Wall Street Breakfast: Must-Know News

• Vodafone swings to profit. Vodafone (VOD) swung to a £6.66B ($13.2B) profit for the year, from a £5.43B loss a year ago. Sales rose 14% to £35.48B, just beating analyst consensus of £35.2B. Looking ahead, Vodafone sees 2009 revenue of £39.8-40.7B and operating profit of £11-11.5B. CEO Arun Sarin said he's stepping down in July, to be replaced by deputy Vittorio Colao. Shares gained 2.2% in London.
• LG mulls bid for GE unit. LG Electronics is considering a bid for GE's (GE) appliance unit, which is up for grabs.
• Home buyers go bargain hunting. While home sales remain weak, they are rising in some areas -- those where lenders are offering deep discounts on foreclosed properties, including Las Vegas, Sacramento, and Detroit.
• Auction-rate suits on shaky ground. Legal experts say at least 24 proposed class-action suites against broker-dealers including Citigroup (C) and Morgan Stanley (MS) for the $330B failure of the auction-rate securities market will have a hard time making a case. "I don't see how you get around the fact that, for the most part, the investors are doing better," former SEC lawyer David Gourevitch says.
• Small business sentiment weak, but improved. Small business owners think the U.S. economy is deteriorating, though sentiment was up slightly from recent lows. 28% of business owners say business is improving, up from 24% in April. 71% feel the economy is worsening.
• Microsoft calling Yell? Shares of UK local search engine Yell.com gained as much as 5.4% on rumors Microsoft (MSFT) is mulling a bid for the company.
• BUDding merger. Belgian business daily De Tijd says InBev's board will decide today whether to allow its advisers to start negotiating with Anheuser Busch (BUD). Shares of InBev fell 2.8%.
• Betting dollar pegs will relax. Hedge funds and currency investors are betting heavily gulf nations like Saudi Arabia, Qatar and the United Arab Emirates will loosen their dollar pegs and allow their currencies to rise. "The rope is pretty strained, and once it breaks, the rubber raft is going to shoot to the surface," one fund manager says.
• Private equity deals rising from dead? Private-equity firms Blackstone (BX) and Apollo Management are in talks to buy Chemtura (CEM), a manufacturer of specialty chemicals. Chemtura as a market cap of about $1.9B. Chemtura said in December it would pursue strategic alternatives.
• HSBC warns worst may not be over. HSBC (HBC) CEO Michael Geoghegan says the bank may see further losses on its U.S. subprime assets. "We see a slowing of provision requirements in the first quarter. But is this permanent? We do not know," he said this morning in Hong Kong. "We are not convinced yet that the worst is over." HSBC put aside $3.2B for bad debt in Q1, down from a previous $4.6B. Noteworthy: 80% of the bank's subprime mortgage borrowers continue to make repayments.

Today's Markets

• Asian markets were mainly higher. Nikkei +1.5%. Hang Seng +0.6%. Shanghai +0.3%. BSE Sensex -0.45%.
• In Europe, markets are largely down at midday. FTSE +0.08%. CAC -0.66%. DAX -0.3%.
• U.S. futures are down at 7:15 AM. Dow -0.17%. S&P -0.11%. Nasdaq +0.03%
• Gold -0.33% to $923. Oil +0.79% to $133.24.

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Comments

[nukldrager:]

??? Does "Betting Dollar pegs will relax " mean that USD value drop continues?

2008 May 27 08:16 AM

[SW Richmond:]

nukldrager

Yes, that's what it means. Look for engineered dollar strength in response to this ("see, it doesn't matter!"), but then back to trend, and probably accelerated.

2008 May 27 08:34 AM

[dectra:]

So much for bush's "strong dollar" policy....what a putz.

Worst. President. Ever.

2008 May 27 08:42 AM

[tom1234:]

dectra--i was ashame to be an american when interest rates were 22% and rosilyn told jimmy to appoligize to the iatola to get back the us citizens held hostage in iran-- and we had odd/even gasloine lines --

2008 May 27 08:59 AM

[nukldrager:]

So park the car. Trade the oil plays online from your couch, and buy a one way ticket to Singapore. (in dollars while you still can) Geeze, I sound like a desperate carpenter. Maybe when I get to Singapore, I can work on Mr. Rogers house, or in his neighborhood! lol, (but not really). Interesting times. Complex and indicernable. When does the dollar peg get so relaxed that it is no longer the peg? Are we really in fact losing an economic war? Memorial day I saw now less traffic on the roads, at the malls than in the past, but these gas prices have to show up sometime as less people out and about I would think.

2008 May 27 09:25 AM

[nukldrager:]

Typo... "no less traffic"

2008 May 27 09:29 AM

[Mazel Tov:]

Rabbi Hoffman...what happend on Friday? I was lost without your report! Do leave me hanging like that again. Mazel Tov Eli

2008 May 27 10:16 AM

[Eli Hoffmann:]

Thanks Mazel Tov. Ran late Friday, although it did go up eventually. Glad you enjoy.

2008 May 27 10:34 AM

[dave mckay:]

dectra said.."So much for bush's "strong dollar" policy....what a putz. Worst. President. Ever."

I see the BDS afflicted (Bush derangement syndrome) have shown up. Too bad you can't see the socialism that your favorite candidate will bring. God help us all.

2008 May 27 10:59 AM

[jimocarroll:]

Iatola: the illegitimate offspring of an Iranian theocrat and the former Chairman of the Chrysler Corporation.

I guess...

2008 May 27 11:44 AM

[Daniel Kowk...:]

We all knew Jimmy Carter was a bad president. He is even a worse ex-president.

2008 May 27 12:01 PM

[HBADGER:]

and what did Bush (the worst President ever) bring?????? Prosperity!!!

2008 May 27 12:01 PM

[jackooo:]

Highest the stock market has ever been....
And he did not make fools buy houses.......

2008 May 27 02:08 PM

[User 6790:]

Eli,
In your 'Todays markets' summary, could you pls include the closing values of the respective markets? Its very useful to quickly scan the values as well as the %

Thanks

2008 May 27 02:48 PM

[nukldrager:]

jackooo as you know the prez only has partial effect on economy, as the fed and congress have maybe (probably) a bigger impact. Bankers share as much of the culpability as the "fools" who ignored caveat emptor. And as has been reported here many times, the housing part of the credit crisis is not the biggest piece of the problem. If the bankers that created this mess were rocket builders, and the passengers on the rocket were the buyers, the rocket would have exploded at 2,008 feet above the ground for all to see on the news over and over again. Bankers are still alive and well on the ground
re-designing their next rocket.

2008 May 28 06:49 AM