Wall Street Breakfast: Amazon-Disney Dispute Involves More Than Pricing

by: Wall Street Breakfast
Wall Street Breakfast
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The U.S. Treasury Department is looking into the increased use of the master limited partnership as a business structure, hours after Kinder Morgan (NYSE:KMI) turned its back on the MLP. The move represents a turning point for the rise of MLPs, and prompted the Treasury to look into "the effects of these transactions on future tax revenues," says a department spokesperson.

The EU is planning to hold talks with Latin American countries to dissuade them from becoming the replacement for Europe’s banned agricultural exports to Russia. EU officials have stated goals of "seeking...a united international front on Ukraine" and to talk to countries that would potentially replace EU exports "to indicate that we would expect them not to profit unfairly from the current situation." Russia has already been courting Latin America for alternative supplies.

A convoy of 280 trucks carrying humanitarian aid for Ukraine left from Russia this morning amid Western warnings against using help as a pretext for an invasion. Business FM radio quoted Putin's spokesman, Dmitry Peskov, saying "It has all been agreed with Ukraine," although other sources say there had been no agreement for Russian vehicles to cross into the country. 45,000 Russian troops are stationed on Ukraine's eastern border, increasing the probability of military intervention.

Iraqi President Fouad Massoum has tapped Haider al-Abadi, the deputy speaker of parliament, to be the new head of government, in defiance of current PM Noori Al-Maliki who says he will not step down. "Today, Iraq took a promising step forward," says President Obama, after pledging his support to the new leader. The political crisis comes during the fourth day of U.S. airstrikes in northern Iraq, humanitarian airdrops and the arming of Kurdish military forces.

Argentina's default has taken a new swing, following Judge Thomas Griesa's threat of a contempt order unless the government stops publicly claiming it has met its obligations and is not in default. However, Argentina says that it has paid the holders of its restructured bonds when it deposited $539M into the account of intermediary BNY Mellon (NYSE:BK) in June. The South American country has now called on Washington to intervene, saying a contempt order would violate Argentina's sovereign immunity.

The dispute that has erupted between Amazon and Disney which halted some movie preorders is not only about price, the WSJ reports. Differences regarding promotion and product placement on Amazon's (NASDAQ:AMZN) website, as well as who makes up the price difference when Amazon loses money due to matching policies are also main factors in the disagreement. However, sales of previously released Disney (NYSE:DIS) movies, as well as the company's other products, have not been affected.

Boeing continues to face large spending cuts from the U.S. government, with the latter's defense budget falling nearly 24% due to sequestration. The company has already cut $4B in costs from its defense unit and plans to cut an additional $2B. "Out of the $6B, probably 66% of that will come out of the supply chain, maybe more," says Chris Chadwick, CEO of Boeing (NYSE:BA) Defense, Space and Security.

Arguments over the planned route of the Keystone XL $5.4B pipeline will soon be heard by the Nebraska Supreme Court, but a ruling regarding the controversial project is likely to be delayed until next year. Now in its sixth year of debate, TransCanada's (NYSE:TRP) pipeline continues to face opposition from politicians, landowners and regulators, and ultimately lies in the hands of President Obama to make a final decision on whether to approve or veto the project.

Cutrale and Safra have offered $610.5M in cash to buy Chiquita Brands (NYSE:CQB). The deal could scuttle plans for Chiquita and Irish tropical fruit company Fyffes (OTCPK:FYFFF) to merge in a transaction that would see the merged company domiciled in Ireland. The acquirers set a deadline of noon ET Friday for Chiquita to accept the deal. Shares of Chiquita rose more than 30% yesterday in response to the competing offer.

"Despite the actions we've taken to improve our operational performance, we have fallen short in our efforts, leaving the Company with a liquidity position that is not sufficient to support the business," says NII (NASDAQ:NIHD) CEO Steve Shindler. NII declares it will probably file for Chapter 11 bankruptcy protection because it can’t fulfill financial obligations. Shares have fallen -58.8% AH.

JPMorgan's long-awaited sale of about half of its stake in its P-E arm - One Equity Partners - has been agreed upon. The buyers are Carlyle Group's (NASDAQ:CG) AlpInvest Partners and Lexington Partners. Terms were not disclosed, but the deal - expected to close by the year-end reportedly values the companies JPMorgan (NYSE:JPM) is selling at about $2B.

Sales at Volkswagen's core passenger-car brand rose 4% in July as higher deliveries in Europe and China offset declines in the Americas. Sales of VW (OTCPK:VLKAY) cars and SUVs rose to 491,600 last month, compared with 472,800 a year ago. Seven-month sales were up 3.8% to 3.6M vehicles.

Enbridge says it has no interest in imitating rival Kinder Morgan's (KMI) plan to consolidate its publicly traded units into a single company and cannot see a competitive advantage coming from such a move. Enbridge (NYSE:ENB) says it already has a highly competitive cost of capital, and is well positioned to deliver double-digit dividend per share and earnings per share growth through 2017.

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Today's Markets:
In Asia, Japan +0.2% to 15161. Hong Kong +0.2% to 24689. China -0.1% to 2222. India +1.4% to 25881.
In Europe, at midday, London flat. Paris -0.3%. Frankfurt -0.3%.
Futures at 6:20: Dow +0.2%. S&P +0.3%. Nasdaq +0.3%. Crude -0.9% to $97.25. Gold +0.1% to $1311.90.
Ten-year Treasury Yield flat at 2.44%

Today's economic calendar:
7:30 NFIB Small Business Optimism Index
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
10:00 Job Openings and Labor Turnover Survey
1:00 PM Results of $27B, 3-Year Note Auction
2:00 PM Treasury Budget

Notable earnings before today's open: AER, ARRY, CNCE, CST, FLO, IDRA, INSY, KATE, NOAH, PETX, RTRX, SOL, TW, USAC, VAL

Notable earnings after today's close: CHMI, CREE, EPAY, FMI, FOSL, FTD, HMIN, JDSU, JKHY, KING, MYGN, OPWR, PE, PRSS, SYNC, TCX, URS, VSAT

See full real-time earnings coverage »

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