Wall Street Breakfast: Big Tumult At Fox News

by: Wall Street Breakfast
Wall Street Breakfast
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Chaos is ruling at Fox News as the network works to walk back its earlier confirmations that CEO Roger Ailes had agreed to leave the network, possibly along with a $40M exit package. Bret Baier, Greta Van Susteren, Bill O'Reilly, Shepard Smith and Sean Hannity may also band together and potentially execute contract clauses allowing them to leave if Ailes is driven out. Adding to the pressure is Megyn Kelly's reported claim accusing the Fox News (FOX, FOXA) chief of sexual harassment.


The greenback is at a four-month high against a basket of currencies, bolstered by strong U.S. data and growing expectations the Fed may raise rates before the end of the year. The dollar index is up 0.2% at 97.271, its highest level since March 10. Fed funds futures rates now suggest a 40% chance of a rate hike in December, compared with less than 20% a few weeks ago.

Donald Trump officially clinched the Republican presidential nomination Tuesday evening after securing enough delegates during the roll call vote at the GOP convention. "Such a great honor... I will work hard and never let you down! AMERICA FIRST!" Trump wrote on Twitter. The U.S. Federal Election Commission will separately release its June report today, with fundraising details of both the Trump and Clinton campaigns.

Around 50,000 Turkish soldiers, police, judges, civil servants and teachers have now been suspended or detained as President Erdogan responds to the coup attempt that almost forced him from power. His crackdown offers stability of sorts, which explains why domestic markets have pared some of their kneejerk losses. But it also engenders uncertainty, causing Turkey's central bank to cut its overnight lending rate by a quarter point to 8.75%.

Iran is exploring a return to international debt markets for the first time since 2002, as the Islamic Republic seeks to finance an economic recovery that can offer it another route out of isolation. Economy Minister Ali Tayebnia said in an interview that he expects his country to secure a credit rating in the "near future" and Iranian officials are "negotiating with all the rating agencies."

U.K. Prime Minister Theresa May will meet with Chancellor Angela Merkel in Germany today before heading to France to meet with President Francois Hollande. The recent Brexit vote will likely top the agenda in discussions with her EU counterparts. Prior to her first foreign trip as leader, May will take on her opposition parties at Prime Minister's Question time in the House of Commons.

The Bank of England sees "no clear evidence" that a sharp economic slowdown is yet under way after last month's vote to leave the European Union, though there are signs investment and hiring are being put on hold. Sterling surged to a session high of $1.3157 on the news and better-than-expected jobs data. The U.K. jobless rate fell to 4.9% in the three months to May, marking the lowest level since 2005.


Elon Musk expects a "super majority" of shareholders to back Tesla's (NASDAQ:TSLA) proposed combination with SolarCity (SCTY) despite investor skepticism about the planned deal. In an interview, Musk said he would include details of the tie-up in a new "master plan" he intends to publish as early as this week. "The most informed investors are highly supportive of the transaction... most just didn't understand how bringing together a car and a solar company made sense from a product standpoint."

Dollar Shave Club, the start-up that upended the men's razor blade industry with its online-only subscription service, has been acquired by Unilever (NYSE:UL). No financial terms were disclosed, but multiple sources told Fortune that Unilever paid $1B in cash for the business. Mike Dubin, Dollar Shave Club's founder and chief executive, will retain the top job at the company.

Federal prosecutors are poised to launch one of the largest asset seizures in U.S. history as they step up their investigation into scandal-hit Malaysian state fund 1MDB, sources told WSJ. Authorities are expected to file civil lawsuits as soon as this morning seeking to seize more than $1B of properties and other assets purchased with money allegedly misappropriated from 1MDB.

Pacific Investment Management Co. has raided Man Group (OTCPK:MNGPY) to find a new chief executive, as it tries to reverse a slump in fortunes since co-founder Bill Gross left in 2014. Manny Roman will join Pimco (OTCPK:AZSEY) on November 1, 2016, with Luke Ellis succeeding him as CEO of the world's largest listed hedge fund. Man Group shares are down 3.7% in London.

After more than doubling in value over the past seven sessions, Nintendo (OTCPK:NTDOY) shares plunged 12.6% overnight, hurt in part by a reported delay for the game's introduction in Japan. TechCrunch said developer Niantic planned to launch Pokemon GO across the country on Wednesday, but then canceled it over worries the hype generated by the game would overload its servers.

Meanwhile, McDonald's Holdings Japan is set to announce a Pokemon GO initiative in Japan, where its more than 3,000 fast food restaurants may become gyms (places that players can train or battle their Pokemon). McDonald's (NYSE:MCD) owns 50% of the Japan joint venture and is believed to have some Pokemon plans of its own for the U.S.

A Brazilian bruising for BHP Billiton (NYSE:BHP) and Anglo American (OTCPK:AAUKY). Shares of both companies are in the red after the miners outlined several challenges in the country. BHP's fiscal 2016 iron ore guidance missed expectations by 3M tons because of its Samarco dam disaster, while Anglo American cut its full year guidance for Brazilian iron ore production after posting mixed Q2 results.

Volkswagen's operating profit came to €7.5B in the first half of 2016, beating market expectations and pushing its shares higher. Adjusted for one-off costs of €2.2B, operating profit came to €5.3B. VW (OTCPK:VLKAY) got another wave of heat yesterday after getting sued by New York state's attorney general, who claimed CEO Matthias Muller was told about the automaker's diesel emissions issue in 2006.

Just a few weeks after the U.S. Senate decided to stop handing out BlackBerrys (BBRY), the body has inked a new deal with the company on the software side. The "multimillion-dollar" deal with the Senate's chief security service, will power the Sergeant at Arms office's emergency mass notification system. With the decline of its venerable device line, BlackBerry has been at work reinventing itself as a software provider.

Messaging app news: Brazil's Supreme Court has lifted a block on WhatsApp (NASDAQ:FB) chat service that had shut off service for millions of users across the country. Snapchat (CHAT) is reportedly developing an ad-overlay system that turns snaps into ads by recognizing the objects around photos. Meanwhile, Twitter (NYSE:TWTR) has moved to permanently suspend a number of user accounts for abuse and harassment after Ghostbusters actress Leslie Jones drew renewed attention to the issue and announced she would quit the social media site.

Florida health officials are investigating a possible case of Zika that wasn't carried back by a traveler. If it's confirmed, it would be the first evidence the virus has spread to mosquitoes in the continental U.S. All 1,306 American cases up to now have been in people who traveled to Zika-affected regions or who have been infected by their sexual partners. Related tickers: SNY, INO, AEMD, XON, CEMI, BCRX, TMO, OTCQB:GOVX

Tuesday's Key Earnings

Johnson & Johnson (NYSE:JNJ) +1.7% lifting its profit forecast.
Goldman Sachs (NYSE:GS) -1.2% as conditions "remained challenging."
Lockheed Martin (NYSE:LMT) +1% raising its guidance for 2016.
Microsoft (NASDAQ:MSFT) +4.1% AH after cloud sales doubled.
Philip Morris (NYSE:PM) -3% on lower shipment volumes.
UnitedHealth (NYSE:UNH) +1.3% following health-services growth.
United Continental (NYSE:UAL) +1.2% AH after topping expectations.

Today's Markets

In Asia, Japan -0.3% to 16682. Hong Kong +1% to 21882. China -0.3% to 3028. India +0.5% to 27916.
In Europe, at midday, London +0.3%. Paris +1.2%. Frankfurt +1.4%.
Futures at 6:20, Dow +0.4%. S&P +0.3%. Nasdaq +0.3%. Crude +0.3% to $45.59. Gold -0.5% to $1325.30.
Ten-year Treasury Yield +2 bps to 1.57%

Today's Economic Calendar

7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories

Companies reporting earnings today »