JDfn Daily Digest - August 6, 2008
There's lots of news centering on the U.S. housing situation today -
According to the Mortgage Bankers Association's weekly application survey, mortgage application volume rose 2.8 percent during the week ending Aug. 1st. The MBA's application index rose to 432.6 from 420.8 a week earlier, which was the lowest reading of the year.
According to Richard Syron, the chairman and CEO of Freddie Mac (FRE), U.S. house prices will fall by as much as 20 percent nationally and the current mortgage finance crisis is about half-way through. Freddie Mac and rival Fannie Mae faced a storm of stock selling last month as investors speculated the companies would fall short of the capital needed to offset losses sustained from delinquent mortgages.
Morgan Stanley (MS) told thousands of clients this week that they will not be allowed to withdraw money on their home-equity credit lines. Most of the clients had properties that have lost value. Earlier this year, the investment bank said its quarterly earnings dropped 57 percent on weak trading, investment losses and a slowdown in investment banking, even after it realized $1.43 billion in one-time gains.
Connecticut Attorney General Richard Blumenthal says his state is suing Countrywide Financial Corp. (CFC), alleging it misled borrowers into taking on risky home loans they could not afford. He alleges the mortgage company violated state consumer protection laws and that it charged unjustified fees to homeowners who defaulted.
David Rosenberg, chief North American economist for Merrill Lynch, believes the U.S. economy is at the onset of the first consumer recession since the early 1990s. He also told interviewers that even the positives the economy has seen, such as better-than-expected report on gross domestic product growth and corporate earnings reports were purely due to leverage.
Oil prices are fluctuating after a government report showed gasoline stockpiles fell more than forecast last week and crude oil supplies unexpectedly grew. The Energy Information Administration says gasoline stockpiles fell by 4.4 million barrels last week. That’s compared to the 1.4 million drop that was expected by analysts.
Scheduled U.S. Economic Reports (Thursday)
Initial Jobless Claims (Week of Aug 2), Pending Home Sales (June), Consumer Credit (June)
In Earnings News
Freddie Mac (FRE) reported a second-quarter loss that was more than three-times larger than Wall Street expected as more homeowners fell behind on their mortgage loans. Including preferred dividends, the company said it lost $821 million, or $1.63 a share. Stock analysts expected a loss of 53 cents a share.
Time Warner (TWX) said that second-quarter net income fell 26 percent to $792 million, or 22 cents per share. The company said it would split AOL's dial-up Internet and advertising businesses into separate divisions by early 2009.
Sprint Nextel (S) reported that it lost $344 million, or 12 cents per share, during the quarter ending June 30th. Not counting one-time items, Sprint Nextel said it would have earned 6 cents per share, beating the 3 cents per share expected.
Nasdaq OMX Group's (NDAQ) second-quarter earnings rose 81 percent from a year earlier, before Nasdaq combined with Sweden's OMX stock exchange. The operator reported Wednesday its second-quarter net profit rose to $101.6 million, or 48 cents per share.
Mylan Inc. (MYL) reported a loss after buying the generics unit of German drug maker Merck (MRK), although the acquisition allowed Mylan to more than double its second-quarter revenue. Mylan took a loss of $8.4 million, or 3 cents per share, mostly due to costs connected to the buyout.
Dean Foods (DF) said its second-quarter net income soared 72% amid strong performance from the milk producer's DSD Dairy business and lower interest expenses. The company reported a second-quarter net income of $48.9 million, or 31 cents a share. Analysts were expecting 32 cents.
Scheduled Earnings Reports (Thursday)
1-800-Flowers, DirecTV, Sirius Satellite Radio, Blockbuster, Kaiser Aluminum, Progress Energy, Trump Entertainment, Westwood One
Stocks in the News
Cisco Systems (CSCO) reported a fiscal fourth-quarter net income of $2 billion, or 33 cents a share.
Foster Wheeler Ltd (FWLT) reported second-quarter net income of $160.8 million, or $1.11 a share.
Devon Energy Corp (DVN) said its second-quarter net profit rose 44% to $1.3 billion, or $2.88 a share.
Ambac Financial (ABK) reported its second-quarter net income jumped to $823.1 million or $2.80 a share.
Holly Corp (HOC) aid second-quarter net income fell to $11.5 million or 23 cents a share.
Marsh & McLennan (MMC) said second-quarter earnings fell to $65 million or 13 cents a share.
Whole Foods Market (WFMI) forecast fiscal 2008 profit of as much as 95 cents, below analysts’ estimates.
Priceline.com (PCLN) reported second-quarter profit of $1.08, short of analyst estimates.
According to the Mortgage Bankers Association's weekly application survey, mortgage application volume rose 2.8 percent during the week ending Aug. 1st. The MBA's application index rose to 432.6 from 420.8 a week earlier, which was the lowest reading of the year.
According to Richard Syron, the chairman and CEO of Freddie Mac (FRE), U.S. house prices will fall by as much as 20 percent nationally and the current mortgage finance crisis is about half-way through. Freddie Mac and rival Fannie Mae faced a storm of stock selling last month as investors speculated the companies would fall short of the capital needed to offset losses sustained from delinquent mortgages.
Morgan Stanley (MS) told thousands of clients this week that they will not be allowed to withdraw money on their home-equity credit lines. Most of the clients had properties that have lost value. Earlier this year, the investment bank said its quarterly earnings dropped 57 percent on weak trading, investment losses and a slowdown in investment banking, even after it realized $1.43 billion in one-time gains.
Connecticut Attorney General Richard Blumenthal says his state is suing Countrywide Financial Corp. (CFC), alleging it misled borrowers into taking on risky home loans they could not afford. He alleges the mortgage company violated state consumer protection laws and that it charged unjustified fees to homeowners who defaulted.
David Rosenberg, chief North American economist for Merrill Lynch, believes the U.S. economy is at the onset of the first consumer recession since the early 1990s. He also told interviewers that even the positives the economy has seen, such as better-than-expected report on gross domestic product growth and corporate earnings reports were purely due to leverage.
Oil prices are fluctuating after a government report showed gasoline stockpiles fell more than forecast last week and crude oil supplies unexpectedly grew. The Energy Information Administration says gasoline stockpiles fell by 4.4 million barrels last week. That’s compared to the 1.4 million drop that was expected by analysts.
Scheduled U.S. Economic Reports (Thursday)
Initial Jobless Claims (Week of Aug 2), Pending Home Sales (June), Consumer Credit (June)
In Earnings News
Freddie Mac (FRE) reported a second-quarter loss that was more than three-times larger than Wall Street expected as more homeowners fell behind on their mortgage loans. Including preferred dividends, the company said it lost $821 million, or $1.63 a share. Stock analysts expected a loss of 53 cents a share.
Time Warner (TWX) said that second-quarter net income fell 26 percent to $792 million, or 22 cents per share. The company said it would split AOL's dial-up Internet and advertising businesses into separate divisions by early 2009.
Sprint Nextel (S) reported that it lost $344 million, or 12 cents per share, during the quarter ending June 30th. Not counting one-time items, Sprint Nextel said it would have earned 6 cents per share, beating the 3 cents per share expected.
Nasdaq OMX Group's (NDAQ) second-quarter earnings rose 81 percent from a year earlier, before Nasdaq combined with Sweden's OMX stock exchange. The operator reported Wednesday its second-quarter net profit rose to $101.6 million, or 48 cents per share.
Mylan Inc. (MYL) reported a loss after buying the generics unit of German drug maker Merck (MRK), although the acquisition allowed Mylan to more than double its second-quarter revenue. Mylan took a loss of $8.4 million, or 3 cents per share, mostly due to costs connected to the buyout.
Dean Foods (DF) said its second-quarter net income soared 72% amid strong performance from the milk producer's DSD Dairy business and lower interest expenses. The company reported a second-quarter net income of $48.9 million, or 31 cents a share. Analysts were expecting 32 cents.
Scheduled Earnings Reports (Thursday)
1-800-Flowers, DirecTV, Sirius Satellite Radio, Blockbuster, Kaiser Aluminum, Progress Energy, Trump Entertainment, Westwood One
Stocks in the News
Cisco Systems (CSCO) reported a fiscal fourth-quarter net income of $2 billion, or 33 cents a share.
Foster Wheeler Ltd (FWLT) reported second-quarter net income of $160.8 million, or $1.11 a share.
Devon Energy Corp (DVN) said its second-quarter net profit rose 44% to $1.3 billion, or $2.88 a share.
Ambac Financial (ABK) reported its second-quarter net income jumped to $823.1 million or $2.80 a share.
Holly Corp (HOC) aid second-quarter net income fell to $11.5 million or 23 cents a share.
Marsh & McLennan (MMC) said second-quarter earnings fell to $65 million or 13 cents a share.
Whole Foods Market (WFMI) forecast fiscal 2008 profit of as much as 95 cents, below analysts’ estimates.
Priceline.com (PCLN) reported second-quarter profit of $1.08, short of analyst estimates.
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