Wall Street Breakfast: Iranian Oil Sanctions Gain Chinese Boost

by: Wall Street Breakfast
Wall Street Breakfast
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Top Stories
Iranian oil sanctions gain Chinese boost. China P&I Club has bowed to international sanctions and become the first Chinese insurer to say that it will stop providing indemnity cover to tankers that carry Iranian oil, Reuters reports. This is despite China refusing to take part in the international action. If other insurers from the country follow suit, the shipping of Iranian oil could halt completely.

Shell mulls $10B plant to turn gas to diesel. Shell (NYSE:RDS.A) is considering building a giant plant in Louisiana that would convert natural gas into diesel fuel, The Wall Street Journal reports. The plant, which could cost more than $10B, would be similar in size to Shell's new gas-to-liquids facility in Qatar, which turns natural gas into enough diesel to fill more than 160,000 cars a day.

Top Equities News
NY Fed considers Maiden Lane sequel. Following improving market conditions and the success of Maiden Lane II, the New York Fed is considering a sale of assets in Maiden Lane III. The vehicle, which owes the Fed $9B, unwound CDSs that AIG (NYSE:AIG) wrote; during the company's bailout, the facility bought the underlying assets that AIG insured for banks, saving them from losses.

Chrysler received legal airbag during bailout. As part of its 2009 bankruptcy sale to Fiat (FIATY.PK), Chrysler received immunity from new punitive-damage claims connected to any vehicles sold prior to the rescue. The exemption is the product of federal bankruptcy law and applies to 28M cars and trucks. However, GM didn't receive any such dispensation, while Chrysler is liable for compensatory claims.

Sanofi, Regeneron cancer drug misses Phase III goals. Sanofi (NYSE:SNY) and Regeneron Pharmaceuticals (NASDAQ:REGN) have disclosed that their experimental Zaltrap drug didn't meet targets in a late-stage Phase III trial. Despite the miss, the firms said the FDA granted a priority review to examine the proposed treatment for colon cancer.

ConocoPhillips to spin off gas station chain. ConocoPhillips' (NYSE:COP) board has approved the spinoff of gas station business Phillips 66, which will trade on the NYSE as PSX, effective after the close on April 30. A tax-free share distribution (one share of PSX for every two held of COP on April 16) will fulfill the deal. SA contributor Ry Frank reckons ConocoPhillips "has high upside potential in 2012."

Falcone may put LightSquared into bankruptcy. Hedge fund manager Philip Falcone is considering filing a voluntary bankruptcy for LightSquared, the struggling telecom startup in which his fund is the majority owner. Bankruptcy - which is just one option Falcone is thinking of - would allow the company time to find a way to deal with the problems of communications interference that have arisen from the buildout of its nationwide wireless broadband network.

New York widens probe into overcharging of homeowners. New York's top financial regulator is issuing new subpoenas to several insurers, The Wall Street Journal reports, expanding an investigation into whether firms overcharged clients on homeowners policies. Companies that received document requests include Assurant (NYSE:AIZ) and QBE Insurance.

DirecTV and Tribune settle spat. DirecTV (NYSE:DTV) has reached an agreement to resume carrying Tribune (OTC:TRBCQ) TV stations. "It's unfortunate that Tribune was willing to hold our customers hostage in an attempt to extract excessive rates, but in the end we reached a fair deal at market rates similar to what we originally agreed to on March 29," DirecTV said.

Return of pooled junk loans gains momentum. With interest rates at minimal levels for goodness knows how long, collateralized loan obligations - pools of loans to "junk"-rated firms - are staging a revival. Sales of CLOs, which produce a high yield, are over $6.8B this year so far. Despite the apparent risk, CLOs have actually performed well, with not one defaulting during the credit crisis.

Top Economic & Other News
Job creation expected to have slowed down in March. Unemployment data for March is due out tomorrow, despite most markets being closed for Good Friday (bond markets are open for half a day), with economists forecasting that non-farm payrolls rose by 205,000 after climbing by 277,000 in February. The jobless rate is expected to have remained steady at 8.3%. SA author Hale Stewart is more optimistic based on the trends in initial claims, and he predicts a gain of 250,000 and a rate of 8.2%.

Greece puts off showdown with holdouts. Greece has again extended a deadline, this time until April 20, for holdout private creditors who own bonds governed by foreign law to accept a debt swap. The cut-off date had already been put back once to yesterday, but authorities need to work out what to do if the creditors refuse to take part. Still, Greece will settle the exchange of €20.27B of bonds, or 72%, next week.

Japan's parliament vetoes BOJ candidate, wants more easing. Japan's upper house of parliament has rejected Ryutaro Kono's nomination to the Bank of Japan board, a strong message from legislators who want more monetary easing to spur growth.

Where To Go Next
Xerox Is A Cash Machine
Evidence Builds For Another Post-April Letdown
Finding High Dividend Yields Overseas

Today's Markets:
In Asia, Japan -0.5%. Hong Kong -0.9%. China +1.7% to 2302. India closed.
In Europe, at midday, London -0.4%. Paris -0.5%. Frankfurt -0.9%.
Futures at 7:00: Dow -0.35%. S&P -0.4%. Nasdaq -0.2%. Crude +0.3% to $101.81. Gold +0.6% to $1623.70.

Thursday's economic calendar:
Chain Store Sales
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
9:10 Fed's Bullard: 'U.S. Economy and Monetary Policy'
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Earnings Results:
For full real-time earnings coverage, please click here.

Companies that beat EPS expectations last night and today include:
- Bed Bath & Beyond (NASDAQ:BBBY)
- Ruby Tuesday (NYSE:RT)

Companies that missed expectations include:
- PriceSmart (NASDAQ:PSMT)
- Schulman (NASDAQ:SHLM)

Notable earnings before Thursday's open: KMX, PIR, RPM, STZ