James Dicks Daily Digest - January 19, 2009
U.S. Stock Markets are closed today in observance of the Martin Luther King Jr. Holiday.
Barack Obama has prepared a "strong message" for banks after he takes over the U.S. presidency tomorrow. Obama's senior adviser David Axelrod said there would be changes in the use of the second half of the $700 billion Troubled Asset Relief Program (TARP) meant to clean out bad assets from the financial system, saying the use of the first half was ineffective and poorly accounted for.
Britain announced a second rescue plan for the country's ailing banks, hoping to thaw frozen lending by offering to insure banks against large-scale losses on bad assets they already hold. Prime Minister Gordon Brown said the government would offer to insure banks against default on toxic loans in exchange for legally binding commitments to make credit more freely available to British businesses and home buyers who are struggling in an economic downturn.
European Central Bank President Jean-Claude Trichet said global economic growth this year will be "substantially below" forecasts made only about a month ago. In a speech in Paris, Trichet said "world and European growth in 2009 will be substantially below the forecasts made at the beginning of December."
Billionaire investor Warren Buffett says the U.S. is engaged in an "economic Pearl Harbor." The chairman and CEO of Berkshire Hathaway Inc. said the nation's economic situation is not as bad at World War II or the Great Depression, but it's still pretty severe.
Alternative energy advocate, T. Boone Pickens said that he expects Russia will likely become a member of OPEC soon. He told a group of mayors that the membership "will not be favorable to the United States." Pickens, chairman of BP Capital, recently said that oil will reach $75 a barrel within a year and go back up to $140 a barrel when the global economy turns around.
The New York Times Co. (NYT) is in talks with billionaire Carlos Slim about a possible investment of hundreds of millions of dollars that could help the newspaper publisher to meet debt payments. The New York Times, citing anonymous sources, that Slim is close to a deal to invest about $250 million in the company.
Hertz Global Holdings Inc. (HTZ) will slash its work force by an additional 4,000 jobs worldwide as it further cuts costs to contend with deteriorating demand and vehicle values. The company expects to save $150 million to $170 million this year and take a related fourth-quarter charge of $20 million to $25 million.
Scheduled U.S. Economic Reports (Tuesday)
It will be a very slow economic week in the U.S. On Wednesday, expect the January Home Builders’ Index and on Thursday, Housing Starts for December.
In Earnings News
Of the 42 companies in the Standard & Poor's 500 index that have reported results for the October-December quarter, 25 have fallen short of Wall Street's already reduced forecasts. But some analysts believe that investors, who buy and sell based on how they think the economy will be faring six to nine months from now, will eventually stop reacting negatively to disappointing data.
Johnson Controls Inc. (JCI), which makes building and automotive systems, said it lost $608 million in its fiscal first quarter and warned that it expects a loss for this quarter. The company said its loss amounted to $1.02 per share. That contrasts with a profit of $235 million, or 39 cents per share, in the prior-year quarter. Analysts were expecting a profit of 1 cent.
Charles Schwab Corp. (SCHW) said its fourth-quarter profit matched what it earned in the same period a year ago. Schwab earned $308 million, or 27 cents per share, in the last three months of 2008. Analysts had been expecting earnings of 26 cents a share.
PPG Industries Inc. (PPG), which supplies paints, coatings and optical products, said Friday its fourth-quarter profit fell 64 percent. For the three months, net income fell to $71 million, or 43 cents per share. Analysts expected, on average, 40 cents per share.
BASF SE (BASF) said 2008 and 2009 earnings would be hurt by difficult market conditions, which have deteriorated more than the company anticipated amid the global economic downturn. In November the company abandoned its goal to match the previous year's earnings, when it achieved pretax profit of euro7.6 billion ($10.02 billion) on sales ofeuro57.9 billion ($76.32 billion).
Scheduled Earnings Reports (Tuesday)
IBM, CSX Corp, Johnson & Johnson, Century Bancorp, TD Ameritrade, PetMed Express, State Street Corp, Fastenal
Stocks in the News
Deutsche Bank AG (DBK) Chief Executive Officer Josef Ackermann said the financial industry remains in a “very fragile” situation as deteriorating economies drag on investment banking.
Royal Bank of Scotland Group Plc (RBS) said it may post a loss of as much as 28 billion pounds ($41 billion), the biggest ever reported by a U.K. company, as the credit crisis worsens. The stock slumped as much as 71 percent.
Lehman Brothers Holdings Inc.’s (LEHMQ) rescue failed when U.S. officials couldn’t find a bank to provide the same trading guarantees that Bear Stearns Cos. received.
West Energy Ltd. (WTL) and firms that will own about C$32 billion ($25.7 billion) in new notes in Canada’s biggest restructuring say they’ll hold the debt for as long as eight years rather than sell it at “fire sale” prices to hedge funds.
Pearson PLC (PSO), the owner of the Financial Times newspaper and Penguin books, rallied around 5 percent after the company indicated profits for 2008 would be ahead of market expectations despite the difficult economic environment.
Barack Obama has prepared a "strong message" for banks after he takes over the U.S. presidency tomorrow. Obama's senior adviser David Axelrod said there would be changes in the use of the second half of the $700 billion Troubled Asset Relief Program (TARP) meant to clean out bad assets from the financial system, saying the use of the first half was ineffective and poorly accounted for.
Britain announced a second rescue plan for the country's ailing banks, hoping to thaw frozen lending by offering to insure banks against large-scale losses on bad assets they already hold. Prime Minister Gordon Brown said the government would offer to insure banks against default on toxic loans in exchange for legally binding commitments to make credit more freely available to British businesses and home buyers who are struggling in an economic downturn.
European Central Bank President Jean-Claude Trichet said global economic growth this year will be "substantially below" forecasts made only about a month ago. In a speech in Paris, Trichet said "world and European growth in 2009 will be substantially below the forecasts made at the beginning of December."
Billionaire investor Warren Buffett says the U.S. is engaged in an "economic Pearl Harbor." The chairman and CEO of Berkshire Hathaway Inc. said the nation's economic situation is not as bad at World War II or the Great Depression, but it's still pretty severe.
Alternative energy advocate, T. Boone Pickens said that he expects Russia will likely become a member of OPEC soon. He told a group of mayors that the membership "will not be favorable to the United States." Pickens, chairman of BP Capital, recently said that oil will reach $75 a barrel within a year and go back up to $140 a barrel when the global economy turns around.
The New York Times Co. (NYT) is in talks with billionaire Carlos Slim about a possible investment of hundreds of millions of dollars that could help the newspaper publisher to meet debt payments. The New York Times, citing anonymous sources, that Slim is close to a deal to invest about $250 million in the company.
Hertz Global Holdings Inc. (HTZ) will slash its work force by an additional 4,000 jobs worldwide as it further cuts costs to contend with deteriorating demand and vehicle values. The company expects to save $150 million to $170 million this year and take a related fourth-quarter charge of $20 million to $25 million.
Scheduled U.S. Economic Reports (Tuesday)
It will be a very slow economic week in the U.S. On Wednesday, expect the January Home Builders’ Index and on Thursday, Housing Starts for December.
In Earnings News
Of the 42 companies in the Standard & Poor's 500 index that have reported results for the October-December quarter, 25 have fallen short of Wall Street's already reduced forecasts. But some analysts believe that investors, who buy and sell based on how they think the economy will be faring six to nine months from now, will eventually stop reacting negatively to disappointing data.
Johnson Controls Inc. (JCI), which makes building and automotive systems, said it lost $608 million in its fiscal first quarter and warned that it expects a loss for this quarter. The company said its loss amounted to $1.02 per share. That contrasts with a profit of $235 million, or 39 cents per share, in the prior-year quarter. Analysts were expecting a profit of 1 cent.
Charles Schwab Corp. (SCHW) said its fourth-quarter profit matched what it earned in the same period a year ago. Schwab earned $308 million, or 27 cents per share, in the last three months of 2008. Analysts had been expecting earnings of 26 cents a share.
PPG Industries Inc. (PPG), which supplies paints, coatings and optical products, said Friday its fourth-quarter profit fell 64 percent. For the three months, net income fell to $71 million, or 43 cents per share. Analysts expected, on average, 40 cents per share.
BASF SE (BASF) said 2008 and 2009 earnings would be hurt by difficult market conditions, which have deteriorated more than the company anticipated amid the global economic downturn. In November the company abandoned its goal to match the previous year's earnings, when it achieved pretax profit of euro7.6 billion ($10.02 billion) on sales ofeuro57.9 billion ($76.32 billion).
Scheduled Earnings Reports (Tuesday)
IBM, CSX Corp, Johnson & Johnson, Century Bancorp, TD Ameritrade, PetMed Express, State Street Corp, Fastenal
Stocks in the News
Deutsche Bank AG (DBK) Chief Executive Officer Josef Ackermann said the financial industry remains in a “very fragile” situation as deteriorating economies drag on investment banking.
Royal Bank of Scotland Group Plc (RBS) said it may post a loss of as much as 28 billion pounds ($41 billion), the biggest ever reported by a U.K. company, as the credit crisis worsens. The stock slumped as much as 71 percent.
Lehman Brothers Holdings Inc.’s (LEHMQ) rescue failed when U.S. officials couldn’t find a bank to provide the same trading guarantees that Bear Stearns Cos. received.
West Energy Ltd. (WTL) and firms that will own about C$32 billion ($25.7 billion) in new notes in Canada’s biggest restructuring say they’ll hold the debt for as long as eight years rather than sell it at “fire sale” prices to hedge funds.
Pearson PLC (PSO), the owner of the Financial Times newspaper and Penguin books, rallied around 5 percent after the company indicated profits for 2008 would be ahead of market expectations despite the difficult economic environment.
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