Wall Street Breakfast: GM Testimony, Citigroup Settlement, Immigration Crisis

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.

President Barack Obama has asked Congress for $3.7B in emergency funding to deal with an influx of Central American minors illegally crossing the southern border. GOP leaders say they are unwilling to give the administration a "blank check" without more detailed plans to curb the crisis. Tensions have already been rising in Washington after the President announced he would take executive actions to reform border-control laws on his own.

Indonesian presidential elections are underway, with the latest polls showing a very narrow margin between candidates Joko "Jokowi" Widodo and ex-general Prabowo Subianto. The latter faces a U.S. visa ban for allegations of past human rights violations. The new president will come into office facing key issues including foreign investment, a crumbling currency and a need to cut government fuel subsidies.

Argentina will meet with court appointed debt mediator Daniel Pollack for the second time this week to discuss its dispute with holdout investors. The country is trying all it can to avoid a debt default by July 30. Benchmark Discount bonds rose 1.6% to 88.65 on Argentina's local over-the-counter market, while Par bonds were up 1.3% to 49.90. Traders cited optimism over the talks as the cause of the increase.

After ruling out a need for a 3rd bailout, Greece is now looking to issue its second sovereign bond since April. The new offering further marks Greece's return to the financial markets after a four-year shut out, although the country still faces about a $16B funding gap in 2015. The bond will likely be a three-year issuance with a possible interest rate of just under 3% to raise €2.5-3B.

Citigroup may pay approximately $7B to settle an investigation by the DOJ which accuses the former of defrauding investors with billions of dollars of MBSs prior to the financial crisis. The settlement talks broke down last week after Citi (NYSE:C) offered less than $4B to settle, while the Department of Justice demanded $10B+. Details of the settlement are now expected to be announced as early as next week.

Apple has filed a patent for products housed entirely in glass to be used to hold the internals of a mobile device or to house a TV or monitor. One of the biggest challenges with the new design is to make it both lightweight and durable. A video leaked Monday showed Apple's (NASDAQ:AAPL) newest glass creation - the virtually indestructible sapphire glass screen of the iPhone 6.

America Movil plans to divest some Mexican assets into a new independent company due to increasing regulatory pressure. The company also plans to separate its wireless towers from its Mexican business and renounce its rights to acquire Dish Mexico. The move comes after Mexico approved a new telecom reform bill that would impose stiff penalties on America Movil (NYSE:AMX) if it kept its combined wireline/mobile market share above 50%.

The Senate has now called upon GM execs to testify why it took the company nearly 11 years to recall cars produced with a faulty ignition switch. GM (NYSE:GM) CEO Mary Barra and General Counsel Mike Millikin will testify before a subcommittee on July 17. The Senate is expected to investigate the issue in depth, compared to the House which held its hearing last month.

Alcoa's Q2 earnings and revenues beat expectations, driven by strength in its engineered products and primary metals businesses. Alcoa (NYSE:AA) posted a Q2 operating profit of $97M vs. a $32M in the year-ago period; average realized aluminum prices rose 2.4%. Q2 operating income in Alcoa's engineered products segment rose 5.7% Y/Y to $204M amid higher volumes across all businesses. The company also reaffirmed its 2014 global aluminum demand growth forecast of 7%.

Strict British takeover rules have forced AbbVie (NYSE:ABBV) to retract comments made yesterday by CEO Richard Gonzalez. In reference to the company's takeover bid for Shire (NASDAQ:SHPG), Gonzalez announced that he believed major Shire investors were "generally supportive of this transaction." However, U.K. Takeover Panel rules state that a company cannot declare this claim unless it has it in writing from shareholders. AbbVie raised its offer for Shire to $51.3B yesterday.

Pfizer's long-running lawsuit pertaining to its pain-relieving drugs Celebrex and Bextra has been dismissed prior to its scheduled trial in September. Pfizer (NYSE:PFE) was accused of misleading investors about the safety of the drugs, although the case was thrown out after plaintiffs failed to procure evidence relating to the danger and damages of the painkillers.

Boeing has finalized a $56B order for 150 777X planes from Dubai's Emirates airline. Included in the deal are purchase rights that Emirates could exercise for an additional 50 airplanes - which would bring the value of the order to $75B. The new Boeing (NYSE:BA) acquisition deals a harsh blow to Airbus (OTCPK:EADSF), after Emirates scrapped a $16B purchase for 70 Airbus A350s in June, and was looking to replace the order.

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Today's Markets:
In Asia, Japan -0.1% to 15303. Hong Kong -1.6% to 23176. China -1.2% to 2039. India -0.5% to 25445.
In Europe, at midday, London -0.4%. Paris -0.1%. Frankfurt +0.1%.
Futures at 6:20: Dow flat. S&P flat. Nasdaq +0.1%. Crude flat at $103.42. Gold +0.6% to $1323.80.
Ten-year Treasury Yield +2 bps to 2.57%

Today's economic calendar:
7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
1:00 PM Results of $21B, 10-Year Note Auction
2:00 PM FOMC minutes

Notable earnings before today's open: MSM

Notable earnings after today's close: HELE, WDFC

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