Wall Street Breakfast: Must-Know News

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 |  Includes: AA, CCI, CHFN, COST, EPD, FTPLF, JOSB, MPC, NOK, QQQ, SFXE, SPY, SSNLF, STKL, T, TLRD, VLO, WMT
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 to nominate Yellen as Fed chief. President Obama is due to officially nominate Janet Yellen as the first woman Chairperson of the Federal Reserve at 3PM ET today. The Senate will have to confirm the appointment of Yellen, who's known as a bit of a dove when it comes to monetary policy. Global equities were mostly positive at the time of writing as markets weighed the news against the continued deadlock in Washington over the federal budget and debt cap.

Jos. A. Bank bids $2.3B for Men's Wearhouse. Jos. A. Bank Clothiers (NASDAQ:JOSB) has offered to acquire larger rival Men's Wearhouse (MW) for $2.3B in a deal that could help the retailers reduce expenses and strengthen themselves in a difficult sales environment. Jos. A. Bank's bid is worth $48 a share, which represents a 36% premium to Men's Wearhouse's closing price yesterday of $35.24. Jos. A. Bank's move follows a recent boardroom spat at Men's Wearhouse that led to the ouster of founder and Chairman George Zimmer.

Costco's FQ4 net profit and revenue rise 1%. Costco's (NASDAQ:COST) FQ4 net profit edged up 1.3% to $617M as revenue rose 1% to $31.77B, although EPS of $1.40 missed expectations by $0.06. Membership fees grew 3.2% to $716M and comparable sales rose 5%, including and excluding the negative impact of forex rates. Costco operates 638 warehouses, including 454 in the U.S. and Puerto Rico, and 85 in Canada. The retailer intends to open 11 warehouses before the end of calendar 2013. Shares were -1.3% premarket.

Top Stock News
Alcoa returns to profit and tops forecasts. Alcoa's (NYSE:AA) Q3 earnings beat expectations despite lower aluminum prices, helped by demand from auto makers and cost cutting. EPS came in at $0.11 and net profit was $24M vs a loss of $143M a year earlier, although sales dipped to $5.77B from $5.83B. Alcoa reaffirmed its global aluminum demand growth forecast for 2013, and it sees essentially balanced alumina and aluminum markets. Shares were +3.65% premarket.

Yum slumps following earnings. Yum Brands' shares (NYSE:YUM) dropped 7% in post-market trading after the restaurant operator's FQ3 earnings missed expectations and it gave downbeat guidance as its woes in China continued. EPS came in at $0.85, revenue fell 2.9% to $3.47B and net profit plunged 68% to $152M. Yum's Chinese business is unlikely to return to same-store sales growth in FQ4, with the operations still suffering from the impact of a scandal involving the company's chicken suppliers and avian flu cases in the spring.

AT&T nears sale of towers to Crown Castle. AT&T (NYSE:T) is reportedly close to selling its wireless tower portfolio to Crown Castle (NYSE:CCI) in a deal that could fetch $5B. Any transaction would boost AT&T's finances as it carries out a $14B upgrade, buys back shares in a program that may exceed $11B, and looks at acquisitions in Europe.

Wal-Mart to end JV in India with Bharti. Wal-Mart (NYSE:WMT) is ending its Indian joint venture with Bharti Enterprises after six years. Wal-Mart will buy Bharti's 50% holding in Bharti Wal-Mart, which operates 20 wholesale stores, while Bharti will acquire compulsory convertible debentures that Wal-Mart holds in Bharti-owned Cedar Support Services. The move doesn't come as a total surprise given the speculation that Bharti wanted out. Wal-Mart has held back from further investment and store openings in India due to regulations.

France warns Alcatel-Lucent over job cuts. French Prime Minister Jean-Marc Ayrault has warned Alcatel-Lucent (ALU) that authorities won't approve the company's planned layoffs of 900 staff in the country unless it negotiates a good a deal with unions, and saves as many jobs and sites as possible. Under a law passed in May, companies that want to fire workers have to negotiate with them, with any agreement needing the backing of authorities. Alcatel-Lucent's shares were -7% in Paris at the time of writing.

Investors set to dance to electronic beat of SFX Entertainment. SFX Entertainment (NASDAQ:SFXE), a producer of live events and content focused on electronic music, is set to debut on Nasdaq today after raising $260M in its IPO by selling shares at $13 each, giving the company a market cap of $1.05B. SA contributor IPOdesktop recommends buying into SFX's IPO, "because it has critical mass with high barriers to competition in a growing market."

Samsung unveils phone with curved screen. Samsung (OTC:SSNLF) has launched the Galaxy Round, the world's first mobile phone with a curved display. The handset is more of a "symbolic product," says analyst Nam Dae-jong, as it doesn't have many new unique features, other than its shape. However, he does see the phone as a "step forward for having unbreakable gadgets and flexible devices eventually."

Top Economic & Other News
U.K. industrial output in shock fall. The U.K. recovery may not be as strong as thought, with industrial production surprisingly dropping 1.1% on month in August vs consensus for a rise of 0.4%. The pound took a tumble and was -0.7% at $1.5974 at the time of writing.

Refiners exporting record amounts of fuel. The U.S. energy boom has helped allow refiners to export more fuel than ever, with sales abroad hitting a record 3.8M barrels a day in July, almost 65% above the 2010 level. U.S. refiners are increasingly using locally produced crude that is cheaper than North Sea oil; they can then sell products such as gasoline, diesel and jet fuel to overseas customers at bargain prices. Companies that are benefiting - or looking to do so - include Marathon Petroleum (NYSE:MPC), Valero Energy (NYSE:VLO) and Enterprise Products Partners (NYSE:EPD).


Alpha-Rich Stock Movers and Great Calls
1) On Monday, buysider Renzo Dancourt said there were too many holes in Web.Com's (WWWW) model to support its lofty valuation, with 50% downside possible. The stock is -11.4% since. Read article »
2) On December 21, buysider Yaron Ron Reuven explained how SunOpta's (NASDAQ:STKL) secret ingredients could lead to a multi-bagger opportunity. The stock is +65.4% to date. Read article »

Alpha-Rich Stocks To Watch
1) Charter Financial's (NASDAQ:CHFN) conversion to a thrift bank should help unlock its true earning potential. The stock trades 15% below book and has significant potential beyond that. Read article »
2) Fortress Paper's (OTC:FTPLF) debentures trade at a high yield but are well-covered. With a mill coming online and other key catalysts, the company's fortunes could make the paper a strong investment. Read article »

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Today's Markets:
In Asia, Japan +1% to 14038. Hong Kong -0.6% to 23034. China +0.6% to 2212. India +1.3% to 20249.
In Europe, at midday, London flat. Paris +0.5%. Frankfurt +0.2%.
Futures at 6:20: Dow +0.3%. S&P +0.4%. Nasdaq +0.3%. Crude flat at $103.52. Gold -1.1% to $1310.40.
Ten-year Treasury Yield -1 bps to 2.63%.

Today's economic calendar:
7:00 MBA Mortgage Applications
10:00 Wholesale Trade
10:30 EIA Petroleum Status
1:00 PM Results of $21B, 10-Year Note Auction
2:00 PM FOMC minutes

Notable earnings before today's open: COST, FAST, FDO, PGR, RPM

Notable earnings after today's close: RT, VOXX

See full real-time earnings coverage »

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