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
Summers withdraws from consideration for Fed Chief. Larry Summers has dropped out from the race to become the next Chairman of the Federal Reserve, saying that "any possible confirmation process for me would be acrimonious," and would not serve the interests of the Fed, the government or the economy. The remaining top contenders are Janet Yellen and Don Kohn, both of whom helped shape the Fed's super easy money policy, of which Summers has been a critic.

Stocks up, rates and dollar down on Summers news. Global equities were mostly higher at the time of writing following Larry Summers' exit from consideration as the next Fed chief, although the dollar index was -0.4% and 10-year Treasury yields were -0.8 bps to 2.81%. "Clearly the dollar doesn't like the idea it could be Yellen at the helm because of the interpretation that QE (stimulus) could be in place for longer," said Rabobank currency strategist Jane Foley. Gold was +0.45%, but oil was -1.3%, possibly hurt by the increasing prospects of a diplomatic solution to the Syrian crisis. (See below)

Chrysler could submit IPO filing this week. Chrysler is preparing to file for an IPO this week and could list this year, CEO Sergio Marchionne has told the FT. Marchionne, who's also the CEO of 58.5% Chrysler owner Fiat (FIATY.PK), said he's going to the market to determine the value of shares held by a retirement trust, which owns the rest of the U.S. car maker. The trust wants $10.3B for Fiat to buy the stock, but the Italian auto firm values the holding at $4.2B.

Top Stock News
Boeing moves closer to winning $7.64B S. Korean fighter-jet deal. The officials managing South Korea's 8.3T won ($7.64B) tender for new fighter aircraft have reportedly briefed President Park Geun-hye that Boeing's (NYSE:BA) F-15 Silent Eagle proposal is the only eligible bid. Boeing's offer was the only one of three that came in under budget, with the other two being a proposal from Lockheed (NYSE:LMT) for F-35s and one from the Eurofighter consortium for the Typhoon. However, former Air Force chiefs prefer the F-35.

Repsol looking to make big U.S. acquisition. Repsol (OTCQX:REPYY) is reportedly looking to spend $5-10B on an acquisition in North America as the Spanish oil major seeks to gain a foothold in "stable" market economies after the Argentina debacle - in which its YPF unit was nationalized - imperiled the company's investment-grade rating. Possible targets include Whiting Petroleum (NYSE:WLL) and Kodiak Oil & Gas (NYSE:KOG).

Roche appoints Lufthansa CEO as Chairman. Roche (OTCQX:RHHBY) has nominated Deutsche Lufthansa (OTCQX:DLAKF) CEO Christoph Franz to become non-executive Chairman to replace Franz Humer. Franz's tasks include ensuring that Roche overcomes the impact of a patent cliff and possibly to decide whether the Swiss drugmaker should purchase the stake held in the firm by rival Novartis (NYSE:NVS). He will officially leave Lufthansa in May.

U.S. watches as U.K. launches new rules to ease bank switching. Starting today, tens of millions of U.K. consumers will be able to seamlessly switch bank accounts within seven working days, down from 19-30 days until now - with help from the companies that they're leaving. The project is being closely watched in the U.S., where banks have no obligations to assist customers if they want to switch, and where the U.K. program could serve as a template.

Top Economic & Other News
Key Merkel ally wins big in Bavaria, junior ally loses badly. German Chancellor Angela Merkel experienced mixed results in key elections in the region of Bavaria yesterday, just a week ahead of a national poll next Sunday. A sister party of Merkel's Christian Democratic Union (CDU) won a landslide but the CDU's junior coalition partner, the market-oriented Free Democratic Party (FDP), won just 3%. Polls suggest that Merkel will be returned to power for a third term, but coalition negotiations could be tricky if the FDP is wiped out.

Obama sets out latest stall over budget, debt ceiling. Barack Obama has said he is willing to negotiate with Republicans over tax and spending but he won't exchange cuts in his healthcare program - as demanded by some Republicans - for a rise in the debt ceiling. Washington has until the end of the month to negotiate a government-funding bill and avoid a shutdown, while the debt limit is due to be reached in mid-October.

Eurozone inflation edges up. As expected, Eurozone CPI rose 0.1% on month in August vs -0.5% in July. On year, inflation slipped to 1.3% from 1.6% and dropped further away from the ECB's target of just under 2%, giving the bank further room to ease if it so wishes.

Indian headline inflation hits six-month high. India's wholesale price index, the country's main gauge of inflation, climbed to a six month high of 6.1% in August from 5.79% in July and topped consensus of 5.8%. The rise was driven by an 18.2% jump in food inflation and an increase in energy prices. The climb strengthens the case for Raghuram Rajan, the new governor of the Reserve Bank of India, to keep interest rates high at his first policy meeting on Friday. India's Sensex was +0.05% at the time of writing, while the USD-INR was -1% at 62.755 rupees.

U.S., Russia agree to deal on Syrian chemical-weapons disarmament. The U.S. and Russia have reached a deal whereby Syria will have a week to provide information about its chemical weapons and then until the middle of next year to let international inspectors destroy them. Given Syria's civil war, it's not clear how realistic the timetable is. If the agreement is not implemented, the U.S. is prepared to take military action, President Obama said.

Alpha-Rich Stock Movers and Great Calls
1) Last Monday, Mike Arnold told Spark Networks' (NYSEMKT:LOV) story, saying the company's faith-based dating services and low valuation could beget 65% upside. The stock is +13.2% since. Read article »
2) On July 5th, Alpha Bet said United Natural Foods (NASDAQ:UNFI) had more room to run, with at least 20% upside. After a big earnings report on Friday, the stock is +24.2% from when the article was published. Read article »

Alpha-Rich Stocks To Watch
1) Rare Element Resources (NYSEMKT:REE) is lagging a positive change in sentiment for its sector and has room to run as it retraces to past heights. Read article »
2) Allied World Assurance (NYSE:AWH) is still in the early stages of the insurance profitability cycle. With its share price tracking tangible book value, the stock has limited downside and 20% upside. Read article »

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Today's Markets:
In Asia, Japan closed. Hong Kong +1.5% to 23252. China -0.2% to 2231. India +0.05% to 19742.
In Europe, at midday, London +0.6%. Paris +0.9%. Frankfurt +1.2%.
Futures at 6:20: Dow +1.1%. S&P +1.1%. Nasdaq +1%. Crude -1.3% to $106.84. Gold +0.45% to $1314.50.
Ten-year Treasury Yield at 6:20 -8 bps to 2.81%

Today's economic calendar:
8:30 Empire State Mfg Survey
9:15 Industrial Production

Notable earnings after today's close: OCLR

See full real-time earnings coverage »

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