JDfn Daily Digest - December 15, 2008

The Federal Reserve is widely expected to cut a key interest rate -- perhaps to an all-time low-- to prevent the sinking economy from falling deeper into the doldrums. Fed Chairman Bernanke and his colleagues open a two-day meeting today to take a fresh pulse on the ailing economy, which has been mired in a recession since last December, and to decide their next move on interest rates.

Industrial production slipped by a slightly less-than-expected 0.6 percent in November and was a bit stronger the month before than previously thought. Economists polled by Reuters had expected a 0.7 percent decline in November after a revised rise of 1.5 percent in October. This was previously reported as a 1.3 percent increase.

The Empire State Manufacturing index fell to negative 25.8 in December from negative 25.4 in November. New orders and shipments were slightly higher, but unfilled orders fell to a record low. Prices paid plunged to negative 7.5 in December from 27 in November.

The National Association of Home Builders/Wells Fargo index of builder confidence held at 9 this month. Analysts had expected the builder confidence index to rise to 10 this month. Confidence dropped in two of the country’s four regions in December. The biggest decrease occurred in the South, where the index fell to 10, from 12 in November, while the measure for the Midwest declined one point to 6.

American homeowners will collectively lose more than $2 trillion in home value by the end of 2008. Real estate Web site Zillow.com calculated that home values have dropped 8.4% year-over-year during the first three quarters of 2008, compared with the same period of 2007. Some 11.7 million Americans now are “underwater,” and owe more on their mortgage balances than their homes are actually worth.

Kuwait's oil minister says OPEC is "undoubtedly inclined" to cut production in its upcoming meeting in Algeria to shore up oil prices. But the minister said that any decision at OPEC’s December 17th meeting would balance the need for a cut with its impact on the ailing world economy and producer nations' need for revenue to fund development projects.

Detroit automakers got public reassurance from President Bush that short-term government help for the industry is in the works and could come soon. Bush wouldn't give a precise timetable but said it won’t be “a long process because of the economic fragility of the autos."

Charles Schwab Corp. (SCHW) said it is cutting at least 100 jobs in an effort to improve operating efficiency. Schwab said it is cutting the positions, and over the next two months will review further actions to improve efficiencies that could include further job cuts. Schwab said it expects to record severance charges of $20 million in the fourth quarter related to the 100 jobs cuts.

Huntsman Corp. (HUN) has ended its $6.5 billion agreement to be taken over by Hexion Specialty Chemicals Inc. and agreed to a $1 billion legal settlement with Hexion's private equity owner, Apollo Global Management.

Investors Bancorp Inc. (ISBC) said it will acquire American Bancorp of New Jersey Inc. (ABNJ) for $140 million in cash and stock. The deal values American Bancorp, which operates five branches across two New Jersey counties, at $12.50 per share, a 43 percent premium from Friday's closing price of $8.75.

MGM Mirage (MGM) has agreed to sell its Treasure Island Hotel & Casino in Las Vegas for $775 million to Ruffin Acquisition. The companies said they expect the deal to close by the end of the second quarter of 2009.

General Growth Properties Inc (GGP) said it has not reached a unanimous agreement with its lenders to further extend the maturity date on $900 million of mortgage loans on two Las Vegas Properties. The shopping mall developer said it is continuing its discussions with lenders regarding its loans.

Scheduled U.S. Economic Reports (Tuesday)

Consumer Price Index (Nov), Housing Starts (Nov), the FOMC interest rate announcement (2:15 pm –Eastern Time)

In Earnings News

Honeywell International Inc. (HON), which makes products such as airplane and fire safety equipment, gave 2009 earnings guidance within the range of analysts' expectations, but revenue guidance fell slightly short. In 2009, the company predicts earnings of $3.20 to $3.55 per share on revenue of $33.6 billion to $35.3 billion. Analysts expect a profit of $3.37 per share.

Aetna Inc. (AET) -- seeking to reassure investors about its financial health-- said it will provide additional information tomorrow (Tuesday) about its balance sheet and capital position. It also reaffirmed its earnings guidance for this year and 2009. The company said it expects profit from operations between $3.90 and $3.95 per share for the full-year.

Sonic Corp. (SONC), which operates a chain of drive-in restaurants, said it will begin offering cash-strapped consumers a bit more value at the end of December after seeing its same-store sales drop during its first quarter. The company said it will launch a new value menu, but did not offer any specifics about which items would be placed on the menu.

Scheduled Earnings Reports (Tuesday)

Best Buy, Goldman Sachs, Adobe Systems, Hovnanian Industries, G-Tech Holdings, Macromedia

Stocks in the News

ATT (T) was cut to neutral from buy by Goldman Sachs.

Gaylord Entertainment’s (GET) traded higher after Barron’s reported that the company’s share price may rise to $48 as its convention business grows.

Progressive Corp (PGR) said that no dividend would be paid in 2008 under the company's annual variable dividend policy.

Phoenix Companies (PNX) plans to spin off Virtus Investment Partners Inc. to its holders as an independent publicly traded asset manager.

Siemens AG (SI) agreed to pay $800 million to settle a U.S. inquiry under the Foreign Corrupt Practices Act and the company is close to settling a parallel inquiry by German prosecutors.

Waste Management’s (WMI) board approved a 2009 capital allocation program that includes the authorization for up to $1.3B in combined cash dividends, common stock repurchases, debt reduction and acquisitions in 2009.

DSM (RDSMY) cut its estimate of 2008 adjusted operating profit and will pare expenses including 1,000, or about 5%, of its jobs.

Time Warner (TWX) Chief Executive Jeffrey L. Bewkes will add the post of chairman at the end of the year, taking over from Richard Parsons.