Wall Street Breakfast: BHP Billiton To Spin Off Assets

by: Wall Street Breakfast
Wall Street Breakfast
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President Barack Obama says that the U.S. will continue "limited" airstrikes against Islamic State militants, which have helped Iraqi and Kurdish forces retake the Mosul dam and halted the advance of IS on the city of Erbil. News of the recaptured dam helped push oil prices down. Brent for October settlement slid 1.9%, to $101.60 a barrel on the London-based ICE Futures Europe exchange yesterday, recording its lowest close in fourteen months.

The National Association of Broadcasters has filed a lawsuit against the FCC's plans to auction off airwaves stating that the plan will incur expense and harm coverage of TV stations. The auction is set to take place next year, and will allow TV stations to take bids and sell their airwaves to meet the surging demand of mobile broadband. The NAB is arguing that the new regulations do not fully protect broadcasters that don't participate in the auction.

BHP Billiton has announced its plans to form a new global metals and mining company based around its aluminium, coal, manganese, nickel and silver assets. "With a simpler portfolio, we are targeting sustainable, productivity-led gains of at least $3.5B per annum by the end of the 2017 financial year," says CEO Andrew Mackenzie. The demerger will leave BHP Billiton (NYSE:BHP) focused on its long-life iron ore, copper, coal, petroleum and potash basins.

Google is planning to officially offer accounts to kids under 13 for the first time. Parents would reportedly have the ability to set up accounts and establish controls, and a kids-friendly version of YouTube would also be offered. Google (GOOG, GOOGL) and other Internet companies have been hesitant to market services to kids due to the Children’s Online Privacy Protection Act, which imposes strict limits on how information about children under 13 is collected.

Drifting again toward the "Internet of Things", Samsung has purchased U.S. air conditioner distributor Quietside. The acquisition is aimed at strengthening the company's "smart home" business, which enables users to control multiple household appliances from a mobile device. Last week, Samsung (OTC:SSNLF, OTC:SSNGY) snapped up SmartThings, a developer of home automation hardware/software platforms.

Deutsche Bank has hired two technology execs as an effort to step up its regulatory lapses identified by NY regulators. The New York Fed warned Deutsche Bank (NYSE:DB) over its shoddy financial reporting and weak technology systems last December, and it is now concerned that the bank will get its records in order by next year. In 2015, all U.S.-based foreign lenders will have to present how they comply with new strict foreign bank rules.

Thomas Montag, Bank of America's top-paid senior manager, will become the bank's sole chief operating officer as co-COO David Darnell takes a new title so he can relocate to Florida. Darnell will serve as vice chairman and oversee the bank's business banking and global wealth and investment management divisions, while Montag will continue to be head of BofA's (NYSE:BAC) investment banking and capital markets businesses.

Standard Chartered is nearing a $200M-$300M settlement with the New York Department of Financial Services over its alleged failure to flag high risk transactions. The penalty would be the second that Standard Chartered (OTC:SCDRF, OTCPK:SCBFF) has paid to the banking regulator in the last two years. In 2012, the bank agreed to pay a $340M settlement over allegations that it erased identifying information from transactions linked to Iran in order to avoid U.S. detection.

PetroChina is re-evaluating its multi-billion-dollar push for LNG production, due to the rising cost of the gas and China's slower growth rate. An anti-corruption probe of PetroChina's top executives also adds to the uncertainty of the company's business strategy. PetroChina (NYSE:PTR) shut two of its loss-making gas liquefaction plants in the past month, with no clear restart date in sight.

After promising big price cuts, Sprint has launched Family Share Packs, a pricing scheme that bears a strong resemblance to AT&T (NYSE:T) and Verizon's (NYSE:VZ) subsidy-free shared data plans. Sprint's (NYSE:S) new promotion for the data-heavy family plans start at $100 and the company will pay up to $350 when subscribers switch from rivals.

Telecom Italia will hold a board meeting next week to discuss its offer to acquire Vivendi's (OTCPK:VIVHY) Brazilian broadband unit GVT. "Certainly nothing will happen this week," a source reports. Currently both Telefonica (NYSE:TEF) and Telecom Italia (NYSE:TI) are likely to be offering €7B for GVT, although TI's offer is reportedly all-stock, whereas Telefonica is offering both cash and stock.

Two years after resigning as Aeropostale's CEO, Julian Geiger has returned to take the top job. Geiger re-joined Aeropostale's board in May. The struggling apparel retailer says its FQ2 sales of $396.2M (-13% Y/Y), were slightly above a $395.4M consensus, and FQ2 EPS is expected to be in a range of -$0.80 to -$0.83 (including $0.37-$0.39/share in charges).

AstraZeneca says that the U.S. government has closed a probe that investigated a major clinical trial used to win marketing approval for the company's new heart drug Brilinta. Following the DOJ's investigation into the study last October, doubts have ensued over the medicine's future success. AstraZeneca (NYSE:AZN) argues that Brilinta can bring in $3.5B in annual sales, although until now the drug has not made any record performance.

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Today's Markets:
In Asia, Japan +0.8% to 15450. Hong Kong +0.7% to 25123. China +0.3% to 2245. India +0.1% to 26421.
In Europe, at midday, London +0.4%. Paris +0.5%. Frankfurt +1%.
Futures at 6:20: Dow +0.2%. S&P +0.2%. Nasdaq +0.2%. Crude +0.2% to $96.63. Gold +0.2% to $1301.20.
Ten-year Treasury Yield -2 bps 2.38%

Today's economic calendar:
7:45 ICSC Retail Store Sales
8:30 Housing Starts
8:30 Consumer Price Index
8:55 Redbook Chain Store Sales

Notable earnings before today's open: CMCM, CYRN, DKS, HD, MDT, RDEN, TJX

Notable earnings after today's close: LZB, PLAB, RGSE, YOKU

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