Wall Street Breakfast: Must-Know News

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Includes: AABA, AIG, CMCSA, DB, GLD, GS, HSBC, JPM, LYG, MFGLQ, QQQ, SNE, SPY, TWX, UBS, USO
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.

Greek PM: Vote will decide euro membership. Greek Prime Minister George Papandreou today said the country's upcoming bailout referendum will also "be a clear mandate...on our European course and participation in the euro." Papandreou made the remarks in a cabinet meeting where he won backing for the plebiscite. He is now due to face the wrath of Nicolas Sarkozy, Angela Merkel and others in Cannes today, after which he will face a confidence vote in parliament on Friday. With a majority of just four following another defection, neither the government's survival, nor the referendum taking place, is certain. Meanwhile, Silvio Berlusconi's key cabinet ministers will meet to draft measures for the country’s financial stability legislation after the market for its sovereign debt was again plunged into turmoil over the past week.

MF says it can account for all its cash. Despite reports that up to $700M of customer money had gone missing, MF Global (MF) has told a judge that it has accounted for all its clients' cash. Most of the bankrupt firm's U.S. assets are held at its brokerage unit, which is not part of the main bankruptcy case, while foreign funds are mostly with regulated entities. Meanwhile, MF has admitted using its customers' money as its problems escalated, AP reports. The FBI is expected to look at whether those actions broke criminal laws, adding to other investigations into MF.

Time Warner tops forecasts...Time Warner (NYSE:TWX) Q3 EPS of $0.79 beats by $0.03. Revenue of $7.1B (+10.8% Y/Y) beats by $100M.

...but Comcast misses. Comcast (NASDAQ:CMCSA) Q3 EPS of $0.33 misses by $0.06. Revenue of $14.3B (+51.1% Y/Y) in-line.

Sony forecasts $1.2B FY loss after woeful Q2. Sony (NYSE:SNE) swung to an FQ2 net loss of ¥27B ($345.3M) from a ¥31.1B profit a year earlier as revenue fell to ¥1.575T from ¥1.73T. Sony's many woes include the strong yen, its chronically ill TV division, and lately the Thai floods, with the company expecting the disaster to cut ¥25B from its earnings. This is one factor in Sony changing its FY outlook to a loss of ¥90B ($1.2B) from a prior forecast for a ¥60B profit.

Lloyds CEO takes medical leave. Lloyds (NYSE:LYG) CEO Antonio Horta-Osorio is going on medical leave until the end of the year due to stress and fatigue. Finance Director Tim Tookey is taking over the reins despite being due to leave the bank in the coming months after resigning in the summer. However, a clear-out of senior executives following Horta-Osorio's arrival at Lloyds at the start of 2011 left the board with few credible alternatives. Shares were -4.1% premarket.

JPMorgan, UBS off the hook in massive Madoff claims. A federal judge yesterday lightened some of the heavy weight of uncertainty surrounding the legal liabilities of major banks by dismissing the bulk of a $19.9B lawsuit against JPMorgan (NYSE:JPM) and half of a $2B claim against UBS (NYSE:UBS). The judge said that Irving Picard, who brought the suits as the trustee seeking money for Bernard Madoff's victims, doesn't have the legal right to pursue the claims. The ruling follows the dismissal of $8.6B in lawsuits against HSBC (HBC) and other defendants in July.

Yahoo puts forward "leveraged capitalization" scheme. Yahoo (YHOO) is pitching a leveraged recapitalization plan to private-equity firms in an effort to entice them to take close to a 20% stake in the Internet portal instead of acquiring the whole company. The move would allow Yahoo co-founders Jerry Yang and David Filo to form an ownership block with the new buyer that could be increased to 40%-45% of the company with a stock buyback.

Fed may look to wean markets off quick fix. Despite another week of pandemonium, the FOMC is unlikely to come to the market's rescue at the end of its two-day meeting today. And while some hope the Fed will announce the purchase of mortgage bonds to aid the housing market, or even give a hint of QE3, observers believe the bank may actually contribute to further market declines by downgrading its economic outlook. "Fed officials want to wean the markets from expecting ever more action at each meeting," Bank of America's Michael Hanson told CNBC.

SEC escapes lightly over destruction of records. SEC Inspector General David Kotz yesterday said he found no evidence that full agency investigations were harmed by the destruction of the records of thousands of preliminary inquiries, including into Bernard Madoff, Goldman Sachs (NYSE:GS) and Deutsche Bank (NYSE:DB). However, Kotz stopped short of asserting that no damage was done, saying he didn't make "an exhaustive audit or review" of the potential effect of the 20-year policy. Kotz also said the SEC should have kept the records, and that it broke federal rules by giving incomplete information to the National Archives about the action.

AIG makes $972M repayment. AIG (NYSE:AIG) has paid another $972M back to the Treasury after raising the cash through the sale of its American Life Insurance subsidiary last year. That leaves just $50B that the Treasury still has tied up with AIG - giving it a 77% stake in the firm - while the Fed has $17.5B in loans to the insurer.

Today's Markets:
In Asia, Japan -2.2% to 8640. Hong Kong +1.9% to 19734. China +1.4% to 2504. India -0.1% to 17465.
In Europe, at midday, London -0.4%. Paris +0.3%. Frankfurt +0.8%.
Futures at 7:00: Dow +0.1%. S&P +0.3%. Nasdaq +0.15%. Crude +0.1% to $92.29. Gold +1.2% to $1732.90.

Wednesday's economic calendar:
7:00 MBA Mortgage Applications
7:30 Challenger Job-Cut Report
8:15 ADP Jobs Report
9:00 Treasury Quarterly Refunding
10:30 EIA Petroleum Inventories
12:30 PM FOMC Announcement

Earnings Results: Companies that beat EPS expectations last night and today include Discovery Communications (DISCA), Enterprise Products Partners L.P. (EPD), EOG Resources (EOG), Hertz Global (HTZ), JDS Uniphase (JDSU), Pitney Bowes (PBI), R.R. Donnelley & Sons Company (RRD), TEVA (TEVA), Time Warner (TWX).

Those in line include Williams Cos. (WMB).

Those that missed forecasts include Comcast (CMCSA), Foster Wheeler (FWLT), Unum Group (UNM).

Full real-time earnings coverage here.

Notable earnings before Wednesday's open: AOL, CLX, CMCSA, CNP, CTSH, DVN, EIX, EP, EPD, FWLT, GPOR, HUN, LVLT, MA, MMC, NVE, PWR, RRD, SNE, SVM, TAP, TEVA, TLM, TRW, TWX

Notable earnings after Wednesday's close: AUY, AWK, CAR, CLGX, CLR, CLWR, CTL, CVI, CXO, DRC, EQY, ESV, HBI, HIG, IO, KFT, KGC, KIM, LBTYA, LNC, MUR, NWSA, ONNN, ONXX, PRU, QCOM, QGEN, RIG, TSLA, TSO, VMC, WFM, WFR, WLL, WLT

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