Wall Street Breakfast: BofA Expected To Pay $16.5B Mortgage Settlement

by: Wall Street Breakfast
Wall Street Breakfast
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After a year-long blockade, Libya has restarted oil exports from its largest port, resolving some mistrust between rebel leaders and the government. Despite the ongoing clashes and violence still raging in main cities, the OPEC member's oil production has risen in the past few weeks to around 560K barrels a day. The new production is well above the 100K bpd seen earlier this year, but still short of the 1.4M bpd a year ago.

Thailand's military General Prayuth Chan-ocha has been nominated prime minister by a legislature he hand-picked, nearly three months after he seized power in a coup d'état. Political analysts say the army is now likely to create a much more limited form of democracy before allowing elections, which Prayuth has planned for the end of 2015.

The Central Bank of Brazil has added $4.5B into Brazil's banking system, its second multibillion-dollar injection in three weeks. "It is hoped that the measures will improve small businesses’ access to credit and strengthen foreign trade,” says the bank. The government is grasping for ways to boost the country's slumping economy ahead of October elections, but analysts doubt that the moves will increase lending and borrowing due to the uncertainty over the country’s future.

Japanese stocks rose to a three-week high this morning, posting large gains for the ninth consecutive day, as a weaker yen shored up exporters after Fed meeting minutes raised the risk of an earlier interest rate hike. The Nikkei closed at its highest level since July 31, climbing 0.9% to 15,586.20. The nine-days of straight gains was the index's longest streak since December. The Topix also gained 0.9% to 1,291.19, while the JPX-Nikkei Index 400 rose 0.9% to 11,752.54.

In yet another decision to tighten foreign currency sales, Ukraine's central bank has announced that it is now mandatory for companies to sell all of their foreign currency income on the domestic market. The new move is aimed at offsetting the pressure of a pro-Russian separatist revolt on the Ukrainian currency and requires banks to sell their foreign currency earnings the day after receiving the funds from companies.

Bank of America is expected to pay around $9B in cash and provide customer relief valued at approximately $7B in a settlement with federal and state authorities over its role in mortgages leading up to the financial crisis. The record $16.5B payout is the largest in a series of increasing penalties against banks, and requires BofA (NYSE:BAC) to acknowledge the misrepresentations of the quality of MBSs that it, Countrywide, and Merrill Lynch sold.

Dollar General states that Family Dollar CEO Howard Levine ignored multiple requests to pursue a merger even prior to Dollar Tree's (NASDAQ:DLTR) $74.50-a-share offer. Rick Dreiling, CEO of Dollar General (NYSE:DG) claims that Levine shrugged off the requests out of fear he would be forced to step down as CEO. Earlier this week, Family Dollar's (NYSE:FDO) board announced that it would review Dollar General's bid of $78.50-a-share, but continued to recommend shareholders to vote for its $74.50-a-share deal with Dollar Tree.

Toyota is now the latest automaker to cut its auto parts prices in China, reducing parts on its Lexus models by an average of 26%. In recent months, many foreign automakers have lowered price tags due to the ongoing anti-trust investigation in the country's auto sector. Toyota's (NYSE:TM) price cuts come just one day after China's anti-monopoly regulator issued a $201M fine on 12 Japanese companies over price manipulation.

Chinese antitrust officials have also reached out to South Korea's regulatory commission in order to talk over Qualcomm's (NASDAQ:QCOM) violations of a 2008 anti-monopoly law. South Korea previously fined Qualcomm more than $200M in 2009 for abusing its dominant market position and China is looking for ways to handle the violations back home. China's anti-trust regulator can issue a fine of as much as a tenth of a company's annual revenue, which was $25B for Qualcomm this past year.

Norwegian software maker Opera has signed a deal with Microsoft (NASDAQ:MSFT) to take over browser building at its Nokia mobile phone unit. "We have signed a strategic licensing deal with Microsoft...taking over the browser building department in Nokia," says Opera (OTCPK:OPESY) CEO Lars Boilsesen. "This means that Opera Mini will become the default browser for Microsoft's feature phone product lines and the Asha phones product lines."

Russia's food safety regulator Rospotrebnadzor says it is now conducting spot checks at McDonald's (NYSE:MCD) restaurants in the Sverdlovsk region of the country. Yesterday, Russia temporarily closed four McDonald's restaurants in Moscow, stating possible sanitary violations. The closures come amid tensions between Russia and the West, and an extensive ban on agricultural imports in retaliation over U.S. sanctions.

JPMorgan and Bank of America are planning to raise junior employees' salaries by at least 20%. Many banks besides JPMorgan (NYSE:JPM) and BofA (BAC) have been considering pay hikes, as Wall Street continues to ease strains on junior bankers by limiting the hours they work and compensating them better. Yesterday, Goldman Sachs (NYSE:GS) announced its plans for salary increases and Citigroup (NYSE:C) is now considering a similar pay raise.

After reports of an IPO surfaced last week, Carlyle Group (NASDAQ:CG) has now filed for an initial public offering of common stock for Axalta Coating Systems that could raise as much as $1B. Axalta makes liquid and powder coatings for the transportation industry and does business in more than 130 countries. Carlyle Group purchased the company from Dupont (NYSE:DD) only a year and a half ago.

UPS has disclosed a data breach that appears to have occurred in 51, or about 1% of franchised UPS (NYSE:UPS) Store locations throughout the U.S. The current assessment says certain customers' information who used a credit or debit card at these locations between Jan. 20 and Aug. 11 may have been exposed. The malware was eliminated on Aug. 11, allowing customers to again shop securely at all these locations.

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Today's Markets:
In Asia, Japan +0.9% to 15586. Hong Kong -0.7% to 24994. China -0.4% to 2230. India +0.2% to 26360.
In Europe, at midday, London +0.3%. Paris +0.7%. Frankfurt +0.5%.
Futures at 6:20: Dow +0.2%. S&P +0.2%. Nasdaq +0.1%. Crude -0.7% to $92.80. Gold -1.1% to $1281.50.
Ten-year Treasury Yield +1 bps to 2.45%

Today's economic calendar:
8:30 Initial Jobless Claims
9:45 PMI Manufacturing Index Flash
10:00 Existing Home Sales
10:00 Philly Fed Business Outlook
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Notable earnings before today's open: BKE, BONT, CYBX, DLTR, HRL, NM, PDCO, PERY, PLCE, SHLD, SMRT, SSI, TTC, WUBA

Notable earnings after today's close: ARAY, ARO, AVNW, BRCD, CRM, GME, GPS, INTU, MENT, MRVL, NDSN, NWY, QUNR, ROST, TFM, TUES

See full real-time earnings coverage »

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