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Wall Street Breakfast: Must-Know News

By Yigal Grayeff
March 28, 2012

Tyco to merge $4.9B Flow Control unit with Pentair. Tyco's (TYC) Flow Control unit will merge with Pentair (PNR), a provider of fluid-processing solutions, in an all-stock deal that values Tyco Flow at around $4.9B, including debt. After the closing, Tyco's shareholders will have 52.5% of the combined Flow-Pentair business and Pentair holders 47.5%. The pro-forma 2012 revenue of the new entity is forecast at $7.7B.

MF's O'Brien talks to DOJ but not to Congress. MF Global (MFGLQ.PK) Assistant Treasurer Edith O'Brien, who's at the center of attempts to find out what happened to client money at the firm, has provided Department of Justice investigators details about transactions that dipped into customer funds, The Wall Street Journal reports. However, O'Brien is still expected to invoke the fifth when she appears before a House panel today.

AMR seeks to throw out staff contracts. The parent of American Airlines (AAMRQ.PK) yesterday sought approval from a bankruptcy court to void labor contracts, placing new pressure on pilots, flight attendants and other unionized workers to quickly agree to concessions. AMR CEO Tom Horton has told employees the "best outcome" remains negotiated settlements, and promised to work with unions toward that end.

Facebook warns on Yahoo dispute. Facebook (FB) yesterday said its patent dispute with Yahoo (YHOO) "could be material to our business, financial condition or results" in the event of "an unfavorable outcome." Meanwhile, Mark Zuckerberg's reluctance to meet investors ahead of Facebook's IPO could become an issue, especially given the control he will retain over the firm.

France, U.K., U.S. mull releasing more oil reserves. France, the U.K. and the U.S. are in talks about a possible release of strategic oil reserves "in a matter of weeks" in order to push fuel prices down, Le Monde reports. The speculation comes as Iran says that talks with world powers about its nuclear program will take place on April 13.

Risk of Spanish restructuring at all-time high - Citigroup. The risk of a Spanish debt restructuring is higher now than it has been since the beginning of the crisis, Citigroup chief economist William Buiter has said. "Spain looks likely to enter some form of a troika program this year, as a condition for further [ECB] support for the Spanish sovereign and/or Spanish banks."

Nokia to launch Windows phones in China in April. Nokia (NOK) shares were +3.7% premarket after the firm said it will start selling Windows Lumia smartphones in China from next month. Nokia, which is seeking to recover a plunge in market share from Apple and Samsung, is initially selling the devices through China Telecom (CHA), but plans to market its products through the other two big carriers as well.

House OKs easing of IPO rules. The House yesterday voted 380-41 in favor of legislation that will ease a variety of business regulations, especially for IPOs. It's the first major lightening of securities law since the Dodd-Frank reforms were passed, and is a significant rollback from Sarbanes-Oxley. President Obama has signaled he will sign the bill.

eBay's Passage to India. eBay (EBAY) is targeting growth in India, investing more money and fine-tuning its strategy there as it tries to steer Indian customers away from low-margin electronic goods to higher-margin purchases like clothes and shoes. The stakes are huge, with India's online shopping market expected to hit $70B by 2020 from just $600M now.

BATS retains Ratterman as CEO. Joe Ratterman is being removed as BATS (BATS) Chairman but he gets to keep his job as CEO with the "unanimous support" of the board following the exchange's botched IPO last week. Earlier this week, BATS co-founder Dave Cummings urged the company to carry out the listing in Q2.

BofA looks to expand internationally. Bank of America (BAC) is putting together an international advisory board to provide guidance on global strategy, The Wall Street Journal reports, as the U.S. powerhouse prepares for a greater global push. This is despite BofA recently selling holdings in China Construction Bank and other international assets as it works to shore up its balance sheet.

Banks can direct foreclosure fines for routine activity. Here's the fine print from the $25B foreclosure settlement the five big mortgage banks signed last month: Of the $17B banks must earmark for "assistance to borrowers," more than half can be used in ways that won't stop foreclosures, including some activities that are already standard bank practices, such as demolishing abandoned houses.

Bernanke: Fed stopped "Total Meltdown." Ben Bernanke yesterday defended the Fed's response to the 2008 financial crisis, saying that it prevented "total meltdown" at a time when there were "very real" fears of a second Great Depression. "I think the view is increasingly gaining acceptance that without the forceful policy response that stabilized the financial system in 2008 and early 2009, we could've had a much worse outcome in the economy," Bernanke said.

Asia set to double firewall. Asian policymakers are preparing to double a $120B reserve pool for defending the region against shocks. The move is meant to reduce their reliance on traditional backstops such as the IMF, which expects the eurozone to take up around 80% of its total credit in 2014.

Today's Markets:
* In Asia, Japan -0.7% to 10183. Hong Kong -0.8% to 20885. China -2.6% to 2285. India -0.8% to 17122.
* In Europe, at midday, London -0.2%. Paris -0.1%. Frankfurt -0.1%.
* Futures at 7:00: Dow +0.2%. S&P +0.2%. Nasdaq +0.2%. Crude -0.9% to $106.38. Gold -0.55% to $1675.70.

Wednesday's economic calendar:
7:00 MBA Mortgage Applications
8:30 Durable Goods
10:00 Hearing: FY 2013 Budgetary Requests (Geithner)
10:30 EIA Petroleum Inventories
1:00 PM Results of $35B, 5-Year Note Auction
2:30 PM Hearing: 'Enhancing Economic Growth' (Geithner)

Earnings Results: Companies that beat EPS expectations last night and today include Commercial Metals Company (CMC), Family Dollar Stores (FDO), Phillips-Van Heusen (PVH), Sealy (ZZ), Synnex (SNX).

Notable earnings before Wednesday's open:
AUQ, CMC, FDO.

Notable earnings after Wednesday's close:
MOS, PAYX, RHT.
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Bernanke's Debt Crisis Lecture

"Calamitous circumstance thrust me
Into coping with crisis robustly,
And in daring to bail
The Too Big To Fail,
I rescued your tail, you can trust me."

-Dr Goose
http://tiny.cc/2lqvbw