Wall Street Breakfast

by: SA Editors
SA Editors
Seeking Alpha's flagship daily business news summary, gives you a rapid overview of the day's key financial news. It is published before 7:00 AM ET every market day and delivered to over 900,000 email subscribers.
  1. Yesterday's slide: Wall Street slid Thursday: Dow -192.08 (-1.42%); S&P 500 -21.39 (-1.43%). Nasdaq -47.62 (-1.75%). Volume was light. Decliners outpaced advancers 3:1. Bond yields fell sharply (10-year Treasury down 0.1% to 4.19%). The dollar fell 0.49% against the Yen but gained 0.81% against the Euro. Crude gained $0.65 to $96.62/bbl. Gold closed up $2.30 to $831.80.
  2. In Asia Friday morning, Japan (-1.65%) and Hong Kong (-1.7%) fell; Shanghai was up 1.44%. Japan's Nikkei finished 2007 down 11%, its first decline in five years. Japanese markets are closed until next Friday. European markets were down about 0.3% in early trading. U.K. house prices fell by 0.5% in December.
  3. Pakistan's stock market (+47% YTD) is closed Friday to limit potential damage after the assassination of former PM Benazir Bhutto. Indian ADRs and ETNs fell Thursday. Bhutto enjoyed U.S. support, and may have retaken PM on elections Jan. 8. Her death removes President Musharraf's strongest potential ally in a struggle against radical Islam. S&P warned Pakistan's credit rating could be lowered in the face of a "prolonged political stalemate or social disorder." However, in Friday trading, Bombay's Sensex fell just 0.04%. Some analysts say long-term effects on Karachi's market will be minimal.
  4. It appears the bulk of the Fed's first $20B auction went to large Wall Street firms, with only a small percent leaving New York.
  5. Warren Buffett's Berkshire Hathaway (BRK.A) agreed Friday to buy the reinsurance unit of Dutch bank ING (NYSE:ING) for €300 million ($435.2 million). Buffett is also planning to open a municipal bond insurer which will make it cheaper for municipalities to borrow - new competition for battered MBIA (NYSE:MBI) and Ambac Financial (ABK) (see below).
  6. Other banks may follow ING's lead and sell assets to bolster balance sheets: Citigroup (NYSE:C) may shed up to $12 billion worth of non-critical units; HSBC (HBC) could exit its $13 billion auto finance business.
  7. Fitch Ratings put 240 residential mortgage-backed securities backed by bond insurers, including MBIA (MBI) and Ambac Financial (ABK), on review for downgrade.
  8. Troubled student lender Sallie Mae (SLM -7.7%) disclosed details of a previously reported $2.5B offering. SLM priced 101.78 million shares at $19.65 (Thu. close $19.65), and is offering $1 billion in 7.25% mandatory convertible preferred stock. $2B of the proceeds will be used to settle obligations incurred on forward commitments to buy its own shares; the rest will go to "general corporate purposes." SLM also said higher financing costs and subsidy cuts "could possibly eliminate the profitability" of making new federally-backed student loans. It will shift its focus to private loans, which now account for 17% of its $160B portfolio.
  9. Dubai World disclosed it grew its stake in MGM Mirage (NYSE:MGM) to 6.5% from 4.9% by buying 5M shares for $424 million ($84.80/share) from The Lincy Foundation, the philanthropic foundation of Kirk Kerkorian.
  10. Insiders at Leap Wireless (LEAP -4.75%) snapped up $258 million worth of shares this month. Chairman Mark Rachesky bought 3.8 million shares for $163.2M; he now has a 22.3% stake. Harbert Management purchased 2.4M shares for $94.8M; it now owns 15%. "Insiders definitely see value there, and they definitely see bright prospects for the company over the longer period," StreetInsider.com's Lon Juricic said.
  11. Shares of front-office software vendor Chordiant (CHRD) jumped 14.5% in AH after announcing a biggest-ever €18.1M ($26.1M) contract with a leading telecom company.
  12. Christopher & Banks (NYSE:CBK) reported Q3 EPS of $0.29 vs. consensus of $0.28. Revenue was in line at $160M. Comps were up 9%. CBK sees Q4 EPS of $0.02-$0.05, below consensus of $0.07. Shares (-3.7%) fell another 5.6% in AH.
  13. "My guess is we've got some trying times ahead," Phil Dow, director of equity strategy for RBC Dain Rauscher, said Thursday. "You've got people beginning to worry about the relatively high earnings expectations next year, and then how financial stocks do when they report earnings in early to mid-January."
  14. The Consumer Confidence index rose to 88.6 from a revised 87.8, but consumers remain "far from optimistic." Initial jobless claims rose 1,000 to 349,000. Continuing claims were up 75K to 2.71 million, their highest in two years. Durable goods orders rose (.pdf) 0.1% on strong aircraft sales; economists were looking for 2.9%.