Wall St. Breakfast's Pre-Market Snapshot:
U.S. Futures As of 9:10 AM ET
S&P 500: +3.75; 1,486.50
NASDAQ 100: -6.50; 2,174.50
Dow: +33; 13,388
NIKKEI 225: -2.02%; 15,771.57 (-325.11)
HANG SENG: -3.19%; 28,760.22 (-948.71)
SHANGHAI SE COMPOSITE: -4.85%; 5,330.02 (-271.76)
BSE SENSEX 30: -1.20%; 19,058.93 (-230.90)
FTSE 100: +0.23%; 6,399.60 (+14.50)
CAC 40: -0.64%; 5,646.95 (-36.27)
XETRA-DAX: +0.20%; 7,814.96 (+15.34)
Commodity Futures (Reuters/Jefferies CRB)
Oil: +0.38%; $96.74 (+$0.37)
Gold: +0.35%; $836.40 (+$2.90)
Natural Gas: +0.26%; $7.64 (+$0.02)
Silver: +0.95%; $15.47 (+$0.145)
U.S. Breaking Newssee today's Wall Street Breakfast for earlier news
Ford Rises on Strong Earnings Beat; May 'Break Even' Before Charges in '07
Ford Motor Company reported a significantly narrower quarterly loss Thursday morning, and nearly broke even on an adjusted basis, topping analyst estimates and sending shares higher by 4.85% in pre-market trading (as of 7:36 AM ET). Ford reported a Q3 net loss of $380 million, good for EPS of -$0.19, versus a loss of $5.2 billion (EPS of -$2.79) in the prior-year period. Total revenue, including revenue from its finance arm, Ford Credit, was up 11.7% Y/Y to $41.1 billion. Wednesday, top U.S. rival General Motors reported 'record' revenue of $43.1 billion amid a one-time loss of $39 billion (full summary). The company, which is in the midst of a major overhaul of its business, as it attempts to again become profitable, said adjusted earnings from continuing operations were -$24 million, good for EPS of -$0.01. On that basis, the company lost $0.45 cents a share a year earlier. Consensus analyst estimates were for an adjusted EPS loss of $0.46-$0.48 on revenue of $33.46 billion. Ford CEO and President Alan Mulally called his company's latest performance "very encouraging," adding, "We can see our [restructuring] plan taking hold with significant improvement continuing in our core Automotive operations," (full earnings call transcript later today). Profitability may not be all that far away: Ford said it expects "Full-year pre-tax results excluding special items to be in the range of a small loss to breakeven" with significant "substantial year-over-year improvement in fourth-quarter results." On the labor front, Ford laid off 6,500 workers in North America during Q3 as part of its restructuring. The company recently concluded a four year agreement with the United Auto Workers union (full summary). Ford saw its monthly sales decline for the 12th straight month in October (full summary). The company said it expects to sell off luxury brands Jaguar and Land Rover by early 2008 (full summary). In related news, Ford and Daimler announced they had agreed to swap 34.3 million shares in Canada's Ballard Power Systems worth approximately $168 million in exchange for Ballard's automotive fuel cell business. Ballard will cancel the shares upon receipt.
Commentary: Ford, UAW Reach Deal • October Auto Sales: Ford Sags, Toyota Gains, Nissan Surges • A Stock Pick That's Built Ford Tough
Stocks to watch: F. Competitors: GM, DAI, TM, HMC, OTCPK:NSANY
Earnings call transcript: Ford Q2 2007
ECB, BOE Keep Rates Unchanged
Both the European Central Bank [ECB] and the Bank of England [BOE] voted to maintain their current benchmark interest rates as widely expected, at 4.0% and 5.75%, respectively. Central bankers are torn between controlling rising inflation and appreciating currencies, against continued financial industry turmoil stemming from the U.S. subprime mess. "The recent energy- and food-led spike in inflation fuels the fears of the hawks: Combined with the still healthy pace of the euro-zone economy and a tighter labor market, risks of a broader-based acceleration in prices increase. At the same time, the appreciation of the euro and the still fragile state of the financial markets confirm the fears of the doves," commented a London-based Bank of America economist. The ECB is particularly concerned with inflation, as consumer prices jumped 2.6% in October for the fastest rise in more than two years. The ECB's target of 2% is an elusive one it has not been able to achieve over the past eight-years. Meanwhile, the Bank of England is also reluctant to cut rates -- despite inflation falling back to 1.8% from a peak of 3.1% in March -- since Q3 GDP of 3.3% reached a three-year high and unemployment of 2.6% in Sept. is at a two-year low. Still, the BOE faces a declining real estate market and deteriorating confidence among manufacturers and the services sector alike. The U.S. FOMC has recently cut rates twice to 4.5%. Benchmark stock indices are mostly lower throughout Europe, but the FTSE 100 and DAX are both trading slightly to the upside.
Commentary: Current Dollar Decline Longer, More Severe Than Historical Declines • Bill Gross: Expect Fed Funds To Hit 3.5% - Seeking Alpha • ECB , BoE Hold Rates Steady Despite Inflationary Dangers
Stocks to watch: EWU, EZU, VGK, FEZ, FXE, DBV
Related: ECB and BOE websites
Clear Channel Beams Q3 EPS Beat
Shares of Clear Channel Communications are up 2.2% to $36.70 in pre-market trading following the company's better than expected 51% jump in third-quarter profit to $279.74 million ($0.56/share). Adjusted earnings per share (excluding gains from asset sales) of $0.52 easily beat analysts' average estimate of $0.38. However, revenue growth of 5% to $1.73B fell short of analyst expectations of $1.77B. Outdoor advertising revenues climbed 14% to $817.5M, while radio broadcasting related revenue declined 1% to $882.2M. Clear Channel said it will not host a quarter conference call due to its pending private equity takeover deal (approved in a Sept. 25 shareholder vote) valued at $19.5B ($39.20/share). Clear Channel is hopeful the deal will close by year's end, but has said it may not close until early 2008 due to ongoing antitrust and FCC reviews. However, the company said Q4 outdoor advertising revenue is trending up 7.7%, against a 4.7% pacing down in revenues at its radio division. Shares of Clear Channel lost 1.8% to $35.91 on Wednesday amidst a broader market sell-off.
Commentary: Icahn Management Releases Latest 13F: Summary of Holdings • Loeb's Third Point Issues Latest 13F: Summary of Holdings
Stocks to watch: CCU. Competitors: CMLS, CDL, XMSR, SIRI
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• Shares of HDTV and LCD maker Syntax-Brillian Corp. (BRLC) tumbled 7.9% in pre-market trading (as of 8:50 AM ET) as the company missed estimates by a wide margin. EPS was -$0.15 on revenue of $150.6 million; Consensus estimates were for EPS of $0.05 on revenue of $176.25 million. BRLC share are down 55% YTD. (source: Reuters)
• Charter Communications (NASDAQ:CHTR) plunged 11.25% in pre-market trading (as of 8:45 ET AM) on a worse than expected loss in Q3. Net income was -$407 million, or -$1.10 cents a share, vs. EPS of -$0.41 a year earlier. Revenue climbed 9.9% to $1.53 billion. Consensus analyst estimates were for EPS of -$0.89 on revenue of $1.53 billion. CHTR shares are down 42% YTD. (source: Wall Street Journal)
Today's Market (via Sam Collins, ChangeWave.com)
Recap of Yesterday's Action
Yesterday's new round of selling began when a Chinese official called for the country to diversify into other currencies than the U.S. dollar. That was seen as a change in China's policy, in which "diversify" really meant "sell," and could result in flooding the markets with dollars. That fear led to another round of selling in the dollar and the euro hit another new high at $1.473.
Two other stories added to the selling pressure: General Motors (NYSE:GM) reported a net loss of $39 billion from a huge accounting charge, and the New York attorney general accused Washington Mutual (NYSE:WM) of collusion with real estate appraisers. Following this, the Royal Bank of Scotland added fuel to the fire when it said that the credit crisis could ultimately result in write-offs of up to $250 billion. So, financial stocks suffered another day of strong selling.
At the close, the Dow Jones Industrial Average was off 361 points closing at 13,300. The S&P 500 was off 24 points at 1,476, and the Nasdaq lost more than 76 points to close at 2,749. Volume on the Big Board came to nearly 1.7 billion shares and 2.7 billion shares traded on the Nasdaq, with breadth strongly negative on both. The NYSE had three times more sellers than buyers, and on the Nasdaq the ratio was a negative 5-to-1.
Crude oil (December contract) closed down by 33 cents at $96.37 but only after setting another new high at $98.62 a barrel. The Amex Energy SPDR (NYSEARCA:XLE) lost $2.66 and closed at $74.97. Both crude and the XLE appear to have formed reversals after making those new highs, but that can't be confirmed until last week's lows are penetrated.
The December gold contract closed at $833.50, up $10.10, for a new record-closing high that eclipsed the one set on Jan. 21, 1980 at $825.50. The Philadelphia Gold/Silver Index [XAU] fell $4.64 and closed at $188.53.
What the Markets Are Saying
The support line for the S&P 500 finally cracked yesterday after holding back four rounds of pounding in the last three weeks. The significant line at 1,490 and the S&P's 200-day moving average were also violated and that triggered a powerful sell signal from our internal indicator, the CBR (Collins Bollinger Reversal).
Even though the Dow Jones Industrial Average is still holding above its support line at 13,270 and the NYSE Composite is above its line of support at 9,740, it is clear that once again the bears are in charge and the likelihood is that those barriers will fall, too.
Today's Trading Landscape
The following companies will report earnings today: Adams Respiratory, Allscripts, American States Water, Barr Pharmaceuticals, Cablevision, California Pizza Kitchen, Cephalon, Charter Communications, Chiquita Brands, Clear Channel, Constellation Energy, Corrections Corp, Dean Foods, Dendreon, Dynegy, EGL, EZ Corp., Flowers Foods, Hansen Natural, Hospira, Hutchinson Technology, King Pharmaceuticals, Knot, Lamar Advertising, Lee Enterprises, Lincoln Educational, Live Nation, Marsh & McLennan, MHI Hospitality, National CineMedia, Nvidia, Public Storage, Qualcomm, Quanta Services, Ready Mix, Red Lion Hotels, Red Robin Gourmet, Rockwell Automation, S1, Sapient, Spectrum Brands, Station Casinos, Stereotaxis, Syneron Medical, Syntax-Brillian, Urban Outfitters, US Concrete, Vonage, Watson Wyatt Worldwide, WCI Communities, Windstream and Xerium.
The following economic reports are due: chain store sales (the consensus expects 2.1%) and the weekly jobs claims. The focus today will be on Federal Reserve Chairman Ben Bernanke's appearance before Congress and the ability of stocks to reverse yesterday's losses.
Asian Headlines (via Bloomberg.com)
Asian Stocks Drop Most in 12 Weeks as Dollar Slides, Subprime-Losses Mount Asian stocks fell the most in 12 weeks, extending a global rout after the dollar plunged yesterday, oil slumped and U.S. financial companies disclosed mounting credit-market losses.
Primary Offers $1.9 Billion for Rest of Symbion, Rivals Healthscope Bid Primary Health Care Ltd., Australia's second-largest owner of medical centers, offered A$2.1 billion ($1.9 billion) in cash for the rest of Symbion Health Ltd., challenging an agreed buyout led by Healthscope Ltd.
Kirin Agrees to Buy San Miguel's Australian Beverage Unit for $2.6 Billion Kirin Holdings Co., Japan's biggest brewer, agreed to buy San Miguel Corp.'s Australian dairy and fruit juice unit, as it seeks to make up for dwindling beer sales in its home market.
Yuan Rises Most in Two Weeks as China's Reserve Plan Sparks Dollar Decline The yuan rose the most in almost two weeks against the dollar after China's plans to diversify its $1.43 trillion in foreign-exchange reserves caused the U.S. currency to extend a global slump.
Hyundai Heavy Profit More Than Doubles as Surging Trade Raises Ship Prices Hyundai Heavy Industries Co., the world's largest shipbuilder, said third-quarter profit more than doubled to a record after it raised vessel prices and as China's trade with Europe and the U.S. spurred demand for ships.
Honda Plans System Allowing Fuel-Cell Car Owners to Make Hydrogen at Home Honda Motor Co., aiming to start mass production of fuel-cell cars by about 2015, is developing a system using solar energy for drivers to make hydrogen at home to fuel such vehicles.
European Headlines (via Bloomberg.com)
European Stocks Fall; Fortis, Deutsche Bank, ING, Credit Suisse Pace Drop European stocks retreated, led by financial companies, after Morgan Stanley said the outlook for credit markets worsened and Fortis reported profit that trailed analysts' estimates.
Fortis Reports Profit Fell to $1.17 Billion, Missing Analysts' Estimates Fortis, part of a group that bought ABN Amro Holding NV, reported an unexpected decline in third- quarter profit on an increase in borrowing costs and U.K. flood- insurance claims. The shares fell the most in four years.
Close Brothers Rejects Cenkos, Landsbanki $2.9 Billion Bid as `Inadequate' Close Brothers Group Plc, the 129-year- old London-based investment bank, rejected a 1.4 billion-pound ($2.9 billion) cash offer from Cenkos Securities Plc and partner Landsbanki Islands hf.
InBev Net Rises 8.4 Percent, Misses Estimates; Shares Fall Most Since 2001 InBev NV, the world's largest brewer, reported third-quarter profit that missed analysts' estimates after demand for Stella Artois and Beck's stagnated in Britain and Germany. The shares dropped the most in almost seven years.