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.

Uncertainty over Slovakia eurozone vote weighs on shares. Slovakia's SaS party, a junior member of the ruling coalition, has said it will abstain from a vote today to expand the eurozone's EFSF bailout fund. With the bill to be tied to a confidence vote, the government could fall as it is likely to lack the necessary support to pass the measure. However, the bill could be approved in a repeated ballot with the help of opposition votes. The uncertainty is casting a shadow over trading, with European shares and U.S. stock futures lower midday in Europe.

Greece creditor losses could exceed 60%. Greece's bondholders may have to take a haircut of over 50%-60%, Jean-Claude Juncker, the head of the eurozone's finance ministers, is reported to have said. The figures are way above the 21% agreed to in the country's second bailout deal in July, with Juncker's comments the first admission by a high-ranking official that such a drastic move is being considered. More immediately, inspectors from the IMF, EU and ECB Troika are wrapping up their visit to Greece, with their review set to influence whether the government receives the next €8B ($10.9B) of its bailout.

Settlement over foreclosure practices close. A settlement between states and major lenders over inappropriate foreclosure practices is close, although some issues could "frustrate the agreement," Iowa AG Tom Miller has told Bloomberg. Any deal, which Fox reports could cost the banks $20B, won't prevent local governments from pursuing claims for unpaid mortgage fees and securities fraud, Miller said. Potentially freeing the banks from other legal liabilities has led New York and California to exit the negotiations. The banks involved are Bank of America (NYSE:BAC), JPMorgan (NYSE:JPM), Citigroup (NYSE:C), Wells Fargo (NYSE:WFC) and Ally Financial.

Alcoa forecast to kick off earnings season with profit rise. As always, Alcoa (NYSE:AA) will unofficially kick off earnings season after the bell today, when it is expected to report that Q3 2011 EPS grew to $0.23 from $0.06 a year earlier and that revenue increased to $6.26B from $5.3B. Alcoa was optimistic in its Q2 report, when it forecast increased aluminum sales across a wide a range of sectors, although today's statement will show whether that upbeat view was justified or has since been undermined by the softening economy. In Q3, Alcoa's shares plummeted 40%, due to lower aluminum prices and weakening European demand.

Sony expects little Christmas cheer. The outlook for Sony (NYSE:SNE) in Europe and North America for the end-of-year shopping season is "murky," CFO Masaru Kato has told Reuters, adding, "We don't see any reasons for optimism." Kato also said the company has no "tricks" for offsetting the high yen, nor does it have plans to announce a revamp of its loss-making TV division. Mizuho analyst Ryosuke Katsura said restructuring the unit was Sony's "most important task," as its losses "will outweigh" any increased profit in other areas of the corporation.

Samson considers $7B-$10B sale. Samson Investment, one of the largest privately held oil and gas explorers in the U.S., is considering a full or partial sale, as well as joint venture options, as it looks to raise funds to finance more shale drilling, The Wall Street Journal reports. A full sale of the group, which is owned by the Schusterman family, could bring in $7B-$10B.

Innkeepers, Cerberus return to talks. Innkeepers is in negotiations to sell most of its hotels to Cerberus for lower than the $1.12B initially agreed upon, The Wall Street Journal reports. The discussions led Innkeepers to yesterday delay by at least a day the start of a trial in which it is suing Cerberus and Chatham (NYSE:CLDT) for backing out of the original deal.

Jobs panel to present report. The President's Council on Jobs & Competitiveness, chaired by Jeff Immelt, is today due to present Barack Obama with its second report, in which it provides a long list of recommendations that "have the potential to create millions of jobs" over the next few years. The proposals include measures to attract more foreign investment and help entrepreneurs, carrying out infrastructure projects, being more aggressive in the energy sector, and changes to the immigration rules.

Obama's jobs plan heading for Senate defeat. President Obama's own $450B job proposal is due to go to the Senate for a vote this evening, although with the GOP opposing the bill in its entirety, it's likely to be defeated. If so, Democrats will consider breaking the package into parts so that votes can be held on separate components, The Wall Street Journal reports, with a Republican aide saying there are aspects of the plan the GOP could support.

New York financial sector set for major job losses. New York could lose almost 10,000 securities jobs by the end of next year, city Comptroller Thomas DiNapoli has predicted in a report. The losses would add to the 22,000 positions already cut since January 2008, while bonuses are also expected to fall. The forecast is not a surprise given that leading banks such as HSBC (HBC) and Bank of America (BAC) have announced major cutbacks. The Occupy Wall Street movement is unlikely to shed a tear, but tax revenues will be hit.

Method for choosing "systemic" firms to be unveiled. The Financial Stability Oversight Council is today due to release proposals on how it will determine which non-bank financial firms are big enough to be labeled "systemic." It's a moniker companies are anxious to avoid, as it will mean increased Fed oversight, as well as new capital and liquidity rules, which firms fear will hit their profitability. However, companies are unlikely to find out before next year whether they're considered systemic or not.

FDIC to officially unveil Volcker rule. The Federal Deposit Insurance Corp. will today officially release its proposed version of the Volcker rule, which is expected to ban banks from trading for their own profit in securities, derivatives and certain other financial instruments. The law contains some exemptions, and the way these are formulated will significantly affect large banks such as Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS). A draft of the Volcker rule was leaked last week and received a mixed reaction.

Senate panel: Repatriation tax holiday failed. With major corporations pressing for a tax break that would enable them to bring home hundreds of billions of dollars of overseas cash holdings, a Senate subcommittee report has found that the last repatriation holiday in 2004-5 failed. The measure is expected to cost the Treasury at least $3.3B in lost revenue over ten years and has "produced no appreciable increase in U.S. jobs or domestic investment, and (has) led to U.S. corporations directing more funds offshore." In fact, 15 companies that repatriated the most cut a net 20,931 jobs from 2004-2007.

Today's Markets:
In Asia, Japan +1.9% to 8774. Hong Kong +2.4% to 18142. Shanghai +0.2% to 2349. India -0.1% to 16536.
In Europe, at midday, London -0.8%. Paris -0.8%. Frankfurt -0.8%.
Futures at 7:00: Dow -0.3%. S&P -0.4%. Nasdaq -0.3%. Crude -0.6% to $84.88. Gold -0.5% to $1662.20.

Tuesday's economic calendar:
7:30 NFIB Small Business Optimism Index
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
10:00 Employment Trends Index
10:00 IBD/TIPP Economic Optimism
1:00 PM Results of $32B, 3-Year Note Auction
2:00 PM FOMC minutes

Notable earnings after Tuesday's close: AA, ADTN

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