Wall Street Breakfast: Must-Know News 19 comments
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- Automakers report on progress. General Motors (GM) and Chrysler must submit preliminary reports today about their progress in cutting costs and their recovery plans, with final plans due March 31. Along with its report, sources say GM, due to receive another $4B from the government today, may seek aid beyond the initial $18B requested because of worsening economic conditions. GM may also shut or sell up to four European plants as it looks to save around $1.5B, while angling for €3B ($3.8B) in loan guarantees from European governments. The reports will be reviewed by a government task force led by Treasury's Geithner and White House economic adviser Lawrence Summers, rather than by an individual 'car czar.'
- Sirius-ly close to a deal. Liberty Media (LINTA) is close to finalizing a deal to take a major stake in Sirius XM (SIRI), saving Sirius from bankruptcy. The details are unclear, but sources say Liberty's investment would be "enough to cover a significant chunk of debt owed [by Sirius] this year" in return for just under half the company. Creditors are threatening to oust Mel Karmazin, Sirius' CEO, if the company chooses bankruptcy over a deal with an investor that would allow it to stay solvent. The companies hope to announce an agreement before markets open today.
- Santander sweetens payoffs. Banco Santander (STD) is sweetening its offer to select private-banking clients who lost money with Madoff. Last month, Santander became the first (and thus far only) bank to offer to return some of the money clients lost in Madoff's scam, offering to repay the original value of investments in the form of preferred stock paying 2% annually. Several clients balked at the terms and Santander is now trying to woo its best clients to sign up for the deal by offering a series of incentives. Among the sweeteners: clients no longer have to maintain a Santander account to be eligible for the preferred-stock swap, and some clients can use the preferred shares as collateral for a loan charging 3% annually.
- Trump slumps to bankruptcy. Court documents show Trump Entertainment Resorts (TRMP) filed for bankruptcy protection this morning, with assets of around $2.1B and debts of around $1.74B as of December 31. Nine affiliates of the casino operator, including Trump Plaza Associates, Trump Plaza Associates, Trump Marina Associates and Trump Taj Mahal Associates, simultaneously sought protection. Donald Trump and daughter Ivanka both resigned from Trump Entertainment's board late last week. This is Trump Entertainment's third appearance in bankruptcy court.
- Rio tries to charm angry investors. Rio Tinto (RTP) is stepping up its efforts to win shareholder approval for its $19.5B deal with Chinalco (ACH). Many shareholders are angry at Rio for opting for a cash injection that will dilute shareholder holdings and say a rights issue would be a better way to solve the company's financial problems. Sources say several investors have even invited BHP Billiton (BHP) to suggest "an alternative proposal to buy some of Rio’s assets."
- Nokia, Qualcomm get friendly. Nokia (NOK) announced it will work with Qualcomm (QCOM) to develop handsets in a move that marks a further warming of ties between the two former rivals. The phones will initially be for the North American market and will work on third generation networks. The companies didn't say when phones for other markets might be developed. Premarket: NOK -5.1% (7:00 ET).
- Tough times for Japan. The Bank of Japan's policy board will meet this week to discuss creative answers to the country's worsening economic crisis. Recent data showed the country suffered its biggest quarterly contraction since 1974, shrinking 12.7% in Q4 on an annualized basis and 3.3% from the previous quarter, and economists expect further deterioration. Unfortunately for the central bank, it has few options available and "effectively all the Bank of Japan can do is accelerate measures that have already been announced." In a further blow, Japan's finance minister, Shoichi Nakagawa, resigned today following sharp criticism over his apparently drunken state at this weekend's G-7 conference. Nakagawa denies being drunk, but said he is resigning to "take responsibility for the trouble I caused."
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- Daimler (DAI) posts Q4 loss of €1.53B, reversing last year's gain of €1.7B and worse than the €227M loss analysts predicted. Earnings were burdened by a €1.67B writedown related to the sale of Chrysler. Shares -6.8% premarket. (PR)
- Holly Corp. (HOC): Q4 EPS of $1.01 beats by $0.41. Revenue of $924M (-35.8%) vs. $1.1B. (PR)
- Medtronic (MDT): FQ3 EPS of $0.71 beats by $0.01. Revenue of $3.5B (+2.6%) in-line. (PR)
- Teva Pharmaceutical Industries (TEVA): Q4 EPS of $0.76 beats by $0.03. Revenue of $2.85B (+10.6%) vs. $2.9B. Shares -1.8% premarket. (PR)
- Wal-Mart (WMT): Q4 EPS of $1.03 beats by $0.04. Revenue of $108B vs. $109.1B. Sees Q1 EPS of $0.72-0.77 vs. $0.77 consensus. Sees 2009 EPS of $3.45-3.60 vs. $3.59 consensus. (PR)
Today's Markets
- Asia markets closed broadly down. Nikkei -1.35% to 7,646. Hang Seng -3.8% to 12,945. Shanghai -2.9% to 2,319. BSE -2.9% to 9,035.
- In Europe at midday, London -2.3%. Paris -2.8%. Frankfurt -2.7%.
- U.S. futures: Dow -2.0%. S&P -2.3%. Nasdaq -2.6%. Crude -1.1% to $37.08. Gold +2.1% to $962.20.
Tuesday's Economic Calendar
- 8:30 Empire State Mfg Survey
9:00 Treasury International Capital
10:00 State Street Investor Confidence Index
1:00 PM NAHB Housing Market Index
5:00 PM ABC Consumer Confidence Index - Notable earnings before Tuesday's open: GPC, HOC, HSP, LPX, MDT, RIG, TEVA, WMT
- Notable earnings after Tuesday's close: A, CHK, IO, UPL, WYNN
Seeking Alpha editor Eli Hoffmann contributed to this post.
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This article has 19 comments:
In an otherwise doom & Gloom market, I think there are grounds for cautious optimism in the direction GM is taking.
With the European cuts, restructuring, the applications for new hybrid &etc patents and the strides that GM has made in product quality, I think GM will be around for a long, long time!
This plan could involve every voter and democratically save all the right banks.
The stimulus package is law, but as important as the content is the perception that it will work is vital to the success. The people need to be part of the solution and here is a way to make that happen.
I also believe that many banks have to be nationalized or fail for the banking system to get back on its feet. This idea will help solve this one as well.
The government is going to be spending billons to bail out the system, why not put the choice of which bank fails and which doesn't into the hands of the people to decide. Issue vouchers to all voters of say $1000 every three months for as long as necessary for the system to work. The people deposit the voucher in the bank of their choice. The bank will pay them interest on a competitive basis. The people cannot withdraw the money until the government gives the green light when we are all financially healthy.
By the people deciding which banks get the assets they in effect will bail out some and let others fail. This is better than having the government make these decisions. The people will be involved, not wondering what magic is going on behind closed doors, The people will be part of the solution, the people will be building up there personal savings and earning interest. Everyone wins.
If there are some other money's that have to be injected in to the likes of AIG or Fanny or Freddy, that can be handled separately or in the form of vouchers for Stock in these companies.
This could work, work fast, it's democratic, it involves everyone so by being part of the solution they will assure it working. Let's do it.
peter
There something wrong when in the stimuls plan, under medical treatment, a 15 member board will be the deciding factor if a person recieves treatment or if they die. This is wrong, very wrong...
[1] Rescind Mark-to-Market, at least for 24 months during this crisis [that it has largely created]! All the experts agree that the underlying assets are worth significantly more than the current "market value" for the securitized mortgage instuments.
* Bank Balance Sheets would be immediately "reflated" by ~30%. Pressure would be removed from loaning for houses & cars.
* Individuals NET WORTHS would increase dramatically with the increase in the share prices in their portfolios & retirements accounts, thus stimulating consumer spending.
* Fear factor removed from Politicians who would no longer be able to justify massive debt giveaways.........
[2] Reinstate UPTICK RULE thus taking relentless selling pressure off stocks, many driven to below Book values..........
[3] Prosecute NAKED SHORT SELLERS --- NOW & RETROACTIVELY TO 1-1-08..............
Tell all the ACCOUNTANTS, ACADEMICS & HEDGE FUNDS to
STFU ............the party to destroy Americas economy is over!!!!!!!!
Now, imagine WHO & WHY any honest leader wouldn't want to avoid OBAMA'S ADMITTED CATASTROPHE???????????...
WHO & WHY????????????
IMHO
Market value is what the market is willing to pay. If the government tells you, or allows you to state that your House is worth $500,000, yet no one is willing to pay more than $300,000... then you're house is worth $300,000. Of course, if YOU perceive it to be worth more, than don't sell it. But the Market perception will still be that it's worth $300,000, and rescinding mark to market isn't going to make your house worth more. That applies to ANY asset.
If rescinding 'mark to market' would have any effect, then McDonalds should just change its dollar money to a $50 menu instead. It'll make 50x more money, right? Of course, like your rant, that's at best wrong and at worst absurd.
"Why prop grandpa up in the living room next to the fire place when he died three months ago. He's starting to smell. "
Seriously folks, why add to the burden. It is called a jettison. We need more jettisons.
Buy of a lifetime
That is one heck of a game plan, fire your best customers and watch sales grow! [/sarcasm]
Go ask Cramer what that means. BOND BULLIES (cause they are smarter than ya!)
On Feb 17 08:20 AM know nothing wrote:
> We're on our way to a one world bank. New world order, this crisis
> is just setting the stage. The sheeplo will be begging the gov't
> to save them, giving up all their rights in the process.
>
> There something wrong when in the stimuls plan, under medical treatment,
> a 15 member board will be the deciding factor if a person recieves
> treatment or if they die. This is wrong, very wrong...
Trump never puts his own money into any development project as that is his biz model, as he and others think his name on it is enough for a substantial equity stake. So, whatever he loses under BK is nothing out of his own pocket. And, he is so arrogant, that money lost by others under his name is of no concern to him, nor are the many BKs. He considers himself to be well "above" and detached from all that. Methinks The Donald has just about run his course and will not be much of a face in future gossip news. His time is past.
Reality Will Be Reality Weather believed In Or Not.
To Assume Benevolence Is Foolish.
Power Given is not So Easily Taken Back.
Beware that devils may occupy the seats you intended for Angels.
On Feb 17 10:27 AM Atypical wrote:
> Your comment re a 15 member board and the stimulus is totally wrong.
> Whatever source you got that from - don't listen again. Your brain
> is obviously affected.
>
>
> On Feb 17 08:20 AM know nothing wrote:
Now the reason the American automobile companies going bankrupt is simply because of a lack of proper strategy. Instead of plant level costing of automobiles and then arriving at the selling price of the automobiles what the American big three should do is to add up all the labor costs of all the plants spread over different parts of the globe and then add to it total overheads of all the worldwide plants and then add to it all the material cost of all the worldwide plants and then only they would arrive at the total cost. The amount by which it is lower than the total revenues the company has earned by selling all the cars in the world in a particular year will reflect the total profit.
So in order to increase its profit tremendously the company has to acquire low cost producers in India and China and also in Japan and east european countries and thereby increase its total sales while the total cost will not go up proportionately.
Share holders have to be motivated that it will be more important to have dividends in the future years in a big way rather than to go for immediate gains. So it is actually the strategy that is important. It can make or break a big company.