JDfn Daily Digest - December 10, 2008
Wholesale inventories fell by 1.1 percent in October following a downwardly revised 0.4 percent decrease in September. The decrease came as a surprise to economists, who had expected an increase of about 0.2 percent.
Congress will vote as early as today on a $15 billion plan Democrats reached with the Bush administration to keep U.S. automakers afloat while forcing them to restructure. The tentative agreement calls for appointment of a so-called “car czar” who could force General Motors Corp. (GM) and Chrysler LLC into Chapter 11 bankruptcy if the companies don’t come up with a restructuring plan by March 31st.
GMAC LLC, the auto and consumer lender seeking federal aid failed to obtain enough capital to become a bank holding company and may abandon the effort, casting new doubt on the company’s ability to survive. A debt exchange by GMAC and its Residential Capital mortgage unit designed to bolster the company’s finances didn’t attract enough participation.
The Federal Reserve is mulling issuing its own debt for the first time in a move that would give it more flexibility to stabilize financial markets. Government debt issuance is largely the job of the Treasury Department, but Fed officials are looking for new tools as the crisis drags on and have approached Congress about the idea.
Applications for U.S. home mortgages fell last week in a setback from the record jump in the previous period after a Federal Reserve proposal aimed at lowering interest rates. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity fell 7.1 percent in the week ended Dec. 5th.
Leading bank analyst Meredith Whitney remains bearish about the economy, and her outlook for the banks that "lubricate the economy" is grim. Whitney said she believes “big banks are going to be on life support for at least 18 months, if not 36 months.”
The World Bank said in a new report called "Global Economic Prospects 2009," the recent sharp declines in oil and food prices have marked the end of the 2003-2008 commodity price boom - the most historic of the past century. The boom was driven by strong global economic growth and has come to an end with the abrupt slowdown in the global economy precipitated by the financial crisis.
Oil prices rose above $43 a barrel in Asia as the market looked to an expected OPEC production cut next week to help stabilize prices that have plummeted amid slowing global economic growth.
Rio Tinto Group (RTP) will cut 14,000 jobs worldwide and reduce capital investment as part of new measures to reduce its debt amid waning demand for iron ore and other metals. The job cuts and reduction in operating expenditure are expected to save at least 2.5 billion Australian dollars ($1.6 billion) a year by 2010.
Toyota Motor Corp. (TM) said it would further reduce production at several factories in North America, as the global slowdown continues to cut into the automaker's sales abroad. Japan's largest carmaker will temporarily suspend output in December and January.
Wells Fargo (WFC) Chief Executive John Stumpf said that the bank, which he said is involved in one of every eight mortgages in the country, is seeing signs that real estate prices may be bottoming. Stumpf also said jobs are the economy's major issue right now.
Office Depot Inc (OPD) said that over the next three months it will close 112 underperforming North American stores and another 14 stores as their leases expire in 2009. New store openings for 2009 now have been reduced to approximately 20, down from the previous estimate of 40 stores.
American International Group (AIG) owes Wall Street firms about $10 billion for speculative trades that went bad. The debt highlights the challenges the insurer faces as it seeks to recover under a U.S. government rescue.
Analysts at Citigroup began coverage of American Express (AXP) shares with a sell rating, saying they expect the firm's credit to deteriorate faster than rivals does after an aggressive growth spurt in 2006 and 2007.
Japanese cellular phone parts makers are considering using new system software that could cut the cost for developing technology that controls mobile phone functions by up to 99%. The software, called Network on a Terminal Architecture, was developed by Nokia Corp. (NOK).
Scheduled U.S. Economic Reports (Thursday)
Initial Jobless Claims (Week of Dec 6th), Trade Balance (Oct), Import Price Index (Nov)
In Earnings News
Korn/Ferry International (KFY) a premier global provider of talent management solutions announced second quarter fiscal 2009 diluted earnings per share of 30 cents a share compared to 37 cents in the second quarter.
Actuant Corp (ATU) said that it expects to report first-quarter earnings of 44 cents to 45 cents a share, excluding an asset-impairment charge, and revenue of about $375 million to $380 million.
Neiman Marcus, Inc. reported financial results for the first quarter of fiscal year 2009. For the first quarter of fiscal year 2009, the Company reported total revenues of $986 million compared to $1.13 billion in the prior year.
Eastman Kodak (EK) has withdrawn its full-year 2008 operating profit and sales forecast because of a weak economy and stronger dollar, and say executives will not receive a salary increase next year.
International Speedway Corp. (ISCA) maintained its fiscal 2008 outlook, but forecast 2009 profit below Wall Street's expectations, citing declines in attendance and corporate sponsorship.
MDS Inc. (MDZ), a Canadian life sciences company, cut its 2008 revenue outlook and said charges would leave it with a full-year loss. The company said the charges will restrict it from buying back shares of common stock for the foreseeable future.
Scheduled Earnings Reports (Thursday)
Costco Wholesale, Global Crossing, Krispy Kreme Doughnuts, Shoe Pavilion, Ciena, Maverick Oil, Club Med
Stocks in the News
Sony (SNE) will issue bonds for the first time in three years. The bonds will help refinance $2.7 billion of maturing debt.
Texas Instruments Inc (TXN) lowered its fourth-quarter revenue and earnings projections. It now expects revenue in the range of $2.3B and $2.5B.
Samsung Electronics (SSNGY) said profit margins in its liquid-crystal-display business have "vaporized" and it may slash capital spending 30% in 2009.
Agrium Inc (AGU) affirmed its estimate of second-half earnings.
UAL Corp (UAUA), the parent of United Airlines, raised about $150 million in cash from the sale of 15 Boeing 757 aircraft to East Shore Aircraft LLC.
Electronic Arts (ERTS) expects fiscal 2009 net revenue and earnings to be below the guidance announced in October due to lower-than-expected sales in North America and Europe.
A.O. Smith Corp. (AOS) cut its profit guidance for the fourth quarter and the year, citing the decline in construction and consumer spending.
Progressive Corp. (PGR) said its November profit jumped 48 percent as the insurer recorded gains as part of its tax planning strategy.
Congress will vote as early as today on a $15 billion plan Democrats reached with the Bush administration to keep U.S. automakers afloat while forcing them to restructure. The tentative agreement calls for appointment of a so-called “car czar” who could force General Motors Corp. (GM) and Chrysler LLC into Chapter 11 bankruptcy if the companies don’t come up with a restructuring plan by March 31st.
GMAC LLC, the auto and consumer lender seeking federal aid failed to obtain enough capital to become a bank holding company and may abandon the effort, casting new doubt on the company’s ability to survive. A debt exchange by GMAC and its Residential Capital mortgage unit designed to bolster the company’s finances didn’t attract enough participation.
The Federal Reserve is mulling issuing its own debt for the first time in a move that would give it more flexibility to stabilize financial markets. Government debt issuance is largely the job of the Treasury Department, but Fed officials are looking for new tools as the crisis drags on and have approached Congress about the idea.
Applications for U.S. home mortgages fell last week in a setback from the record jump in the previous period after a Federal Reserve proposal aimed at lowering interest rates. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity fell 7.1 percent in the week ended Dec. 5th.
Leading bank analyst Meredith Whitney remains bearish about the economy, and her outlook for the banks that "lubricate the economy" is grim. Whitney said she believes “big banks are going to be on life support for at least 18 months, if not 36 months.”
The World Bank said in a new report called "Global Economic Prospects 2009," the recent sharp declines in oil and food prices have marked the end of the 2003-2008 commodity price boom - the most historic of the past century. The boom was driven by strong global economic growth and has come to an end with the abrupt slowdown in the global economy precipitated by the financial crisis.
Oil prices rose above $43 a barrel in Asia as the market looked to an expected OPEC production cut next week to help stabilize prices that have plummeted amid slowing global economic growth.
Rio Tinto Group (RTP) will cut 14,000 jobs worldwide and reduce capital investment as part of new measures to reduce its debt amid waning demand for iron ore and other metals. The job cuts and reduction in operating expenditure are expected to save at least 2.5 billion Australian dollars ($1.6 billion) a year by 2010.
Toyota Motor Corp. (TM) said it would further reduce production at several factories in North America, as the global slowdown continues to cut into the automaker's sales abroad. Japan's largest carmaker will temporarily suspend output in December and January.
Wells Fargo (WFC) Chief Executive John Stumpf said that the bank, which he said is involved in one of every eight mortgages in the country, is seeing signs that real estate prices may be bottoming. Stumpf also said jobs are the economy's major issue right now.
Office Depot Inc (OPD) said that over the next three months it will close 112 underperforming North American stores and another 14 stores as their leases expire in 2009. New store openings for 2009 now have been reduced to approximately 20, down from the previous estimate of 40 stores.
American International Group (AIG) owes Wall Street firms about $10 billion for speculative trades that went bad. The debt highlights the challenges the insurer faces as it seeks to recover under a U.S. government rescue.
Analysts at Citigroup began coverage of American Express (AXP) shares with a sell rating, saying they expect the firm's credit to deteriorate faster than rivals does after an aggressive growth spurt in 2006 and 2007.
Japanese cellular phone parts makers are considering using new system software that could cut the cost for developing technology that controls mobile phone functions by up to 99%. The software, called Network on a Terminal Architecture, was developed by Nokia Corp. (NOK).
Scheduled U.S. Economic Reports (Thursday)
Initial Jobless Claims (Week of Dec 6th), Trade Balance (Oct), Import Price Index (Nov)
In Earnings News
Korn/Ferry International (KFY) a premier global provider of talent management solutions announced second quarter fiscal 2009 diluted earnings per share of 30 cents a share compared to 37 cents in the second quarter.
Actuant Corp (ATU) said that it expects to report first-quarter earnings of 44 cents to 45 cents a share, excluding an asset-impairment charge, and revenue of about $375 million to $380 million.
Neiman Marcus, Inc. reported financial results for the first quarter of fiscal year 2009. For the first quarter of fiscal year 2009, the Company reported total revenues of $986 million compared to $1.13 billion in the prior year.
Eastman Kodak (EK) has withdrawn its full-year 2008 operating profit and sales forecast because of a weak economy and stronger dollar, and say executives will not receive a salary increase next year.
International Speedway Corp. (ISCA) maintained its fiscal 2008 outlook, but forecast 2009 profit below Wall Street's expectations, citing declines in attendance and corporate sponsorship.
MDS Inc. (MDZ), a Canadian life sciences company, cut its 2008 revenue outlook and said charges would leave it with a full-year loss. The company said the charges will restrict it from buying back shares of common stock for the foreseeable future.
Scheduled Earnings Reports (Thursday)
Costco Wholesale, Global Crossing, Krispy Kreme Doughnuts, Shoe Pavilion, Ciena, Maverick Oil, Club Med
Stocks in the News
Sony (SNE) will issue bonds for the first time in three years. The bonds will help refinance $2.7 billion of maturing debt.
Texas Instruments Inc (TXN) lowered its fourth-quarter revenue and earnings projections. It now expects revenue in the range of $2.3B and $2.5B.
Samsung Electronics (SSNGY) said profit margins in its liquid-crystal-display business have "vaporized" and it may slash capital spending 30% in 2009.
Agrium Inc (AGU) affirmed its estimate of second-half earnings.
UAL Corp (UAUA), the parent of United Airlines, raised about $150 million in cash from the sale of 15 Boeing 757 aircraft to East Shore Aircraft LLC.
Electronic Arts (ERTS) expects fiscal 2009 net revenue and earnings to be below the guidance announced in October due to lower-than-expected sales in North America and Europe.
A.O. Smith Corp. (AOS) cut its profit guidance for the fourth quarter and the year, citing the decline in construction and consumer spending.
Progressive Corp. (PGR) said its November profit jumped 48 percent as the insurer recorded gains as part of its tax planning strategy.
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