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
Government to cut AIG stake. The Treasury confirmed it's putting another $18B worth of AIG (NYSE:AIG) stock on the block, as observers recently anticipated. AIG plans to buy up to $5B worth of the shares at the IPO price. Premarket: AIG -1.85% (6:30 ET).

BP in asset sale talks. BP (NYSE:BP) is reportedly in negotiations to sell assets in Gulf of Mexico oil fields to Plains Exploration & Production (NYSE:PXP) for $7B, which is above the latter's market cap of $5.2B. The deal would be part of BP's efforts to raise money to pay for the fallout from the 2010 oil spill; so far, the company has agreed to sell $26.5B worth of the $38B in assets that it has earmarked for sale.

Top Stock News
Glencore touts Xstrata offer. Glencore (OTCPK:GLCNF) provided details of its improved $36B bid for Xstrata (OTC:XSRAY, OTC:XSRAF), saying that the offer of 3.05 shares per Xstrata share represents a 27% premium based on stock prices last week. Xstrata shareholder Knight Vinke rejected the new proposal, although Standard Life Investments supports it. Qatar Holdings, the key player, has so far remained silent.

Transocean nabs rig deal. Transocean (NYSE:RIG) agreed to sell 38 shallow-water drilling rigs to P-E backed Shelf Drilling International for $1.05B, with the amount comprising $855M in cash and $195M of seller financing in the form of preference shares. Following the deal, Transocean will take a Q3 impairment charge. Shares +2.4% premarket (6:45 ET).

ArcelorMittal reaches union deal. ArcelorMittal (NYSE:MT) reached a new 3-year labor agreement with the United Steelworkers union following the expiry of the old contract on September 1. The deal covers almost 14,000 workers in 8 states, with the USW saying it protects current and future retirees, increases wages and improves healthcare. The agreement follows one between the USW and U.S. Steel last week. Shares -0.4% premarket (6:45 ET).

RBS eyes settlement. RBS (NYSE:RBS) is in talks with the U.K.'s Financial Services Authority to settle allegations about its involvement in the Libor scandal, Bloomberg reported. The bank will probably have to pay more than the £290M that Barclays agreed to pay for its role. UBS (NYSE:UBS) is also in negotiations with authorities in the U.S. and U.K. over resolving Libor allegations. Premarket: RBS +2.4% (6:45 ET).

License to list. MGM hopes to complete its IPO before the release of the new James Bond film, "Skyfall," in late October, Bloomberg reported. The idea is to benefit from the huge publicity that invariably accompanies Bond movies. The pricing of the offering could determine whether MGM carries out the IPO or considers acquisition offers.

Rising cost of compliance. Complying with tighter fracking regulations on federal lands will cost $253,839 per well, said EOG Resources (NYSE:EOG) and officials from Wyoming and Utah, citing a study from John Dunham & Associates. That's well above the $11,833 that the Bureau of Land Management estimates, and would cost natural gas producers a total of $1.5B-$1.62B a year.

Leviathan rights for sale. The consortium that develops the Leviathan natural gas field off Israel's coast, in which Noble Energy (NYSE:NBL) and Delek (NYSE:DK) own large holdings, is considering offers from "leading international companies" to sell up to 30% rights to the field. Leviathan has estimated reserves of 17T cubic feet of gas, with the group hoping to find 600M barrels of oil as well.

Top Economic & Other News
Japan GDP slower than estimated. Japanese Q2 GDP rose 0.7% Q/Q, half the initial estimate of +1.4% and below consensus of +1%. GDP fell a nominal 1% in annualized terms vs. +5.5% in Q1. The current account surplus declined 41% to ¥625.4B ($8B) in July. With the economy losing momentum, economists increasingly expect Japan to slip into contraction this quarter.

Another bank failure. First Commercial Bank of Bloomington, Minnesota became the 41st U.S. bank failure of the year on Friday. Republic Bank & Trust of Louisville, Kentucky will assume about $207M in deposits and acquire assets with a book value of approximately $194M at a discount of $79M. The total cost to the FDIC's deposit-insurance fund: $63.9M.

Overseeing the overseers. Legislators are promoting a bipartisan bill in the Senate that would give the White House influence over the SEC, the CFTC and other financial regulators in the rule-making process, and would force the agencies to carefully analyze the economic impact of new regulation. A Senate panel is due to debate the plan this month, although with elections looming, the bill's future is uncertain.

China CPI as expected. Chinese CPI rose 2% Y/Y, in-line with consensus and up from an increase of 1.8% in July. The increase was fueled by the price of food, which rose 3.4% vs. an increase of 2.4% in July. August PPI signals deflation, falling 3.5% vs. -2.9% in July and consensus of -3.2%. Fixed-asset investment in non-rural areas rose 20.2% in January-August vs. +20.4% in January-July.

China trade surplus beats forecasts. China's trade surplus came in at $26.7B in August, up from $25.1B in July and well ahead of forecasts of $17.2B. Exports rose 2.7% Y/Y vs. consensus of +3%. Imports fell 2.6% vs. consensus of +3.4%. Bank of America economist Ting Lu said the fall in imports is "not good, but not that scary," explaining that falling commodity prices played a key part.

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Today's Markets:
In Asia, Japan flat at 8869. Hong Kong +0.1% to 19827. China +0.3% to 2135. India +0.1% to 17767.
In Europe, at midday, London flat. Paris -0.1%. Frankfurt flat.
Futures at 7:00: Dow -0.1%. S&P -0.2%. Nasdaq -0.15%. Crude flat at $96.42. Gold -0.3% to $1733.50.

Today's economic calendar:
10:00 Employment Trends Index
3:00 PM Consumer Credit

Notable earnings before today's open: PPHM

See full real-time earnings coverage »

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