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.

Asian stocks start the week on a cautious note as the tense situation in Ukraine stays in focus. A gun battle in the eastern part of Ukraine over the weekend has rolled back some of the optimism from last week on progress over the efforts to "de-escalate" the crisis. The Shanghai Composite Index fell to a two-week low amid concerns that new potential listings could dilute the market. Stocks in Japan slipped slightly and the yen dropped against the dollar after Japan posted its largest trade deficit of the current fiscal year ending in March on higher energy import bills. The greenback rose to 102.71 yen to mark its highest level since April 8. The major European exchanges are closed today for Easter Monday.

Politicians in Europe passed new legislation that requires companies to disclose information on how they address environment, social, and governance issues. Statements by firms on their policies on bribery and corruption matters are part of the new law. The legislation still needs to be passed by member states before going into effect.

The Conference Board's read on economic activity should show an increase for March, according to a poll of economists. The consensus estimate of economists is for a 0.7% gain, a 20 bp improvement over February's mark.

China and Japan bickered again over territory during the weekend. The Shanghai Maritime Court took hold of a vessel owned by Japanese shipping firm Mitsui O.S.K. Any significant escalation of tension between the two nations could put Japanese automakers (OTCPK:NSANY, TM, HMC, OTCPK:MZDAY, OTCPK:SZKMY, OTCPK:FUJHY, OTCPK:MMTOF) at risk of seeing demand in China suffer. A visit by Japanese Prime Minister Shinzo Abe to the Yasukuni Shrine won't help the mood in China.

Earnings season picks up steam this week with Netflix (NASDAQ:NFLX), Kimberly-Clark (NYSE:KMB), and Halliburton (NYSE:HAL) all slated to report today. Analysts expect Kimberly-Clark to show flat profit growth for Q1 with EPS of $1.48, while Halliburton is tapped to see a $0.04 gain this year to $0.71. Netflix is forecast to show EPS of $0.83 for Q1, although it will be the firm's subscriber count and guidance for sub growth which sets the tone for post-earnings trading. BMO Capital anticipates the streaming giant added 2.6M new subscribers in the U.S. during Q1.

Tesla Motors will start making deliveries of Model S vehicles in China this week to fulfill orders which have been piling up since August. The entry of the Model S in China comes with the electric vehicle industry in the nation at a crossroads. Though pollution in some large metropolitan cities is as bad as ever, EV infrastructure is still in its infancy in key regions. Tesla's (NASDAQ:TSLA) Model S is priced at 734K yuan ($118K) in China with shipping charges, taxes, and import duties pushing the electric vehicles deep into the luxury segment.

All eyes are on General Motors this month to see if there will be an impact on its sales from the large ignition switch recall which has dominated auto industry headlines. GM execs at the Beijing Auto Show say sales trends have been strong, despite the negative publicity following the recall and ongoing scrutiny from regulators and Congressional committees. However, an early read from J.D. Power indicated that sales of GM vehicles were down over 6% Y/Y during the first five days of the month. The automaker will report April U.S. sales on May 1.

General Mills decided to give up its fight to strip consumers of their right to sue the company. The food seller had tried to slip in a notice on its website which would have forced consumers with a dispute to enter arbitration or a round of negotiations - instead of filing a lawsuit. After seeing a considerable amount of backlash over the harsh terms, General Mills (NYSE:GIS) released an apology for having started down the path of narrowing the legal options of consumers.

Kraft Foods will recall 96K pounds of hot dogs due to packaging labels which lack accurate information on the ingredients of the product. The problem arose because some packages of Oscar Mayer Classic Wieners may contain the Kraft's (KRFT) Classic Cheese Dogs by mistake. The USDA pointed out to the company that due to the issue consumers weren't properly warned that Oscar Mayer Classic Wieners might contain pasteurized milk which is a known allergen.

Charter Communications is in talks to acquire 3M subscribers from Comcast (NASDAQ:CMCSA) in a deal that could be worth $18B-$20B. Charter (NASDAQ:CHTR) could buy the subscribers through a straight purchase or Comcast could create a spin-off in which Charter would acquire a large minority holding. Other cable firms also are interested in obtaining the Comcast subscribers, according to reports. Comcast has already committed to selling the subscribers in order to appease regulators fretting about the impact of its $45.3B takeover of Time Warner Cable (TWC).

Pfizer took a flyer at acquiring AstraZeneca (NYSE:AZN) with a tentative offer to land the company in a deal worth over $100.7B. Though AstraZeneca has turned the offer down, Pfizer (NYSE:PFE) could make a fresh proposal. Pfizer is looking to do something with a $70B cash pile it has accumulated overseas; repatriating the money to the U.S. so it could be distributed to shareholders would land the company with a massive tax bill.

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Today's Markets:
In Asia, Japan -0.03% to 14512. Hong Kong +0.3% to 22760. China -1.5% to 2065. India +0.6% to 22760.
In Europe, several markets are closed for the Easter holiday.
Futures at 6:20: Dow +0.1%. S&P +0.1%. Nasdaq +0.1%. Crude -0.1% to $104.20. Gold -0.5% to $1287.69.
Ten-year Treasury Yield - 2bps to 2.70%.

Today's economic calendar:
8:30 Chicago Fed National Activity Index
10:00 Leading Indicators

Notable earnings before today's open: HAL, HAS, KMB, LII, RCI

Notable earnings after today's close: BXS, BOH, BRO, CDNS, CE, CYS, DRWI, GLF, HSTM, HLX, HXL, ICUI, NFLX, RMBS, RCII, UMPQ, WCN, WAL, ZION

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