JDfn Daily Digest - November 24, 2008

The U.S. government agreed to rescue Citigroup (C), once the nation's largest bank and the pioneer of the one-stop-shop for business and consumer financial services, in an eleventh-hour, $326 billion plan to avoid financial collapse. The government agreed to invest $20 billion in Citi and to guarantee as much as $306 billion of Citi's troubled assets in a deal reached Sunday. The deal also gives the government control of executive bonuses, and limits dividend payments.

Pacific Rim nations assured the world over the weekend that the global financial crisis can be control in 18 months, but provided few details of how they expect that to happen -- or how their governments can help. The main accomplishment of the Asia-Pacific Economic Cooperation forum was a widening of support for the Washington Declaration made last weekend by major economies that pledged to maintain free trade despite pressures to protect domestic industries.

President-elect Barack Obama is rolling out an economic vision that will require congressional cooperation even before he settles into his new desk in the White House's Oval Office. Obama aides called on the new Congress to pass by the Jan. 20th inauguration legislation that meets Obama's two-year goal of saving or creating 2.5 million jobs.

Reports say Obama may consider delaying a campaign promise to roll back tax cuts on high-income Americans as he works on a huge stimulus plan to counter the worst economic crisis the world has faced in decades.

The National Association of Realtors reported resales of U.S. single-family homes and condos fell 3.1% in October to a seasonally adjusted annual rate of 4.98 million. Resales have fallen 1.6% in the past year. Economists expected sales to fall to 5.0 million. The inventory of unsold homes on the market fell 0.9% to 4.23 million, a 10.2 month supply at the current sales pace.

MasterCard Advisors said in a report that U.S. sales of apparel, shoes and appliances fell dramatically in the first two weeks of November, as consumers concerned about a recession and job losses further cut their personal spending. Analysts are predicting the worst holiday sales season in nearly two decades.

Freddie Mac (FRE) said its mortgage portfolio decreased 0.8% in October. On a year-to-date annualized rate it was up by 5.3%. The amount of retained portfolio mortgage purchase and sales agreements entered into during October totaled $17.4 billion. The single-family delinquency rate for all loans was 134 basis points in October.

Johnson & Johnson (JNJ) announced it will pay $438 million for Omrix Biopharmaceuticals Inc. (OMRI), in a move to expand its surgical product unit. If completed, Omrix would operate as a stand-alone entity through the Ethicon unit, which sells a range of surgical products. The deal would result in a $120 million charge for J&J in 2008.

Eli Lilly and Co. (LLY) said it has completed its acquisition of ImClone Systems (IMCL), which is now a wholly-owned subsidiary of Lilly. Lilly said it will take a one-time charge to fourth-earnings for acquired in-process research and development, but the amount hasn't yet been determined.

Alpharma (ALO) has finally agreed to King Pharmaceuticals' (KG) $1.6 billion cash takeover offer, ending the drugmaker’s' months-long battle. Both companies' boards have unanimously approved the deal. King's tender offer, which had been scheduled to expire Nov. 21st, is now extended to Dec. 19th. As of last Friday, 73 percent of Alpharma shares had been tendered.

Scheduled U.S. Economic Reports (Tuesday)

Gross Domestic Product (Q3), Consumer Confidence (Nov)

In Earnings News

The Campbell Soup Co. (CPB) says its first-quarter profit fell 3.7 percent, but its sales rose as people bought more condensed soup. The company said it earned $260 million, or 71 cents per share in the quarter ended Nov. 2nd. That compares to $270 million, or 70 cents per share, a year earlier.

Xerox Corp. (XRX) guided for 2009 profit below previous estimates but within range of Wall Street projections. The company announced ahead of an investor meeting in New York that it expects profit of between $1 and $1.25 per share next year. Analysts polled forecast 2009 profit of $1.16 per share.

CBRL Group Inc. (CBRL), which operates Cracker Barrel restaurants and gift shops, lowered the bottom end of its guidance for the year, due to lower sales expectations. The company expects earnings from continuing operations to be between $2.65 and $3 per share. Analysts expect net income of $2.64 per share.

Waste Connections Inc. (WCN) projected fourth-quarter revenue below Wall Street expectations. The company expects sales between $264 million and $267 million, assuming no recovery in recycled commodity prices. Analysts estimate revenue of $274.2 million in the fourth quarter.

Scheduled Earnings Reports (Tuesday)

DR Horton, Hormel Foods, Tivo, Borders, American Eagle Outfitters, Dollar Tree, Fleetwood Enterprises, Chicos FAS, J. Crew Group, Zale Corp

Stocks in the News

Ford Motor Co (F) is exploring the sale of its five corporate jets. General Motors (GM) said it would sell two of its five jets.

Sanofi-Aventis (SNE) was upgraded to overweight from equal-weight by Morgan Stanley, and the broker lifted its price target by one euro to 50 euros.

Cooper Industries Ltd (CBE) expects fourth-quarter results below its previous outlook of 83 cents to 92 cents a share, excluding restructuring charges.

Target Corp (TGT) rejected proposals by Pershing Square, a hedge-fund firm run by activist investor Bill Ackman, regarding its real estate portfolio.

Ampal-American Israel Corp (AMPL), the Tel Aviv holding company focused on energy and related fields, said it would buy back as much as $20 million of its Class A shares.

LandAmerica Financial (LFG) traded lower after Fidelity National Financial (FNF) ended its definitive agreement to acquire LandAmerica.