Thursday, December 6, 2012


Wall Street Breakfast: Must-Know News




Top StoriesWall Street Breakfast picture
Deutsche Bank accused of hiding $12B of losses. In an attempt to avoid a bailout during the financial crisis, Deutsche Bank (DB) is alleged to have hidden about $12B in losses on a massive derivatives trade. Deutsche said the allegations are old news and "wholly unfounded." Still, the SEC is reportedly probing the claims. Robert Khuzami, head of enforcement at the agency, has recused himself from the inquiry, as he was general counsel for Deutsche's U.S. operations at the time in question. And current general counsel Dick Walker used to hold Khuzami's job at the SEC.
HSBC may pay $1.8B to settle allegations of illicit dealings. HSBC (HBC) may reportedly pay a $1.8B fine to settle allegations in the U.S. that the bank allowed clients to move illicit funds from Mexico and Iran, among other countries. The deal may be finalized next week. The case could serve as a litmus test for just how far U.S. prosecutors will go to try to halt illegal flows of money moving through banks in the country.
Costs balloon at Chevron-led Aussie LNG project. The cost of the Chevron (CVX) led Gorgon LNG project off the northwest coast of Australia has soared by $15B to $52B, due to rising wages, weak productivity, logistical problems, bad weather and the strong Australian dollar. Production could also be delayed. Chevron owns 50% of Gorgon, while Exxon (XOM) and Shell (RDS.A) own 25% each.
Top Stock News
Rolls-Royce probed for foreign "malpractice." Rolls-Royce's (RRCEF.PK) shares were -3% at midday in London after it said that a company review has "identified matters of concern" in its business dealings in China, Indonesia and other markets. Rolls has passed its findings to the U.K.'s Serious Fraud Office, which had requested information about allegations of malpractice in Indonesia and China. The company will now appoint an independent auditor to look at its anti-corruption procedures.
Apple, Samsung due back in court. Apple (AAPL) and Samsung (SSNLF.PK) are due back before the long-suffering Judge Lucy Koh in Silicon Valley today as part of the follow-up to their trial earlier this year, when a jury ordered Samsung to pay Apple $1.05B in damages for patent violations. Samsung wants a new trial due to alleged juror misconduct, and, failing that, for the award to be reduced. Apple wants more money and for Judge Koh to ban lots of Samsung devices from the U.S.
Investors not thrilled with Freeport McMoRan's acquisitions.Freeport McMoRan's (FCX) shares slipped 0.9% premarket afterplummeting 16% in regular trading yesterday on news that it has agreed to acquire Plains Exploration (PXP) for $6.9B and McMoRan Exploration (MMR) for $3.4B. Investors aren't happy but Freeport is looking at 10-20 years down the road. Copper miners such as Freeport have found it more difficult to find new projects in politically stable areas, while there are also few good acquisition targets.

Gamers answer the "Call of Duty" to the tune of over $1B. Activision Blizzard (ATVI) is fighting back against the rise of casual gaming, with retail sales of "Call of Duty: Black Ops II" topping $1B within the first 15 days of its release. Activision CEO Bobby Kotick pointed out that the "Call of Duty" franchise has now generated more revenues than cinema sales of the "Harry Potter" and "Star Wars" series. Is that a hint that a film version is in the offing?
BHP eyes Walter Energy. Speculation continues to build that BHP Billiton (BHP) is considering a bid for Walter Energy (WLT), whose closing share price of $31.66 gave it a market cap of $1.98B yesterday. BHP could make a $55 per share offer; if true, it would be the "swan song" for CEO Marius Kloppers, whose potential successor could be Xstrata's Mick "the miner" Davis. Walter's shares were +6.8% premarket to $33.80.
Boeing, Speea postpone talks until 2013. Boeing (BA) and the Speea union, which represents 23,000 engineers and technical workers at the company, have suspended negotiations over a new contract until 2013 following a request from federal mediators amid an impasse in the talks. Speea earlier this week made moves to prevent a wildcat strike that was due for yesterday, but has encouraged engineers to refuse voluntary overtime and to "work to rule."
StanChart expects fines of $330M over Iran. Standard Chartered (SCBFF.PK) expects to pay $330M in fines to settle accusations that its dealings with Iranian customers breached U.S. sanctions. The penalty, which the U.K. bank is negotiating with multiple authorities, would add to the $340M that StanChart has agreed to pay to the New York Department of Financial Services. Meanwhile, the company has forecast FY revenue and pretax profit growth of under 10%.
Intel likely to promote from within for next CEO. Intel's (INTC) next CEO is likely to be an internal hire, current chief Paul Otellini has said. "Even if you brought in Mr or Ms Perfect, that person is going to take two years to figure out the culture...In this environment, why take the risk?" Some think "this environment" is exactly why Intel needs fresh blood.
Garmin to join the S&P 500. Garmin (GRMN) will join the S&P 500 as of the close of trading on Tuesday next week and will replace R.R. Donnelley (RRD), which is joining the S&P MidCap 400. RRD has had a tough year, punctuated by declining demand for printing services and an embarrassing mishap related to Google's (GOOG) Q3 report.
Top Economic & Other News
German factory orders trounce estimates. The calender says December, but Europe will take good economic news where it can find it: German factory orders rose 3.9% in October, far ahead of forecasts for a 1% increase, and the biggest jump in nearly two years. At least part of the gain was probably the result of a punk September, for which orders were revised to -3.3% from the initial report of -2.4%.
Senate set to OK trade bill with Russia. The Senate is expected to approve a bill today that grants Russia "permanent normal trade relations" by lifting Cold War-era restriction. With the House having passed its version of the measures, the bill would then go to President Obama for his signature. While the package is forecast to help exports to Russia double within five years, the country isn't happy about provisions seeking to punish human rights violations.
BOE holds policy unchanged. The Bank of England has left its benchmark interest rate at 0.5%, while its £375B QE program expired at the end of October and has thus far not been replaced. Next up very soon is the ECB.
Today's economic calendar:
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
9:45 Bloomberg Consumer Comfort Index
10:00 Quarterly Services Report
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
Notable earnings before today's open: HRBLULUSFDTDTITN
Notable earnings after today's close: SWHCPANW

Sourcs: seekingalpha.com

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