Wall Street Breakfast: Must-Know News 19 comments
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- Looser rules for bank buyouts. Following intense lobbying, the FDIC voted 4-1 in favor of easing the restrictions on private-equity groups interested in buying failed banks. However, some private-equity groups said the FDIC still hasn't adequately loosened its requirements, as buyout firms must still hold on to failed banks for at least three years and maintain elevated capital ratios at the failed banks. (Read the FDIC's statement)
- Fed asks for disclosure delay. The Federal Reserve asked to delay the enforcement of a ruling that would require it to publicly disclose information about emergency loans made to financial firms. The Fed has until August 31 to disclose the details of its lending, but wants to stay the ruling until it can file an appeal in court.
- Taxing the financial sector down to size. Adair Turner, head of the U.K.'s Financial Services Authority, said he supports the idea of new global taxes on financial transactions in order to shrink a 'swollen' financial sector that has grown too large for society. Turner called the backlash over bonuses a 'populist diversion' distracting attention from the need for more drastic measures to shrink the industry's size. He also raised doubts about the value of being a leading financial center, claiming London's financial sector is a destabilizing force in the U.K. economy.
- Tribune bondholders go to court. Tribune Co. bondholders have asked a bankruptcy judge to let them investigate Sam Zell's 2007 buyout of the media firm. In a filing made late yesterday, bondholders called the $8.2B transaction a 'fraudulent conveyance' that left Tribune insolvent and accused senior lenders led by JPMorgan Chase (JPM) of completing a deal they should have known would push the company into bankruptcy. Bondholders are trying to stop, or at least slow, a bankruptcy exit plan that will likely see JPMorgan and other banks owning nearly all of Tribune in exchange for $8B of debt forgiveness.
- Goldman gets subpoenaed. In the latest development regarding Goldman Sachs' (GS) trading huddles, Massachusetts' chief financial regulator has subpoenaed the firm for additional information and internal documents. The concern is that the huddles may have disadvantaged some of Goldman's clients, and the investigation may be expanded to look at practices at other firms.
- Xbox 360 gets a price cut. Microsoft (MSFT) is cutting the price of its high-end Xbox 360 game console by $100, following a similar price cut last week by Sony (SNE) for its PlayStation 3. Microsoft is also set to announce today that it's phasing out the mid-range version of the console. Nintendo's (NTDOY.PK) Wii is now the only console that hasn't yet had a price cut ahead of the holiday shopping season.
- Dollars-for-dishwashers. Cash-for-clunkers was seen as a broad success but appliance makers and retailers are less certain about a similar rebate program planned for household appliances. With a budget of $300M, the program is seen as too small to provide significant gains to appliance makers like General Electric (GE) and Whirlpool (WHR). The program also lacks consistency, as the size of rebates can vary on a state-by-state basis. In light of the uncertainty, manufacturers have been reluctant to ramp up production.
- China iPhone release one step closer. Apple (AAPL) is moving closer to an iPhone launch in China, one of its last untapped phone markets, after a prototype modified for the local market received a technical license required by the government. With 687M subscribers, China is the world's largest mobile market, and an iPhone release there could lead to explosive sales growth for the product.
- GE may sell its security unit. General Electric (GE) is reportedly looking to sell its security unit in a deal that could be worth $2B. Possible buyers include Tyco International (TYC) and United Technologies Corp. (UTX), and GE may sell the unit in parts if it can't find a buyer for the whole business.
- TiVo files suit. TiVo (TIVO) filed a lawsuit against AT&T (T) and Verizon (VZ), claiming the companies infringed three of its patents. TiVo is seeking a permanent injunction to force the two companies to shut off their DVRs. The action is similar to one taken against Dish Network (DISH) and its sister company EchoStar (SATS) in what is becoming a protracted legal battle over digital video recording.
- Thrifts post small profit. Savings and loans institutions broke a six-quarter losing streak in Q2 by posting a $4M profit, up from a $1.62B loss in Q1. John Bowman, acting director at the Office of Thrift Supervision [OTS], said "the industry essentially broke even," but "despite some encouraging signs, the industry’s performance remained uneven. The bottom line is that the industry is not out of the woods yet.” (Read the OTS press release)
- Durable goods rise. Durable Goods Orders rose 4.9% in July, compared to consensus of +2.5% and last month's -1.3% (revised). The increase was the largest jump in two years. Net of transportation, orders rose 0.8%.
- Home sales improve (.pdf). New Home Sales totaled 433K in July, a 9.6% increase from June and better than the 390K that was expected. Sales were down 13.4% from the previous year. The median home price in July was $210,100, up from June's $206,200. Inventory of 271K homes represents a 7.5 month supply, down from 8.8 months in June.
Earnings: Thursday Before Open
- A-Power Energy Generation Systems (APWR): Q2 EPS of $0.14 misses by $0.06. Revenue of $57.5M (-12.5%) vs. $73.7M. Shares -5.8% premarket (6:50 ET). (PR)
- Toll Brothers (TOL): FQ3 EPS of -$2.93 misses by $1.14. Revenue of $461M (-42%) in-line. While the results "reflect continuing challenging housing market conditions, we do see signs for optimism... We believe declining cancellations and more solid demand indicate that the housing market is stabilizing. We are reducing incentives and raising prices in selected communities..." (PR)
Earnings: Wednesday After Close
- CNinsure (CISG): Q2 EPS of $0.27 beats by $0.08. Revenue of $42M (+33%) vs. $46M. (PR)
- Coldwater Creek (CWTR): Q2 EPS of -$0.05 in-line. Revenue of $225M (-7%) vs. $222M. (PR)
- Guess? (GES): Q2 EPS of $0.64 beats by $0.20. Revenue of $522M (+1%) vs. $485M. (PR)
- Jo-Ann Stores (JAS): Q2 EPS of -$0.13 beats by $0.26. Revenue of $419M (+4%) in-line. Sees full-year EPS of $1.35-1.50 vs. $1.10 and full-year same-store sales flat to up 1%. (PR)
- Sigma Designs (SIGM): Q2 EPS of $0.28 in-line. Revenue of $51M (flat) in-line. (PR)
- SWS Group (SWS): FQ4 EPS of $0.25 beats by $0.05. Revenue of $99M (+13%) vs. $103M. (PR)
- TiVo (TIVO): Q2 EPS of $0.03 beats by $0.08. Revenue of $49M (-9%) in-line. (PR)
Today's Markets
Asian markets closed mostly down, and European markets are showing modest losses. U.S. futures are largely unchanged.
- In Asia, Nikkei -1.6% to 10,474. Hang Seng -1% to 20,243. Shanghai -0.7% to 2,946. BSE +0.1% to 15,781.
- In Europe at midday, London -0.1%. Paris -0.1%. Frankfurt -0.5%.
- Futures: Dow -0.1%. S&P -0.2%. Nasdaq flat. Crude -0.7% to $70.93. Gold flat.
Thursday's Economic Calendar
- 8:30 GDP Q2
8:30 Jobless Claims
8:30 Corporate Profits
10:30 EIA Natural Gas Inventory
4:30 PM Fed Balance Sheet
4:30 PM Money Supply - Notable earnings before Thursday's open: AEO, APWR, CSUN, ENER, TOL, VIP
- Notable earnings after Thursday's close: ARUN, DELL, JCG, MCRS, MRVL, NOVL
Seeking Alpha editor Eli Hoffmann contributed to this post.
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This article has 19 comments:
Raising taxes ALWAYS comes down to the consumer paying more. Additionally taxing something involves government. I want less govt not more. I dont want the govt do come past my mailbox. They should stop there and come no further.
Carve them up like a Christmas turkey. Leave me out of it.
Now is the time to really apply the pressure and get rid of the Federal Reserve for once and all.
I thought we had kicked the can all the way to the end of the road and was ready to kick it in the ditch. WOW it was a 90 degree LEFT turn.
So now we are still kicking the can down the road but it is no longer a paved road, the road is going to sh*t.
On Aug 27 08:22 AM Speedspirit wrote:
> The Federal Reserve wants to appeal the ruling and not disclose information
> by the Aud 31st deadline but why? They have kept the financial system
> from crashing to the ground you would think they would love to show
> how smart they are and how they sucedded.
>
> Now is the time to really apply the pressure and get rid of the Federal
> Reserve for once and all.
And how is it Swiss secrecy for depositors = bad, Fed secrecy for loans = good.
On Aug 27 08:36 AM doubleguns wrote:
> I thought this was going to happen for a while there when we were
> deep in it. I though the entire fiat system was done. I failed to
> realize how far the financial system world wide will go to keep this
> system going. Look at our deficit and we are not done yet.
And how is it Swiss secrecy for depositors = bad, Fed secrecy for loans = good.
On Aug 27 08:36 AM doubleguns wrote:
> I thought this was going to happen for a while there when we were
> deep in it. I though the entire fiat system was done. I failed to
> realize how far the financial system world wide will go to keep this
> system going. Look at our deficit and we are not done yet.
On Aug 27 08:28 AM ScroogeMcduck wrote:
> There were less taxes with King George.
If Great Britain would let us have the old Hong Kong government, I say we give ourselves back!
On Aug 27 07:46 AM BlueOkie wrote:
> Dollars for Dishwashers - wonder if there is anything else I can
> help my neighbor buy. Or should I say is there anything else we
> can charge to our grandkids?
The British socialist morons just keep coming! The UK, under the Labour Party, is a failed state. All British "men" have been killed off by the last Century's two wars and what's left is morally and intellectually deficient. Dismiss the UK from the UN and consider it, at best, a principality.
On Aug 27 08:01 AM doubleguns wrote:
> Why is the solution always taxes. Tax financial transactions? Why
> not just carve the offending too big to fail institutions up and
> be done with it.
>
> Raising taxes ALWAYS comes down to the consumer paying more. Additionally
> taxing something involves government. I want less govt not more.
> I dont want the govt do come past my mailbox. They should stop there
> and come no further.
>
> Carve them up like a Christmas turkey. Leave me out of it.
Looser rules for bank buyouts.: Actual Capital, not created by the "Magic Money Fountain" is scarce. The FDIC is beginning to realize this.
Fed asks for disclosure delay. : The Lawyer Dance Continues. This is tenuous; the charade will continue indefinitely unless there is transparency and accountability. I understand that the Fed is "Private" but isn't the TARP funds "Our Money"?
Metrics and PEG and P/e ratio' s always good for valuation going forward