JDfn Daily Digest - August 14, 2008
First-time applications for state unemployment benefits fell by 10,000 in the latest week to 450,000, but the smoothed trend in new claims moved to its highest level in more than six years. Initial claims have increased recently by publicity about a new federal program of extended benefits that has encouraged more unemployed workers to file for claims under regular state programs.
U.S. consumer prices jumped a greater-than-expected 0.8% in July, marked by big increases in energy, food, clothing and cigarettes. The core consumer price index - which excludes volatile food and energy prices - rose 0.3% for the second straight month. The report was much worse than expected. The core CPI has risen 2.5% in the past year, the biggest gain since January.
Former Federal Reserve chairman Alan Greenspan said he expects that U.S. house prices, a key factor in the outlook for the economy and financial markets, will begin to stabilize in the first half of next year. An end to the decline in house prices, he explained, matters not only to American homeowners but is "a necessary condition for an end to the current global financial crisis."
The number of homeowners hit by the decline in the U.S. housing market increased last month. Nationwide, more than 272,000 homes received at least one foreclosure-related notice in July, up 55 percent from about 175,000 in the same month last year and up 8 percent from June.
Ford Motor Co. (F) announced it has started production of its new subcompact Fiesta at a plant in Germany. The vehicle is the first product to come out of Ford's new global development process, which intends to produce global models that are tailored to regional tastes.
British Airways PLC, American Airlines (AMR) and Spain's Iberia SA announced they have signed a joint business agreement on flights between North America and Europe. The three airlines said that they planned to file for worldwide antitrust immunity from U.S. authorities for the deal. They will also notify European regulatory authorities.
Cablevision Systems Corp. (CVC) executives met with its major shareholders this week to discuss strategic options for the company, but while many alternatives remain open they are not expected to go private again or mount another major acquisition. Cablevision is reportedly considering returning capital to shareholders in the form of a special or regular dividend and stock repurchases.
Scheduled U.S. Economic Reports (Friday)
Industrial Production (July), Consumer Sentiment (Aug)
In Earnings News
Wal-Mart Stores Inc. (WMT) reported second-quarter profit rose 17 percent. The company said that net income was $3.45 billion, or 87 cents per share. Net sales were about $101.6 billion in the second quarter, a 10.4 percent increase from $92 billion in the year-ago period.
The J.M. Smucker Co. (SJM) reported fiscal first-quarter earnings rose 4 percent, helped by acquisitions and price increases. Profit for the quarter rose to $42.3 million, or 77 cents per share. That’s in line with analysts’ expectations.
Flowers Foods Inc. (FLO) said income for the quarter grew to $23.9 million, or 26 cents per share. Analysts expected a profit of 27 cents per share on sales of $523.9 million.
InBev SA's second-quarter profit climbed 8.6 percent despite flat sales and higher costs as it paid less tax. InBev made 542 million euros ($808 million) for the quarter, up from 499 million euros ($680 million at earlier exchange rate) for the same period in 2007.
Scheduled Earnings Reports (Friday)
JC Penney, Abercrombie & Fitch, International Stem Cell, Micro Star International, Remote Dynamics, OSI Restaurant Partners
Stocks in the News
Diamond Foods Inc (DMND) said it is buying the Pop Secret popcorn business from General Mills Inc. for about $190 million in cash.
VeraSun Energy Corp (VSE) filed plans to raise up to $750 million in an offering of common stock, preferred stock, depositary shares, debt securities, warrants, subscription rights, purchase contracts, and purchase units.
NetEase.com Inc (NTES) said its second-quarter profit rose to $63.9 million, or 49 cents an American depositary share, from $45.6 million, or 34 cents an ADS, in the year-ago period.
Barnes & Noble Inc. (BKS) isn't expected to bid for its main rival Borders Group (BGP).
General Dynamics (GD) was downgraded by J.P. Morgan to neutral from overweight on the expectation that its earnings growth will slow next year.
Syneron Medical Ltd. (ELOS) reported its profit grew 6 percent in the second quarter due to stronger international sales.
Estee Lauder Companies (EL) said its fourth-quarter profit rose almost 36% to $120 million, or 61 cents a share, from $88.6 million, or 45 cents a share, in the same quarter a year before.
U.S. consumer prices jumped a greater-than-expected 0.8% in July, marked by big increases in energy, food, clothing and cigarettes. The core consumer price index - which excludes volatile food and energy prices - rose 0.3% for the second straight month. The report was much worse than expected. The core CPI has risen 2.5% in the past year, the biggest gain since January.
Former Federal Reserve chairman Alan Greenspan said he expects that U.S. house prices, a key factor in the outlook for the economy and financial markets, will begin to stabilize in the first half of next year. An end to the decline in house prices, he explained, matters not only to American homeowners but is "a necessary condition for an end to the current global financial crisis."
The number of homeowners hit by the decline in the U.S. housing market increased last month. Nationwide, more than 272,000 homes received at least one foreclosure-related notice in July, up 55 percent from about 175,000 in the same month last year and up 8 percent from June.
Ford Motor Co. (F) announced it has started production of its new subcompact Fiesta at a plant in Germany. The vehicle is the first product to come out of Ford's new global development process, which intends to produce global models that are tailored to regional tastes.
British Airways PLC, American Airlines (AMR) and Spain's Iberia SA announced they have signed a joint business agreement on flights between North America and Europe. The three airlines said that they planned to file for worldwide antitrust immunity from U.S. authorities for the deal. They will also notify European regulatory authorities.
Cablevision Systems Corp. (CVC) executives met with its major shareholders this week to discuss strategic options for the company, but while many alternatives remain open they are not expected to go private again or mount another major acquisition. Cablevision is reportedly considering returning capital to shareholders in the form of a special or regular dividend and stock repurchases.
Scheduled U.S. Economic Reports (Friday)
Industrial Production (July), Consumer Sentiment (Aug)
In Earnings News
Wal-Mart Stores Inc. (WMT) reported second-quarter profit rose 17 percent. The company said that net income was $3.45 billion, or 87 cents per share. Net sales were about $101.6 billion in the second quarter, a 10.4 percent increase from $92 billion in the year-ago period.
The J.M. Smucker Co. (SJM) reported fiscal first-quarter earnings rose 4 percent, helped by acquisitions and price increases. Profit for the quarter rose to $42.3 million, or 77 cents per share. That’s in line with analysts’ expectations.
Flowers Foods Inc. (FLO) said income for the quarter grew to $23.9 million, or 26 cents per share. Analysts expected a profit of 27 cents per share on sales of $523.9 million.
InBev SA's second-quarter profit climbed 8.6 percent despite flat sales and higher costs as it paid less tax. InBev made 542 million euros ($808 million) for the quarter, up from 499 million euros ($680 million at earlier exchange rate) for the same period in 2007.
Scheduled Earnings Reports (Friday)
JC Penney, Abercrombie & Fitch, International Stem Cell, Micro Star International, Remote Dynamics, OSI Restaurant Partners
Stocks in the News
Diamond Foods Inc (DMND) said it is buying the Pop Secret popcorn business from General Mills Inc. for about $190 million in cash.
VeraSun Energy Corp (VSE) filed plans to raise up to $750 million in an offering of common stock, preferred stock, depositary shares, debt securities, warrants, subscription rights, purchase contracts, and purchase units.
NetEase.com Inc (NTES) said its second-quarter profit rose to $63.9 million, or 49 cents an American depositary share, from $45.6 million, or 34 cents an ADS, in the year-ago period.
Barnes & Noble Inc. (BKS) isn't expected to bid for its main rival Borders Group (BGP).
General Dynamics (GD) was downgraded by J.P. Morgan to neutral from overweight on the expectation that its earnings growth will slow next year.
Syneron Medical Ltd. (ELOS) reported its profit grew 6 percent in the second quarter due to stronger international sales.
Estee Lauder Companies (EL) said its fourth-quarter profit rose almost 36% to $120 million, or 61 cents a share, from $88.6 million, or 45 cents a share, in the same quarter a year before.
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