JDfn Daily Digest - December 22, 2008

The deputy head of the Bank of England said they saw the financial crisis coming, but didn't expect it to be so severe. John Gieve said that if the bank had tried to use interest rates to keep the price of assets -- like houses -- from spiraling upward over the past couple of years, it would have held down the level of activity in other parts of the economy, like manufacturing, that needed to be allowed to enjoy prosperity.

According to the Lundberg survey, the average national price of gasoline fell 9 cents in the past two weeks, bringing it to its lowest point in nearly five years. Oil industry analyst Trilby Lundberg said the average price of regular gasoline was $1.66 a gallon. The price of mid-grade was $1.80 a gallon and the price of premium was $1.92 a gallon.

Standard & Poor's Ratings Services cut the long-term ratings for American Express Co. (AXP). The credit ratings agency said in a statement that it lowered the credit card companies' ratings one notch to "A" from "A+" based on expectations for further weakening in consumer credit quality, rising losses on the lender's credit card portfolio and its high concentration of funding through wholesale markets.

Munich Re AG said it would pay $742 million to buy Hartford Steam Boiler from its embattled parent company, American International Group Inc. (AIG). The purchase price is considered well below HSB's value -- estimated at between $1 billion and $2 billion -- as AIG is forced to sell off units to pay back a U.S. government bailout loan.

St. Jude Medical Inc. (STJ) has purchased Radi Medical AB for $250 million, obtaining new heart diagnostic and treatment products. Sweden-based Radi makes the pressure-measurement guide wire, which tests for heart lesions and accounts for about 70 percent of a global market worth about $60 million.

Circuit City Stores Inc. (CC) is heading into U.S. Bankruptcy Court for a hearing to seek final approval of financing to be used while it is in Chapter 11 bankruptcy protection. The nation's second-biggest electronics retailer filed for bankruptcy protection last month as it faced pressure from vendors and as consumer spending waned.

JP Morgan Chase’s (JPM) investment bank said that it has agreed to buy UBS’s (UBS) Canadian energy operations and global agricultural business. Terms of the deal, which is expected to close in the first quarter of 2009, were not disclosed. UBS Commodities Canada Ltd. will become an indirect wholly-owned subsidiary of J.P. Morgan. The agricultural business includes a London-based trading and marketing team.

Tata Motors Ltd. (TTM), based in Mumbai, India, has reportedly been spending money on its Jaguar Land Rover subsidiary and will continue to do so as needed. A company spokesman declined to say how much Tata Motors has diverted to Jaguar Land Rover since it bought the brands from Ford Motor Co. (F) for $2.3 billion in June.

President-elect Obama unveiled a new task force over the weekend that is charged with helping struggling working families, as an aide said Obama's economic recovery plan would be expanded to try to save 3 million jobs. The White House Task Force on Working Families, to be headed by Vice-President-elect Joe Biden, would aim to boost education and training and protect incomes and retirement security of middle-class and working families whose plight Obama made a central issue of his campaign.

China cut interest rates for the fifth time in three months after trade growth collapsed because of recessions in the U.S., Europe and Japan. The one-year lending rate will drop by 0.27 percentage point to 5.31 percent and the deposit rate by the same amount to 2.25 percent from tomorrow.

Scheduled U.S. Economic Reports (Tuesday)

Gross Domestic Product (Q3), Consumer Sentiment (Dec), New Home Sales (Nov), Existing Home Sales (Nov)

In Earnings News

Toyota Motor Corp. (TM) cut its earnings forecast, projecting that it would report its first annual operating loss for the fiscal year through March -- its first such loss since it began reporting results in 1941. Toyota forecast an operating loss of 150 billion yen ($1.66 billion) for the fiscal year ending March 2009.

Walgreen Co. (WAG) says its profit fell 10 percent in the fiscal first quarter because of costs to open more than 200 new stores. The company says it earned $408 million, or 41 cents per share. Analysts expected 46 cents per share and $15.08 billion in revenue.

Steelcase Inc. (SCS) posted a drop in third-quarter profit because of a big charge and lower sales. Profit slid 99 percent to $400,000, or nil per share. Analysts expected a 9 cent profit.

Manpower Inc. (MAN) pulled its fourth-quarter profit and revenue forecasts, as demand declined. The temporary staffing company had predicted a quarterly revenue decline between 9 percent and 11 percent, but said its quarter-to-date drop-off is much larger, coming in at 20 percent.

Scheduled Earnings Reports (Tuesday)

Micron Technology, FSI International, Quest Resource Corp, Feldman Mall Properties, Affinity Technology Group

Stocks in the News

Visa Inc (V) has deposited $1.1 billion into a previously-established litigation escrow account. The account is part of a plan set up when Visa went public.

Palm Inc (PALM) will get $100 million equity investment from private-equity firm Elevation Partners.

Sysco Corp (SYY) expects flat to slightly negative year-on-year sales for its second quarter of fiscal year 2009, which ends Dec. 27th.

Nationwide Financial Services (NFS) and its subsidiaries may be downgraded by Moody's Investors Service.

Fifth Third Bancorp (FITB) had its counterparty credit rating downgraded by Standard & Poor's. S&P said in a statement the downgrade comes on its belief that "the banking system's credit outlook will continue to weaken.

XL Capital Ltd (XL) was downgraded by Moody's Investors Service on concerns of reduced financial flexibility, anticipated profit weakness and a possible drop in market position.

King Pharmaceuticals (KG) has extended its $37-a-share tender offer for Alpharma Inc. (ALO).