JDfn Daily Digest - September 25, 2008
Senior lawmakers and Bush administration officials have cleared away key obstacles to a deal on the unprecedented $700 billion financial rescue plan, agreeing to include widely supported limits on pay packages for executives whose companies benefit. A bipartisan meeting is set to begin drafting a compromise, which top Democrats said they hoped could pass within days.
Federal Reserve Chairman Bernanke moved closer to cutting interest rates, signaling that risks to U.S. growth are greater than policy makers saw them just last week. Speaking on Capitol Hill, Bernanke said the ``intensification'' of the financial crisis in recent weeks is curbing Americans' access to borrowing, making the outlook for consumer spending ``sluggish at best.''
The House has passed a $630 billion-plus spending bill that wraps together a record Pentagon budget with aid for automakers and natural disaster victims, and increased health care for veterans returning from Iraq and Afghanistan. The bill is dominated by $488 billion for the Pentagon, $40 billion for the Homeland Security Department and $73 billion for veterans' programs and military base construction projects.
New claims for unemployment benefits jumped last week to their highest level in seven years due to the impact of a slowing economy and Hurricanes Ike and Gustav. New requests for jobless benefits for the week ending Sept. 20 increased by 32,000 to a seasonally-adjusted 493,000, much higher than analysts' expectations of 445,000.
The Commerce Department reported that orders for durable goods fell by 4.5 percent last month, far worse than the 1.6 percent decline that economists expected. It was the biggest setback since a 4.7 percent fall in January and came after modest increases in the past three months.
U.S. home sales fell 11.5% to a 17-year low in August. The decline in new-home sales to a seasonally adjusted annual rate of 460,000 was much weaker than the 505,000 pace expected by economists. New-home sales are down 34.5% compared with a year ago.
Delta (DAL) and Northwest Airlines (NWA) are crossing off the various issues on their checklist to become the world's biggest carrier, with shareholder votes at both companies expected to overwhelmingly back the deal merging the two air carriers. If the deal is completed, Delta plans to issue a nearly 13.4 percent equity stake in the combined airline to employees.
Scheduled U.S. Economic Reports (Friday)
Gross Domestic Product (2Q), Consumer Sentiment (Sep)
In Earnings News
General Electric Co. (GE) lowered its earnings guidance for the third quarter and the full year. GE said it expects to report third-quarter profit of 43 cents to 48 cents per share while analysts expect 52 cents.
Discover Financial Services (DFS) said it earned $180 million, or 37 cents per share, in the quarter. Analysts had expected earnings of 35 cents per share.
Pilgrim's Pride Corp. (PPC) said it expects to report a "significant loss" in its fiscal fourth quarter. The company did not offer any details about the size of the loss but analysts expect a loss of 89 cents per share for the fiscal fourth quarter.
Rite Aid (RAD) said its loss increased to $222 million, or 27 cents per share. Analysts expected a loss of 15 cents per share.
Bed, Bath & Beyond (BBBY) said that its second-quarter profit fell to $119.3 million, or 46 cents a share, from $147 million, or 55 cents a share, in the year-ago period. Revenue rose to $1.85 billion from $1.77 billion last year. Analysts estimated a quarterly profit of 46 cents a share.
Scholastic Corp. (SCHL) said its fiscal first-quarter loss widened compared with a year-ago period that benefited from a new Harry Potter book. The children's book publisher reported a loss of $49.1 million, or $1.30 per share, compared with a loss of $2.8 million, or 7 cents per share, in the same quarter a year ago.
Vail Resorts Inc. (MTN) reported a narrower loss in its fiscal fourth quarter. For the quarter, the company posted a loss of $11.1 million, or 29 cents per share, compared with a loss of $34.3 million, or 88 cents per share. Analysts expected a loss of 21 cents per share.
Scheduled Earnings Reports (Friday)
American Greetings, Jabil Circuit, KB Home, and Azz Inc. Third quarter earnings season begins on October 7th when Alcoa releases its quarterly numbers.
Stocks in the News
Merck & Company (MRK) signed a licensing agreement with Japan Tobacco Inc to develop and commercialize a drug for treating osteoporosis that is currently being developed by Japan Tobacco.
Altria Group’s (MO) Philip Morris USA said it filed a suit to overturn a San Francisco law that would ban convenience drugstores from selling tobacco products.
Nike Inc (NKE) reported that fiscal first-quarter net income fell to $510.5 million, or $1.03 a share, from $569.7 million, or $1.12, a year earlier.
Ameriprise Financial (AMP) said it would commit as much as $33 million to protect clients who invested in Primary Fund, a money-market mutual fund managed by Reserve Management Co.
Fortress Investment Group (FIG) said that it has chosen not to pay a dividend in the third quarter of 2008 and will use that money to make investments.
ABB (ABB) was upgraded to hold from sell by Citi, which said the valuation now better reflects the end-market risk.
Waste Connections Inc (WCN) priced an offering of 11 million shares at $32.50.
Federal Reserve Chairman Bernanke moved closer to cutting interest rates, signaling that risks to U.S. growth are greater than policy makers saw them just last week. Speaking on Capitol Hill, Bernanke said the ``intensification'' of the financial crisis in recent weeks is curbing Americans' access to borrowing, making the outlook for consumer spending ``sluggish at best.''
The House has passed a $630 billion-plus spending bill that wraps together a record Pentagon budget with aid for automakers and natural disaster victims, and increased health care for veterans returning from Iraq and Afghanistan. The bill is dominated by $488 billion for the Pentagon, $40 billion for the Homeland Security Department and $73 billion for veterans' programs and military base construction projects.
New claims for unemployment benefits jumped last week to their highest level in seven years due to the impact of a slowing economy and Hurricanes Ike and Gustav. New requests for jobless benefits for the week ending Sept. 20 increased by 32,000 to a seasonally-adjusted 493,000, much higher than analysts' expectations of 445,000.
The Commerce Department reported that orders for durable goods fell by 4.5 percent last month, far worse than the 1.6 percent decline that economists expected. It was the biggest setback since a 4.7 percent fall in January and came after modest increases in the past three months.
U.S. home sales fell 11.5% to a 17-year low in August. The decline in new-home sales to a seasonally adjusted annual rate of 460,000 was much weaker than the 505,000 pace expected by economists. New-home sales are down 34.5% compared with a year ago.
Delta (DAL) and Northwest Airlines (NWA) are crossing off the various issues on their checklist to become the world's biggest carrier, with shareholder votes at both companies expected to overwhelmingly back the deal merging the two air carriers. If the deal is completed, Delta plans to issue a nearly 13.4 percent equity stake in the combined airline to employees.
Scheduled U.S. Economic Reports (Friday)
Gross Domestic Product (2Q), Consumer Sentiment (Sep)
In Earnings News
General Electric Co. (GE) lowered its earnings guidance for the third quarter and the full year. GE said it expects to report third-quarter profit of 43 cents to 48 cents per share while analysts expect 52 cents.
Discover Financial Services (DFS) said it earned $180 million, or 37 cents per share, in the quarter. Analysts had expected earnings of 35 cents per share.
Pilgrim's Pride Corp. (PPC) said it expects to report a "significant loss" in its fiscal fourth quarter. The company did not offer any details about the size of the loss but analysts expect a loss of 89 cents per share for the fiscal fourth quarter.
Rite Aid (RAD) said its loss increased to $222 million, or 27 cents per share. Analysts expected a loss of 15 cents per share.
Bed, Bath & Beyond (BBBY) said that its second-quarter profit fell to $119.3 million, or 46 cents a share, from $147 million, or 55 cents a share, in the year-ago period. Revenue rose to $1.85 billion from $1.77 billion last year. Analysts estimated a quarterly profit of 46 cents a share.
Scholastic Corp. (SCHL) said its fiscal first-quarter loss widened compared with a year-ago period that benefited from a new Harry Potter book. The children's book publisher reported a loss of $49.1 million, or $1.30 per share, compared with a loss of $2.8 million, or 7 cents per share, in the same quarter a year ago.
Vail Resorts Inc. (MTN) reported a narrower loss in its fiscal fourth quarter. For the quarter, the company posted a loss of $11.1 million, or 29 cents per share, compared with a loss of $34.3 million, or 88 cents per share. Analysts expected a loss of 21 cents per share.
Scheduled Earnings Reports (Friday)
American Greetings, Jabil Circuit, KB Home, and Azz Inc. Third quarter earnings season begins on October 7th when Alcoa releases its quarterly numbers.
Stocks in the News
Merck & Company (MRK) signed a licensing agreement with Japan Tobacco Inc to develop and commercialize a drug for treating osteoporosis that is currently being developed by Japan Tobacco.
Altria Group’s (MO) Philip Morris USA said it filed a suit to overturn a San Francisco law that would ban convenience drugstores from selling tobacco products.
Nike Inc (NKE) reported that fiscal first-quarter net income fell to $510.5 million, or $1.03 a share, from $569.7 million, or $1.12, a year earlier.
Ameriprise Financial (AMP) said it would commit as much as $33 million to protect clients who invested in Primary Fund, a money-market mutual fund managed by Reserve Management Co.
Fortress Investment Group (FIG) said that it has chosen not to pay a dividend in the third quarter of 2008 and will use that money to make investments.
ABB (ABB) was upgraded to hold from sell by Citi, which said the valuation now better reflects the end-market risk.
Waste Connections Inc (WCN) priced an offering of 11 million shares at $32.50.
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