Wall Street Breakfast: Oil Export Policy, Russell Acquired, Barclays Lawsuit

by: Wall Street Breakfast
Wall Street Breakfast
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Following yesterday's reports that the ban on U.S. oil exports will begin to narrow, the White House has announced that there has been no change to its policy. U.S. law allows for refined oil, even minimally refined, to be exported under the name fuel, instead of crude oil. Pioneer Natural Resources (NYSE:PXD) and Enterprise Products Partners (NYSE:EPD) therefore received permission to ship their condensates, classed as fuel, to foreign buyers.

China's national chief auditor has discovered $15.2B in falsified gold transactions that have been borrowed from banks since 2012. Chinese traders and investors are known to borrow against commodities such as gold, copper and soybeans, and most of it is valid trading. However, the Chinese audit office has found many gold processing firms which borrowed based on fake transactions in the gold market. Further investigation may result in new restrictions on commodity financing.

The London Stock Exchange announced it is buying the asset-management and stock index unit Frank Russell for $2.7B. A large chunk of the funding for London Stock Exchange's (OTCPK:LDNXF) acquisition will be based off a $1.6B rights issue to be issued in September. The stock-index operations of Frank Russell include the Russell 2000 barometer of small-cap stocks, and its investment business that has $256B in assets under management.

Philip Morris has reported a drop to its 2014 forecast, cutting earnings to $4.87-$4.97 per share, from the $5.09-$5.19 per share it previously expected. The company still estimates adjusted profit in 2014 to rise 6-8%. "We continue to face significant currency headwinds, an improving but weak macro-economic environment in the European Union and known challenges in Asia," says Philip Morris (NYSE:PM) CEO Andre Calantzopoulos.

Barclays has withdrawn a $1.5B bond offering, after yesterday's news that NY Attorney General Eric Shneiderman will sue the bank for securities fraud. The bank already received more than $4.5B in orders for the 10-year subordinated deal, before the lawsuit took its toll. The claim accuses Barclays (NYSE:BCS) of favoring high frequency traders over other investors, and charges the bank of falsely representing the concentration of HFT in its dark pool.

BNP Paribas may now face another penalty from U.S. authorities due to its money transfer sanction violations. The NY Department of Financial Services is now looking to impose a year suspension on the bank's "dollar clearing" service, affecting hundreds of billions of dollars in everyday business. The suspension will cause a hefty hit to BNP Paribas (OTCQX:BNPQF), although it will allow the bank to retain its New York operating license.

Confirming earlier reports, Daimler and Nissan have completed a deal establishing a 50-50 joint venture at a Nissan plant in Mexico. Since 2010, Mercedes (OTCPK:DDAIF), Nissan (OTCPK:NSANY) and Renault (OTC:RNSDF) have shared engines, plants and vehicle architectures, and the new agreement further forges the German automaker's bond with the Renault-Nissan alliance. Advantages of the venture include an expansion of Nissan's Mercedes parts sharing, and Daimler will be able to lower development costs.

General Motors will close its Opel Bochum factory in Germany, in pursuit of bringing down its high operating costs in Europe. The company estimates it will cost a total of $866M to shut down. Opel's heavy losses have inhibited GM's (NYSE:GM) European sales for most of the last decade, and the closure is seen as a key step toward GM's restructuring.

GoPro has finalized its share price at $24, suggesting the sports/action camera vendor will see a strong debut this morning. GoPro (NASDAQ:GPRO) is set to raise $214M by selling 8.9M new shares; an equal number of shares are being sold by existing holders. The IPO price values the company at almost $3B, or 3x 2013 sales.

Austrian chipmaker AMS and Dialog Semiconductor have entered talks today to discuss an upcoming merger. If combined, the market value of the new entity would reach approximately $5B. AMS and Dialog (OTCPK:DLGNF) both supply iPod and iPad chips to Apple (NASDAQ:AAPL), and are big players in the market. The merger would create a competitive large European chipmaker, and would support the increasing need for chips resulting from the rise in global demand for connectivity.

Google has started to remove search results following the new EU “right to be forgotten” ruling which went into effect on May 30. The law allows for Europeans to request the company censor links or damaging information. Google (GOOG, GOOGL) reports that searches for names in Europe will now note "may have been removed".

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Today's Markets:
In Asia, Japan +0.3% to 15308. Hong Kong +1.5% to 23198. China +0.7% to 2039. India -1% to 25063.
In Europe, at midday, London +0.1%. Paris +0.1%. Frankfurt +0.1%.
Futures at 6:20: Dow flat. S&P flat. Nasdaq flat. Crude -0.1% to $106.43. Gold -0.8% to $1312.20.
Ten-year Treasury Yield flat at 2.56%

Today's economic calendar:
8:30 Initial Jobless Claims
8:30 Personal Income and Outlays
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
1:00 PM Results of $29B, 7-Year Note Auction
1:05 PM Fed's Bullard: “Monetary Policy and Income Inequality”
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Notable earnings before today's open: ACN, CAG, LEN, MEI, MKC, SCHN, SCS, SJR, WGO, WOR

Notable earnings after today's close: NKE, PRGS

See full real-time earnings coverage »

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