JDfn Daily Digest - November 3, 2008
The Institute for Supply Management reported that the nation's manufacturers continued to cut back production sharply in October for the second straight month. The ISM index fell to 38.9% in October from 43.5% in September. This is the lowest level since September 1982. The consensus forecast of estimates was for the index to fall to 41.5% as all regional manufacturing surveys were weak in October.
Construction spending dropped by 0.3 percent in September, less than the 0.8 percent decline many economists had been expecting. The Commerce Department said that construction spending increased by 0.3 percent in August following a huge 2.4 percent plunge in July.
A survey of top economists shows that the vast majority of them believe the economy has fallen into a recession that will continue throughout all of 2009. According to the National Association of Business Economists, 90% of the 102 members responding were more pessimistic about the economy than they had been in July.
The European Commission forecast that their economy in the 15 countries that use the euro may already be in a recession and will barely grow next year, expanding just 0.1 percent as the financial crisis hits hard.
Meantime, the China Federation of Logistics and Purchasing said China's manufacturing activity slowed sharply in October amid weaker export demand despite a flurry of official measures to boost flagging growth in the world's fourth-largest economy.
The Wall Street Journal reported that as many as 1,800 publicly held institutions could apply for U.S. government investment in coming weeks. The government's $700 billion rescue plan, known as the Troubled Asset Relief Program (TARP), has earmarked about $250 billion to recapitalize the troubled banking sector and spur lending.
OPEC oil supply fell in October for a second consecutive month as Saudi Arabia and Iran trimmed production and maintenance curbed supply in the United Arab Emirates. Supply from OPEC fell to 32.23 million barrels per day in October from 32.34 million barrels per day in September.
The head of BP says the era of cheap energy is over, echoing suggestions from other Big Oil executives that the steep drop in prices may not last long term. BP Chief Executive Tony Hayward told an oil conference in the United Arab Emirates that growing global population and rapid industrialization in countries in China and India will continue to drive demand for oil.
Circuit City (CC) says it's closing about 20 percent of its U.S. stores in an effort to return the nation's second-largest consumer electronics retailer to profitability. The company said it will close 155 of its more than 700 stores in 12 markets by Dec. 31st, laying off thousands of employees.
Boeing Co. (BA) production workers began returning last night to the factories where they build jetliners, one day after they voted to end a costly eight-week strike that clipped profits and stalled deliveries by the world's second largest commercial airplane maker.
PepsiCo Inc. (PEP) said it will invest $1 billion in China over the next four years to expand its manufacturing capability, research and development and sales force in the country. The company will expand local research and development facilities, build the sales force and fund brand-building and new product initiatives.
Lloyds (LYG) is going ahead with its government-backed takeover of rival HBOS as both published third-quarter earnings statements revealing steep declines in profit. Both companies said merging would shore up their balance sheets, reduce their costs and increase their profits.
Scheduled U.S. Economic Reports (Tuesday)
Retail Chain Index (Week of Oct 31st), Factory Orders (Sep)
In Earnings News
Sysco Corp (SYS), a food distributor, said fiscal first-quarter net income rose 4% to $276.8 million, or 46 cents a share, with sales up 5% to $9.88 billion. Analysts expected earnings of 47 cents a share.
Administaff Inc. (ASF) said its third-quarter profit slipped 1.9 percent on higher tax rates. The human resources services provider earned $11.9 million, compared to $12.2 million in the same period a year ago. Analysts polled by Thomson Reuters expected earnings of 45 cents per share.
Oshkosh Corp. (OSK), which makes specialty trucks, said its fiscal fourth-quarter profit dropped 37 percent. Oshkosh earned $53.6 million, or 72 cents per share. Analysts expected 67 cents a share.
PMI Group Inc. (PMI) said its third-quarter loss widened as claims payments and loss reserves grew, and new business declined. PMI Group lost $229.4 million, or $2.81 per share, during the quarter. Analysts forecast a loss of $2.43 per share.
DaVita Inc. (DVA) reported its third-quarter profit fell slightly on higher costs, but the results matched Wall Street expectations. The company earned $93.9 million, or 89 cents per share. Its earnings matched Wall Street's expectations.
American Tower Corp. (AMT), which owns wireless communication towers, said its third-quarter profit rose 2 percent on tower revenue growth. Earnings increased to $60.5 million, or 15 cents per share, compared with $59.6 million, or 14 cents per share, a year earlier. Analysts expected net income of 14 cents per share.
Scheduled Earnings Reports (Tuesday)
Bridgestone, LoJack, Dean Foods, Archer Daniels Midland, Papa Johns Pizza, Marvel Entertainment, Tenet Healthcare, Hecla Mining, Kaiser Aluminum
Stocks in the News
Citigroup (C) reported third-quarter losses from credit-card securitizations of $1.4 billion and expects the losses to continue.
Delta Air Lines (DAL) named Steve Gorman executive vice president and chief operating officer and Hank Halter senior vice president and chief financial officer.
Chevron Corp (CVX) said that its Chevron Africa subsidiary agreed to sell its holdings in Chevron Kenya and Chevron Uganda to Total Outre Mer SA.
Wal-Mart Stores (WMT) was upgraded to overweight from neutral by J.P. Morgan.
Pacific Mercantile Bancorp (PMBC) added $2 million to its share-buyback plans.
Goodyear Tire & Rubber (GT) third-quarter earnings were $31 million, or 13 cents a share.
Bayer (BAYRY) traded higher after Societe Generale raised its rating on the German drug maker to hold from sell, saying recession fears are now fully priced in.
Franklin Bank Corp (FBTX) said it is in talks regarding several proposals it has received to strengthen the subsidiary's capital position.
DryShips Inc (DRYS) third-quarter net income rose to $180 million, or $4.21 a share.
Alvarion Ltd (ALVR) reported third-quarter net income rose 29% on 23% higher revenue.
Central Virginia Bankshares (CVBK) reported a third-quarter net loss from a year-earlier profit and cut its quarterly dividend 42%.
K-Tron International (KTII) third-quarter net income rose to $6.8 million, or $2.34 a share.
Construction spending dropped by 0.3 percent in September, less than the 0.8 percent decline many economists had been expecting. The Commerce Department said that construction spending increased by 0.3 percent in August following a huge 2.4 percent plunge in July.
A survey of top economists shows that the vast majority of them believe the economy has fallen into a recession that will continue throughout all of 2009. According to the National Association of Business Economists, 90% of the 102 members responding were more pessimistic about the economy than they had been in July.
The European Commission forecast that their economy in the 15 countries that use the euro may already be in a recession and will barely grow next year, expanding just 0.1 percent as the financial crisis hits hard.
Meantime, the China Federation of Logistics and Purchasing said China's manufacturing activity slowed sharply in October amid weaker export demand despite a flurry of official measures to boost flagging growth in the world's fourth-largest economy.
The Wall Street Journal reported that as many as 1,800 publicly held institutions could apply for U.S. government investment in coming weeks. The government's $700 billion rescue plan, known as the Troubled Asset Relief Program (TARP), has earmarked about $250 billion to recapitalize the troubled banking sector and spur lending.
OPEC oil supply fell in October for a second consecutive month as Saudi Arabia and Iran trimmed production and maintenance curbed supply in the United Arab Emirates. Supply from OPEC fell to 32.23 million barrels per day in October from 32.34 million barrels per day in September.
The head of BP says the era of cheap energy is over, echoing suggestions from other Big Oil executives that the steep drop in prices may not last long term. BP Chief Executive Tony Hayward told an oil conference in the United Arab Emirates that growing global population and rapid industrialization in countries in China and India will continue to drive demand for oil.
Circuit City (CC) says it's closing about 20 percent of its U.S. stores in an effort to return the nation's second-largest consumer electronics retailer to profitability. The company said it will close 155 of its more than 700 stores in 12 markets by Dec. 31st, laying off thousands of employees.
Boeing Co. (BA) production workers began returning last night to the factories where they build jetliners, one day after they voted to end a costly eight-week strike that clipped profits and stalled deliveries by the world's second largest commercial airplane maker.
PepsiCo Inc. (PEP) said it will invest $1 billion in China over the next four years to expand its manufacturing capability, research and development and sales force in the country. The company will expand local research and development facilities, build the sales force and fund brand-building and new product initiatives.
Lloyds (LYG) is going ahead with its government-backed takeover of rival HBOS as both published third-quarter earnings statements revealing steep declines in profit. Both companies said merging would shore up their balance sheets, reduce their costs and increase their profits.
Scheduled U.S. Economic Reports (Tuesday)
Retail Chain Index (Week of Oct 31st), Factory Orders (Sep)
In Earnings News
Sysco Corp (SYS), a food distributor, said fiscal first-quarter net income rose 4% to $276.8 million, or 46 cents a share, with sales up 5% to $9.88 billion. Analysts expected earnings of 47 cents a share.
Administaff Inc. (ASF) said its third-quarter profit slipped 1.9 percent on higher tax rates. The human resources services provider earned $11.9 million, compared to $12.2 million in the same period a year ago. Analysts polled by Thomson Reuters expected earnings of 45 cents per share.
Oshkosh Corp. (OSK), which makes specialty trucks, said its fiscal fourth-quarter profit dropped 37 percent. Oshkosh earned $53.6 million, or 72 cents per share. Analysts expected 67 cents a share.
PMI Group Inc. (PMI) said its third-quarter loss widened as claims payments and loss reserves grew, and new business declined. PMI Group lost $229.4 million, or $2.81 per share, during the quarter. Analysts forecast a loss of $2.43 per share.
DaVita Inc. (DVA) reported its third-quarter profit fell slightly on higher costs, but the results matched Wall Street expectations. The company earned $93.9 million, or 89 cents per share. Its earnings matched Wall Street's expectations.
American Tower Corp. (AMT), which owns wireless communication towers, said its third-quarter profit rose 2 percent on tower revenue growth. Earnings increased to $60.5 million, or 15 cents per share, compared with $59.6 million, or 14 cents per share, a year earlier. Analysts expected net income of 14 cents per share.
Scheduled Earnings Reports (Tuesday)
Bridgestone, LoJack, Dean Foods, Archer Daniels Midland, Papa Johns Pizza, Marvel Entertainment, Tenet Healthcare, Hecla Mining, Kaiser Aluminum
Stocks in the News
Citigroup (C) reported third-quarter losses from credit-card securitizations of $1.4 billion and expects the losses to continue.
Delta Air Lines (DAL) named Steve Gorman executive vice president and chief operating officer and Hank Halter senior vice president and chief financial officer.
Chevron Corp (CVX) said that its Chevron Africa subsidiary agreed to sell its holdings in Chevron Kenya and Chevron Uganda to Total Outre Mer SA.
Wal-Mart Stores (WMT) was upgraded to overweight from neutral by J.P. Morgan.
Pacific Mercantile Bancorp (PMBC) added $2 million to its share-buyback plans.
Goodyear Tire & Rubber (GT) third-quarter earnings were $31 million, or 13 cents a share.
Bayer (BAYRY) traded higher after Societe Generale raised its rating on the German drug maker to hold from sell, saying recession fears are now fully priced in.
Franklin Bank Corp (FBTX) said it is in talks regarding several proposals it has received to strengthen the subsidiary's capital position.
DryShips Inc (DRYS) third-quarter net income rose to $180 million, or $4.21 a share.
Alvarion Ltd (ALVR) reported third-quarter net income rose 29% on 23% higher revenue.
Central Virginia Bankshares (CVBK) reported a third-quarter net loss from a year-earlier profit and cut its quarterly dividend 42%.
K-Tron International (KTII) third-quarter net income rose to $6.8 million, or $2.34 a share.
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