Wall Street Breakfast: Google's Nest Apps, Argentine Court Stay, E-cigarette Craze

by: Wall Street Breakfast
Wall Street Breakfast
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After Argentine President Cristina Fernandez switched her policy on Friday of not negotiating with holdout creditors, Argentina is now looking for a court stay to avoid default. Without the stay, Argentina will not be able to fulfill the June 30 coupon payments on its restructured bonds, until it pays the $1.3B it owes to holdout creditors who refused to take part in Argentina's 2002 debt default restructurings.

Iran is lobbying to get HSBC to process its humanitarian trade transactions, which the bank froze due to the scope of international sanctions. Although the country did obtain some sanction relief last November after agreeing to downsize its nuclear program, banks are growing increasingly worried over stepping out of line. The move follows a potential $9B fine imposed on BNP Paribas (OTCQX:BNPQF), which is being investigated for avoiding sanctions between 2002 and 2009.

The $96B tobacco bond market is continuing its decline, as most Americans have quit smoking at a faster rate than estimated in the previous decade - when most of the bonds were sold. E-cigarettes have been a major factor to the recent decrease, along with prior declines due to public smoking bans and new excise taxes. A forecast last month from Moody's Investors Service estimates 65-80% of tobacco bonds are headed toward default.

Amazon and Warner Bros. are nearing a solution to the pricing dispute which inflamed the two the past few weeks. Amazon (NASDAQ:AMZN) will now again allow Warner Bros. (NYSE:TWX) movie preorders, after withholding the company's releases as a bargaining chip. Amazon has previously used this negotiating tactic against the Hachette Book Group (OTCPK:LGDDF), by blocking customers' preorders and delaying shipments of the publisher.

Google's Nest is now permitting other companies and developers to create third-party apps for its smart devices. Nest was acquired by Google (GOOG, GOOGL) for $3.2B this past January, and is the maker of home automation products including smart thermostats and smoke detectors. More than 5,000 developers have already expressed interest in creating the apps. On Friday, Nest purchased Dropcam for $555M.

Russia's Gazprom says that gas flow to Europe via Ukraine is stable, after a pricing battle led to last week's cut off of Ukrainian Gazprom (OTCPK:OGZPY) supply. Rebel leaders in Ukraine have also agreed to join a ceasefire agreement with the newly elected Ukrainian government until Friday, as separatists try to negotiate in a first round of peace talks.

Avon is cutting another 600 jobs, as financial bumps continue to plague the company. Avon (NYSE:AVP) reported losses in five of the past six quarters, and posted an 11% Y/Y Q1 sales drop, along with a 6% drop in units sold. The cuts are expected to largely take place "in the corporate organization and North America business unit," as it sets a target of slashing annual costs by $400M.

Sprint is still facing troubles, losing 2.5M customers in the last five quarters, and lagging behind in service and product offerings. Problems at the company date back to its 2005 merger with Nextel, however, in the past three years it has been upgrading its cell sites nationwide. Sprint (NYSE:S) will also now offer customers a 30-day trial period on its updated network. Sprint's difficulties are also signalling a possible future merger between it and T-Mobile (NASDAQ:TMUS).

Abbott Labs has agreed to acquire Russian pharmaceutical manufacturer Veropharm via purchasing Limited Liability Company Garden Hills, a holding company that owns a controlling interest in Veropharm. The deal is expected to fetch up to $495M, and will depend on the size of Garden Hills' stake at the time of closing. Abbott's (NYSE:ABT) acquisition will close in Q4, to add $150M in sales for 2015.

After recalling over 20M cars this year, and facing lawsuit after lawsuit regarding its faulty ignition switches, General Motors (NYSE:GM) has named Cathy Clegg as new Vice President for its North American manufacturing division. Clegg will be appointed to the role starting July 1, and will be responsible for 55 manufacturing facilities across the U.S., Canada and Mexico.

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Today's Markets:
In Asia, Japan +0.1% to 15376. Hong Kong +0.3% to 22881. China +0.5% to 2034. India +1.35% to 25369.
In Europe, at midday, London -0.3%. Paris +0.1%. Frankfurt flat.
Futures at 6:20: Dow -0.2%. S&P -0.3%. Nasdaq -0.2%. Crude is flat at $106.16. Gold +0.5% to $1324.30.
Ten-year Treasury Yield -3 bps to 2.6%

Today's economic calendar:
7:45 ICSC Retail Store Sales
8:05 Fed's Plosser: Monetary Policy and Economic Outlook
8:55 Redbook Chain Store Sales
9:00 FHFA House Price Index
9:00 S&P Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 State Street Investor Confidence Index
10:00 Richmond Fed Mfg.
10:00 New Home Sales
1:00 PM Results of $30B, 2-Year Note Auction

Notable earnings before today's open: CCL, WAG

Notable earnings after today's close: APOG

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