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
U.S.: Syria could avoid action by handing over chemical weapons. John Kerry has said Syria could avert military strikes by giving up all of its chemical weapons within a week. Kerry made his comments ahead of a major PR attempt by President Obama to convince members of Congress and the American public of the need for action. Obama's efforts come amid uncertain support in Congress for intervention, where the President doesn't appear to be assured of a majority in either chamber.

Winning Olympic bid, GDP update sends Tokyo higher. The Nikkei jumped 2.5% after Q2 GDP growth was revised up to 3.8% from a prior reading of +2.6% and Tokyo won the bid for the 2020 Summer Olympics. The improved GDP number was fueled by a more positive read on capital expenditures, while it also increased the chances that the government will go through with a hike in sales tax. Meanwhile, the Olympics is forecast to boost the economy by ¥2.96T ($30B) over the next seven years and create 150,000 jobs.

Verizon set to launch massive bond offering. Verizon Communications (NYSE:VZ) reportedly plans to start marketing a $50B debt sale today in what would be the largest ever corporate-bond offering. The carrier is raising the money to help pay for the $130B acquisition of Vodafone's (NASDAQ:VOD) 45% holding in Verizon Wireless. Some hedge funds are doubtful that the new paper will be attractive enough and plan not to participate.

Top Stock News
Kabel Deutschland investors fear for Vodafone acquisition. Kabel Deutschland (OTCPK:KBDHY) shareholders are reportedly worried that Vodafone (VOD) won't reach the required level for its €7.7B acquisition of the German cable operator to go through. Vodafone has stipulated that 75% of Kabel Deutschland shares need to be tendered by Wednesday in what is the first stage of a two-step approval process. Failure to buy Kabel Deutschland could make Vodafone vulnerable to a takeover bid from AT&T (NYSE:T).

Verizon, FCC to face off over "net neutrality." In a case that could have wide repercussions, Verizon Communications (VZ) and the Federal Communications Commission are due to make oral arguments in a U.S. Court of Appeals today over whether the company should be allowed to manage its network as it wishes, including by giving higher-paying content-providers preferential treatment. The FCC supports "net neutrality," whereby the pipes are as open as possible for everybody.

GSK to sell Lucozade, Ribena brands for £1.35B. In a widely anticipated move, GlaxoSmithKline (NYSE:GSK) has agreed to sell its Lucozade and Ribena drink brands to Japan's Suntory for £1.35B. GSK intends to use the proceeds of the deal to cut debt. Glaxo said in April that it planned to sell the brands, which are highly popular in the U.K., as part of a strategic review in order to focus on its health businesses.

Possible corruption found in BP Gulf settlement scheme. In a partial vindication for BP (NYSE:BP), former FBI director Louis Freeh has found evidence of attempts by senior lawyers working on the company's Gulf oil-spill claims program to "corrupt" the process. Freeh recommended that his report be passed on to the Department of Justice. However, he absolved court-appointed claims administrator Patrick Juneau of any wrongdoing, and said the problems didn't warrant the suspension of payments to victims.

Jacobs Engineering to acquire Australian firm for $1.2B. As expected, Jacobs Engineering (NYSE:JEC) has agreed to buy Australian employee-owned consultancy Sinclair Knight Merz (SKM) for A$1.3B ($1.2B) in a deal that adds to Jacobs' six other acquisitions over the past three years. SKM generated $1.2B in revenue in 2012 from clients in a range of sectors, including mining and power-plant construction. Jacobs expects SKM to add to its earnings once the deal is completed by the end of FQ1 2014.

Top Economic & Other News
Economic data helps boost Chinese shares. Chinese shares surged 3.4% following better-than-expected export figures that provided further indications that the economy is stabilizing. Sales abroad accelerated to +7.2% on year in August and the trade surplus jumped 61% on month to $28.6B, although imports slowed to +7% on year. Meanwhile, inflation slipped to 2.6% in August from 2.7% in July and PPI deflation eased. Banks (NYSEARCA:CHIX) were boosted by speculation that they'll be allowed to issue preferred shares in order to firm up their finances.

Rio, BHP rise after Australia elects new prime minister. Rio Tinto (NYSE:RIO) shares were +2.2% premarket and those of BHP Billiton (NYSE:BHP) were +1.6% after Australia elected the right-of-center Liberal-National Party coalition to replace the strife-riven Labor Party. Liberal Party leader Tony Abbott ran on a platform of repealing controversial mining and carbon taxes that have affected a sector suffering from China's slowdown. "As of today, the mining boom will be rebooted," said incoming Trade Minister Andrew Robb.

Eurozone investor confidence shoots up. The Eurozone Sentix investor confidence index has turned positive for the first time in over two years, jumping to 6.5 this month from -4.9 in August and slaying consensus of -2.8. Readings for the current situation and expectations surveys also climbed strongly. The figures add to other data indicating that the eurozone is recovering from its deep recession.

Alpha-Rich Stock Movers & Great Calls
1) On Thursday, special-situations investor Yuanxi Zhang pointed out the termination risks for NTS Realty Holdings' (NYSEMKT:NLP) go-private deal. The stock is -11.4% to date. Read article »
2) On July 5, GFP Investments said that uncertainty in Egypt created an opportunity for Transglobe Energy (NASDAQ:TGA). The company's shares are +17.8% since. Read article »

Alpha-Rich Stocks To Watch
1) Axcelis Technologies (NASDAQ:ACLS) is on the verge of an inflection point as a cyclical upswing kicks in. Fund manager Ben Axler sees 50% upside on a conservative basis as the company regains market attention. Read article »
2) Torstar (OTCPK:TORSF) has seen short-term earnings declines in both of its segments, driving shares down 60%. Fund manager Saj Karsan thinks shares could triple as the market recognizes the longer-term story. 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 +2.5% to 14205. Hong Kong +0.6% to 22751. China +3.4% to 2213. India closed.
In Europe, at midday, London -0.2%. Paris -0.4%. Frankfurt flat.
Futures at 6:20: Dow +0.2%. S&P +0.2%. Nasdaq +0.4%. Crude -0.4% to $110.06. Gold +0.1% to $1387.40.

Today's economic calendar:
3:00 PM Consumer Credit

Notable earnings before today's open: HITK, HOV

Notable earnings after today's close: CASY, FIVE, FLOW, HDS, IRET, PANW, PBY, PPHM, PVH

See full real-time earnings coverage »

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