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  • Oil prices take a dive. Crude oil futures closed down more than $6/barrel, the largest daily drop in 17 years. Besides longs booking profits, other factors might have been 1) Bernanke saying the U.S. economy faces significant growth risks. 2) OPEC lowered its global oil-demand growth forecast for 2008 by 70K b/d and for 2009 by 100K b/d. "It looks like oil fell to lows we saw at the end of last week and then probably triggered quite a few automatic sell-stops," Wachovia's Nathan Golz said. Today brings the weekly EIA petroleum inventories at 10:35. Forecast (Reuters): Crude -2.1M. Distillate +2M. Gasoline -0.4M. Utilization 89.2%.
  • SEC tweaks rule to reduce short-selling. In an effort to limit naked short selling, the SEC said it will issue an emergency order requiring 'pre-borrowing' on all short sales of Fannie (FNM), Freddie (FRE), and primary brokers (LEH, MS, GS, MER) for the next 30 days. SEC chief Christopher Cox also said the SEC will draft rules "to address these same issues across the entire market."
  • After you finish reading Wall Street BreakfastSeeking Alpha's Market Currentswill keep you current all day long.
  • Two CEOs question Goldman. Sources say former Bear Stearns chief Alan Schwartz and Lehman (LEH) CEO Richard Fuld have both asked Goldman Sachs (NYSE:GS) CEO Lloyd Blankfein if there is any truth to rumors Goldman traders put pressure on the struggling firms' shares. "You're not going to like this conversation," Fuld told Blankfein, but he was hearing "a lot of noise" about Goldman traders who allegedly spread negative rumors about Lehman. Blankfein was reportedly taken aback by Schwartz's question, denied knowledge, and said he would respond severely to such behavior. Blankfein does not recall the conversation.
  • Trying to avoid another credit crunch. Federal regulators are doing everything they can to make sure liquidity-conscious lenders don't freeze up the credit markets. On Tuesday, the FDIC approved a new covered-bond policy that it hopes will provide more funds for mortgage lending. Separately, U.S. and foreign regulators are hastily putting together a liquidity risk-management framework aimed at diversifying banks' cash sources and testing for crisis situations.
  • IRS plugging holes. The IRS is closing loopholes in an effort to make it harder for Americans to hide assets in offshore shell companies. "We're trying to pierce the veil," an official said. "It's going to happen in the near future. This is not a long-term project." The new rules will require foreign banks to identify the true owner of an accounts assets, and report any interest payments made to him. Tomorrow, the Senate Permanent Subcommittee on Investigations releases a report on secret accounts at UBS (NYSE:UBS) and Liechtenstein's LGT Group.
  • BP's (NYSE:BP) stake in TNK-BP once again under threat. Russian immigration says it won't give CEO Robert Dudley a new visa unless it gets a copy of a new employment contract. BP's Russian partners want Dudley out.
  • Bernanke walks tightrope - pleases no-one? In his semi-annual testimony to the Senate Tuesday, Fed chief Ben Bernanke toed the line between remaining "particularly alert" to signs of runaway inflation, while continuing to address concerns over U.S. economic contraction. MFR economist Josh Shapiro thought the testimony, "with enormous downside economic and financial risks offsetting any impetus to tighten in the face of higher headline inflation," signalled interest rates would remain steady through mid-2009. While balanced, some were concerned about the lack of overall direction. "The Fed does not act like it has a plan to get us out of this. That's what markets did not like to hear," economist Robert Brusca said.
  • Sprint, SK Telecom mull JV. Sources say South Korea's SK Telecom (NYSE:SKM) is in preliminary talks to form a strategic partnership with Sprint-Nextel (NYSE:S) to develop new handsets and services. The two are not considering a merger, although SK Telecom may take a minority stake in Sprint. SKM investors worry any investment would require additional cash injections over time to the struggling U.S. carrier. Shares of SKM fell 2.5%; S gained 9.5%.
  • Cleveland-Cliffs spends $10B on coal miner. Miner Cleveland-Cliffs (NYSE:CLF) is buying coal miner Alpha Natural Resources (NYSE:ANR) for $10B in cash and stock - a 35% premium. The combo becomes "one of the largest U.S. mining companies and be positioned as a leading diversified mining and natural resources company," it said.
  • Convergys buys InterVoice for $335M. Relationship management solutions provider Convergys (NYSE:CVG) is buying peer InterVoice (INTV) for $335M ($8.25/share) - a 24% premium. "Separately, these companies have been strong strategic partners delivering products that have created opportunities for customers like us," said T-Mobile's (DT) Robert Strickland. "If they come together, we look forward to seeing them continue to build on their ability to bring solutions to the market that place customer relationships at the center."
  • AOL talks heat up. Time Warner (NYSE:TWX) wants to sell or merge AOL with Yahoo (NASDAQ:YHOO) or Microsoft (NASDAQ:MSFT). A source says talks have taken on a new urgency ahead of Yahoo's Aug. 1 shareholders meeting.
  • Rio Tinto Q2 operations disappoint. Rio Tinto (RTP) said iron ore production gained 13% in Q2, recovering some of the shortfall from Q1 cyclones. Aluminum production gained 374% due to the acquisition of Alcan. Shares -4%.
  • UBS makes good on auction-rate bonds. UBS (UBS) buying back up to $3.5B in auction-rate securities from its clients - three weeks after it was accused of auction-rate fraud. The move will cost an estimated $70M. Much of the $330B auction-rate debt market has been frozen since February. Shares +2%.
  • Wholesale prices [PPI] rose 1.8% in June, including a 6% gain in energy and 1.5% in food - more than the 1.4% consensus. Core PPI gained 0.2%. Total PPI is up 9.2% from last year, but core PPI is only up 3% - a stable reading and a positive data point in the inflation discussion.
  • June retail sales gained just 0.1% despite almost $50B in stimulus checks. Excluding essentially dead auto sales, retail sales rose 0.8% - less than the 1% economists expected.
  • The Empire State Manufacturing survey showed NY State general business conditions (-4.9%) were better than a month ago and exceeded expectations. Manufacturing fell for the third straight month.
  • Chain store sales rose 2.2% from this week last year, ICSC says, and 0.2% from last week. Sales were lead by groceries and drugs; electronics, jewelry and furniture lagged.

Earnings: Tuesday After Close

  • Altera (NASDAQ:ALTR): Q2 EPS of $0.32 beats by $0.05. Revenue of $360M (+7.1%) vs. $347M consensus. Shares +9%. [PR]
  • Cintas (NASDAQ:CTAS): FQ4 EPS of $0.58 beats by $0.02. Revenue of $1.01B in-line. Sees full-year EPS of $2.22-2.30, better than consensus of $2.14. [PR]
  • CSX (NYSE:CSX): Q2 EPS of $0.93 beats by $0.03. Revenue of $2.9B vs. $2.8B consensus. Shares -1%. [PR]
  • Intel (NASDAQ:INTC): Q2 EPS of $0.28 beats by $0.03. Revenue of $9.5B vs. $9.32B consensus. Sees Q3 revenue of $10-10.6B vs. consensus of $10.07B. Shares +2%. [PR}
  • Seagate Technology (NASDAQ:STX): FQ4 EPS of $0.44 beats by $0.02. Revenue of $2.9B (+5.6%) in-line. Sees Q1 EPS of $0.22-0.26 vs. consensus of $0.58. Shares -9%. [PR]
  • Spansion (SPSN): Q2 EPS of -$0.63 beats by $0.12. Revenue of $613M vs. consensus of $580M. Sees Q3 revenue up slightly. Shares -2%. [PR]
  • Sun Microsystems (JAVA): Sees Q4 EPS of $0.25-0.35, better than consensus of $0.27. Shares +12%. [PR]

Earnings: Wednesday Before Open

  • Abbott Labs (NYSE:ABT): Q2 EPS of $0.84 beats by $0.05. Revenue of $7.31B vs. consensus of $7.23B. Sees Q3 EPS of $3.24-3.28 vs. consensus of $3.23. [PR]
  • AMR Corp. (AMR): Q2 EPS of -$5.77 vs. consensus of -$1.40 (not comparable). Revenue of $6.18B in-line. Company is severely challenged by fuel crisis, and expects to remain so for the foreseeable future. Shares +2%. [PR]
  • ASML (NASDAQ:ASML): Q2 EPS of $0.44 beats by $0.06. Sales of €844M vs. consensus of €812M.
  • Delta Air Lines (NYSE:DAL): Q2 EPS of $0.35 beats by $0.25. Revenue of $5.50B vs. consensus of $5.39B. [PR]
  • First Midwest Bancorp (NASDAQ:FMBI): Q2 EPS of $0.51 beats by $0.03. [PR]
  • Gannett (NYSE:GCI): Q2 EPS $1.02 in-line. Revenue of $1.72B in-line. June operating revenue fell 12.1% vs. a year ago. Shares -3%. [PR]
  • Host Hotels (NYSE:HST): Q2 FFO of $0.56 beats by $0.01. Revenue of $1.4B in-line. Sees Q3 FFO of $0.27-0.29, short of consensus of $0.35. [PR]
  • Knight Capital Group (NITE): Q2 EPS of $0.32 misses by $0.02. Revenue of $219M vs. consensus of $222M. Shares -9%. [PR]
  • Marshall & Ilsley (NYSE:MI): Q2 EPS of -$1.52 beats by $0.04. Wealth management revenue rose 14%. Shares -2%. [PR]
  • National Penn Bancshares (NASDAQ:NPBC): Q2 EPS of $0.34 beats by $0.02. [PR]
  • Northern Trust (NASDAQ:NTRS): Q2 EPS of $1.35 beats by $0.30. Revenue of $1.09B vs. consensus of $1.01B. Shares +1%. [PR]
  • Piper Jaffray (NYSE:PJC): Q2 EPS of -$0.32 misses by $0.16. Revenue of $94.9M vs. consensus $86.7M. [PR]
  • R.R. Donnelley (NASDAQ:RRD): Sees Q2 EPS of at least $0.72 in-line. Sees revenue of $2.9B vs. consensus of $2.98B. Sees full-year EPS of $3.08-3.15, short of consensus of $3.14. [PR}
  • Charles Schwab (NYSE:SCHW): Q2 EPS of $0.26 in-line. Revenue of $1.30B in-line. Clients add $26B new money in Q2, to a total of $1.4T. [PR]
  • St. Jude Medical (NYSE:STJ): Q2 EPS of $0.58 beats by $0.03. Revenue of $1.13B vs. consensus of $1.06B. Sees Q3 EPS of $0.56-0.58, better than consensus of $0.53, and full-year EPS of $2.28-2.33, better than consensus of $2.19. [PR]
  • Trina Solar (NYSE:TSL): Sees Q2 net revenue of $200-205M, better than consensus of $174M. Sees full-year revenue to exceed $770M-808M vs. consensus of $786M. Shares +11%.
  • Valley National Bancorp (NYSE:VLY): Q2 EPS of $0.33 beats by $0.08. [PR]
  • Wells Fargo (NYSE:WFC): Q2 EPS of $0.53 beats by $0.03. Revenue of $11.5B vs. consensus of $10.65B. Tier 1 capital of 8.24% up from 7.92% in March and 7.59% in Dec. 2007. Announces 10% dividend increase. Shares +13%. [PR]

Today's Markets

  • Asia markets closed flat to down Wednesday. Nikkei +0.05% to 12,761. Hang Seng +0.2% to 21,223. Shanghai -2.65% to 2,706. BSE -0.8% to 12,576.
  • In Europe, bourses are lower at midday. London -1.3%. Paris -1%. Frankfurt -0.9%.
  • Futures at 7:00 AM: Dow -0.4%. S&P -0.5%. Nasdaq -0.4%. Crude -1.2% to $137. Gold -0.3% to $975.

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