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 plunges after AT&T rules out bid. Vodafone's (NASDAQ:VOD) shares slumped 4% premarket after AT&T (NYSE:T) said in a statement it has no intention of making an offer for the U.K. telecom operator. AT&T's comments follow much speculation that it was interested in Vodafone after the latter agreed to sell its 45% stake in Verizon Wireless to Verizon (NYSE:VZ) for $130B last year. AT&T's statement means that it can't make an offer for Vodafone for the next six months unless certain conditions are met.

Liberty seals the deal to buy Ziggo. Liberty Global (NASDAQ:LBTYA) has agreed to acquire the 70% or so of Ziggo that it doesn't own in a cash and stock deal that values the Dutch cable group at €10B ($13.7B). The purchase adds to Liberty's expansion in Europe after it bought the U.K.'s Virgin Media for $16B last year. Ziggo is the Netherlands' largest provider, while Liberty operates in the country through its UPC Broadband unit. The combined company will have 4M customers, although one wonders whether the deal won't face antitrust hurdles.

Japanese trade deficit almost doubles to hit record. Japan's trade deficit nearly doubled to a new high of ¥11.5T ($113B) in 2013, pulled upwards by the weak yen and increasing energy imports because of a shutdown of the country's nuclear industry. Japan enjoyed surpluses for three decades, a trend that came to an end in 2011 after the Fukushima meltdown. "It's hard to anticipate when Japan can emerge from trade deficits at this point," says economist Takeshi Minami. High energy costs could discourage companies from having production centers in Japan "and undermine Abenomics."

Top Stock News
Asian, European shares slump. Asian and European shares have tumbled as investors continue to worry about the Chinese economy following poor PMI data on Thursday and about the effect of Fed tapering. Emerging markets are front and center in the sell-off amid country specific trouble in Turkey, Argentina and Thailand in particular. Money has been flowing into havens such as gold and the yen, which was 102.65 to the dollar at the time of writing vs 104.71 on Thursday morning. As is the way, that has sent the Nikkei spiraling.

Samsung in IP deals with Google, Ericsson. Samsung (OTC:SSNLF) and Google (NASDAQ:GOOG) have signed a global patent-licensing agreement to share existing IP and patents filed within the next 10 years. Samsung has also inked a multi-year licensing deal with Ericsson (NASDAQ:ERIC) that will end all the companies' IP-related legal disputes. Samsung will pay an initial sum and then royalties. The agreement will affect Ericsson's Q4 sales by 4.2B Swedish kroner ($652M) and its net income by 3.3B kroner.

Vodafone eyes Spain's ONO - report. Vodafone (VOD) is in talks to acquire Spain's Grupo Corporativo ONO before the cable operator carries out an IPO, Bloomberg reports. Any deal for ONO, which one analyst says could be worth an estimated €6.4B ($8.7B) including debt, would add to Vodafone's acquisition of other cable providers in Europe such as Kabel Deutschland in Germany.

Apple's earnings seen rising; sales to pass $57B. Apple's (NASDAQ:AAPL) FQ1 earnings are due out after the bell, with analysts estimating that the company's EPS rose to $14.09 from $13.81 last year and that revenues increased 5.4% to $57.46B. SA author Almario Alexej Alcaraz reckons Apple will beat the Street. "Its high-margin-only policy is still viable and will likely stay this way for at least two more years," Alcaraz writes.

Apple building mobile-payments business - report. Apple (AAPL) is working to expand its mobile-payments service so that its devices can enable users to buy goods and services, the WSJ reports. With iTunes having 575M registered users, the potential looks rather interesting and the service could pose a serious threat to the likes of PayPal (NASDAQ:EBAY) and Square.

Tata MD Slym falls to death in Bangkok. Tata Motors' (NYSE:TTM) Managing Director Karl Slym, who headed the company's Indian operations, has been killed after falling from a room on the 22nd floor of a hotel in Bangkok in what Thai police suspect is a suicide. Slym was hired in 2012 to revive Tata's falling sales and market share. Analyst Anil Sharma says Slym's death comes before his efforts have borne fruit. "We should be able to see the results in a year or two," Sharma says.

BofA probed over trading practices. The Department of Justice and the Commodity Futures Trading Commission have investigated Bank of America (NYSE:BAC) for possible improper trading by carrying out futures trades for its own purposes before executing large orders for clients. The probes appear to shed light on an FBI bulletin in which the agency said it suspects traders at two unnamed banks of conspiring to manipulate rates on major orders from Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC), and of front running the government-sponsored enterprises (GSEs) in the markets for interest-rate swaps.

Google to buy U.K. AI company for $400M. Google (GOOG) has agreed to acquire British artificial-intelligence company DeepMind Technologies, which develops general-purpose learning algorithms for applications that include simulations, e-commerce and games. Terms of the deal weren't disclosed, although the Web site Re/code said Google is paying $400M. The purchase comes after Google last year announced a partnership with NASA to launch the Quantum Artificial Intelligence Lab.

Top Economic & Other News
German business optimism continues to strengthen. The Ifo institute's business climate index has increased to its highest level since July 2011, rising to 110.6 in January from 109.5 in December and topping consensus of 110. The current-situation reading rose to 112.4 from 111.6 and the expectations print climbed to 108.9 from 107.4. Ifo economist Klaus Wohlrabe says the survey suggests that the economy could grow by 0.5%, nicely above the 0.25% projected for Q4.

Obama to increase use of exec authority for economic plans. President Obama is expected to say in his State of the Union speech tomorrow evening that he plans to increase his use of executive authority to implement his economic and other proposals. Obama intends to take unilateral action and bypass Congress on issues such as infrastructure development, job training, climate change and education.

Argentine peso on watch following loosening of currency controls. Having slumped more than 20% over recent days, the Argentinian peso could fall further today after the government said on Friday that it would end a two-year-old ban on Argentines buying foreign currency. That will allow the country's citizens to purchase dollars, which they are obsessed with following crises such as the one in 2002. However, the Central Bank, the main source of foreign exchange, has reserves of less than $30B.

Top Ideas: Movers and Great Calls
1) On December 11, Valuable Insights and IP expert Markman Advisors spelled out the bull case for patent play Crossroads Systems (NASDAQ:CRDS), respectively detailing the stock's fundamental and legal potential. Shares are +43.3% since. Read first article » Read second article »
2) Micro & Small Cap Reporter recommended shares of Liberator Medical Holdings (NYSEMKT:LBMH) in late November, citing a pending up-listing, impressive fundamentals, and recurring revenue as catalysts for triple-digit upside. The stock is +108.9% to date. Read article »

Top Ideas To Watch
1) Biotech bulls have left one company behind: Conatus Pharmaceuticals (NASDAQ:CNAT), whose liver-failure treatment could lead to 100% upside, writes Stephen Simpson, CFA. Read article »
2) Structured-settlement provider JGWPT Holdings (JGW) is the dominant player in its niche, has limited risk and room to grow for decades, says Ashleigh Rogers. JGWPT also trades far below industry multiples. Read article »

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

Today's Markets:
In Asia, Japan -2.5% to 15006. Hong Kong -2.1% to 21976. China -1% to 2033. India -2% to 20707.
In Europe, at midday, London -1.5%. Paris -0.3%. Frankfurt -0.5%.
Futures at 6:20: Dow flat. S&P +0.2%. Nasdaq +0.1%. Crude +0.2% to $96.79. Gold +0.4% to $1269.10.
Ten-year Treasury Yield +2 bps to 2.75%.

Today's economic calendar:
10:00 New Home Sales
10:30 Dallas Fed Manufacturing Outlook

Notable earnings before today's open: AEP, AUO, CAT, NVR, RCL, RGS, ROP, RYN

Notable earnings after today's close: AAPL, ASH, CMRE, CR, GGG, OLN, PCL, RCII, RMBS, SANM, SIMO,STLD, STM, STX, SWFT, X, ZION

See full real-time earnings coverage »

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