Wall Street Breakfast: Must-Know News

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.

Top Stories
Microsoft gains backing for Windows Phone 8. Microsoft (NASDAQ:MSFT) has won widespread industry backing and good early reviews for Windows Phone 8 after introducing it yesterday. AT&T (NYSE:T), Verizon (NYSE:VZ), and T-Mobile (OTCQX:DTEGF) have promised to support the new OS, while Samsung (OTC:SSNLF), HTC, and Huawei are joining Nokia (NYSE:NOK) as initial hardware partners. Pundits praised WP8's features and code compatibility with Windows 8, but many are disappointed that WP7 devices can't be upgraded.

Manufacturing woe continues from Europe to China. Factory activity in the eurozone and China continued to shrink in June, with the flash eurozone manufacturing PMI falling to 44.8 from 45.1 in May. Germany's print dropped to 44.7 from 45.2 while China's declined to 48.1 from 48.4, marking the 8th consecutive month of contraction.

J&J could settle Risperdal inquiry for $1.5B-$2B. Johnson & Johnson (NYSE:JNJ) is close to settling a Department of Justice probe into the off-label marketing of its antipsychotic medication Risperdal. The deal is expected to be one of the largest for a drug-marketing case, as J&J and the government discuss a payment of $1.5B-$2B or higher.

Top Stock News
AMR set for court after pilots turn down final offer. The pilots union at American Airlines (AAMRQ.PK) has rejected the company's final contract proposal in a move that will throw the dispute to a bankruptcy judge in New York. Judge Sean Lane is expected to decide tomorrow on the carrier's motion to throw out the existing contract and set new terms. Potential AMR suitor US Airways (LCC) will be watching closely.

American Tower, Crown Castle eye $2B T-mobile cellular towers. American Tower (NYSE:AMT), Crown Castle (NYSE:CCI) and P-E firms have made second-round bids for T-Mobile USA's (OTCQX:DTEGF) cellular towers, Bloomberg reports. "I expect they will announce a winner in July and probably close the deal by September," says Macquarie analyst Kevin Smithen, who estimates that the assets could fetch $2B.

Bed Bath & Beyond falls on weak outlook. Bed Bath & Beyond's (NASDAQ:BBBY) FQ1 EPS rose 24% to $0.89 and beat expectations, while revenue climbed 5% to $2.22B, which was in line. However, shares were hammered 10.6% in post-market trading due to FQ2 guidance that was below consensus. The decline came after the stock hit an all-time high on Tuesday.

KKR puts $1.8B Bis Industries on the block. KKR (NYSE:KKR) has put Australia's Bis Industries up for sale, Reuters reports. The business, which has operations in coal mining, steel and iron ore, is valued at ~$1.8B including debt. KKR faces a June 2013 deadline to repay the A$905M in loans it used to buy Bis in 2006.

Moves in Congress to revamp IPO laws. A bipartisan group of legislators is pushing to overhaul the IPO process, concerned that the current system unfairly punishes small investors. Pointing to the Facebook (NASDAQ:FB) debut, the group wrote that I-banks are able to "dictate pricing while only indirectly considering market supply-and-demand."

Top Economic & Other News
Demand is high but so are yields in Spanish debt auction. Spain has sold €2.22B in bonds, exceeding the target range of €1B-€2B, but yields for 5-year paper rose to a 15-year high of 6.072% from 4.96% in a sale last month. The auction came ahead of the scheduled release today of an independent audit of how much Spanish banks need to recapitalize. Speculation, as well as IMF and Fitch estimates, put the figure at anywhere from €40B to €150B.

Fed continues to do the Twist. As expected, the FOMC yesterday said that it will extend Operation Twist through the end of the year, adding $267B to the total purchased. The Fed is prepared to take additional steps as necessary. The Fed also lowered its GDP growth forecasts for 2012, and said it sees significantly lower inflation.

ECB's Coeure backs using rescue funds for bond buys. ECB member Benoit Coeure has told the FT that the eurozone's bailout funds should buy the sovereign debt of troubled EU states - the first time a top central bank policymaker has publicly backed such a move. "It's a mystery why the EFSF was allowed almost a year ago to undertake (such actions) and governments have not yet chosen to use that possibility."

Germany on track to authorize eurozone rescue fund. Angela Merkel's government and Germany's opposition parties have reached an agreement to next week provide Bundestag approval for the eurozone's permanent bailout scheme and the fiscal compact. The ESM needs to be ratified so that it can come into effect on July 1.

Editors' Picks
Silver, Copper, Gold... And China
Buy Citigroup: The Best Positioned Global Bank
Thermo Fisher Is Poised For Growth

Today's Markets:
In Asia, Japan +0.8%. Hong Kong -1.3%. China -1.4%. India +0.8%.
In Europe, at midday, London -0.6%. Paris -0.2%. Frankfurt -0.3%.
Futures at 7:00: Dow -0.2%. S&P -0.2%. Nasdaq -0.3%. Crude -1.1% to $80.59. Gold -1.1% to $1598.60.

Today's economic calendar:
8:30 Initial Jobless Claims
10:00 Existing Home Sales
10:00 Philly Fed Business Outlook
10:00 Leading Indicators
10:00 FHFA House Price Index
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Notable earnings before today's open: CAG, KMX, RAD

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