Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:50 AM ET
S&P 500:-2.50; 1474.25
NASDAQ 100:-1.50; 1993.25
Dow: -19; 13345
NIKKEI 225:-0.63%; 16,420.47 (104.46)
HANG SENG:-0.08%; 23,886.07; (-18.02)
SHANGHAI SE COMPOSITE:-0.5%; 5,559.12 (-28.20)
BSE SENSEX 30:+0.28%; 15,465.40; 43.35
FTSE 100:-0.14%; 6306.50 (8.70)
CAC 40:-0.14%; 5,643.46 (7.81)
XETRA-DAX:0.02; 7,650.11 (1.53)
U.S. Breaking News-- see today's Wall Street Breakfast for earlier news
Merrill Cuts Estimates on Banks, Says 60% Chance of Recession
Merrill Lynch dropped its earnings estimates for 12 large regional U.S. banks -- including Bank of America Corp., Wachovia Corp. and Wells Fargo & Co. -- over concerns relating to current economic conditions in the U.S. Wachovia's EPS target was lowered to $4.90 from $5.05, Bank of America's was reduced to $5.10 from $5.25, and Wells Fargo's estimate was cut to $2.95 from $3.00. Merrill analysts Edward Najarian, Brian Bedell and Dwain Carryl said the probability of a U.S. recession is now more than 60%.
Commentary: As Mortgage Brokers Flounder, Consider Investing in Regional Banks • It's Too Late To Short The Financial Sector • Bank of America and Wells Fargo Are Buys At Current Levels
Stocks/ETFs to watch: BAC, WB, WFC, MER. ETFs: IAT, KBE, KBW, RKH
MEMC Drops on Lowered Outlook
Shares of MEMC Electronic Materials are trading to the downside, -3.8% to $59.10, in pre-market activity, on news the company cut its revenue guidance for the third-quarter, due to a construction incident last week at a polysilicon plant undergoing an expansion in Texas. MEMC said it expects Q3 revenue to be about 5% less than its prior forecast of $500 million. Analysts had expected sales of $504.1M, on average. Margins are seen "approximately flat sequentially" as a result of the associated costs, which include inclement weather hindering recovery operations. CEO Nabeel Gareeb commented in a statement that the company does "not expect this discrete incident to have any affects on year-end or long-term targets for capacity expansion." MEMC believes it will have an opportunity to recover some of its lost production in Q4, potentially reducing the impact on full-year targets. Gareeb said "specific quantification of this potential recovery will not be available until after the end of this quarter," and therefore will be provided when MEMC reports Q3 earnings results.
Sources: Press release, MarketWatch
Commentary: MEMC Electronic Materials: More Cause For Concern Than Opportunity • Credit Suisse Sees Opportunity For MEMC Trade • MEMC Electronic Materials: The Future Looks Bright For Solar Wafers
Stocks/ETFs to watch: WFR. ETFs: QCLN, PSI, IGW, PBW, PWJ
Earnings call transcript: MEMC Electronic Materials Q2 2007
Nasdaq Sets Deadline For LSE Bidders -- WSJ
Nasdaq announced it would give potential buyers of its 31% stake in the London Stock Exchange [LSE] until Friday to express their interest, the Wall Street Journal reported. It is not certain, however, that there will be any formal bids made between now and then, because it is not a hard deadline according to two sources familiar with the situation. Last week, there were around six companies considering putting in a bid, some even having talks with Nasdaq reps. One source also said that the Nasdaq was considering selling the shares on the open market. The U.S. exchange has accumulated the stake after two failed attempts to take over the LSE, and now needs some financial flexibility to fund an attempted buyout of OMX AB, a Nordic exchange operator (full story). The LSE stake is valued at approximately $1.71 billion.
Sources: Wall Street Journal, Reuters
Commentary: Nasdaq and Borse Dubai May Form Joint Bid for OMX -- Daily Telegraph • The Nasdaq Is a Buy on Valuation and Growth Catalysts • Nasdaq OMX Bid Aided by Swedish Politics
Stocks/ETFs to watch: NDAQ. Competitors: CME, NMX, NYX. ETFs: EXB
Earnings call transcript: The Nasdaq Stock Market Q2 2007
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Asian Headlines (via Bloomberg.com)
Asian Stocks Fall For First Time in Four Days; Posco, China Mobile Drop -- Asian stocks fell for the first time in four days, led by Posco and China Mobile Ltd., on speculation recent gains have outpaced the potential for earnings growth.
Philippine Stocks Decline on Oil, Led by SM Prime: World's Biggest Mover -- Philippine stocks fell, snapping a three-day rally, on concern higher crude oil costs will hurt consumer spending and corporate earnings.
Sovereign Wealth Funds May Drive Asian Stocks Higher, Fullerton's Lee Says -- Asian stocks are likely to climb in the next six to 12 months as so-called sovereign wealth funds pump more funds in to regional equities to boost returns, said Gerard Lee, chief executive officer of Fullerton Fund Management.
DnB's Ho Uses Market Rout to Buy Emer, Goldbond for Fund Amid Redemptions -- Anna Ho, manager of the Carlson Asian Small Cap fund, used the worldwide market rout in July and August to buy stocks, even as her investors demanded as much as 10 percent of their money back.
European Headlines (via Bloomberg.com)
European Bank Stocks Advance; Deutsche Bank, UBS, Credit Suisse Gain -- European bank stocks rose, led by Deutsche Bank AG after Chief Executive Officer Josef Ackermann said there are signs that markets are beginning to stabilize.
U.K. Real-Estate Stocks Decline, Led by Hammerson; Kazakhmys, Shell Climb -- U.K. property stocks fell, led by Hammerson Plc after the company said commercial real-estate investment is starting to slow. Segro Plc and Liberty International Plc paced the retreat.
Deutsche Bank Says Financial Markets Stabilizing After `Turbulent' August -- Deutsche Bank AG Chief Executive Officer Josef Ackermann said there are signs that financial markets are stabilizing after ``turbulent'' conditions in August.
ArcelorMittal, Schneider, Vinci to Join Euro Stoxx 50 Index; Ahold Exits -- ArcelorMittal, the world's biggest steelmaker, Vinci SA and Schneider Electric SA will be added to the Dow Jones Euro Stoxx 50 Index, a measure for countries that share the euro currency.