Wall Street Breakfast: Must-Know News

by: SA Editor Yigal Grayeff
SA Editor Yigal Grayeff
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.

  • EU delays €12B payment to Greece. Markets around the world have fallen after eurozone finance ministers last night postponed until July the transfer of a €12B ($17.1B) loan payment to Greece that would prevent a default. U.S. stock futures are down, as are European shares, the euro and commodities. The EU is conditioning the tranche - part of Greece's €110B bailout - on Prime Minister George Papandreou driving through €28B in unpopular austerity measures. First, though, the PM must survive a no-confidence vote due for Tuesday. In a statement, the finance ministers said they would seek private sector agreement to a 'voluntary' rollover of their Greek debt as part of a second bailout.
  • PNC to buy RBC Bank for $3.45B. PNC Financial Services (NYSE:PNC) has agreed to buy Royal Bank of Canada's (NYSE:RY) U.S. retail banking unit for $3.45B in a deal that represents a $112M discount to the unit's tangible book value. PNC has the option to pay up to $1B in the form of stock, with the deal expected to boost earnings by 2013. The acquisition enables PNC to expand into the south east, where it has relatively little presence. RBC, meanwhile, is shedding a subsidiary that has been hit by the housing crisis - the unit has made 11 consecutive quarterly losses, and combined annual losses of about $3.1B since 2007.
  • Airbus set to fly high at Paris Air Show. Airbus (OTCPK:EADSY) is reportedly poised to announce a record $17B order from AirAsia (OTCPK:AIABF) for 200 of its A320neo jets at the Paris Air Show this week. Today, Airbus received a booking for 60 of the planes from GECAS, the commercial aircraft leasing and financing arm of GE (NYSE:GE). The plane maker also hopes to finalize an order from IndiGo for 150 of the jets in a deal that was first flagged in January. The prospective transactions highlight the growing importance of Asia in the market and the demand for fuel-efficient planes amid higher fuel prices. Boeing (NYSE:BA) will decide over the next several months whether to make the 737 more efficient or build a new plane in response to the success of the A320neo.
  • GE, unions in agreement on new contracts. GE (GE) and two of its largest unions have tentatively agreed on new four-year labor contracts that include wage and pension boosts for workers. The terms of the deals with the IUE-CWA and with the United Electrical, Radio & Machine Workers of America will be extended to additional unions that have local contracts with GE, and so will cover over 15,000 workers, or about 11% of GE's U.S. employees. The agreements are subject to review and ratification by June 30, and will replace contracts that expired last night.
  • Panasonic forecasts 11% fall in operating profit. Panasonic (PC) expects its operating profit to fall 11% to ¥270B yen ($3.4B) in FY 2012 due to the damage from Japan's earthquake, although the prediction is above analyst estimates of ¥262.6B. Demand for electronic car parts and accessories has been sluggish due to depressed domestic auto production, while the company is facing competition in its flat-screen business from lower-cost Chinese and South Korean companies. "Like rivals Sony (NYSE:SNE) and Sharp (OTCPK:SHCAY), they (Panasonic) have structural disadvantages," said an asset manager. Panasonic is attempting to deal with these disadvantages, announcing in April a program to cut 17,000 jobs and close dozens of factories.
  • Japan May exports plunge 10.3%. Japan's overseas sales dropped 10.3% to ¥4.76T ($6B) in May, badly affected by massive production losses in the auto sector following the March earthquake. The fall was greater than a predicted decline of 8.4%, and combined with a 12.3% jump in imports to 5.61T, resulted in a trade deficit of ¥853.7B - Japan's second biggest. The government voiced confidence that the deficit was only a temporary blip, noting that auto production was recovering from the disaster. However, the figures raised concerns that weakness in overseas demand will constrain factory production and delay the economic rebound.
  • Ford investing $1B on Lincoln cars. Ford (NYSE:F) is spending $1B on seven all-new or significantly upgraded Lincolns that will roll out over the next four years in what the car maker sees as a 'last chance' to revive the struggling brand, sources said. Lincoln was once the top-selling luxury marque in the U.S., but it only sold 85,828 vehicles last year, fewer than rivals such as Lexus (NYSE:TM), BMW (BAMXY.PK), Mercedes-Benz (OTCPK:DDAIF) and Cadillac (NYSE:GM). Ford aims to almost double Lincoln sales to 162,000 by 2015.
  • ING to sell car leasing unit. Fresh from agreeing to sell its U.S. online bank to Capital One (NYSE:COF) for $9B just last week, ING (NYSE:ING) has confirmed it is in talks to sell its car leasing business, with Dutch media reporting the unit may be worth €4B ($5.7B). The Dutch bank is selling the assets to comply with conditions placed upon it when it received €10B in a state bailout in the 2008 financial crisis, although ING Car Lease hadn't previously been earmarked for divestment. As part of its plans, ING also intends to list its insurance operations in two separate IPOs.
  • Details of 1.3M Sega users stolen. Sega (OTCPK:SGAMY) has joined the list of hacking victims after thieves stole the names, birth dates, e-mails and passwords of 1.3M members of its Sega Pass online network. Credit card numbers, though, were not exposed. The breach follows cyber attacks on several companies and organizations, including Google (NASDAQ:GOOG), Sony (SNE), Nintendo (OTCPK:NTDOY), Lockheed Martin (NYSE:LMT), the CIA and the Senate. In a twist, the hacker group responsible for some of these attacks, Lulz, has offered to find and punish Sega's assailants.
  • Regulators to increase embeds at banks. As part of efforts to prevent another financial crisis, the New York Fed and the Office of the Comptroller of the Currency are increasing the number of examiners who work at the offices of the banks they regulate. Sources said the NY Fed plans to double the number of its 'embeds' from 150, while the OCC expects to increase the number of its examiners by 10% from 500. The embeds have unprecedented access to banks such as Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS), with the top examiner at each firm meeting the CEO once a month.

Today's Markets

  • In Asia, Japan +0.0% to 9354. Hong Kong -0.4% to 21600. China -0.8% to 2623. India -2.0% to 17507.
  • In Europe, at midday, London -0.7%. Paris -1.2%. Frankfurt -1.1%.
  • Futures at 7:00: Dow -0.5%. S&P flat. Nasdaq -0.4%. Crude -1.3% to $91.83. Gold -0.1% to $1538.10.

Monday's Economic Calendar

  • No events scheduled

The SA Currents team contributed to this post.

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