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.

PMI data from China has painted a mixed picture of the country's manufacturing sector, with the official gauge, which focuses on larger state-owned enterprises, edging up to 50.3 in March from 50.2 in February. The HSBC index, which gives more weight to smaller private companies, slipped to 48 from 48.5. HSBC says that its reading confirms the weakness of domestic demand and that it implies 1Q GDP growth of below the annual goal of 7.5%.

Eurozone manufacturing PMI slipped to 53 in March from 53.2 in February as French PMI returned to expansion territory and hit a 33-month high. Spain and Ireland continued to roar ahead, but German growth eased and Greece dipped back into contraction. The survey indicates that production rose 1% in Q1 and GDP 0.5%. Meanwhile, eurozone unemployment held steady at 11.9% in February, coming in below consensus of 12%.

The Bank of Japan's Tankan survey of large-manufacturing sentiment increased for the fifth consecutive time, edging up to a seven-year high of 17 in Q1 from 16 in Q4 but slightly missing consensus of 18. The non-manufacturing index rose to 24 from 20. However, with sales tax increasing to 8% today from 5%, Japanese businesses are pessimistic for the future, and manufacturers are set to sharply scale back capex growth.

BHP Billiton is considering structural options as part of what it today called the "simplification" of its portfolio. The company was responding to reports that it could spin off non-core operations into a new A$20B company. The assets the new firm would receive could include BHP's (NYSE:BHP) aluminum, nickel and bauxite businesses. The problem for the spin-off company would be that many of the assets are struggling due to weak commodity prices.

Marvell Technology has been ordered to pay almost $1.54B by a district judge for breaching two hard disk drive patents held by Carnegie Mellon University. The amount is well above the $1.17B that a jury awarded Carnegie in December 2012. The judge, Nora Barry Fischer, increased the payout because she believes that Marvell (NASDAQ:MRVL) copied the IP with "known willful infringement."

Private-equity firm Ares Management has filed for an IPO on the NYSE, where it would trade under the symbol ARES. The company has $74B in assets under management, with the figure growing by a compound annual rate of 24% over the last five years. In 2013, Ares generated management fees of $517M and economic net income of $329M.

A group of investors has sued 12 banks for allegedly colluding to manipulate currency rates, with the firms under attack including Bank of America (NYSE:BAC), Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), JPMorgan (NYSE:JPM) and Morgan Stanley (NYSE:MS). The investors are from across the U.S. and Caribbean, and include city and state pension plans such as the City of Philadelphia and the State-Boston Retirement System.

The FBI is investigating whether high-frequency trading companies break the law by abusing fast-moving information they receive before other investors. Inter alia, the agency is looking at whether traders manipulate the market by placing a set of orders and then very quickly canceling them. News of the probe comes after Michael Lewis accused high-speed trading firms of rigging the markets in a new book called "Flash Boys."

McDermott has warned that its Q1 results may "differ substantially from the company's current expectation." McDermott (NYSE:MDR), an engineering firm, forecasts that the operating-profit margins of projects in backlog will be in the low single digits, which does not cover restructuring costs or a portion of fixed expenses.

Eni CEO Paolo Scaroni has received a three-year prison sentence after being found guilty in Italy of allowing "inadequate environmental standards" while he was CEO of utility Enel. In Italy, defendants typically avoid serving prison terms for sentences of three years and less, but the verdict casts further doubt on whether the government will renominate Scaroni as head of Eni (NYSE:E) when his term expires in May.

General Motors CEO Mary Barra plans to tell a Congressional subcommittee today that she doesn't know why it took years for a safety defect involving ignition switches to be disclosed. Barra said GM (NYSE:GM) will be transparent with the details as they become available. Faulty switches in Chevrolet Cobalts, Saturn Ions and other models are due to start being replaced on April 7.

Caterpillar has been accused of avoiding paying $2.4B in taxes by shifting billions of dollars in profits to a wholly owned Swiss affiliate. The allegations were made by Senator Carl Levin ahead of hearings at a Senate panel today into Caterpillar's (NYSE:CAT) offshore tax strategies.

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Today's Markets:
In Asia, Japan -0.2% to 14792. Hong Kong +1.3% to 22449. China +0.7% to 2047. India +0.3% to 22446.
In Europe, at midday, London +0.4%. Paris +0.7%. Frankfurt +0.5%.
Futures at 6:20: Dow +0.15%. S&P +0.1%. Nasdaq +0.1%. Crude -0.3% to $101.28. Gold -0.5% to $1287.30.
Ten-year Treasury Yield +3 bps to 2.75%

Today's economic calendar:
Auto sales
7:45 ICSC Retail Store Sales
8:30 Gallop US ECI
8:55 Redbook Chain Store Sales
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
11:00 Global Manufacturing PMI

Notable earnings after today's close: APOL

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