- Freddie sells $2B in debt, eases bailout worries. Freddie Mac (FRE) easily sold $2B in short-term debt on Monday, providing welcome reassurance to investors worried about Freddie Mac and Fannie Mae's (FNM) ability to fund operations without government help. Freddie's stock jumped 17% to $3.29, and Fannie gained a more modest 3.8% to $5.19. Both companies currently meet regulatory capital requirements and are rolling over their debt on schedule, and Fannie Mae is due to sell $2B in bills tomorrow.
- Rio H1 profit more than doubles. H1 profit more than doubled at Rio Tinto (RTP) on increased aluminum production and record high iron ore prices. Net income rose to $6.91B from $3.25B the previous year. Underlying earnings reached $5.47B, beating estimates of $5.15B. The company is fighting a $142B unsolicited takeover bid from BHP Billiton (NYSE:BHP) and says it is better able to expand its output of commodities independently.
- Regulators put more banks on probation. Federal regulators have put more struggling banks on "probation," forcing them to fix their problems and try to avoid costly failures. More so-called memorandums of understanding have been issued this year to date than in all of 2007. The memorandums can force banks into agreements that include taking steps to raise capital, cutting back on risky loans and suspending dividend payments. The FDIC had 90 "problem" banks on its list at the end of March, but there have been five bank failures since then and many more considered at risk. A revised list will be released Tuesday.
- Troubled economy weighs on Obama's ambitious agenda. With the Democratic National Convention underway, Obama is finding his ambitious economic agenda threatened by economic reality, WSJ says. Obama is calling for a government healthcare plan to cover millions without insurance; a system of tradeable pollution permits to reduce emissions; and higher income-tax rates and capital-gains tax rates. His top priorities would cost hundreds of billions of dollars a year, not counting a stimulus plan he is considering with a price tag of $115B.
- Anadarko plans $5B stock buyback. Anadarko Petroleum (NYSE:APC) plans to repurchase $5B of its own stock, representing 18% of its outstanding shares at Monday's stock price. Shares rose 2.4% in after-hours trading.
- JPMorgan loses $600M on Fannie/Freddie. JPMorgan (NYSE:JPM) reported the market value of its Fannie Mae (FNM) and Freddie Mac (FRE) preferred stock holdings was cut in half this quarter, to $600M. In regulatory filings, the bank said the loss could affect its Q3 earnings, but the fluctuations in Fannie/Freddie share price make the exact loss hard to calculate. Other financial institutions, especially smaller regional banks, could also take losses on their GSE preferred stock holdings.
- Teva's Azilect slows progression of Parkinson's. Shares of Teva Pharmaceutical (NYSE:TEVA) gained 1.1% in Tel Aviv after it said a phase-III trial of its Parkison's drug Azilect showed patients who began taking the drug immediately demonstrated a significant improvement compared to those who initiated treatment nine months later. The 1mg dose met all three primary endpoints, as well as the secondary endpoint, with statistical significance.
- Gulf investors kick Hummer's tires. Two separate investors from the Arab Gulf region have approached GM (NYSE:GM) about a possible sale of its Hummer brand. GM's Middle East Managing Director Terry Johnson says such solutions "could be very realistic," but noted keeping the division was also a possibility.
- Delta taps $1B credit line. Delta Air Lines (NYSE:DAL) tapped a $1B loan ahead of its merger with Northwest Airlines (NWA). The money is part of a credit line made available to Delta after its exit from bankruptcy protection last year, and the company said it is now comfortable with its liquidity level through the end of the year. Delta also renegotiated agreements with credit-card processors to make sure sales revenue continues to be turned over promptly.
- MGM turns to Goldman for capital "enhancements." MGM (SNE, CMCSA) is in the process of arranging a $500M credit line to produce some franchise films, including The Hobbit and Pink Panther, but the company seems to want even more for its turnaround effort. Company execs say MGM's existing financing arrangement is sufficient to meet its needs but has retained Goldman Sachs (NYSE:GS) to "explore enhancements to MGM's long-term capital structure."
- U.S. home sales rise 3.1% in July. Home sales rose 3.1% in July, their highest level since February, as falling home prices attracted buyers. The number of homes and apartments for sale rose 3.9% in July, adding to the supply glut and further depressing home values. Home prices were down 7.1% in July over the previous year, and at least a third of July's property sales involved foreclosed homes sold at discounted prices or by owners with no alternative.
- German weakness pressures euro. Q2 GDP fell 0.5% in Germany, the first contraction for Europe's biggest economy in almost four years. Q2 building investment fell 3.5%, while consumer spending was down 0.7%. Economists say they see no signs of a broad-based recovery in 2009. German business confidence fell to 94.8 in August - the lowest level since mid-2005 - from 97.5 in July. Economists expected a milder drop to 97.2. The euro is down 1.11% to $1.4575.
Earnings: Monday After Close
- Winn-Dixie (NASDAQ:WINN): FQ1 EPS of -$0.10 misses by $0.01. Revenue of $1.69B (+0.8%) in-line. Shares -2.7%. [Briefing.com]
Earnings: Tuesday Before Open
- Big Lots (NYSE:BIG): Q2 EPS of $0.32 beats by $0.05. Revenue of $1.11B (+1.9%) in-line. [PR]
- Smithfield Foods (NYSE:SFD): FQ1 EPS of -$0.02 beats by $0.02. Revenue of $3.14B (+20.1%) vs. $2.87B. [PR]
- Asia markets closed mostly down. Nikkei -0.8% to 12,778. Hang Seng -0.2% to 21,056. Shanghai -2.6% to 2,350. BSE +0.3% to 14,493.
- In Europe at midday: London -1.9%. Paris -0.7%. Frankfurt -0.4%.
- U.S. equity futures are up slightly. Dow +0.14%. S&P +0.14%. Nasdaq +0.11%. Crude -1.57% to $113.30. Gold -1.47% to $813.60.
Tuesday's Economic Calendar
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
9:00 S&P/Case-Shiller Home Price Index
10:00 Consumer Confidence
10:00 Ofheo House Price Index
10:00 Richmond Fed's Manufacturing Index
10:00 New Home Sales
2:00 PM FOMC Minutes
5:00 PM ABC Consumer Confidence Index
- Notable earnings before Tuesday's open: AEO, BIG, CHS, COCO, SFD
- Notable earnings after Tuesday's close: JCG
Seeking Alpha editor Eli Hoffmann contributed to this post.
Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.