Wall Street Breakfast Editors submit:
Economy
John Kerry and Iranian Foreign Minister Javad Zarif will meet again this morning to finalize plans of a comprehensive nuclear agreement that would slowly lift international sanctions in exchange for clear guarantees that Iran will not pursue nuclear weapons. Kerry warned earlier this month that if there is not enough progress in the talks by the July 20 deadline, the U.S. may not allow them to continue.
Russia has blamed Ukraine for the killing of a civilian on Russian soil, declaring that the act could carry "irreversible consequences" and affirming its right to intervene in Ukraine to protect ethnic Russians. Ukraine denied the accusation, stating separatists were responsible for the crossfire. It remains to be seen if Russia will intervene in eastern Ukraine, facing threats of economic sanctions from the West should it cross the line.
Stocks
Shire says it has received a new $53B takeover proposal from AbbVie (ABBV) and it is willing to recommend the new offer to shareholders. At ?53.20 per Shire (SHPG) share, the new bid includes ?24.44 in cash and 0.8960 shares of new AbbVie shares. As a result of the updated deal, Shire investors will own approximately 25% of the combined company. The new bid marks AbbVie's fifth takeover attempt.
Citigroup is expected to report its $7B settlement with U.S. authorities today at the same time it announces second-quarter earnings results. The U.S. government has been investigating the bank's sale of shoddy MBSs prior to the 2008 financial crisis and has been negotiating with Citi (C) since November. Last year, JPMorgan (JPM) agreed to pay $13B to settle similar probes, and BofA (BAC) will be the next bank summoned to the negotiating table.
After closing its $500M stock hedge-fund last month, KKR (KKR) has pivoted itself back into the hedge-fund market by purchasing a 24.9% stake of BlackGold Capital Management (a $1.4B fund specializing in the natural-resources and energy sector). KKR is concentrating on diversifying its business, slowly moving into the hedge-fund sector from corporate buyouts. The hedge-fund business of KKR currently includes a $10B fund of hedge funds, KKR Prisma, and its minority stakes in external funds.
The Bank of Portugal has ordered Banco Espirito Santo to replace management immediately in a move attempted at distancing the bank from the serious financial condition at Espirito Santo International - one of the bank's holding companies. Fears over Banco Espirito Santo's state last week sent tremors across the financial markets and led to the trading suspension of both Banco Espirito Santo and Espirito Santo Financial Group (ESFHF).
Aecom Technology has agreed to purchase rival URS (URS) for $4B in cash and shares, forming a company with roughly double the amount of turnover than the next closest competitor in the industry. Aecom (ACM) is already the world?s largest engineering design company by revenue. URS shares have had a chaotic last few months, dropping below $45 this June from $55 last September. Shares started to then climb a few weeks ago due to M&A speculation.
Samsung has temporarily suspended business with its Shinyang supplier factory after finding evidence suggesting that the child labor allegations which surfaced last week could very well be true. The accusation was made by the New York-based China Labor Watch which reported several cases of underage workers at the facility. ?If the investigations conclude that the supplier indeed hired children illegally, Samsung (SSNLF) will permanently halt business with the supplier,? announced the South Korean company.
Whiting Petroleum will acquire Kodiak Oil & Gas (KOG) creating North Dakota's largest Bakken shale producer. During the first quarter, combined output of the two companies was more than 107k barrels of oil per day from the Bakken/Three Forks formations. The deal is valued at $6B, including $3.8B in stock and $2.2B in net debt. Kodiak shareholders will receive 0.177 share of Whiting (WLL) stock for each share of Kodiak common stock they own.
American Airlines has agreed to buy $2.6B of jet engines from CFM International, a joint venture between GE (GE) and Safran (SAFRF). 100 Airbus A320neo jetliners American Airlines (AAL) has on order will be outfitted with the new engines. CFM also landed another massive jet engine purchase following easyJet's (ESYJY) order for 270 engines. GE is now expecting more than $30B in orders at the Farnborough Airshow this week.
Airbus has finally confirmed its newly upgraded A330neo jet which it plans to start delivering in 2017. The new wide-body plane will be 14% more fuel efficient due to enhanced aerodynamics and larger Rolls-Royce (RRCEF) engines. Airbus' (EADSY) revamped jet seeks to rival Boeing's (BA) 787 Dreamliner. However, while the 787 will still provide greater fuel savings, the A330neo will have a lower price tag and repair costs.
Top Ideas
Marchex Inc. (MCHX) - new article by Ariana Research ?
CCA Industries (CAW) +12.9% since Jun. 23 John Leonard article ?
Clearfield (CLFD) -32.8% since Feb. 15 Simple Insights article ?
Today's Markets:
In Asia, Japan +0.9% to 15297. Hong Kong +0.5% to 23347. China +1% to 2067. India -0.1% to 25007.
In Europe, at midday, London +0.6%. Paris +0.5%. Frankfurt +0.7%.
Futures at 6:20: Dow +0.3%. S&P +0.3%. Nasdaq +0.5%. Crude -0.4% to $100.42. Gold -1.1% to $1322.30.
Ten-year Treasury Yield flat at 2.53%
Today's economic calendar:
No events scheduled.
Notable earnings before today's open: [[C]]
Notable earnings after today's close: [[LEDS]], [[OZRK]], [[PPHM]]
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