Tuesday, May 8, 2012


Wall Street Breakfast: Must-Know News



Wall Street Breakfast picture
Top Stories
Carlos Slim makes first big foray into Europe. Carlos Slim's America Movil (AMX) intends to increase its stake in KPN (KKPNY.PK) to 28% from 4.8% by offering to buy shares for €8 each, which represents a premium of 23% to the Dutch telecom carrier's close yesterday of €6.48 and which would cost €2.64B. KPN shares were +20% midday in Amsterdam.Opinion: AMX gives customers what they want.
Government generates first surplus since 2008. The federal government ran its first surplus in four years in April with a positive balance of $58B, or a $98B turnaround from a year ago. For the first seven months of the fiscal year beginning on October 1, the deficit tallied $721B, or $149B less than a year ago. Receipts were up 6% on year, but still $20B less than the CBO projection. Opinion: Economic outlook worsens, stay in cash.
Marubeni in talks to buy Gavilon for $5.2B. Marubeni (MARUY.PK) has beaten out competition from rival Japanese firms to enter advanced negotiations to acquire U.S. grain and energy trader Gavilon for $5.2B, including $1.7B in debt, Reuters reports. Marubeni first needs to secure financing to buy Gavilon, whose owners include George Soros and hedge fund manager Dwight Anderson. Opinion: El Nino's possible effect on grain prices.

Top Stock News
Chesapeake board was aware of McClendon's activities.Chesapeake's (CHK) contract with CEO Aubrey McClendon allowed him to play the markets in a perk that isn't common in the industry or even within the company, Reuters reports. The 2009 contract did limit the executive from taking an active role in any hedge fund after his personal fund shut down, showing that the board was at last partially aware of McClendon's outside activities. Opinion: Chesapeake bears need to wake up.
BofA to offer mortgage relief to 200,000 customers. Bank of America (BAC) will this week start contacting 200,000 distressed homeowners to offer them a reduction in their mortgage repayments. The move is part of the $25B settlement reached between large lenders and government agencies. BofA's commitment is $11B, although the cost could be more if enough borrowers respond and don't chuck out the bank's letter as too good to be true. Opinion: 10 reasons to buy Bank of America.
Shareholder anger over pay claims another FTSE 100 CEO... Aviva (AV) CEO Andrew Moss has become the third FTSE 100 CEO to resign in recent weeks following shareholder rebellion over pay. Last week, angry investors rejected the U.K. insurer's annual remuneration report and Moss' £2.69M ($4.4M) pay packet. Shareholders had called on Moss to quit due to his salary and Aviva's performance. Opinion: Investor ire over pay rises.
...and Ontario fund expresses wrath over pay of Sprint CEO. A major Sprint (S) investor, the Ontario Teachers' Pension Plan, plans to vote against the re-election of CEO Dan Hesse to the company's board, due to the "poor linkages" between company performance and senior management pay. Hesse said on Friday he'd take a $3.25M pay cut, which was enough to convince proxy advisor ISS to reverse course and back him. Opinion: Sprint's sales tax blunder.
U.S. set to make profit on AIG bailout. The taxpayer could make a profit of $15.1B on the $182B bailout of AIG (AIG) in 2008, the Government Accountability Office has estimated. The latest return will come from the Treasury's sale - announced this week - of $5.8B worth of AIG shares for $30.50 each, above its break-even price of $28.72.Opinion: Large AIG options strategy makes sense.
Carriers move to limit smartphone costs. Although Tim Cook recently downplayed fears that iPhone (AAPL) subsidies will decline, telecom operators are taking steps to limit the hit they're taking from such subsidies. U.S. carriers are making indirect moves such as hiking data plan rates and establishing upgrade fees, while Telefonica (TEF) and Vodafone (VOD) have discontinued subsidies for new customers in recession-hit Spain. Opinion: 3 telecom giants to consider this year.
EA beats estimates but guidance disappoints. Electronic Arts' (EA) FQ4 earnings declined but beat estimates as adjusted FQ4 EPS fell 33% to $0.17 and revenue slipped 2% to $977M. Shares dropped sharply post-market after the company gave guidance that was below consensus and said its crucial Star Wars game lost 400,000 subscribers, but appear to have recovered today and EA was just -0.8% premarket. Opinion: EA slips on loss forecast.
HSBC beats the street as profit surges 25%. HSBC's (HBC) Q1 underlying pretax profit jumped 25% to $6.8B and beat consensus, boosted by its investment-banking and emerging-market operations, and a drop in U.S. bad loans. Total operating revenue was flat at $20.44B. CEO Stuart Gulliver said he's confident HSBC will meet its earnings targets, although continued high costs have sparked skepticism from analysts, Dow Jones Newswires reports. Shares were +0.5% premarket.Opinion: 4 banks with good long-term prospects in China.
Allergan subpoenaed over obesity device. Allergan (AGN) has received a subpoena from the Department of Health's Inspector General over Lap-Band, a gastric band that helps people lose weight. The device generated $203.1M in sales last year. Opinion: Time for another look at the biotech sector.

Top Economic & Other News
India falling into line over Iran. India will cut its Iranian oil imports this FY to 14M tons from 17.5M last FY as it bows to increased U.S. pressure, Bloomberg reports. However, Hillary Clinton, who's in India, said it's too early to say whether India will receive a temporary exemption from sanctions in return for its efforts. Opinion: Is India's growth in trouble?
Gas prices on the slide. Average pump prices have fallen for the fifth week in a row, hitting $3.79 a gallon as of yesterday. That's 3.8% down from the 2012 high, with the decline helping to ease concerns that gas was set to breach $4 and even rise to $5. Factors for the trend include weakening U.S. and European economies, refineries coming back on line, and crude bottlenecks unclogging. Opinion: Minding the alternative energy commercialization gap.

Today's Markets:
In Asia, Japan +0.7%. Hong Kong -0.3%. China -0.1%. India -2.2%.
In Europe, at midday, London -0.4%. Paris -1.6%. Frankfurt -1.1%.
Futures at 7:00: Dow -0.5%. S&P -0.6%. Nasdaq -0.7%. Crude -1.1%to $96.85. Gold -0.7% to $1627.60.

Today's economic calendar:
7:30 NFIB Small Business Optimism Index
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
1:00 PM Results of $32B, 3-Year Note Auction
1:45 PM Fed's Fisher: Economic Outlook

Notable earnings before today's open: AKRXARCCCHTRDISCA,DTVFOSLHCNHLHSICIFFNVEPRGOSMGSTWDTAPTDG,THCWEN

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