Wall Street Breakfast: Must-Know News

by: Wall Street Breakfast
Wall Street Breakfast
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.

Top Stories
Cisco shares slump after downbeat forecast. Cisco's (NASDAQ:CSCO) FQ3 earnings grew in line with forecasts, but shares were -8.8% premarket after the company provided FQ4 guidance that was below consensus. While FQ3 EPS rose to $0.48 from $0.42 and revenue climbed 6.6% to $11.59B, CEO John Chambers said customers are waiting to see what happens in Europe and with government policy before making orders. Opinion: Cisco outlook sends shares lower.

Bundesbank may lay the ghosts of the 1920s to rest. As the crises in Spain and Greece rumble on, the Bundesbank has hinted at a major policy u-turn: it might accept higher German inflation to assist the rebalancing effort between the Club Med countries and the EU core. While the Bundesbank has viewed ECB policy as too loose, it has now indicated its "awareness" of the deflationary pressures in the peripheral states. Opinion: How Germany benefits from the euro.

FDIC plans to seize big financial companies that fail. FDIC Chairman Martin Gruenberg is expected to outline today that the next time a major financial firm is brought to its knees, the agency will seize the parent company and unwind it while allowing its global subsidiaries to keep operating. Equity stakeholders will be wiped out and bondholders will face losses as their holdings are swapped for equity in a new entity. Opinion: The silver lining of bank downgrades.

Top Stock News
Sony forecasts recovery after record annual loss. Sony (NYSE:SNE) reported a record annual net loss of $5.7B in FY 2012, its fourth consecutive year of red ink, hurt by the troubles at its TV business. Consolidated sales fell 9.6% to ¥6.5T ($8.2B), due to the impact of the strong yen. However, Sony predicted that it would recover this FY, forecasting net profit of ¥30B and operating profit of ¥180B. Opinion: How Sony got into this mess.

Liberty edges closer to Sirius control. Liberty Media (NASDAQ:LMCA) is keeping its chase for Sirius XM (NASDAQ:SIRI) moving forward with more purchases that edge it closer to majority control. The latest acquisitions increase Liberty's stake in Sirius to 46.2%. Sirius and Liberty: The waiting game is almost over.

Morgan Stanley adds twist to KPN investment story. Morgan Stanley (NYSE:MS) has emerged as a large shareholder in KPN (OTCPK:KKPNY), revealing that it owns a 10.01% ownership stake in the Dutch carrier. Morgan bought the position just three days before America Movil's (NYSE:AMX) €8 a share offer for KPN, although the Mexican company said that the U.S. bank isn't holding the stake on its behalf. Opinion: Why Morgan Stanley trumps Goldman Sachs.

Facebook highlights its mobile weakness. Facebook (NASDAQ:FB) has again stated that it needs to improve its mobile monetization. The social network's ad growth is no longer keeping up with its daily active user trends (+41% Y/Y in March), and the massive expansion of Facebook's mobile user base has much to do with that. Still, the company has only just begun selling mobile ads. Opinion: Facebook will always be No. 2 to Google.

Micron confirms Elpida chatter. Micron (NASDAQ:MU) has confirmed that it is indeed in talks to acquire Elpida Memory, although it has given no official word on media reports that it has offered over ¥200B ($2.5B) for the bankrupt Japanese chipmaker. Opinion: Winners and losers of a DRAM oligopoly.

Panasonic, Itochu in mobile alliance. Panasonic (PC) and Japanese trading house Itochu plan to merge their mobile-phone sales units to create Japan's third-biggest handset firm, Nikkei reports. Opinion: Panasonic's long road to recovery.

Top Economic & Other News
Bernanke wary of looming "fiscal cliff." Ben Bernanke has warned that the economy faces a "massive fiscal cliff" if Congress lets various tax cuts expire on January 1 at the same time as allowing the automatic implementation of $1.2T in spending cuts. "All those things are hitting on the same day, basically. It’s quite a big event," Bernanke said. Opinion: The Fed and credit bubbles.

Spain nationalizes bank as "train wreck" continues. The Bank of Spain yesterday confirmed the partial nationalization of Bankia after it was unable to repay €4.47B it owed the government. The loan will instead be converted into shares. Nouriel Roubini and Meg Greene commented in the FT that the Spanish bank bailout has been postponed to the very last minute as the "slow-motion train wreck" continues. Opinion: Europe wasn't destroyed in a day.

Greeks headed for more elections. The Greek Socialist party is today attempting to form a government after hard-left and right-of-center rivals failed over the past few days. If, as is probable, the socialists are unsuccessful, a technocratic government friendly to Brussels is likely to be installed until new elections, possibly next month. The deadlock prompted the troika to withhold part of a payment yesterday. Opinion: Greece: Not a hopeless basket case after all?

China gets "wakeup call" from trade data. China's trade surplus widened to $18.4B in April from $5.4B in March as exports rose 4.9% and imports just 0.3%. It's "a wake-up call for policy makers to do more to stimulate domestic demand, and is likely to lead to further elevated fiscal spending and monetary easing," MarketWatch quoted Credit Agricole as saying. Opinion: Can the U.S. become a manufacturing mecca again?

Today's Markets:
In Asia, Japan -0.4%. Hong Kong -0.5%. China +0.1%. India -0.4%.
In Europe, at midday, London -0.4%. Paris -1.0%. Frankfurt +0.0%.
Futures at 7:00: Dow -0.1%. S&P +0.1%. Nasdaq -0.1%. Crude -0.4% to $96.41. Gold -0.2% to $1591.00.

Today's economic calendar:
8:30 International Trade
8:30 Jobless Claims
9:30 Fed's Evans: 'Banks and Bank Lending: The State of Play'
9:30 Bernanke: 'Banks and Bank Lending: The State of Play'
10:00 Fed's Kocherlakota: Monetary Policy
10:30 EIA Natural Gas Inventory
12:10 PM FDIC's Gruenberg: Ending TBTF
1:00 PM Results of $16B, 30-Year Note Auction
2:00 PM Treasury Budget
4:30 PM Fed Balance Sheet
4:30 PM Money Supply

Notable earnings before today's open: BAM, BT, KSS, MPW, MT, SNE, WIN

Notable earnings after today's close: AGO, BID, CA, CIM, DAR, DRYS, ESRX, JWN, LBTYA, MBI, MCP, MDR, NUAN

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