JDfn Daily Digest - October 14, 2008
President Bush announced a $250 billion plan by the government to directly buy shares in the nation's leading banks, saying the drastic steps were "not intended to take over the free market but to preserve it." Nine major banks will initially participate including all of the country's largest institutions.
Treasury Secretary Henry Paulson urged banks receiving $250 billion in capital injections from the government to use the funds to spur economic growth. The U.S. initiative followed an announcement that France, Germany, Spain, the Netherlands and Austria committed $1.8 trillion to guarantee bank loans and take stakes in lenders.
Former U.S. Federal Reserve Chairman Paul Volcker said the U.S. housing sector faced more losses and the economy was in recession even as authorities moved to stabilize the financial system. Volcker said the priority for U.S. authorities in the credit crisis was to stabilize the financial system even though that meant heavy government intrusion.
China's trade surplus with the United States held steady at $17.5 billion in September. The surplus matched the $17.5 figure for August, showing the resiliency of exports despite fears of a downturn in key markets. China's exports to the U.S. over the first nine months of the year grew by 11.2 percent over the same period last year.
According to analysts at Merrill Lynch, gold prices could hit $1,500 as global plans to rescue the financial industry are set to increase inflation pressures. They wrote, "The unintended consequence of the ongoing financial bailout will be a return of inflationary pressures to the commodity markets." The analysts didn't say when gold would hit the price target. They also predicted oil prices will rise to $150 a barrel.
The International Council of Shopping Centers announced that chain-store sales for the week ended Oct. 11th rose 1% from the year-earlier period. On a week-over-week basis, sales climbed 0.7%. The group is forecasting October sales to rise between 1% and 2%.
Boeing Co. (BA) says renewed negotiations with its striking machinists broke down over an issue crucial to the company's "long-term competitiveness." A labor leader says the union was being asked to bargain away 2,000 jobs.
PepsiCo Inc. (PEP), which has struggled with lagging sales of its soft drinks business in the U.S., announced plans to eliminate 3,300 positions globally, as it reported a 9.5 percent drop in third-quarter profit and offered a downbeat profit outlook amid a surging U.S. dollar.
Scheduled U.S. Economic Reports (Wednesday)
Retail Sales (Sep), Producer Price Index (Sep), Empire State Index (Oct), Inventories (Aug), Beige Book
In Earnings News
Johnson & Johnson (JNJ) reported a 30 percent jump in third-quarter profit, beating Wall Street expectations. The Company reported net income of $3.31 billion, or $1.17 per share. Analysts expected earnings per share of $1.11 and revenue of $15.69 billion.
Dominoes Pizza (DPZ) reported its third-quarter profit dropped 8 percent as the troubled U.S. economy made its mark on the pizza delivery company's sales. For the quarter, net income fell to $10.1 million, or 17 cents per share. Analysts expected profit of 21 cents per share.
Supervalu Inc. (SVU) reported its profit fell nearly 14 percent in its second quarter as the chain attempted to keep prices low and answer consumers' demands for value. The company also chopped its 2009 profit guidance by 4 cents per share.
Hercules Offshore Inc. (HERO) said that the four named storms in the Gulf of Mexico dragged down revenue and boosted expenses in the third quarter. Hercules estimated its profit at 36 cents to 38 cents per share in the quarter. Analysts are forecasting a profit of 37 cents per share on revenue of $304 million.
W.W. Grainger Inc. (GWW) reported that its third-quarter profit rose 28 percent on a double-digit increase in sales. For the quarter, net income increased to $140 million or $1.79 a share, from $109.2 million, or $1.29 a share, a year ago. Analysts were expecting earnings per share of $1.53 in the third quarter.
Scheduled Earnings Reports (Wednesday)
JP Morgan Chase, AMR Corp, eBay, Abbott Labs, Delta Air Lines, Piper Jaffray, Wells Fargo, Movie Gallery
Stocks in the News
General Motors (GM) will close a metal stamping plant in Wyoming, Mich., by the end of 2009.
Banco Santander (STD) said it will buy the 75.65% stake in Sovereign Bancorp.
Intel (INTC) is projected to report third-quarter earnings of 35 cents a share.
Wynn Resorts (WYNN) expects a drop in its third-quarter Las Vegas operating results while Macau results are expected to be better than last year's.
Macrovision Solutions Corp (MVSN) will sell TV Guide Magazine to OpenGate Capital as a part of its corporate strategy.
Research in Motion (RIMM) was upgraded from underperform, or sell, rating by Needham & Co.
Treasury Secretary Henry Paulson urged banks receiving $250 billion in capital injections from the government to use the funds to spur economic growth. The U.S. initiative followed an announcement that France, Germany, Spain, the Netherlands and Austria committed $1.8 trillion to guarantee bank loans and take stakes in lenders.
Former U.S. Federal Reserve Chairman Paul Volcker said the U.S. housing sector faced more losses and the economy was in recession even as authorities moved to stabilize the financial system. Volcker said the priority for U.S. authorities in the credit crisis was to stabilize the financial system even though that meant heavy government intrusion.
China's trade surplus with the United States held steady at $17.5 billion in September. The surplus matched the $17.5 figure for August, showing the resiliency of exports despite fears of a downturn in key markets. China's exports to the U.S. over the first nine months of the year grew by 11.2 percent over the same period last year.
According to analysts at Merrill Lynch, gold prices could hit $1,500 as global plans to rescue the financial industry are set to increase inflation pressures. They wrote, "The unintended consequence of the ongoing financial bailout will be a return of inflationary pressures to the commodity markets." The analysts didn't say when gold would hit the price target. They also predicted oil prices will rise to $150 a barrel.
The International Council of Shopping Centers announced that chain-store sales for the week ended Oct. 11th rose 1% from the year-earlier period. On a week-over-week basis, sales climbed 0.7%. The group is forecasting October sales to rise between 1% and 2%.
Boeing Co. (BA) says renewed negotiations with its striking machinists broke down over an issue crucial to the company's "long-term competitiveness." A labor leader says the union was being asked to bargain away 2,000 jobs.
PepsiCo Inc. (PEP), which has struggled with lagging sales of its soft drinks business in the U.S., announced plans to eliminate 3,300 positions globally, as it reported a 9.5 percent drop in third-quarter profit and offered a downbeat profit outlook amid a surging U.S. dollar.
Scheduled U.S. Economic Reports (Wednesday)
Retail Sales (Sep), Producer Price Index (Sep), Empire State Index (Oct), Inventories (Aug), Beige Book
In Earnings News
Johnson & Johnson (JNJ) reported a 30 percent jump in third-quarter profit, beating Wall Street expectations. The Company reported net income of $3.31 billion, or $1.17 per share. Analysts expected earnings per share of $1.11 and revenue of $15.69 billion.
Dominoes Pizza (DPZ) reported its third-quarter profit dropped 8 percent as the troubled U.S. economy made its mark on the pizza delivery company's sales. For the quarter, net income fell to $10.1 million, or 17 cents per share. Analysts expected profit of 21 cents per share.
Supervalu Inc. (SVU) reported its profit fell nearly 14 percent in its second quarter as the chain attempted to keep prices low and answer consumers' demands for value. The company also chopped its 2009 profit guidance by 4 cents per share.
Hercules Offshore Inc. (HERO) said that the four named storms in the Gulf of Mexico dragged down revenue and boosted expenses in the third quarter. Hercules estimated its profit at 36 cents to 38 cents per share in the quarter. Analysts are forecasting a profit of 37 cents per share on revenue of $304 million.
W.W. Grainger Inc. (GWW) reported that its third-quarter profit rose 28 percent on a double-digit increase in sales. For the quarter, net income increased to $140 million or $1.79 a share, from $109.2 million, or $1.29 a share, a year ago. Analysts were expecting earnings per share of $1.53 in the third quarter.
Scheduled Earnings Reports (Wednesday)
JP Morgan Chase, AMR Corp, eBay, Abbott Labs, Delta Air Lines, Piper Jaffray, Wells Fargo, Movie Gallery
Stocks in the News
General Motors (GM) will close a metal stamping plant in Wyoming, Mich., by the end of 2009.
Banco Santander (STD) said it will buy the 75.65% stake in Sovereign Bancorp.
Intel (INTC) is projected to report third-quarter earnings of 35 cents a share.
Wynn Resorts (WYNN) expects a drop in its third-quarter Las Vegas operating results while Macau results are expected to be better than last year's.
Macrovision Solutions Corp (MVSN) will sell TV Guide Magazine to OpenGate Capital as a part of its corporate strategy.
Research in Motion (RIMM) was upgraded from underperform, or sell, rating by Needham & Co.
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