Wall Street Breakfast: Must-Know News

• UBS reaches tax settlement. UBS (UBS) and the Swiss and U.S. governments finalized a settlement in an ongoing tax evasion probe. Details of the settlement will likely be filed over the next week, but UBS clients will reportedly be allowed to appeal to a Swiss tribunal before their information is handed over to U.S. authorities. The IRS will likely end up with details on 8,000-10,000 accounts, down from the 52,000 it asked for. Shares +5.2% premarket (7:00 ET).
• WTO rules against China. The WTO ruled China's import and distribution regulations for books, songs and movies violated international trade laws and the terms of China's accession to the WTO in 2001. The ruling is a victory for the U.S., which brought the case, and offers some hope to the U.S. and Europe, which have seen China become increasingly nationalistic in its trade policies. China said it regrets the WTO's decision and wouldn't rule out an appeal.
• Surprise growth in Germany, France. Germany's GDP rose an unexpected 0.3% in Q2 vs. forecasts of a 0.3% contraction, led by increases in private and public consumption, construction and net trade. The economy shrank 7.1% compared to Q2 2008 vs. an expected 7.3% drop. France also posted 0.3% growth in Q2, helping the broader eurozone contract at a milder 0.1% pace and raising hopes of a regional recovery.
• Investors jump On2 Google lawsuits. Investors in On2 Technologies (ONT) have filed lawsuits against Google (GOOG) in New York and Delaware, claiming the companies' $106.5M all-stock deal is structured to favor the search giant and rewards On2 executives at the expense of shareholders. The plaintiffs are seeking a permanent injunction blocking the deal.
• No surprises from FOMC. As expected, the Federal Open Market Committee maintained the federal funds rate at 0-0.25% and expects it to remain there "for an extended period." Economic activity is "likely to remain weak for a time," but it's "leveling out" and there should be a "gradual resumption of sustainable economic growth in a context of price stability" while inflation remains "subdued for some time." The Federal Reserve will wind down $300B of Treasury purchases by the end of October instead of September. (Read the Fed's release)
• Pequot could face SEC charges. In a letter to investors, Arthur Samberg said that both he and his firm Pequot Capital had received Wells Notices from the SEC around six weeks ago, advising them of possible civil charges in connection to 2001 trading in Microsoft (MSFT). Samberg and Pequot said the trades weren't based on material or private information. The development shouldn't slow Pequot's liquidation, which Samberg announced in May because regulatory inquiries "cast a cloud over the firm and have become a source of personal distraction."
• Delta circles NY market. Delta (DAL) intensified its efforts to dominate the New York air-travel market by acquiring 125 takeoff/landing slots at LaGuardia Airport from US Airways (LCC). The move will boost Delta's New York flights by 85%, stepping up the competition with rivals Continental (CAL) and JetBlue (JBLU). In exchange, Delta gave US Airways 42 slots at Ronald Reagan Washington National Airport and the rights to fly to Tokyo and Sao Paulo.
• $100M payday safe from pay czar, for now. Sources say Andrew Hall, the energy trader who stands to collect up to $100M from Citigroup (C) this year, will likely be exempt from interference by pay czar Kenneth Feinberg because his contract was signed before a cut-off date of Feb. 11, 2009. Though Feinberg will have flexibility in applying his authority on a case-by-case basis, he "can't force a TARP recipient to break a contractual obligation that is grandfathered under the statute." Hall has reportedly suggested converting a substantial amount of his compensation to equity from cash to avoid any potential problems.
• AIG's Greenberg settles again. Former AIG (AIG) chief Hank Greenberg and five other defendants agreed to pay $115M to settle a shareholder lawsuit alleging investors lost money because of fraudulent accounting and pay practices at AIG. The cost of the settlement will be largely taken care of by an insurance policy covering company executives' legal costs. Earlier this month, Greenberg agreed to pay $15M to settle SEC charges of accounting fraud.
• Record foreclosures. Home foreclosures set another record in July, marking the third new record in five months, with foreclosure activity rising 7% from the previous month and 32% from the previous year. One in every 355 homes with a loan received a foreclosure filing in July, despite continued relief efforts by the government.
• U.S. deficit grows. The U.S. deficit for July came in at nearly $181B, bringing the 2009 total to $1.26T and marking the tenth consecutive month of deficits. The White House expects the deficit to reach $1.841T in the fiscal year ending Sept. 30, which would be an all-time record. Outlays rose 26% and receipts fell 6% from a year ago.

Earnings: Thursday Before Open

• Dr Pepper Snapple Group (DPS): Q2 EPS of $0.62 beats by $0.13. Revenue of $1.5B (-4%) in-line. (PR)
• Gildan Activewear (GIL): FQ3 EPS of $0.32 beats by $0.03. Revenue of $308M (-19%) vs. $337M. (PR)
• Kohl's (KSS): Q2 EPS of $0.75 beats by $0.01. Revenue of $3.8B (+2%) in-line. Issues downside guidance: sees Q3 EPS of $0.40-0.44 vs. $0.47 consensus, sees Q4 EPS of $0.99-1.06 vs. $1.14 consensus, sees FY '10 EPS of $2.59-2.70 vs. $2.78 consensus. (PR)
• Urban Outfitters (URBN): Q2 EPS of $0.29 beats by $0.03. Revenue of $459M (+1%) in-line. (PR)
• Wal-Mart (WMT): Q2 EPS of $0.88 beats by $0.02. Revenue of $100B (-1.4%) vs. $102.9B. Same-store sales fell 1.2% vs. consensus of +0.85%; U.S. sales were up 0.3%, but international sales fell 5.1%. (PR)

Earnings: Wednesday After Close

• Advance Auto Parts (AAP): Q2 EPS of $0.89 beats by $0.06. Revenue of $1.3B (+7%) in-line. Same-store sales up 4.8%. (PR)
• Aegean Marine Petroleum Network (ANW): Q2 EPS of $0.28 beats by $0.07. Revenue of $543M (-27%) vs. $489M. (PR)
• Bally Technologies (BYI): FQ4 EPS of $0.58 beats by $0.03. Revenue of $205M (-17%) vs. $222M. (PR)
• Harris (HRS): FQ4 EPS of $0.91 beats by $0.10. Revenue of $1.3B (+4%) vs. $1.2B. Raises full-year guidance on EPS to $3.40-3.50 vs. $3.17 and sees full-year revenue of $5.0B-5.1B vs. $4.93B. (PR)
• Kinross Gold (KGC): Q2 EPS of $0.12 misses by $0.01. Revenue of $598M (+100%) vs. $545M. (PR)
• LDK Solar (LDK): Q2 EPS of -$2.03 misses by $1.12. Revenue of $228M (-48%) vs. $236M. Sees Q3 revenue of $240M-270M vs. $290M. (PR)
• NetEase.com (NTES): Q2 EPS of $0.53 beats by $0.08. Revenue of $128M (+22%) vs. $120M. (PR)
• ShoreTel (SHOR): FQ4 EPS of $0.03 beats by $0.02. Revenue of $32M (-7%) in-line. (PR)
• SRA International (SRX): FQ4 EPS of $0.30 beats by $0.04. Revenue of $402M (+5%) vs. $386M. Sees full-year EPS of $1.15-$1.25 vs. $1.13. (PR)
• URS (URS): Q2 EPS of $0.73 beats by $0.07. Revenue of $2.3B (-9%) vs. $2.4B. Sees full-year EPS of $3.20-$3.35 vs. $3.01. (PR)

Today's Markets

Markets are up across the globe.

• In Asia, Nikkei +0.8% to 10,517. Hang Seng +2.1% to 20,861. Shanghai +0.9% to 3,141. BSE +3.3% to 15,518.
• In Europe at midday, London +1.1%. Paris +1%. Frankfurt +1.4%.
• Futures: Dow +0.9%. S&P +0.9%. Nasdaq +0.8%. Crude +1.9% to $71.51. Gold +0.9% to $961.20.

Thursday's Economic Calendar

• 8:30 Retail Sales
  8:30 Jobless Claims
  8:30 Import/Export Prices
  9:00 RBC CASH Index
  10:00 Business Inventories
  10:30 EIA Natural Gas Inventory
  4:30 PM Fed Balance Sheet
  4:30 PM Money Supply
• Notable earnings before Thursday's open: DPS, EL, GIL, KSS, URBN, WMT
• Notable earnings after Thursday's close: BBI, DV, JWN

Seeking Alpha editor Eli Hoffmann contributed to this post.

Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.

After you finish reading Wall Street BreakfastSeeking Alpha's Market Currentswill keep you current all day long.

Comments

[bbowen7:]

So, can we revisit this "uncoupling" concept. The BRIC countries have continued to grow their economies this year, and now we find that the EuroZone alos grew a bit in Q2. Enough of the egotistical claims that the US will lead the world out of the recession. Played properly, we will be pulled out of the rut by healthier partners.

Aug 13 08:11 AM

[absinop:]

08/13/09A. Earnings season is a great opportunity to earn some money. I've taken a position in the following stocks. Their EA announcements are scheduled at the market period indicated. But please remember: Sell the Losers, Keep the Winners.

8/13 before Mrkt opens: FIGI TRAC PIP
8/13 after Mrkt opens: GRFF ICXT PRPL
8/13 after Mrkt closes: LWAY
8/14 before Mrkt opens: PTN MDLK
8/14 after Mrkt opens: PDA PNRG
8/14 after Mrkt closes: ONSM

Aug 13 08:28 AM

[doubleguns:]

2 more records we can be proud of, 1) July forclosures. 2) July deficit.

What records will be set in August?

Aug 13 08:42 AM

[robert.b.fe...:]

Growth in the Euro zone is much like the rest of the "good news." this earnings season mostly hype with little substance. Listening to all of this makes one think the real miracle is that these oafs actualy think investors are buying it. New home sales are up a fraction. Meanwhile forclosures are at a record high. Cosumer confidence is up as retail sales plummit. Did some one hire the writers from The global enquiring star to make this crap up?

Aug 13 08:50 AM

[Avooch:]

Inventory Number (ex Autos) will be key today

-------------------------

Don't Get Massacred !

Aug 13 08:50 AM

[Old Trader:]

Actually, its more like the "BIC" countries, leaving Russia out of the equation, 'cause they're in pretty bad shape, too. The Eurozone is spotty...with mixed numbers, depending on which country one is looking at. I believe its France and Germany that surprised a bit on the upside. Both countries had the benefit of government intervention in their auto mfg (our C4C was modeled after Germany's program).


On Aug 13 08:11 AM bbowen7 wrote:

> So, can we revisit this "uncoupling" concept. The BRIC countries
> have continued to grow their economies this year, and now we find
> that the EuroZone alos grew a bit in Q2. Enough of the egotistical
> claims that the US will lead the world out of the recession. Played
> properly, we will be pulled out of the rut by healthier partners.

Aug 13 08:55 AM

[David Van K...:]

Just a quick note of appreciation to Rachael. Day after day, she produces the most readable little summary of "must-know news." Source documents are linked for the curious. She slips in little humorous headlines ("Investors jump On2 Google lawsuits") that serve the purpose of headlines AND bring a smile to your face. I used to do work like this (write little blurbs), and I know how hard it is to be concise, complete, and humorous all at once. She is great at it. Three cheers.

Aug 13 08:59 AM

[AndrewBaker:]

New jobless up more though total jobless down, and retail sales down but only by 0.1% when expected to have picked up by 0.7%. Something for everyone here: bears will say jobless up and sales down, whilst bulls will say total jobless down whilst sales down by less and nearly went up! However, we are still ignoring the facts and the momentum is on the side of the bulls; so I'll stay there for now and see what happens. Join me for a short while: it could be profitable, providing you can sell in time.

Aug 13 09:01 AM

[Bill L.:]

America is Number 1!


On Aug 13 08:42 AM doubleguns wrote:

> 2 more records we can be proud of, 1) July forclosures. 2) July deficit.
>
>
> What records will be set in August?

Aug 13 10:02 AM

[notsosmart:]

its all bs.the insiders are right back fleecing the dumb sheeples who are still busy filling the stadium to watch the druggy stars & buy $10 beer.LOL

Aug 13 10:25 AM

[axelrod608:]

The reports that GDP is growing based on "stimulus" money being dumped into economies is misleading, at best. Reminds me of the "personal income growth" reported by adding refi proceeds to national income figures and "GDP growth" adding the same to GDP. If you backed the refi proceeds out of the GDP numbers, we had negative GDP "growth" most of the 2000 - 2007 period. It's smoke and mirrors accounting.

Anyone who thinks you "grow" anything other than debt load by borrowing money or spending money you don't have just doesn't understand the basic underlying principles of economics or accounting.

Aug 13 01:37 PM

[spald_fr:]

Very nicely stated, DVK.


On Aug 13 08:59 AM David Van Knapp wrote:
>>> Just a quick note of appreciation to Rachael. Day after day, she produces the most readable little summary of "must-know news." Source documents are linked for the curious. She slips in little humorous headlines ("Investors jump On2 Google lawsuits") that serve the purpose of headlines AND bring a smile to your face. I used to do work like this (write little blurbs), and I know how hard it is to be concise, complete, and humorous all at once. She is great at it. Three cheers.<<<

Aug 14 10:32 AM