Wall Street Breakfast: Must-Know News

by: Judith Levy
Judith Levy
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.

Today's Markets

  • Asia: Japan's Nikkei closed +0.4%. Shanghai -2.37%. Hang Seng: +1.08%.
  • In Europe markets were down from Tuesday's close. FTSE: -1.1%. CAC: -0.27%. SAX: -0.72%.
  • U.S. futures are up. S&P: +4.25. Dow: +26. Nasdaq: +6.75.

Must-Know News

  • Market doubts value of Buffett's offer to bond insurers. Warren Buffett's holding company, Berkshire Hathaway (BRK.A), has offered to commit $5 billion to reinsure policies written by MBIA (NYSE:MBI), Ambac (ABK) and the Financial Guaranty Insurance Company on $800 billion in municipal bonds. The offer does not include reinsurance of any mortgage-related securities. MBIA shares closed down 15.3% and Ambac shares 15.1% on fears that the offer would leave them more vulnerable than they are now, since they would retain the riskiest securities.
  • Fed's Yellen: Economy still faces "significant threat;" banks grab another $30 billion from Fed. Janet Yellen, president of the San Francisco Fed, said Tuesday that enough downside risks to the economy remain to preclude a tightening by the Fed of its monetary policy. Also, sixty-six banks bid $58.4 billion for $30 billion in short-terms loans auctioned by the Fed. This was the Fed's fifth auction since the facility was established in December.
  • Google's enthusiasm dissipates for ad pact with Yahoo; shareholder calls Microsoft bid for Yahoo insufficient. Yahoo (YHOO) had discussed outsourcing its search advertising with Google (NASDAQ:GOOG) as a means of countering Microsoft's (NASDAQ:MSFT) takeover attempt, but Google is apprehensive about the regulatory scrutiny such an arrangement would draw -- particularly while it is trying to get its acquisition of Doubleclick approved by European antitrust regulators. In related news, Bill Miller of asset manager Legg Mason (NYSE:LM) estimated Yahoo to be worth about $40/share, well above Microsoft's $31/share offer. Legg Mason Capital Management owns 6% of Yahoo.
  • Oil demand waning - IEA. The International Energy Agency cut its forecast for 2008 global oil demand by 200,000 bpd amid a slowing U.S. economy. "Just as the demand shock of 2004 shaped the oil market for the next three years, so too could the pending slowdown," it said. Global oil demand growth for 2008, projected at 2.2% last July, is now estimated at 1.9%.
  • Rio beats expectations; reiterates rejection of Billiton offer. Rio Tinto (RTP) said that while full-year net profit fell 2% to $7.31 billion, underlying earnings rose 1% to $7.44 billion, ahead of analyst forecasts of $7.1 billion. The results bolstered the miner's case against a $147.4 billion hostile offer from BHP Billiton (NYSE:BHP); Rio's iron-ore CEO Sam Walsh characterized the bid as "not in the ballpark." In related news, the International Iron and Steel Institute said a Rio/Billiton merger should be prevented on the grounds that it would be anticompetitive.
  • Applied Materials' display screen orders ease impact of spending slowdown. Applied Materials (NASDAQ:AMAT) reported a 35% drop in fiscal Q1 earnings, but orders were up 13% from Q4, well ahead of the company's forecast 5-15% decline. Shares gained 4.76% after hours.
  • Citi to bail out six of its SIVs. In order to protect the top rating of its senior debt, Citigroup (NYSE:C) will supply approximately $3.5 billion to support six of the seven SIVs it brought onto its balance sheet in December. At the time, the SIVs' assets amounted to $49 billion; Citi has not disclosed their current value.
  • AIG says any writedown will be immaterial. In an attempt to reassure investors unnerved by the revelation that its derivatives losses could be closer to $5 billion than a forecast $1.5 billion, insurer (NYSE:AIG) said Tuesday that no writedown is expected to be material to the company.
  • Congress takes on broadband companies over access.... Congressman Edward Markey (D-Mass.) and Rep. Chip Pickering (R-Miss.) introduced a bill on Tuesday requiring broadband companies to provide unimpeded internet access, much the way telecoms are required to connect phone calls without artificial delays. The "Internet Freedom Preservation Act" would give the FCC greater power to police network operators. Time-Warner Cable (NYSE:TWX) and Verizon Communications (NYSE:VZ) are considering pricing plans that would require consumers of high-capacity content to pay more, a departure from the traditional flat fee for unlimited downloading.
  • ...and a bid for wider broadband access hits technical snag. The attempt by wireless broadband providers to gain access to a spare spectrum was dealt a blow when a prototype device provided by Microsoft (MSFT) malfunctioned during a test by FCC engineers.
  • LTE gets boost. Two overseas telecom giants backed LTE (Long Term Evolution) as the next-generation mobile internet technology. Vodafone (NASDAQ:VOD) said it is joining with China Mobile (NYSE:CHL) and Verizon Wireless (VZ) to promote LTE. Meanwhile, Alcatel-Lucent (ALU) announced a JV with NEC to develop LTE-based technology. The moves further entrench LTE's lead over WiMax (in which Sprint-Nextel (NYSE:S) has an interest) and Ultra Mobile. Other firms developing LTE technology include AT&T (NYSE:T), Ericsson (NASDAQ:ERIC), Nortel Networks (NT) and Nokia Siemens Networks (NYSE:NOK) (SI).
  • T-Mobile dumps Google for Yahoo. T-Mobile parent Deutsche Telecom (DT) said Tuesday it will drop Google (GOOG) in favor of Yahoo (YHOO) as search engine for its websites, making Yahoo the primary search engine for about 80 million European subscribers.
  • Wynn swings to profit. Wynn Resorts (NASDAQ:WYNN) posted net income of $65.5 million ($0.57/share) versus a loss of $55.4 million (-$0.55/share) a year ago. Excluding items, EPS came in at $0.72, ahead of analyst forecasts of $0.68. Revenue was up 26% to $711.3 million, beating expectations of $692 million.
  • Venezuela fires back at Exxon. State-owned Petroleos de Venezuela halted oil supplies to ExxonMobil (NYSE:XOM) in an act of retaliation for Exxon's move to freeze $12B of the country's assets. President Hugo Chavez, who had threatened to cut off all oil shipments to the U.S., instead opted for a direct attack on its adversary.
  • Legg Mason ups Countrywide stake. Legg Mason's (LM) Capital Management unit has boosted its stake in Countrywide Financial (CFC) to 14.9% from 11.8%. The asset manager said it might purchase more shares if Countrywide removes poison-pill provisions designed to avert single ownership of more than 15% of the company.
  • EU raids Intel's office in Germany
  • Sun Microsystems to acquire Innotek
  • Strong steel prices nudge ArcelorMittal net profit higher
  • In second trial, Avastin is found effective in treating breast cancer
  • Total's net income rises 64% on higher output, prices
  • Bank of England damps speculation on rate cuts after inflation accelerates
  • Hewlett Packard in $675M Unilever outsourcing deal

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