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
Apple vs. Samsung trial set to start in California. Jury selection is due to begin today in a U.S. patent trial between Apple (NASDAQ:AAPL) and Samsung (OTC:SSNLF). Apple is seeking $2.5B in damages and a ban on U.S. sales of Samsung's tablet and smartphones. The stakes are high for Google (NASDAQ:GOOG) as well - a decision against Samsung's Android-powered hardware could hurt Google's partners around the world, while an Apple loss could give Android more momentum.

Feds summon ex-Avon boss Andrea Jung. Federal prosecutors have asked to speak to former Avon (NYSE:AVP) CEO and current Chairperson Andrea Jung in connection with a long-running investigation into bribery of foreign officials. The tally for legal expenses from the internal and external investigations into the affair is $250M and counting.

Top Stock News
HSBC profit increases 11%; sets aside $2B. HSBC's (HBC) H1 pretax profit rose 11% to $12.7B and beat consensus, although underlying profit slipped 3% to $10.6B. The bank has set aside $2B to cover regulatory and compliance problems in the U.S. and U.K. HSBC's core tier 1 ratio increased to 11.3% from 10.1% in December. Shares were -0.1% premarket.

RBS boss warns of big Libor fine. RBS (NYSE:RBS) CEO Stephen Hester has warned that the bank faces a large fine due to the Libor scandal, although he doesn't know how big it will be. In an interview with The Guardian, Hester added that the U.K. government's exit of RBS is going to take longer than hoped, due to the poor economy and a changed regulatory situation.

New York bank sues over Libor. What banks don't seem to have provisioned for yet in the Libor scandal are lawsuits. Berkshire Bank, which has 11 branches and $881M in assets, has filed a suit alleging it was cheated out of interest income because of the "artificially" depressed rate. The defendants are the 16 banks that set the rate from 2007-2010. Berkshire is proposing class-action status for its case.

Aviva receives approaches for £1B U.S. unit. Aviva (NYSE:AV) has received unsolicited offers for its U.S. life division, valued at £1B, The Sunday Telegraph reports. The figure would represent an £800M loss from when Aviva bought the former AmerUs for £1.8B in 2006. A sale could shore up capital and help preserve the insurer's dividend, now expected to be maintained on August 9.

Companies' guidance turns south. For a brief, shining moment until Friday, the outlook had been for continued growth in earnings, but global weakness is forcing U.S. firms to cut costs and guidance; the ratio of negative-to-positive Q3 forecasts is now the worst since 2001. Analysts expect Q3 profit and revenue for S&P 500 companies to decline 0.4% on year.

Regulators close 9th Georgian bank this year. Regulators shut down Jasper Banking Co. in Georgia on Friday, bringing the state's total bank failures this year to nine, and the number nationwide to 39. The cost to the FDIC's insurance fund is estimated at $58.1M.

Top Economic & Other News
U.K. starts Libor review. The U.K. government has set out the terms for a review of Libor, which will be headed by Martin Wheatley, a senior official at the Financial Services Authority. The study will look at how Libor is put together, governance, alternative ways to set it, and how to implement any changes. Wheatley is due to publish a paper on August 10 and offer final recommendations at the end of September.

Spanish recession worsens. Spain's preliminary Q2 GDP fell 0.4% on quarter, slightly worse than the -0.3% registered in Q1 but in line with expectations and better than the U.K.'s shock 0.7% decline. The GDP data came after German Finance Minister Wolfgang Schaeuble rejected speculation over the weekend that Spain is about to request that the eurozone's bailout fund buy its bonds.

Fed may be considering chopping interest paid on reserves. Less talked about than QE, the Fed may be contemplating cutting the interest paid on reserves to 0% from 0.25%, suggests former Fed economist Ward McCarthy. The amount banks have deposited in Fed vaults has ballooned to $1.49T from $2.4B in 2007. Lowering the rate to zero might force the cash into the economy - or it might destroy the money market industry.

Japanese industrial production slips. Japan's industrial production fell 0.1% in June after May's 3.4% decline, with the usual suspect of the strong yen again making things difficult for companies. Economists had expected a 1.5% gain.

ECB rumors aid Italian bond auction. Speculation that the ECB might restart buying government bonds helped send Italian yields lower in an auction of €5.48B ($6.749) of debt with differing maturities. The cost of 10-year paper dropped to 5.96% from 6.19% in a sale in June, while the bid-to-cover ratio edged up to 1.29 from 1.28. Yields on five-year paper dropped to 5.29% from 5.84%.

Editors' Picks
The Eurozone: It's Crunch Time Again
Netflix, Comcast And The Future Of Streaming Content
A123 Systems: An Object Lesson In Toxic Financing

Today's Markets:
In Asia, Japan +0.8%. Hong Kong +1.6%. China -0.9%. India +1.8%.
In Europe, at midday, London +0.5%. Paris +0.5%. Frankfurt +0.8%.
Futures at 7:00: Dow -0.2%. S&P -0.25%. Nasdaq -0.1%. Crude +0.1% to $90.18. Gold -0.1% to $1621.70.

Today's economic calendar:
8:30 Chicago Midwest Mfg. Index
10:30 Dallas Fed Manufacturing Outlook

Notable earnings before today's open: BEN, CIT, HCA, L

Notable earnings after today's close: APC, ARE, CRUS, EMN, EXR, HLF, HOLX, HTZ, JEC, MAS, PMCS, SPN, STX, VRTX

See full real-time earnings coverage »

Wall Street Breakfast is sent out by email for free -- Get it now »