Wall Street Breakfast: Bank Lawsuits, Crude Sinks, Middle East Tension

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 |  Includes: AMX, APPCQ, BAC, BNGLF, BNPQF, CNDUF, CRARY, CRZBF, CRZBY, DB, GOOG, GOOGL, IBM, KKR, OCN, QQQ, SCGLF, SGLOF, SPY, SSNGY, SSNLF, UNCFF
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.

Economy
Brent crude fell for a ninth straight session this morning following weak gasoline demand in the U.S. The drop marks its longest losing streak in four years, falling 14 cents to $108.14 a barrel at 3:45 GMT. U.S. crude tumbled for a tenth consecutive session, down 48 cents below Wednesday's close at $101.81 a barrel. The front-month price is on track to display its longest stretch of losses since July 1984.

Tensions are mounting in the Middle East, after Gaza militants fired new M-302 rockets deeper into Israel, armed with a range of 93 miles. Israel has ramped up its air strike campaign as a result, targeting 486 militant positions including rocket-launching sites and smuggling tunnels. The newly acquired rockets put about two thirds of Israel's 8M people into Gaza's range of fire, increasing pressure to neutralize any threats.

The Fed has agreed to end its bond-buying program in October. The new definitive closing date marks the end of the quantitative easing and controversial central-banking approach. The plan will decrease bond purchases in three increments until October, when the last $15B reduction is scheduled.

The results of Indonesia's presidential election will remain uncertain for at least ten days, as 130M votes still need to be hand-counted. Presidential candidates Widodo and Subianto have both claimed victory in preliminary tallies. Indonesian stocks soared as much as 2.8% in early trading after foreign investors bought $263M worth of stock - nearly four times the daily average of foreign buying. The rupiah also gained, hitting a two-month high against the dollar.

Stocks
Commerzbank is now expected to pay between a $600-$800M settlement for its money transfer operations which evaded U.S. sanctions, CNBC reports. The bank is accused of transferring money on behalf of companies in Iran and Sudan. It was previously reported that Commerzbank (OTCPK:CRZBF, OTCPK:CRZBY) would have to pay more than $500M. The U.S. is still probing UniCredit (OTCPK:UNCFF), Credit Agricole (OTCPK:CRARY), Societe Generale (OTCPK:SCGLF), and Deutsche Bank (NYSE:DB) for possible sanctions violations.

Eric Holder says he will not meet with BofA (NYSE:BAC) CEO Brian Moynihan to discuss a settlement over the bank's mortgage lawsuit with the Justice Department, Reuters reports. The Attorney General states that the "parties remain too far apart for a meeting to be productive." In prior negotiations over the shoddy mortgage lawsuit, BofA discussed paying $12B to resolve claims, although the Justice Department countered with a $17B settlement.

BNP Paribas has pleaded guilty to evading U.S. sanctions for the second time, admitting it had also violated the International Emergency Economic Powers Act and Trading with the Enemy Act. BNP Paribas (OTCQX:BNPQF) previously agreed to a record $8.9B settlement on July 1, after pleading guilty to charges of falsifying business records and conspiracy.

Google is forming a European venture capital operation to scout out ideas and technology produced by the continent’s emerging start-ups. The new $100M Google (GOOG, GOOGL) Ventures fund will operate from offices in London. "As we look out around the world, we realize that the tech ecosystems are getting bigger and stronger," says SVP of Corporate Development David Drummond. "Nowhere is this more true than in Europe."

Though its struggling chip manufacturing unit is reportedly on the block, IBM (NYSE:IBM) is committing $3B over 5 years to develop new chip technologies. The company is focusing on bringing transistor widths down to 7nm or less from current 14nm widths and commercializing unconventional materials and technologies. Even if its chip manufacturing unit gets sold, IBM is likely to continue designing chips for its own hardware.

Following the new regulation requiring America Movil to lower its market share by less than 50%, the company is now looking to sell 15-17% of its assets. America Movil (NYSE:AMX) is looking to divest the assets as soon as possible and hopefully to a single buyer, says company spokesman Arturo Elias. Industry experts say the assets can be worth worth well over $10B, although the telecommunications giant has not yet announced a price.

Samsung is facing new child labor accusations at its Shinyang supplier factory in China. The allegations were made by the New York-based China Labor Watch after finding several cases of underage workers at the Samsung (OTC:SSNLF, OTC:SSNGY) facility. The factory seems to employ children and underage students during busy seasons, generally hiring them for three to six months.

Continuing with its Australian expansion, KKR (NYSE:KKR) is now planning to enter a joint bid with Pacific Equity Partners for compliance company SAI Global (OTC:SGLOF). The two will make an offer before the July 15 bid deadline. Pacific Equity previously launched a $1B non-binding proposal for SAI in May, but the company related that other prospective buyers had also contacted it and therefore published more information about its business.

Standard General will provide $25M in "immediate financial support" to American Apparel (APP), and agree to "certain standstill and voting limitations through the Company's 2015 annual meeting." As part of the deal, fired CEO Dov Charney and 4 other directors will leave APP's board. American Apparel will continue to investigate Charney's behavior to determine if it is appropriate for him to serve as CEO or an officer.


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Today's Markets:
In Asia, Japan -0.6% to 15216. Hong Kong +0.3% to 23240. China flat at 2038. India -0.3% to 25373.
In Europe, at midday, London -0.7%. Paris -1.3%. Frankfurt -1.4%.
Futures at 6:20: Dow -0.8%. S&P -0.8%. Nasdaq -0.8%. Crude -0.5% to $101.76. Gold +1.5% to $1343.70.
Ten-year Treasury Yield -3 bps to 2.53%

Today's economic calendar:
Chain Store Sales
8:30 Initial Jobless Claims
10:00 Wholesale Trade
10:30 EIA Natural Gas Inventory
1:00 PM Results of $13B, 30-Year Note Auction
1:15 PM Fed's George: Monetary Policy
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Notable earnings before today's open: FDO, PGR

Notable earnings after today's close: CUDA, EOPN, PSMT, VOXX

See full real-time earnings coverage »

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