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.

The Bank of Japan has kept its key interest rate at 0.1% and left unchanged its program of expanding the monetary base by ¥60-70T ($580-680B) a year. The BOJ refrained from further easing and maintained its optimism about the economy despite concerns about the impact of a rise in sales tax that took effect last week.

Ukraine's security forces have been attempting to clear Kharkiv, the country's second-biggest city, of separatists as the government tries to counteract what it sees as Russian schemes to engineer more annexations. Violence has flared amid pro-Russian demonstrations in Ukraine, with the latter accusing its neighbor of using separatists to seize administration buildings in Luhansk and Donetsk. The increasing tension has weighed on European shares today.

The Senate has passed a bill that would extend benefits for 2.8M people who have been out of work for at least six months, with the measure receiving support from several prominent Republicans. The legislation would restore the payout for five months retroactive to December, when it expired. The bill now goes to the House, where approval may be harder to come by due to concerns about costs.

Puerto Rico has hired restructuring lawyers from Cleary Gottlieb Steen & Hamilton, prompting speculation that the commonwealth is about to revamp its $70B of debt. Puerto Rico wouldn't be drawn on what the law firm's specific role is. Cleary has represented a who's who of debt-laden countries, including Greece, Iceland and Argentina. News of the hiring comes after Puerto Rico raised $3.5B in bonds last month.

A jury has ordered Japan's Takeda to pay $6B and Eli Lilly (NYSE:LLY) $3B in punitive damages over allegations that they hid the cancer risks associated with the diabetes therapy Actos. However, Eli Lilly could be off the hook, as Takeda (OTCPK:TKPYY) agreed to indemnify Lilly for any legal liability connected to Actos. In addition, the award has a good chance of being cut on appeal.

Samsung's operating profit fell for the second quarter in a row in Q1, dropping a preliminary 4.3% to 8.4T won ($7.96B) vs consensus of 8.5T won. Sales rose slightly to 53T won from 52.87T won. Samsung (OTC:SSNLF) released its Q1 estimates ahead of the global launch of the Galaxy S5 on Friday amid criticism that the device doesn't have any overly interesting new features.

James River Coal has filed for Chapter 11 with $818.7M in debt after missing an interest payment on $275M of senior notes. As with Patriot Coal (PATCA), which filed for bankruptcy protection in July 2012, James River Coal (JRCC) has suffered from falling coal demand due to gas prices plunging because of the shale boom.

Alcoa is due to get earnings season underway after the bell today, with analysts estimating that Q1 EPS fell to $0.05 from $0.11 as revenue dropped 4.9% to $5.55B. Deutsche Bank yesterday upgraded Alcoa (NYSE:AA) to Hold from Sell, citing expectations of higher realized aluminum prices. A weekend report said Alcoa may be turning around, due to its commitment to using aluminum for cars and as global producers have begun to cut capacity.

Citigroup has agreed to pay 18 institutional investors $1.125B to settle demands that it repurchase billions of dollars in mortgage bonds. The deal covers 68 Citi-sponsored trusts that packaged $59.4B of home loans into securities from 2005 to 2008. If the agreement is approved, Citigroup (NYSE:C) wouldn't have to buy back the mortgages.

Regulators are due to vote today on whether to increase the "leverage ratio" for the eight largest U.S. banks to 5-6% of their total assets. The Basel III standard is 3%. The move would force banks to add tens of billions of dollars in loss-absorbing capital, although many firms have already been bulking up in anticipation of the rule change.

Fourteen companies are due to price IPOs through Thursday, which would make this week the busiest for such offerings since November 2007. Ally Financial (NYSE:ALLY), in which the Treasury plans to sell $2.5B of shares, and hotel chain La Quinta (NYSE:LQ), which intends to raise $725M, are among the standout debutants. A total of $4.8B in stocks is projected to be sold.

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Today's Markets:
Japan -1.4% to 14607. Hong Kong +1% to 22597. China +1.9% to 2098. India closed.
In Europe, at midday, London -0.7%. Paris -0.6%. Frankfurt -0.6%.
Futures at 6:20: Dow flat. S&P flat. Nasdaq +0.1%. Crude +0.7% to $101.16. Gold +0.75% to $1313.30.
Ten-year Treasury Yield flat at 2.7%.

Today's economic calendar:
7:30 NFIB Small Business Optimism Index
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
10:00 Job Openings and Labor Turnover Survey
1:00 PM Results of $30B, 3-Year Note Auction
1:30 PM Fed's Kocherlakota Speech
2:45 PM Fed's Plosser: "Enhancing Prudential Standards in Financial Regulations"
4:00 PM Fed's Evans: "Managing the Transition to Normality"

Notable earnings after today's close: AA, SAIC, WDFC

See full real-time earnings coverage »

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