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
Nike's net profit jumps 22% but Chinese outlook is soft. Nike's (NYSE:NKE) FQ4 earnings beat expectations as net profit soared 22% to $668M, adjusted EPS came in at $0.76 and revenues climbed 7% to $6.7B. North American sales rose 12% and revenues grew in emerging markets, although they fell in Japan and Western Europe, and were flat in greater China. Nike's shares were -0.9% premarket after the company said that it expects Chinese revenue to fall in fiscal H1 2014 and that it's hard to predict how quickly sustained growth will return to the region.

Japanese data provides encouragement. Japanese CPI was flat on year in May, as expected, vs -0.4% in April as a weakening yen sent utility costs up at the fastest pace in almost five years. "Deflationary pressure appears to be broadly weakening," says economist Hideki Matsumura. Meanwhile, industrial production rose 2% on month and comfortably topped expectations, while retail sales grew 0.8% on year for the first increase since December.

FCC won't enforce spectrum sales in Sprint-Clearwire deal. The Federal Communications Commission does not reportedly intend to demand the sale of any spectrum as part of Sprint's (NYSE:S) purchase of the almost 50% of Clearwire (CLWR) that it doesn't already own. FCC commissioners could vote on an order recommending the deal today, as well as on SoftBank's (OTCPK:SFTBF) purchase of Sprint. FCC approval of the latter transaction is the last hurdle the companies have to overcome.

Top Stock News
Asia shares finish volatile quarter on high. Asian shares rose to end what's been a fairly torrid quarter on an upbeat note. Japan (NYSEARCA:DXJ) led the way following generally positive economic data, while China (NYSEARCA:FXI), says investment adviser Peter Esho, is "close to a turnaround." European shares were turning lower at the time of writing after being up earlier, although U.S. stock futures were higher. Gold futures fell below $1,200 an ounce - the cost of production - but recovered a bit to $1,202 (see below for more details).

BofA rejects settlement talks with AIG. Bank of America (NYSE:BAC) has rejected a request from AIG (NYSE:AIG) to reopen negotiations over the latter's $8.5B mortgage-bond settlement with investors after the judge overseeing a hearing about the deal suggested mediation rather than waiting for her to rule. The developments suggest that BofA is feeling confident the judge will approve the deal and that AIG may have waited a couple of years too long before trying to work out a better arrangement.

Casinos' Macau operations draw scrutiny. The Macau casinos of U.S. companies such as Las Vegas Sands (NYSE:LVS), MGM Resorts (NYSE:MGM) and Wynn Resorts (NASDAQ:WYNN) were under the microscope yesterday at a congressional hearing. Concerns include VIP rooms that are located in the casinos but are run by third-party operators. "Criminal transactions are widely alleged to take place just out of the direct purview of the casino," said Nevada regulator A.G. Burnett.

CFTC sues Jon Corzine over collapse of MF Global. The Commodity Futures Trading Commission has filed civil charges against former MF Global CEO Jon Corzine and Assistant Treasurer Edith O'Brien over the collapse of the firm and the apparent misuse of customer money. The CFTC blamed Corzine for failing "to supervise diligently," and stop O'Brien from transferring customer money to banks and clearinghouses. Corzine and O'Brien face fines and bans from trading commodities. MF Global received a $100M penalty.

Top Economic & Other News
ECB plays down report it's considering bond-buying. The ECB has dismissed a report that a working group has been discussing buying bonds from all 17 eurozone countries, akin to the Fed's QE program. "I can't rule out that inside a large organization, someone is thinking about something, but that's not policy-relevant," said German ECB board member Joerg Asmussen. "Still, the kite has flown," Reuters' Jamie McGeever tweeted.

White House works on Bernanke replacement. The White House has reportedly begun assembling a list of candidates to replace Ben Bernanke as Fed chief. It's not too much of a surprise given the President's "firing" of Bernanke last week. There is no front-runner, sources say, although markets have presumed that Fed Vice-Chair Janet Yellen has been occupying that spot, while Larry Summers and Timothy Geithner may also be in the running.

Senate OKs immigration bill but House likely to block it. The Senate has overwhelmingly approved an immigration bill that would clear a pathway to citizenship for 11M people. However, the package is unlikely to pass in the House, where leader John Boehner said the chamber will "do our own bill." Tech firms, especially outsourcers such as Infosys (NASDAQ:INFY), have been watching the legislation closely, as it would provide easier access to foreign labor.

EU agrees first budget cut in its history. The EU has agreed a seven-year €960B budget that represents the first spending cut in its history. The bloc also approved plans to invest €6B on tackling youth unemployment and for the European Investment Bank to lend hundreds of billions of euros to small and medium-sized businesses. With finance ministers agreeing rules for bank rescues this week, the EU has enjoyed an uncommonly productive summit.

Alpha-Rich Stock Movers and Great Calls
1) Last Friday, fund manager Igor Novgorodtsev recommended Spar Group (NASDAQ:SGRP) as a value play with strong organic growth. The stock is +52% since then. Read article »
2) On May 28, Michael Cutler cautioned investors to read Whiting's (NYSE:WHX) announcements, warning that trust units were 40-50% overvalued. Shares are -33% since then. Read article »

Alpha-Rich Stocks To Watch
1) Apogee (NASDAQ:APOG) could see margin growth in its architectural business and a cyclical recovery. The stock has 50-75% upside over the next 2-3 years. Read article »
2) GSI Technologies (NASDAQ:GSIT) successfully defended a patent lawsuit and can now regrow its revenue. The share has 20-30% upside as the business normalizes. Read article »

Alpha-Rich articles are the best long and short ideas on Seeking Alpha. SA Pro subscribers receive early access to these Alpha-Rich articles, which often move markets. For more information about SA Pro and becoming a subscriber, click here.

Today's Markets:
In Asia, Japan +3.5% to 13677. Hong Kong +1.8% to 20803. China +1.5% to 1979. India +2.8% to 19396.
In Europe, at midday, London +0.1%. Paris -0.4%. Frankfurt -0.1%.
Futures at 6:15: Dow +0.3%. S&P +0.3%. Nasdaq +0.3%. Crude +0.5% to $97.56. Gold -0.8% to $1202.

Today's economic calendar:
8:00 Jeremy Stein: Monetary Policy
9:15 Fed's Lacker: Economic Outlook
9:45 Chicago PMI
9:55 Reuters/UofM Consumer Sentiment
3:30 PM Fed's Williams: U.S. Economy and Monetary Policy

Notable earnings before today's open: BBRY, FINL, SJR

Notable earnings after today's close: MHR

See full real-time earnings coverage »

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