Wall Street Breakfast: Must-Know News 11 comments
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- 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)
Today's Markets
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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This article has 11 comments:
Yesterday, Reuters had a short piece in which an analyst following RIMM pointed out their numbers were good, but it was the guidance, as well as the fact the numbers didn't meet "expectations", which had been revised upwards, that caused an afterhours' meltdown.
More than a few have pointed out, such disappointments of revised expectations may be what triggers a "correction".
Buy if you want to sell a home over $250,000, your chance of finding a buyer is only marginally better than your probability of getting hit by a snowball.
Cherry picking statistics does not lead to valid conclusions. Keep in mind that all reputable reports are documenting the mass of empty homes that are not in foreclosure or on the market - the part of the housing iceberg not visible.
The housing bubble continues to deflate in the areas it was most overblown.
Syndicated loan losses tripling? No, say it ain't so! (sarcasm filter off) Regular CNBC watchers should be surprised; not me.
Eurozone private lending is being crowded out by sovereign stimulus borrowing. We'll soon see the same here.
TARP funds kept and used by banks to bolster their own situation, and not lent out to help others. Having touched mug investors for extra funds to repay the loan, banks now wondering how to get rid of the balance without it costing them.
Home loans and sales down again. Realtors and statisticians finding ways to present this as a plus or to distort the figures to make it seem loans and sales are up.
More jobs lost this month, but not so obvious as people coming off the figures because used up their allowance make it look like not so many jobs down the swanee. Plus some retired which helped figures look less bad than otherwise.
Banks expect to earn more fortunes now market is so low by advising on takeover bids and charging extortionate costs.
Politicians and bankers voted as being the most honest people and the ones most people would trust. (OK, I made that one up: but I've already got a job offer at the White House on the strength of it.)
I am not even sarcastic here if anyone can shed some light on my dilemma to understand things better here please?
Large loans come mostly from large banks. Large banks have forgotten what banking is all about. They now want to be Wall Street traders and Casino operators 'cause that's where the bonuses are. And they will always find new ways to lose money.
My prescription for taxpayer support to banks: Give 'em more -- they lose more. Give 'em less -- they lose less. So give them nothing and let them compete in the real world like every other business must...
On Sep 25 09:09 AM Old Trader wrote:
> Re: RIMM
>
> Yesterday, Reuters had a short piece in which an analyst following
> RIMM pointed out their numbers were good, but it was the guidance,
> as well as the fact the numbers didn't meet "expectations", which
> had been revised upwards, that caused an afterhours' meltdown.<br/>
>
> More than a few have pointed out, such disappointments of revised
> expectations may be what triggers a "correction".
Common sense is the only medicine that will prevail for those willing to apply it in our endeavors. We are all on our own. Is this crazy? I am going long gold/silver/oil/ag commodities immediately. Why? Because Israel is likely going to attack Iran. Saudi Arabia gave permission in July to Israelis to use airspace and Saudis recently reported considering sending troops into Iraq. Not to fight US but to fight Shiites. The Saudis/Jordan/Egypt and Israel have formed an alliance against Iran This information is common knowledge except in the US MSM. I have known of many of these developments for 3 months. There is much more! I firmly beleive an attack is immenent, this weeks charade at the sham UN verifies all.. Iran cannot be allowed to get nuclear weapons at any cost and the alliance is real. Arutz Sheva is the source and G2. Good Luck to all.