Wall Street Breakfast: Must-Know News 17 comments
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- GM gets union concessions. The Canadian Auto Workers union ratified a cost-saving labor agreement with General Motors (GM) yesterday to protect jobs in the likely event of a June 1 bankruptcy filing. The deal freezes pension payments through 2015 and pays new hires less. The United Auto Workers union is working on its own labor package, with votes scheduled to begin this week. With a bankruptcy 'probable,' and likely to be the most complicated bankruptcy case in U.S. corporate history, GM is rushing to get labor contracts amended so that a court-managed bankruptcy restructuring can proceed quickly. Shares +2.1% premarket (7:00 ET).
- Opel decision imminent. German officials will try to reach a decision on the three bids for GM's (GM) Opel unit by tomorrow. A government spokesman said talks with all three suitors are ongoing and the bids are still being improved. Magna International (MGA) appears to be the frontrunner, followed by Fiat, though earlier in the week Germany's economy minister said all three bids have shortcomings that might make a bankruptcy filing the best option.
- Chrysler faces pockets of resistance. Chrysler slammed the Indiana State Treasury for making demands that would force the automaker into liquidation, resulting in the loss of over 4,000 jobs and 9,000 retiree pensions in Indiana alone. The Indiana State Treasury had objected to Chrysler's plans to quickly sell itself in bankruptcy, and filed court papers requesting an examiner be appointed to review Chrysler's business decisions and that the company be placed in the hands of a Chapter 11 trustee. Chrysler is also facing resistance from dealers opposed to closure plans.
- Lehman bankruptcy causes rift. Lehman's bankruptcy is causing a standoff between its U.S. and U.K. units. Administrators for Lehman's U.S. operations plan to ask a federal judge to approve an international framework for coordinating bankruptcy proceedings among global subsidiaries. Administrators for Lehman's unit in the U.K. argue they're bound by local rules and the interests of their own creditors. The standoff is significant because Lehman's U.K. unit held about a third of the firm's $630B in assets before it filed for bankruptcy and also has data essential to the bankruptcy proceedings at other smaller European subsidiaries.
- DoJ focuses on bribery. The Department of Justice is stepping up its prosecutions of alleged acts of foreign bribery by U.S. corporations. At least 120 firms are under investigation, including Sun Microsystems (JAVA) and Royal Dutch Shell (RDS.A), forcing companies to mount costly defenses. In some cases, companies have even called the Justice Department and come clean in an effort to secure leniency.
- Firms talk major phone merger. South African phone carrier MTN Group and India's Bharti Airtel revived merger talks to create a $61B telecoms giant spanning Africa, Asia and the Middle East. Previous talks fell apart last year after the companies failed to reach an agreement on who would control the massive corporation.
- Rio's evolving deal. Rio Tinto (RTP) said its $19.5B investment deal with Chinalco (ACH) is still 'evolving' and subject to shareholder consideration. Rio chairman Jan du Plessis will spend the week speaking to shareholders in Australia, after meeting with major U.K. investors over the past two weeks. Separately, Rio agreed to a 33% cut in iron-ore prices with Nippon Steel Corp., calling it a 'realistic outcome for both parties.'
- Nokia launches App Store rival. Nokia (NOK) began rolling out Ovi Store, its online content and software store built to compete with Apple's (AAPL) App Store. The store will launch globally this week. Despite the massive popularity of App Store, analysts expect competitors to struggle to match Apple's success because of technical issues, a lack of applications and increased competition.
- HP battery recall. Hewlett-Packard (HPQ) is recalling 15,000 laptop batteries distributed in China because of a danger they could overheat and pose a fire hazard.
- German GDP drops. Germany confirmed its Q1 GDP shrank 3.8% vs. the previous quarter, the sharpest decline since records began in 1970. GDP declined 6.9% from Q1 2008. Economists expect a milder Q2 contraction before GDP stabilizes in the second half of the year.
- Aussies end short-sale ban. Australia's securities regulator lifted an eight-month ban on covered short-selling of financial stocks as the global financial system showed signs of stabilization. Regulators cautioned the rule will be reinstated if trading activity threatens sector stability.
Earnings: Tuesday Before Open
Today's Markets
Asia stocks moved lower Tuesday, reversing much of Monday's gains. In Europe, stocks gapped down at the open and are near the day's lows.
- Asia: Nikkei -0.39% to 9,311. Hang Seng -0.76% to 16,992. Shanghai -0.82% to 2,589. BSE -2.33% to 13,589.
- Europe at midday: London -1.5%. Paris -.7%. Frankfurt -2.3%.
- Futures: Dow -1.1% to 8212. S&P -1.3% to 878.50. Nasdaq -1.4%. July crude -2.2% to $59.84. Gold -1.5% to $943.80. Euro -1% vs. dollar. Yen -0.2%. Pound -0.6%.
Tuesday's Economic Calendar
- 9:00 S&P/Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 State Street Investor Confidence Index
10:00 Richmond Fed's Manufacturing Index
10:30 Texas Manufacturing Outlook Survey
5:00 PM ABC Consumer Confidence Index - Notable earnings before Tuesday's open: CSIQ
- Notable earnings after Tuesday's close: TTWO
Seeking Alpha editor Eli Hoffmann contributed to this post.
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Seems like a lot of crooked dealing will eventually come to light in all of these delaying the coveted quick fix. Just to big of a problem to fix in short order.
Canned bankruptcies are a complex problem when various interests choose to fight it out in court.
There is legal precendent being set here for usurping secured creditors during these procedings that will ripple throughout the justice system. If you can't rely on purchasing a bond or other secured debt from a company during court procedings, this will mark the tip of the iceburg for future legal procedings.
The Obama administration is breaking the law, put in place for protection of secured creditors. What other laws will be broken when there is no repercussions for surcumventing the justice and legal systems. We are opening a whole new playing field.
Conclusion: we have to bite the bullet, make the US motor industry more competitive which means smaller cars, smaller pay and smaller pollutants whilst driving.
Before that though, there will be horse trading, so it is still gonna take some time to get reality into this market place, including the downsizing in worker numbers that will be needed.
please keep this column running
"The motor industry is a big problem. They've built big thirsty vehicles for many years that the public used to like driving. Pay has been too high because the unions have been so strong. The vehicles still sold as the running costs were not so high. But now, gas is no longer so cheap and won't be again, small cars are wanted more and the unions have to give in on pay if any motor industry is going to be left in the US. Foreign makers offer better smaller cars at lower prices.
Conclusion: we have to bite the bullet, make the US motor industry more competitive which means smaller cars, smaller pay and smaller pollutants whilst driving.
Before that though, there will be horse trading, so it is still gonna take some time to get reality into this market place, including the downsizing in worker numbers that will be needed."
JOIN A UNION.
Nothing more than fat cats at the top milking the common man who is totally ignorant of what is happening. While the common man is fighting for scraps, the union bosses are living high off the hog.
Question? Ever see a union big shot take a loss in wages because you were on strike? Ever see them have a pension freeze? Ever see them walk a picket line AFTER the newspaper photographers have left the scene?
On May 26 11:48 AM bbowen7 wrote:
> Dear Mr. Ferguson: I think that your questions are about the unpredictability
> of investing in 21st century America, where the government dominates
> and changes the rules regularly - banking, housing, automotive, and
> (developing) healthcare, energy, and insurance. I am finding an increasing
> amount of my investments going overseas to where I can find a more
> reliable government structure - Turkey and China for telecom; Israel
> for pharma; Brazil for iron ore; Canada for banking and railroads.
> (The last sentence was meant to be ironic, but it is true.)
On May 26 12:27 PM jackooo wrote:
> The GM union, for the common man, sells out for lesser wages for
> new employees.
> JOIN A UNION.
This decision comes from the belief that a loss in a worker's current pay is more painful than a denial of pay that a new worker never had.
> Nothing more than fat cats at the top milking the common man who
> is totally ignorant of what is happening. While the common man is
> fighting for scraps, the union bosses are living high off the hog.
Nearly all union heads make less than $100,000 per year. Compare that to the corporate CEOs who are compensated in the millions while our propagands industry explains that they just wouldn't be properly motivated.
>
> Question? Ever see a union big shot take a loss in wages because
> you were on strike? Ever see them have a pension freeze? Ever see
> them walk a picket line AFTER the newspaper photographers have left
> the scene?
Are you aware that unions are the lone independent voice of the hourly employees? Do you know that the unions brought the 40 hour work week to America? Do you enjoy 2-day weekends off or overtime pay? Perhaps you know someone who does.
On May 26 02:53 PM grh1212 wrote:
>
The newer workers have the same bills as the already employed worker. All you do is set up an unequal workforce with conflict.
Like I said the union officials are over paid. Plus you forgot the perks.
40 hr. work week has been in existence forever. Same with 2 days off. Back ages ago the union was needed. Now we have state agencies that cover your back.
signed 34 yr. union member with I.A.M.