JDfn Daily Digest - September 29, 2008
The House defeated a $700 billion emergency rescue for the nation's financial system, ignoring urgent warnings from President Bush and congressional leaders of both parties that the economy could nose dive into recession without it.
Several Republican aides said House Speaker Nancy Pelosi, torpedoed any spirit of bipartisanship that surrounded the bill with a scathing speech near the close of the debate that blamed Bush's policies for the economic turmoil.
Citigroup (C) will acquire the banking operations of Wachovia Corp (WB). The FDIC said that Citi will acquire "the bulk of Wachovia's assets and liabilities." Under the agreement, Citigroup will absorb up to $42 billion of losses on a $312 billion pool of loans, while the FDIC will take losses beyond that. Treasury Secretary Paulson said he supports the FDIC action to facilitate the sale of Wachovia's banking operations to Citigroup. Citigroup said it will reduce its dividend in the wake of the Wachovia takeover.
Freddie Mac and Fannie Mae, both taken over by the government in the wake of the subprime mess, said they have been subpoenaed by federal prosecutors, seeking documents relating to accounting, disclosure and corporate governance matters for the period from Jan. 1, 2007, to the present. It also said it received notice that it is the subject of a probe by the SEC, directing it to preserve documents.
The European Central Bank launched a special operation to provide more cash to banks in the euro zone as the financial meltdown's tendrils enveloped banks in Britain, the Benelux and Germany. At the same time, the Bank of England launched a $10 billion overnight tender which was oversubscribed by more than $3 billion by 10 bidders, indicating demand for credit exceeded supply.
The Commerce Department reported that U.S. consumer spending was flat in August, the third consecutive month of weak consumption. The weaker-than-expected consumption figures raise the odds that consumer spending declined in the third quarter. Economists were expecting consumption to increase 0.2% in August. Personal incomes increased 0.5%. However, core inflation rose 0.2%, as expected.
According to the Lundberg Survey, gas prices fell 3.8 cents in the last two weeks. The average price of a gallon of regular gasoline at self-serve stations was $3.66 Friday. Mid-grade was at $3.80 and premium was at $3.92.
Office Depot Inc. (ODP) entered into a new $1.25 billion asset-based credit facility. The facility will be secured by Office Depot's inventory, accounts receivable, cash and depository accounts. It replaces company's current $1 billion revolving credit agreement.
InBev SA shareholders backed the company's $52 billion (euro32.8 billion) takeover of Anheuser-Busch (BUD) -- a deal which would form the world's largest brewer. They also approved changing the company's name to Anheuser-Busch InBev.
Cardinal Health Inc. (CAH) announced it will spin off its clinical and medical products businesses into one separate, publicly-traded company. The drug distributor said back in early August that it was considering such a move and expected to announce a decision within 90 days. The company announced it expects the spin-off to be completed by mid-2009.
AT&T Inc. (AT) and DirecTV Inc. (DTV) are launching a cobranded satellite television service that will be available to customers beginning after the telecommunication company's current deal with Dish Network expires early next year. The service, called AT&T DirecTV, will become part of the company's advanced TV video portfolio after Jan. 31st.
Scheduled U.S. Economic Reports (Tuesday)
Retail Chain Index (Week of September 27th), Case-Shiller Home Prices (Jul), Chicago PMI (Sep), Consumer Confidence (Sep)
In Earnings News
Walgreen (WAG) reported that fourth-quarter earnings rose to $443 million, or 45 cents a share, compared to $397 million, or 40 cents a share, in the same period a year ago. Sales in the period rose to $14.6 billion compared to $13.4 billion a year earlier. Analysts estimated, on average, earnings per share of 45 cents on sales of $14.7 million.
Cal-Maine Foods Inc. (CALM) said its fiscal first-quarter profit fell 38 percent, as higher feed costs outpaced strong demand for eggs. Profit for the quarter ended Aug. 30 fell to $11.1 million, or 47 cents per share, from $18 million, or 76 cents per share last year.
Circuit City (CC) reported that its quarterly loss widened to $239.2 million, or $1.45 a share, from $62.8 million, or 38 cents, a year earlier. Sales in the quarter ended Aug. 31 fell to $2.39 billion from $2.64 billion. The company also said it's undertaking a comprehensive review of its business and has identified key areas to bolster its holiday season performance.
Pilgrim's Pride Corp. (PPC) said it notified its lenders it expects to report a "significant" loss for the fiscal fourth-quarter and completed an agreement with them to temporarily waive the fixed-charge covenant under its credit facilities.
Scheduled Earnings Reports (Tuesday)
Pfizer and Pepsi Bottling are on the earnings calendar for Tuesday. Third quarter earnings season will begin on October 7th when Alcoa releases its quarterly numbers.
Stocks in the News
American International Group (AIG) said the New York Stock Exchange granted it an exemption to issue preferred shares to the U.S. Treasury without shareholder approval.
Oshkosh Corp (OSK) said it expects to report earnings per share for its fiscal fourth quarter at or above the higher end of its previously announced estimate range of 50 cents to 65 cents.
McClatchy Company (MNI) reported its advertising revenue is still sluggish, with most of the weakness coming from "California and Florida.
General Growth Properties (GGP) had its corporate credit rating cut to BB from BB+ by S&P.
Meritage Homes Corp (MTH) was awarded $111 million by a jury in its case against Greg Hancock, a former Meritage division president.
Apple Inc. (AAPL) shares fell after Morgan Stanley said slowing sales and profit growth will hurt the stock.
Several Republican aides said House Speaker Nancy Pelosi, torpedoed any spirit of bipartisanship that surrounded the bill with a scathing speech near the close of the debate that blamed Bush's policies for the economic turmoil.
Citigroup (C) will acquire the banking operations of Wachovia Corp (WB). The FDIC said that Citi will acquire "the bulk of Wachovia's assets and liabilities." Under the agreement, Citigroup will absorb up to $42 billion of losses on a $312 billion pool of loans, while the FDIC will take losses beyond that. Treasury Secretary Paulson said he supports the FDIC action to facilitate the sale of Wachovia's banking operations to Citigroup. Citigroup said it will reduce its dividend in the wake of the Wachovia takeover.
Freddie Mac and Fannie Mae, both taken over by the government in the wake of the subprime mess, said they have been subpoenaed by federal prosecutors, seeking documents relating to accounting, disclosure and corporate governance matters for the period from Jan. 1, 2007, to the present. It also said it received notice that it is the subject of a probe by the SEC, directing it to preserve documents.
The European Central Bank launched a special operation to provide more cash to banks in the euro zone as the financial meltdown's tendrils enveloped banks in Britain, the Benelux and Germany. At the same time, the Bank of England launched a $10 billion overnight tender which was oversubscribed by more than $3 billion by 10 bidders, indicating demand for credit exceeded supply.
The Commerce Department reported that U.S. consumer spending was flat in August, the third consecutive month of weak consumption. The weaker-than-expected consumption figures raise the odds that consumer spending declined in the third quarter. Economists were expecting consumption to increase 0.2% in August. Personal incomes increased 0.5%. However, core inflation rose 0.2%, as expected.
According to the Lundberg Survey, gas prices fell 3.8 cents in the last two weeks. The average price of a gallon of regular gasoline at self-serve stations was $3.66 Friday. Mid-grade was at $3.80 and premium was at $3.92.
Office Depot Inc. (ODP) entered into a new $1.25 billion asset-based credit facility. The facility will be secured by Office Depot's inventory, accounts receivable, cash and depository accounts. It replaces company's current $1 billion revolving credit agreement.
InBev SA shareholders backed the company's $52 billion (euro32.8 billion) takeover of Anheuser-Busch (BUD) -- a deal which would form the world's largest brewer. They also approved changing the company's name to Anheuser-Busch InBev.
Cardinal Health Inc. (CAH) announced it will spin off its clinical and medical products businesses into one separate, publicly-traded company. The drug distributor said back in early August that it was considering such a move and expected to announce a decision within 90 days. The company announced it expects the spin-off to be completed by mid-2009.
AT&T Inc. (AT) and DirecTV Inc. (DTV) are launching a cobranded satellite television service that will be available to customers beginning after the telecommunication company's current deal with Dish Network expires early next year. The service, called AT&T DirecTV, will become part of the company's advanced TV video portfolio after Jan. 31st.
Scheduled U.S. Economic Reports (Tuesday)
Retail Chain Index (Week of September 27th), Case-Shiller Home Prices (Jul), Chicago PMI (Sep), Consumer Confidence (Sep)
In Earnings News
Walgreen (WAG) reported that fourth-quarter earnings rose to $443 million, or 45 cents a share, compared to $397 million, or 40 cents a share, in the same period a year ago. Sales in the period rose to $14.6 billion compared to $13.4 billion a year earlier. Analysts estimated, on average, earnings per share of 45 cents on sales of $14.7 million.
Cal-Maine Foods Inc. (CALM) said its fiscal first-quarter profit fell 38 percent, as higher feed costs outpaced strong demand for eggs. Profit for the quarter ended Aug. 30 fell to $11.1 million, or 47 cents per share, from $18 million, or 76 cents per share last year.
Circuit City (CC) reported that its quarterly loss widened to $239.2 million, or $1.45 a share, from $62.8 million, or 38 cents, a year earlier. Sales in the quarter ended Aug. 31 fell to $2.39 billion from $2.64 billion. The company also said it's undertaking a comprehensive review of its business and has identified key areas to bolster its holiday season performance.
Pilgrim's Pride Corp. (PPC) said it notified its lenders it expects to report a "significant" loss for the fiscal fourth-quarter and completed an agreement with them to temporarily waive the fixed-charge covenant under its credit facilities.
Scheduled Earnings Reports (Tuesday)
Pfizer and Pepsi Bottling are on the earnings calendar for Tuesday. Third quarter earnings season will begin on October 7th when Alcoa releases its quarterly numbers.
Stocks in the News
American International Group (AIG) said the New York Stock Exchange granted it an exemption to issue preferred shares to the U.S. Treasury without shareholder approval.
Oshkosh Corp (OSK) said it expects to report earnings per share for its fiscal fourth quarter at or above the higher end of its previously announced estimate range of 50 cents to 65 cents.
McClatchy Company (MNI) reported its advertising revenue is still sluggish, with most of the weakness coming from "California and Florida.
General Growth Properties (GGP) had its corporate credit rating cut to BB from BB+ by S&P.
Meritage Homes Corp (MTH) was awarded $111 million by a jury in its case against Greg Hancock, a former Meritage division president.
Apple Inc. (AAPL) shares fell after Morgan Stanley said slowing sales and profit growth will hurt the stock.
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