Wall Street Breakfast: Must-Know News

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Includes: ADDYY, BAC, BEAM, BP, CSE, GLD, GS, HAL, JCG, JPM, MEE, MS, NKE, PXD, QQQ, RIG, SHLD, SPY, URBN, USO
by: Rachael Granby
Rachael Granby
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.

  • Gulf spill blamed on BP, industry, regulators. The presidential commission charged with investigating the Gulf of Mexico spill has concluded that everyone is to blame, at least to some degree. The report, which will be released in full next week, slams BP (NYSE:BP) and two of its contractors, Transocean (NYSE:RIG) and Halliburton (NYSE:HAL), for various missteps that led to an avoidable disaster. However, the report concluded that the spill also reflected the oil industry's failure to recognize and respond to the risks inherent in deepwater drilling, and regulators' inability to properly police the industry. The blowout was not a fluke, but "rather, the root causes are systemic and, absent significant reform in both industry practices and government policies, might well recur." Premarket: BP +1.5%, RIG +1.15% (7:00 ET).
  • Goldman flooded by Facebook-mania. Goldman Sachs (NYSE:GS) plans to stop taking private orders for Facebook shares today, after being inundated by investors eager to own a piece of the social network. Sources said Goldman has also warned investors they may only see a fraction of their orders filled because demand is so high, with several billion dollars of interest shown in an equity offering likely to be worth $1.5B at most. Perhaps most strikingly, investors remain keen to buy in despite the fact that Goldman has provided only a snapshot of Facebook's traffic and other basic measurements and has made no disclosures about the company's bottom line.
  • Rival interest in J. Crew. Shares of J. Crew (JCG) spiked midday yesterday on reports that Sears (NASDAQ:SHLD) and Urban Outfitters (NASDAQ:URBN) are considering a possible challenge to TPG Capital and Leonard Green's $2.86B bid for the retailer. Sears and Urban Outfitters are said to be looking at J. Crew's books, as are at least two other private-equity firms, ahead of the Jan. 15 deadline when J. Crew can no longer shop for other bids. Shares of JCG closed +2.3% yesterday.
  • CapitalSource considers a sale. CapitalSource (NYSE:CSE) has reportedly hired a financial advisor to explore a potential sale of the company, which has a market value of $2.4B. A sale would be targeted primarily at large banks, but may be called off if potential buyers show insufficient interest. Shares of CapitalSource, a commercial lender to small and midsize businesses, rose 4% in yesterday's trading on rumors of a sale, and another 1.6% after-hours.
  • Pioneer sells Tunisian ops. Pioneer Natural Resources (NYSE:PXD) will sell its Tunisian operations to Austria's OMV for $866M. The deal will allow Pioneer to "redeploy capital to our high-return oil-related core assets in the U.S."
  • Massey Energy settles safety lawsuit. Massey Energy (NYSE:MEE) reached a settlement with safety regulators and agreed to a sweeping set of safety regulations on its Freedom Mine No. 1 in Kentucky, just minutes before a court trial was set to begin in which regulators were seeking to shut down the mine. The court order essentially mandates that the mine be immediately and temporarily closed any time inspectors find a safety violation. Separately, Massey said Q4 coal shipments came in around 1.4M tons lower than expected, because of decreased production, inconsistent rail service and export-shipment delays. Shares fell 2.1% in AH trading.
  • U.S. inches towards debt limit. Economists believe the U.S. will hit its $14.3T debt limit by the end of March or sometime in April unless Congress takes action to raise the limit. Hitting the debt ceiling could force shutdowns of federal offices, as happened in 1995, jeopardize federal benefits programs or potentially cause a default on federal debt payments. Though no one expects an actual default, Rep. Paul Ryan, the new chairman of the House Budget Committee, said he's not interested in raising the debt limit without 'concessions on spending.'
  • Corporate-tax code may get revamp. Momentum is growing among both White House officials and congressional Republicans to fundamentally overhaul the U.S. corporate tax code. Specific changes haven't been discussed yet, but lawmakers from both sides of the aisle have been touting the need for a lower corporate tax rate, a move that could boost U.S. competitiveness while repairing relations with corporate leaders who feel estranged by the current government.
  • Fortune Brands moves forward with golf unit auction. Fortune Brands (FO) has hired Morgan Stanley (NYSE:MS) to auction off its golf division, which could bring in as much as $1.5B. Morgan Stanley is expected to approach companies including Adidas (OTCQX:ADDYY) and Nike (NYSE:NKE), as well as private-equity firms, about the division, which Fortune is spinning off under pressure from activist investor William Ackman.
  • LinkedIn plans 2011 IPO. LinkedIn, the social networking site for professionals, is reportedly planning to go public this year, and has selected Morgan Stanley (MS), Bank of America (NYSE:BAC) and JPMorgan (NYSE:JPM) as underwriters. Sources said the company is trying to make sure its IPO happens well before Facebook's debut, on concerns that Facebook-related buzz might drown out interest in its own business model.
  • Volcker to leave advisory position. Paul Volcker is expected to step down as the chair of the President's Economic Recovery Advisory Board, though sources said Volcker would continue to advise President Obama on an informal basis. An official announcement will likely come tomorrow, and would be the latest in a string of key White House departures.

Today's Markets

  • In Asia, Japan +1.4% to 10530. Hong Kong +0.1% to 23786. China -0.5% to 2824. India -0.6% to 20185.
  • In Europe, at midday, London +0.7%. Paris +0.8%. Frankfurt +1.1%.
  • Futures at 7:00: Dow +0.3%. S&P +0.35%. Nasdaq +0.4%. Crude -0.5% to $89.81. Gold flat at $1373.60.

Thursday's Economic Calendar

The SA Currents team contributed to this post.


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