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.

  • SocGen CEO: Banks could absorb Greek restructuring. The door to a restructuring of Greek debt may have been opened after Frederic Oudea, the CEO of French banking giant Societe Generale (OTCPK:SCGLY), said the European banking sector could absorb such a move. "The impact is overstated on the banking sector," Oudea told CNBC. "It's a relatively small debt...(and) it's pretty well spread." His comments come after a secret meeting of top eurozone officials on Friday night agreed to revise Greece's €110B ($157B) bailout. This was followed by Ireland's energy minister saying yesterday that his country intends to push for improvements in the terms of its €85B euro program as well.
  • Hertz offers $2.08B for Dollar Thrifty. Hertz (NYSE:HTZ) has bid $2.08B to buy Dollar Thrifty Auto Group (DTG +5.5%) in an offer that comprises $57.60 in cash and 0.8546 of its own shares for every Dollar Thrifty share. The deal is worth $72 a share at Hertz's closing price on Friday and represents a 26% premium on Dollar Thrifty's 90-day average price.
  • Barclays to take £1B hit after banks drop mis-selling fight. Barclays (NYSE:BCS) has made a provision of £1B ($1.64B) to compensate customers for the mis-selling of payment protection insurance, while HSBC (HBC) has set aside $440M. The provisions come after the British Bankers' Association said today it wouldn't appeal a court ruling that made banks liable for these claims. Barclays' shares were -1.6% in midday London trading while those of HSBC, which reported its Q1 2011 earnings this morning (see below), were -1.4% premarket in the U.S. Last week, Lloyd's (NYSE:LYG) disclosed that it had put £3.2B aside to cover potential compensation, and analysts believe the episode could cost banks £8B in total.
  • HSBC pretax profit falls and misses forecasts. HSBC's (HBC) Q1 2011 adjusted pretax profit fell to $5.5B from $6B a year earlier and missed analyst expectations, also of $6B. However, HSBC's net profit jumped to $4.15B from $2.63B, lifted by a drop in bad-loan charges and taxes. Revenue slipped to $17.04B from $17.9B, due to a decline in the money HSBC makes on its excess cash, with the fall also reflecting its contracting U.S. consumer-finance loan portfolios. On Wednesday, new CEO Stuart Gulliver is scheduled to unveil a strategic revamp.
  • Fall in U.S. home values accelerates. The values of U.S. homes in Q1 2011 posted their largest declines since Q4 2008, slumping 3% from the prior period, figures from real-estate data firm Zillow show. With an abundance of repossessed homes weakening prices - in March, one out of every 1,000 homes was in foreclosure - negative equity hit a new high of 28.4% of all single-family homes vs. 27% in Q4 2010. Given the new data, Zillow has revised its forecast for when prices will reach a bottom, now estimating that this will occur next year at the earliest.
  • Muni concerns ease as banks renew credit letters. Fears that municipalities would need to refinance tens of billions of dollars in bonds this year eased in the first quarter after banks renewed or replaced 85% of expiring letters of credits with state and local governments, a report from Moody's shows. The banks had issued these notes, worth $13.5B, during the financial crisis. The renewals indicate that the $2.9T muni-bond market is stabilizing after months of turmoil. However, the current and next quarters may prove to be more challenging, with $50B worth of letters of credit set to expire.
  • U.S. and China set to meet as record yuan run continues. The U.S. and China are due to begin two days of high-level talks in Washington today, with the hosts likely to call for further appreciation of the yuan even as it continues to reach record highs, and their guests likely to raise concerns about soaring U.S. debt. The U.S. will probably also call for China to increase interest rates, provide better access for American companies, and implement financial market reforms at a faster pace. Although no big breakthrough is expected, neither is a major flare-up, especially as China is Washington's biggest creditor.
  • Elan to sell EDT unit to Alkermes for $960M. Elan (NYSE:ELN) has agreed to sell its drug technology unit EDT to U.S. firm Alkermes (NASDAQ:ALKS) in a $960M deal in which the Irish biotech will receive $500M in cash and a 25% stake in the merged group. Elan plans to use the money to cut debt.
  • Terex offer for Demag Cranes 'inadequate.' Terex's (NYSE:TEX) €884M ($1.31B) bid for Demag Cranes (OTC:DMGCF) has suffered a blow after Cevian Capital, the German company's largest shareholder, described the €41.75 offer as 'completely inadequate.' Cevian, which holds over 10% in Demag, has in the past backed the latter's strategy of staying independent as foreign companies circled.
  • Apple deposes Google as world's most valuable brand. Apple (NASDAQ:AAPL) has overtaken Google (NASDAQ:GOOG) as the world's most valuable brand, WPP (NASDAQ:WPPGY) said today in its annual BrandZ listing. While the value of Apple's brand has surged 84% in the past year to $153.3B, that of Google has slipped 2% to $111.5B, ending four years at the top. IBM (NYSE:IBM) jumped 17% to take the number three spot. Twelve of the top 100 global brands come from China, led by China Mobile (NYSE:CHL).
  • Unilever gets U.S. okay for $3.7B Alberto Culver purchase. Unilever (NYSE:UL) has reached an agreement with the U.S. Department of Justice for its $3.7B acquisition of Alberto Culver (NYSE:ACV-OLD). Unilever will have to sell the Alberto V05 brand in the U.S. from Alberto Culver's portfolio and the Rave brand from the Unilever portfolio. However, the deal still needs regulatory approval in other countries, includng in the U.K. and Argentina.

Earnings: Monday Before Open

  • AES (NYSE:AES): Q1 EPS of $0.22 vs consensus of $0.26. Revenue of $4.26B (+8.8% Y/Y). (PR)
  • Quicksilver Resources (NYSE:KWK): Q1 EPS of $0.02 misses by $0.01. Revenue of $212M (-4.5% Y/Y) beats by $18M. (PR)

Today's Markets

  • In Asia, Japan -0.7% to 9794. Hong Kong +0.8% to 23336. China +0.3% to 2873. India +0.1% to 18529.
  • In Europe, at midday,London -0.6%. Paris -0.9%. Frankfurt -1.0%.
  • Futures at 7:00: Dow +0.4%. S&P +0.4%. Nasdaq +0.6%. Crude +2.9% to $99.98. Gold +1.1% to $1507.70.

Monday's Economic Calendar

The SA Currents team contributed to this post.

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