View Full Version : Wall Street Breakfast: Syrian Aid, EU Summit, Index Realignment

Wall Street Breakfast Editors submit:
The Obama administration has requested $500M to aid Syrian rebels, as a result of the civil war which seems to be expanding into Iraq. In a move that increases the United States' role in the crisis, the government is requesting funds to train and arm the rebels, and marks its opposing stance which previously sought no heavy involvement in the region.

At an EU summit today, the West will debate if Russian sanctions will need to be increased. The discussion follows the controversial EU trade deal signed by Ukraine this morning. The U.S. and Germany are insisting the EU broaden sanctions against entire sectors of the Russian economy, although Italy has expressed concerns that widening sanctions right after the EU trade deal was signed can backfire miserably.

Despite a New York federal court order prohibiting Argentina from paying its restructured debt before its holdout investors, the country has just deposited $832M towards its restructured debt, so as not to default before its Monday deadline. Holdout investors were peeved by the move, and the violation of the court order. The ruling still prevents third party agents from distributing the funds unless the holdout investors are included on the payments.

Sanctions imposed on Rosneft's CEO Igor Sechin, have not stopped BP (BP) from working with the company. The latter has just signed a five-year deal for a supply of up to 12M tonnes of oil products. Sanctions were imposed on Sechin over the Ukraine crisis, however Rosneft (RNFTF) itself did not receive any injunctions. "I am working here with Rosneft. It's a business between the companies. I don't comment on personal sanctions," says BP CEO Bob Dudley.

Barclays has begun an internal investigation of its dark pool, which was accused this week of false representation and favoring high frequency traders over other investors. Deutsche Bank, RBC, and ITG severed their connections with the dark pool yesterday. "The success of our business depends crucially on our clients being able to rely absolutely on our honesty and integrity," says Barclays (BCS) CEO Antony Jenkins.

BNP Paribas is expected to plead guilty to sanction violations and pay an $8.9B fine, the NYT reports. Authorities are hoping to announce the verdict Monday, and it will outline the bank's illicit money transfers between 2002 and 2009 that violated U.S. sanctions. Yesterday, the NY Department of Financial Services looked to impose a year suspension on BNP Paribas (BNPQF) "dollar clearing," a service which is essential to doing business with international clients.

Russell Investments is planning its annual index realignment before the market close, affecting more than $5T in assets. Credit Suisse estimates $42B will trade as a result of the adjustment, resulting in one of the biggest trading days of the year in terms of dollar volume. Asset managers and investors will have to realign their portfolios to match up with the new shifts in indices such as the Russell 2000 and the Russell 3000.

Yahoo is looking to buy YouTube content provider Fullscreen, and has put in a bid for $250M, Sky News reports. Two of the major attractions for Yahoo (YHOO) are the startup's 380M subscriber base and 3B monthly video views on YouTube. Fullscreen is backed by Peter Chernin, who is said to have the right to purchase the company at a previously negotiated price, unless another bidder offers over $300M.

Michaels has priced its 27.8M-share IPO at $17, the low end of a $17-$19 range. Shares will begin trading today on the Nasdaq. The arts & crafts retailer has a market value of $3.45B, and has already raised $472M in the offering. After sinking into the red with $3.7B in debt, Michaels (MIK) is looking pay a chunk of it down with the money raised from the IPO.

Audi is bringing out its new A3 Sportback E-Tron, the company's first plug-in hybrid. The move comes as the luxury automaker seeks to compete with an ever increasing electric plug-in market. Carrying a heavy price tag, the new model costs ?38k ($51k) in Germany, ?15k more than a gasoline-powered A3. By the end of the decade, Audi (VLKAY) is planning to offer plug-in hybrid technology to every one of its models.

After much discussion to revamp its A330, Airbus (EADSF) is now close to a decision which will allow Rolls-Royce (RRCEF) to become the exclusive provider of the upgraded planes' new engines, CNBC reports. The announcement reinforces the bond between the two companies, as the current jet engine supply is also provided by rival GE (GE). The new A330neo will be a wide-body jet with new wingtips, and save up to 15% in fuel costs.

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Today's Markets:
In Asia, Japan -1.4% to 15095. Hong Kong +0.1% to 23222. China -0.1% to 2037. India +0.2% to 25100.
In Europe, at midday, London +0.2%. Paris +0.2%. Frankfurt +0.1%.
Futures at 6:20: Dow -0.1%. S&P -0.2%. Nasdaq -0.1%. Crude flat at $105.81. Gold -0.2% to $1314.90.
Ten-year Treasury Yield flat at 2.53%

Today's economic calendar:
9:55 Reuters/UofM Consumer Sentiment
3:00 PM USDA Ag. Prices

Notable earnings before today's open: [[AZZ]], [[CMC]], [[FINL]], [[KBH]]

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