Wall Street Breakfast: Must-Know News

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.

A red Monday? Overseas markets are lower and futures foretell a weak Monday open as Greece scrambles to somehow resolve external demands for tougher demands with internal resistance to meaningful change.

Greece tries to convince eurozone neighbors. The Greek government reportedly held emergency meetings over the weekend following a warning that future eurozone aid will be withheld unless the country can bring its budget deficit under control. Prime Minister George Papandreou is looking to identify new savings to convince the eurozone that Greece can meet its budget targets. The pressure may be coming to a head, and with it the risk of crisis, as Greek FM Evangelos Venizelos said the country was being "threatened and humiliated" by continued demands for cuts by the ECB, IMF and European Commission.

Obama to propose $3.6T deficit cut. President Obama is expected to propose today around $3.6T of deficit reduction measures over the next decade, including entitlement cuts and tax hikes on corporations and individuals. Medicare and Medicaid would both have their budgets reduced, while Social Security would remain untouched, at least for now. The proposal is unlikely to pass Congress in its current format because of Republican opposition to tax increases.

Netflix to split off DVD business. Writing on Netflix's (NASDAQ:NFLX) corporate blog, CEO Reed Hastings announced the company will be re-branding its DVD-by-mail service as Qwikster and moving it to a separate website from Netflix's video streaming service. Hastings also apologized over the handling of a recent price hike which had faced significant pushback from usually-loyal customers. Last week, the company cut its Q3 domestic subscriber guidance by 1M, or 4%. NFLX -0.8% premarket.

UBS raises loss estimate. UBS (NYSE:UBS) said its loss from unauthorized trading is now at $2.3B, up from an earlier estimate of $2B, but continued to dismiss calls for CEO Oswald Gruebel's resignation. UBS said the rogue trader hid his loss with fake hedging positions, but sources say some inside the bank knew enough to question the trader's actions early on but failed to report on the trades.

A second farewell to Tyco. Four years after spinning off its medical-products and electronics-components units, Tyco (TYC) will divide what's left into three companies. TYC will remain home to its commercial fire and security business, while residential security (ADT) and flow control will be parceled out to shareholders in a tax-free stock dividend. Tyco expects the transaction to take 12 months and cost $700M.

Moody's: Dim outlook for states. The outlook for states and local governments remains negative, Moody's said this morning, as the U.S. economy remains weak and improved revenue collections are still not high enough to compensate for the federal support that is gradually being withdrawn. Though Moody's believes "rating downgrades will continue to outpace upgrades," bond defaults and Chapter 9 bankruptcy filings are expected to remain rare.

A much awaited cooling? New-home prices rose in fewer Chinese cities in August - a possible sign of a much-awaited cooling. Prices rose in 23 out of 70 cities in August, vs. 39 in July. Year-on-year, prices were higher in all 70 cities tracked by the index.

AT&T hopes rivals can save T-Mobile bid. AT&T (NYSE:T) is trying to get rivals including MetroPCS (PCS) and Leap Wireless (LEAP) to sell spectrum and subscribers to rivals like Sprint (NYSE:S) in the hopes of rescuing its $39B takeover of T-Mobile (OTCQX:DTEGF) from the clutches of a DOJ anti-competition lawsuit. A botched deal would cost AT&T $3B-plus-perks in payments to Deutsche Telekom.

Lennar cautiously optimistic. Lennar (NYSE:LEN) said demand for new homes is slowly returning, driven by low home prices and record-low mortgage rates, but added tighter lending standards, high unemployment and weak consumer confidence are capping the upside. FQ3 net income fell 31%, in line with estimates (see below). Shares -1% premarket.

Credit Suisse settles tax probe. Credit Suisse agreed to pay a €150M ($207M) penalty in Germany to avoid a "complex and prolonged legal dispute" emanating from charges of tax evasion. The settlement could lower FY11 net profit forecasts by 4%.

GM, UAW agree on contract. General Motors (NYSE:GM) and the UAW said late Friday they came to terms on a new contract, the first labor deal for any of Detroit's big automakers since the 2009 government bailouts for GM and Chrysler (FIATY.PK). The agreement, which covers four years with improved profit-sharing and healthcare benefits, is likely to put pressure on Chrysler and Ford (NYSE:F) to increase worker pay and add factory jobs.

Central banks load up on gold. European central banks have become net buyers of gold for the first time in more than two decades, while central banks globally are set to buy more gold this year than they have since the Bretton Woods system collapsed forty years ago. The shift towards gold has helped push the price of the metal up more than 25% this year. Gold futures +0.5% to $1,824 (2:45 ET).

Peabody extends Macarthur bid. Peabody (NYSE:BTU) and ArcelorMittal (NYSE:MT) extended their sweetened $5.2B takeover bid for Macarthur Coal (OTC:MACDF) to October 14. The bid was due to expire Sept. 27.

Today's Markets
Asia: Hong Kong -2.8%. China -1.8%. India -1.1%. Japan closed.
Europe at midday: London -2.0%. Paris -2.5%. Frankfurt -3.1%.
Futures at 7:00: S&P -1.53%. 10-yr +0.35%. Euro -0.98% vs. dollar. Crude -0.98% to $87.31. Gold +0.52% to $1821.95.

Monday's Economic Calendar
Obama announces debt reduction recommendations
10:00 NAHB Housing Market Index
10:00 Quarterly Retail Trade Report

Premarket Earnings
Lennar (LEN): FQ3 EPS of $0.11 in-line. Revenue of $820.2M (-0.6% Y/Y) beats by $10M. Shares -2.2% premarket. (PR)

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