Wall Street Breakfast: Must-Know News

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 |  Includes: ACET, AGU, BA, BP, DOOR, FB, FNGN, HLF, JPM, MTSN, NDAQ, QQQ, SPY, UTX
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
Obama: No negotiations while government is shut. An "exasperated" President Obama yesterday said there will be no discussions of GOP demands over a federal-funding bill as long as the government stays closed. "Negotiations now would lead to more demands...I have bent over backwards to deal with the Republican party," Obama said. It sounds like a lot got accomplished at White House meetings between the sides to discuss legislation that would reopen the government.

BP wins partial reprieve from oil-spill payments. A court of appeals in New Orleans has ordered District Judge Carl Barbier to temporarily halt some payments on BP (NYSE:BP) oil-spill claims while Barbier reassesses how to calculate losses that Gulf-coast businesses say they suffered from the 2010 disaster. The ruling represents a partial victory for BP, which has said that the claims administrator has been too generous with the company's money by approving applications from parties that weren't harmed. Shares were +0.8% premarket.

PMI surveys show eurozone recovery gaining momentum. Eurozone services PMI climbed to 52.2 in September from 50.7 in August, while composite output rose to 52.2 from 51.5. "The eurozone enjoyed its strongest quarter of expansion for just over two years in the third quarter," says Markit, adding that this bodes well for further growth in Q4. Germany led the way, France returned to expansion, Spain stabilized, and Ireland and Italy impressed. However, the recovery is fragile and growth modest.

Top Stock News
Shares suffer from U.S. impasse. Global stocks were mostly lower at the time of writing as the deadlock in Washington continued, although strong services PMI data from China, the eurozone and the U.K. injected positive sentiment. The idea that the U.S. shutdown will cause the Fed to put off tapering apparently also provided some lift somewhere, although not too many indexes seemed to be benefiting from that line of thought.

JPMorgan faces trial in Italy. Just as JPMorgan (NYSE:JPM) tries to end its legal headaches in the U.S. and U.K., another one from Italy returns to the headlines. Authorities in Siena reportedly want to prosecute JPMorgan for obstructing regulators in an investigation into Banca Monte dei Paschi di Siena's acquisition of Banca Antonveneta. JPMorgan is accused of withholding information about a €1B ($1.36B) financing that the bank arranged for Monte Paschi's purchase of Italian peer Antonveneta in 2008.

Ackman shifts Herbalife strategy. Bill Ackman's Pershing Square has converted around 40% of its Herbalife (NYSE:HLF) short into long-term put options. The move reduces the percentage of the float sold short but will allow the hedge fund to "make a similar amount of profit as if (it) had maintained the entire initial short position," assuming Herbalife fails "within a reasonable amount of time." Ackman was also scathing about the company's chances of issuing an investment-grade bond to fund a $2B buyback.

SEC's White signals review into self-regulation of exchanges. SEC Chairperson Mary Jo White wants a re-evaluation of "the self-regulatory model" of exchanges and the competition in the sector. White's comments follow an increase in such competition in recent years and after a series of tech glitches on exchanges. The regulatory nature of the operators has helped protect them from lawsuits, including when traders lost money because of Facebook's (NASDAQ:FB) botched IPO on Nasdaq (NASDAQ:NDAQ).

Agrium taps COO Chuck Magro to be new CEO. Agrium (NYSE:AGU) has named COO Chuck Magro as CEO to succeed Mike Wilson when he retires at the end of the year. Magro has been the agro-chemicals company's COO since 2012 after serving as executive VP of corporate development and chief risk officer.

Top Economic & Other News
How the shutdown is affecting the economy. The National Retail Federation expects sales during the November-December holiday shopping period to increase 3.9% to $602.1B, with growth accelerating from 3.5% last year. However, says the NRF, a prolonged government shutdown could hurt consumer sentiment and harm sales. Meanwhile, Boeing (NYSE:BA) may have to postpone deliveries of aircraft and United Tech (NYSE:UTX) might furlough workers; small businesses are hurting as well.

China services activity hits six-month high. China's official non-manufacturing PMI increased to a six-month peak of 55.4 in September from 53.9 in August, with the print contrasting with lower-than-expected manufacturing surveys. "The rising services PMI suggests that the recovery in Q313 was quite broad based," says Bank of America's Lu Ting. The "robust" sector indicates that the chances of a hard landing are low.

U.K. services sector rounds off best quarter in 16 years. U.K. services PMI slipped to 60.3 in September from 60.5 in August, but activity still expanded sharply and ensured that Q3 was the best since Q2 1997. PMI surveys suggest the economy expanded by up to 1.2% in Q3, the "fastest growth rate since the pre-crisis days of 2007," says Markit. "If such strong expansion persists, it's hard to see how the Bank of England can avoid a review of its forward-guidance policy," Markit adds. U.K. shares were +0.2% at the time of writing.

U.S. poised to pass Russia as world's top oil and gas producer. A WSJ analysis shows that the U.S. is on track to pass Russia as the world's biggest producer of oil and gas this year - if it hasn't already. The amount of crude from the Bakken oil field in North Dakota and the Eagle Ford shale in Texas continues to rise rapidly, while Russian output is expected to remain flat through 2016. That's a big problem for Russia, whose oil exports could fall 25%-30% after 2015, reducing GDP more than $100B.


Alpha-Rich Stock Movers and Great Calls
1) On September 26, Akram's Razor said Financial Engines (NASDAQ:FNGN) was lumped in with the wrong peer group and priced for impossible growth. The stock is -7.5% since. Read article »
2) On August 30, Stephen Simpson argued that Mattson Technology (NASDAQ:MTSN) was poised to benefit from a cyclical upswing, leading to 35-50% upside. Just over a month later, the stock is +35.2%. Read article »

Alpha-Rich Stocks To Watch
1) The changing operating model of Aceto's (NASDAQ:ACET) Human Health segment hasn't been fully recognized by the market, leaving the potential for substantial upside via growth and revaluation. Read article »
2) Masonite's (NYSE:DOOR) low-key market debut has left its housing-related growth story under-followed. Buysider BenWise Research calls for 50% upside. Read article »

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Today's Markets:
In Asia, Japan -0.1% to 14157. Hong Kong +1% to 23214. China closed. India +2% to 19903.
In Europe, at midday, London +0.2%. Paris -0.3%. Frankfurt -0.1%.
Futures at 6:20: Dow -0.3%. S&P -0.3%. Nasdaq -0.2%. Crude -0.4% to $103.69. Gold -0.9% to $1309.
Ten-year Treasury Yield +0.2 bps to 0.65%.

Today's economic calendar:
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
9:45 Bloomberg Consumer Comfort Index
10:00 Factory Orders
10:00 ISM Non-Manufacturing Index
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Notable earnings before today's open: STZ

Notable earnings after today's close: XRTX

See full real-time earnings coverage »

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