Wall Street Breakfast: Must-Know News

by: Wall Street Breakfast
Wall Street Breakfast
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.

Top Stories
Vodafone confirms talks to sell Verizon Wireless stake. Vodafone (NASDAQ:VOD) has confirmed speculation that it is in discussions with Verizon Communications (NYSE:VZ) over the sale of the U.K. carrier's 45% stake in Verizon Wireless to the U.S. company. Vodafone provided few details, although Bloomberg reported that a deal could be worth $130B and that it could be announced early next week. Vodafone's shares were +8.3% premarket, while those of Verizon were +2.5%.

Equities rise on possible delay to action against Syria. U.S. stock futures and European shares were higher at the time of writing, while most indices in Asia rose, following the emergence of divisions in the U.S. and U.K. that could delay military intervention in Syria. The latest developments are "prompting a number of investors to bet on a rebound," says Guillaume Dumans of research firm 2Bremans. Meanwhile, gold and oil, which rose because of the tension, were lower. (See below for more details)

DOJ, AMR and US Airways open to deal over merger dispute. The Department of Justice, AMR (AAMRQ.PK) and US Airways (LCC) are open to a settlement in which the DOJ would withdraw its attempt to block the companies from merging. The government said it wants the airlines to address its antitrust concerns but hasn't yet received any proposals, an assertion contradicted by a Reuters source that said the carriers had offered concessions.

Top Stock News
JPMorgan spreadsheet links recruitment to deals. The investigation into JPMorgan's (NYSE:JPM) hiring practices in China and Hong Kong has reportedly uncovered an internal spreadsheet that linked recruitment to specific deals that the bank was trying to obtain. The Department of Justice has joined the SEC in the probe, which has been widened to include other parts of Asia and Europe. Authorities are looking at whether JPMorgan hired the relatives of senior government officials or managers of potential customers in order to win business.

How high did Libor rigging go? Regulators investigating Libor manipulation at numerous banks are attempting to ascertain whether senior executives were involved in the rigging of rates. Former Tokyo-based Citigroup (NYSE:C) trader Tom Hayes, who was fired for his alleged manipulation, says higher-level management was involved. "My actions were entirely consistent with those of others at senior levels" in Citigroup Japan, Hayes wrote three days after his sacking in 2010.

BlackBerry "savior" device hits the ground and dies. Sales of BlackBerry's (NASDAQ:BBRY) keyboard-equipped Q10, which the company hoped would help propel it back into the reckoning in the smartphone market, have been appalling. One Midwestern retailer said that his stores only ordered a few units per location, while those that were sold have been returned. Even in Canada, the Q10's performance has disappointed. "The one we all thought was going to be the savior, just hit the ground and died," says an executive at a Canadian carrier. Still, the corporate market may yet bring some respite.

Top Economic & Other News
Italian PM to scrap property tax in concession to Berlusconi. Italian Prime Minister Enrico Letta has pledged to scrap an unpopular levy on primary residences this year and replace it with a municipal tax in 2014. The cancellation of the tariff was a key demand from Silvio Berlusconi's PDL party to remain in the government. Their other major requirement is that Berlusconi is not thrown out of the Senate for his conviction for tax fraud. Italian shares (NYSEARCA:EWI) were +0.7% at the time of writing.

German jobless rate holds steady. As expected, Germany's unemployment rate was unchanged at 6.8% in August, although the number of people without a job unexpectedly rose by 7,000 vs a fall of 7,000 in July and consensus for a drop of 5,000. Analysts seemed unworried by the slight increase. "The German economy is recovering," says Rainer Sartoris of HSBC Trinkaus. "That will feed through to the labor market with delay. There's scope for a small autumn revival."

Rupee rebounds as RBI sells dollars to oil companies. The Indian rupee has rebounded from the record low it hit yesterday after the Reserve Bank of India said it would sell dollars to the country's major oil companies. With oil India's biggest import item, the action is aimed at removing $400-500M worth of demand a day for the dollar from the spot market and reducing downward pressure on the rupee. The USD-IRN was -1.9% at 67.465 at the time of writing, while shares were +2.25% and 10-year bond yields -16 bps at 8.805%.

San Bernardino declared eligible for bankruptcy. Federal Bankruptcy Judge Meredith Jury has ruled that San Bernardino in California is eligible for Chapter 9 bankruptcy protection, overruling opposition from California Public Employees' Retirement System (Calpers), the city's largest creditor. The key question is whether Calpers should be treated like other debtees. The pension fund says no and other creditors say yes. It's an argument that is being closely watched and one that could have wide ramifications; it could reach the Supreme Court.

Alpha-Rich Stock Movers and Great Calls
1) Yesterday, Stephen Simpson explained how Cyan's (CYNI) network solutions could help carriers solve their traffic-growth/capital-budgeting dilemma. The stock finished the day +7.8%. Read article »
2) On June 21, Volte-Face Investments called Coastal Energy (OTCPK:CENJF) a traditional value investing opportunity, with a sell-off offering investors 55% upside. The stock is +27.1% since. Read article »

Alpha-Rich Stocks To Watch
1) Ark Restaurants' (NASDAQ:ARKR) idiosyncratic approach has produced consistent earnings despite unavoidable bumps. With a potential acquirer lurking and an investment that could hit the jackpot, the company is too cheap to ignore. Read article »
2) Ithaca Energy (OTCPK:IACAF) trades at 50% of NAV and very low multiples. As production picks up and the company digests a recent acquisition, there could be a large upside. Read article »

Alpha-Rich articles are the best long and short ideas on Seeking Alpha. SA Pro subscribers receive early access to these Alpha-Rich articles, which often move markets. For more information about SA Pro and becoming a subscriber, click here.

Today's Markets:
In Asia, Japan +0.9% to 13460. Hong Kong +0.8% to 21705. China -0.2% to 2097. India +2.25% to 18401.
In Europe, at midday, London +0.5%. Paris +0.1%. Frankfurt +0.3%.
Futures at 6:20: Dow +0.2%. S&P +0.15%. Nasdaq +0.3%. Crude -0.7% to $109.28. Gold -0.7% to $1408.90.

Today's economic calendar:
8:30 Initial Jobless Claims
8:30 GDP Q2
8:30 Corporate Profits
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
1:00 PM Results of $29B, 7-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
7:45 PM James Bullard: Economic and Monetary Policy

Notable earnings before today's open: BRLI, COCO, CPB, FLWS, JASO, LRN, PLL, RY, TD

Notable earnings after today's close: BEBE, CRM, KKD, OVTI, PSUN, SPLK, WMS

See full real-time earnings coverage »

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