Wall Street Breakfast: Must-Know News 10 comments
an article to
-
Font Size:
-
Print
- TweetThis
- TARP loses TA, gets new focus. Treasury's Henry Paulson officially abandoned plans to buy troubled assets through the Troubled Assets Relief Program. Instead, the government will continue to pump money directly into financial institutions. Paulson said the program will also begin to focus on consumer credit by trying to increase the availability of student loans, auto loans and credit cards, and will examine ways to prevent foreclosures. The shake-up underscored the breadth of the U.S. economy's problems, and threw markets 'into a tizzy,' as U.S. indices closed strongly down on Wednesday and Asian markets opened in the red Thursday morning. Paulson remained unapologetic about switching focus, saying facts had changed and that an asset purchase plan would have taken too long and been insufficient to calm markets.
- GM searches for bailout, buyers. Desperately waiting for a federal bailout, General Motors (GM) is having a tough time selling $4B in assets after warning it may run out of operating cash. All divisions for sale would rely on GM as a partner post-sale, and potential buyers are concerned units like the Hummer SUV brand will lose value if GM fails. Even in the case of a bailout, GM may only be able to unload these assets at fire-sale prices. The sales are a central part of GM's plans to boost cash by up to $20B by the end of 2009, but 'there probably isn't a much more difficult environment in which GM could try to make these sales.'
- Showdown over Big Three bailout. Democrats in Congress are pushing forward with a proposal to rescue failing automakers, despite expected resistance from Republicans and the White House. Much of the debate hinges on whether automakers will be 'viable' after receiving aid or if the government will just be pouring money into a failing industry in need of serious restructuring and reform. In the case of General Motors (GM), some experts believe a painful bankruptcy would be better than a government bailout because a bailout would only delay the necessary steps GM needs to take to become a stronger, leaner and viable company. Treasury's Paulson remains firmly against assistance to automakers using existing bailout funds, calling the auto industry important but insisting TARP is not the right facility to help those institutions. President-elect Obama, who had broad support from labor unions during his campaign, came out strongly in favor of a bailout.
- GE gets liquid. General Electric (GE) received temporary FDIC backing for up to $139B of debt from its financing arm. Inclusion in the FDIC temporary liquidity guarantee program is 'part of a very clear plan' that will allow GE to source its debt competitively, said a GE spokesman, and will level the playing field with other issuers. GE's credit arm has been hit hard by the credit crunch, and the company has taken several steps to improve its liquidity. The cost of insuring GE's debt fell after the announcement.
- Citigroup chases Chevy Chase Bank. Earlier this week, Citigroup (C) was reported to be in advanced talks with an unnamed regional bank. Sources now say the mystery target is Chevy Chase Bank, which has over 285 branches and operates in the mid-Atlantic region. Chevy is reportedly in talks with other bidders as well, and spokesmen from both Citigroup and Chevy Chase refused to comment. Citigroup's board is becoming increasingly dissatisfied with the company's financial performance, sources say, and is considering replacing Sir Win Bischoff as chariman.
- BHP undaunted by antitrust requirements. BHP Billiton (BHP) is determined to push ahead with its hostile takeover bid for Rio Tinto (RTP), despite antitrust concerns. As such, the company is considering various concessions, including selling billions of dollars in mining assets or spinning off key iron-ore operations, as it prepares a formal response to objections laid out by EU regulators. Analysts estimate BHP could spin off as much as $12B worth of assets, and both Anglo American (AAUK) and Xstrata (XSRAF.PK) have indicated they may be interested in any such sale. EU approval is the last major obstacle for BHP before it can take its deal directly to Rio shareholders.
- CDS probe looks at matchmakers. The office of NY AG Andrew Cuomo is probing possible manipulation in the largely unregulated world of credit-default swap trading. In focus are interdealer brokers - the middlemen who match buyers and sellers in CDS trades. Meanwhile the SEC is also conducting separate inquiries into the market. Regulators suspect market players may have spread false rumors to manipulate CDS prices.
- Wal-Mart: Bring on the recession. Net sales at the world's largest discount retailer, Wal-Mart (WMT), increased 7.5% as cash-strapped consumers went value shopping (see results below). International sales outshone domestic, with sales growth of 11.2% vs. 6.1% in the U.S. Comparable-store sales were up 2.7%; looking ahead CFO Tom Schoewe predicted comps growth of 1-3% in Q4. While economists forecast a grim holiday season for most retailers, Wal-Mart (WMT) has managed to thrive; its shares are up 10.7% YTD vs. a 43% drop in the Consumer Discretionary ETF (XLY). America's Research Group says U.S. holiday retail sales will fall 1% this year - the first time ARG has forecast a decline in almost a quarter century of surveys. While 40% plan to spend less, an unbelievable 92.9% say they'll shop at Wal-Mart.
- Anheuser gives the OK. Anheuser-Busch (BUD) shareholders overwhelmingly approved a proposed $52B takeover by rival InBev (INBVF.PK). Over 95% of Anheuser shareholders voted in favor of the bid which would create the world's largest brewer. Antitrust regulators in the U.S., U.K. and China still have to approve the deal, which the two companies hope to complete by the end of the year. The new company will be called Anheuser-Busch InBev and will have over $36B in annual revenue.
- OECD revises down. For the second time this year, the OECD cut its global growth forecast for 2009. The OECD now predicts its 30 member countries will expand 1.4% this year and contract 0.3% in 2009, down from forecasts of 1.8% growth in 2008 and 1.7% growth in 2009. The U.S. is leading the slowdown, and is forecast to contract 0.9% next year. The organization called on governments to take additional stimulus measures to fight a global recession.
- Foreclosures keep coming. Nearly 280,000 U.S. homes received a foreclosure filing in October, RealtyTrac reported, even as laws aimed at helping property owners slowed the rate of defaults. Filings rose 5% from September and were up 25% from the year before, still better than average monthly gains of around 50% this year. RealtyTrac CEO James Saccacio warned the slowdown could be misleading, as "the net effect may be merely delaying inevitable foreclosures."
- Mortgage apps rise. Mortgage applications rose by 11.9% this week after falling 20.3% the previous week, MBA said. 30-year fixed mortgage rates fell by 23 BPs to 6.24%.
- Germany, meet recession. German GDP fell 0.5% in Q3 after dropping 0.4% in Q2 - worse than the 0.2% decrease expected by economists. The two-quarter decline pushes Germany into an official recession, its first since 1996. "The German recession has begun in earnest and it's very serious," Bank of America economist Holger Schmielding said, adding the worse-than-expected contraction will lead to reduced forecasts for the entire eurozone. The report sent the euro down more than a penny to $1.2388.
Earnings: Thursday Before Open
- Dr Pepper Snapple (DPS): Q3 EPS of $0.45 misses by $0.06. Revenue of $1.5B (-2%) in-line. Sees full-year EPS of $1.83-1.86 vs. $1.95. (PR)
- Fortress Investment Group (FIG): Q3 EPS of -$0.04 misses by $0.14. Revenue of $185M (-21.5%) vs. $165M. (PR)
- Siemens (SI): FQ4 EPS of €2.17 vs. consensus of €1.07. Revenue of €21.65B vs. €21.33B. Takes a €3B restructuring charge, and a €1B provision for the settlement of bribery charges. Shares -6% premarket. (PR)
- Urban Outfitters (URBN): Q3 EPS of $0.35 in-line. Revenue of $478M (+26%) in-line. (PR)
- Wal-Mart (WMT): Q3 EPS of $0.77 beats by $0.01. Revenue of $97.63B (+7.5%) vs. $98.26B. Sees Q4 EPS of $1.03-1.07 vs. $1.11. Says sudden changes in currency rates reduced EPS by $0.06. (PR)
Earnings: Wednesday After Close
- Applied Materials (AMAT): FQ4 EPS of $0.18 beats by $0.04. Revenue of $2.04B (-13.6%) vs. $1.94B. Shares -0.6%. (PR)
- Computer Sciences (CSC): FQ2 EPS of $0.72 misses by $0.04. Revenue of $4.24B (+5.5%) in-line. Sees FQ3 EPS of $1.00-1.10 vs. $1.13 and revenue of $4.1-4.2B vs. $4.27B. Shares +0.5%. (PR)
- Crocs (CROX): Q3 EPS of -$1.79 vs. consensus of $0.02. Revenue of $174M (-32%) vs. $202M. Shares -34%. (PR)
- Intel (INTC): Lowers Q4 revenue outlook to $8.7-9.3B vs. $10.4B due to "weaker than expected demand in all geographies and market segments." Reduces gross margin expectation to 55% from 59%. Shares -8.8%. (PR)
- NetApp (NTAP): FQ2 EPS of $0.28 beats by $0.01. Revenue of $912M (+15.2%) vs. $905M. Shares +2.1%. (PR)
- Netease.com (NTES): Q3 EPS of $0.36 misses by $0.02. Revenue of $119M (+41.3%) vs. $109M. Shares -4.3%. (PR)
- Sina (SINA): Q3 EPS of $0.44 beats by $0.03. Revenue of $105M (+63.9%) vs. $103M. (PR)
Today's Markets
- Asia markets closed mostly down. Nikkei -5.2% to 8,239. Hang Seng -5.1% to 13,221. Shanghai +3.7% to 1,928. Kospi -3.1% to 1,088.
- In Europe at midday, London -1.9%. Paris -0.2%. Frankfurt -0.9%.
- U.S. futures: Dow -0.3%. S&P -0.3%. Nasdaq -1.3%. Crude -0.2% to $56.05. Gold -0.6% to $713.70.
Thursday's Economic Calendar
- 7:00 MBA Mortgage Applications
8:30 International Trade
8:30 Jobless Claims
9:00 RBC CASH Index
10:35 EIA Petroleum Status
12:30 PM Fed's Charles Plosser speaks on regulatory reform
2:00 PM Treasury Budget
4:30 PM Money Supply - Notable earnings before Thursday's open: MPEL, PAAS, SI, URBN, WMT
- Notable earnings after Thursday's close: CLNE, JWN, KSS
Seeking Alpha editor Eli Hoffmann contributed to this post.
Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.
After you finish reading Wall Street BreakfastSeeking Alpha's Market Currentswill keep you current all day long.
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
David Fry
-
2
TraderMark
-
3
Don Dion
-
4
Cliff Wachtel
-
5
Mike Havrilla
Top Instabloggers » -
1
-
Top StockTalkers
Top
StockTalkers.-
1
David Fry
-
2
Cliff Wachtel
-
3
Mike Havrilla
-
4
David White
-
5
Hedged In
Top StockTalkers » -
1
[1] Rescind SARBANES/OXLEY;
[2] Reverse Mark-to-Market Accounting;
[3] SEC to reinstitute UPTICK RULE;
[4] NAKED SHORTING made ILLEGAL & prosecuted;
[5] CONDITIONS placed on all BAILOUT MONEYS TO ACCOMPLISH DESIRED RESULT IN ECONOMY;
[6] Paulson changed the TARP "completely" by saying, "I DECIDED"!!!!
One has only to wonder WHY, and WHO IS REALLY IN CONTROL of US?
Problem is the banks are sitting on whatever cash they can get, buying T bills yielding .25 %. Buying their junk doesn't help.
On Nov 13 08:36 AM eddie64 wrote:
> What the government "still" hasn't done, all of which will help our
> financial system "tremendously&...
> [1] Rescind SARBANES/OXLEY;
> [2] Reverse Mark-to-Market Accounting;
> [3] SEC to reinstitute UPTICK RULE;
> [4] NAKED SHORTING made ILLEGAL & prosecuted;
> [5] CONDITIONS placed on all BAILOUT MONEYS TO ACCOMPLISH DESIRED
> RESULT IN ECONOMY;
> [6] Paulson changed the TARP "completely" by saying, "I DECIDED"!!!!
>
>
> One has only to wonder WHY, and WHO IS REALLY IN CONTROL of US?
>
Eddie;
You have some great points to ponder but, where did you pick up on who might be attempting to lead. There aint anyone.
It has been learned that upon President-elect Obama's Inaugural ball
he will not be dressing in a suit but will be donning his new outfit
for the next four years. The out fit will be of a special protective
spandex material and will proudly display a large golden O standing for Obama, Oprha, or simply, Opps. It will be comprised of the colors red and black, will have
special booties that can scale anything and a long cape that will
facilitate him flying all over the world in mere seconds. Da, da, da, daaaaa, da, da, da, da, daaaa, da, da, da, da, daaaa, da, da...
In reality, the kindest, most effective thing that one can do for an insolvent company is put it into bankruptcy. There a court appointed conservator takes over the operations and the fools that ran the company into the ground get to go golfing ( unfortunately for US, the fools that ran 'em into the ground are Paulson's buddies, who he is treating especially well)
In bankruptcy the assets get bought up by lean, mean capitalists who get the company back to work less the enormous debt burden. Look at Lehman - they were back in business with 10,000 workers back on the job in days.
Put all the insolvents where they belong - in bankruptcy. Yes, the losses will be huge. Yes, it will hurt all Americans. But it will allow a fresh start. And that's a lot better than a decade or two of muddling through.
Losses the size of what Wall St and the automakers have CANNOT be worked out. Why try ? It is just a waste of time, money and effort.
1. the UAW which delivered Michigan;
2. the environmentalists who want to force Detroit to develop better cars.
The specific path is TBD - but it will cost you and me a bundle.