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Wall Street Breakfast: Should The U.K. Stay Or Should It Go?
Jun. 23, 2016 7:00 AM ET|
Includes: AAPL, BABA, BAC, BBBY, BKS, CHAT, CZR, DIS, DPS, FB, FCAU, FIZZ, FOX, GE, GOOG, GOOGL, KO, MNST, PEP, PG, QQQ, RHT, SBUX, SCTY, SPY, TSLA, TWLO, TWTR, TWX, UL, VIA, VIAB, VICE
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.

The highly anticipated Brexit referendum is underway in Britain, where citizens across the country are casting their vote on whether to 'Remain' or 'Leave' the EU. Despite most polls suggesting the outcome is too close to call, equities are soaring and sterling is at fresh 2016 highs. Traders across London are still bracing themselves for an all-night vigil, while the G7 nations are poised to take "all necessary steps" to calm markets in case of a Brexit.

Economy

As EU members await the results of the U.K. vote, the latest preliminary data on eurozone business activity revealed yet another slowdown in growth for the single currency area. The composite flash PMI showed that services and manufacturing in the bloc tumbled to a 17-month low in June, falling to 52.8 from a revised figure of 53.1 in May.

Norway's central bank has left its key interest rate unchanged at 0.5% amid signs the economy of western Europe's biggest oil producer will narrowly avoid a recession. "There are still prospects that the key policy rate may be reduced in the course of the year," Governor Oeystein Olsen said in a statement. Until now, Norway has managed to avoid the negative rates and unconventional polices that dominate elsewhere.

Helping breathe life into Greece's struggling economy, the ECB will start accepting junk-rated Greek government debt as collateral for its regular bank lending operations. According to economists, the decision to open a funding facility that had been shut for 16 months could lead to the partial lifting of capital controls in the coming days.

"Data pointed to a further deterioration in manufacturing conditions in Japan. Both production and new orders declined at marked rates, led by a sharp drop in international demand," Markit said in its latest preliminary survey. The Japan Flash Manufacturing PMI came in at a seasonally adjusted 47.8 in June, little changed from a final reading of 47.7 the previous month.

Janet Yellen's prepared remarks before the House Financial Services Committee yesterday offered nothing new from her appearance in the Senate. Of the weak May jobs report, which seems to have shaken the Fed from what appeared to be plans to hike rates this summer, Yellen said it's likely transitory, and a reflection of a previous soft patch for the economy.

Saudi Arabia's new oil minister has signaled an end to the worst of the oil glut and indicated the OPEC kingpin is preparing to reassert a degree of control over the market after two years of letting prices fall. "We are out of it. The oversupply has disappeared," Khalid Al-Falih told the Houston Chronicle. "We just have to carry the overhang of inventory for a while until the system works it out." Falih replaced long-time Saudi oil policymaker Ali al-Naimi in May.

Stocks

After raising $150M in its initial public offering, Twilio has priced 10M Class A shares (above its targeted $12-14 range) at $15 each, valuing the cloud software developer at $1.23B. The stock will begin trading today on the NYSE under ticker symbol TWLO. The impact of Twilio's IPO extends far beyond the Silicon Valley unicorn: It is likely to be a current litmus test for the public market's appetite for private tech companies.

Elon Musk tried to reassure Tesla (NASDAQ:TSLA) shareholders yesterday about a SolarCity (NASDAQ:SCTY) deal, but investors weren't having any of it. Tesla shares plunged by more than 10% during the session, while SolarCity climbed over 3%. "A shameful example of corporate governance at its worst," said high-profile investment manager Jim Chanos, calling out the yield of SCTY bonds, the market drop following the announcement and insider trading.

Fiat Chrysler is speeding up its software fix for 1.1M recalled vehicles for rollaway risks like the recalled Jeep (NYSE:FCAU) Grand Cherokee involved in the recent death of actor Anton Yelchin. The changes will force vehicles to automatically change into park mode if the driver's door opens when the shifter is in neutral, drive or the reverse position.

Almost a week after recovering the black boxes from EgyptAir Flight 804, investigators have yet to download their data, slowing efforts to determine why the plane plunged into the Mediterranean Sea last month. Accident investigators haven't ruled out any cause for the crash of the Airbus A320 (OTCPK:EADSY), but Egyptian officials have said the data analysis could "take several weeks."

General Electric executives will present Wall Street analysts a progress report this morning on its new standalone software business, GE Digital. Its new products, including Predix (an operating system for the industrial internet), are vital to GE's plan to become a "digital-industrial company." The unit is expected to record $6B in revenue this year, compared with GE's total revenue of $117B in 2015.

GE has also received a binding offer from Cerberus Capital Management for its French consumer-credit unit, GE Money Bank, the latest step in the industrial group's exit from the finance sector. The sale would represent ending net investment equivalent to around $4.6B at March 31, but the operation would exclude the unit's $2B mortgage loan portfolio, which will be sold separately.

The casino operating unit of Caesars Entertainment (NASDAQ:CZR) can begin seeking creditor votes for a plan to exit its long and contentious $18B bankruptcy, Judge Benjamin Goldgar ruled in a Chicago court. The move will set a final courtroom showdown for early next year between the casino giant and bondholders who say they're being shortchanged.

Bank of America has been in discussions with the SEC about paying $400-450M to settle allegations it violated rules designed to safeguard client accounts, WSJ reports. The probe centers around whether BofA (NYSE:BAC) had proper controls for some customer accounts and retail brokerage funds, and could result in one of the largest ever settlements for the SEC. BAC +2% premarket.

"When I see reports in the press taking my recent words about counterfeit goods out of context, I feel compelled to set the record straight," Alibaba's (NYSE:BABA) Jack Ma said in an opinion piece published by the WSJ. "Counterfeit goods are absolutely unacceptable, and brands and their intellectual property must be protected." Media reports last week quoted a remark from Ma that stated "fake products today are of better quality and price than the real names."

Twitter is close to announcing deals to stream more live events after experiencing higher-than-expected advertising demand for the NFL games it plans to air this season. "You'll see other announcements around premium content from us soon," said Kayvon Beykpour, co-founder of Periscope, the live-streaming app that Twitter (NYSE:TWTR) acquired in 2015 and embedded in its micro-blogging platform. TWTR +1% premarket.

Meanwhile, Vice Media is facing a decision on whether to go public or be acquired by a larger firm. "We're having a very good year and at some point we're going to be priced out of the market. So we'll be too expensive," VICE CEO Shane Smith told CNBC. Who would be the ideal owner of the millennial-focused media company? According to Smith, there are a bunch of choices: Apple (NASDAQ:AAPL), Google (GOOG, GOOGL), Facebook (NASDAQ:FB), Snapchat (Private:CHAT), Disney (NYSE:DIS), Fox (NASDAQ:FOX), or Time Warner (NYSE:TWX).

Sumner Redstone's plan to replace five directors at Viacom (VIA, VIAB) is on hold until it can be determined if the 93-year-old is mentally capable of making decisions. The news came at a hearing on Wednesday, where a Delaware judge said he wanted to wait until another case regarding the media mogul's competency was through its discovery process before ruling on the proposed board changes.

San Francisco will have a second chance to vote on whether to tax sugar-sweetened beverages after city officials added the measure to a November ballot that could expand the hotly debated levy deeper into the Bay Area. The penny-per-ounce tax proposal follows the city's legal victory last month against the soda industry, which tried to halt its effort to introduce warnings on advertisements for drinks with added sugar. Related stocks: KO, PEP, DPS, MNST, FIZZ, SBUX, UL, PG

Wednesday's Key Earnings

Barnes & Noble (NYSE:BKS) +4.9% AH looking to new products, marketing.
Bed Bath & Beyond (NASDAQ:BBBY) -4.3% AH after missing expectations.
Red Hat (NYSE:RHT) -6.7% AH on downbeat guidance.

Today's Markets

In Asia, Japan +1.1% to 16238. Hong Kong +0.4% to 20868. China +0.5% to 2892. India +0.9% to 27002.
In Europe, at midday, London +1.5%. Paris +2.2%. Frankfurt +2.3%.
Futures at 6:20, Dow +1%. S&P +1.1%. Nasdaq +1.2%. Crude +1.6% to $49.91. Gold -0.6% to $1263.
Ten-year Treasury Yield +5 bps to 1.73

Today's Economic Calendar

8:30 Initial Jobless Claims
8:30 Chicago Fed National Activity Index
9:45 PMI Manufacturing Index Flash
9:45 Bloomberg Consumer Comfort Index
10:00 New Home Sales
10:00 Leading Indicators
10:30 EIA Natural Gas Inventory
4:30 PM Money Supply
4:30 PM Fed Balance Sheet

Companies reporting earnings today »
http://seekingalpha.com/earnings/upcoming