Wall Street Breakfast: Must-Know News

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Includes: AGCO, AKS, AMTD, ARRS, AVY, BIDU, BP, BYD, CE, COG, COL, CP, CTV, CVG, DIA, DRYS, ELNK, FDP, FE, FLEX, FPL-OLD, GE, GLD, GS, HMA, HMC, HSP, IAC, ICON, INGR, JCI, LLL, MAS, PBG, PCL, PEP, QQQ, SAH, SLG, SPY, TMO, TXT, UAA, UBS, USO, UTX, VFC, VLO, VRTX, WYNN, X
by: SA Eli Hoffmann
SA Eli Hoffmann
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.

  • Goldman defends dark pools, status quo. In a letter to the SEC (.pdf), Goldman Sachs (NYSE:GS) dispelled five common myths about so-called 'dark pool' anonymous trading exchanges, saying the venues benefit both institutional and retail traders by reducing transaction costs and increasing competition. The rest of the 56-page document - which summarizes a Sept. 24 SEC/Goldman gettogether - sheds light on industry practices of short selling, high-frequency trading, flash trading and naked access, which have come under varying levels of criticism in recent months.
  • India begins exit. With inflation pressures building, the Reserve Bank of India took the first step toward withdrawing its record fiscal stimulus by ordering lenders to keep more cash in government bonds. "It may be appropriate to sequence the 'exit' in a calibrated way," governor Duvvuri Subbarao said today after boosting the liquidity ratio to 25% from 24%. BofI kept its benchmark rates unchanged, and maintained its 6% GDP growth forecast. "We will start to see G-20 economies exiting now, starting with the emerging ones and then the advanced countries," economist Mridul Saggar said. India's BSE Sensex was down 2.3% amid a broad Asia pullback. (ETF: INP)
  • New IRS group targets ultra-rich. A new IRS unit will target the ultra-wealthy by helping decode partnerships, offshore trusts and other complex techniques used to hide earnings. Speaking to an accountants' trade group Monday, IRS commissioner Doug Shulman said the new Global High Wealth Industry group will begin its first audits next month, honing in on individuals with assets or income in the tens of millions - for whom, he said, you cannot assess compliance "by looking only at their 1040s."
  • Gross sees weaker U.S., pressure on Treasurys. Influential bond manager Bill Gross warned Monday that an end to the Fed's debt buyback schemes could add selling pressure to several credit markets, including U.S. Treasurys. Gross also said he believes emerging economies will grow faster than the U.S.: "The emerging world, whether it's in Asia, Australia or other associated countries, will do much better from the standpoint of growth, and that's where money should eventually move to. It moves there because of higher profits and it moves there actually because of higher real interest rates."
  • China predicts more growth ahead. China reported a 190% jump in overseas investment (to $20.5B in Q3), and forecast industrial production would rise 16% in Q4 after a 13.9% gain in Q3. Analysts say Beijing may be encouraging Chinese companies to invest abroad to ease upward pressure on the yen. Last week, China reported an 8.9% gain in Q3 GDP, leading to speculation about an imminent exit from its super-loose monetary stance. This morning, Morgan Stanley's Stephen Roach said investors are wrong to bet on China reining things in: "The Chinese really are fixated on one thing and one thing alone which is social stability - they don’t want to take a risk of another negative growth surprise." (ETFs: FXI, PGJ)
  • Japan's Fujii criticizes BOJ. Japan's finance minister lashed out at its central bank Tuesday, calling its view of the economy too rosy and narrowly informed. "The BOJ has repeatedly said the economy is getting better, but they are dealing with different people," Hirohisa Fujii said at a meeting. The BOJ has a developed a reputation of allowing its jawboning to push it to act in a contrary way just to demonstrate its independence. (ETF: EWJ)
  • UBS hires McCann to rebuild Americas unit. UBS (NYSE:UBS) named Robert McCann - former chief of Merrill Lynch's brokerage unit - to head its Americas wealth management businesses. UBS has been hurt by a tax dispute with the U.S. government, not to mention bad bets on auction-rate securities, writedowns, and capital outflows. McCann dispelled rumors the unit may be up for sale: "I had to go to court against two of my former employers to be able to work with UBS. I would have not done that if the whole goal was to sell the company." Analysts say the unit remains 'strategically challenged,' and are skeptical a new helmsman can combat the negative implications of UBS's loss of its status as banker to the ultra-secretive.
  • Utex leads bidders for GE Security. Sources say United Technologies (NYSE:UTX) has emerged as the frontrunner for GE's (NYSE:GE) fire alarm and surveillance systems unit, which it put on the block earlier this year. A deal would bolster United's strategy of locking in revenue streams by offering multi-year service contracts for equipment and systems in commercial buildings. GE is thought to want about $2B for the unit.
  • EU approves Pepsi bottlers merger. PepsiCo (NYSE:PEP) received the European Commission's blessings for its $7.8B deal to buy Pepsi Bottling Group (PBG) Tuesday, despite some overlap in their businesses. "The proposed transaction would not significantly change the market structure. Consequently, the Commission concluded that the transaction would not raise competition concerns," it said.
  • Europe lending dries up. Euro zone private-sector loans fell 0.3% from a year ago, the first contraction on record, but economists said a slight rise in month-over-month lending was a sign credit in the area was slowly beginning to flow again. "The year-on-year fall is going to catch everyone's imaginations, but that's a lagging indicator of what's been going on," Fortis's Nick Kounis said. Loans to households rose by €14B from August, the fifth sequential increase.
  • Data point to bumpy recovery. Regional reports Monday suggested the economy is approaching levels associated with the end of recession, but isn't exactly surging to new highs. Chicago Fed's national activity index (.pdf) fell to -0.81 from -0.65 in August, with production/income making the only positive contribution. Still, the index's three-month moving average makes quite a strong case for a V-shaped recovery. Dallas Fed said Texas-area factory activity declined, and its production index moved into negative ground after leveling the month before. The Chicago Fed's manufacturing index (.pdf) rose 1% to 82.3, but remains 15.7% lower than a year ago.

Earnings: Tue. Before Open

  • ACGO Corp. (NYSE:AGCO): Q3 EPS of $0.13 beats by $0.09. Revenue of $1.4B (-32.7%) in-line. (PR)
  • AK Steel (NYSE:AKS): Q3 EPS of $0.06 beats by $0.05. Revenue of $1.04B (-51.7%) in-line. Shares +1.1% premarket. (PR)
  • Avery Dennison (NYSE:AVY): Q3 EPS of $0.82 beats by $0.25. Revenue of $1.55B (-10.2%) vs. $1.47B. "While the rate of volume decline in the third quarter improved compared with the first half of the year, this was largely due to a slowdown in inventory reductions. Our end-markets remain soft, and we continue to be cautious about the pace of their recovery." (PR)
  • BE Aerospace (BEAV): Q3 EPS of $0.36 beats by $0.04. Revenue of $460M (-21.8%) in-line. Expects a substantial increase in earnings and revenue in 2011. (PR)
  • Boyd Gaming (NYSE:BYD): Q3 EPS of $0.09 misses by $0.01. Revenue of $398M (-6.6%) vs. $411M. "While visitation levels remained fairly constant, spend per visitor continues to be down significantly year-over-year, as consumers are still being cautious with their spending." (PR)
  • BP (NYSE:BP): Q3 earnings of $4.67B (-47%) vs. consensus of $3.25B. Sees 2009 costs down by $4B vs. a previous $3B. Total production +6.9%. Shares +5% premarket. (PR)
  • Canadian Pacific Railway (NYSE:CP): Q3 EPS of $0.85 beats by $0.07. Revenue of $1.09B (-14%) in-line. (PR)
  • Celanese (NYSE:CE): Q3 EPS of $0.58 beats by $0.15. Revenue of $1.3B (-28.5%) in-line. (PR)
  • CommScope (CTV): Q3 EPS of $0.61 beats by $0.05. Revenue of $750M (-29.4%) vs. $784M. (PR)
  • Convergys (NYSE:CVG): Q3 EPS of $0.27 beats by $0.04. Revenue of $765M (+13.2%) vs. $653M. (PR)
  • Corn Products International (CPO): Q3 EPS of $0.70 beats by $0.07. Revenue of $971M (-10.5%) vs. $983M. (PR)
  • EarthLink (NASDAQ:ELNK): Q3 EPS of $0.28 beats by $0.03. Revenue of $174M (-24.4%) in-line. Net subscriber losses of 146K, down from 149K in Q2 and 275K a year ago. Shares +3.8% premarket. (PR)
  • Del Monte (NYSE:FDP): Q3 EPS of $0.61 beats by $0.24. Revenue of $766M vs. $819M. (PR)
  • FirstEnergy (NYSE:FE): Q3 EPS of $1.11 beats by $0.06. Revenue of $3.4B (-12.8%) vs. $2.96B. (PR)
  • FPL Group (FPL-OLD): Q3 EPS of $1.38 misses by $0.03. Revenue of $4.47B vs. $4.96B. Shares -3.1% premarket. (PR)
  • Honda (NYSE:HMC): FQ2 profit of ¥54B (-56%) beats consensus by ¥11B. U.S. vehicle sales -25% to 300K. Sees full-year net income of ¥155B, almost triple its previous forecast, and global sales of 3.4M, up 3.2%. (Bloomberg)
  • Hospira (NYSE:HSP): Q3 EPS of $0.90 beats by $0.21. Revenue of $1.01B (+8.9%) vs. $0.94B. Shares +3.7% premarket. (PR)
  • IAC/InterActiveCorp (IACI): Q3 EPS of $0.34 beats by $0.21. Revenue of $337M (-8.9%) in-line. Shares +1.3% premarket. (PR)
  • Iconix Brand Group (NASDAQ:ICON): Q3 EPS of $0.31 beats by $0.03. Revenue of $59.4M (+7.7%) vs. $53.9M. Shares -1.3% premarket. (PR)
  • Johnson Controls (NYSE:JCI): FQ4 EPS of $0.52 beats by $0.01. Revenue of $7.87B (-15.5%) in-line. (PR)
  • L-3 Communications (NYSE:LLL): Q3 EPS of $2.12 beats by $0.27. Revenue of $3.84B (+4.9%) in-line. (PR)
  • Life Technologies (NASDAQ:LIFE): Q3 EPS of $0.73 beats by $0.11. Revenue of $805M (+2.7%) vs. $791M. Shares +4.1% premarket. (PR)
  • Sonic Automotive (NYSE:SAH): Q3 EPS of $0.21 misses by $0.03. Revenue of $1.52B (-5.9%) in-line. (PR)
  • TD Ameritrade (NASDAQ:AMTD): Q3 EPS of $0.26 beats by $0.04. Revenue of $658M (+1.3%) vs. $630M. Avg. client trades +35% to 411K/day. Used 70% of net income to buy back shares at average of $11.94/share. Shares +1.4% premarket. (PR)
  • Textron (NYSE:TXT): Q3 EPS of $0.12 vs. consensus of -$0.03. Revenue of $2.55B (-26.6%) in-line. Sees full-year EPS of $0.33-0.63 vs. consensus of -$0.06. (PR)
  • Under Armour (NYSE:UA): Q3 EPS of $0.52 beats by $0.08. Revenue of $270M (+16.2%) vs. $250M. Shares +1.6% premarket. (PR)
  • United States Steel (NYSE:X): Q3 EPS of -$2.11 beats by $0.76. Revenue of $2.82B (-61.5%) vs. $2.72B. Shipment volumes and operating rates increased significantly from the very low levels of Q2. Remains cautious in its outlook for end-user demand, as customer order rates have decreased from Q3. Shares +4.4% premarket. (PR)
  • Valero (NYSE:VLO): Q3 EPS of -$0.39 misses by $0.06. Revenue of $19.5B (-45.8%) vs. $18.8B. Refining margins continued to suffer from a combination of weak demand for refined products and high inventories. Shares +0.6% premarket. (PR)
  • Wynn Resorts (NASDAQ:WYNN): Q3 EPS of $0.33 beats by $0.18. Revenue of $773M vs. $743M. Shares +1.9% premarket. (PR)

Earnings: Mon. After Close

  • Arris Group (NASDAQ:ARRS): Q3 EPS of $0.25 beats by $0.01. Revenue of $276M (-7%) vs. $274M. Shares +0.7% AH. (PR)
  • Baidu.com (NASDAQ:BIDU): Q3 EPS of $2.16 beats by $0.35. Revenue of $187M (+39%) vs. $188M. Sees Q4 revenue of $174M-180M vs. $203M. Shares -13.1% AH. (PR)
  • Cabot Oil & Gas (NYSE:COG): Q3 EPS of $0.41 beats by $0.05. Revenue of $207M (-15%) vs. $205M. (PR)
  • DryShips (NASDAQ:DRYS): Q3 adjusted EPS of $0.27 beats by $0.07. Revenue of $228M (-30%) vs. $210M. Shares -0.3% AH. (PR)
  • Flextronics International (NASDAQ:FLEX): FQ2 EPS of $0.13 beats by $0.04. Revenue of $5.8B (+1%) in-line. Sees Q3 EPS of $0.14-0.16 vs. $0.13. Shares +2.7% AH. (PR)
  • Health Management Associates (NYSE:HMA): Q3 EPS of $0.10 beats by $0.01. Revenue of $1.1B (+6%) in-line. Shares -1.1% AH. (PR)
  • Masco (NYSE:MAS): Q3 EPS of $0.08 misses by $0.01. Revenue of $2.1B (-17%) vs. $2B. Sees full-year adjusted EPS of $0.12-0.22 vs. $0.07. Shares -0.1% AH. (PR)
  • Plum Creek Timber (NYSE:PCL): Q3 EPS of $0.12 beats by $0.04. Revenue of $294M (-29%) vs. $274M. Sees Q4 EPS of $0.12-0.17 vs. $0.12, and full-year EPS of $1.39-1.44 vs. $1.35. Shares +0.6% AH. (PR)
  • SL Green Realty (NYSE:SLG): Q3 EPS of $0.98 in-line. Revenue of $250M (-7%) vs. $224M. (PR)
  • Vertex Pharmaceuticals (NASDAQ:VRTX): Q3 EPS of -$0.71 beats by $0.10. Revenue of $25M (-21%) vs. $30M. (PR)
  • VF Corp. (NYSE:VFC): Q3 EPS of $1.94 misses by $0.01. Revenue of $2B (-5%) in-line. Shares -7% AH. (PR)

Today's Markets

Asia's markets dropped strongly on Tuesday, but Europe is above breakeven at midday, and futures are flat after a U.S. pullback Monday.

  • Asia: Nikkei -1.4% to 10212. Hang Seng -1.9% to 22170. Shanghai -2.8% to 3021. BSE -2.3% to 16353.
  • Europe at midday: FTSE +0.4% to 5213. CAC +0.3% to 3757. DAX +0.3% to 5659.
  • Futures at 7:00: Dow +0.1% to 9853. S&P +0.1% to 1067. Nasdaq flat. Crude +0.6% to $79.18. Gold -0.3% to $1,040. Dec. 10-year note +0.13%. Euro +0.2% vs. dollar. Yen +0.3%. Pound +0.8%.

Tuesday's Economic Calendar

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