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.

Oil prices mixed as Gaddafi teeters on the brink. Brent crude oil prices fell after Libyan rebels swept into the heart of Tripoli, although Muammar Gaddafi's forces have begun a counter attack reportedly led by Gaddafi's son Khamis, and they controlled about 15%-20% of the city as of earlier in the day. Brent crude was -1.8% at $106.71 midday in Europe, but WTI recovered from earlier losses and was +1.3% at $83.36 due to a weaker dollar. Brent is more exposed to supply and demand fluctuations in the international oil market than WTI. Analysts reckon that while it may take years for Libya's oil production to fully recover if and when Gaddafi falls, output of up to 1M bpd could be feasible within months.

ConvaTec enters bidding for Kinetic. ConvaTec has reportedly made an offer for rival Kinetic Concepts (NYSE:KCI) that tops the wound-care company's $6.3B agreement with a consortium comprising Apax Partners and two Canadian pension funds. The Apax group is looking to borrow $5B of the deal amount, which would make it the largest leveraged buyout since the financial crisis.

Verizon workers to return to work. Verizon (NYSE:VZ) appears set to avoid losses from a prolonged walkout, with 45,000 workers due to start returning to work this evening after a 15-day strike. However, the stoppage will end without unions obtaining a deal over the telecom carrier's demands for concessions on pensions, health care and job security. Negotiations over a new contract will continue, but it looks like the company's decision to suspend health benefits at the end of the month may have helped persuade workers to end the strike for now.

Fed lending hit $1.2T during crisis. As the Fed fought to save the global financial system in 2008, lending to banks under seven programs tallied by Bloomberg reached a peak of $1.2T early in the December, almost three times the U.S. budget deficit that year. The largest borrower was Morgan Stanley (NYSE:MS) with up to $107.3B in loans, while Citigroup (NYSE:C) took $99.5B and BofA (NYSE:BAC) $91.4B. "You're talking about the aristocracy of American finance going down the tubes without the federal money," said a former DOJ official. In addition, almost half of the Fed's top 30 borrowers, as measured by peak balances, were European firms.

Dollar Thrifty requests final takeover bids. Seeking to end a long-running bidding war and uncertainty over its future, Dollar Thrifty (NYSE:DTG) has told Hertz (NYSE:HTZ) and Avis (NASDAQ:CAR) to make "best and final" acquisition offers by early October. However, the suitors are unlikely to submit such proposals until they know they can get antitrust clearance, sources say. Based on Friday's closing prices, Hertz's offer is valued at $1.91B and Avis’ at $1.55B.

Lowe's to buy back $5B in shares. Lowe's (NYSE:LOW) has authorized a $5B share buyback and said it expects to complete the program over the next two-to-three years. The U.S. home improvement chain also declared a regular quarterly dividend of $0.14 a share.

CCB unaware of prospective BofA stake sales. Bank of America (BAC) has not told China Construction Bank (OTCPK:CICHF) that it plans to sell any of its $17B holding in the Asian company, CCB Chairman Guo Shuqing said today. His comments follow reports BofA has held initial talks to sell some of its stake to the principal investment funds of Kuwait and Qatar. CCB also said it has extended its co-operation agreement with BofA until the end of next year and is in negotiations to lengthen it for another five years.

Merkel again rejects eurobonds. Angela Merkel yesterday reiterated her opposition to eurobonds despite increasing pressure within the EU and among investors, saying they are "not the answer" to solve the eurozone's debt crisis. "Politicians can't and won't simply run after the markets," Merkel said. The finance ministry believes eurobonds would cost the country €2.5B ($3.6B) in extra interest in the first year and twice that in the second; by the tenth year the expense would soar to €20-25B.

Germany sees slowdown continuing through year-end. Germany's finance ministry said the country's "unexpected, obvious slowdown" may continue through to the end of 2011, with the main causes of the softening including the stuttering U.S. economy and market volatility. Another factor, private consumption, could keep faltering after falling in Q2 because of the uncertainties caused by the eurozone debt crisis. Germany should end 2011 with a GDP deficit of 1.5%, less than previously forecast.

White House pressures NY AG over foreclosure deal. The Obama administration has put increasing pressure on New York Attorney General Eric Schneiderman to drop his opposition to a settlement with major banks over inappropriate foreclosure practices, sources say. Schneiderman and his counterparts in some other states object to the deal because it would restrict their ability to prosecute wrongdoing in a variety of areas, including the securitization of mortgages.

Samsung C&T mulls bid for Parallel Petroleum. South Korean trading firm Samsung C&T said it is considering buying Parallel Petroleum from Apollo Global Management (NYSE:APO), with a media report saying a deal for the U.S. oil firm might be worth almost $1B.

South Korea indicts Deutsche Bank staff. South Korean prosecutors have charged four Deutsche Bank (NYSE:DB) employees and the bank's brokerage in the country for manipulating stock prices and making "unfair" profits during a one-day stock rout in November that wiped $27B in value from South Korean shares. Deutsche Bank has denied any wrongdoing.

Three banks shut. Regulators closed three banks on Friday, bringing the total failures so far this year to 68. The banks were in Florida, Georgia and Illinois, with the cost to the FDIC's insurance fund expected to be a combined $363.8M.

Today's Markets:
In Asia, Japan -1.0% to 8628. Hong Kong +0.5% to 19487. China -0.7% to 2516. India +1.2% to 16342.
In Europe, at midday, London +1.9%. Paris +1.5%. Frankfurt +0.5%.
Futures at 7:00: Dow +1%. S&P +1.1%. Nasdaq +1.4%. Crude +1.3% to $83.36. Gold +1.6% to $1881.50.

Monday's economic calendar:
8:30 Chicago Fed National Activity Index

Notable earnings before Monday's open: STP

Notable earnings after Monday's close: FMCN

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