Wall Street Breakfast: Must-Know News

• Dell buys Perot for $3.9B. Dell (DELL) said early Monday it will acquire Perot Systems (PER) for $3.9B, or $30/share, creating a "comprehensive, customer-focused IT-solutions company." Perot will become Dell's services unit, to be headed by Perot CEO Peter Altabef; Dell directors will 'consider' chairman Ross Perot Jr. for appointment to its board. Over the past year, the two have produced a combined $16B in enterprise-hardware and IT-services revenue, with half of that coming from enhanced services and support. Shares of Perot closed at $17.91 on Friday.
• Building a more robust global economy. Ahead of this week's Pittsburgh summit, G-20 leaders are scrambling to finalize a framework that will promote stable global growth in part by correcting imbalances in the U.S. and China. The U.S.-led proposal, known as the Framework for Sustainable and Balanced Growth, involves broad changes to economic policies in the U.S., Asia, and Europe, including the U.S. saving more and reducing its deficit, and China relying less on exports. Potential sticking points include China's reluctance to participate, how to enforce any commitments, and a divergence of opinions on how to estimate future world growth.
• BofA forced to spill the beans. A House panel has told Bank of America (BAC) it cannot use attorney-client privilege to keep details of its purchase of Merrill Lynch out of Congress. Panel chairman Edolphus Towns wants Bank of America to reveal information it's kept secret for months, which could impact a range of ongoing probes into the merger, including one by the SEC, another by NY AG Andrew Cuomo and a third by the DoJ. Towns has given BofA until noon today to provide answers and documentation.
• Fed rejects public review. Sources say the Fed has rejected a request by Treasury Secretary Tim Geithner for a public review of its structure and governance. Fed officials say the review - which would have examined the Fed's ability to accomplish its existing and proposed functions, and the role of regional Fed banks - could have threatened its independence.
• FCC to push for open internet. The FCC will today recommend broad new rules that aim to force internet carriers to treat all traffic equally. Currently, some providers block and/or slow the transfer of large files such as videos and music, which they say hogs bandwidth. Sources say FCC chief Julius Genachowski will also push to expand net equality to wireless internet access, a concept fiercely opposed by wireless carriers like AT&T (T). If implemented, net neutrality could drastically impact how ISPs and wireless carriers charge for access, and could encourage internet companies to launch new data-intensive services.
• RBS weighs huge share sale. Royal Bank of Scotland (RBS) is in talks with shareholders to gauge the appetite for a £5B ($8.1B) share issue in an attempt to stop the British government's stake in the bank from creeping higher. The U.K.'s stake in RBS is set to reach more than 80% under the terms of its toxic asset insurance program. Last June, RBS raised £12.3B in a disastrous takeover of ABN Amro.
• Ka-boom! Walt Disney's (DIS) $4B acquisition of Marvel Entertainment (MVL) hit a snag Sunday after heirs to revered comic book artist Jack Kirby, creator of many of Marvel's mainstays, filed claims challenging Marvel's long-term rights to some of its superheros. In a statement, Disney said the claims are an attempt to terminate Marvel's rights 7-10 years from now, and "were fully considered in the acquisition."
• Santander to raise $7.35B in Brazilian IPO. Santander (STD) plans to raise almost €5B ($7.35B) through the previously announced IPO of 16% of its Brazilian unit. The target is well above the €2.5B analysts expected. The bulk of the proceeds will be spent opening another 600 branches in Brazil.
• Heading off say on pay. A group of companies including AT&T (T), Cisco (CSCO), H-P (HPQ) and Tyco (TYC) will announce today a joint effort to voluntarily change their pay practices, a move aimed at heading off potentially more onerous restrictions out of Washington. The group, led by the Conference Board, will endorse principles that tie incentives to long-term success rather than short-term gains, and advocates doing away with 'overly generous' golden parachutes, but stops short of signing off on 'say on pay' legislation that would give shareholders a vote on executive pay.
• The return of risk appetite. Global and emerging-markets bond funds, and global stock funds and sector funds, saw the highest inflows this year in the latest week, while money-market funds had their second-biggest weekly outflows. Risk appetite is clearly on the rise, although the move remains cautious, with bond funds growing at a faster clip than stock funds.
• One more chance. The IRS will announce today it's extending its amnesty program, giving wealthy Americans with secret offshore accounts another 22 days, until Oct. 15, to come forward. The program, which began in March as a way of luring UBS (UBS) clients of out of the woodwork, has attracted 3,000 taxpayers so far, compared with just 80 last year.

Earnings: Before Open

• Lennar (LEN): Q3 EPS of -$0.97, including $0.42 charge for valuation adjustments and writeoffs and another $0.34/share charge, vs. consensus of -$0.46. Revenue of $721M (-34.9%) vs. $774M. New home deliveries decreased to 2,660 from 3,694 last year. Backlog grew 19% from Q2 to $647M. (PR)

Today's Markets

Asia markets, only partially open, were mixed overnight, but Europe has turned lower, as have futures.

• Asia: Hang Seng -0.7% to 21,473. Shanghai +0.15% to 2,967. Nikkei and BSE closed.
• Europe at midday: London -0.7%. Paris -0.8%. Frankfurt -1.3%.
• Futures at 6:30: Dow -0.6% to 9675. S&P -0.7% to 1053. Nasdaq -0.7%.
  Crude -2.3% to $70.80. Gold -0.9% at $1,001.50.
  30-year Treasury flat. 10-year +0.12%. Euro -0.3% vs. dollar. Yen -0.7%. Pound -0.4%.

Monday's Economic Calendar

• 10:00 Conference Board's Leading Indicators
  10:00 FHFA Housing Price Index
  12:00 HUD Secretary Shaun Donovan speaks on Helping Homeowners Avoid Foreclosure
• Notable earnings before Monday's open: LEN

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Comments

[doubleguns:]

BOA stripped of their 5th amendment rights by house panel while the FED still clings to theirs and tells little Timmy to kiss off.

I think we need to use the same house panel after BOA for the FED. I doubt little Timmy is up to playing hard ball with his future employer.

Too much conflict of future interest there.

Sep 21 07:49 AM

[doubleguns:]

See you in a few months Rachael.

May you always walk in sunshine.
May you never want for more.
May Irish angels rest their wings
beside your nursery door.
And for the proud parents:
May God grant you
a wee bit of heaven
to cradle in your arms -
a sweet bonny baby
to hold close to your heart
A newborn babe
brings light to the house
warmth to the hearth
and joy to the soul
for wealth is family
family is wealth.

Sep 21 08:14 AM

[robert.b.fe...:]

Congrats Rachel. Imagine that, CEOs don't want these pesky owners telling them how much they can siphon off ... err get paid. The FED doesn't want us poking around in their books I have a problem with this independence argument, the FED isn't independent from us we are the sole authority and the FED works at our pleasure. Open the books Ben of course this isn't for the squeamish.

Sep 21 08:50 AM

[axelrod608:]

In reality, unfortunately, the Fed IS independent, a private entity, not part of the government as most folks seem to believe. Which, of course, is the very reason it should not exist at all.

All US money is created by the fed and lent - at interest - to our government and corporations. Nice job, but not one you'll find listed in the Constitution.

There will be no audit of the Fed while the bankers still run this country.

Sep 21 11:04 AM

[Buckoux:]

The US Constitution is VERY explicit in its use of the words, "Rights" and or, "Powers". Only "persons", "people", or "the people" poses
"Rights" guaranteed by the Constitution. The government, including states poses only "Powers", by the Constitution, and these are limited. These two words are NEVER interchanged. Congress may have the power to subpoena Ken Lewis to answer questions, however, he does have the individual right to refrain from self-incrimination. Lewis' status as BOA-CEO-COB, at the time, may alter this balance of rights and powers. The issue is also not so clear with regards to the Federal Reserve. It may have the "power", as a government entity to protect itself from Congress' medling in it's affairs. Then again, it was the power of Congress that created the Fed and confirms its chairman. And, Congress could dissolve the Fed (I don't know if that would be good or bad).

Considering past performance of Congress and the Federal Reserve, perhaps their seats of power should should be removed from Washington D.C. and re-situated at Disney World for Congress and Disney Land for the Fed. At least they'd both be preoccupied with mice and ducks and stay out of the country's business.

Sep 21 11:14 AM

[Joseph L. S...:]

"A House panel has told Bank of America (BAC) it cannot use attorney-client privilege to keep details of its purchase of Merrill Lynch out of Congress."

How dare them even try to invoke attorney-client privilege. They take OUR money to arrange their little sweetheart deal, they play by OUR rules: open, transparent, and honest business practices. If they survive the shock to their cholesterol-riddled system, they'll be the better for it. And so will we.

Sep 21 11:20 AM

[bbowen7:]

The Fed is a little like the Supreme Court - although without the Constitutional standing. The less it is subject to the political winds in its role as keeper of the integrity of the currency, the better. For that reason, it should not become the central regulator of banks or be subject to the politically-appointed Treasurer's call for an inquiry into things that he already knows.

Sep 21 01:01 PM

[DavyJ:]

Exactly who would take the loss on the toxic assets the Federal Reserve holds should the worst happen?

Who would reap the rewards if the best happens?

Do the profits or losses just stay there forever?

Could the Federal Reserve go into conservatorship?

Sep 21 02:06 PM

[Anthony Alfidi:]

Dell's taking a page out of IBM's playbook, migrating their business model from hardware to business services. The whole PC OEM biz is now the commodified province of the lowest-cost producers. If you want fat margins, you've gotta go for the business services.

Any G-20 agreement forged without China will fail. China will increasingly become the leading voice in that crowd.

Fed's rejection of Treasury's request was expected. The request itself may have been a bit of political theater designed to placate Congressional noise for some kind of action to curb Fed's printing press.

Return of risk appetite, you say? Global investors need to remember that dumb money gets in at the top.

Sep 22 03:15 AM

[Truyen:]

What imnportant thing to do right now for the G-20 Summit is have the "very" concrete plan for the global finance, especially for the post-crisis period. Not just the G-2 Framework, we need the global consensus on this problem right now.
Mr. Pham
Vietnam

Sep 22 07:20 AM