Wall Street Breakfast: Must-Know News

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 |  Includes: BX, C, CBY, CEO, DIA, GLD, KBH, LAZ, MDLZ, PHG, QQQ, SPY, USO, XOM
by: SA Eli Hoffmann
SA Eli Hoffmann
Seeking Alpha's flagship daily business news summary, gives you a rapid overview of the day's key financial news. It is published before 7:00 AM ET every market day and delivered to over 900,000 email subscribers.

  • Cnooc covets Exxon's Ghana deal. Chinese state-owned CNOOC (NYSE:CEO) is reportedly in advanced JV talks with Ghana National Petroleum to pitch a rival bid to ExxonMobil's (NYSE:XOM) $4B offer for Kosmos Energy's 23.5% stake in the giant Jubilee oil discovery. News of Exxon's agreement with Kosmos last week infuriated the Ghanaian government and GNPC, which was trying to boost its existing 13.8% stake in the field. But insiders recently said they were confident Ghana would approve the sale to Exxon because of its superior expertise in developing the find quickly and on budget, while handing the field over to the untested Chinese could be a gamble.
  • Dollar dumping gets serious. Central banks are making good on their threats to dump the dollar, with 63% of the $413B policy makers poured into foreign currency holdings last quarter going to the euro and yen. While some see the move as reflecting a dim view on the U.S.'s policies and future, others say the diversification is no more than a reduction of concentration risks (and some actually think it's good news!). The record-breaking diversification likely means the greenback won’t rebound any time soon after losing 10.3% vs. a basket of currencies over the past half year.
  • Bullard: ease up on the QE! St. Louis Fed president James Bullard on Sunday repeated his call to adjust the Fed's $1.75T scheme to buy mortgage loans and Treasurys, especially in light of its increasingly optimistic outlook of the economy. "There has been little indication of how or whether these amounts might be adjusted given incoming information on economic performance," he said, voicing concerns the policy is creating uncertainty in the markets, and could ultimately ignite inflation. (read Bullard's full speech (.pdf))
  • Summers talks up stimulus. Top Obama advisor Larry Summers defended the government's stimulus efforts in a letter to Republican House Leader John Boehner this morning: "Thanks largely to the Recovery Act, alongside an aggressive financial stabilization plan and a program to keep responsible homeowners in their homes, we have walked a substantial distance back from the economic abyss and are on the path toward economic recovery." Summers said the president will not be satisfied until the U.S. returns to "robust job growth," and called the significant reduction in the pace of job loss over the last six months "an essential first step in that direction."
  • Killer quarter coming up. Economists boosted their Q3 GDP growth outlook to 3.2% - the strongest in two years - fueled by a rebound in personal consumption expenditures, the first increase in residential investment since the Q1 2005, and a reduced rate of business inventory reduction.
  • KB faces accounting probe. KB Home (NYSE:KBH) disclosed it's being investigated by the SEC over accounting and disclosure issues, adding to the homebuilders legal issues, not to mention a still soft U.S. housing market. In May, homeowners brought a federal racketeering lawsuit against KB, accusing it of colluding with Countrywide and appraiser LandSafe to fraudulently inflate sales prices of KB homes. Shares -4% premarket.
  • Blackstone to list eight firms, sell five. Blackstone (NYSE:BX) is planning to publicly list up to eight of its portfolio companies. According to a letter sent to investors Friday, Blackstone is positioning hospital staffing firm Team Health for an IPO, and assessing the potential for seven others. The letter also says Blackstone is in the process of five realizations (exits), which sources say includes the sale of its stake in Kosmos Energy's Ghanian oil interests (see above for more on this).
  • Lazard's CEO hospitalized with serious heart condition. Lazard (NYSE:LAZ) chairman and CEO Bruce Wasserstein was hospitalized over the weekend for 'serious' heartbeat irregularity. Wasserstein, 61, is personally leading the team advising Kraft (KFT) on its $16B takeover bid for Cadbury (CBY). Experts say a company's ability to continue functioning after the incapacity of a CEO depends significantly on his level of day-to-day interaction with operations, which in Wasserstein's case is high. Shares were down about 1% in Frankfurt Monday morning. (read Lazard's statement)
  • Citigroup fined by Finra. Sources say Citigroup (NYSE:C) will pay $600,000 to settle charges it failed to supervise international customers, thereby allowing them to avoid dividend taxes. Citigroup has already paid the IRS $24M in taxes to settle claims it concocted derivatives to help clients circumvent taxes.

Earnings

  • Koninklijke Philips Electronics (NYSE:PHG): Q3 profit of €174M, vs. consensus of €41M loss. Sales of €5.62B (-11%) vs. consensus of €5.45B. Operating margin 6.1% vs. 0.9% in prior-year quarter. Free cash flow of €353M vs. Ebitda of €344M. Shares +6.5% in Amsterdam. (MW)

Today's Markets

Asia markets were mixed Monday, with heavy gains in India offset by losses in Hong Kong and China. Europe is broadly higher, and U.S. stocks are poised to open higher.

  • Asia: Hang Seng -0.93% to 21,299. Shanghai -0.59% to 2,894. BSE +2.31% to 17,027.
  • Europe at midday: London +1.3%. Paris +1.3%. Frankfurt +1.5%.
  • Futures at 7:00: Dow +0.7% to 9783. S&P +0.8% to 1076. Nasdaq +0.65%. Crude +1.7% to $72.97. Gold +0.75% to $1,056. Treasurys are up moderately. Euro +0.3% vs. dollar. Yen -0.3%.

Monday's Economic Calendar

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