Wall Street Breakfast: Moment Of Truth For Tesla-SolarCity Merger

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Includes: AAL, BA, C, CSCO, DAL, DB, EADSY, F, FB, FSLR, JPM, LC, LOW, MSFT, QQQ, RIO, RJETQ, SPACE, SPY, TGT, TSLA, UAL, VLKAY
by: Wall Street Breakfast
Wall Street Breakfast
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.

After five months of wrangling and two different recommendations from proxy advisory firms, a merger between Tesla (NASDAQ:TSLA) and SolarCity (SCTY) is one shareholder meeting away. While some have called the $2.6B deal "the next logical step," others have billed it as a bailout of the nation's top solar installer and questioned how Tesla will absorb SolarCity's hefty debt-load. The special meeting, scheduled to start at 4 p.m. ET, will be webcast live.

Economy

Japan's Shinzo Abe will meet Donald Trump today in NY, making him the first foreign leader to meet the incoming American President, as the BOJ goes on the defensive, buying JGBs in a bid to offset rising treasury yields. Governor Haruhiko Kuroda said he would not allow market pressure from the U.S. to interfere with Japanese monetary policy and does not need to move in tandem with the Federal Reserve.

The Philippines has become the fastest growing economy in Asia, in an early boost for President Duterte's efforts to court investors and calm business fears about the impact of his tilt from the U.S. to China. GDP rose by a faster than expected 7.1% on-year in the three months following the new leader's inauguration on June 30, and is on track for full-year growth of 6-7%.

Fed chair Janet Yellen is due to appear before the Joint Economics Committee in Washington, where she's likely to be quizzed on how tax cuts or fiscal stimulus under Trump could affect the economic and interest rate outlook. Don't expect a clear answer. Almost every Fed official who spoke publicly so far this week has been asked those questions, but said they're unsure because it's not yet obvious which policies will be pursued and enacted.

Mexico's central bank is expected to hike interest rates significantly today after Trump's election sparked a historic tumble in the peso and threatened to exacerbate above-target inflation. The President-elect has threatened to unwind NAFTA and block money sent home by migrants to pay for a border wall.

More central bank activity... The ECB will publish minutes of its October policy meeting at 7:30 a.m. ET, shedding light on discussions within the bank's governing council as it prepares to decide whether to extend its €1.7T stimulus. President Mario Draghi said last month that policy makers hadn't discussed the future of their bond-purchase program, which is due to end in March.

Stocks

Deutsche Bank is going back on its promises of bonuses made to six former executives, according to Suddeutsche Zeitung, which quoted a double-digit multi-million euro figure. Those set to be affected include former CEO Josef Ackermann and former co-chief Executives Anshu Jain and Jurgen Fischen. The three others involved are said to be former DB board members.

Citi's Australian arm is going cashless, telling customers that it will no longer handle notes and coins as of Nov. 24, because fewer than 4% of customers have used them in the last year. While Citi (NYSE:C) is a small force in domestic retail banking, the move is a sign of how banks are being forced to reinvent branches in the face of a boom in digital transactions and contactless payments.

Renaud Laplanche has quietly started a new company called Credify Finance that will make loans via the Internet, just like LendingClub (NYSE:LC), WSJ reports. Wasting no time, Laplanche incorporated the company on May 31, less than a month after he exited LendingClub. Still in the early stages, Credify expects to begin making loans next year, and hopes to generate $50M in revenue in 2017.

Following a nearly three-year investigation, JPMorgan (NYSE:JPM) has agreed to pay more than $200M to settle allegations that it had hired children of well-connected Chinese decision-makers to win business, sources told Reuters. JPMorgan may take another hit; Fox Business is reporting that CEO Jamie Dimon will likely be named Treasury Secretary in the new Trump administration.

First Solar intends to lay off more than one-quarter of its staff and restructure operations to focus on newer solar modules, which will lead to at least $500M in charges and push the company into the red this year. The restructuring is in response to steep price declines and lower demand in China, and includes about 1,600 layoffs in the U.S. and abroad. FSLR -12.2% premarket.

Rio Tinto has fired two of its top executives in the wake of a payments scandal in Guinea dating back to 2011. The mining giant terminated the contracts of energy and minerals chief executive Alan Davies and legal and regulatory affairs group executive Debra Valentine, amid an investigation into a $10.5M payment made to a consultant who helped Rio (NYSE:RIO) win iron ore mining rights.

Documents filed with the FCC show SpaceX (SPACE) plans to deploy 4,425 satellites to create a super-fast global internet network. That's more than three times the 1,419 operational satellites that are currently in orbit, according to the Union of Concerned Scientists. The initiative was first floated by Elon Musk in early 2015, when he estimated the project would take at least five years and cost around $10B.

Airbus is set to announce a "significant order" from Japan's Peach Aviation, in a move that could help the planemaker narrow a gap with Boeing (NYSE:BA) in their race to supply to Asia's No.2 aviation market. The sale is expected to cover ten A320neos and three previous versions of the A320, for $1.3B at list prices, Reuters reports. Airbus (OTCPK:EADSY) will make the announcement tomorrow.

After seeking Chapter 11 protection in February, Republic Airways (OTCPK:RJETQ) plans to emerge from bankruptcy in the first quarter of 2017 under the name Republic Airline. The regional carrier, which feeds flights to American Airlines (NASDAQ:AAL), Delta (NYSE:DAL) and United Continental (NYSE:UAL), has renegotiated and extended its capacity purchase agreements with the three companies.

Negotiations are proving difficult! Volkswagen (OTCPK:VLKAY) is pushing for a cost-cutting deal with workers at its core brand by Friday to help fund investment in electric and self-driving cars. The need for a turnaround plan at VW has been amplified by the billions of costs it is facing for its diesel emissions scandal, but union leaders don't want workers to carry the can for what they see as the mistakes of managers.

Ford's new EcoSport is set to become the smallest SUV in the Detroit automaker's line-up, but it could also fuel the big debate over automotive trade. That's because the model will roll off a Ford (NYSE:F) assembly line in India, rather than one in the U.S. The carmaker has also made plans to move all of its small car production to Mexico - a decision frequently cited by President-elect Trump during his campaign.

Russia has formally blocked professional social network LinkedIn (LNKD), according to communications watchdog Roskomnadzor. The landmark ban comes a week after a Moscow court upheld a decision to block the company for not agreeing to store personal data of Russian users within the country's borders, a law that came into effect a year ago.

With pressure mounting from regulators in Germany, the U.K. and elsewhere across Europe, Facebook (NASDAQ:FB) has stopped collecting WhatsApp user data across the continent. The shift in policy means that European users of the messaging app will no longer have information relayed to Facebook, but it may only be a temporary suspension while the laws are debated.

Wednesday's Key Earnings

Cisco (NASDAQ:CSCO) -3.8% AH giving weak guidance.
Lowe's (NYSE:LOW) -2.9% after missing estimates.
Target (NYSE:TGT) +6.4% on sizzling e-commerce growth.

Today's Markets

In Asia, Japan flat at 17862. Hong Kong -0.1% to 22262. China +0.1% to 3208. India -0.3% to 26227.
In Europe, at midday, London +0.4%. Paris +0.1%. Frankfurt -0.2%.
Futures at 6:20, Dow +0.1%. S&P +0.1%. Nasdaq +0.3%. Crude +0.9% to $46.53. Gold +0.5% to $1229.60.
Ten-year Treasury Yield -2 bps to 2.2%

Today's Economic Calendar

8:30 Initial Jobless Claims
8:30 Housing Starts
8:30 Philly Fed Business Outlook
8:30 Consumer Price Index
8:50 Fed's Dudley Speech
9:45 Bloomberg Consumer Comfort Index
10:00 Yellen delivers testimony before the joint economic committee
10:00 E-Commerce Retail Sales
10:30 EIA Natural Gas Inventory
12:30 PM Fed's Reserve Gov. Lael Brainard speech
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Companies reporting earnings today »