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.

The S&P 500 is edging up to the 2,000 mark. After Friday's close, the index would only need a 2.5% gain to boost it to the 2k level. It still may take a little time to advance though, as the index has not made a 1% move in a single session in almost two months. Analysts are expecting the S&P to break the record in the next few weeks.

Asian stocks hit their highest levels in nearly three years today, after the Dow Jones and S&P 500 ended at new records this past Friday. The Nikkei stock average is up by over 0.3%, and Hong Kong up 0.7%. The yuan rose after the People's Bank of China unexpectedly fixed its daily midpoint higher against the dollar for the second straight session, leading to an additional rise in other Asian currencies.

Russian companies are looking to change their U.S. dollar-denominated contracts, to renminbi, Hong Kong or Singapore dollars due to increasing western sanctions. The move shows a Russian shift towards Asia, as tension mounts between Russia, Europe, and the West. Sanctions have led Russian companies to limit their dependence on the western financial markets, and increase the importance of bilateral trade with China.

Former army chief Abdel Fattah al-Sisi was sworn in as president of Egypt yesterday. Sisi is said to have won 97% of the vote in last month's election. Egypt's economy still has a long way to recovery, and a rapidly growing population mixed with widespread poverty should make job creation a number one priority. The forecast for the country's economic growth for the fiscal year beginning July 1 is set at 3.2%.

Tyson Foods appears to have won the battle to buy Hillshire Brands (NYSE:HSH), after offering $7.7B for the company, or $63 a share. The offer is nearly $1B more than the bid cast by Pilgrim's Pride (NYSE:PPC) last week. However, the agreement is still not finalized. Hillshire cannot even make the deal with Tyson (NYSE:TSN) until it terminates a previous merger agreement with Pinnacle Foods (NYSE:PF), paying $163M towards a break-up fee.

Amazon will break into the online payments market today by launching its new role of managing subscription payments - starting with start-ups and other companies. The service will allow more than 240M users to use credit card details stored on Amazon.com to pay for services such as a monthly phone bill or a digital music subscription. PayPal (NASDAQ:EBAY) is set to feel incoming pressure, as Amazon (NASDAQ:AMZN) encroaches on the sector it has long dominated.

SABMiller is seeking a bigger share of the U.S. craft beer market. While one-third of beer volumes sold in the U.S. is premium beer, the category is only 8% of the company's sales. "We’ve got to shift our portfolio to premium," CEO Alan Clark says. SABMiller (OTCPK:SBMRY) is already doing well with many of its new brands, contributing to 25% of last year's growth in the U.S. craft-brew industry.

Credit Suisse has yet another reason to be excited for Alibaba’s (ABABA) IPO - the bank would make a paper profit of $68M if Alibaba lists at a valuation of $121B, due to $50M worth of convertible bonds it purchased in the group in 2012. The $68M gains would be a notch higher than the underwriting fees Credit Suisse (NYSE:CS) would see from the IPO. The bank expects to receive $66M from the offering.

Nestle is looking to dive into high-end chocolate, as a way to increase growth for its confectionery business. The question will be if the company will build the business internally, or look for an outside acquisition. Nestle (OTCPK:NSRGY) sold $8.39B of chocolate in 2013, about 8% of the group's sales. The company has been rapidly expanding its product lines, and CEO Paul Bulcke forecasts the company will be able to achieve 5% organic growth this year.

Kraft raised prices by 10% on its product lines - Maxwell House, Yuban roast and ground coffee brands, as a result of climbing bean costs which went into effect on June 6. Kraft (KRFT) is not alone. J.M. Smucker (NYSE:SJM) has already increased prices on its retail brands Folgers, Dunkin' Donut roast, and ground coffee products by ~9% last week, while reporting lower sales in FQ4 due to pricing actions in the quarter.

United Continental is still facing a series of challenges nearly four years after the deal between United and Continental closed in October 2010. The company faces an outdated fleet, slipping customer satisfaction and unmatched losses compared to its rivals. United Continental (NYSE:UAL) experienced a terrible 2012, after losing a total $723M. Last year, the airline came back with $571M in earnings, but declined again during the first quarter of this year posting a $609M loss.

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Today's Markets:
In Asia, Japan +0.3% to 15124. Hong Kong +0.7% to 23117. China flat at 2031. India +0.7% to 25580.
In Europe, at midday, London +0.2%. Paris flat. Frankfurt +0.1%.
Futures at 6:20: Dow -0.1%. S&P -0.1%. Nasdaq flat. Crude +0.5% to $103.20. Gold +0.2% to $1255.30.
Ten-year Treasury Yield +3 bps to 2.62%

Today's economic calendar:
12:30 TD Ameritrade IMX

Notable earnings before today's open: FGP

Notable earnings after today's close: CASY, PBY, SURG, TPLM

See full real-time earnings coverage »

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