- UBS posts Q2 loss, plans to restructure. Swiss banking giant UBS (NYSE:UBS) reports a Q2 net loss of CHF358M ($329M), including $5.1B in writedowns. Looking ahead to the second half, UBS says it doesn't expect any improvement "in the adverse economic and financial market trends that affected this quarter's results," adding, "UBS will continue its program to reduce personnel levels, costs and risk." As anticipated, UBS said it will begin separating its troubled investment bank from its wealth-management unit - but said it has not plans to sell the I-bank. UBS continued to cut back on its exposure to toxic debt: Subprime holdings fell to $6.7B from $15.6B while Alt-A exposure dropped to $6.4B from $17.1B. Shares rose 2.8% in overseas trading.
- Cuomo drags three more banks into ARS melee. NY AG Cuomo sent letters to JPMorgan (NYSE:JPM), Morgan Stanley (NYSE:MS) and Wachovia (NASDAQ:WB), warning them to get on board with auction-rate securities settlements.
- Morgan Stanley's $4.5B ARS offer fails to impress Cuomo. Morgan Stanley (MS) said it is willing to buy back $4.5B in auction-rate securities, following similar settlements by Citigroup (NYSE:C), UBS (UBS), and Merrill Lynch (MER). NY Attorney General Andrew Cuomo called Morgan Stanley's (MS) buy back offer "too little, too late." Cuomo is expected to press for fines on top of a more substantive settlement.
- IEA breathes a bit easier. The IEA (International Energy Agency) says tight global oil supply that has seen crude rise to record heights this year is easing - but cautions that heavy China consumption and geopolitical tension still have the potential to send prices back up. "In terms of oil fundamentals, crude and product supply tightness has eased," it said. But "we continue to stress the supply uncertainty that's out there. The events over the past week in Georgia and Turkey have only reconfirmed that." The IEA dropped its global demand growth forcast by 100K barrels/day due to a major demand pullback in the U.S. (-3.1% this year and -2% next year). (.pdf)
- JPMorgan hit with $1.5B writedown. JPMorgan (JPM) warned that credit-market turbulance forced it to take a $1.5B writedown on mortgage-backed assets in July. The firm says mortgage market trading conditions have substantially deteriorated since the beginning of July. Bankers are saying July was the worst month for mortgage-backed bonds since the crisis began.
- Mitsubishi UFJ plans UnionBanCal buy out. Mitsubishi UFJ Financial Group (NYSE:MTU) plans to spend $3B to buy out minority investors in U.S. commercial-banking unit UnionBanCal (UB). At $63 per share, Mitsubishi UFJ's offer represents an 8.3% premium on UnionBanCal's Monday closing price. Mitsubishi UFJ has made it clear that it wants a bigger presence in the U.S., and plans to take part in future consolidation of the U.S. banking industry. The bid is the latest in a series of multi-billion dollar deals in the U.S. by Japanese companies that have emerged relatively unscathed from the subprime crisis.
- Middleby buying TurboChef for $200M. Middleby Corp. (NASDAQ:MIDD) announced an agreement to acquire TurboChef Technologies (OVEN) for approximately $200M. TurboChef shareholders, who need to approve the merger, will receive a cash-stock payout combination of $3.67 in cash and 0.0486 Middleby shares for each TurboChef share. TurboChef has greatly expanded its customer base in recent years and is a leader in speed cook technology, a field Middleby believes is in the beginning stages of gaining broader market acceptance.
- 3M iPhones in first month. After just one month, iPhone 3G (NASDAQ:AAPL) sales reportedly top 3M - way ahead of expectations. "They are seeing unprecedented demand," Michael Cote of the Cote Collaborative says. While not commenting on Cote's estimates, Apple did disclose it sold 1 million iPhones during the first three days; it took Apple 74 days to hit the one million mark with the original iPhone.
- Germany mulls limiting foreign investment. The German government will vote on August 20 on a bill that could be used to prevent foreigners from buying 25% or more in German companies deemed crucial to the country's security. Opponents say it will deter foreign investment. (ETF: EWG)
- Airlines soon profitable? Airline stocks extended their rally Monday after Morgan Stanley said there's a chance the industry could return to profitability by 2009 if the price of oil stays down. The broker says recent moves by carriers to reduce seats and increase fees could ultimately be a positive for the battered sector. UAL +10%. AMR +8%. CAL +8%. UAUA +5.4%.
- Fed Survey on Bank Lending. 65% of banks said they tightened credit-card lending, car and consumer loans during the last quarter. 70% say they'll tighten standards on commercial real estate loans. Major loan categories were tighter across the board.
- Toyota mulls exporting us gas guzzlers. Trying to stay ahead of the auto industry downturn, Toyota (NYSE:TM) said it is considering downsizing U.S. manufacturing jobs, and may start exporting U.S.-made U.S. pickups and SUVs abroad. Some analysts were puzzled by the proposal; the larger vehicles are not big sellers outside of U.S. borders.
- Precious metals plunge again. Gold, platinum, and silver hit 7-month lows on concerns of reduced demand for raw materials. Commodities descend Monday into bear territory, with S&P's GSCI index off 22% from its July 3 highs.
- Blue Chip economists sour on H2 and 2009. They now see Q3 GDP growth of 1.2%, down 0.1% from previous estimates, and Q4 growth of just 0.3% - down 0.3%. Year-end unemployment is seen at 6%. 56% think the U.S. economy is in recession.
- India production up 3.4%. India's production in six key industries, accounting for a quarter of the country's industrial production, grew 3.4% in June from a year earlier. (ETFs: INP, EPI)
- Inflation pulls back in China. China's inflation slows to a ten-month low, allowing the government a chance to focus on sustaining economic growth instead of fighting rising prices. (ETFs: FXI, PGJ)
Earnings: Tuesday Before Open
- Fossil (NASDAQ:FOSL): Q2 EPS of $0.36 beats by $0.11. Revenue of $353M (+15.2%) vs. $347M. [PR]
- JA Solar (NASDAQ:JASO): Q2 EPS of -$0.01 vs. consensus of $0.15. Revenue of $180M (+170.7%) vs. $170M. [PR]
Earnings: Monday After Close
- Fluor (NYSE:FLR): Q2 EPS of $0.87 beats by $0.05. Revenue of $5.77B (+36.8%) vs. $5.18B. Sees full-year EPS of $3.39-3.54 vs. $3.29. Shares +3.9%. [PR]
- LDK Solar (NYSE:LDK): Q2 EPS of $1.29 beats by $0.87. Revenue of $442M vs. $282M. Sees 2008 revenue of $1.65-1.75B vs. $1.16B. Shares +25.3%.[PR]
- Napster (NAPS): FQ1 EPS of -$0.10 misses by $0.01. Revenue of $30.3M (-6%) vs. $30.5M. Shares -1.1%. [PR]
- McDermott International (NYSE:MDR): Q2 EPS of $0.77 in-line. Revenue of $1.79B (+26.4%) vs. $1.85B. Shares -8.1%. [PR]
- Safe Bulkers (NYSE:SB): Q2 EPS of $0.82 beats by $0.21. Revenue of $51.4M (+48.1%) vs. $49.6M. Shares +3.6%. [PR]
- TravelCenters of America (NYSE:TA): Q2 EPS of -$0.69 beats by $0.23. Revenue of $2.28B vs. $2.15B. [PR]
- TW Telecom (NASDAQ:TWTC): Q2 EPS of $0.00 misses by $0.01. Revenue of $290M (+2.7%) in-line. [PR]
- Verasun Energy (VSE): Q2 EPS of $0.15 beats by $0.13. Revenue of $1.01B (+498.7%) vs. $925M. [PR]
- Asian markets closed lower on Tuesday. Nikkei -0.95% to 13,304. Hang Seng -1.0% to 21,641. Shanghai -0.52% to 2,457. BSE -1.88% to 15,213.
- Europe at midday: London +0.2%. Paris +0.05%. Frankfurt -0.05%.
- U.S. futures at 7:10 AM: Dow -0.08%. S&P -0.04%. Nasdaq +0.15%. Crude -0.74% to $113.63. Gold -0.65% to $822.80.
Tuesday's economic calendar:
7:45 ICSC Retail Store Sales
8:30 Trade Balance
8:55 Redbook Chain Store Sales
10:00 IBD/TIPP Economic Optimism
10:00 Job Openings and Labor Turnover
10:30 Fed's Gary Stern on CNBC
2:00 PM Treasury Budget
5:00 PM ABC Consumer Confidence Index
- Notable pre-open earnings: CNO, FOSL, GOL, JASO, TJX, UBS, VSE
- Notable post-close earnings: AMAT, BZP, CREE, DNDN, MELI, NVDA
Seeking Alpha editor Rachael Granby contributed to this post.
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