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
Amazon stung as sales growth slows. Amazon's (NASDAQ:AMZN) shares were -4.6% premarket after the e-commerce giant's Q4 earnings and guidance missed expectations. Still, Amazon's net profit rose to $239M from $97M a year earlier, EPS was $0.51, and revenue increased 20% to $25.59B, although that represented a slowdown from Q3 and Q2. For a long time, Amazon hasn't been too worried about profits, but is that changing? The company is considering jacking up the price of its $79 Prime shipping program by up to 50%, which could add $500M to the bottom line.

Google profit rises but mobile continues to hit ad rates. Google's (NASDAQ:GOOG) Q4 net profit climbed 17% to $3.38B as revenue grew 17% to $16.86B and topped consensus, although adjusted EPS of $12.01 missed expectations. Google's paid click growth, boosted by mobile searches and product listing ads, continued to accelerate in Q4, but such metrics again took a toll on ad prices. The company also announced a long-delayed stock split that will further cement management's control of the company. Shares were +3.3% premarket.

Microsoft to name Nadella CEO, mulls replacing Gates - Bloomberg. Microsoft (NASDAQ:MSFT) is preparing to name server/cloud product chief Satya Nadella as its next CEO, Bloomberg reports. Microsoft is also thinking of replacing Bill Gates as Chairman with lead independent director John Thompson. Nadella is head of a product group that has arguably represented Microsoft's biggest success story over the last decade.

Top Stock News
Keystone review to play down carbon concerns - reports. The State Department's review of TransCanada's (NYSE:TRP) Keystone XL oil pipeline is expected to say that the project is unlikely to significantly increase carbon emissions, reports say, as oil sands in Alberta will be developed anyway. The 800,000 bpd line would transport crude from the Canadian province to refineries in the U.S. President Obama has said that he'll only approve Keystone if it won't cause an increase in carbon pollution. The review could be released today.

Honda's FQ3 profit surges. Honda's (NYSE:HMC) FQ3 net profit more than doubled on year to ¥160.7B ($1.6B) but slightly missed consensus of ¥165.25B. The weak yen and strong growth in Japan and North America helped outweigh the impact of investments in new plants. Revenue climbed 24.5% to ¥3.021T, with volumes increasing 9.7% to 1.08M vehicles. Honda reduced its full-year sales outlook for vehicles and motorcycles by around 1% but maintained its guidance that net profit would jump 58% to ¥580B and that revenue would increase 22% to ¥12.1T.

Top Economic & Other News
Japanese inflation edges closer to BOJ's 2% target. Japanese core inflation, which excludes food prices, edged up to a fresh five-year high of 1.3% on year in December from 1.2% in November and topped consensus that was also 1.2%. Overall inflation increased to 1.6% from 1.5%. While CPI is heading towards the Bank of Japan's target of 2%, the government wants businesses to increase wages in order to solidify the rise in inflation, the test of which will come in Spring wage negotiations. There are also concerns about the impact of an increase in sales tax in April.

Other Japanese data looking good too. Japan's unemployment rate dropped to the lowest since December 2007, falling to 3.7% last month from 4% in November and vs forecasts of 3.9%. The number of positions for every person looking for a job rose to 1.03, passing one for the first time since October 2007. Industrial production recovered with a rise of 1.1% on month vs -0.1% previously.

Eurozone CPI falls, reviving deflation fears. Eurozone inflation edged down to 0.7% on year in January from 0.8% in December, brought down by a sharp fall in energy costs. Consensus was for a rise to 0.9%. Overall CPI is now under half that of Japan. A question for policy makers in the eurozone is whether deflation is a major threat. ECB President Mario Draghi has indicated that he isn't too concerned, saying at the end of last month that "We don't have a situation as in Japan."

German retail sales suffer shock fall. German retail sales plunged 2.5% on month in December after rising 0.9% in November and badly missed consensus for an increase of 0.2%. The drop in sales is in marked contrast to surveys showing that consumer confidence is high and getting stronger, as well as to other positive economic data.

Bernanke's time at the Fed coming to an end. Today is Ben Bernanke's last day as Chairman of the Federal Reserve after eight years in the job. Writing in the New York Times, long-time Wall Street executive Steven Rattner believes that Bernanke has been "one of the finest chairmen in the institution's hundred year history." True, he "missed the housing bubble," "failed to detect the onset of recession" and was lax in asserting the Fed's regulatory responsibilities, but he "played a central role in averting a financial meltdown and lifting the nation out of recession."

Top Ideas: Movers and Great Calls
1) On Tuesday, Chris Bunge and Cabeza Howe laid out the bull case for desalination provider Energy Recovery (NASDAQ:ERII), with each seeing an inflection point in the business - and the stock - in the second half of the year. Shares are +10.2% since. Read first article » Read second article »
2) In July, Stephen Simpson, CFA said that investors were ignoring the future potential of the mobile and server businesses for Chinese computer-maker Lenovo (OTCPK:LNVGY). After buying Motorola from Google and a server unit from IBM, the stock is +45.5% to date. Read article »

Top Ideas To Watch
1) Mincor (OTCPK:MCRZF) is a pure-play miner with direct leverage to nickel and which should benefit from pending export controls in Indonesia, writes Itinerant. Read article »
2) NGV Investors says Hexagon Composites (OTC:HXGCF) is well-positioned in the promising market for natural-gas vehicles. Read article »

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

Today's Markets:
In Asia, Japan -0.6% to 14915. Hong Kong closed. China closed. India +0.1% to 20514.
In Europe, at midday, London -0.8%. Paris -1%. Frankfurt -1.3%.
Futures at 6:20: Dow -0.55%. S&P -0.5%. Nasdaq -0.15%. Crude -0.4% to $97.85. Gold +0.2% to $1245.50.
Ten-year Treasury Yield - 3 bps to 2.67%

Today's economic calendar:
8:30 Personal Income and Outlays
8:30 Employment Cost Index
9:45 Chicago PMI
9:55 Reuters/UofM Consumer Sentiment
3:00 PM USDA Ag. Prices

Notable earnings before today's open: ABBV, ALV, AON, AVY, BAH, BPO, CNX, CVX, D, IMGN, KCG, KFN, LEA, LM, LYB, MA, MAT, MJN, MOD, NOV, NWL, PCAR, SAIA, SPG, TSN, TYC, WETF, WY

See full real-time earnings coverage »

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