JDfn Daily Digest - December 16, 2008

The Federal Open Market Committee lowered its target for overnight interest rates by three quarters of one percent to a record low 0.25%. At the same time, the central bank released a statement that signaled an aggressive posture. It said it would keep rates low "for some time" and continue to expand its balance sheet to stabilize the economy. The vote to lower the Fed funds rate was unanimous.

European Central Bank President Jean- Claude Trichet said there’s a limit to how far the bank can cut interest rates and signaled policy makers may pause in January. The ECB has lowered its benchmark rate by 175 basis points since October to 2.5 percent.

The Labor Department reported that consumer prices fell 1.7 percent in November, surpassing the previous record decline of 1 percent set in October. The drop was the largest one-month decline dating to February 1947.

The construction of new homes fell even further in November, slashing construction of new dwellings far below the worst levels seen in 50 years. New starts dropped 18.9% to a seasonally adjusted annual rate of 625,000, the lowest since the Commerce Department began keeping records in 1959.

Detroit automakers, teetering on the brink of collapse, are receiving strong signals from the White House that short-term help is on the way while a key senator says the relief package could reach $15 billion for GM and Chrysler.

Saudi Arabia's Oil Minister said the Organization of Petroleum Exporting Countries plans to cut crude oil production by an additional 2 million barrels a day. The cuts are an effort to trim excess crude inventories and support oil prices. Saudi Arabia has cut production by 1.2 million barrels a day from its August peak of 9.7 million barrels a day, and is now producing 8.5 million barrels a day.

American International Group (AIG) sold $39.3 billion of assets to a fund established by the Federal Reserve Bank of New York. The new fund, Maiden Lane II, was created to hold mortgage liabilities from an AIG securities lending portfolio that caused huge losses to the troubled insurer, the company said in a press release.

As part of a global restructuring, Citigroup Inc. (C) announced it will sell its Japanese trust banking unit to Mitsubishi UFJ Trust and Banking Corp. The all-cash deal, valued at 25 billion yen ($277.6 million), is expected to close around April 1st.

Scheduled U.S. Economic Reports (Wednesday)

Current Account Balance

In Earnings News

Goldman Sachs (GS) suffered its first loss as a publicly traded company. The investment bank said it lost $2.1 billion, or $4.97 a share during the fourth quarter, representing the company's first loss since it went public in 1999. A year ago, Goldman reported a profit of $3.2 billion, or $7.49 a share.

Best Buy (BBY) profit fell 77 percent to $52 million, or 13 cents per share, in the three months ended Nov. 29th. That's down from 53 cents per share, a year ago. The company said it sees reducing capital spending by about 50 percent next year. And it believes that there has been dramatic and potentially long-lasting change in consumer behavior.

FactSet Research Systems Inc. (FDS) said its fiscal first-quarter profit rose 21 percent. Net income for the quarter ended Nov. 30 rose to $35.6 million, or 73 cents per share. Analysts, on average, forecast earnings of 63 cents per share.

Air Products & Chemicals Inc. (APD), which supplies oxygen and other gases to the industrial and medical sectors, said it is cutting about 7 percent of its work force because of weak business conditions worldwide. The company will slash 1,300 jobs and take a fiscal first-quarter charge of $140 million to $160 million, or 43 cents to 50 cents per share.

Johnson Controls (JCI) said it's withdrawing its 2009 targets as its expects a first-quarter loss tied to deteriorating automobile production. Analysts forecast earnings of 20 cents a share for the coming quarter and earnings of $1.83 a share for 2009.

Scheduled Earnings Reports (Wednesday)

General Mills, Morgan Stanley, Conagra Foods, Apogee Enterprises, Nike, Paychex, Alpine Group, Novastar Financial

Stocks in the News

General Electric (GE) analysts are wondering whether the company might stop forecasting quarterly earnings. GE missed its forecasts in the first and third quarters, which contributed to a 54% stock drop this year.

Harley Davidson (HOG) announced that President and Chief Executive Officer James Ziemer will retire in 2009, after 40 years with the company.

Credit Suisse (CS) was downgraded to equal weight from overweight at Morgan Stanley.

Beckman Coulter (BEC) affirmed its 2008 earnings outlook. In 2008, the company expects to earn $3.55 to $3.65 a share as revenue rises 12%.

Chubb Corp’s (CB) counterparty credit rating was raised to A+ from A by Standard & Poor's.

Office Depot’s (ODP) corporate-credit rating was downgraded to BB- from BB by S&P.

Palm Inc (PALM) named Douglas Jeffries chief financial officer.

Jazz Pharmaceuticals (JAZZ) cut 71, or 24%, of its jobs to cut costs. The company expects to report a fourth-quarter charge of $1.9 million for the job cut.