Wall Street Breakfast: Must-Know News

by: SA Editor Yigal Grayeff
SA Editor Yigal Grayeff
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.

  • Nikkei rebounds but investors remain nervous. Japanese stocks regained some of the deep losses they suffered this week following last Friday's earthquake, but another fire at the Fukushima Daiichi nuclear plant and fears that reactor cores may have been damaged kept investors on edge. The Nikkei 225 closed +5.7% at 9,093.72, driven up by short-covering, with Toyota (NYSE:TM), Sony (NYSE:SNE) and Hitachi (HIT) among the leading gainers. Toyota plans to restart some domestic auto-parts production tomorrow, although it doesn't know when it will recommence manufacturing at its 12 main assembly plants. The yen surged towards its 1995 historic high of 79.75 to the dollar, but slid back down and was at ¥80.66 at 6:20 ET. In further efforts to maintain stability, the Bank of Japan pumped another ¥5T ($61.8B) into short-term credit markets, adding to the ¥35 trillion it already injected this week.
  • Watchdog takes one last swing at TARP. The government's bailout program has left behind a 'troublesome legacy,' according to the final report by TARP's watchdog, including "continuing distortions in the market, public anger toward policymakers, and a lack of full transparency and accountability." The Congressional Oversight Panel also said that TARP has reinforced the notion that some firms are too big to fail and will be rescued by the government if push comes to shove, and that TARP has been far more effective in helping Wall Street than in helping Main Street. TARP's final cost to taxpayers is estimated to be around $25B vs. earlier estimates of around $350B. The panel will disband on April 3, 2011. (More: Citigroup (NYSE:C) was top bank recipient of federal aid)
  • Major banks probed over possible Libor manipulation. Regulators in the U.S., Japan and U.K. are investigating whether leading banks conspired to 'manipulate' the Libor benchmark interest rate before, during and after the financial crisis of 2008. A panel of 16 banks, including Bank of America (NYSE:BAC), Barclays (NYSE:BCS), Citigroup (C), Credit Suisse (NYSE:CS), Deutsche Bank (NYSE:DB), HSBC (HBC) and JPMorgan Chase (NYSE:JPM), help set the Libor, which is used to calculate the cost of inter-bank lending. UBS (NYSE:UBS), another bank on the panel, disclosed in its annual report yesterday that it has received subpoenas from three U.S. agencies and an information demand from the Japanese Financial Supervisory Agency.
  • Rambus rises on licensing renewal. Rambus (NASDAQ:RMBS) announced yesterday that it had renewed its patent license agreement with Toshiba (OTCPK:TOSBF). The financial terms of the deal were not disclosed; Rambus will receive unspecified royalty payments during the duration of the five-year agreement for the shipment of Toshiba products with certain memory controllers. In after-hours trading, RMBS +7.9%.
  • Ex Freddie Mac CEO may face SEC action. Freddie Mac's (OTCQB:FMCC) former CEO, Richard Syron, has received a Wells notice from the SEC, an indication the agency is considering an enforcement action against him for his role in the collapse of the mortgage finance giant. Syron follows Daniel H. Mudd, Fannie Mae's (OTCQB:FNMA) former CEO, and other executives in receiving the notice as the SEC ramps up its investigation of disclosure practices at the companies and whether their depictions of their exposure to risky loans were too rosy.
  • FOMC: Economy on firmer footing, no mention of Japan. The Fed left its benchmark interest rate at 0.25% yesterday, as expected, and signaled that it's unlikely to expand its $600B bond purchase plan. The FOMC said in a statement that the economy is on a "firmer footing, and overall conditions in the labor market appear to be improving gradually," and while commodity prices have 'risen significantly,' inflation expectations have 'remained stable.' Following the Fed's statement, U.S. equities clawed back some of their earlier losses, with investors apparently unperturbed by the FOMC's decision not to mention events in Japan.
  • Netflix looks to stream original content. Netflix (NASDAQ:NFLX) is reportedly in negotiations to acquire a drama series starring Kevin Spacey called House of Cards, which would be its first original TV show. In an offer believed to be worth over $100M, Netflix has outbid HBO, AMC and several other major cable networks, and committed to screening 26 episodes over two seasons. Netflix could be looking to cement its high growth - subscriber numbers rose 63% in 2010 to 20M - by following the strategy of HBO, whose original titles such as 'The Sopranos' and 'The Wire' have played a big part in its success. Reports of the negotiations sent Netflix shares +7.9% in yesterday's trading.
  • Goldman looks to sell mortgage-servicing unit. Goldman Sachs (NYSE:GS) is 'exploring strategic options' for its Litton Loan Servicing unit, including a possible sale, four years after buying the mortgage-servicing business. Goldman had originally expected Litton to provide steady revenue from servicing mortgage-loan portfolios but Litton's performance has been underwhelming, and the financial crisis turned the unit into a major headache for the bank. Sources said a Litton sale would include negotiations about potential litigation costs.
  • Apollo delays IPO launch. Apollo Global Management has reportedly delayed its IPO and is waiting for stock markets to calm down before proceeding. The move suggests that the earthquake in Japan, the subsequent nuclear crisis and the ongoing market aftershocks of those events could substantially dampen investor enthusiasm for U.S. IPOs, despite the relatively strong demand in the last few months for initial public offerings.
  • Eurozone February annual inflation 2.4%. Consumer prices in the eurozone rose 2.4% in February, the largest increase since October 2008. The figure matched expectations but is above the ECB's target of just below 2%. The news comes a day after EU finance ministers made further attempts to restore confidence in the euro by approving tougher legislation for eurozone members that breach budget rules. Meanwhile, Greece said it might need more aid beyond the €110B granted last year, and Moody's cut Portugal's debt rating to A3, four steps from so-called junk status. The euro was -0.17% at $1.3946 in midday trading in Europe.
  • LivingSocial trying to raise $500M. LivingSocial, a website offering local daily discounts, is in talks to raise $400M-500M to help finance its expansion and keep up with rival Groupon. The deal would value LivingSocial at $2B and comes just three months after it said it had raised $175M from Amazon (NASDAQ:AMZN). Like Groupon, LivingSocial has grown exponentially since it was founded in 2007 and has forecast that it will generate more than $500M in revenue in 2011. Earlier this week, The Wall Street Journal reported that Facebook plans to challenge the dominance of both companies and test a service that will provide local discounts to its more than 500M members.
  • Volvo names new CEO. Volvo (OTCPK:VOLVY) has named Olof Persson as CEO to replace the long-serving Leif Johansson, who is set to become chairman of Ericsson (NASDAQ:ERIC). Persson, the head of Volvo's construction equipment business, takes the driving seat at the world's second-largest truck maker as it accelerates out of the worst market downturn in decades.

Today's Markets

  • In Asia, Japan +5.7% to 9094. Hong Kong +0.1% to 22701. China +1.2% to 2931. India +1.1% to 18359.
  • In Europe, at midday, London -0.9%. Paris -0.9%. Frankfurt -0.3%.
  • Futures at 7:00: Dow -0.2%. S&P -0.3%. Nasdaq -0.1%. Crude +1.5% to $98.63. Gold +0.4% to $1398.80.

Wednesday's Economic Calendar

The SA Currents team contributed to this post.

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