JDfn Daily Digest - December 17, 2008
The Commerce Department says the current account trade deficit fell by 3.7 percent to $174.1 billion in the July-September quarter. That was a better showing than the $178.8 billion deficit economists expected. The deficit represents the amount of money the country is borrowing from foreigners.
Consumers trying to buy a house or finance a car loan could be the big winners as a result of the Federal Reserve's decision to slash its target interest rate to nearly zero and take other steps to battle the financial crisis and worsening recession. But analysts caution that any upturn in the economy is still months away.
Saudi Arabia, a motivating member of OPEC, said the group will slash a record 2 million barrels from its daily production as of Jan. 1st, while Russia and other OPEC outsiders announced their own cutbacks of hundreds of thousands of barrels from the market. The Saudi oil minister said there was an OPEC consensus ahead of a formal agreement later in the day for the cut.
SEC Chairman Christopher Cox admitted that the regulator failed to act on warnings about the activities of Bernard Madoff stretching back nearly a decade. In a statement Cox said an initial probe into how Madoff's alleged fraud remained undetected revealed "multiple failures" by the regulator to thoroughly investigate the former Nasdaq chairman and his firm.
U.S. mortgage applications climbed last week, driven by demand for loans to refinance as government interventions helped drive down borrowing costs. The push to cut expenses by refinancing will intensify after the Federal Reserve aggressively cut short-term interest rates to near zero percent. The Mortgage Bankers Association said its application activity index rose 2.9 percent to a seasonally adjusted 841.4 in the week ended Dec. 12th.
With mortgage rates at the lowest levels of the year and loan activity showing a modest improvement, the housing market may be primed for a long-awaited recovery. But the market will need further help from government rescue measures, which remain unlikely until the new president takes office on January 20th.
Western Digital Corp. (WDC) says it plans to cut 2,500 jobs, or about 5 percent of its global work force, and will cut executive pay in response to weakening demand for its products. Western Digital said that demand for the current quarter is "significantly below" what it expected when it offered revenue guidance in October.
British Airways and Virgin Atlantic Airways are cutting their fuel surcharges because of the falling price of oil. The reductions apply on tickets purchased beginning Thursday, and the airlines are not offering refunds to customers who booked flights earlier at the higher price.
Citigroup Inc. (C) will merge its investment and commercial banking operations as part of an attempt to integrate its businesses and successfully emerge from a financial crisis that forced it to accept a government rescue.
Morgan Stanley (MS) said fourth-quarter investment losses were $1.8 billion as a result of losses in real estate funds and other investments. Advisory revenue fell 32% from the year-ago quarter to $528 million, while underwriting revenue dropped 63% to $215 million.
CIT Group Inc (CIT) said it expects to raise $1.5 billion in new regulatory capital. The company said it would raise the money by exchanging senior debt for subordinated debt and cash, and it also plans to exchange convertible debt into common shares.
Scheduled U.S. Economic Reports (Thursday)
Initial Jobless Claims (Week of Dec 13th), Philadelphia Fed Index (Dec), Leading Indicators (Nov)
In Earnings News
ConAgra Foods Inc. (CAG) says its second-quarter profit plunged 31 percent this fall as commodity prices fell from record highs seen over the summer. The company says it earned $168.1 million, or 37 cents a share which was in line with analysts expectations.
General Mills (GIS) said earnings fell to $378.2 million, or $1.09 per share, from $390.5 million, or $1.14 per share, last year. But excluding charges on commodity positions and a gain on the sale of its Pop Secret microwave popcorn business, profit totaled $1.36 per share. The results beat estimates of analysts, who had predicted profit of $1.23 per share.
Honda (HMC) cut its profit forecast for the fiscal year and said managers will take a 10 percent pay cut amid a global downturn in the auto industry. The company now expects 185 billion yen ($2.06 billion) in group net profit for the fiscal year ending March 31st, 2009 -- less than a third of the 600 billion yen earned last fiscal year.
Joy Global Inc. (JOYG), which makes mining equipment, said its fiscal fourth-quarter profit rose 70 percent. For the three months ended Oct. 31, net income rose to $118 million, or $1.11 per share, compared with $70 million, or 64 cents per share, in the year-earlier period. Analysts expected, on average, $1.08 a share.
Newell Rubbermaid Inc. (NWL) cut its fourth-quarter and full-year profit guidance, citing the downturn in the global economy and its impact on the company's retail customers.
Scheduled Earnings Reports (Thursday)
Research in Motion, FedEx, Discover Financial, Lennar Corp, Actuant, Palm, Carnival Corp, Oracle Corp, Pier 1 Imports, 3Com Corp
Stocks in the News
Apple Inc (AAPL) said the Macworld Expo in January will be the computing giant's last and Chief Executive Steve Jobs will not give a final keynote address at the event this year.
News Corp (NWS) said it will move its stock-exchange listing to the Nasdaq from the New York Stock Exchange, effective Dec. 29th.
Hovnanian Enterprises Inc (HOV) reported its fourth-quarter loss attributable to common stock narrowed to $450.5 million, or $5.79 a share.
Elbit Systems (ESLT) the Haifa, Israel, defense contractor, received about $80 million of contracts from European customers.
Leggett & Platt Company (LEG) expects a fourth-quarter loss of 3 cents to 18 cents a share.
Adobe Systems’ (ADBE) fiscal fourth-quarter net income rose to $245.9 million, or 46 cents a share.
Xilinx Inc (XLNX) raised the top and bottom of the range of its estimated fourth-quarter loss.
Nissan Motor Co. (NSANY) will reduce production in Japan by 78,000 units starting January 2009 amid waning demand for automobiles.
Silicon Storage Technology (SSTI) raised the top and bottom of the range of its estimated fourth-quarter loss.
Consumers trying to buy a house or finance a car loan could be the big winners as a result of the Federal Reserve's decision to slash its target interest rate to nearly zero and take other steps to battle the financial crisis and worsening recession. But analysts caution that any upturn in the economy is still months away.
Saudi Arabia, a motivating member of OPEC, said the group will slash a record 2 million barrels from its daily production as of Jan. 1st, while Russia and other OPEC outsiders announced their own cutbacks of hundreds of thousands of barrels from the market. The Saudi oil minister said there was an OPEC consensus ahead of a formal agreement later in the day for the cut.
SEC Chairman Christopher Cox admitted that the regulator failed to act on warnings about the activities of Bernard Madoff stretching back nearly a decade. In a statement Cox said an initial probe into how Madoff's alleged fraud remained undetected revealed "multiple failures" by the regulator to thoroughly investigate the former Nasdaq chairman and his firm.
U.S. mortgage applications climbed last week, driven by demand for loans to refinance as government interventions helped drive down borrowing costs. The push to cut expenses by refinancing will intensify after the Federal Reserve aggressively cut short-term interest rates to near zero percent. The Mortgage Bankers Association said its application activity index rose 2.9 percent to a seasonally adjusted 841.4 in the week ended Dec. 12th.
With mortgage rates at the lowest levels of the year and loan activity showing a modest improvement, the housing market may be primed for a long-awaited recovery. But the market will need further help from government rescue measures, which remain unlikely until the new president takes office on January 20th.
Western Digital Corp. (WDC) says it plans to cut 2,500 jobs, or about 5 percent of its global work force, and will cut executive pay in response to weakening demand for its products. Western Digital said that demand for the current quarter is "significantly below" what it expected when it offered revenue guidance in October.
British Airways and Virgin Atlantic Airways are cutting their fuel surcharges because of the falling price of oil. The reductions apply on tickets purchased beginning Thursday, and the airlines are not offering refunds to customers who booked flights earlier at the higher price.
Citigroup Inc. (C) will merge its investment and commercial banking operations as part of an attempt to integrate its businesses and successfully emerge from a financial crisis that forced it to accept a government rescue.
Morgan Stanley (MS) said fourth-quarter investment losses were $1.8 billion as a result of losses in real estate funds and other investments. Advisory revenue fell 32% from the year-ago quarter to $528 million, while underwriting revenue dropped 63% to $215 million.
CIT Group Inc (CIT) said it expects to raise $1.5 billion in new regulatory capital. The company said it would raise the money by exchanging senior debt for subordinated debt and cash, and it also plans to exchange convertible debt into common shares.
Scheduled U.S. Economic Reports (Thursday)
Initial Jobless Claims (Week of Dec 13th), Philadelphia Fed Index (Dec), Leading Indicators (Nov)
In Earnings News
ConAgra Foods Inc. (CAG) says its second-quarter profit plunged 31 percent this fall as commodity prices fell from record highs seen over the summer. The company says it earned $168.1 million, or 37 cents a share which was in line with analysts expectations.
General Mills (GIS) said earnings fell to $378.2 million, or $1.09 per share, from $390.5 million, or $1.14 per share, last year. But excluding charges on commodity positions and a gain on the sale of its Pop Secret microwave popcorn business, profit totaled $1.36 per share. The results beat estimates of analysts, who had predicted profit of $1.23 per share.
Honda (HMC) cut its profit forecast for the fiscal year and said managers will take a 10 percent pay cut amid a global downturn in the auto industry. The company now expects 185 billion yen ($2.06 billion) in group net profit for the fiscal year ending March 31st, 2009 -- less than a third of the 600 billion yen earned last fiscal year.
Joy Global Inc. (JOYG), which makes mining equipment, said its fiscal fourth-quarter profit rose 70 percent. For the three months ended Oct. 31, net income rose to $118 million, or $1.11 per share, compared with $70 million, or 64 cents per share, in the year-earlier period. Analysts expected, on average, $1.08 a share.
Newell Rubbermaid Inc. (NWL) cut its fourth-quarter and full-year profit guidance, citing the downturn in the global economy and its impact on the company's retail customers.
Scheduled Earnings Reports (Thursday)
Research in Motion, FedEx, Discover Financial, Lennar Corp, Actuant, Palm, Carnival Corp, Oracle Corp, Pier 1 Imports, 3Com Corp
Stocks in the News
Apple Inc (AAPL) said the Macworld Expo in January will be the computing giant's last and Chief Executive Steve Jobs will not give a final keynote address at the event this year.
News Corp (NWS) said it will move its stock-exchange listing to the Nasdaq from the New York Stock Exchange, effective Dec. 29th.
Hovnanian Enterprises Inc (HOV) reported its fourth-quarter loss attributable to common stock narrowed to $450.5 million, or $5.79 a share.
Elbit Systems (ESLT) the Haifa, Israel, defense contractor, received about $80 million of contracts from European customers.
Leggett & Platt Company (LEG) expects a fourth-quarter loss of 3 cents to 18 cents a share.
Adobe Systems’ (ADBE) fiscal fourth-quarter net income rose to $245.9 million, or 46 cents a share.
Xilinx Inc (XLNX) raised the top and bottom of the range of its estimated fourth-quarter loss.
Nissan Motor Co. (NSANY) will reduce production in Japan by 78,000 units starting January 2009 amid waning demand for automobiles.
Silicon Storage Technology (SSTI) raised the top and bottom of the range of its estimated fourth-quarter loss.
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