Wall Street Breakfast: Must-Know News

• Xstrata proposes Anglo American merger. Xstrata (XSRAF.PK) proposed a 'merger of equals' with Anglo American (AAUK), noting the pair's 'complementary assets.' Analysts say a tie up would be very compelling, and could save the combined firm $750M a year while creating a world leader in base metals, platinum, ferrochrome and coal. Anglo American has thus far been resistant to the idea, and characterized merger talks as 'preliminary.' AAUK +5.6% premarket (7:00 ET).
• Jobs' liver transplant leak. The Wall Street Journal reported over the weekend, without citing any sources, that Apple (AAPL) CEO Steve Jobs received a liver transplant two months ago. Jobs didn't comment on the story and an Apple spokeswoman would only say that Jobs is expected to return to work by the end of June. However, the report raises questions about who leaked the story, whether it was planned by Apple executives to lower expectations and to what degree Jobs should have to disclose his past and present medical problems once he returns to work. Shares -1% premarket (7:00 ET).
• U.S. calls for China talks over internet filter. The U.S. has called for talks with China over Chinese plans to require web-filtering software on personal computers, voicing concerns about the possible effect on trade and freedom of expression. Direct U.S. intervention over internet freedom is rare, but the issue has become an increasingly important one between the two countries over the years and U.S. technology companies see it as a back-door way of keeping them out of the Chinese market. Chinese officials have also taken aim at Google (GOOG), and asked the company to stop showing some results from foreign websites through its Chinese website.
• Swiss pressure for a UBS deal. After the U.S. and Switzerland agreed to a double taxation treaty last week, Swiss officials said the U.S. might be willing to cut a deal with UBS (UBS) over allegations of tax fraud and evasion. Officials reiterated that without some sort of deal, the Swiss government could have trouble getting the new tax agreements ratified in a possible referendum.
• Fed weighs repo market changes. The Federal Reserve is considering major changes to the repurchase markets where banks raise overnight dollar loans, including plans to create a utility to replace the clearing banks that handle transactions. Fed officials plan to meet with market participants next month to discuss the changes. JPMorgan Chase (JPM) and Bank of New York Mellon (BK) are the largest intermediaries.
• Looser rules urged for Fannie/Freddie. Two lawmakers want Fannie Mae (FNM) and Freddie Mac (FRE) to relax recently tightened standards for new condominium mortgages, saying the tighter rules could threaten the viability of some projects and 'may be too onerous' for a weak housing market. In March, Fannie said it won't guarantee mortgages on condos where less than 70% of the units have been sold, up from 51%. It also won't buy mortgages in buildings where 15% of owners are delinquent on condo dues or where one owner has more than 10% of the units. Freddie plans to implement similar rules.
• World Bank cuts outlook. The World Bank lowered its outlook for global growth, forecasting a 2.9% contraction this year vs. a previous forecast of -1.7%. Growth in 2010 will reach 2%, down from 2.3%. Impoverished economies will lag rich ones in an eventual recovery, while a flight of capital from developing economies will contribute to a spike in the number of poor and unemployed.
• Bye, bye banks. Regulators closed three more banks on Friday, bringing this year's total number of failures to 40. Georgia-based Southern Community Bank's closure will cost the FDIC $114M. North Carolina-based Cooperative Bank's closure will cost the FDIC $217M. Kansas-based First National Bank of Anthony's closure will cost the FDIC $32.2M.

Earnings: Monday Before Open

• Walgreen (WAG): FQ3 EPS of $0.53 misses by $0.03. Revenue of $16.2B (+8%) in-line. (PR)

Today's Markets

Asian markets closed mostly up, but Europe is deep in the red and U.S. futures are heading down as well.

• In Asia, Nikkei +0.4% to 9,826. Hang Seng +0.8% to 18,060. Shanghai +0.55% to 2,896. BSE -1.35% to 14,326.
• In Europe at midday, London -1.2%. Paris -1.7%. Frankfurt -1.3%.
• U.S. futures: Dow -0.7%. S&P -0.8%. Nasdaq -0.6%. Crude -1.7% to $68.36. Gold -1.2% to $925.20.

Monday's Economic Calendar

• No events scheduled.
• Notable earnings before Monday's open: WAG
• Notable earnings after Monday's close: SWHC

Seeking Alpha editor Eli Hoffmann contributed to this post.

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Comments

[H. T. Love:]

"Two lawmakers want Fannie Mae (FNM) and Freddie Mac (FRE) to relax recently tightened standards for new condominium mortgages, saying the tighter rules could threaten the viability of some projects and 'may be too onerous' for a weak housing market."

Hm, *great* ideas from our lawmakers, as usual. Let's do more of what helped get us in this mess. I mean, these are extraordinary times, right? Let's take the sot to the local bar - again.

HardToLove

Jun 22 08:17 AM

[robert.b.fe...:]

And just vwho are the geniuses advocating this repeat? Let me guess : Dodd and Frank. Just when you thought that things were looking up.

Jun 22 08:50 AM

[prudentinve...:]

Almost a footnote at the end of the page: "Georgia-based Southern Community Bank's closure will cost the FDIC $114M. North Carolina-based Cooperative Bank's closure will cost the FDIC $217M. Kansas-based First National Bank of Anthony's closure will cost the FDIC $32.2M."

These add up to roughly $365m, which is roughly the cost to the taxpayers of the entire real estate crash of the late 1980's.

In other words, the total cost to the taxpayers of the previous, disastrous real estate crash of twenty years ago is now treated as a minor footnote, repeated on a weekly basis, and almost unnoticed. Last time, fraudulent bankers were led in chains by the FBI, and this time they are getting bonuses. Is this the "change we can believe in" ?

Jun 22 09:26 AM

[pockyclips ...:]

Yeah, it's a sad comment on how much the dollar has depreciated
in a generation. Most kids laugh like I'm senile when I tell them you could buy a new vehicle for $7k in the '80s.


On Jun 22 09:26 AM prudentinvestor wrote:

> Almost a footnote at the end of the page: "Georgia-based Southern
> Community Bank's closure will cost the FDIC $114M. North Carolina-based
> Cooperative Bank's closure will cost the FDIC $217M. Kansas-based
> First National Bank of Anthony's closure will cost the FDIC $32.2M."
>
>
> These add up to roughly $365m, which is roughly the cost to the taxpayers
> of the entire real estate crash of the late 1980's.
>
> In other words, the total cost to the taxpayers of the previous,
> disastrous real estate crash of twenty years ago is now treated as
> a minor footnote, repeated on a weekly basis, and almost unnoticed.
> Last time, fraudulent bankers were led in chains by the FBI, and
> this time they are getting bonuses. Is this the "change we can believe
> in" ?

Jun 22 09:32 AM

[axelrod608:]

>> "The World Bank lowered its outlook for global growth, forecasting a 2.9% contraction this year vs. a previous forecast of -1.7%. Growth in 2010 will reach 2%," >>

I sure would like to see the "improvements" that the World Bank uses to predict 2% growth in 2010. Getting worse slower is NOT a turnaround.

Jun 22 09:46 AM

[mac123449:]

Why is deflation such a bad thing most people like lower prices on things but to Bernanke deflation is the devil himself.

Jun 22 10:26 AM

[User 433379:]

Was thinking the same thing...what the heck is wrong with these politicians. It would be like me breaking my leg while skiing off large cliffs, then waking up one morning, looking down at my cast and saying, "I think things will get better if I just go ski off a few more cliffs."


On Jun 22 08:17 AM H. T. Love wrote:

> "Two lawmakers want Fannie Mae (seekingalpha.com/symbo...)
> and Freddie Mac (seekingalpha.com/symbo...) to relax recently
> tightened standards for new condominium mortgages, saying the tighter
> rules could threaten the viability of some projects and 'may be too
> onerous' for a weak housing market."
>
> Hm, *great* ideas from our lawmakers, as usual. Let's do more of
> what helped get us in this mess. I mean, these are extraordinary
> times, right? Let's take the sot to the local bar - again.
>
> HardToLove

Jun 22 12:13 PM

[AndrewBaker:]

Funny, but I don't see much today about how badly the banks and related financials are doing. They get downgrades, here and in Europe and elsewhere, and more people are renaging on their credit card debts, and commercial property in the US is plunging in value because bank loans taken out to buy it are not being paid, and yet the "green shoots" brigade are carrying on without a care in the world and ignoring bigger bank losses to come.

Example: The John Hancock Tower in Boston was bought at the end of 2006 fpr $1.36 billion; the company who bought it failed to meet their loan payments, and in the foreclosure auction on 31 March this year, less than 3 years later, only one bidder turned up and bought it for $660.6 million. More than 50% off the previous buy price!

There are other examles, plus does anyone think credit card payments are going up any time soon? No, of course not. And I haven't even mentioned mortgages and other loans

If you want more alpha, sell those bank shares!

Jun 22 01:33 PM

[Joseph Sherman:]

Swiss pressure for a UBS deal. - What does this mean for the brand "Banking in Switzerland"?

Jun 22 04:19 PM

[backtoreality:]

MAC 123
Bernanke doesn't want deflation...because econ 101 and all the university econ professors teach that you can inflate your way out of debt.
For example...in 1966 I built a new house..20 % down and a little sweat equity helping the carpenters, and painted it myself...I wound up with a $120 per month payment...which in today's dollars is less than 50/month. (3 BR..2 baths..dble garage)..that house today is about 150 to 200K.

I felt so good, I bought a brand new buick century for $3000 cash....note above that pockyclips thinks a new car for 7K is a good deal.
nothing is worth more over the years...including gold...it's just that your dollar is constantly getting to be worth less..that's university econ 101.




On Jun 22 10:26 AM mac123449 wrote:

> Why is deflation such a bad thing most people like lower prices on
> things but to Bernanke deflation is the devil himself.

Jun 22 04:59 PM

[Novista:]

Maybe if the U.S. is so interested in web filtering, they should also look at their friend Australia. There's a conroy job in process to "protect the children" but of course. I know there's some stealth tests ongoing which blocked several financial and economic e-letters that was previously getting.

This was reported months ago to one ISP which claimed they were 'looking into a technical problem'. I guess they're still looking ...

Jun 22 07:55 PM

[bbowen7:]

Let's take a step back - what right do we have to dictate to the Chinese what they need to allow on their version of the internet? What if France thought that we should allow Craigslist to advertise for prostitution? There is quite a bit of arrogance in evidence here. There may have been a time when we could dictate this kind of stuff to the world, but that was pre-Lehman Brothers.

Jun 23 02:00 AM

[luv2makemonies:]

Yep, bought my first car, a Chevy in 1982 with a out the door price tag of $4200 with $750 down and 36 month loan and payment of $120 per month. Now the same type of car will cost you $26,00 to $30,000 out the door... wow just don't know how people could afford that, they all must make alot of money.

Jun 23 05:13 AM