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
Merkel wins German election but building coalition could be tricky. Angela Merkel's Christian Democratic Union (CDU) bloc enjoyed a resounding victory in Germany's elections yesterday, although the CDU fell short of a majority and its preferred coalition partner, the pro-business Free Democrats, was wiped out. That means Merkel will probably have to form a coalition with the left-of-center Social Democrats, which came in second, or the Greens. German shares were flat at the time of writing.

Chinese manufacturing activity hits six-month high. China's HSBC flash manufacturing PMI climbed to a six-month high of 51.2 in September from 50.1 in August, boosted by improvements in external and domestic demand. The reading adds to a string of data that indicate that China's economy is bouncing back after a slowdown. HSBC expects a more "sustained recovery" that "will create more favorable conditions to push forward reforms." The PMI reading helped strengthen shares in China but not in other parts of Asia.

BlackBerry co-founder reportedly weighs bid for company. BlackBerry (NASDAQ:BBRY) co-founder Mike Lazaridis has reportedly approached private-equity firms Blackstone (NYSE:BX) and Carlyle (NASDAQ:CG) about a possible bid for the company. Along with Jim Balsillie, Lazaridis was BlackBerry's co-CEO until last year and still owns a sizable minority stake, which could help facilitate a deal. Last week's giant FQ2 warning and layoff announcement could allow Lazaridis to obtain a lower price, but it might also make P-E support harder to come by. Shares were -4.2% premarket.

Top Stock News
Citigroup's trading revenues drop significantly - report. Citigroup's (NYSE:C) trading revenue has reportedly fallen sharply following a greater-than-expected slowdown during the summer, with the decline threatening to hurt the bank's overall earnings. The firm's focus is weighted towards interest rates and forex, which are seen as weak, while it also has high exposure to emerging markets, which have recently suffered from capital flight and falling currencies. Shares were -0.2% premarket.

Germans hack iPhone fingerprint scanner. That didn't take long - a group of respected German hackers yesterday said they have cracked the fingerprint scanner of the iPhone 5S, just two days after the Apple (NASDAQ:AAPL) device went on sale. The company was hoping that the scanner, and the added security it was supposed to bring, would differentiate the new smartphone. "Fingerprints should not be used to secure anything," said one hacker. "It is far too easy to make fake fingers out of lifted prints."

Paint makers try to avoid $2.5B verdict over lead hazard. Lawyers for house-paint providers are due to make their final arguments today in a trial over whether the companies should have to remove decades-old lead paint from hundreds of thousands of homes in California, a requirement that could cost up to $2.5B. The defendants include Sherwin-Williams (NYSE:SHW), ConAgra (NYSE:CAG) and DuPont (NYSE:DD). The case has been brought by 10 city and county governments in California, which argue that the lead is harmful to children.

GE wins key $1.9B gas-turbine contract. General Electric (NYSE:GE) has obtained a $1.9B order to supply Algeria with a total of 26 heavy duty gas turbines for six power plants. The deal is an important one for GE, which has been trying to turn its struggling gas-powered turbine business around for a number of years. The booking tops the orders for 24 turbines that GE obtained globally in Q2 and the eight it received in Q1.

Cable networks dominate Emmys, Netflix picks up first award. Premium cable-networks swept the Emmy Awards last night, with Time Warner's (NYSE:TWX) HBO picking up the most gongs with 27 trophies. Netflix (NASDAQ:NFLX) won three Emmys, the key one being best director for David Finch for "House of Cards." The victory was the first in a major category for an online video distributor and further cemented Netflix's status as a contender in Hollywood.

LinkedIn denies it breaks into users' email accounts. LinkedIn (NYSE:LNKD) has denied allegations made in a lawsuit that it breaks into members' accounts, and said it never sends invitations to join the service on a user's behalf without permission. The lawsuit, which is from four members, has also accused the company of collecting the addresses of users' contacts and spamming those contacts with multiple requests to sign up.

Top Economic & Other News
Eurozone business activity continues to grow. Eurozone composite PMI increased to a 27-month high of 52.1 from 51.5 and topped expectations of 51.9, with the services reading also rising and exceeding forecasts but the manufacturing print unexpectedly falling. It was a motif that Germany and France experienced as well. Still, the eurozone data adds to "growing signs that the region is recovering from the longest recession in its history" and is consistent with GDP growth of 0.2%, Markit says.

Greece on track to hit primary budget surplus. Greece may be on course to achieve a primary budget surplus this year, an achievement that would allow it to seek further debt relief from its lenders. Troika officials arrived in the country yesterday amid speculation that the government is reportedly considering issuing bonds backed by state property assets as it looks for ways to avoid a third bailout and more onerous austerity conditions.

Alpha-Rich Stock Movers and Great Calls
1) Last Monday, Igor Novgorodtsev said Top Image Systems' (NASDAQ:TISA) intellectual property, blue-chip customer base, and well-differentiated product offerings made it an acquisition target. The stock is +7.4% since. Read article »
2) On July 2, Caiman Valores said that short-term issues caused Petrominerales (OTCPK:PMGLF) to trade at a huge discount to net asset valuation, but that several positive operational trends could lead to 80% upside. The shares are +24.6% to date. Read article »

Alpha-Rich Stocks To Watch
1) Datalink (NASDAQ:DTLK) doesn't have the lofty valuation of other players in its space, but the company does have a solid earnings model and unappreciated growth plans, with 75% long-term upside. Read article »
2) Ship Finance (NYSE:SFL) shares trade at a substantial discount to net asset value. With 30% upside to a fair enterprise valuation / EBITDA and a 10% dividend, investors can ship profits all the way home. Read article »

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Today's Markets:
In Asia, Japan closed. Hong Kong -0.6% to 23372. China +1.3% to 2221. India -1.8% to 19901.
In Europe, at midday, London -0.2%. Paris +0.1%. Frankfurt flat.
Futures at 6:20: Dow +0.1%. S&P +0.2%. Nasdaq +0.3%. Crude +0.2% to $104.95. Gold -0.8% to $1322.
Ten-year Treasury Yield +2 bps to 2.75%.

Today's economic calendar:
8:30 Chicago Fed National Activity Index
8:30 PMI Manufacturing Index Flash

Notable earnings after today's close: RHT

See full real-time earnings coverage »

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