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.

Debt deal agreed. Both houses of Congress are due to vote today on a bill to raise the debt ceiling by $2.4T in two stages and slash spending after Democrats and Republicans last night finalized a deal. The agreement provides for a $917B fall in debt over 10 years, while a bipartisan committee will work on finding another $1.5T in cuts. The panel will have until December 23 to come up with at least $1.2T in reductions, or automatic cuts will kick in. The deal is expected to pass the Senate, although things may be more dicey in the House, where it will probably hit opposition from both sides.

Stocks rise on debt deal. Shares across the world rose in reaction to the U.S. debt deal, with Dow, S&P and Nasdaq futures all increasing after U.S. stocks ended their worst week in a year on Friday due to the stalemate in the talks. The Nikkei and Hang Seng closed higher today, while the FTSE 100 and the Dax increased in morning trading. The dollar rose against the Swiss franc and gold fell as investors unwound safe haven positions. (See "Todays Markets" below for more details.)

HSBC to slash 30,000 jobs, sell branches; profit up. HSBC (HBC) is to axe 30,000 jobs between now and 2013 as it looks to save $2.5B-$3.5B, although hiring in some countries may limit the net headcount reduction. HSBC has also agreed to sell 195 branches, mostly in New York, to First Niagara Bank (NASDAQ:FNFG) for $1B as part of its plan to pare its U.S. operations and exit non-core markets. In H1, HSBC's pretax profit edged up 3.3% to $11.47B and beat analyst forecasts, with net interest income rising 2.4% and loan impairments dropping 30%. Shares rose 5% premarket.

Peabody, ArcelorMittal go hostile with $5.2B Macarthur bid. Peabody Energy (BTU) and ArcelorMittal (NYSE:MT) have taken their A$4.7B ($5.2B) bid for Macarthur Coal (OTC:MACDF) directly to the Australian firm's shareholders after it turned down what it termed an "opportunistic" offer and said it was working on a rival proposal. Macarthur, the world's largest producer of pulverized coal, has been a target for over a year as major companies look to exploit the demand created by Asia's rapid industrialization.

Factory activity slows across the world. Hopes for global economic growth have taken a dent after factory activity in China and Europe decelerated in July and contracted in the U.K. Eurozone PMI fell to 50.4 from 52 in June, its lowest level since September 2009. New orders, an indicator for future prospects, contracted with a fall to 47.6. China's official PMI dropped to 50.7 from 50.9 previously, and while new orders rose, PMI data from HSBC showed manufacturing contracted in the country, as well as in Taiwan and Russia.

U.S. Manufacturing activity forecast to be mostly unchanged. Better manufacturing news is expected in the U.S. this morning, with the July ISM Manufacturing Index forecast to slip only slightly to 55 from 55.3 in June. However, any major deterioration beyond this would hit hopes for a rebound in growth in the second half, especially after Friday's dismal GDP numbers. It could also be another factor that prompts the Fed to embark on QE3.

Major hedge fund exits Goldman Sachs. Lansdowne Partners, one of Europe's largest hedge funds, has reportedly sold its entire $850M stake in Goldman Sachs (NYSE:GS), underlining investor concerns about prospects for the global banking sector due to regulatory changes. The divestiture has echoes of Lansdowne's exit from the industry in 2008, ahead of the financial crisis, although this time it has only pulled out of investment banks and moved more capital to the retail segment. Goldman rose 1% premarket.

DOJ intensifies Nortel patent investigation. The Justice Department is intensifying a probe into whether the six companies that recently bought $4.5B in patents from Nortel could use the IP to unfairly hinder smartphones that operate Android (NASDAQ:GOOG). In particular, the DOJ is asking the companies, which include Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and RIM (RIMM), whether they plan to file patent infringement suits.

Three banks closed. Regulators shut three banks on Friday, bringing the total failures in 2011 to 61 so far. The banks closed were in Indiana, Virginia and South Carolina, with the combined cost to the FDIC's insurance fund expected to be $253.4M. By this time last year, regulators had shut 108 banks.

EADS to acquire satellite company for $960M. EADS (OTCPK:EADSY) is to buy satellite communications service provider Vizada for $960M from private equity owner Apax France. The purchase is part of EADS's strategy to lower its reliance on cyclical manufacturing revenues, particularly from Airbus. It is also the latest in a series of deals as EADS uses an €11B ($15.9B) cash pile to grow through acquisitions.

Today's Markets:
In Asia, Japan +1.3% to 9965. Hong Kong +1.0% to 22663. China +0.1% to 2704. India +0.6% to 18314.
In Europe, at midday, London +1.5%. Paris +0.9%. Frankfurt +0.9%.
Futures at 7:00: Dow +1.5%. S&P +1.5%. Nasdaq +1.45%. Crude +1.25% to $96.90. Gold -0.8% to $1618.50.

Monday's Economic Calendar:
10:00 ISM Manufacturing Index
10:00 Construction Spending

Earnings Results: Today Premarket

Notable earnings before Monday's open: ALL, CNA, HUM, L, NVE, SOHU, UDR

Notable earnings after Monday's close: BGC, BXP, CVG, FOE, FST, HLF, HOLX, IDTI, PFG, SBAC, SM, SONE, VNO, VVUS, WRC

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