Tuesday, June 23, 2009

Wall Street Breakfast: Must-Know News

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Wall Street Breakfast: Must-Know News

by SA Editor Rachael Granby

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  • Xstrata offer rebuffed. Anglo American's (AAUK) board unanimously rejected a merger offer from Xstrata (XSRAF.PK) due to "totally unacceptable" terms. Xstrata would have been the 'best fit' for Anglo American, say some analysts, but rival bids may emerge from company's like Vale (VALE). A 'disappointed' Xstrata may also make another bid, though its limited capacity to take on more debt could prevent it from offering Anglo American a premium. AAUK +0.5% premarket (7:00 ET).
  • 3 banks suspend TARP dividends. At least three small, cash-strapped banks have stopped paying TARP dividends to the government. Pacific Capital Bancorp (PCBC), which received $180.6M in November, has since posted net losses of $49.7M and suspended dividend payments as part of a wider effort to save $8M per quarter. The other two banks - Seacoast Banking Corp. of Florida, which received $84.8M, and Midwest Banc Holdings, which received $50M - pointed to industry turmoil and a desire to strengthen their balance sheets as the reasons for suspending the dividend payments. Treasury said it "respects the contractual rights of [TARP recipients] to make decisions about dividend distributions, and that banks are best positioned to decide how to manage their own capital base."
  • SEC wants OTC regulatory power. Testifying in the Senate, SEC's Mary Schapiro told lawmakers the SEC should get expanded authority over security-based swaps and certain non-banking derivatives dealers that offer securities-related over-the-counter products. The SEC currently has only antifraud authority over security-based swaps, which makes investigations 'far more difficult and time-consuming.' According to Schapiro, the Commodity Futures Trading Commission would handle oversight of foreign exchange, interest-rate and commodity swaps, and the Federal Reserve would oversee banks that also deal in derivatives. (Read Schapiro's testimony)
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  • UBS settlement likely. Amid a fierce lobbying campaign by UBS (UBS) and Swiss officials, and following a recent tax treaty signed with Switzerland, sources say the U.S Justice Department may be nearing a decision to drop a closely watched tax evasion case against UBS. The complaint could be dropped by July 13, when a federal judge is expected to hold a short trial on the issue.
  • Ford, Nissan to tap retooling loans. The White House is expected to announce this morning that Ford (F), Nissan (NSANY) and Tesla Motors are among the first recipients in a $25B loan program to help automakers retool their factories. The loans are designed to help automakers revamp plants in order to produce new models at least 25% more fuel-efficient than vehicles made in 2005.
  • Intel lands Nokia deal. Intel (INTC) will reportedly sell processors to Nokia (NOK) for mobile devices, marking a major breakthrough in Intel's efforts to expand into the phone market. Intel's microprocessors run over 80% of the world's PCs, but the company has been working for a decade to crack into the market for mobile-phone chips. An announcement of the deal is expected today. INTC +0.6% premarket (7:00 ET).
  • More fraud lawsuits in Madoff case. Three Madoff-related lawsuits were filed yesterday, providing new details about who might have helped perpetuate the long-running Ponzi scheme. The SEC filed civil fraud charges against money manager Stanley Chais, one of Madoff’s earliest investors, accusing Chais of deceiving his clients and ignoring obvious signs of fraud. A civil fraud case was also filed against three senior executives of brokerage firm Cohmad Securities Corporation, alleging they knowingly helped finance and conceal the scheme for years. The third suit named Cohmad and several of its executives and employees, and seeks to recover millions of dollars in fees and profits the defendants received from Madoff.
  • Google phones coming soon. Verizon Wireless (VZ) and T-Mobile USA (DT) are planning to launch Motorola (MOT) smartphones based on Google's (GOOG) Android operating system by the end of the year. Motorola has bet heavily on Android as a way to regain traction in the cellphone market, but the new handsets will be released into a market already flooded with new offerings by Apple (AAPL) and Palm (PALM).

Earnings: Monday After Close

  • Smith & Wesson (SWHC): FQ4 EPS of $0.14 beats by $0.02. Revenue of $99.5M (+20%) vs. $97.8M. (PR)

Today's Markets

Asian markets closed broadly down, but European markets are pushing into positive territory.

  • In Asia, Nikkei -2.8% to 9,550. Hang Seng -2.9% to 17,538. Shanghai -0.1% to 2,893. BSE -0.02% to 14,324.
  • In Europe at midday, London +0.3%. Paris -0.15%. Frankfurt +0.5%.
  • U.S. futures: Dow +0.2%. S&P +0.3%. Nasdaq +0.2%. Crude -0.4% to $67.20. Gold +0.15% to $922.40.

Tuesday's Economic Calendar

Seeking Alpha editor Eli Hoffmann contributed to this post.

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