Wall Street Breakfast: Brent Falls, AbbVie Pushes Takeover, Amazon Lawsuit

by: Wall Street Breakfast
Wall Street Breakfast
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Brent futures continue to fall, following a decrease in Libyan supply fears. Negotiations concluded yesterday to release two captured terminals, freeing up additional exports. Brent futures hit a new three-week low this morning, falling below $111 a barrel. Additionally, U.S. crude stocks dropped by more than expected last week, falling 3.2M barrels, compared to a previous estimated decrease of 2.2M.

The Fed confirmed yesterday that it will not raise interest rates, in order to keep a safeguard on avoiding future financial crises. Fed chairwoman Janet Yellen issued the forceful comments at an IMF meeting in Washington, and also stated she first favors regulation and supervision to make the financial system more resistant against potential disturbances.

The escalating violence is Iraq and Syria is disrupting trade routes all across the Middle East, and reversing the region's past decade of growth. Supplies have either been interrupted, or have needed to be re-routed, increasing costs in any scenario. The threats to the region's economy follow Iraqi Prime Minister al-Maliki's priority to battle the country's militant extremism over finding a solution to sectarian tensions.

Amazon is now facing a similar lawsuit to Apple's (NASDAQ:AAPL) January court case, after the Federal Trade Commission demanded it pay a fine for deceptive billing practices, causing millions of dollars in unintentional app purchases. U.S. regulators are accusing Amazon (NASDAQ:AMZN) of charging users for additional services through registered credit cards, after an app is downloaded for free. Earlier this year, Apple agreed to refund customers at least $32.5M and change its billing practice.

Volkswagen is busy preparing a takeover bid to offer U.S. truck maker PACCAR (NASDAQ:PCAR) next year, Reuters reports. The report surfaced after Daimler Trucks Chief Wolfgang Bernhard told the details to analysts at Bernstein Research, stating that multiple sources had informed him of the proposed Volkswagen (OTCPK:VLKAY) takeover.

Despite its massive recalls in recent months, GM's (NYSE:GM) U.S. market share is on the rise, climbing 18.8% in June, from 16.9% in January. To continue its sales offerings, GM is now ramping ups its technology game, and aims to include a Wi-Fi option for every 2015 model year vehicle purchase. The high-speed Internet service will allow for up to seven device connections, and looks to rival Ford's Sync which offers similar features.

AbbVie CEO Richard Gonzalez has been holding discreet meetings with Shire (NASDAQ:SHPG) shareholders in London this week, in another pursuit of a $46B takeover. AbbVie (NYSE:ABBV) is looking to buy Shire mainly as a tax inversion, but also to diversify its drug portfolio. The company made no mention of increasing its current bid, but under British takeover rules, it has until July 18 to make another offer or walk away.

Alcoa has replied to an SEC inquiry regarding newly proposed warehousing rules, warning premiums will likely shift if the reforms are passed. Aluminum producers and Alcoa (NYSE:AA) earn a premium above the London Metal Exchange's benchmark price from buyers needing an actual physical delivery. Some premiums have already hit record highs this year, despite declining benchmark prices.

Paramount Group, one of the largest privately owned real estate companies in the U.S., is considering a possible upcoming IPO, which would value the company at up to $15B. The city office property owner is currently working with BofA to explore different alternatives, but should the company go for the IPO, it would likely amount to the second-largest U.S. real estate public offering - by raising around $2B.

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Today's Markets:
In Asia, Japan -0.1% to 15348. Hong Kong -0.1% to 23531. China +0.2% to 2063. India -0.1% to 25824.
In Europe, at midday, London +0.5%. Paris +0.5%. Frankfurt +0.6%.
Futures at 6:20: Dow +0.1%. S&P +0.1%. Nasdaq +0.1%. Crude -0.4% to $104.505. Gold -0.6% to $1323.60.
Ten-year Treasury Yield flat at 2.63%

Today's economic calendar:
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
8:30 International Trade
8:30 Non-farm payrolls
9:00 PMI Services Index
10:00 ISM Non-Manufacturing Index
10:30 EIA Natural Gas Inventory
11:00 Global Composite PMI
11:00 Global Services PMI
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

NYSE close at 1:00 PM

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