Wall Street Breakfast: Must-Know News

by: Rachael Granby
Rachael Granby
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.

  • Coke sets sights on Chinese juice market. Coca-Cola (NYSE:KO) is set to buy China Huiyuan Juice Group for $2.3B. The deal will make Coke the largest juice seller in China at a time when North American sales are slowing. Coke has said it expects over 80% of future growth to come from non-U.S. markets including China, and the company's China sales jumped 22% last year as it focused on non-carbonated drinks.
  • Bad commodity bets sink fund. Ospraie Management is closing Ospraie Fund, its biggest hedge fund, after reporting a 38.6% loss this year. Once the largest commodity hedge fund firm, Ospraie Management has seen profits tank after bad bets on commodity stocks, including energy and mining. The Ospraie Fund managed $2.8B at the start of August.
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  • Ambac looks for a fresh start. Ambac (ABK) has won approval from Wisconsin insurance regulators to create a new insurance subsidiary. Ambac plans to inject $850M into its Connie Lee financial-guarantee subsidiary which will then be revived as a new entity. The yet-to-be-named subsidiary will provide insurance only on U.S. public finance and global infrastructure, and will avoid contracts for complex financial products that have hurt Ambac's existing insurance business since late last year. Shares +11.7% in extended trading.
  • KDB gets Lehman competition. As reported in a South Korean newspaper, HSBC (HBC) and an unnamed Chinese bank are both considering a potential bid for a stake in Lehman Brothers (LEH). A bid by HSBC or another bank would place it in direct competition with Korea Development Bank [KDB], which is in talks with Lehman to buy up to a 25% stake of the troubled investment bank for up to $6B. HSBC declined to comment.
  • Morgan Stanley opens new real estate fund. Ignoring concerns about a property market downturn and a potential pricing bubble, Morgan Stanley (NYSE:MS) is raising $10B for a global property fund, of which at least $1.5B will be invested in China. The Morgan Stanley Real Estate Fund VII Global is expected to begin its global investments by the end of this year, with investments in China focused on high-end residential and commercial properties in large cities.
  • Fed minutes show inflation disagreement. Three of 12 Federal Reserve regional banks would have liked the discount rate increased to 2.5% from 2.25% on June 26, according to FOMC minutes. Officials from Chicago, Kansas City and Dallas were worried that inflation risks were greater than downside risks to growth.
  • Dell shrinks laptop, price. Dell (NASDAQ:DELL) is getting ready to offer a mininotebook computer that could sell for under $400, according to sources familiar with the matter. The market for low-end portable laptops that offer internet access is growing rapidly, and analysts expect mininotebook sales to reach 8M units next year and as many as 50M in 2012. Rival Hewlett-Packard (NYSE:HPQ) released a similar machine earlier this year.
  • Murdoch's newspaper dreams. Rupert Murdoch, the News Corp (NASDAQ:NWS) chairman and CEO who bought the Wall Street Journal, admits in a Vanity Fair interview that he yearns to buy the New York Times (NYSE:NYT). Interviewer Michael Wolff says, "It's obviously irresistible to him. I've watched him go through the numbers, plot out a merger with the Journal's backroom operations, and fantasize about the staff's quitting en masse as soon as he entered the sacred temple."
  • Bargain-hunters help Costco sales. Costco (NASDAQ:COST) U.S. same-store sales rose 9% in August (vs. +9.3% consensus), as shoppers searched for lower prices on food and gas. Costco, which sells gasoline in many of its stores, said without gas price inflation, sales would have been up 6%. International sales rose 6%.
  • IMF tries consensus-building on sovereign investments. The IMF has negotiated a voluntary "preliminary agreement" with the world's largest sovereign-wealth funds regarding accepted principles for commercial investment, aiming to reassure recipient countries that investments are profit-motivated. Investments from sovereign wealth funds have provided critical support to the shaky financial system in the U.S. However, concerns have grown in the U.S. and Europe that sovereign-wealth investments might ultimately be angled more towards gaining political power and less towards turning a profit.
  • July construction drops. July Construction Spending fell 0.6% from a month ago, steeper than the -0.3% consensus. Residential private construction was -2.1%, and non-residential was +0.2%.
  • ISM index dips down. ISM Manufacturing inched down to 49.9 in August, in-line with consensus. Paper products and computer & electronic products led growth, while wood, plastic and rubber products led the laggards.
  • Consumers feel better- but not by much. ABC's weekly Consumer Comfort Index, released yesterday, showed American consumer confidence rose slightly on improved perceptions about the consumer spending climate. The index was up to -47 in the week to Aug. 31, but still dangerously close to its all-time low of 51, reached in May.

Earnings: Wednesday Before Open

  • Joy Global (JOYG): FQ3 EPS of $1.03 beats by $0.15. Revenue of $904M (+45.4%) vs. $884M. [PR]
  • Staples (NASDAQ:SPLS): Q2 EPS of $0.21 in-line. Revenue of $5.07B (+18.3%) vs. $4.69B. [PR]

Today's Markets

  • Asia markets closed mixed. Nikkei +0.6% to 12,690. Hang Seng -2.2% to 20,585. Shanghai -1.2% to 2,277. BSE closed.
  • In Europe at midday, London -1.9%. Paris -1.5%. Frankfurt -0.9%.
  • U.S. futures at 7:00 AM: Dow -0.25%. S&P -0.22%. Nasdaq -0.51%. Crude -1.27% to $108.38. Gold -0.93% to $803. Silver -2.18% to $12.765.

Wednesday's Economic Calendar

Seeking Alpha editor Eli Hoffmann contributed to this post.

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