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
Eurozone PMI points to recession. Eurozone manufacturing PMI increased to a preliminary 46 in September from 45.1 in August, although composite output fell to a 39-month low of 45.9. The flash PMI is consistent with GDP of -0.6% in Q3, "sending the region back into a technical recession," says Markit. German manufacturing PMI improved but still contracted, while France's manufacturing output slumped to 39.8 from 45.3, suggesting that the country is also heading for recession.

Chinese PMI improves but still continues to shrink. China's flash HSBC PMI rose to 47.8 in September from 47.6 in August, which, if confirmed, would represent the 11th straight month of contraction in the country's manufacturing sector. The depressing figures have been weighing on markets since they came out.

BofA to slash 16,000 jobs by the year-end. Bank of America (NYSE:BAC) is speeding up its staff-reduction program and plans to slash 16,000 jobs by the year-end to leave it with 260,000 workers, the WSJ reports. The cuts are part of "Project BAC," which aims to bring savings of $8B a year by 2015. Most of the layoffs will probably come at BofA's consumer operations, with the bank intending to close 200 branches on top of the 178 it shut in 2011.

Top Stock News
BP could receive Rosneft stake in sale of TNK-BP holding. BP (NYSE:BP) is in negotiations to sell its 50% stake in TNK-BP to Rosneft for $10B-$15B in cash and at least 12.5% of the latter's shares, the Kommersant financial daily reports. To pay for the deal, other reports say Rosneft is attempting to raise $15B-$20B in debt from foreign and Russian banks. BP and Rosneft met Vladimir Putin on Tuesday to discuss the deal.

Nike, CVS Caremark in massive buyback plans. Nike (NYSE:NKE) intends to repurchase $8B worth of class B shares in a four-year program, the sportswear giant said late yesterday, and will commence the scheme once it completes an existing $5B program in FQ2 2013. Earlier, CVS Caremark said it would buy back up to $6B in shares. The timing is interesting given that CVS's stock is trading at record highs.

U.K. regulator slates James Murdoch over phone hacking. Following an investigation in the wake of the phone-hacking scandal, British media regulator Ofcom has found that News Corp. (NASDAQ:NWS) affiliate BSkyB (BSYBY.PK) is "fit and proper to hold its broadcast licenses." However, Ofcom slammed former Sky Chairman James Murdoch, who's now deputy COO at News Corp, saying that his behavior was "difficult to comprehend and ill-judged," and that he "repeatedly fell short" of his duties.

Liberty Global bids €2B for rest of Belgian telco. Liberty Global (NASDAQ:LBTYA) looks to deepen its interests in Europe with an offer to acquire the 49.6% of Belgian telecom operator Telenet it doesn't already own for €1.96B ($2.56B). Liberty's bid of €35 a share values Telenet at €4B and represents a 13% premium on its close yesterday of €31.10. In Europe, Liberty also owns German cable providers Kabel Baden-Wuerttemberg and Unitymedia.

Bain closing in on Apex Tool for $1.5B-$1.8B. Bain Capital is reportedly in final negotiations to acquire Apex Tool Group from Danaher (NYSE:DHR) and Cooper Industries (CBE) for $1.5B-$1.8B, and a deal could be struck within several days. Apex, one of the world's biggest manufacturers of hand and power tools, produces Crescent wrenches, Lufkin measuring tapes, and tools for Sears' Craftsman brand.

GM eyes Ally Financial ops. GM (NYSE:GM) is preparing to bid this week for Ally Financial's auto-lending operations in Europe and Latin America but isn’t pursuing Ally’s Canadian operations or its Mexican auto insurer, Bloomberg reports. An acquisition of the units would more than double the assets of GM Financial.

Regulators ask banks to waive statute of limitations on Libor. The Department of Justice and CFTC have asked major banks to sign "tolling" agreements that will allow the agencies to file charges over alleged interest-rate manipulation beyond the statute of limitations, the WSJ reports. The banks are expected to acquiesce rather than prompt regulators to indict them in order to beat the clock. The banks include Citigroup (NYSE:C), Deutsche Bank (NYSE:DB), JPMorgan (NYSE:JPM), RBS (NYSE:RBS) and UBS (NYSE:UBS).

Oracle profit seen rising even as sales stall. Oracle (NASDAQ:ORCL) is due to release its FQ1 results after the bell today, with analysts expecting that EPS rose to $0.53 from $0.48, while revenue edged up 0.3% to $8.42B. Given Oracle's software and hardware interests, the results should provide an updated view of the corporate IT sector. Nomura analyst Rick Sherlund reckons Oracle could even spring a pleasant surprise in its forecast for FQ2, with the firm's projections for new software licenses a key metric.

Japanese car makers count costs of Chinese protests. The anti-Japan demonstrations in China over the disputed Diayou islands have cost Japanese car-makers such as Toyota (NYSE:TM), Honda (NYSE:HMC) and Nissan (OTCPK:NSANF) an estimated $250M after the companies temporarily halted production, IHS Automotive estimates. However, executives and analysts believe that the automakers will be able to make up for the lost output, while one consultant reckons the Chinese will still buy Japanese cars.

Top Economic & Other News
Spain's "surreal" bond auction goes well. Yields fell as Spain auctioned €859M of 10-year bonds at a cost of 5.67% vs 6.65% at a sale last month, and €3.94B of three-year paper at a yield of 3.845%. "There's a surreal air to Spanish debt auctions," says strategist Nicholas Spiro. The auctions are well received because markets expect Spain to ask the ECB to buy its debt. However, the country may not make the request as long as yields remain manageable.

A fourth Californian city heads for bankruptcy. Atwater is the latest Californian city facing bankruptcy protection after racking up a deficit of over $3M. Council members held a meeting last night to discuss declaring a fiscal emergency, which would allow Atwater to file for Chapter 9. The city of over 28,000 residents said its revenue and general fund have been "critically reduced" because of the weak economy.

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Today's Markets:
In Asia, Japan -1.6%. Hong Kong -1.2%. China -2.1%. India -0.8%.
In Europe, at midday, London -0.6%. Paris -0.6%. Frankfurt -0.4%.
Futures at 7:00: Dow -0.2%. S&P -0.3%. Nasdaq -0.2%. Crude -0.6% to $91.45. Gold -0.5% to $1762.20.

Today's economic calendar:
7:45 Fed’s Rosengren: Economic Outlook
8:30 Initial Jobless Claims
9:00 PMI Manufacturing Index
9:30 Fed's Lockhart: ‘The Future of Workforce Development’
9:45 Bloomberg Consumer Comfort Index
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
12:30 PM Fed's Kocherlakota speaks at Gogebic Community College
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
5:00 PM Fed's Pianalto speaks at Miami University Farmer School of Business
6:30 PM Fed's Bullard: Monetary Policy

Notable earnings before today's open: CAG, JEF, KMX, RAD

Notable earnings after today's close: ORCL, TIBX

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