Wall Street Breakfast: Must-Know News

• Geithner, Obama wait for Senate stimulus. Obama has postponed unveiling his financial recovery plan until tomorrow to allow Congress to give its full attention to the stimulus debate today. Obama stressed the importance of rapid passage in the Senate, and then rapid merger between the House and Senate versions of the bill. Economic adviser Lawrence Summers added "ninety percent of these bills are essentially overlapping" and urged lawmakers not to focus on "the bit of difference." Senate Democrats expressed confidence they can push for a vote on the amended $827B stimulus bill, and will likely do so today. Tomorrow, Treasury's Geithner will announce the administration's plans for the second half of TARP funds, plans that are expected to include efforts to draw private investment back into the economy, as well as help for homeowners.
• No sun at Nissan. Hurting from slumping demand and a strengthening Yen, Nissan (NSANY) said it will cut 20,000 jobs, or 9% of its workforce, will cut production and will post its first loss in nine years. It also eliminated its H2 dividend, may shorten its work week to four days and is seeking a U.S. federal loan under a program for fuel-efficient autos. The company is forecasting a net loss of ¥265B ($2.91B) for the fiscal year ending March 31, compared with earlier forecasts for a ¥160B net income. Sales in the U.S., Nissan's biggest market, fell 31% in January, as CEO Carlos Ghosn warned "our worst assumptions on the state of the global economy have been met or exceeded." He cited declining consumer confidence and tight credit as "the most damaging factors." Shares closed -5.8% in Japan.
• Forced bankruptcy possible for GM, Chrysler. The U.S. government has hired a law firm with bankruptcy expertise to provide advice on how to restructure General Motors (GM) and Chrysler. The two carmakers may have to be forced into bankruptcy to assure repayment of $17.4B in government loans, as U.S. taxpayers currently take a back seat to prior creditors including Citigroup (C), JPMorgan Chase (JPM) and Goldman Sachs (GS). Federal officials are working to change their place in line for repayment, but failing to do so, could make bankruptcy a requirement of any additional aid.
• Mortgage rescues on the way? Sources say the Obama administration is creating a mortgage-rescue program that would have Fannie Mae (FNM) and Freddie Mac (FRE) ease payments for hundreds of thousands of borrowers, creating a model for Wall Street firms to replicate. Officials were working with Fannie and Freddie to agree on standards for who would be eligible for relief and how to get other companies to follow suit with similar plans. Industry sources say efforts thus far by Fannie and Freddie to rewrite home loans have been a disappointment, while officials in Obama's administration believe as many as 1.5M people could remain in their homes this year if their loans were modified.
• Barclays beats consensus. Barclays' (BCS) H2 profit rose by more than analysts expected, buoyed by one-off gains from the purchase of Lehman assets and the sale of an insurance unit. Net income rose to £2.66B ($3.9B), up 49% from the year before, vs. analyst estimates of £2.05B. For the full year, net income declined less than 1% to £4.38B. Barclays will scrap 2008's final dividend to help the bank meet new capital requirements in the U.K. The bank reported its results more than a week ahead of schedule in an attempt to clamp down on losses speculation that has pushed down the company's share price. Shares +9.5% premarket (7:00 ET).
• Swiss banks set for heavy losses. According to Swiss media reports, UBS (UBS) and Credit Suisse (CS) will post massive 2008 losses of 21B Swiss francs ($18B) and 8B Swiss francs ($6.9B). UBS is expected to announce the loss tomorrow, and if reports are correct it will mark the largest loss in Swiss history. UBS will also announce 5,000-8,000 new job cuts in addition to the 9,000 cuts already planned. Credit Suisse will announce its annual results on Wednesday.
• Rio loses its director. Rio Tinto (RTP) director Jim Leng has quit and will not become chairman as previously planned after objecting to a deal with top shareholder Chinalco (ACH). Leng disagreed with how to cut Rio's heavy debt load of around $39B, after the company held talks last week with Chinalco about selling it convertible notes and stakes in some assets. Leng was named as Rio's next chairman less than a month ago. Rio shares -6.9% premarket (7:00 ET).
• Using the D-word. The world's advanced economies are "already in depression," at least according to IMF chief Dominique Strauss-Kahn. The "worst cannot be ruled out," he said, adding that the IMF could further cut its global growth forecasts. Strauss-Kahn's remarks are markedly more pessimistic than IMF forecasts released as recently as Jan. 28.

Earnings: Monday Before Open

• AGCO (AG): Q4 EPS of $1.08 beats by $0.07. Revenue of $2.16B (-0.6%) vs. $2.36B. (PR)
• Alexandria Real Estate Equities (ARE): Q4 EPS of $1.55 in-line. Revenue of $127M (+17.6%) vs. $114M. (PR)
• Beazer (BZH): FQ1 EPS of -$2.08 misses by $0.25. Revenue of $232.4M (-53.6%) vs. $273.1M. (PR)
• Energy Conversion Devices (ENER): FQ2 EPS of $0.33 beats by $0.02. Revenue of $103M (+82.8%) vs. $102M. (PR)
• Hasbro (HAS): Q4 EPS of $0.62 misses by $0.13. Revenue of $1.23B (-5.1%) vs. $1.27B. (PR)
• Hewitt Associates (HEW): FQ1 EPS of $0.68 beats by $0.08. Revenue of $771M (-2.9%) vs. $807M. (PR)
• Loews (L): Q4 loss of $958M ($2.20/share) including $754M in writedowns on its HighMount Exploration business and a $283M loss on its 90% stake in CNA Financial (CNA). Revenue fell 23% to $2.74B. (PR)
• NYSE Euronext (NYX): Q4 EPS of $0.52 misses by $0.03. Revenue of $1.2B (+20.8%) in-line. (PR)
• Rohm and Haas Company (ROH): Q4 EPS of $0.67 beats by $0.02. Revenue of $2.0B (-13.4%) vs. $2.3B. (PR)
• Sohu.com (SOHU): Q4 EPS of $1.35 beats by $0.19. Revenue of $121.6M (+86.2%) vs. $121M. (PR)
• Whirlpool (WHR): Q4 EPS of $0.60 misses by $0.18. Revenue of $4.3B (-19.0%) vs. $4.9B. (PR)
• W.R. Berkley (WRB): Q4 EPS of $0.62 misses by $0.16. Revenue of $1.1B (-22.9%) vs. $1.2B. (PR)

Today's Markets

• Asia markets closed mostly up. Nikkei -1.3% to 7,969. Hang Seng +0.8% to 13,769. Shanghai +2.0% to 2,225. BSE +3.0% to 9,584.
• In Europe at midday, London +1.15%. Paris -0.2%. Frankfurt -0.1%.
• U.S. futures: Dow -0.7%. S&P -0.8%. Nasdaq -0.4%. Crude +0.4% to $40.33. Gold -1.1% to $904.40.

Monday's Economic Calendar

• 8:45 Fed's Fisher speaks about the global financial crisis
  8:00 PM Obama speaks about his economic recovery plan
• Notable earnings before Monday's open: AG, ARE, BZH, ENER, HAS, HEW, LO, NYX, ROH, SOHU, WHR, WRB
• Notable earnings after Monday's close: AXS, CPT, CRK, CRL, CUZ, GNW, LNC, NUAN, PEG, PLD, PPDI, TWTC, UDR, VMC

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.

Comments

[AndrewBaker:]

Why the delay? Uncertainty doesn't make for optimism. We've a bankrupt financial system and have little choice but to bail it out with tax dollars, whipping the financiers who put us here as much as possible to make us feel just a little better. At the same time we have to trust our politicians to do the job, which is also not adding to the feel-good factor: and at the end of it, we pretty much know it'll get worse. So, let's get the proposed deal out as quickly as possible, so we can see how much more it's gonna cost us and then we an get on with dealing with the bad. The sooner we do, the sooner we can get through.

Feb 09 08:50 AM

[JasonR:]

Apparently this Dominique feller hasn't tried finding a parking spot at the mall... at least in the boring mid-sized markets, it doesn't seem all that bad.

Feb 09 10:41 AM

[axelrod608:]

JasonR - While the mall parking lots are full, perhaps you haven't seen the customers' shopping carts. They are NOT full. There are a lot of people "shopping the sales" and looking for this or that specific bargain.

It's a lot like the economy in general - it's the same, but it's different. If you REALLY want to see what's happening go talk to the good folks who prepare and serve free meals in the nation's churches and NGO's. They will give you an earful of the increase in demand and the decrease in food contributions. Many have double the diners.

Looking at the malls for evidence of financial hardship is like looking for poverty on Wall Street.

Feb 09 11:58 AM

[axelrod608:]

Ominous overtones to the breakfast menu this morning. It appears that the true nature of the US automakers is finally sinking in. The Chinese who've invested heavily everywhere are getting more aggressive in their demands to safeguard their investments - Rio can ill afford to lose Leng. The usually conservative Swiss banks are hemmoraging along with the rest. And the federales want to stuff mortgage losses down the throats of already weakened financials that desperately need the earnings to stay afloat.

Ben Franklin ( I believe) said, "A stitch in time saves nine". Oh how we wish our Congress and regulators weren't all asleep at the controls while this mess was brewing.

And Oh how we wish they'd fix the holes before pouring in more money. The talking heads all keep saying we need more confidence. And I agree. But just how confident can we be in a system unchanged from how it got here and the folks in charge wanting to throw money around recklessly rather than analyze the problem and fix it first ?

Feb 09 12:15 PM

[JasonR:]

I figure as long as we have money for stuff on sale and we still have restaurants giving away their leftovers to the soup kitchens, and the lines there are only twice as long as normal, then we aren't so bad off. The IMF should call it a recession, which it is. I don't understand droppin' the "d-word." Has nobody seen pictures of the bread lines during the Depression? Like I said... people are out shopping. We're not standing for hours in line for some bread.

Feb 09 04:30 PM

[bbowen7:]

Come on JasonR. This is the worst since Jimmy Carter.

Feb 09 05:17 PM

[Joseph Sherman:]

D-Word: advanced economies are "already in depression," according to IMF chief Dominique Strauss-Kahn.

Economists are like physicians for the economy. When the health of the economy has severely deteriorated, an honest look at the situation with real, even painful solutions may be needed for recovery.

Feb 09 05:46 PM