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
Global stocks fall ahead of FOMC meeting. Global equities were mostly lower at the time of writing - although U.S. stock futures were only slightly down - prior to the start of the FOMC's two-day meeting today, when the Fed is expected to reduce its bond-buying program by $10B a month to $75B despite a tepid jobs report for August. "Investors are pricing in $10B, but $20B or above could create waves, so people remain cautious ahead of the decision," says Global Equities' David Thebault. Investors will also be looking at the Fed's rates forecasts for 2016.

Shareholders ramp up pressure on Barrick for boardroom shakeup. Barrick Gold's (NYSE:ABX) large investors have been increasing the pressure on founder and co-Chairman Peter Munk to say when he'll step down. The 85-year old, though, has given no indication that he will retire anytime soon, which could set up a showdown with shareholders. Investors also want Barrick to bring in new independent directors. The dispute comes amid a 50% slump in the mining company's stock this year and falling gold prices. Shares were +1.7% premarket.

Top Stock News
JPMorgan agrees to London Whale fines, to admit wrongdoing. JPMorgan (NYSE:JPM) has reportedly agreed to pay $800M in fines related to its $6B London Whale trading loss and to make the significant admission of wrongdoing, a move that could expose the bank to private lawsuits. JPM has forged the settlement with a number of regulators in the U.S. and U.K., although not with the Commodity Futures Trading Commission, which plans to levy a separate fine. While senior executives have escaped without charges, the FBI and Federal prosecutors are still investigating the bank.

U.K. sells 6% of Lloyds shares for £3.2B. The U.K. has raised £3.2B after selling a 6% stake in Lloyds (NYSE:LYG) in a deal that marks the start of the government's privatization of its holding in a bank that received a £20.5B bailout during the financial crisis in 2008. The shares were sold to unnamed institutions at 75 pence each, a 3% discount to Lloyds' close yesterday of 77.36 pence but above the state's average buy-in price of 73.6 pence. The government's holding in the bank fell to 32.7%. Lloyds' shares were -2.2% at 75.65 pence at midday in London.

Dutch to buy 37 F35 jets. Holland reportedly intends to acquire 37 Lockheed Martin (NYSE:LMT) F35 fighter jets, with Defense Minister Jeanine Hennis-Plasschaert set to announce the decision later today. Amid an atmosphere of austerity, as well as due to the project's delays and ballooning expenses, the F35 purchase has become controversial in the Netherlands. Last year, Dutch parties representing a majority in parliament favored ending Holland's participation in the project, for which €4.5B had been set aside.

Philips ups targets, to repurchase $2B in shares. Philips (NYSE:PHG) has slightly raised its EBITA growth target for 2016 to 11-12% from a previous goal of 10-12%, and the company is aiming for cumulative comparable sales growth of 4-6% a year. Philips also intends to buy back €1.5B ($2B) worth of stock over the next two-to-three years. The increased financial targets represent progress in Philips' turnaround program in which it has been slashing jobs and expenses, and focusing on its core activities. Despite the news, shares were -1.6% premarket.

Top Economic & Other News
Inflation seen holding steady on month. U.S. CPI data for August is due out this morning, with economists estimating that inflation held steady at 0.2% on month but fell to 1.6% on year from 2% in July. Such a fall could give strength to those on the FOMC who don't want to start tapering just yet. "Inflation is not a threatening issue," says Daiwa's Kei Katayama.

German investor confidence rises again. The German ZEW survey of investor confidence has climbed to 49.6 in September from 42 in August and topped consensus of 46. The current situation print also rose strongly, as did sentiment for the eurozone. "Optimism has increased due to the improved economic outlook for the eurozone," says ZEW President Clemens Fuest, "although recently released economic data for Germany has fallen short of expectations."

European car sales fall back again. European car sales dropped 4.9% on year in August to 686,957 units after rising 4.9% in July as new registrations fell in France, Italy and Germany last month. However, the U.K. again continued to enjoy growth, with volumes increasing 10%. The data comes after car executives had expressed hope at the Frankfurt Motor Show that the European car market was stabilizing.

Chinese foreign direct investment stalls. China's foreign direct investment grew 0.6% on year to $8.38B in August, although the expansion was down sharply from 24.1% in July and 20.1% in June. The data, along with a rise in money market rates, helped Chinese shares slump 2%.

North American shale boom could go global. Countries such as Argentina, Russia and Algeria hold shale oil deposits that could be even more bountiful than the regions at the center of the U.S.'s energy revolution. The 23 most promising "tight" oilfields outside the U.S. and Canada have the potential to extract 5M bpd in the 2020s, a report from research firm IHS has estimated. A main problem, though, is that the cost of shale production in many countries is significantly higher than in the U.S.

Alpha-Rich Stock Movers and Great Calls
1) On Thursday, Douglas Ehrman said Rare Element Resources (NYSEMKT:REE) was lagging an inflection point in its sector and had 33% upside. The stock is most of the way there already, as it is +24.2% to date. Read article »
2) Gastar Exploration (NYSEMKT:GST) has continued to move higher since Josh Young laid out his full thesis as an Alpha-Rich idea in June. The stock is +74.5% to date. Read article »

Alpha-Rich Stocks To Watch
1) JetBlue (NASDAQ:JBLU) is the rarest of all stocks: an airline that value investors should look into. A clean balance sheet, cheap valuation, and strong growth prospects add up to 50% potential upside. Read article »
2) Lexmark's (NYSE:LXK) shift to a software-based model should drive growth, while its shareholder friendly policies and strong balance sheet offer value. The stock has as much as 50% 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 -0.7% to 14312. Hong Kong -0.3% to 23181. China -2% to 2186. India +0.3% to 19804.
In Europe, at midday, London -0.3%. Paris -0.3%. Frankfurt -0.1%.
Futures at 6:20: Dow -0.04%. S&P -0.1%. Nasdaq -0.03%. Crude -0.5% to $106.08. Gold -0.05% to $1317.20.
Ten-year Treasury Yield -2 bps to 2.85%.

Today's economic calendar:
FOMC meeting begins
7:45 ICSC Retail Store Sales
8:30 Consumer Price Index
8:55 Redbook Chain Store Sales
9:00 Treasury International Capital
10:00 NAHB Housing Market Index

Notable earnings before today's open: FDS

Notable earnings after today's close: ADBE

See full real-time earnings coverage »

Wall Street Breakfast is sent out by email for free -- Get it now »