JDfn Daily Digest - October 10, 2008
President Bush said the government's financial rescue plan was aggressive enough and big enough to work, but would take time to fully kick in. Bush spoke as leaders of the world's leading economies gathered in Washington amid frozen credit markets, panic selling in stock markets and a looming global recession. The president noted that major Western economies were working together in an attempt to stabilize markets and end the spreading panic.
U.S. authorities are now considering drastic new measures to shore up ailing financial markets, including guaranteeing billions in bank debt and insuring all U.S. bank deposits for a temporary period. The moves, if implemented, would mark the government's most extensive intervention in the financial system.
Japan is set to propose to the world's leading industrialized nations that a joint fund be set up to give emergency loans to nations hit by the growing financial crisis. His comments come at a time when Washington, which is implementing a $700 billion bailout, mainly to buy bad mortgages and mortgage-related securities from banks.
The Commerce Department said the nation's trade deficit narrowed by 3.5% to $59.1 billion. Exports dropped by 2.0% in August, the biggest decline since June 2004. Analysts had been assuming that weaker global growth would trim exports. Economists expected the deficit to narrow to $58.5 billion.
The Labor Department reported U.S. import prices fell 3% in September -- the second consecutive month of declines -- and the largest decline since the index fell 3.1% in April 2003. Economists were looking for a 2.9% decline for September.
General Motors (GM) said that it is not considering bankruptcy protection. News reports quote the company saying, "Bankruptcy would not be in the interests of our employees, stockholders, suppliers or customers." Shares of General Motors, already hurt from the widening credit crisis that has crippled Wall Street, fell as much as 33% yesterday, dropping to levels last seen in the springtime of 1950.
Wells Fargo (WFC) emerged as the apparent victor in the battle for control of Wachovia Bank (WB). While Citigroup (C) said it plans to seek $60 billion in damages for breach of contract, it has decided not to challenge the Wells Fargo-Wachovia deal in court.
Scheduled U.S. Economic Reports (Next Week)
Retail Sales (Sep), Producer Price Index (Sep), Empire State Index (Oct), Inventories (Aug), Beige Book, Consumer Price Index (Sep), Industrial Production (Sep), Philly Fed (Oct), Home Builder’s Index (Oct), Housing Starts (Sep), Consumer Sentiment (Oct)
In Earnings News
General Electric Co. (GE), said its third quarter profit fell 22 percent. GE’s net income fell to $4.3 billion, or 43 cents per share. Analysts forecast earnings of 45 cents a share on revenue of $47.34 billion.
Chevron Corp. (CVX) expects third-quarter results to surpass those of the second quarter thanks to improvements at its downstream, or refining and marketing, operations. In the June quarter, the country's second-largest oil company reported its profit rose 11 percent to a record $5.98 billion, or $2.90 per share. Analysts forecast third-quarter earnings per share of $3.23, on average.
Emmis Communications Corp. (EMMS) reported second-quarter earnings dropped nearly 90 percent as the prior-year period. After paying preferred dividends, earnings for the quarter ended Aug. 31 fell to $1.2 million, or 3 cents per share. Analysts forecast, on average, break-even second-quarter earnings on revenue of $90.9 million.
Host Hotels & Resorts Inc. (HST) said its fiscal third quarter results declined amid a difficult economic environment. Funds from operations fell nearly 18 percent to $173 million, or 31 cents per share, from $210 million, or 38 cents per share last year. Analysts, on average, predicted FFO of 28 cents per share.
Macy's (M) has slashed its 2008 profit outlook, as a softening economy has consumers scaling back on spending. Macy's now expects earnings between $1.30 and $1.50 per share, excluding consolidation costs and impairment charges. Analysts expect earnings of $1.76 per share.
Scheduled Earnings Reports (Next Week)
Citigroup, Intel, Coca Cola, Nokia, Google, Johnson & Johnson, PepsiCo, Delta Airlines, Bank of the Ozarks, Dominoes Pizza, Genentech, Abbott Labs, Piper Jaffray, Advanced Micro Devices, Capital One Financial, Continental Airlines, Hershey, Southwest Airlines
Stocks in the News
Atlas Air Worldwide Holdings (AAWW) pared its estimate of pretax earnings from operations in 2008 to $65 million from $85 million.
Ford Motor Company (F) had its B- long-term corporate credit rating put on CreditWatch for possible downgrade by Standard & Poor's.
American International Group (AIG) boosted its borrowing from the government by $9 billion, to a total of $70.3 billion, as it tries to meet its trading partners' demands for cash.
Morgan Stanley (MS) said it is the target of a lawsuit related to its involvement as an underwriter of a preferred-share offering for Lehman Brothers this year.
Brinker International (EAT) that runs restaurants including Chili's, On the Border, Maggiano's and Romano's, estimated fiscal first-quarter per-share earnings fell as much as 35%.
U.S. authorities are now considering drastic new measures to shore up ailing financial markets, including guaranteeing billions in bank debt and insuring all U.S. bank deposits for a temporary period. The moves, if implemented, would mark the government's most extensive intervention in the financial system.
Japan is set to propose to the world's leading industrialized nations that a joint fund be set up to give emergency loans to nations hit by the growing financial crisis. His comments come at a time when Washington, which is implementing a $700 billion bailout, mainly to buy bad mortgages and mortgage-related securities from banks.
The Commerce Department said the nation's trade deficit narrowed by 3.5% to $59.1 billion. Exports dropped by 2.0% in August, the biggest decline since June 2004. Analysts had been assuming that weaker global growth would trim exports. Economists expected the deficit to narrow to $58.5 billion.
The Labor Department reported U.S. import prices fell 3% in September -- the second consecutive month of declines -- and the largest decline since the index fell 3.1% in April 2003. Economists were looking for a 2.9% decline for September.
General Motors (GM) said that it is not considering bankruptcy protection. News reports quote the company saying, "Bankruptcy would not be in the interests of our employees, stockholders, suppliers or customers." Shares of General Motors, already hurt from the widening credit crisis that has crippled Wall Street, fell as much as 33% yesterday, dropping to levels last seen in the springtime of 1950.
Wells Fargo (WFC) emerged as the apparent victor in the battle for control of Wachovia Bank (WB). While Citigroup (C) said it plans to seek $60 billion in damages for breach of contract, it has decided not to challenge the Wells Fargo-Wachovia deal in court.
Scheduled U.S. Economic Reports (Next Week)
Retail Sales (Sep), Producer Price Index (Sep), Empire State Index (Oct), Inventories (Aug), Beige Book, Consumer Price Index (Sep), Industrial Production (Sep), Philly Fed (Oct), Home Builder’s Index (Oct), Housing Starts (Sep), Consumer Sentiment (Oct)
In Earnings News
General Electric Co. (GE), said its third quarter profit fell 22 percent. GE’s net income fell to $4.3 billion, or 43 cents per share. Analysts forecast earnings of 45 cents a share on revenue of $47.34 billion.
Chevron Corp. (CVX) expects third-quarter results to surpass those of the second quarter thanks to improvements at its downstream, or refining and marketing, operations. In the June quarter, the country's second-largest oil company reported its profit rose 11 percent to a record $5.98 billion, or $2.90 per share. Analysts forecast third-quarter earnings per share of $3.23, on average.
Emmis Communications Corp. (EMMS) reported second-quarter earnings dropped nearly 90 percent as the prior-year period. After paying preferred dividends, earnings for the quarter ended Aug. 31 fell to $1.2 million, or 3 cents per share. Analysts forecast, on average, break-even second-quarter earnings on revenue of $90.9 million.
Host Hotels & Resorts Inc. (HST) said its fiscal third quarter results declined amid a difficult economic environment. Funds from operations fell nearly 18 percent to $173 million, or 31 cents per share, from $210 million, or 38 cents per share last year. Analysts, on average, predicted FFO of 28 cents per share.
Macy's (M) has slashed its 2008 profit outlook, as a softening economy has consumers scaling back on spending. Macy's now expects earnings between $1.30 and $1.50 per share, excluding consolidation costs and impairment charges. Analysts expect earnings of $1.76 per share.
Scheduled Earnings Reports (Next Week)
Citigroup, Intel, Coca Cola, Nokia, Google, Johnson & Johnson, PepsiCo, Delta Airlines, Bank of the Ozarks, Dominoes Pizza, Genentech, Abbott Labs, Piper Jaffray, Advanced Micro Devices, Capital One Financial, Continental Airlines, Hershey, Southwest Airlines
Stocks in the News
Atlas Air Worldwide Holdings (AAWW) pared its estimate of pretax earnings from operations in 2008 to $65 million from $85 million.
Ford Motor Company (F) had its B- long-term corporate credit rating put on CreditWatch for possible downgrade by Standard & Poor's.
American International Group (AIG) boosted its borrowing from the government by $9 billion, to a total of $70.3 billion, as it tries to meet its trading partners' demands for cash.
Morgan Stanley (MS) said it is the target of a lawsuit related to its involvement as an underwriter of a preferred-share offering for Lehman Brothers this year.
Brinker International (EAT) that runs restaurants including Chili's, On the Border, Maggiano's and Romano's, estimated fiscal first-quarter per-share earnings fell as much as 35%.
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