Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:45 AM EST
S&P 500: -1.60; 1,401.80
NASDAQ 100: -6.00; 1,758.75
Dow: -21.00; 12,235.00
NIKKEI 225: -0.69%; 16,744.15 (-116.24)
HANG SENG: -0.08%; 18,953.50 (-15.94)
S&P/ASX 200: -0.29%; 5,836.30 (-16.70)
BSE SENSEX 30: -0.90%; 12,430.40 (-113.45)
FTSE 100: -0.38%; 6,110.10 (-23.10)
CAC 40: -0.49%; 5,363.21 (-26.64)
XETRA-DAX: -0.45%; 6,555.99 (-29.48)
Commodity Futures (Reuters/Jefferies CRB)
Oil: +0.40%; $57.78 (+$0.23)
Gold: +0.59%; $650.90 (+$3.80)
Natural Gas: +0.04%; $6.96 (+$0)
Silver: +0.50%; $13.14 (+$0.065)
U.S. Breaking News — see today's Wall Street Breakfast for earlier news
Core CPI is In-Line; Futures Respond Positively
The U.S. Labor Department released the February Consumer Price Index [CPI] this morning, showing a 0.4% increase for the month. Led by rises in food and energy prices, the increase came in slightly above the 0.3% gain economists were predicting. Core prices, which excludes food and energy, increased 0.2% in-line with expectations. By the numbers, food prices rose 0.8%, their largest gain in nearly two years, while energy prices were higher by 0.9%; natural gas prices jumped 5%, in their biggest increase since October 2005. Core prices are up 2.7% over the last 12-month period, unchanged from last month's 12-month view. Futures responded positively to the report, making up half their losses from earlier in the morning.
Sources: Bloomberg, MarketWatch
Commentary: Soft PPI, Empire State Index Readings Send Futures Lower • Greenspan: Subprime Meltdown Will Spread if Housing Prices Drop Further • Fed Rate Cut: Good For the Dollar, Gold
Stocks/ETFs to watch: S&P 500 Index (SPY), Diamonds Trust Series 1 ETF (DIA), iShares Lehman Aggregate Bond (AGG)
AnnTaylor: Weak Earnings, Strong Outlook
AnnTaylor Stores said this morning its FQ4 net income fell 27%, its first earnings setback in six quarters, as it was forced to discount merchandise to clear excess inventory. EPS was $0.31, down from $0.38 a year ago, but ahead of consensus estimates of $0.29. Net sales were up 6% to $610.5 million, in line with estimates. Same-store sales fell 6%. The company offered guidance of $2.15-2.25 a share, slightly higher than analyst forecasts of $2.13. The company also said its board authorized a $300 million share buyback program. The company, which has 869 shops, plans to open as many as 85 stores, mostly Loft locations, while closing about ten stores this year. "Looking further out, the Company indicated that it is moving forward with the launch of a new concept targeted at what the Company believes is a very attractive untapped opportunity in the market today. The new concept is targeted to be rolled out in Fall 2008." It didn't elaborate on what the untapped opportunity might be. Among 19 analysts, six rate ANN a Buy, 11 a Hold, and two say Sell. In pre-market trading, shares are up 1.6% to $36.24.
Sources: Press Release, MarketWatch, Bloomberg
Commentary: Jim Cramer's Take on ANN
Stocks/ETFs to watch: AnnTaylor Stores Corp. (ANN). Competitors: Chico's FAS Inc. (CHS), Gymboree Corp. (GYMB), Talbots Inc. (TLB), Guess? Inc. (GES), Liz Claiborne Inc. (LIZ). ETFs: Retail HOLDRS ETF (RTH), SPDR S&P Retail (XRT), PowerShares Dynamic Retail (PMR)
China's Premier Says Plans to Diversify Reserves Won't Affect U.S. Dollar
PM Wen Jiabao tried to allay concerns about China's plans to allow a new agency to manage a portion of its more than $1 trillion in foreign reserves at a press conference today in Beijing. "Our purchases of U.S. dollar assets are mutually beneficial," and the formation of a new agency "won't affect the value of the U.S. dollar assets," said Wen. He added that the agency is tasked with "preserving and increasing the value of foreign exchange reserves" and said increasing the "safety" of holding is important given China's inexperience in overseas investing. A Credit Suisse analyst in Singapore commented, "We're looking at very small amount of money going into the equity markets until they build up the expertise to manage these holdings." An analyst at China's Construction Bank acknowledged "the most immediate problem is the lack of talent" with global investment management experience. PM Wen also spoke about the need to raise direct overseas investments as China lags far behind other economies its size.
Sources: Bloomberg, The Wall Street Journal
Commentary: China's Commerce Minister Discusses Trade Surplus, Critical of U.S. Proposed Tariff • China's February Trade Surplus Blows Away Estimates, 2nd Highest Ever • Commodities, Gold and Silver to Benefit from China's New Investment Agency
Stocks/ETFs to watch: iShares Trust FTSE-Xinhua China 25 Index Fund (FXI), PowerShares Golden Dragon Halter USX China Portfolio (PGJ). Bonds: iShares Lehman Aggregate Bond (AGG), iShares Lehman 1-3 Year Treasury Bond (SHY), iShares Lehman 7-10 Year Treasury (IEF), iShares Lehman 20+ Year Treas Bond (TLT), iShares Lehman TIPS Bond (TIP). Currency: PowerShares DB G10 Currency Harvest Fund (DBV), Euro Currency Trust (FXE)
Carlos Ghosn To Cease Heading Nissan's N. American Operations
In an attempt to address worse-than-expected sales, Nissan Motor Co. CEO Carlos Ghosn will no longer control the company's North American operations. Taking over for Ghosn, who also leads Nissan-owned Renault SA, will hand over responsibility for N. American operations to Executive VP Hiroto Saikawa. Scaling back his obligations will give Ghosn the ability to tackle what he's labeled a 'crisis' at Nissan. In February the company cut its earnings forecasts for FY2007 on weak U.S. and Japanese sales. Ghosn is also currently trying to double profits at Renault. Koichi Ogawa, of Daiwa SB Investments in Tokyo, says "Ghosn revived the company by running flat out, but he has pushed himself and employees to the point of exhaustion. Ghosn has said simply "We have to put more energy into management." In separate news, Nissan disclosed today it will cut auto production at two Japanese factories though the company didn't disclose the scope of the cutbacks.
Sources: Bloomberg, Reuters, AP
Commentary: GM Vehicle Sales, U.S. Market Share Rise; Japan's 'Big 3' Continue to Roll • Nissan's Earnings Disappoint Across the Board, Outlook Lowered • Why Japanese Cars Earn $2400 More Profit Each
Stocks/ETFs to watch: Nissan (OTCPK:NSANY). Competitors: Toyota (TM), Honda (HMC), General Motors (GM), Ford (F), DaimlerChrysler (DCX)
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Asian Headlines (via Bloomberg.com)
• Asian Stocks Fall; Mitsubishi UFJ, Toyota Drop on Economic Growth Concern Asian stocks fell, posting their third weekly loss. Mitsubishi UFJ Financial Group Inc. (MTU) and Toyota Motor Corp. (TM) led Japanese stocks lower on concern the level of pay rises will damp growth in the region's largest economy.
• Livedoor Founder Horie Gets 2 1/2 Year Prison Term for Securities Fraud Takafumi Horie, the Japanese Internet entrepreneur who challenged the country's establishment, was sentenced to 2 1/2 years in prison for securities fraud.
• Accredited Home Lenders Agrees to Sell $2.7 Billion of Loans for Liquidity Accredited Home Lenders Holding Co. (LEND), a U.S. mortgage lender to people with poor credit, agreed to sell $2.7 billion of loans to pay bankers who demanded cash to cover the risk of defaults.
European Headlines (via Bloomberg.com)
• European Stocks Decline on Economic Growth Concern, Led by BP, Shell, HSBC European stocks declined, led by commodity producers and banks, on speculation a slowdown in U.S. economic growth will weigh on profits.
• UBS Investment Bank Head Moelis Might Quit After Disagreement Over Buyouts Kenneth Moelis, who helped UBS AG (UBS) win a bigger slice of Wall Street's merger-advisory business, may leave amid frustration with the company's reluctance to commit capital to leveraged buyouts, two people with knowledge of the matter said.
• HSBC Shares Extend Slump as U.S. Subprime Mortgage-Industry Crisis Spreads Shares of HSBC Holdings Plc (HBC) fell to their lowest since October 2005, extending a four-month losing streak, on concern a U.S. mortgage industry crisis will erode earnings this year.
• Unilever Shares Climb to Five-Year High on Private-Equity Bid Speculation Shares of Unilever (UN), the world's second-biggest food and detergent maker, rose for a second day to the highest value in almost five years on takeover speculation after Cadbury Schweppes Plc (CSG) said it would sell or spin off its North American beverage unit.
• NIBC Delays $2 Billion Initial Share Sale, Citing `Volatility' of Markets NIBC, a Dutch investment bank owned by J.C. Flowers & Co., delayed an initial public offering because of market ``volatility,'' becoming the biggest European company to cancel a sale amid stock swings this year.