Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 8:02 AM ET
S&P 500: +6.00; 1,558.20
NASDAQ 100: +8.75; 2,131.75
Dow: +39; 14,080
NIKKEI 225: -0.16%; 17,065.04 (-27.45)
HANG SENG: +3.18%; 27,831.52 (+857.54)
SHANGHAI SE COMPOSITE: 5,552.30 [9/28]
BSE SENSEX 30: -0.02%; 17,773.36 (-3.78)
FTSE 100: +0.21%; 6,561.90 (+14.00)
CAC 40: +0.08%; 5,809.02 (+4.63)
XETRA-DAX: +0.36%; 7,973.35 (+28.36)
Commodity Futures (Reuters/Jefferies CRB)
Oil: -0.11%; $81.35 (-$0.09)
Gold: -0.22%; $742.20 (-$1.60)
Natural Gas: -0.90%; $7.34 (-$0.07)
Silver: +0.30%; $13.54 (+$0.04)
U.S. Breaking Newssee today's Wall Street Breakfast for earlier news
Goldman to Buy Japanese Real Estate Co. with JV for $1.1B
Goldman Sachs plans to acquire Japanese real estate investment service provider Simplex Investment Advisors Inc., for ¥124.7 billion ($1.1B), or ¥215,000/share, representing a 65% premium over its Thursday close. Goldman and joint venture partner Aetos Capital LLC are pursuing at least an 80% stake of Simplex, according to a report filed with the Tokyo Stock Exchange. Nikko Cordial, a 42.5% shareholder of Simplex issued a statement saying it agrees to sell its stake to the venture. Nikko said it will book a ¥44B gain. The JV will purchase Simplex shares in the stock market from Oct. 12 to Nov. 8. Simplex was founded in 2002 and has ¥622B of assets under management including 179 properties in Tokyo and other cities. Goldman's local managing director of real estate investments said the company sees more upside in real estate even though the market has rallied the past two years. However, "We need to be more selective in terms of future growth potential, location and quality of tenants when we assess investing targets," commented the director. Shares of Goldman Sachs lost 0.6% to $225.95 on Thursday. Simplex Investment Advisors jumped 15.4% (limit-up) to ¥150,000.
Commentary: Goldman Sachs to Buy Tiffany's Tokyo Property -- WSJ • Citi to Acquire Rest of Nikko; List on Tokyo Exchange • Morgan Stanley to Buy 13 Japanese Hotels
Stocks/ETFs to watch: GS, OTC:NIKOY, Simplex Investment Advisors [Tokyo MOTHERS: 8942]
Earnings call transcript: Goldman Sachs F3Q07
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Today's Market (via Sam Collins, ChangeWave.com)
Recap of Yesterday's Action
After a small scare because of two negative reports, the market recovered by 10:30 a.m. on Thursday and meandered for the rest of the day. The decline in factory orders was the largest in seven months -- missing analysts' estimates by a wide margin -- and before that data came in, the report on jobless claims showed a modestly unexpected rise.
Both of these reports could indicate that the economy is slowing and could serve to put pressure on the Fed to cut rates again at its end-of-the-month meeting. But the big report that most analysts use to gauge activity is the jobs report, and that is due today. Overall, yesterday was a pretty quiet affair, with just the following corporate news:
• NutriSystems (NTRI) was a big loser after the company lowered its Q3 estimates, falling almost $16 to $31.59.
• NorthWest Airlines (NWA) gained on a Merrill Lynch (MER) buy rating.
• Marriott International (MAR) lost over $2 after the report of its Q3 earnings, despite the fact that it exceeded estimates.
At the close Thursday, the Dow Industrials had gained six points at 13,974, the S&P 500 rose by three at 1,543 and the Nasdaq gained 4 to close at 2,734. Volume was very light, with just more than 1 billion shares trading on the NYSE and just over 1.1 billion on the Nasdaq. Breadth was a positive 4-to-3 on both exchanges. The November crude oil contract gained $1.50 at $81.44 a barrel, and the Amex Energy SPDR (XLE) gained 52 cents at $74.80, finding support at its 30-day moving average but still in a short-term pullback.
The December gold contract gained $6.30 to $742.10 per troy ounce, and it executed a reversal after dropping below $730 intraday. The Philly Gold and Silver Index [XAU] also reversed, gaining $3.06 to close at $168.42, having traded as low as $163.50 during the day.
What the Markets Are Saying
At times like these, the sentiment indicators are often referenced in order to give some idea as to where the "smart money" (i.e., hedge funds, institutional traders) is going and whether it is heading in the opposite direction of the "dumb money." (The latter is generally considered to be the investment advisers and the public.)
Recent reports from Investors Intelligence (which tracks the advisers) and the American Association of Individual Investors [AAII] (which follows the public) show that both advisers and the public are now strongly bullish -- and that's not good.
In fact, in July -- just three days after the failed market breakout -- both were at the most bullish levels in months. And in August, again just three days following the market low, both were very bearish.
Now, both are very bullish. And so, you may be wise to continue to hold some cash rather than taking a flyer on the latest tip from your barber.
Today's Trading Landscape
The big news today is the September unemployment report (the consensus expects 4.7%), change in non-farm payrolls (consensus expects 98,000), manufacturing payrolls (consensus expects a 10,000 drop), hourly earnings (consensus expects 0.3% month-over-month, 4.0% year-over-year), and August consumer credit (consensus expects $9.5 billion).
On the earnings front, numbers are due from Accredited Home Lenders (LEND), Atari (OTCPK:ATAR), Chaparral Steel (CHAP), Emmis Communications (EMMS), Hybrid Fuels (OTC:HRID) and Roadhouse Grill (GM:GRLL).
Asian Headlines (via Bloomberg.com)
• Asian Stocks Climb, Capping Third Weekly Gain; BHP, PetroChina, HSBC Rise Asian stocks climbed, capping a third weekly gain. BHP Billiton Ltd. (BHP) rose after crude oil traded above $81 a barrel and a weaker dollar boosted demand for gold.
• United Test Shareholders Vote in Favor of Buyout by TPG, Affinity Equity United Test & Assembly Center Ltd. shareholders approved a takeover by TPG Inc. and Affinity Equity Partners Ltd., in Asia's third-biggest private equity buyout this year.
• Toys `R' Us Asia Removes China-Made Products Containing Lead From Stores Toys ``R'' Us Asia Ltd., a unit of Hong Kong-based Li & Fung Group, said it removed from its stores Chinese-made toys that contained lead, a day after eight U.S. companies recalled products tainted with the dangerous metal.
European Headlines (via Bloomberg.com)
• ECB Says Banks Anticipate Credit Conditions Tightening in Fourth Quarter European banks may make it harder for companies and consumers to borrow money in the next three months after the slump in the U.S. subprime mortgage market increased the cost of credit, the European Central Bank said.
• Ahold Former Chief Van Der Hoeven to Pay Company $7 Million in Settlement Former Royal Ahold NV Chief Executive Officer Cees van der Hoeven will pay the retailer 5 million euros ($7.1 million) to settle a dispute over severance, four years after he was ousted and then charged with fraud.
• Norilsk Nickel First-Half Earnings Jump 60 Percent on Higher Metals Prices OAO GMK Norilsk Nickel (OTCPK:NILSY), the world's biggest producer of nickel and palladium, reported a 60 percent increase in first-half profit after metal prices rose and the Russian company bought mines in Australia and Africa.