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Wall Street Breakfast: Must-Know News

July 3, 2012

Libor claims Diamond's scalp. Bob Diamond today bowed to intense political pressure and resigned as CEO of Barclays (BCS) following the Libor-manipulation scandal. Marcus Agius, who was supposed to be quitting as Chairman, will stay and lead the search for a new CEO. Investors might be wondering what happened since yesterday, when Diamond was reportedly ready to "fight back" and reveal potentially embarrassing details about regulators. Barclays shares were +1.95% premarket.

Microsoft's Internet black hole swallows $6.3B acquisition. Microsoft's (MSFT) perennial loss-making Online Services division will take a $6.2B non-cash charge, primarily to write down its $6.3B acquisition of Internet ad agency aQuantive in 2007. With analysts expecting Microsoft to make a net profit of $5.25B in FQ4, the charge means the company will now probably make a loss for the period.

J.C. Penney reverting back to old strategy. J.C. Penney (JCP) has sent an e-mail to shoppers advertising thousands of discounts for the holiday week. Though the company hasn't officially moved off of its new pricing strategy, it's increasingly relapsing into offering promotions and discounts.

BlackRock buys P-E unit from Swiss Re. BlackRock (BLK) has agreed to acquire Swiss Re's $7.5B private equity arm, taking advantage as the insurer streamlines its business in the face of new regulations on risk-asset holdings. Terms of the all-cash deal were not disclosed, but BlackRock expects it to close in Q3, and for it to be neutral or modestly accretive to 2012 earnings.

Samsung, Google work closely in battle against Apple. Samsung (SSNLF.PK), scrambling to respond to a U.S. Galaxy Nexus injunction, is "working closely" with Google (GOOG) to create a common legal front against Apple (AAPL), The Korea Times reports. The patents Google acquired from Motorola Mobility might help Samsung's cause. Meanwhile, a judge has rejected Samsung's request to lift her ban on U.S. sales of the Galaxy Tab 10.1.

Potash firms could face billions in damages in cartel suit. Critics have long accused the potash industry of operating like a cartel to keep prices artificially high. Those critics are now closer to having their day in court, as a U.S. Court of Appeals has ruled that an antitrust suit against potash producers can proceed. Potash Corp. (POT), Agrium (AGU) and Mosaic (MOS) could face total damages of $2B-$6.5B if they lose.

Groupon chairman cuts down duties. Groupon (GRPN) Chairman and co-founder Eric Lefkofsky is reducing his role at the daily deals giant, and will spend more time working with VC firm Lightbank. The news, in addition to a note from Susquehanna, probably contributed to Groupon's 10.5% selloff yesterday, particularly given the Street's lingering concerns about CEO Andrew Mason.

Universal's EMI acquisition in danger of EU veto. The EU has warned Universal Music (VIVHY.PK) that its $1.9B acquisition of EMI's (C) recorded music arm will significantly hurt competition in the region, Reuters reports, indicating that regulators could block the deal in the absence of significant concessions from Universal. The company has until today to respond.

Eurozone producer prices weaken to 27-month low. Eurozone PPI fell to +2.3% in May, the lowest for over two years, from +2.6% in April as inflationary pressures continued to weaken amid the eurozone's slowing economy and falling energy prices. The PPI reading, which also dropped 0.5% on month, has raised hopes for an interest rate cut when the ECB meets on Thursday.

GOP states lead opposition to Medicaid expansion. Several Republican-led states, including Texas and Iowa, are considering opting out of the expansion of Medicaid under the Healthcare Act following last week's Supreme Court decision. Florida Governor Rick Scott has already pledged to not take part. Still, former White House budget director Peter Orszag thinks most states will opt in because of the attractive subsidy.

Mammoth Lakes set to join Stockton in bankruptcy. Mammoth Lakes in California will file for bankruptcy, just days after Stockton filed for Chapter 9 protection. The ski resort of around 8,000 residents said it saw no other choice after its largest creditor refused to negotiate concessions on a $43M legal judgement against the town.

Gasoline on three-month losing streak. Gasoline prices have notched their 13th straight weekly decline, which hasn’t happened since a 15-week streak that ended in December 2008. However, gasoline generally has been on an upward trend since then, and it’ll take a lot more before prices aren't a weight around consumers' necks. Moreover, analysts think the slide will end soon.

Today's Markets:
* In Asia, Japan +0.7%. Hong Kong +1.5%. China +0.1%. India +0.1%.
* In Europe, at midday, London +0.3%. Paris +0.3%. Frankfurt +0.6%.
* Futures at 7:00: Dow -0.05%. S&P flat. Nasdaq -0.1%. Crude +2% to $85.39. Gold +0.7% to $1609.10.

Today's economic calendar:
Auto sales
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
10:00 Factory Orders
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LIBOR Rate Upset

There's an interbank market in London
To set rates where one's fellows will fund one,
But if dubious sorts
Give phony reports,
Then faith in the market is undone.

-Dr Goose
http://tinyurl.com/clf3nso