. The final price for the deal isn't known yet, although Dell last week reportedly offered $2.3B, or $27.50 a share.
NY power utility shuts out workers. Consolidated Edison (ED) locked out 8,500 unionized workers after a collective bargaining agreement expired over the weekend and talks about a new contract broke down. The New York electricity utility, which has been drafting 5,000 managers to replace the workers, said the lockout won't prevent it from being able to provide enough power to cope with the increased demand brought by the city's heatwave.
Airbus plant could bring 3,000 jobs. Airbus (EADSY.PK) could reportedly create 400-500 permanent jobs at a $600M A320 assembly line it plans to open in Alabama 2017, and 2,500 construction positions to build the plant. That's not to mention any jobs in ancillary industries. An announcement could come today.
Storm downs Amazon Web Services. Amazon Web Services (AMZN) experienced a giant outage over the weekend, due to the storms that hit the East Coast. The breakdown affected Netflix (NFLX), Instagram, Pinterest, and many other clients. It was the second time AWS went down in June, and, together with a Thursday Salesforce.com (CRM) outage, drives home the reliability concerns some enterprises still have about cloud services.
Top Economic & Other News
Banks face wave of foreclosure regulation from states. California's legislature is due to vote today on new foreclosure requirements, with the state one of 25 considering fresh repossession rules. It's a trend the banks are strongly against, saying that the need to deal with different laws will increase costs for borrowers, introduce bottlenecks and hurt the fragile housing recovery.
Eurozone debt crisis continues to bite. Eurozone unemployment rose in May to hit another record of 11.1%, up from April's 11%. As usual, the figures were very ugly in the South, with Spain's rate 24.6% and Greece's 21.9%. Meanwhile, final Eurozone Manufacturing PMI came in at 45.1 in June, rounding off the weakest quarter in three years. Germany and France were among those to suffer contraction, with only Ireland and Austria enjoying growth.
Chinese manufacturing also suffers. China's official PMI dropped to 50.2 in June - the slowest growth this year - from 50.4 in May vs. consensus of 49.9 and the HSBC reading of 48.2. The decline was driven by a fall in new export orders to the lowest since March 2009 as domestic and foreign demand wilted. More positively, sort of, Japan's Q2Tankan survey of business sentiment improved to -1 from -3 vs. an expected -4.
EU embargo on Iranian oil takes effect. EU oil sanctions on Iran came into full force yesterday as exemptions on some contracts and tanker insurance - which has been key in enforcing the embargo - expired. The IEA has forecast that the measures will remove around 1M bpd from oil markets. Brent oil surged 7.05% on Friday and WTI jumped 9.3%, although both were down premarket.
Today's Markets:
In Asia, Japan flat. Hong Kong +2.2%. China flat. India -0.2%.
In Europe, at midday, London +0.7%. Paris +1.4%. Frankfurt +1.1%.
Futures at 7:00: Dow flat. S&P +0.2%. Nasdaq +0.1%. Crude -1.5% to $83.67. Gold -0.8% to $1591.60.
Today's economic calendar:
9:00 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
1:15 PM Fed's Williams: 'Monetary Policy Since the Financial Crisis'
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