Wall Street Breakfast: Must-Know News

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Includes: AAPL, ABB, BAC, CVS, DG, DIA, EMR, ESRX, FCAU, GLD, GOOG, GS, MHS, MMC, NAV, PLL, QQQ, SPY, THC, TLB, TTWO, UBS, USO, WBA
by: Rachael Granby
Rachael Granby
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.

  • ABB buys Chloride Group. ABB (NYSE:ABB) is buying UK-based Chloride Group for £860M ($1.25B) as part of its efforts to improve its automation offering. The news sent shares of Chloride Group soaring in London trading as investors now expect Emerson Electronic (NYSE:EMR) to submit a counter-bid after its earlier offer was rejected. Analysts, however, suggested Chloride's price may already be out of Emerson's reach. Premarket: ABB +2.3% (7:00 ET).
  • Swiss reject handover of U.S. client data. Switzerland's lower house of parliament rejected a bill that would have enabled the country to hand over the names of thousands of UBS (NYSE:UBS) clients who allegedly evaded U.S. taxes. The upper house voted in favor of the bill last week, and the two houses must now work out their differences. Swiss authorities are trying to get the bill passed before an August deadline to hand over the information.
  • Countrywide settles overcharging allegations. In one of the largest-ever fines in an FTC case, Countrywide (NYSE:BAC) will pay a $108M settlement on charges it cheated hundreds of thousands of homeowners by using inflated fees. The funds will be used to reimburse more than 200,000 customers who were overcharged on their loans before Countrywide's July 2008 acquisition by Bank of America. "Life is hard enough for homeowners who are having trouble paying their mortgage," FTC Chairman Jon Leibowitz said in a statement. "To have a major loan servicer like Countrywide piling on illegal and excessive fees is indefensible."
  • FCIC subpoenas Goldman. The Federal Crisis Inquiry Commission revealed yesterday that it had issued a subpoena to Goldman Sachs (NYSE:GS) last week for failing to provide certain requested information and for ignoring requests for interviews with executives including CEO Lloyd Blankfein and CFO David Viniar. Goldman also sent the FCIC over a billion pages of documents, some of them unrelated to the FCIC's investigations, in a "deliberate effort over time to run out the clock.”
  • Tenet Healthcare gives up on Healthscope talks. Tenet Healthcare (NYSE:THC) ended discussions about a potential acquisition of Australian hospital operator Healthscope. Tenet said the decision was prompted by the premature disclosure of its interest in Healthscope and other non-public information, and by its inability to complete the work necessary to convince Healthscope's investors that a deal makes sense. In regular trading yesterday, THC +3.9%.
  • Walgreens dumps CVS networks plan. Walgreens (WAG) announced yesterday that it would no longer participate in CVS Caremark's (NYSE:CVS) pharmacy networks plan, citing CVS' "management practices toward Walgreens." CVS called the unexpected decision "nothing more than a transparent effort to raise its reimbursement rates." The news hurt shares of both Walgreens (-2.7%) and CVS (-8.1%) in yesterday's trading, and gave a nice lift to Express Scripts (ESRX +4.3%) and Medco (MHS +3%), which are seen as benefiting from the Walgreens announcement.
  • MMC sells Kroll. Marsh & McLennan (NYSE:MMC) reached a deal yesterday morning to sell Kroll, its corporate intelligence unit, to Altegrity for $1.13B. Altegrity is owned by private equity firm Providence Equity Partners. The all-cash transaction brings to an end MMC's months-long auction of the unit, and carries a significantly lower price tag than the 2004 deal in which MMC bought Kroll. The news helped lift shares premarket, but investors had second thoughts during the course of the day, pushing MMC to a -2% close.
  • IMF calls for eurozone action. The IMF called for "decisive action" from the eurozone to ensure the debt crisis doesn't threaten the stability of the region's monetary union, and urged nations to "establish fiscal sustainability” and “spur growth.” However, IMF chief Dominique Strauss-Kahn noted the eurozone's debt and deficit levels “aren’t hugely higher than elsewhere. The stress put on Europe is probably exaggerated.” The comments came as eurozone finance ministers gave their final approval to a €440B ($520B) section of the region's rescue package.
  • Estonia to join eurozone. Estonia will become the 17th member of the eurozone, effective Jan. 1, 2011. European finance ministers backed Estonia's bid to adopt the euro despite ECB warnings that the country may find it difficult to keep inflation in check.
  • Brake defects prompt Chrysler recalls. Chrysler (FIATY.PK) confirmed it's voluntarily recalling more than 683,000 jeeps and minivans for defects in the brake lines and wiring. This follows Chrysler's recall of 35,000 vehicles last week in connection to stuck-accelerator problems.
  • New iPhone to fend off rivals. As widely expected, Apple (NASDAQ:AAPL) unveiled a new iPhone yesterday that boasts a thinner design and 100 new features, including video chat, a front-facing camera and better battery life. The iPhone 4 goes on sale June 24 for $199 as Apple tries to stay ahead of rivals using Google's (NASDAQ:GOOG) Android software in the increasingly lucrative smartphone market. Analysts called the new model "more evolutionary than revolutionary," and warned it could be difficult for Apple to impress the market when expectations are already so high.
  • Connecticut takes aim at Google. Connecticut Attorney General Richard Blumenthal is looking into Google (GOOG) to determine if the company inadvertently collected personal consumer information in the state via its Street View vehicles. "Unauthorized surveillance of wireless network data is the dark side of the new internet era - and I will fight it," said Blumenthal, who is running for a U.S. Senate seat.

Today's Markets

  • In Asia, Japan +0.2% to 9538. Hong Kong +0.6% to 19487. China +0.1% to 2514. India -1.0% to 16617.
  • In Europe, at midday, London -0.8%. Paris -1.2%. Frankfurt -0.8%.
  • Futures: Dow +0.3%. S&P +0.3%. Nasdaq +0.3%. Crude -0.5% to $71.09. Gold +0.7% to $1249.80.

Tuesday's Economic Calendar

Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.


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