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
BP swings to loss after $5B in writedowns. BP (NYSE:BP) swung to a Q2 net loss of $1.38B from a profit of $5.7B a year earlier after $5B of writedowns on a number of key assets in the U.S. Replacement cost profit, which excludes oil price movements, plummeted to $238M from $5.4B a year earlier. However, BP does expect its earnings momentum to build in 2013.

Eurozone unemployment hits record 17.8M but rate stays steady. Eurozone unemployment held steady at 11.2% in June, with the number of unemployed increasing by 123,000 on month after rising 95,000 in May. The record total of 17.8M in June was over 2M higher than a year earlier. Meanwhile, annual inflation was unchanged in July at +2.4%, in line with forecasts.

Eurozone crisis hits Deutsche Bank's profit. Deutsche Bank's (NYSE:DB) Q2 net profit halved to €661M as revenue slid 6% to €8B, with earnings hurt by a 63% plunge in pretax profit at its investment banking unit, where income from trading and issuing securities fell amid the eurozone debt crisis. Nevertheless, shares were +0.1% premarket.

Top Stock News
Seagate earns record profit but warns on Q1 revenue. Seagate's (NASDAQ:STX) FQ4 net profit jumped to a record $1.01B from $119M a year earlier and revenue increased 57% to $4.48B, but the latter missed expectations, as did adjusted EPS of $2.41. In addition, Seagate warned that FQ1 revenue would fall 11% to $4B - also missing consensus - due to slowing PC sales and its rivals' faster-than-expected recovery from the Thai floods. Seagate's warning contrasts with Western Digital's (NYSE:WDC) strong FY13 forecast. Shares were -7.5% premarket.

Levinsohn bailing out of Yahoo. To no one's surprise, Ross Levinsohn is leaving Yahoo (NASDAQ:YHOO) after being passed over for the CEO job in favor of Marissa Mayer. Levinsohn struck many content deals during his short time as interim CEO, and the case can be made that Yahoo needs Levinsohn's deal-making ability and media industry ties, and Mayer's product development skills and recruiting ability. Yahoo's North American sales chief has also quit.

UBS to sue Nasdaq as bungled Facebook IPO hits profit. UBS (NYSE:UBS) plans to start legal proceedings against Nasdaq OMX Group (NASDAQ:NDAQ) after the bank's Q2 results were hurt by Facebook's botched debut. UBS said it lost 349M Swiss francs ($357M) following the "gross mishandling" of Facebook's IPO. In Q2, UBS's net profit fell 58% to 425M francs and its investment bank suffered a pretax loss of 130M francs. The eurozone crisis and a weak economic outlook are also hurting the bank.

EU charges Visa over fees. Having recently settled with U.S. merchants over tariffs, Visa (NYSE:V) is in hot water in the EU, where competition regulators have charged the firm over its cross-border credit-card fees and domestic charges in eight countries. The EU accuses Visa of hurting bank competition, inflating costs for merchants, and ultimately increasing consumer prices.

Ford offers to buy out retirees. Ford (NYSE:F) retirees have started to receive letters from the automaker outlining specific lump-sum pension buyout offers. The company wants former employees to take their deals in order to help it close the $15.4B gap in its pension liability.

U.K. objects to InterContinental's Internet deals. British regulators are showing resistance to a planned deal between InterContinental Hotels Group (NYSE:IHG) and online travel sites Expedia (NASDAQ:EXPE) and Booking.com on the grounds it infringes competition law. The companies have three months to respond before a final decision is made on the viability of the deal. IHG was -1.1% midday in London.

Top Economic & Other News
FOMC likely to stay its hand. The FOMC is due to start a two-day policy meeting today, with markets hoping for a fresh injection of monetary opiate, but with leading Fed watchers predicting that the bank will show its concern about the economy but not do much more for the moment. Still, some Fed officials have talked about the return of "insurance" action to pre-empt looming risks such as a eurozone meltdown.

FHFA may be coming round to loan forgiveness. The Federal Housing Finance Agency has calculated that Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) could save $3.6B by reducing the balances for some homeowners who are in negative equity, the WSJ reports. Until now, the agency has maintained that the firms' existing rescue programs were less expensive. The FHFA is due to soon decide on whether to drop its opposition to Fannie and Freddie taking part in a debt-forgiveness program.

China makes moves to revive growth. China will take action in H2 to revive flagging growth, with President Hu Jintao saying the government will increase fiscal and monetary policy support, and diversify China's export market. China has already increased its planned spending on railways for this year, saying in a bond prospectus issued yesterday that it will now invest 470B yuan ($74B). That's a total gain of 14% over the initial program.

Japanese unemployment falls, consumer spending rises. Japan's unemployment rate eased to 4.3% in June, beating expectations the rate would remain at May's level of 4.4%. Meanwhile, household spending rose 1.6% on year, missing forecasts for a 2.9% increase.

Editors' Picks
Income Investors Should Still Be Buying Equities
Natural Gas Prices To Be Significantly Higher Closer To Winter
Lessons From The 2007/08 Global Food Panic

Today's Markets:
In Asia, Japan +0.7%. Hong Kong +1.1%. China -0.3%. India +0.5%.
In Europe, at midday, London -0.4%. Paris +0.1%. Frankfurt +0.5%.
Futures at 7:00: Dow +0.25%. S&P +0.2%. Nasdaq +0.3%. Crude +0.2% to $89.92. Gold +0.2% to $1627.60.

Today's economic calendar:
FOMC meeting begins
7:45 ICSC Retail Store Sales
8:30 Personal Income and Outlays
8:30 Employment Cost Index
8:55 Redbook Chain Store Sales
S&P Case-Shiller Home Price Index
Chicago PMI
Consumer Confidence
State Street Investor Confidence Index
3:00 PM
USDA Ag. Prices

Notable earnings before today's open: ADM, AET, BP, CIE, CMI, COH, DB, DISCA, DLPH, ECL, ETR, FWLT, GT, HCP, LPX, LQDT, MPC, NI, PEG, PFE, TIE, TRI, TRW, TYC, UBS, VLO, VSH, X, YNDX

Notable earnings after today's close: ACAS, ALL, ATML, BMC, CBG, CLD, DDR, DEI, DWA, EA, EIX, FTR, GNW, KIM, LIFE, OKE, PXD, QEP, XCO

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