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.

Global stocks were steady ahead of the FOMC announcing its latest policy decision. With the Fed expected to taper some more and abandon its 6.5% unemployment threshold for considering rate hikes, punters are focusing on what would push the Fed to finally raise rates. Writing on Reuters, Anatole Kaletsky reckons Janet Yellen has the chance to "transform" the way we think about economics. So no pressure then.

Japan's trade deficit narrowed to ¥800.3B ($7.9B) in February from a record ¥2.79T in January but exceeded consensus of ¥590B. Import growth slowed to 9% from 25% while exports rose 9.9%. Japan has now experienced a record 20 consecutive trade deficits, and while the figure may have peaked, few economists expect the country to turn a surplus any time soon.

The yuan was back below 6.20 to the dollar at the time of writing after briefly breaching a level that Morgan Stanley has called a "danger zone." That's because a sustained period under 6.20 could cause losses on billions of dollars of hedging products that Chinese companies have taken out as part of a bet on the renminbi's appreciation. The problem is that the yuan has been going the other way lately.

Toyota has reportedly agreed to pay over $1B to settle a criminal probe over accusations that it misled authorities about the unintended acceleration of its cars in the late 2000s, which has been linked to five deaths and led to a massive recall. The fine for Toyota (NYSE:TM) would be one of the largest ever imposed on a car-maker. GM (NYSE:GM) is presumably watching with nervous interest.

Oracle's shares fell 3.5% in post-market trading after the company's FQ3 earnings missed expectations despite net profit edging up 2% to $2.56B. Adjusted EPS was $0.68 and revenue increased 3.7% to $9.3B. Oracle (NASDAQ:ORCL) provided guidance that was in line with consensus, but still failed to convince the Street that it's doing more than tread water. "They still have heavy lifting ahead in order to declare this a turnaround story," says FBR's Daniel Ives.

Is Sony back? The Japanese giant has unveiled a prototype virtual-reality headset called "Project Morpheus" for the PlayStation 4 that would immerse players in the games they are playing. The PlayStation has been a winner for Sony (NYSE:SNE), selling over 6M units so far, but other divisions have been struggling. Could the headset help restore the company to its former glory?

Adobe has continued to please investors with its transition to cloud computing as FQ1 earnings topped consensus, with EPS coming in at $0.30. Revenue slipped 1% to $1B but Adobe (NASDAQ:ADBE) added 405,000 subscribers for its Creative Cloud Web online software, taking the total to 1.84M. "Adobe has reinvented itself," says analyst Kirk Adams. "This is nothing short of phenomenal."

ING intends to cut its stake in ING U.S. (NYSE:VOYA) to 45% from 57% by selling 26.5M shares in a public offering and another 7M to the subsidiary. The transactions would be worth $1.2B based on ING U.S.'s closing price yesterday of $36.30. ING (NYSE:ING) plans to use the proceeds to repay debt.

Och-Ziff is under investigation over its activities in Libya before the ouster of Muammar Gaddafi, with the hedge fund warning that the probe could hurt its results. The SEC is looking at whether Och-Ziff (NYSE:OZM) made inappropriate payments to officials for access to the Libyan Investment Authority sovereign-wealth fund, while the Department of Justice is scrutinizing the firm's use of "placement agents" to make deals.

JPMorgan has reportedly agreed to sell its commodities-trading operations to Swiss trading house Mercuria Energy Group. The price isn't clear, although JPMorgan (NYSE:JPM) valued the assets at $3.3B in October. The final amount could depend on the valuation of large stockpiles of oil and metals the bank holds.

Fortress Investment Group has extended its involvement in the world of Bitcoin by acquiring a stake in Pantera Bitcoin Partners, a hedge fund of around $150M that buys and sells virtual currencies. Fortress' (NYSE:FIG) investment comes despite the company making a small paper loss on Bitcoin last year and the recent collapse of a major exchange following a massive theft.

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Today's Markets:
In Asia, Japan +0.4% to 14463. Hong Kong -0.1% to 21569. China -0.2% to 2022. India flat at 21835.
In Europe, at midday, London -0.2%. Paris -0.1%. Frankfurt +0.2%.
Futures at 6:20: Dow +0.1%. S&P +0.1%. Nasdaq +0.2%. Crude flat at $99.66. Gold -0.9% to $1346.80.
Ten-year Treasury Yield flat at 2.68%.

Today's economic calendar:
7:00 MBA Mortgage Applications
8:30 Current Account
10:30 EIA Petroleum Inventories
2:00 PM FOMC Announcement
2:30 PM Chairman Press Conference

Notable earnings before today's open: ATU, FDX, GIS, KBH, VRA

Notable earnings after today's close: CTAS, FNV, GES, JBL, XONE

See full real-time earnings coverage »

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