Wall Street Breakfast: Must-Know News 26 comments
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- PPIP finally launched. The Treasury unveiled its scaled-back Public-Private Investment Program, committing $30B of equity and debt to match $10B from private investors, down from an initial plan of buying up to $1T in toxic assets. As expected, BlackRock (BLK), Angelo Gordon and Invesco were named among the nine fund managers. Pimco, the world's largest bond manager and an early supporter of PPIP, withdrew its application because of 'uncertainties' about the plan's design.
- EMC wins Data Domain battle. NetApp (NTAP) dropped out of the bidding war for Data Domain (DDUP), terminating its merger agreement with the company following EMC's (EMC) improved bid earlier this week. Data Domain subsequently signed a definitive agreement to be acquired by EMC for $33.50/share, and paid NetApp a $57M break-up fee.
- AIG talks to MetLife on Alico sale. AIG (AIG) is in talks to sell key business American Life Insurance Company, or Alico, to rival MetLife (MET). A deal could help AIG raise more than $15B to repay the government, but sources say talks are still preliminary and could fall apart, as they did earlier this year, over a disagreement on price.
- G-8 diverge on future stimulus needs. G-8 leaders said the global economic recovery is still too weak to consider reversing stimulus efforts, but disagreed on when exactly those efforts should end. Obama wants to keep the door open for a second stimulus package, while Germany's Merkel is trying to shift the focus to deficit reduction. G-8 leaders agreed to cut greenhouse gases by 80% by 2050, while China and India led developing nations in pledging to set a 2050 goal by December, after balking at calls to set a 50% target without delay. Draft statements from the summit have not yet made direct reference to the dollar or currency exchange.
- OPEC cuts investment forecast. Projecting a steep fall in demand, OPEC cut its five-year forecast for oil investment by around a third, and expects members to invest $110-120B in exploration and production from 2009-2013 instead of the $165B it initially predicted. The International Energy Agency has warned that such a steep cut in oil-development spending could lead to a supply crunch by 2013, and 'huge investment is needed' to meet strong future demand in Asia.
- IMF brightens outlook. The IMF updated its world economic outlook, forecasting a 1.4% contraction this year vs. a previous estimate of -1.3%, and 2.5% growth in 2010 vs. a previous estimate of 1.9%. Though 'vulnerabilities remain,' overall "financial conditions have improved, as unprecedented policy intervention has reduced the risk of systemic collapse and expectations of economic recovery have risen."
- Alcoa loss narrower than expected. Alcoa (AA) kicked off the earnings season with its third consecutive quarterly loss (see details below), but still managed to beat analysts' expectations thanks to cost cutting. CEO Klaus Kleinfeld said there are 'some pockets of growth' despite a challenging global market and there are signs that weak aluminum demand might be easing. Despite the hopeful outlook, Alcoa still expects a 7% decline in global aluminum demand this year.
- Best Buy ties up with TiVo. Best Buy (BBY) is teaming up with TiVo (TIVO) on a multi-year advertising partnership. Best Buy will heavily promote TiVo products in its 1,100 U.S. stores, while TiVo will develop a version of its digital video recorder that will let Best Buy advertise its products and services to TiVo customers using the set-top box at home. Financial details of the deal haven't been disclosed.
- U.K. wants new risk council. As expected, the U.K.'s Darling proposed tighter regulation for the U.K. banking industry, including the creation of a new council including the Treasury, the Bank of England and financial regulator FSA to deal with risks in the market and at specific firms. Darling said the goal is to "inspire trust on the part of businesses and consumers" and "provide effective mechanisms to deal with failures if they occur."
- Consumer credit declines. Consumer debt fell for the fourth month in a row, declining $3.2B, or an annualized 1.5%. Credit-card debt experienced the biggest drop, falling $2.9B. (Fed's release)
Earnings: Wednesday After Close
Today's Markets
Asian stocks were mixed, while European markets and U.S. futures are firmly in positive territory.
- In Asia, Nikkei -1.4% to 9,291. Hang Seng +0.4% to 17,791. Shanghai +1.4% to 3,123. BSE -0.1% to 13,757.
- In Europe at midday, London +0.7%. Paris +0.9%. Frankfurt +1.2%.
- Futures: Dow +0.6%. S&P +0.8%. Nasdaq +0.6%. Crude +1.8% to $61.20. Gold +0.5% to $914.
Thursday's Economic Calendar
- 6:00 Chain Store Sales
8:00 Fed's Duke speaks at FDIC interagency conference
8:30 Jobless Claims
10:00 Wholesale Inventories
10:30 EIA Natural Gas Inventory
2:30 PM Fed's Stern speaks on the response to the financial crisis
4:30 PM Fed Balance Sheet
4:30 PM Money Supply - Notable earnings before Thursday's open: COMS
- Notable earnings after Thursday's close: INFY, LWSN, SGR
Seeking Alpha editor Eli Hoffmann contributed to this post.
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This article has 26 comments:
UK to create new council to blow smoke up the consumers, you know what, in an effort to "inspire trust on the part of businesses and consumers". hahaha
US consumers still smartening up by reducing credit card debt and spending. When in a hole and trying to get out, the first rule is STOP DIGGING.
G-8 to tax hell out of its citizens(80% cut in greenhouse gasses). Wonderful, now we all go down.
One way to stop this cynical manipulatory plan is to sell bank and financial stocks now whilst you can still get a reasonable price, and in so doing preventing further unwarranted price increases.
This is the politically correct way to phrase this concept, "the recovery is too weak". The accurate phrasing would be there is no recovery, but the rate of economic decline has slowed.
When one in four (perhaps one in three) Americans who used to work full time and want to work full time can't, "recovery" is an incorrect descriptor. The stats don't include the millions of workers whose work week has been shortened and paycheck reduced but their status remains unchanged.
Yes, some corporations are making money, but they've done it by slashing employment and other costs and balance sheet maneuvers. So while there may be a "recovery" in some stock prices, there is no recovery in the overall economy.
In a consumer driven economy, "Jobless recovery" is an oxymoron.
Japanese banks were also under pressure as several were notified their performance was not adequate.
The likelihood of tightening credit in Asia is probably not good news for the markets there (or here eventually).
Some analysts believe this may be the trend for this earnings season. Apparently the bar for earnings estimates has been set at approximately a 34% decrease over this quarter last year. Some analysts believe the actual decrease to be more in the area of 28%.
Mostly good comments all around.
To Spectrulater: "Does anybody on Seeking Alpha take a long term view? Who cares if 80% reductions will give the market a few hiccups? "
YES! I take the long, short, and medium view, and I CARE. What you call "a few hiccups" amount to socio-fascist destruction of capitalism. Ask the former residents of the Soviet Bloc, or Red China, if central planning is the way to go for the whole freaking world.
We all see through the crap. Open your eyes and shut your mouth. With eyes open read the site below and then you will be educated that global warming is a solar problem that we can do nothing about.
news.nationalgeographi...
On Jul 09 09:06 AM Spectrulater wrote:
> Does anybody on Seeking Alpha take a long term view? Who cares if
> 80% reductions will give the market a few hiccups? They are talking
> about a 40 year time frame. Weaning the planet from fossil fuels
> is a necessary transition if we are to safeguard civilization for
> generations to come. When are we going to factor in the opportunity
> costs of long term detriment to global health if everyone is focused
> on this quarter's earnings? Do we not want American industry to
> provide real value for the sustainable future or just inefficient,
> fake, cheap, dirty products that make tons of cash but make us sick
> and fill up the landfills? If anything in industry is worth taxing,
> it's the damage being done in the name of profit.
Get your nose out of "Mother Jones Magazine" and stop polluting the discourse with your bogus drivel. If you really want to know what pollution is go to China and India. Or is "Slumdog Millionaire" reality to you.
On Jul 09 09:06 AM Spectrulater wrote:
> Do we not want American industry to
> provide real value for the sustainable future or just inefficient,
> fake, cheap, dirty products that make tons of cash but make us sick
> and fill up the landfills? If anything in industry is worth taxing,
> it's the damage being done in the name of profit.
If you guys prefer to believe that the concensus of the entire world scientific community is a complete farce, that's fine with me. But at least ask yourselves why. What is the incentive for creating a global scientific conspiracy to decieve the world that the earth is warming at an accelerating rate?
Nah, keep that sunny side up!
The same greenhouse effect that enables life on earth has been magnified by 7 billion people on earth emitting way too much carbon dioxide, which is a greenhouse gas. Hmm as a logical and rational person, I like this widely accepted explanation as a contributing factor.
Instead of just ignorantly assuming it's a natural phenomenon, why don't we get the ball rolling to act in a more sustainable fashion by the time we're all old and gray.
Trade well alpha dogs. Make that money. Rachael, if you're listening, the WS Breakfast rules. Thanks for putting together such a useful and fact-filled blog!
We are now at the ice cube stage of the cycle of the earth. Mars and Plute have global warming too!!!!
I can understand why many would believe that this is all our fault but I wholeheartedly disagree. It is a cycle and it will reverse and that will be catastrophic as an advancing ice age returns.
Assuming we have not already killed our selves off by then.
Entire solar system warming.ascension101.blogspot....
Russian scientists further warn that the West’s “obsession” with manmade Global Warming is a deliberately designed propaganda effort to shield their peoples from the fact that not only our Earth, but all of the planets in our Solar System are currently undergoing rapid warming, and as proved, beyond all doubt, by Doctor Scientist Habibullo Abdussamatov, head of space research at St. Petersburg's Pulkovo Astronomical Observatory in Russia, when in 2007 he released his findings that for the previous 3 years the ice caps of Mars have been melting at an unprecedented rate.
And, as reported by one, of many, dissident Western news sites, “Photographs of the merging of two red spots on Jupiter, evidence of warming on Neptune's largest moon Triton, warming on Pluto that is "puzzling scientists" and, of course, the already documented warming trend on Mars all add up to convincing evidence for increased solar activity across the entire solar system.”
mediamatters.org/resea...
A quick Wikipedia search on global warming will describe all the major components of radiative forcing, which are known and measured separately. So yes, we do know that the sun is getting warmer and we also know it's effect is not enough to product the temperature rise we are measuring on earth.
If you look at the ice core data for the last 400,000 years, curves for CO2 concentration and temperature over time are practically identical. Atmospheric CO2 is the largest factor in the current warming trend, that much is definitive.
en.wikipedia.org/wiki/...
I appreciate your sentiment LJR, and you're right, of course, that I should probably expect it from this group. I guess I just realized the futility of it all. Do we really expect to be able to change hearts and minds with a blog comment? Uh... no. Then why bother, right?
All the best.
The key is to look for opportunities despite the outlook.
On Jul 09 08:13 AM AndrewBaker wrote:
> PPIP will make lots of money for the banks who will buy each other's
> debt using bail-out funds and engineering a book profit on the written
> down values, and then when all that money has gone we'll have stimulus
> mark 2, giving them even more of our tax dollars to play with and
> for the top people to get richer on. After that, the real losses
> will come out and the poor stockholders will cry as they watch the
> stock prices drop even more.
>
> One way to stop this cynical manipulatory plan is to sell bank and
> financial stocks now whilst you can still get a reasonable price,
> and in so doing preventing further unwarranted price increases.
You"re going to make Al Gore richer. Pickens just cancelled his big wind farm, and is doing much smaller projects. Doesn't that tell you something?