Wall Street Breakfast: Must-Know News

• The new New Deal. The House and the Senate have drafted a compromise stimulus bill totalling $789.5B, all but guaranteeing the largest economic rescue program since Roosevelt's New Deal. Obama hailed the "endeavor of enormous scope and scale," though it may turn out to be just a down payment on efforts to turn around the economy. The package, which exceeds the cost of the entire Iraq war since the 2003 invasion, will expand unemployment insurance, streamline health-care delivery, give Washington more control over local education spending and tilt federal assistance to the poor. Around 35% of the package is earmarked for tax cuts. Obama and Democratic leaders lowered their expectations for job creation to 3.5M from 4M. Both chambers could approve the compromise bill by the end of the week.
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• Rio rides wave of Chinalco investment. Chinalco (ACH) will invest $19.5B in Rio Tinto (RTP), spending $12.3B on stakes of up to 50% in nine of Rio's mining assets and another $7.2B on convertible bonds. The deal will secure resource supplies for China and will help Rio cut a heavy debt load, but will also raise regulatory scrutiny as the Australian government is anxious to ensure investments from foreign state-owned entities don't come with political or strategic agendas. One of the largest overseas investments by a Chinese company, the deal will potentially double Chinalco's stake in Rio to 18%. Rio strongly denied claims that it's selling out its independence to China, and still needs regulatory and shareholder approval for the deal. RTP -0.4% in London, ACH +5.6% in Shanghai (7:00 ET).
• Slap on the wrist for bank chiefs. Eight bank CEOs (GS, JPM, BK, BAC, STT, MS, C, WFC) sat through a drawn-out Congressional hearing yesterday in which they were showered with populist outrage by many of the Representatives in the room. The chiefs were scolded for spending money unwisely, and were grilled about their TARP spending. They were also asked by a show of hands to indicate how many owned private jets. Unfortunately for U.S. taxpayers, the session was more focused on political grandstanding ("America doesn't trust you anymore") than on actually trying to ask hard questions and get truthful answers. The upshot for homeowners was the agreement to a temporary moratorium on foreclosures. (Read Deal Journal's Heidi Moore's witty liveblog of the grilling/hearing.)
• GM pays workers to leave. In its latest cost-cutting move, General Motors (GM) is offering retirement incentives to 22,000 of its 62,000 UAW union members, and would like to see half of them take the offer. Coming in at far less than previous buyout offers, GM has offered certain workers who choose to retire $20,000 in cash and a $25,000 voucher towards a car purchase. To raise cash, sources say GM is also in talks with China's SAIC Motor Corp. about possibly selling GM's stake in their joint venture or other assets. In a bit of good news for the struggling company, the compromise stimulus bill drafted by Congress would erase a tax liability of up to $10B that would have resulted from GM's restructuring efforts.
• NY AG slams Merrill bonuses. New York Attorney General Andrew Cuomo blasted Merrill Lynch for 'secretly' moving up the date of its bonus payments and providing rich executive rewards despite heavy losses. Cuomo had been trying to obtain information on Merrill's planned bonus payments since late October, and called the bank's lack of disclosure 'a surprising fit of corporate irresponsibility.' He also said the move raised some 'serious and disturbing questions,' including "whether Merrill Lynch and Bank of America (BAC) timed the bonuses in such a way as to force taxpayers to pay for them through the deal funding."
• Swiss Re loses its leader. Jacques Aigrain, CEO of Swiss Reinsurance (SWCEY.PK), has tendered his resignation as chief executive. He said faltering investor confidence in his leadership left him little choice but to resign, a move he felt would be in the best interest of the company after his tenure ended with major losses and falling share price. Swiss Re named Stefan Lippe as its new CEO. Lippe had been deputy CEO since 2008, and will take up his new role immediately. Shares +4.8% in Zurich (7:00 ET).
• Morgan, MUFG talk merger. Mitsubishi UFJ Financial Group (MTU) and Morgan Stanley (MS) denied media reports that they have agreed to merge their Japanese brokerage units, but concede they're in preliminary talks. The Nikkei newspaper had reported the two companies planned to merge their Japanese securities units by the end of the year. MTU -3.5% in Japan.
• Sirius seeks freedom with Liberty. Hovering on the edge of bankruptcy, Sirius XM Radio (SIRI) is in talks with Liberty Media Corp. (LINTA) in a last-ditch attempt to fend off an unsolicited takeover by satellite entrepreneur Charles Ergen. Ergen, who controls Dish Network Corp. (DISH) and EchoStar Corp. (SATS), made an unsolicited offer for Sirius late last year, and is trying to use $175M in bonds that mature Feb. 17 as leverage to force Sirius into a deal. Talks with Liberty are said to be in an advanced stage, but a deal is far from certain.
• Foreclosures slow dramatically. Foreclosure filings dropped 9.6% from December, RealtyTrac reports, largely due to the combined mitigation efforts of banks and the government - but remain 18% higher than a year ago. In January, one in every 466 houses was the subject of a foreclosure filing. Yesterday, Foreclosures.com said completed foreclosures plunged by more than 25% in January from December, to 72,694 from 97,841. Preforeclosure filings - an indicator of future completed foreclosures - also fell 12%. "Efforts last year by government and industry to lay the groundwork for housing recovery finally are yielding the hoped-for slowdown in the foreclosure hemorrhage," Foreclosure.com president Alexis McGee said.
• Mortgage apps fall. Mortgage applications slid 9.8% last week to an eight-year low, MBA said, as potential buyers held out for cheaper prices, better terms and government help. The rate on 30-year mortgages dropped to 5.19% from 5.28%. Mortgage originations in Q4 were 80% lower than a year ago, as commercial and multifamily lending slowed to a trickle. For all of 2008, originations fell 60% from 2007 levels.
• Trade deficit nears 6-year low. December's trade balance was -$39.9B vs. -$36B consensus, down from November's -$41.6B. Exports: $133.8B (-$8.5B). Imports: $173.7B (-$10.2B). The global market for U.S. goods shrank at a record pace, bringing the deficit to its lowest level in nearly 6 years.

Earnings: Thursday Before Open

• Aetna (AET): Q4 EPS of $0.96 beats by $0.02. Revenue of $8.0B (+11.5%) in-line. (PR)
• Alexion Pharmaceuticals (ALXN): Q4 EPS of $0.23 beats by $0.15. Revenue of $77.4M (+128.3%) vs. $76.6M. (PR)
• BorgWarner (BWA): Q4 EPS of $0.00 beats by $0.08. Revenue of $931M (-32.2%) vs. $1.04B. (PR)
• Coca-Cola (KO): Q4 EPS of $0.64 beats by $0.03. Revenue of $7.13B (-2.8%) vs. $7.52B. "While certainly not crisis proof, as no company is, I do believe our global business model is relatively resilient." (PR
• Ecolab (ECL): Q4 EPS of $0.45 in-line. Revenue of $1.5B (+3.0%) in-line. (PR)
• EnCana (ECA): Q4 EPS of $0.60 misses by $0.17. Revenue of $6.4B (+8.2%) vs. $5.1B. (PR)
• Foundation Coal (FCL): Q4 EPS of $0.89 beats by $0.39. Revenue of $456.5M (+24.3%) vs. $453.45M. (PR)
• Laboratory Corp. (LH): Q4 EPS of $1.10 beats by $0.01. Revenue of $1.1B (+11.3%) in-line. (PR)
• Life Technologies Corporation (LIFE): Q4 EPS of $0.83 beats by $0.29. Revenue of $544.9M (+62%) vs. $572.9M. (PR)
• Mack-Cali Realty (CLI): Q4 EPS of $1.00 beats by $0.13. Revenue of $186M (-7.7%) vs. $180M. (PR)
• Marriott International (MAR): Q4 EPS of $0.34 misses by $0.05. Revenue of $3.78B (-7.5%) vs. $3.86B. (PR)
• Nexen (NXY): Q4 EPS of -$0.35 misses by $0.66. Revenue of $1.7B (-8.1%) vs. $1.2B. (PR)
• NRG Energy (NRG): Q4 EPS of $0.98 beats by $0.57. Revenue of $1.655B (+19.8%) vs. $1.25B. (PR)
• Patterson-UTI Energy (PTEN): Q4 EPS of $0.64 beats by $0.09. Revenue of $570M (+9.4%) in-line. (PR)
• Potlatch (PCH): Q4 EPS of $0.14 misses by $0.08. Revenue of $93.6M. "We expect to experience continued weak market conditions well into 2009, and are taking steps to mitigate the losses." (PR)
• Progress Energy (PGN): Q4 EPS of $0.47 beats by $0.01. Revenue of $2.2B (-1.9%) vs. $2.35B. (PR)
• SCANA (SCG): Q4 EPS of $0.73 beats by $0.05. Revenue of $1.3B (+11%) in-line. (PR)
• Teradata (TDC): Q4 EPS of $0.45 beats by $0.08. Revenue of $493M (+5.8%) vs. $465M. (PR)
• Ventas (VTR): Q4 EPS of $0.66 in-line. Revenue of $234M (+2.7%) vs. $241M. (PR)
• Viacom (VIA.B): Q4 EPS of $0.76 misses by $0.01. Revenue of $4.2B (-0.1%) in-line. (PR)
• Waste Management (WMI): Q4 EPS of $0.49 beats by $0.01. Revenue of $3.1B (-7.5%) vs. $3.2B. (PR)

Earnings: Wednesday After Close

• Activision Blizzard (ATVI): Q4 EPS of $0.31 beats by $0.02. Revenue of $2.15B (+2.3%) vs. $2.15B. Sees Q1 EPS of $0.03 vs. $0.11 and revenue of $550M vs. $964M. Shares -2.3% AH. (PR, earnings call transcript)
• Alcon (ACL): Q4 EPS of $1.41 beats by $0.09. Revenue of $1.5B (+1.9%) in-line. Sees 2009 EPS of $6.05-6.25 vs. $6.28. (PR)
• Arris Group (ARRS): Q4 EPS of $0.25 in-line. Revenue of $292M (+17.1%) in-line. Sees Q1 EPS of $0.14-0.19 vs. $0.19 and revenue of $245-265M vs. $280M. Shares -1.2% AH. (PR, earnings call transcript)
• comScore (SCOR): Q4 EPS of $0.05 beats by $0.01. Revenue of $31.6M (+24.9%) vs. $32.5M. Shares -6.8% AH. (PR, earnings call transcript)
• Equinix (EQIX): Q4 EPS of $2.74 vs. consensus of $0.25. Revenue of $191M (+37%) in-line. Shares -3.2% AH. (PR)
• Gildan Activewear (GIL): FQ1 EPS of $0.04 beats by $0.01. Revenue of $184M (-26.5%) vs. $217M. Suspends earnings guidance due to increasing uncertainty regarding the severity and duration of the current economic and financial crisis. Shares -22% AH. (PR)
• JA Solar (JASO): Sees 2009 EPS of $830-952M vs. $1.1B consensus, citing worldwide macro economic conditions, tight credit markets and resulting issues with project financing. Shares -9.6% AH. (PR)
• Jarden (JAH): Q4 EPS of $0.83 beats by $0.09. Revenue of $1.35B (-7.9%) vs. $1.3B. Shares +3.2% AH. (PR, earnings call transcript)
• Las Vegas Sands (LVS): Q4 EPS of -$0.04 misses by $0.08. Revenue of $1.09B (+3.8%) vs. $1.17B. Increases cost-savings target for 2009 to $250M. Shares +4.3% AH. (PR, earnings call transcript)
• NetApp (NTAP): FQ3 EPS of $0.28 in-line. Revenue of $874M (-1.1%) vs. $912M. Shares -7.6% AH. (PR, earnings call transcript)
• Masco (MAS): Q4 EPS of -$0.18 misses by $0.13. Revenue of $2B (-25%) vs. $2.11B. Sees 2009 housing starts down 35% to 550,000-600,000. Shares -8.7% AH. (PR)
• International Coal Group (ICO): Q4 EPS of $0.24 vs. consensus of -$0.06. Revenue of $258M (+25.7%) vs. $292M. Shares -7.3% AH. (PR)
• Post Properties (PPS): Q4 FFO of $0.41 beats by $0.02. Revenue of $69.8M (-1%) vs. $70.9M. Sees 2009 FFO of $1.05-1.25 vs. $1.42. (PR)
• Questar (STR): Q4 EPS of $0.99 beats by $0.15. Revenue of $879 vs. $655M. Sees 2009 EPS of $2.50-2.70 vs. $3.13. Shares -6% AH. (PR)
• Realty Income (O): Q4 FFO of $0.46 in-line. Revenue of $82.7M (+6.8%) vs. $82.4M. Shares +5% AH. (PR)
• Sequenom (SQNM): Q4 EPS of -$0.25 misses by $0.07. Revenue of $12.2M (+9.9%) vs. $13.8M. Shares -3.85% AH. (PR, earnings call transcript)
• Taubman Centers (TCO): Q4 FFO of $0.87 beats by $0.06. Revenue of $190M (+6.2%) vs. $173M. Shares +0.2% AH. (PR)
• Terex (TEX): Q4 EPS of $0.62 beats by $0.01. Revenue of $2.08B (-19.7%) vs. $2.28B. Sees 2009 revenue down 30-35%. General hiring freeze; headcount reductions; eliminating salary increases in 2009 for management; significant reductions in executive long-term compensation. Shares -17.8% AH. (PR)
• TriQuint Semiconductor (TQNT): Q4 EPS of $0.05 misses by $0.01. Revenue of $149M (+16%) vs. $142.5M. Sees Q1 EPS of -$0.11 to -$0.07 vs. $0.01. Shares +6.1% AH. (PR, earnings call transcript)
• Willis Group (WSH): Q4 EPS of $0.37 misses by $0.06. Revenue of $799M (+25%) vs. $821M. "We cannot predict the potential impact of the uncertainty of the global economy on current insurance pricing or on potential changes in the buying decisions of clients with any degree of certainty." Suspends guidance. (PR)
• Winn-Dixie (WINN): FQ2 EPS of -$0.05 beats by $0.01. Revenue of $2.25B (+0%) in-line. Shares +17.3% AH. (PR)

Today's Markets

• Asia markets closed broadly down. Nikkei -3.0% to 7,705. Hang Seng -2.3% to 13,228. Shanghai -0.6% to 2,248. BSE -1.6% to 9,466.
• In Europe at midday, London -1.1%. Paris -1.5%. Frankfurt -2.0%.
• U.S. futures: Dow -1.0%. S&P -1.1%. Nasdaq -0.9%. Crude -1.2% to $35.50. Gold -0.3% to $941.60.

Thursday's Economic Calendar

• 8:30 Retail Sales
  8:30 Jobless Claims
  9:00 RBC CASH Index
  10:00 Business Inventories
  10:30 EIA Natural Gas
  4:30 PM Money Supply
• Notable earnings before Thursday's open: AET, ALXN, BWA, CLI, ECA, ECL, FCL, KO, LH, LIFE, MAR, MAS, NRG, NXY, PCH, PGN, PTEN, SCG, TDC, VIA.B, VTR, WMI
• Notable earnings after Thursday's close: AMKR, CAKE, CEPH, COG, DCT, MFE, SHO, VCLK

Seeking Alpha editor Eli Hoffmann contributed to this post.

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Comments

[AndrewBaker:]

Well, the markets are saying that they do not much like the bailout terms. It all looks very nice that the bankers are saying sorry and accepting new constrains, easing back on foreclosures and similar; but they're still going to do alright thank you, and now will have the policitians to blame when it gets worse, which it will. I just hope that some of the money being spent will really help educate our kids, repair our roads, bridges and other infrastructure, and get people thinking more about how good things can be rather than how much can we get. Investing-wise? I'm still more into shorts than longs. Sadly, it's going to get a lot worse before it gets better.

Feb 12 08:04 AM

[NITRAM:]

I as a bloger give up. With all the illegal actions by the leaders of the financial, not one has been charged with a crime. Not one has changed anything about their tactics. The great untouchable J. Diamond took JPM'S money out of Madoff, but did not tell JPM'S clients. Weeks latter he found $500,000,000. in a Madoff account. This proves he doesnt care nor know what is going on at Jpm. Mr. A. Cuomo has a great legal case against J. Thayne. Sue these men individually for violating Fiduciary Laws. Their insurance companies who carry Officers Liability cover will be forced to bring these men to justice. If the insurance company wants to avoid paying Billions of dollars for the acts caused by their insured, they will bring everything into the open.

A usual the man in the white house leaves town while our country is falling apart. Its a nice thing to go to honor A.Lincoln. Not while the entire country is falling apart. Remember, not every state honors Lincoln. This is our our car salesman(man in the White House) proves he has no clue on what is happening.

Feb 12 08:37 AM

[IA.countryBoy:]

GM still doesn't get it. They are offering 1/2 billion to bribe some of their pampered UAW workers to go home and enjoy their fabulous retirement benefits. If the gov had let GM fail, the workers might have been out on the streets with no buyout and even some of their retirement benefits in question. Which could still happen. I think the UAW doesn't get it either. As they have been saying, they are a great team!

Feb 12 09:22 AM

[Moto:]

Giving Washington more control over education and health care. This is considered stimulus how?

Feb 12 09:59 AM

[JCCIII:]

Stimulus bill: "Around 35% of the package is earmarked for tax cuts." When you back out the welfare portion of the tax cuts - that would be refunds of income tax to people who do not pay income tax - the percentage of tax cuts becomes around 20%-22%.

Feb 12 10:24 AM

[know nothing:]

The idiots in Washington are selling our country to China, Japan............?
For what?

Feb 12 11:37 AM

[grh1212:]

Why are you using present tense, Know Nothing? The seel-out is a done deal. One of the first rules of money is that the debtor dances to the tune of the creditor. We may thank St Ronnie, Poppy, and the drunken 16 year old frat boy for our present state.

Feb 12 02:47 PM

[auto44:]

Laura Rowley on yahoo finance coined the phrase an economy twisted by stupidity and fraud. This is the most accurate and consise discription of the world financial position that I have heard. If you replace the word economy with congress it would be just as accurate. The issue is not democrat or republician. It covers most of the players, one of the most offensive is the mortgague queen.

Feb 12 03:12 PM

[bbowen7:]

First the tobacco guys; then the car guys; then the bank guys. It's a good thing that the Dems got back from their retreat in Williamsburg in time to save the country.

Feb 12 08:29 PM

[bobbobwhite:]

The oddest thing about the "stimulus" plan is that it will not not stimulate the economy as it's not going to provide much but tothe public sector(thus the socialism word). Obama is giving $500B to social services like MedicAid! What is taxpayer paid healthcare for "his poor people" going to do to solve this economic crisis? What is the taxpayer return on that investment? It sure doesn't build infrastructure that was the reason for the money in DC a while back. I guess this is his way of giving Civil War reparations to "his people" 150 years later.

Feb 13 03:28 PM

[mogami_99:]

Hi "His people"???? His father is from Kenya and his mother is white. If "his" people had any connection to slavery it was from the business side not the victim side. (although most slavers working Kenya would have been arab/islamic......wait daddy was a moslem..nevermind)
Reminds me of the supposed gaff/insult when he was referred to as a "slave" people ignored fact that in arabic the word for blackman and slave are the same.


On Feb 13 03:28 PM bobbobwhite wrote:

> The oddest thing about the "stimulus" plan is that it will not not
> stimulate the economy as it's not going to provide much but tothe
> public sector(thus the socialism word). Obama is giving $500B to
> social services like MedicAid! What is taxpayer paid healthcare for
> "his poor people" going to do to solve this economic crisis? What
> is the taxpayer return on that investment? It sure doesn't build
> infrastructure that was the reason for the money in DC a while back.
> I guess this is his way of giving Civil War reparations to "his people"
> 150 years later.

Feb 13 03:39 PM

[Conan the B...:]

Quite obviously, a country divided is still a Country Divided.

We did not get here overnight. It took some 40+ years to get here. JFK, Vietnam,Bobby and LBJ, M.L. King, Vietnam Protests, Woodstock, Nixon, The Oil Embargo, the long Gas Lines in the Major cities, The Shah of Iran, Hostages, Reagan, Bush, Clinton, Bush and Now Obama.

We rarely get together on Anything. Taking in a stream of comments like this, at a Time like this, makes it very Clear that America has not matured.

The Past is The Past, Live in the present and try to Get Along. Otherwise, the small Foxhole we are all In Together, will get very large. IMO

Feb 23 12:20 AM

[Conan the B...:]

Ooops, forgot about Carter, his brother Billy and the "Killer Squirrel".

Feb 23 12:23 AM

[Barbara Ann...:]

subject: Fraudulent Foreclosures, Illegal Seizures & Evictions, 1099 fraud upon the IRS
~~~~~~~~~~~~~~~~~~~~~~...
I applaud New York Attorney Cuomo, and I hope that he as well as other authorities will swiftly and thoroughly investigate the ultimate lethal foreclosure fraud which is causing people to FALSELY lose ownership of their properties and become evicted; and it cheats Investors, as well as mortgage companies!! This appalling fraud occurs when debt collector attorneys deliberately file judicial foreclosures under names of defunct mortgage companies, or companies which do not own the promissory notes; and upon illegal seizure of those properties the collectors charge fees far beyond "Acceleration Clauses," thereby making it impossible for borrowers to recover their properties or bring current the mortgage arrears. SEE: chuckgallagher.wordpre.../.

When property owners sue for "Unfair Debt Collection Practices," etc, collectors make even more $$$$ through protracted litigations. (*An example of protracted foreclosure litigation in lawsuit: “Super Future Equities v. Wells Fargo Bank, et al.”) Fraudulent foreclosure proceedings mean that people actually HAVE NOT lost ownership of their properties, and evictions are illegal, but those homeowners don’t know it!! For predatory and deceptive mortgage lenders, foreclosure frauds are bonanzas because it makes possible real estate FLIPPING frauds, and misleads Investors concerning housing markets. SEE: www.lawgrace.org/2008/.../

Also, foreclosure fraud makes it possible for mortgage companies like Wells Fargo Bank, NA to file with the IRS false 1099-A’s and 1099-C’s for purposes of unlawful tax write offs and tax credits. SEE: www.lawgrace.org/2008/.../. (Also, far too many distressed homeowners have no idea about tax consequences false 1099's from a mortgage company could cause.)

Additionally, an alarming amount of unscrupulous debt collector attorneys are committing amazing fraud in Bankruptcy Court because of “lift stay” motions they filed via use of names of entities which have no “standing,” or have no “real party interest.” Put plainly, foreclosed homes are an alarming epidemic, but it does not mean that all foreclosure proceedings are lawfully executed. The BIG picture is that there are thousands of people who are being rendered homeless, yet those judicial proceedings to take those homes were dishonest, in violation of law, and in too many cases criminal. In a nutshell, NOT UNTIL a valid foreclosure case is filed in court, can a valid loss of the home occur. Unfortunately, in light of the nationwide MORTGAGE MESS, most likely foreclosure fraud exists on a NATIONAL LEVEL. For irrefutable proof and specific details of the foregoing statements, visit www.lawgrace.org.

Mar 11 12:32 AM