- Unilever buys Sara Lee unit for €1.9B. Anglo-Dutch consumer giant Unilever (UN) will pay $1.88B (€1.275B) to acquire Sara Lee's (SLE) personal care business, adding brands such as Sanex, Radox and Duschdas to its lineup including Dove, Pond's, Suave and Vaseline. "Sara Lee brands enjoy strong consumer recognition, offer significant growth potential and are an excellent fit with Unilever's existing business," Unilever's new CEO Paul Polman said, adding there's significant potential to build out the newly-acquired brands in developing and emerging markets. In April, Sara Lee had said it was exploring options for its international household and body-care business, including a possible sale.
- Weak home sales send stocks reeling. Seasonally adjusted home sales fell 2.7% in August to 5.1M/year, well short of the 5.35M economists expected. Sales remain 3.4% higher than a year ago. NAR's Lawrence Yun was upbeat despite the decline, but said the drop - which came after four straight months of growth - "demonstrates we can’t take a housing rebound for granted." The surprising downturn triggered a sudden selloff in equity markets, with stocks finishing down about 1%. The news was not all bad, though; the inventory of existing homes for sale fell to 3.62M, down a whopping 10.8% from a month ago, and 16.4% below year-ago levels.
- After day one in Pittsburgh... G-20 leaders are close to finalizing a framework to force banks to tie compensation more closely to risk, and tighten capital requirements. The group is less united on how to overhaul control of the IMF. Treasury Secretary Tim Geithner also said "strong consensus" is forming behind calls to narrow global economic imbalances, with a policy framework that could push China to rely less on exports, the U.S. to save more and Europe to increase investment. According to a statement released by the White House late Thursday, officials will today announce the G-20 will succeed the G-8 as the main forum for global economic coordination, a sign of the shift in power from superpowers to emerging markets.
- What to do with all that TARP money? The Treasury is looking at how it could keep some of the emergency bailout funds extended to it by Congress beyond year-end, for use in case conditions worsen, even if its $700B Troubled Asset Relief Program (TARP) is allowed to expire. As markets begin to stabilize, some lawmakers are demanding the much-criticized program wind down, with any unused and repaid funds going to pay down national debt. Meanwhile, at a hearing Thursday, TARP special inspector Neil Barofsky said the program has improved stability but fallen short on key goals like spurring lending, adding it's extremely unlikely taxpayers will see a full return the TARP investment.
- Barclays courts Citi's Portugal portfolio. Sources say Barclays (BCS) is in talks to buy some of Citigroup's (C) retail-banking assets in Portugal, including its credit-card portfolio, in a deal thought to be worth less than $100M. Barclaycard, the bank's credit-card business, has suffered fewer impairment charges than many of its peers, and is eyeing expansion. A deal could come as early as next week.
- Large-loan bank losses triple. Regulators say that the level of losses from syndicated loans facing financial institutions tripled to $53B in 2009, due to poor underwriting standards and the recession. Criticized assets rated 'special mention', 'substandard', 'doubtful' and 'loss', hit a massive $642B, or about 22.3% of the total, vs. 13.4% a year ago.
- RIM dives on weak sales, outlook. Shares of Research In Motion (RIMM) plunged almost 13% in after-hours trading after FQ2 sales and its outlook for the coming quarter fell short of Street forecasts (see data below). Co-CEO Jim Balsillie told analysts during RIM's earnings call that the company finds itself in a margin-squeezing 'land grab' as it aims to take advantage of the growing market for smartphones: "There's no question our goal is to get more and more mainstream and get more volume... Or else the world will take you by and you're a nice niche player."
- Euro-Zone private lending cools sharply. Lending to the euro-zone private sector cooled sharply, with the growth rate dropping to a tepid record low of 0.1% in August from 0.7% in July. Economists say the rate may turn negative in September, and warn insufficient access to funds could seriously hurt business and trade in the area, undermining a potential economic recovery.
- Jobless claims drop to eight-month low. Weekly initial jobless claims were 530,000, 20,000 less than Street consensus and down from last week's 551,000 (revised from 545,000). Continuing claims fell to 6.138M from 6.261M. While there are signs of improvement, analysts say initial claims have to fall below 500,000 to signal a recovery. At the present level, claims still indicate net job losses for the coming months. (see Initial Claims press release)
Earnings: Thursday After Close
- Christopher & Banks (CBK): Q2 EPS of -$0.06 beats by $0.08. Revenue of $101M (-21%) vs. $104M. Shares -0.3% AH. (PR)
- Research In Motion (RIMM): Q2 EPS of $1.03 beats by $0.03. Revenue of $3.5B (+37%) vs. $3.6B. Sees Q3 revenue of $3.6B-3.85B vs. $3.92B. Shares -12.7% AH. (PR)
- The Finish Line (FINL): Q2 EPS of -$0.02. Revenue of $299M (-11%) vs. $353M. Shares -3.2% AH. (PR)
- TIBCO Software (TIBX): FQ3 EPS of $0.13 beats by $0.02. Revenue of $150M (-7%) vs. $145M. Shares +8.3% AH. (PR)
Asian markets gave up ground to close lower Friday. Europe stocks are marginally higher at midday, as are U.S. futures.
- Asia: Nikkei -2.64% at 10,266. Hang Seng -0.13% to 21,024. Shanghai -0.52% at 2,839. BSE -0.53% to 16,693.
- Europe at midday: London +0.4%. Paris +0.1%. Frankfurt +0.1%.
- Futures: Dow +0.2% to 9656. S&P +0.3% at 1047. Nasdaq flat. Crude +0.5% to $66.23. Gold flat at $999. 30-year Tsy +0.23%. Euro +0.3% vs. dollar. Yen +1%.
Friday's Economic Calendar
- 8:00 G-20 Pittsburgh Summit, Day Two
8:30 Durable Goods
9:00 Fed General Counsel Scott Alvarez Testifies on The Federal Reserve Transparency Act of 2009
9:55 Reuters/University of Michigan Consumer Sentiment
10:00 New Home Sales
10:30 Chicago Fed: Have the Rules of Finance Changed?, Day Two
- Notable earnings before Friday's open: KBH
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