Wall Street Breakfast: Must-Know News

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 |  Includes: AIG, AMBC, BBRY, DE, DELL, DG, EXC, GLD, GOOG, HPQ, PAR, QQQ, SPY, USO
by: Rachael Granby
Rachael Granby
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.

  • Regulators reject AIG's sale of Taiwan unit. Taiwanese regulators rejected AIG's (NYSE:AIG) planned $2.15B sale of its Taiwan life insurance unit to Primus Financial and China Strategic, saying the deal failed to comply with regulations on mainland investment. Regulators also cited the lack of insurance experience on the part of Primus and China Strategic. Though some analysts said the decision was not a surprise after ten months of regulatory delay, it still leaves AIG with the uncertainty of facing another auction. Alternatively, AIG may be able to reach a deal with a group of investors led by a former Taiwanese diplomat who said they are putting together a bid in order to "save" the unit from mainland ownership. China Strategic will be able to appeal the decision for 30 days.
  • Exelon buys Deere's wind energy business. Exelon (NYSE:EXC) agreed to buy Deere's (NYSE:DE) wind energy business in a deal worth a total of $900M (a purchase price of $860M with a provision for up to $40M upon commencement of construction on the advanced development projects). In its statement, Exelon said "not only does this acquisition add value for Exelon shareholders, providing incremental earnings in 2012 and cash flows in 2013, but it also is one more way to implement a clean energy future."
  • Hedge funds move to block Ambac payments. A group of hedge funds has filed a motion to prevent Ambac Financial Group (ABK) from moving assets from Ambac Assurance Corp., its main operating business. The plaintiffs hold more than $1B in mortgage securities or other debt insured by Ambac Assurance and want to prevent Ambac Financial from receiving dividends from the unit until their claims have been paid in full. The group also alleges that $230M in dividend payments made in 2008-2009 were fraudulent because they took place at a time when the company's finances were rapidly deteriorating. Ambac Financial, which recently said it may file for bankruptcy protection, wasn't available for comment.
  • Gov't proposes new grading system for cars. The Environmental Protection Agency and the Transportation Department jointly proposed new rules that would require passenger cars to be labeled with a grade from A to D depending on the vehicle's fuel efficiency and emissions. Electric cars and plug-in hybrids, for example, would be the only vehicles that could receive an A-minus, A or A-plus, while SUVs would get a C or C-minus. It would be the largest shake-up to car labeling rules in the last 30 years, and has left critics disgruntled that the government is trying to legislate its own value judgments about vehicles.
  • Dell seen as likely to abandon 3Par pursuit. Dell (NASDAQ:DELL) has until tomorrow to decide whether it wants to match H-P's (NYSE:HPQ) latest bid for 3Par (NYSE:PAR) but analysts think the rich valuation will prompt Dell to bow out of the heated bidding war. Both firms see the strategic advantage of storage in cloud computing architecture, so the issue will likely simplify to the size of H-P's balance sheet ($115B in annual revenue) and what it can afford to pay vs. the size of Dell's balance sheet ($53B). Dell said it's still assessing the situation.
  • Google stacks the deck on social networking. Google (NASDAQ:GOOG) acquired Social Deck, a producer of social games and platform technology for mobile devices, as the search engine giant works to bolster its social-networking efforts. Terms of the deal weren't disclosed. Google recently acquired Angstro and Slide, both of which focus on social networking.
  • Whispers the PBOC chief has defected. Rumors have been flying furiously in the last 24 hours that Zhou Xiaochuan, head of the People's Bank of China, may have defected, possibly coming to the U.S., because a $430B loss on U.S. Treasury bonds may prompt the Chinese government to punish some individuals in the PBOC. The Hong Kong-based news agency that initially published the story has since recanted, but that has only added to the rumors, as has the fact that Zhou’s name has been blocked from internet search engines in China. A defection, if true, could have significant implications for Chinese monetary policy and for Sino-U.S. ties which have been strained recently.
  • RIM wins Indian reprieve. Research In Motion (RIMM) has caved to Indian demands that the government be allowed to access secure BlackBerry data, and will make that information available beginning tomorrow. As a result, India has promised to delay by 60 days its decision about whether to shut down BlackBerry services as it tests the new monitoring solution. Failure to act would have led to disrupted service for more than 1M users and halted RIM's efforts to expand in the world's No. 2 cellphone market, but privacy critics are likely to make their opposition heard loud and clear and the move could damage BlackBerry's popularity with businessmen and lawmakers. Premarket: RIMM -1.4% (7:00 ET).
  • IMF rolls out precautionary credit line. The IMF is creating a new credit line that is expected to serve as a precautionary "insurance policy" for developing countries with sound fundamentals that may not meet the more stringent requirements of the IMF's 2009 flexible credit line. The aim is to provide these countries with financial help before they reach a crisis point.
  • India's economy rockets ahead. India's economy expanded at the fastest pace in over two years, growing 8.8% in Q2 from a year earlier. The rapid growth may force officials to raise interest rates, even as Japan steps up its monetary stimulus and the U.S. signals it stands ready to take additional steps as necessary to prevent a second recession.

Today's Markets

  • In Asia, Japan -3.5% to 8824. Hong Kong -1.0% to 20536. China -0.5% to 2639. India -0.3% to 17971.
  • In Europe, at midday, London -0.9%. Paris -1.1%. Frankfurt -0.7%.
  • Futures: Dow -0.2%. S&P -0.3%. Nasdaq -0.3%. Crude -1.2% to $73.83. Gold -0.3% to $1235.70.

Tuesday's Economic Calendar

Seeking Alpha's Market Currents team contributed to this post.


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