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.

Steve Jobs dies. Apple (NASDAQ:AAPL) shares were -2.2% premarket after Steve Jobs died yesterday at the age of 56 following a long battle with cancer. Analysts have given a calm reaction to the news, expressing confidence in the company's products, as well as in CEO Tim Cook and the management team that Jobs left behind. Beyond this, a major question is whether Apple will be able to not just retain its momentum, but also replicate Jobs' ability to invent new products and create highly attractive versions of those that already exist in the market - as he did with the PC, the graphical user interface, the MP3 player, the smartphone and the computer tablet - and transform major industries at the same time.

Hopes increase for plan to save EU banks. EU bank shares were higher midday on rising hopes of action to shore up the region's financial sector, with the STOXX Europe 600 banking index +2.3%. European Commission President Jose Manuel Barroso today said the EU's executive is proposing that member states carry out coordinated action to recapitalize banks and "get rid of toxic assets they may have." Barroso's comments follow Angela Merkel yesterday saying Germany would support such a move, a decision for which could come at an EU summit on October 17.

Spain's borrowing costs fall in debt auction. The ECB's purchase of Spanish debt in the secondary market continued to work its magic today, with the country selling €4.5B ($6B) of bonds - the top of its target range of €3.5-4.5B - at reduced costs. Spain auctioned three 2014 and 2015 bonds, with the average yield on its April 2014 bond falling to 3.59% from 4.81% at the previous sale of the same paper; the yields on its October 2014 and April 2015 bonds also dropped.

BOE resumes bond buying. The BOE's Monetary Policy Committee has voted to maintain interest rates at 0.5%, and to increase the size of its asset purchase program, financed by the issuance of central bank reserves, by £75B to a total of £275B. The BOE said "tensions in the world economy," such as a slackening in global growth and EU debt, threaten the U.K. recovery.

Moody's mulls Ford upgrade. Moody's is considering raising Ford's (NYSE:F) corporate credit rating of Ba2, which is two notches below investment grade, after the motor company this week reached an agreement on a tentative four-year contract with the UAW. Paul Eisenstein of CNBC reports that an upgrade would help Ford save money on its hefty debt and give it the leeway to reinstate its dividend, with the company not having paid one since September 2006.

States investigate Express-Medco deal. Over 25 states have banded together to look at Express Scripts' (NASDAQ:ESRX) proposed $22B purchase of Medco (NYSE:MHS). While the states don't have a direct say in the FTC's review of the deal, they can increase pressure on the commission to give it tougher scrutiny and they can provide the agency with evidence. The states' action comes as specialty pharmacists complain to the FTC about Medco's and Express Scripts' aggressive tactics, including pressuring doctors and patients to switch to the companies' own in-house pharmacies.

Sony obtains financing for EMI as round two closes. Sony (NYSE:SNE) has secured funding from Mubadala, Abu Dhabi’s investment fund, to buy EMI in its $3.5B-$4B auction, the FT reports. Citigroup (NYSE:C), which took control of EMI from P-E firm Terra Firma in February, received second-round offers for the music group ahead of a deadline last night. In addition to Sony, bidders include BMG (NYSE:KKR), Universal Music (OTCPK:VIVHY) and Warner Music. While management wants EMI to stay intact, the bidders believe Citi wants to split the group to secure a higher price.

EU has major concerns over Deutsche Boerse-NYSE merger. The EU has sent Deutsche Boerse (OTCPK:DBOEY) and NYSE Euronext (NYSE:NYX) a formal "statement of objections" running to more than 130 pages over their proposed $9B merger. The specific points are not yet known, but it's not a surprise that regulators have concerns over the near monopoly the combined entity would have on exchange-based futures trading in Europe.

Microsoft interested in Yahoo, or maybe not. Rumor and counter-rumor are swirling about whether Microsoft (NASDAQ:MSFT) is interested in buying Yahoo (NASDAQ:YHOO), with Reuters reporting that the software giant is considering an offer. However, Reuters says Microsoft is split between those for and against a bid, while sources have told Kara Swisher of All Things D that the firm won't make an offer. Separately, Microsoft is set to receive EU approval to buy Skype (NASDAQ:EBAY), while its plans to conquer the living room have taken another step forward following a deal with Verizon (NYSE:VZ) to bring live TV to the Xbox 360.

FDIC to vote on "Volcker rule." The FDIC plans to vote on Tuesday on the long-awaited "Volcker rule," which seeks to prohibit big banks from most speculative trading, and to limit their investments in most hedge funds and private-equity funds. The banks that will be mostly affected include Goldman Sachs (NYSE:GS), Bank of America (NYSE:BAC) and JPMorgan (NYSE:JPM). In addition to the FDIC, the rule needs the approval of three other federal agencies before it can advance into a public comment period that will end in December; it could therefore still undergo major changes.

Banks pay off TARP debt with small-business funds. Around $2.2B in government aid that community banks were supposed to use to increase lending to small businesses was instead used to pay off TARP loans. The idea behind the program, which disbursed $4B out of $30B available, was to spur growth by providing small companies with the funds that would enable them to expand and boost employment. Some banks argue that paying off their high-interest TARP debt, which also carries tough restrictions, is just as effective in freeing up capital for lending.

Ellison experiences a cloud conversion. Oracle (NASDAQ:ORCL) CEO Larry Ellison has announced plans to enable the company's customers to access its applications, and those that the clients write themselves, via the Internet. Ellison's embracing of cloud computing is a bit of an about-turn after he called the term "complete gibberish" in 2008. Oracle's announcement came as Ellison upped the ante in a spat with Salesforce.com (NYSE:CRM) CEO Marc Benioff, describing the latter's company as "the roach motel of clouds." Benioff's response: "beware of false clouds."

Today's Markets:
In Asia, Japan +1.7% to 8522. Hong Kong +5.7% to 17172. China closed. India closed.
In Europe, at midday, London +2.4%. Paris +2.1%. Frankfurt +2.2%.
Futures at 7:00: Dow +1%. S&P +1%. Nasdaq +0.7%. Crude +1.3% to $80.75. Gold +0.6% to $1651.10.

Thursday's economic calendar:
Chain Store Sales
8:30 Initial Jobless Claims
10:30 EIA Natural Gas Inventory
11:00 Fed's Fisher: Texas Economic Development Council Conference
2:00 PM Hearing: 'Annual Report of the Financial Stability Oversight Council' (Geithner)
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Earnings Results: Companies that beat EPS expectations last night and today include Marriott International (MAR shares +0.4). Those in line include Ruby Tuesday (RT -10.1%). Full real-time earnings coverage here.

Notable earnings before Thursday's open: STZ

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