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
Spain set to unveil more austerity amid protests. Spain is expected to announce €39B worth of more austerity and its 2013 budget today, a day after thousands of anti-cuts protesters marched for a second night in Madrid. The reforms are expected to include a new tax oversight body, more tax hikes, extended wage freezes and early retirement limits. The measures are designed to preempt the conditions that would be attached to a bailout, although critics say the proposals lack substance.

Robert McDonald's position as P&G CEO at risk. Robert McDonald is at risk of losing his job as CEO of Procter & Gamble (NYSE:PG) if the company's cost-cutting and product-refocus programs fail to revive its fortunes, the WSJ reports. The speculation follows three years of falling profits, earnings warnings this year, declining market share, and botched product launches. P&G's board is also under pressure from activist investor Bill Ackman to act.

Top Stock News
Tempur-Pedic to acquire Sealy in $1.3B deal. Tempur-Pedic (NYSE:TPX) has agreed to buy fellow mattress seller Sealy (ZZ) for $2.20 a share in a deal worth a total of $1.3B, including debt. The transaction is slated to close during the first half of 2013. Having ended at $2.14 yesterday, Sealy shares were +9.8% at $2.35 premarket, suggesting investors may be expecting a bidding war.

Corporations alter their health-insurance provisions. A major change is underfoot in the way firms provide employee health coverage: Instead of offering insurance, Sears (NASDAQ:SHLD) and Darden Restaurants (NYSE:DRI) are preparing to give workers cash and let them choose coverage from an online marketplace. WellPoint (WLP), AON (NYSE:AON) and Towers Watson (TW) are placing bets on the new model, while UnitedHealth (NYSE:UNH) is taking a wait-and-see approach.

RBS's Direct Line unit to be valued at £2.6B. RBS (NYSE:RBS) will sell shares in its Direct Line insurance unit for less than expected in order to attract investors to the subsidiary's IPO, the FT reports. At the mid-point of its target price-range, Direct Line would be valued at £2.6B, below consensus of £2.7B-£2.9B and the £3.4B that some banks on the deal were pushing for. RBS could issue a prospectus this week.

Chrysler strikes new labor deal in Canada. Chrysler (FIATY.PK) has become the last of the three main Detroit carmakers to agree to a new four-year labor contract with the Canadian Auto Workers union and avert a strike, but as with GM (NYSE:GM) and Ford (NYSE:F), it's unable to reduce the cost gap between U.S. and Canadian workers. Chrysler's CAW staff will vote on the deal at the weekend, while GM employees are due to finish voting today on their new agreement.

EU set to charge Microsoft over browsers. The EU is poised to charge Microsoft (NASDAQ:MSFT) for not fulfilling a 2009 ruling that it should provide consumers with a range of Web browsers. "It should not be a long investigation because the company itself explicitly recognized its breach of the agreement," said EU Competition Commissioner Joaquin Almunia. If found guilty, Microsoft could face penalties of up to 10% of its worldwide revenues.

Sharp lenders OK $2.7B rescue. Sharp's (OTCPK:SHCAY) two main lenders, Mizuho and Mitsubishi, have approved a ¥210B ($2.7B) rescue for the cash-strapped company, Reuters reports, providing hope that it will survive. In exchange, Sharp, which is a major Apple (NASDAQ:AAPL) supplier, will offload foreign TV factories and close solar-panel operations in the U.S. and Europe.

RIM earnings seen cratering. RIM (RIMM) is due to release its FQ2 earnings later, with analysts expecting that the beleaguered smartphone maker swung to a loss per share of $0.47 from a profit of $0.80 a year ago as revenue cratered 40% to $2.49B. Shares have risen over the past couple of days after CEO Thorsten Heins said that RIM's subscriber base has grown by 2M in recent months to 80M vs. forecasts for a decline.

CNOOC bullish that Canada will approve $15.1B Nexen deal. CNOOC (NYSE:CEO) is confident that Canada will authorize its $15.1B acquisition of oil producer Nexen (NXY) following talks with regional premiers in which none of them expressed concern about the deal, Reuters reports. While the premiers don't get a say-so, they are highly influential. Despite fears about allowing a Chinese state-owned firm to buy a major Canadian company, analysts expect Stephen Harper to support the transaction.

Ford plans to complete European staff buyout plan by December. Ford (F) intends to wrap up its buyout plan for European salaried workers by the end of the year, regional head Stephen Odell has said. The executive, who's in France for the Paris Auto Show, also noted that a growing belief exists in the industry that European demand won't snap back as fast as originally forecast.

Intel fails to deny report about CEO's disparaging W8 comments. Intel (NASDAQ:INTC) has described as "unsubstantiated" a Bloomberg report that CEO Paul Otellini told employees in Taiwan that Windows 8 (MSFT) is buggy and is being released before it's ready. That doesn't actually seem to be a denial.

Head of Google's Brazilian ops detained. Brazilian authorities have detained the head of Google's (NASDAQ:GOOG) operations in the country after the company failed to heed a court order to take down YouTube videos criticizing a local-election candidate. Google also faces fines if it doesn't remove the "Innocence of the Muslims" video from Brazilian YouTube. The actions against Google follow trouble for Chevron (NYSE:CVX) and Transocean (NYSE:RIG) executives in an oil-spill case.

Top Economic & Other News
Another Spanish region asks for bailout. While Spain gets ready to request an EU bailout, its Castilla La Mancha region is asking for €848M in emergency financing from the government. The request makes Castilla La Mancha - which said in July that its budget deficit was more than twice as large as previously thought - the fifth region to tap Spain's €18B bailout mechanism for its 17 autonomous areas.

German jobless picture mixed. Germany's adjusted unemployment rate has come in at 6.8% for September, unchanged from August and matching consensus. The total number of unemployed fell to 2.79M - the lowest since 1991 - from 2.91M, with the drop due to seasonal effects. However, jobless claims increased for a 6th consecutive month, rising by 9,000 vs. 11,000.

PBOC injects record amounts into money market. The People's Bank of China injected nearly $58B into money markets this week, the largest such move ever. This and other recent operations are in contrast to much of the past decade, when strong foreign capital inflows kept the PBOC busy draining liquidity. The action is designed to help banks meet reserve requirements and ensure they have enough money to cope with consumer withdrawals during an upcoming long weekend.

U.K. economy may have grown in Q2. The U.K. has revised upwards its Q2 GDP estimate to -0.4% on quarter from -0.5% previously, boosted by improved calculations for industrial production and construction output. With the Bank of England estimating that national holidays in June for the Queen's 60 years on the throne hit GDP by 0.5%, the economy may actually have grown in Q2.

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Today's Markets:
In Asia, Japan +0.5%. Hong Kong +1.1%. China +2.6%. India -0.3%.
In Europe, at midday, London +0.4%. Paris +0.8%. Frankfurt +0.6%.
Futures at 7:00: Dow +0.5%. S&P +0.5%. Nasdaq +0.5%. Crude +0.9% to $90.81. Gold +0.1% to $1755.90.

Today's economic calendar:
8:30 Durable Goods
8:30 Initial Jobless Claims
8:30 GDP Q2
8:30 Corporate Profits
9:45 Bloomberg Consumer Comfort Index
10:00 Pending Home Sales
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
1:00 PM Results of $29B, 7-Year Note Auction
3:00 PM USDA Ag. Prices
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Notable earnings before today's open: DFS, MKC

Notable earnings after today's close: ACN, MU, NKE, RIMM

See full real-time earnings coverage »

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