JDfn Daily Digest - December 1, 2008

The Institute for Supply Management reported that manufacturing activity in the United States declined at the fastest pace in 27 years in November. The ISM index fell to 36.2% in November from 38.9% in October. It's the lowest since late 1981. Economists were expecting the ISM index to fall to 37%.

Construction spending fell by a larger-than-expected amount in October, an indication the problems facing developers in the form of a sinking economy and severe credit crisis are deepening and likely to persist. The Commerce Department says construction spending dropped by 1.2 percent in October, much bigger than the 0.9 percent decline that many analysts had expected.

The Thanksgiving shopping weekend doesn't appear to have been the disaster some had feared, but moderate buying and unprecedented deep discounts likely resulted in soft sales at many retailers. Now, online retailers are ramping up heavy-duty deals to turn skittish shoppers into "Cyber Monday" spenders.

OPEC's Secretary-General says a daily oil production cut of between 1 million and 1.5 million barrels is likely in December. Secretary-General Abdullah El-Badri was quoted as saying that the Organization of Petroleum Exporting Countries is facing a very difficult situation and plans to "restore oil prices to $90 per barrel." OPEC's next official meeting is in Algeria on Dec. 17th.

Meantime, Gas prices fell for the 75th consecutive day, and sold below $2 a gallon in all but three states and the District of Columbia. According to the AAA, gas prices slipped 0.5 cents to a national average of $1.82 a gallon, the cheapest price since January 2005.

Goldman Sachs (GS), the biggest U.S. securities firm to convert to a bank, plans to sell three- year government-backed bonds in Euros, becoming the second U.S. lender to sell debt in the currency under the guarantee program. The notes, backed by the Federal Deposit Insurance Corp., will be priced to yield 45 to 50 basis points more than the benchmark mid-swap rate.

Ford Motor Company (F), the second-largest U.S. automaker, said it may sell its Volvo unit, the company’s sole remaining European brand. The review of options for Volvo probably will take several months.

American International Group Inc. (AIG) said it has agreed to sell its wealth management arm AIG Private Bank Ltd. to Aabar Investments of Abu Dhabi. Under its new ownership, AIG Private Bank will become an independent financial institution, headquartered in Switzerland along with branches and representative offices in Hong Kong, Shanghai, Singapore and Dubai.

Johnson & Johnson (JNJ) announced it will buy cosmetic-product and breast-implant maker Mentor Corp. (MNT) for $1.07 billion in a move to boost its presence in cosmetic and reconstructive medicine. Under the deal, J&J will start a cash tender offer for $31 per share in a move to add breast implants and other products to its Ethicon surgical products unit.

Ryanair (RYAAY) launched a new takeover bid for Aer Lingus (AELGF), seeking to capitalize on labor unrest at its Irish rival and Ireland's economic difficulties. Ryanair Holdings PLC said it would pay euro1.40 ($1.78) a share for 70 percent of Aer Lingus Group PLC, a 25 percent premium over Monday's opening stock price.

IHS Inc. (IHS), which provides consulting services, lowered its revenue outlook for fiscal 2009, citing the effect of a stronger U.S. dollar. The company said it now expects 2009 revenue growth of between 16 percent and 18 percent compared with the current year. Previously, it expected revenue growth of between 19 percent and 21 percent.

AAR Corp. (AIR) said the Army has ordered $40 million of equipment used in military shipping containers. The Army order is for rolling platforms that fit inside the standard 20-foot containers the Army uses to transport supplies. AAR received a $26 million order for the platforms earlier this year.

Scheduled U.S. Economic Reports (Tuesday)

None Scheduled

In Earnings News

Pilgrim's Pride Inc. (PPC) said it expects to post fourth-quarter losses on feed ingredient derivative contracts of about $96.9 million, or $1.31 per share. On average, analyst forecast a quarterly loss of $2.06 per share on revenue of $2.05 billion.

UnitedHealth Group (UNH) raised the lower end of its 2009 revenue forecast, although it maintained its profit outlook for next year. The company projected revenue of $85 billion to $86 billion next year. In October, it forecast $84 billion to $86 billion.

Inergy, L.P. (NRGY) and Inergy Holdings, L.P. (NRGP) each reported record results of operations for the fiscal fourth quarter and year ended September 30th. Inergy, L.P. reported earnings of $239 million for the year ended September 30th, an increase of $27.8 million, or approximately 13.2% from $211.2 million in the year ago period.

Scheduled Earnings Reports (Tuesday)

Sears Holding Corp, Staples, America’s Car Mart, Isle of Capri Casinos, Beazer Homes, Marvell Technology, OmniVision Technologies, Shoe Pavilion, Beacon Roofing Supply

Stocks in the News

General Motors (GM) announced that top officials, trying to avert a bankruptcy-law filing by the Detroit auto giant, are developing a plan under which debt holders would swap their securities for equities.

Bankrate (RATE) traded higher after analysts at Citigroup upgraded the shares to buy, and set a $40 price target.

Citigroup (C) working to stabilize itself after a U.S. federal rescue plan and plans to auction off its custodian administration unit in Japan.

Freddie Mac (FRE) plans to launch a $1 billion reopening of its 4.125% five-year U.S. dollar reference notes, maturing in September 2013.

Mesa Air Group (MESA) settled a lawsuit with the former controlling shareholder of Aloha Airlines.

Trump Entertainment (TRMP) said it wouldn't make a $53.1 million interest payment due today on its 8.5% senior secured notes.

Delta Air Lines (DAL) plans to change orders that it and Northwest Airlines placed with Boeing.

Qimonda AG (QI) expects to report that its fiscal fourth-quarter net loss widened from the third quarter.