The Americas

Today's Markets

• Asia: Japan's Nikkei closed +0.4%. Shanghai -2.37%. Hang Seng: +1.08%.
• In Europe markets were down from Tuesday's close. FTSE: -1.1%. CAC: -0.27%. SAX: -0.72%.
• U.S. futures are up. S&P: +4.25. Dow: +26. Nasdaq: +6.75.

Must-Know News

• Market doubts value of Buffett's offer to bond insurers. Warren Buffett's holding company, Berkshire Hathaway (BRK.A), has offered to commit $5 billion to reinsure policies written by MBIA (MBI), Ambac (ABK) and the Financial Guaranty Insurance Company on $800 billion in municipal bonds. The offer does not include reinsurance of any mortgage-related securities. MBIA shares closed down 15.3% and Ambac shares 15.1% on fears that the offer would leave them more vulnerable than they are now, since they would retain the riskiest securities.
• Fed's Yellen: Economy still faces "significant threat;" banks grab another $30 billion from Fed. Janet Yellen, president of the San Francisco Fed, said Tuesday that enough downside risks to the economy remain to preclude a tightening by the Fed of its monetary policy. Also, sixty-six banks bid $58.4 billion for $30 billion in short-terms loans auctioned by the Fed. This was the Fed's fifth auction since the facility was established in December.
• Google's enthusiasm dissipates for ad pact with Yahoo; shareholder calls Microsoft bid for Yahoo insufficient. Yahoo (YHOO) had discussed outsourcing its search advertising with Google (GOOG) as a means of countering Microsoft's (MSFT) takeover attempt, but Google is apprehensive about the regulatory scrutiny such an arrangement would draw -- particularly while it is trying to get its acquisition of Doubleclick approved by European antitrust regulators. In related news, Bill Miller of asset manager Legg Mason (LM) estimated Yahoo to be worth about $40/share, well above Microsoft's $31/share offer. Legg Mason Capital Management owns 6% of Yahoo.
• Oil demand waning - IEA. The International Energy Agency cut its forecast for 2008 global oil demand by 200,000 bpd amid a slowing U.S. economy. "Just as the demand shock of 2004 shaped the oil market for the next three years, so too could the pending slowdown," it said. Global oil demand growth for 2008, projected at 2.2% last July, is now estimated at 1.9%.
• Rio beats expectations; reiterates rejection of Billiton offer. Rio Tinto (RTP) said that while full-year net profit fell 2% to $7.31 billion, underlying earnings rose 1% to $7.44 billion, ahead of analyst forecasts of $7.1 billion. The results bolstered the miner's case against a $147.4 billion hostile offer from BHP Billiton (BHP); Rio's iron-ore CEO Sam Walsh characterized the bid as "not in the ballpark." In related news, the International Iron and Steel Institute said a Rio/Billiton merger should be prevented on the grounds that it would be anticompetitive.
• Applied Materials' display screen orders ease impact of spending slowdown. Applied Materials (AMAT) reported a 35% drop in fiscal Q1 earnings, but orders were up 13% from Q4, well ahead of the company's forecast 5-15% decline. Shares gained 4.76% after hours.
• Citi to bail out six of its SIVs. In order to protect the top rating of its senior debt, Citigroup (C) will supply approximately $3.5 billion to support six of the seven SIVs it brought onto its balance sheet in December. At the time, the SIVs' assets amounted to $49 billion; Citi has not disclosed their current value.
• AIG says any writedown will be immaterial. In an attempt to reassure investors unnerved by the revelation that its derivatives losses could be closer to $5 billion than a forecast $1.5 billion, insurer (AIG) said Tuesday that no writedown is expected to be material to the company.
• Congress takes on broadband companies over access.... Congressman Edward Markey (D-Mass.) and Rep. Chip Pickering (R-Miss.) introduced a bill on Tuesday requiring broadband companies to provide unimpeded internet access, much the way telecoms are required to connect phone calls without artificial delays. The "Internet Freedom Preservation Act" would give the FCC greater power to police network operators. Time-Warner Cable (TWX) and Verizon Communications (VZ) are considering pricing plans that would require consumers of high-capacity content to pay more, a departure from the traditional flat fee for unlimited downloading.
• ...and a bid for wider broadband access hits technical snag. The attempt by wireless broadband providers to gain access to a spare spectrum was dealt a blow when a prototype device provided by Microsoft (MSFT) malfunctioned during a test by FCC engineers.
• LTE gets boost. Two overseas telecom giants backed LTE (Long Term Evolution) as the next-generation mobile internet technology. Vodafone (VOD) said it is joining with China Mobile (CHL) and Verizon Wireless (VZ) to promote LTE. Meanwhile, Alcatel-Lucent (ALU) announced a JV with NEC to develop LTE-based technology. The moves further entrench LTE's lead over WiMax (in which Sprint-Nextel (S) has an interest) and Ultra Mobile. Other firms developing LTE technology include AT&T (T), Ericsson (ERIC), Nortel Networks (NT) and Nokia Siemens Networks (NOK) (SI).
• T-Mobile dumps Google for Yahoo. T-Mobile parent Deutsche Telecom (DT) said Tuesday it will drop Google (GOOG) in favor of Yahoo (YHOO) as search engine for its websites, making Yahoo the primary search engine for about 80 million European subscribers.
• Wynn swings to profit. Wynn Resorts (WYNN) posted net income of $65.5 million ($0.57/share) versus a loss of $55.4 million (-$0.55/share) a year ago. Excluding items, EPS came in at $0.72, ahead of analyst forecasts of $0.68. Revenue was up 26% to $711.3 million, beating expectations of $692 million.
• Venezuela fires back at Exxon. State-owned Petroleos de Venezuela halted oil supplies to ExxonMobil (XOM) in an act of retaliation for Exxon's move to freeze $12B of the country's assets. President Hugo Chavez, who had threatened to cut off all oil shipments to the U.S., instead opted for a direct attack on its adversary.
• Legg Mason ups Countrywide stake. Legg Mason's (LM) Capital Management unit has boosted its stake in Countrywide Financial (CFC) to 14.9% from 11.8%. The asset manager said it might purchase more shares if Countrywide removes poison-pill provisions designed to avert single ownership of more than 15% of the company.
• EU raids Intel's office in Germany
• Sun Microsystems to acquire Innotek
• Strong steel prices nudge ArcelorMittal net profit higher
• In second trial, Avastin is found effective in treating breast cancer
• Total's net income rises 64% on higher output, prices
• Bank of England damps speculation on rate cuts after inflation accelerates
• Hewlett Packard in $675M Unilever outsourcing deal

Today's Markets

• Asia: Markets were mixed on Tuesday: Nikkei +0.04%, Hang Seng +1.35%. Shanghai is still closed.
• Europe: Shares are higher mid-morning: FTSE +0.98%, DAX +0.68%, CAC +0.97%.
• U.S. futures: DJIA -0.05%, S&P 500 -0.13%, Nasdaq -0.18%.

Must-Know News

• AIG forced to write down mortgage-linked instruments; shares hit five-year low. After auditors found "material weakness" in AIG's (AIG) accounting systems, the insurer was forced to write down the value of insurance contracts tied to subprime mortgages by approximately $4.88 billion. AIG had estimated its subprime-related losses would be in the area of $1B. The news sent AIG shares down 11.72% to $44.74, below their lowest point during the accounting scandal of 2005 and their worst one-day percentage drop since the crash of 1987. Fitch said it is putting AIG's issuer default rating on negative watch.
• Moody's sees sharp rise in corporate defaults on junk. Moody's Investors Service (MCO) forecasts that the global corporate default rate on speculative-grade debt will hit 4.6% by the end of 2008. The junk default rate was 0.91% at year-end 2007.
• Poole sees U.S. economy stable. St. Louis Fed President William Poole says he's betting the U.S. will not enter recession, and that the Fed's interest rate policy "is at a good place for both the long-run concern and for cushioning the impact of financial disturbances." Poole acknowledged a soft economy, but noted companies are in a survival mode. "They're worried about profitability. They're not worried about survival. There is a big difference."
• New measures to forestall foreclosures. Six banks will announce Tuesday steps to help homeowners elude foreclosure, including a 30-day foreclosure freeze in which to examine loan modifications. The lenders -- Bank of America (BAC), Citigroup (C), JPMorgan & Chase (JPM), Wells Fargo & Company (WFC), Washington Mutual (WM) and Countrywide Financial (CFC) -- are being encouraged by Treasury Secretary Henry Paulson, who until recently opposed a foreclosure moratorium.
• Student-loan market goes dry. Auctions of securities backed by student loans issued by SLM (SLM) and others are failing to generate interest, seemingly the latest victim of the credit market crisis. Since Thursday, $3 billion in such securities have failed to sell; the banks who auction them -- which would usually intercede in such cases -- prefer to let the auctions fail rather than to take the debt onto their already-bloated balance sheets.
• White House upbeat on economy. The White House Council of Economic Advisers acknowledged Monday that growth has slowed dramatically, but said it expects the country to avoid recession and unemployment levels to stay low.
• Credit Suisse net tumbles on $1.2 billion writeoff. Q4 profits at Credit Suisse (CS) fell 72% to 1.33 billion francs, missing analysts' 1.43 billion franc estimate, on the heels of a $1.2B debt-related writeoff. Rival UBS (UBS) wrote down $14B during the quarter, while Deutsche Bank (DB) wrote down just $64 million. CS expects credit market turmoil to continue. Shares fell 1% in Zurich.
• Sanofi rises on strong outlook. Sanofi-Aventis (SNY) reported Q4 profits of €1.46 billion (+6.2%), slightly ahead of the €1.41B analysts expected. Sanofi sees 2008 earnings growth of 7%, compared with forecasts of no growth from rival GlaxoSmithKline (GSK), while Novartis (NVS) said growth may pick up in the second half. "They do not seem to be suffering from the pessimism that has struck the rest of the industry," an analyst remarked. Shares were up 2.2% in Paris.
• Teva beats, upbeat on 2008. Generic drug maker Teva Pharmaceutical (TEVA) did better than expected, reporting Q4 EPS of $0.69 vs. analyst consensus of $0.66 and revenue of $2.58B vs. consensus of $2.48B. CEO Shlomo Yanai says he expects the "significant momentum" of 2007 to continue throughout 2008.
• BlackBerry goes black - again. For the second time in 12 months, Research In Motion (RIMM) was hit with an extended outage to its BlackBerry email service, a development which threatens to undermine its high-profile reputation. The incident was caused by an improperly tested software upgrade, and aggravated a failure of the company's backup system.
• Google's ad share slips. IDC reported that online ad spending in Q4 was up 28% over last year to $7.3 billion, but Google's (GOOG) market share was down 0.5% to 23.7% -- its first decline in two years. IDC noted that a combined Yahoo-Microsoft (MSFT) entity would have an advertising market share of 17%.
• AOL senior ad exec jumps ship. Dave Morgan, the head of AOL's ad strategy, has departed the company "to "pursue start-up opportunities." Time Warner (TWX) said recently it will separate AOL's Internet-access business and is thought to be considering a sale or spinoff of all of AOL.
• Peltz presses Wendy's to expand board. The Trian Fund, the firm run by activist investor Nelson Peltz, is seeking to expand the board of Wendy's International (WEN) from 13 people to 15 and then to take five more seats, bringing its total to eight. The WSJ suggests that this is a "backup strategy" for Peltz in case Triarc Cos. (TRY.B), of which he is chairman, does not succeed in its attempt to buy Wendy's.
• Starbucks to provide free Internet access -- for some. Starbucks (SBUX) and AT&T (T) have inked a deal to offer wireless Internet at most Starbucks locations in the U.S., but access will be free only to holders of the Starbucks loyalty card, and then only for two hours. Non-cardholders will have to pay $3.99 for two hours online or $19.99 for a monthly pass.
• Baxter halts heparin production. Baxter International (BAX) has temporarily halted production of the blood-thinner heparin because it may have caused allergic reactions in about 350 people, mostly patients undergoing dialysis or heart surgery. Four of the patients died. The company, which makes half the heparin used in the U.S., and the FDA decided not to suspend sales of heparin already produced in order to avert a shortage.
• Icahn takes stake in Alliance Data. Carl Icahn reported Monday he has taken a 2.73% stake in Alliance Data Systems (ADS) and reserves the right to talk to management about the company's prospective sale to the Blackstone Group (BX). On Friday, Alliance dropped a suit it had brought against Blackstone to force it to complete the $6.4 billion sale.
• WebMD buyout in doubt; 2008 view lowered; shares fall. The online health information provider (WBMD) is 84%-owned by HLTH Corp. (HLTH), which said in November that it would buy the remaining stake. The sides have hit a "negotiation stalemate," however, that has thrown the purchase into doubt. WebMD also lowered its 2008 earnings guidance, in part because of the effect an acquisition of Yahoo (YHOO) could have on WebMD's display ad deal with the company. WebMD shares fell 10.19%.
• Newmont's Indonesia contract at risk. The government of Indonesia says it will terminate Newmont Mining's (NEM) 30-year contract to run a massive copper and gold mine unless Newmont keeps its apparent promise to sell a 10% stake in the venture to local authorities.
• TI, others show off Google operating system in prototype devices
• Handset makers dive into low-end market
• Xstrata spurns Vale approach

Asia

Today's Markets

• In Asia Thursday, the Nikkei was up 0.82%. India's BSE Sensex was down 3.38%. Shanghai and Hong Kong are closed for holidays.
• European indexes were all lower. FTSE: -1.5%. CAC: -1.3%. DAX: -1.2%.
• U.S. futures were down slightly from Wednesday's close. Dow: -0.1%. S&P: -0.15%. Nasdaq: -1.17%.

Must Know News

• Lacker, Plosser: Fed can't take eye off inflation. Philadelphia Fed President Charles Plosser said Wednesday that slow growth cannot be counted on to reduce inflation. Richmond Fed Bank President Jeffrey Lacker said that because of inflation, "we can't cut interest rates as aggressively in response to weakness in growth as we otherwise would."
• Shares fall on Cisco's gloomy outlook. Cisco Systems (CSCO) reported a 7.2% rise in net income and a 16.5% rise in sales for FQ2, but its 10% forecast for revenue growth this quarter -- significantly below the 16-17% range of recent quarters -- sent shares tumbling 8% after hours. The company's warning of reduced demand sent S&P futures down from +7 points to -10 points in a matter of minutes.
• Budding partnership. InBev and Anheuser-Busch (BUD) are in merger negotiations. However, a lack of disclosure by InBev indicates the talks are not yet of a concrete nature, which would require it to report to the Belgian CBFA. Belgian business weekly Trends quoted senior InBev executives as saying a merger is 'inevitable.'
• AT&T to expand wireless service. AT&T (T) will extend its 3G high-speed wireless service to 80 more markets this year, bringing its total number of U.S. markets to nearly 350.
• Costco comps beat estimates. Costco (COST) reported a 7% rise in same-store sales in January, ahead of expectations of 6.6%. Net sales were up 11% to $5.11 billion. Net of high gas prices and the effects of a weak dollar, the numbers were less impressive.
• Deutsche Bank beats; reports no new writedowns. The German bank (DB) reported Q4 net income of €953 million ($1.4B) versus €1.8 billion a year ago, beating analyst expectations of €887 million ($1.3 billion). Revenue was €7.3 billion ($10.7B). For FY 2007, the bank posted a profit of €6.5B ($9.5B), ahead of analysts' forecasts of €6.4B ($9.4B).
• DR Horton posts worse-than-expected loss. The homebuilder (DHI) reported a FQ1 loss of $0.41/share, $0.16 worse than -$0.25 analysts expected. The loss included a $245M charge for inventory impairments, and deposits and pre-acquisition costs on land it will not pursue. Revenue dropped 39% to $1.71B, better than the $1.62B consensus. Backlog was 8,138 homes ($2B), vs. 16,694 ($4.7B) a year ago.
• Infineon's weak outlook drags shares down. Infineon (IFX) posted a €396 million loss ($579M), reversing a €120 profit a year ago, but beat analyst estimates of -€445M. Sales sank 25% to €1.6B. Looking forward, IFX said sales will rise less than the 10% the company forecast in December, displeasing investors who took shares down 12% in Frankfurt. CEO Wolfgang Ziebart told investors wireless chip sales were weaker than normal. CFO Peter Fischl said Qimonda's (QI) financial situation was not worrisome, and that IFX would not need to help it with financing. IFX owns 77.5% of QI.
• Airline talks pick up speed. Merger talks between Delta (DAL) and Northwest (NWA) have intensified, and sources say a deal could be announced within two weeks. The proposed deal is a straight-up stock-for-stock (no premium) transaction. Early talks between United parent UAL (UAUA) and Continental (CAL) are also becoming more serious. Northwest holds a "golden share" of CAL stock that would allow it to block a major merger, but CAL can redeem the stake for $100 (yep) if the DAL/NWA merger goes through. Sources say that UAUA/CAL are poised to move forward quickly if another merger is announced.
• Rio Tinto rebuffs sweetened offer. Rio Tinto (RTP) has turned down a $147 billion offer from BHP Billiton (BHP). "BHP Billiton’s offers, while improved, still fail to recognize the underlying value of Rio Tinto’s quality assets and prospects," said Rio CEO Paul Skinner. BHP shares fell almost 5% in London on the prospect of a protracted bidding war.
• Macy's reverses strategic course, cuts jobs. Macy's (M), faced with below-estimate comps, is shifting its focus to local operations, consolidating its seven back offices and cutting about 2,500 jobs. The company is forecasting same-store sales growth this year ranging from a decline of 1% to an increase of 1.5%. Shares fell 4.6%.
• Time Warner lays out options for AOL. Jeff Bewkes, the new CEO of Time Warner (TWX), told investors he is looking for ways to cut costs at Time Warner Cable (TWC) and to "change" its 84%-ownership of the unit. He also confirmed that he is separating AOL's declining internet access operation from its Web portal and ad business. Barry Diller, Chairman of IAC/InterActiveCorp (IACI), said it is unlikely that IAC would be interested in buying AOL unless its price came down to "something ridiculous."
• BofA counterattacks in $22.5B Russian lawsuit. The Bank of America (BAC), which is facing a massive money-laundering suit brought by the Russian customs service, said Wednesday that a lawyer for the Russian side falsified evidence. The customs service calls the accusation "absolutely unfounded."
• Akamai trounces expectations. Akamai Technologies (AKAM) reported Q4 earnings of $35.9 million ($0.20/share), up from $20.6 million ($0.12) a year ago. Excluding items, Akamai would have earned $0.41/share, ahead of analyst forecasts of $0.37. Revenue was up 46% to $183.2 million; analysts were expecting $175 million. Shares rose 2% in AH trading.
• S&P overhauls system. Standard & Poor's (MHP) is taking 27 steps to boost confidence in the credit markets and bolster its own analytical credibility. They include rotation of lead rating analysts after five years of following the same company, additional training for analysts, and the use of new surveillance tools to track structured-finance performance.
• Worker productivity surprises in Q4; eases inflation fears. U.S. worker productivity rose an annualized 1.8% in Q4, ahead of forecasts of 0.5%. Labor costs, meanwhile, rose less than expected (2.1% versus 3.5%). The figures appear to belie concerns that the Fed's recent rate cuts would spur inflation.
• GM to boost ethanol-car lineup. General Motors (GM) said Wednesday that half the vehicles it will produce by 2012 will run on ethanol. GM will put 11 ethanol-capable vehicles on the market this year and another four in 2009. The company will produce its first four-cylinder ethanol-capable car in 2010.
• Shell declares force majeure in Nigeria after sabotage
• PepsiCo profit falls on lower volume
• Bank of England cuts interest rates by 0.25%

• Asia: Nikkei: -0.70%, Hang Seng: +2.85%, Shanghai: -1.43%.

  Europe: FTSE: +1.28%, DAX: +1.10%, CAC: +1.45%.

• Thursday in Asia: Nikkei: +1.85%, Hang Seng: -0.84%, Shanghai: -0.78%.

  Europe: FTSE: -1.11%, DAX: -1.64%, CAC: -1.30%.

Today's Markets

• Asia: Nikkei: -0.99%, Hang Seng: -2.63%, Shanghai: -0.97%.

  Europe: FTSE: -0.87%, DAX: -0.73%, CAC: -1.60%.

Asia: Nikkei: +2.99%, Hang Seng: +0.99%, Shanghai +0.87%.

Europe: FTSE: +1.20%, DAX: +0.95%, CAC: +1.45%.

• Asian markets pulled back sharply Monday on U.S. economic fears: Nikkei: -3.97%, Hang Seng: -4.25%, Shanghai: -7.2%.

  European indices also slipped in early trading Monday: FTSE: -1.47%, DAX: -1.66%, CAC: -2.2%.

Must-Know News for Friday

• U.S. futures are pointing up (DJIA +0.49%, S&P 500 +0.57%, Nasdaq +0.94%) after Asian indices rallied for the third straight day (Nikkei +4.10, Hang Seng +6.73%, Shanghai +0.93%, BSE Sensex +6.62%), and European shares were broadly higher in Thursday morning trading (FTSE +0.77%, DAX +1.48%, CAC +1.09%).
• Microsoft surges on rosy outlook. Microsoft (MSFT) gained up to 6.2% in late trading Thursday before settling up 4.51% following the company's strong Q2 earnings report in which it raised sales and profit forecasts. Microsoft posted a 79% rise in net income to $4.71 billion ($0.50/share), ahead of analyst expectations of $0.46. Revenue rose 30% to $16.4 billion on strong Vista sales.
• Ambac could rise further on takeover speculation. Billionaire Wilbur Ross is reportedly in talks to buy bond insurer Ambac Financial Group (ABK). ABK shares closed down 17.3% Thursday after the New York Insurance Department said its plan to rescue the bond insurers will take time, but surged 8.65% after hours on buyout rumors.
• Amgen gains on better-than-expected sales of anemia drug. Amgen (AMGN) reported a rise in Q4 net income of less than 1% to $835 million ($0.76/share), but the 25% decline in Aranesp sales following its link to heart risks was less severe than analysts had expected. Revenue of $3.75 billion also beat forecasts. Shares closed up 3.06% and rose another 3.86% after hours.
• Fitch maintains FSA's AAA rating; slashes SCA. Fitch affirmed Financial Security Assurance's (FSF) AAA rating on Thursday, sending its shares up 3.59%. It also cut the rating of Security Capital Assurance (SCA) from AAA to A. SCA shares closed down a steep 30.61% and then regained 10.27% after hours.
• Sun doubles bottom line. Sun Microsystems (JAVA) reported fiscal Q2 earnings of $260 million ($0.31/share) versus $133 million ($0.15) a year ago. Analysts were expecting EPS of $0.30. Shares rose 8.77%.
• E*Trade posts big loss, but unveils turnaround plan; shares rise. E*Trade Financial Corp. (ETFC) reported a $1.7 billion Q4 net loss (-$3.98/share), but cheered investors with specifics about a turnaround strategy. Shares rallied 9.2% after hours.
• Lennar reports major loss, but beats expectations. The homebuilder (LEN) posted a quarterly loss of $1.25 billion on land writedowns and poor sales, a slimmer loss than expected. Shares rose 8.5%.
• Fannie and Freddie stand to gain from stimulus package. The economic stimulus plan just passed by the House would allow Fannie Mae (FNM) and Freddie Mac (FRE) to buy more expensive mortgages. The Senate and the White House have yet to approve the plan.
• BofA raises $12 billion in stock offering. Bank of America (BAC) sold $6 billion of perpetual preferred shares at an 8% yield and $6 billion of convertible preferred at a 7.25% yield in its largest-ever offering of preferred stock.
• Radio-spectrum auction opens with bids above $2.4 billion. The bidders will remain secret until the auction is concluded. Companies qualified to bid include Google (GOOG), AT&T (T), Verizon Wireless (VZ), EchoStar (DISH) and Cablevision (CVC).
• Sprint boots three senior executives. Daniel Hesse, Sprint Nextel's (S) new CEO, is replacing three top executives, including CFO Paul Saleh. Shares rose 4.24% on the news.
• MiddleBrook soars on FDA approval of strep treatment. MiddleBrook Pharmaceuticals (MBRK) skyrocketed 139% to close at $2.99 Thursday after the FDA approved Moxatag, its time-release amoxicillin treatment for strep throat.
• Restoration Hardware slashes price to lock in sale. The home furnishings retailer (RSTO) cut the price at which it will be acquired by private equity firm Catterton Partners to $4.50 per share from $6.70. In exchange, the merger agreement was amended to make it more difficult for Catterton to abandon the deal. Restoration shares rose 7.49% after hours.
• Greenspan does not yet see clear evidence of recession. Former Fed Chairman Alan Greenspan told the FT that recession is not a certainty. "You don't gradually fall into recession, you jump," he said. "The hard data that we are in recession is by no means conclusive."
• Sprint Nextel files patent suits against 4 firms
• Japan CPI posts biggest rise in decade
• FCC votes to approve buyout of Clear Channel
• Allis-Chalmers to buy Bronco Drilling for $437.8 Million
• Morgan Stanley Prepares To Lay Off 1,000 Workers
• Profit Drops, Sales Flat in Hershey's 4Q

Must-Know News for Thursday

• Asian markets closed mixed on Thursday: Nikkei +2.06%, Hang Seng -2.29%, Shanghai +1.42%, Bombay Sensex -2.18%.

  European markets moved sharply higher Thursday morning: FTSE: +2.88%. CAC: +4.12%. DAX: +4.80%.

• Asian markets bounced back after the U.S. Fed soothed investors' frayed nerves by dropping its key rate to 3.5%. Nikkei: +2%. Hang Seng: +10.7%. Shanghai: +3.1%. BSE Sensex: +5.2%.

  European markets were less enthusiastic. FTSE: -0.66%. CAC: -1.02%. Dax: -1.35%. Bear in mind that European markets reacted to the Fed's move late Tuesday, whereas Asian markets were already closed at the time.

• Asian markets took a second straight thrashing Tuesday.

  European markets plunged in early trading, but bounced off lows and made new intraday highs as talks of international interest rate cuts swirled.

  U.S. futures are down massively from Friday's close. See: Overseas Markets, U.S. Futures Take Massive Hit

• Microsoft allies with Citrix. The software giant (MSFT) is expected to announce an alliance with virtualization software company Citrix Systems (CTXS) intended to improve its competitive position against market leader VMware (VMW). Microsoft also purchased similar company Calista Technologies for an undisclosed sum.
• Wipro JV lands $100 million contract. The Indian software services exporter's (WIT) JV with the Saudi Dar Al Riyadh Group has won a five-year outsourcing contract from Saudi Arabian Airlines.
• Roche wins Ventana's support for bid. Diagnostics manufacturer Ventana Medical Systems (VMSI) has approved Roche Holdings' (RHHBY.PK) new $3.4 billion bid, which sweetened an earlier $75 per share offer to $89.50 per share.
• Yahoo planning job cuts. Yahoo (YHOO), faced with seven straight quarters of declining profits, is expected to announce layoffs. Though some estimate the company will cut up to 20% of its 14,000-person staff, a figure in the hundreds is considered more likely.
• Kyocera to buy Sanyo's mobile phone operations. Sanyo Electric (SANYY.PK) will sell its mobile business to Kyocera (KYO) for about 40 billion yen ($375 million).
• Google locks horns with EU over privacy. Google (GOOG) has objected to the attempts of EU regulators to classify IP addresses as private information, a contention that could complicate its pending acquisition of online ad broker Doubleclick.
• Ambac hit with two investor lawsuits. The bond insurer (ABK) has been accused of misleading investors and inflating its stock price.
• IBM targets small businesses with new product. IBM said Monday it is developing Lotus Foundations, a server product geared toward companies with five to 500 employees.
• EBay CEO Whitman to step down. Meg Whitman, eBay's high-profile CEO, is expected shortly to announce her retirement. John Donahoe, the head of eBay's auction business unit, is the top contender to replace her.
• Genentech discovers two lupus genes. Genentech (DNA) announced Sunday that it has identified two lupus-linked genes, BLK and ITGAM. The discovery could enable earlier diagnosis and better treatment of the autoimmune disease.
• Teva to buy CoGenesys. Teva Pharmaceutical Industries (TEVA) has agreed to purchase private biopharmaceutical company CoGenesys for $400 million cash.
• Rolls Royce inks engine deal with China Airlines. Rolls-Royce Group (RYCEY.PK) said Tuesday that Taiwan's China Airlines will purchase Trent XWB engines for use in 14 Airbus A350 XWB aircraft, with an option on six more. The deal is worth $1.3 billion at list prices.
• Wachovia net down sharply on $1.7B valuation loss
• Target sees January sales at low end of guidance
• Crude Oil Drops to Lowest in Six Weeks; Corn, Sugar, Nickel, Platinum Fall
• DuPont Fourth-Quarter Profit Rises on Increased Sales of Seeds, Chemicals
• UnitedHealth quarterly profit rises 3%

U.S. Markets

• U.S. equities sold off Thursday following the unexpectedly bleak Philadelphia manufacturing index report (see News That Moved Thursday's Market): the DJIA closed down 2.46% at a 10-month low, the S&P 500 fell 2.91% and the Nasdaq 1.99%. Stock futures reversed early declines: DJIA futures rose 80 points, S&P 500 futures 8.5 points and Nasdaq futures 19.25 points. Yields on 10-year Treasurys fell 0.24% to 3.659%. Crude settled up slightly at $90.13 while gold declined $1.50 to $880.50.
• President Bush is expected today to outline the principles of an economic stimulus package. Details will probably not be revealed until the State of the Union address on January 28.
• The retail industry might be entering its worst period in 17 years. "It will feel like a recession to many people even if we technically avoid one," said Frank Badillo, senior economist at market researcher TNS Retail Forward.
• U.S. home construction in 2007 fell 24.8% from 2006 to 1.35 million homes, a decline not seen since 1980. Housing starts in December fell 14.2% to a seasonally adjusted annual rate of 1.006 million, the slowest since 1991.
• More video games were sold in 2007 than ever before, led by games for Nintendo's (NTDOY.PK) Wii and Microsoft's (MSFT) Halo 3. Total video retail sales reached $17.94 billion, 43% above 2006.

Global Markets

• Asia: Asian shares rebounded Friday in volatile sessions. The Nikkei closed up 0.56%, almost 500 points above an intraday low. The Hang Seng ended the day up 0.35% after an early 3.9% decline. Nintendo (NTDOY.PK) rose 3.4% after falling heavily during the session.
• Europe: FTSE -0.13%, DAX -0.84%, CAC -0.32%. Rio Tinto (RTP) gained 2% on speculation that BHP Billiton (BHP) will sweeten its offer.

Must-Know News for Friday

• NYSE Euronext buys the Amex. The stock exchange group (NYX) said after hours Thursday that it will buy the American Stock Exchange for $260 million in stock as a means of expanding its options, ETF and cash product businessses. NYX shares gained 2.72% on the news.
• WaMu swings to huge loss; shares drop. The savings & loan (WM) reported a net loss of $1.87 billion (-$2.19/share), far exceeding analyst forecasts of a loss per share of $0.83. Revenue of $3.41 billion was also short of expectations of $3.51 billion. Shares fell 6.95% to $12.46.
• AMD pleases market after the bell. Advanced Micro Devices (AMD) reported a loss excluding items of $97 million (-$0.17/share), much narrower than analyst forecasts of a loss per share of $0.36. Shares rose 5.52% after hours.
• PNC Financial reports 53% drop in profit. Pennsylvania bank PNC Financial Services Group (PNC) posted Q4 net income of $178 million ($0.52/share) against $376 million ($1.27) a year ago. It also said it will not buy back stock before June at the earliest. Shares declined 7.15%.
• Activist shareholder wants to show Comcast CEO the door. Chieftain Capital Management, which holds about 2% of Comcast (CMCSA), has called for the firing of CEO Brian Roberts. Chieftain also wants cash returned to shareholders. Shares fell 4.24%.
• Seagate posts tripling of net income; shares fall on capacity concerns. The hard drive manufacturer (STX) reported Q2 net income of $403 million ($0.73/share) versus $140 million ($0.23) a year ago and analyst forecasts of $0.75. Revenue was up 14% to $3.42 billion, shy of analysts' $3.49 billion expectation, due to difficulties fulfilling demand. Shares fell 6% and another 2% after hours.
• Massey Energy hit with record-setting fine; shares fall. The Appalachian coal miner (MEE) has been fined $20 million, the largest penalty ever levied by the EPA, following an investigation that showed over 4,500 cases in which waters in West Virginia and Kentucky were polluted by mine runoff. MEE shares fell 10.71%.
• Wipro reports slowest growth in three years. India's third-largest software exporter (WIT) posted an 11% increase in net income to 8.26 billion rupees ($210 million), or 5.68 rupees/share, from 7.45 billion rupees, or 5.14 rupees. Analysts were expecting 8.62 billion rupees.
• Google unveils $30 million in new philanthropic grants. Google (GOOG) released the first set of large initiatives to be pursued by philanthropic arm Google.org, which has assets of $2 billion. They include the creation of pandemic prediction systems and job-creation programs in the developing world.
• Lehman cuts residential-mortgage lending jobs. Lehman Brothers (LEH) will eliminate about 1,300 positions at its Aurora Loan Services unit.

U.S. Markets

• Wednesday, the DJIA was down 0.28% and the S&P 500 0.56%. The Nasdaq ticked into positive ground intraday but closed down 0.95%. Crude traded near a four-week low Wednesday but rose in Asian trading Thursday after the IEA said it is maintaining its 2008 demand forecast. Gold fell 2.3% to $882.00 an ounce.
• Mortgage application volume shot up 28.4% last week.
• Consumer prices rose by 4.1% in 2007, their fastest since 1990, led by gasoline and food. Core inflation, which excludes those factors, rose 2.4%.
• The Fed's Beige Book said economic growth slowed in late November and December, with "subdued holiday spending and further weakness in auto sales."
• Homebuilders are cheering up (a little). The homebuilders' housing-market index rose to 19 this month from a downwardly revised 18 in December. A year ago, the index was 35.
• Fed Chairman Ben Bernanke is expected to be "far more circumspect than Greenspan" on specific recommendations concerning the economy when he testifies today before the House Budget Committee.

Global Markets

• Asia: Nikkei up 2.07%, Hang Seng up 2.72%. Both indices swung sharply during the day. Honda (HMC) and Sharp (SHCAY.PK) gained 2.9% and 2.4%, respectively. China shares listed in Hong Hong fell 6.6% as large funds scaled back positions. The yen rose against the dollar and the euro after the Fed and the European Central Bank said growth is slowing.
• Europe: FTSE up 0.74%, DAX up 0.74%, CAC up 0.59%. British-French electronics retailer Kesa Electricals gained 7.8%, Belgian supermarket Delhaize (DEG) 4% and books-and-music chain HMV Group 14.95%.

Must-Know News for Thursday

• Ambac reports massive writedown, cuts dividend; shares plunge. The bond insurer (ABK) announced a $3.5 billion writedown, equivalent to almost two-thirds its net worth. It also said it is cutting its dividend by 2/3 and ousting its CEO. Shares tumbled 38.65% to $12.97.
• Florida follows through on threat and suspends Allstate. Kevin McCarty, commissioner of the Florida Office of Insurance Regulation, has suspended Allstate (ALL) from writing new policies in the state because of the company's noncompliance with a subpoena. "We're going to hit them where it hurts," he said. The suspension will primarily affect new auto policies.
• Air France-KLM might hold key to Delta-Northwest merger. Air France-KLM (AKH) "could provide strategic or financial backing" in a Delta (DAL) bid for Northwest (NWA) in return for a significant stake in the combined airline, sources told the WSJ.
• JPMorgan reports 34% drop in net; shares rise. JPMorgan Chase (JPM) posted net income of $2.97 billion ($0.86/share) against $4.52 billion ($1.26) a year ago. Revenue was up 7% to $17.38 billion. Analysts were expecting EPS of $0.93 on $17.05 billion in revenue. JPM shares rose 5.77%.
• Wells Fargo posts first quarterly profit decline in six years; edges expectations. The mortgage lender (WFC) reported that Q4 earnings fell to $1.36 billion ($0.41/share) from $2.18 billion ($0.64) a year earlier. Revenue rose 8% to $10.21 billion. Analysts expected EPS of $0.39 on revenue of $10 billion. Shares rose 3.32%.
• Citi sees $15 billion writedown at Merrill. Citigroup (C) is forecasting a $15 billion Q4 writedown at Merrill Lynch (MER) and is lowering its price target by $5 to $75, but continues to rate Merrill a "buy".
• Sun to buy MySQL. Sun Microsystems (JAVA) will pay $1 billion for the Swedish open-source database company. Sun shares rose 3.67%.
• Novartis posts Q4 profit miss. The European pharmaceutical (NVS) reported Q4 net income of $904 million ($0.41/share), a 45% decline from the year-ago quarter. Analysts were expecting earnings of $1.5 billion. Shares fell 2.10%.
• Microsoft allies with Edgar Online. The software giant (MSFT) and financial information provider (EDGR) will place advertising and content on one another's sites. Edgar shares gained 3.7% after hours.
• AMR swings to Q4 loss. The parent of American Airlines (AMR) posted a loss of $69 million ($0.28/share) versus a profit of $17 million ($0.07) a year ago. Excluding one-time benefits, the loss comes to $0.75/share, in line with forecasts. Shares closed up 3.18%.
• Apollo Group loses class-action suit. A jury found the education company (APOL) guilty of fraud and ordered it to pay investors $277.5 million. Shares fell 1.70%.
• Airbus Lags Boeing in New Orders, But Aircraft Deliveries Hit Record
• SAP Doesn't See Economy Crimping Sales, Chief Kagermann Says
• Deutsche Bank Set to Cut 250 to 300 Jobs
• Schwab Profit from Continuing Operations Up 36 Percent

U.S. Markets

• U.S. markets continued their decline Tuesday, with the DJIA falling 2.17%, the Nasdaq 2.45% and the S&P 500 2.49%. Oil pulled back by $2.30 to $91.90 and the dollar fell to a 2.5-year low against the yen on recession fears. Gold shed $0.90 to $902.50. The yield on 10-year Treasurys declined to 3.638%. (News That Moved Tuesday's Market)
• Wholesale prices skyrocketed 6.3% in 2007, their steepest rise in 26 years.
• S&P raises subprime loan-loss projections. Standard & Poor's elevated its loss estimate for subprime mortgages made in 2006 to 19% from 14%, suggesting that more downgrades of subprime mortgage securities might be in the offing.
• Retail sales surprised analysts by falling 0.4% in December, their worst performance in six months.
• U.S. producer prices dropped unexpectedly by 0.1% in December because of a temporary decline in energy costs.
• The Supreme Court has dramatically curtailed the ability of investors who were victimized by corporate fraud to file securities class-action suits.

Global Markets

• Asia: Asian markets plunged. The Nikkei fell 3.4%, while the Hang Seng declined 5.4% -- its worst one-day drop since 9/11. Asian banks hit a four-month low, with the Bank of China down 4% and Hong Kong-listed shares of HSBC Holdings (HBC) down 3.2% -- its worst day in over six years. Taipei shares retreated 2.96%.
• Europe: European shares hit 16-month lows Tuesday. The FTSE closed down 3.06%, the DAX 0.37%, and the CAC 2.8%. Dutch chip equipment maker ASML (ASML) declined 7.4% while STMircroelectronics NV fell 3.6% to hit a near 10-year low in Paris. The MSCI World Index has lost 6.9% so far this year, erasing $2.1 trillion from its collective market cap.

Must-Know News for Wednesday

• Bank of America scales back investment banking. BofA (BAC) is eliminating 650 more jobs from its investment banking operation following heavy trading losses, further to the 500 layoffs announced in October. The bank also plans to sell its prime brokerage unit.
• Apple unveils ultrathin notebook, movie rental service. At the MacWorld Expo Tuesday, Apple (AAPL) CEO Steve Jobs demonstrated the "world's thinnest notebook," the MacBook Air ultralight. He also announced that iTunes will now offer movies for rent, and gave details of upcoming iPhone and iPod upgrades. Shares fell 5.5%. (Apple's Post MacWorld Drop - More to Come or Buying Op.? • Air: All That's Left In Your Wallet After You Buy Apple’s New Laptop)
• Intel reports Q4 profit surge, but shares sink on cautious forecast. The chip giant (INTC) posted Q4 net income of $2.27 billion ($0.38/share), a 51% increase from last year, and revenue of $10.71 billion. Analysts were expecting EPS of $0.40 on $10.84 billion. The company's Q1 forecast indicates a 10% decline in revenue from Q4. Intel shares fell 14.2% after hours. (Is Intel's 15% Post-Earnings Decline Really Warranted?)
• Citi reports biggest loss ever, cuts dividend, receives capital infusion. Citigroup (C) posted a $9.83 billion Q4 loss Tuesday -- the worst loss in its 196-year history -- and announced an $18.1 billion write-down on the value of its investment portfolio. It also cut the dividend 41%. The Government of Singapore Investment Corp. is taking a 4% stake in the bank for $6.9 billion. Citi shares sank 7.6% to $26.85 Tuesday, a five-year low. (Tough Times Ahead for Citigroup)
• Rio Tinto reports record output. The mining company (RTP) posted all-time high production levels of iron ore, bauxite, alumina, aluminum, refined gold and refined copper in 2007.
• Boeing might delay Dreamliner again. The aircraft manufacturer (BA) said the 787's maiden flight -- which was already pushed from last August to late March -- could be delayed until June. Shares fell 4.7%
• IndyMac to cut a quarter of its workforce. The mortgage bank (IMB) said it will eliminate 2,403 jobs, or 24% of its workforce, and that more layoffs are likely. Shares fell 5.67% to $4.49.
• Applied Materials to cut 7% of global staff. The semiconductor company (AMAT) announced a global cost reduction plan on Tuesday that will involve laying off about 1,000 people.
• MetLife OK's buyback. The board of the insurance provider (MET) has authorized the repurchase of $1 billion in stock, further to an earlier $1 billion authorization.
• MGM Mirage, Dubai World add to tender offer. MGM Mirage (MGM) and Dubai World are boosting their tender offer to 15 million shares, a 50% increase, at $80 each, a 20% premium to Tuesday's close.
• Florida regulators throw book at Allstate. Regulators shut down a hearing to discuss Allstate's (ALL) request for property-insurance rate increases of up to 42% and accused the company of failing to comply with a subpoena. Consequences could include fines, suspension or revocation of Allstate's license to sell policies in Florida.
• Mitsubishi UFJ announces subprime-linked writeoffs. Mitsubishi UFJ Financial Group (MTU) will write off 50 billion yen ($470.52 million) on investments linked to U.S sub-prime mortgages, almost twice its earlier forecast.

• Blockbuster, Netflix fall on iTunes movie rental news
• Check-Cashing Chain Is Takeover Target
• A Battered MoneyGram To Sell Stake
• Subprime Provisions Damp State Street's Earnings
• Batteries Hamper AT&T TV Effort

Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up. ]]> Wed, 16 Jan 2008 06:00:23 -0500 SA Editor Judith Levy h8 {font-weight:bold; font-size:90%; margin: 0px 20px 0px 20px;} h9 {font-weight:bold; font-size:90%;}

U.S. Markets

• U.S. markets continued their decline Tuesday, with the DJIA falling 2.17%, the Nasdaq 2.45% and the S&P 500 2.49%. Oil pulled back by $2.30 to $91.90 and the dollar fell to a 2.5-year low against the yen on recession fears. Gold shed $0.90 to $902.50. The yield on 10-year Treasurys declined to 3.638%. (News That Moved Tuesday's Market)
• Wholesale prices skyrocketed 6.3% in 2007, their steepest rise in 26 years.
• S&P raises subprime loan-loss projections. Standard & Poor's elevated its loss estimate for subprime mortgages made in 2006 to 19% from 14%, suggesting that more downgrades of subprime mortgage securities might be in the offing.
• Retail sales surprised analysts by falling 0.4% in December, their worst performance in six months.
• U.S. producer prices dropped unexpectedly by 0.1% in December because of a temporary decline in energy costs.
• The Supreme Court has dramatically curtailed the ability of investors who were victimized by corporate fraud to file securities class-action suits.

Global Markets

• Asia: Asian markets plunged. The Nikkei fell 3.4%, while the Hang Seng declined 5.4% -- its worst one-day drop since 9/11. Asian banks hit a four-month low, with the Bank of China down 4% and Hong Kong-listed shares of HSBC Holdings (HBC) down 3.2% -- its worst day in over six years. Taipei shares retreated 2.96%.
• Europe: European shares hit 16-month lows Tuesday. The FTSE closed down 3.06%, the DAX 0.37%, and the CAC 2.8%. Dutch chip equipment maker ASML (ASML) declined 7.4% while STMircroelectronics NV fell 3.6% to hit a near 10-year low in Paris. The MSCI World Index has lost 6.9% so far this year, erasing $2.1 trillion from its collective market cap.

Must-Know News for Wednesday

• Bank of America scales back investment banking. BofA (BAC) is eliminating 650 more jobs from its investment banking operation following heavy trading losses, further to the 500 layoffs announced in October. The bank also plans to sell its prime brokerage unit.
• Apple unveils ultrathin notebook, movie rental service. At the MacWorld Expo Tuesday, Apple (AAPL) CEO Steve Jobs demonstrated the "world's thinnest notebook," the MacBook Air ultralight. He also announced that iTunes will now offer movies for rent, and gave details of upcoming iPhone and iPod upgrades. Shares fell 5.5%. (Apple's Post MacWorld Drop - More to Come or Buying Op.? • Air: All That's Left In Your Wallet After You Buy Apple’s New Laptop)
• Intel reports Q4 profit surge, but shares sink on cautious forecast. The chip giant (INTC) posted Q4 net income of $2.27 billion ($0.38/share), a 51% increase from last year, and revenue of $10.71 billion. Analysts were expecting EPS of $0.40 on $10.84 billion. The company's Q1 forecast indicates a 10% decline in revenue from Q4. Intel shares fell 14.2% after hours. (Is Intel's 15% Post-Earnings Decline Really Warranted?)
• Citi reports biggest loss ever, cuts dividend, receives capital infusion. Citigroup (C) posted a $9.83 billion Q4 loss Tuesday -- the worst loss in its 196-year history -- and announced an $18.1 billion write-down on the value of its investment portfolio. It also cut the dividend 41%. The Government of Singapore Investment Corp. is taking a 4% stake in the bank for $6.9 billion. Citi shares sank 7.6% to $26.85 Tuesday, a five-year low. (Tough Times Ahead for Citigroup)
• Rio Tinto reports record output. The mining company (RTP) posted all-time high production levels of iron ore, bauxite, alumina, aluminum, refined gold and refined copper in 2007.
• Boeing might delay Dreamliner again. The aircraft manufacturer (BA) said the 787's maiden flight -- which was already pushed from last August to late March -- could be delayed until June. Shares fell 4.7%
• IndyMac to cut a quarter of its workforce. The mortgage bank (IMB) said it will eliminate 2,403 jobs, or 24% of its workforce, and that more layoffs are likely. Shares fell 5.67% to $4.49.
• Applied Materials to cut 7% of global staff. The semiconductor company (AMAT) announced a global cost reduction plan on Tuesday that will involve laying off about 1,000 people.
• MetLife OK's buyback. The board of the insurance provider (MET) has authorized the repurchase of $1 billion in stock, further to an earlier $1 billion authorization.
• MGM Mirage, Dubai World add to tender offer. MGM Mirage (MGM) and Dubai World are boosting their tender offer to 15 million shares, a 50% increase, at $80 each, a 20% premium to Tuesday's close.
• Florida regulators throw book at Allstate. Regulators shut down a hearing to discuss Allstate's (ALL) request for property-insurance rate increases of up to 42% and accused the company of failing to comply with a subpoena. Consequences could include fines, suspension or revocation of Allstate's license to sell policies in Florida.
• Mitsubishi UFJ announces subprime-linked writeoffs. Mitsubishi UFJ Financial Group (MTU) will write off 50 billion yen ($470.52 million) on investments linked to U.S sub-prime mortgages, almost twice its earlier forecast.

• Blockbuster, Netflix fall on iTunes movie rental news
• Check-Cashing Chain Is Takeover Target
• A Battered MoneyGram To Sell Stake
• Subprime Provisions Damp State Street's Earnings
• Batteries Hamper AT&T TV Effort

Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.
Complete Story »]]> AAPL ALL AMAT BA BAC C IDMCQ.PK INTC MET MGM MTU RTP SA Editor Judith Levy http://seekingalpha.com/article/60200-wall-street-breakfast-must-know-news?source=feed 60200 U.S. Markets
• The DJIA gained 1.36% Monday, in part on interest rate hopes, closing at 12,778.2. IBM (IBM) led gainers with a strong preliminary Q4 earnings report. The S&P 500 climbed 1.1% to 1,416.25 and the Nasdaq 1.6% to 2,478.30. Oil closed up $1.85 at $92.92 Monday on frosty U.S. weather forecasts and unrest in the Mideast. It continued upward in morning trading Tuesday on tensions in Iran and Nigeria. The dollar slipped against the yen and the euro in response to last week's remarks by Fed Chairman Ben Bernanke advocating "substantive" action at the central bank's next policy meeting. Gold closed up $5.50 at $901.60 an ounce.
• Former Fed Chairman Alan Greenspan said Monday that the U.S. is either already in or likely to soon enter a recession. "The symptoms are clearly there," he said.
• Retail sales are expected to rise 3.5% -- their slowest rate in six years -- according to the National Retail Federation. The Commerce Department will report December's total retail sales figures on Tuesday, which will provide a final figure for 2007. That year's sales growth is currently estimated at 4.0%.
• Senate investigators have issued subpoenas to Citigroup (C), Lehman Brothers Holdings (LEH), Morgan Stanley (MS), and UBS AG (UBS) concerning the alleged structuring of derivatives transactions to help offshore investors avoid U.S. withholding taxes.

Global Markets

• Asia: Most Asian markets declined Tuesday following intraday volatility. The Nikkei dipped below 14,000 for the first time since November 2005 on concerns that the yen's strength will hurt exports. Honda Motor Co. (HMC) was off as much as 4.4% and Sony (SNE) 2.2%. Bank of Japan Governor Toshihiko Fukui said again Tuesday that Japan's economic growth will likely continue to slow, suggesting the central bank will not raise interest rates this year. The Hang Seng declined 1.5%, in part reflecting the Chinese government's rejection of a proposed investment in Citigroup (C). HSBC Holdings (HBC) fell 1.9% and China Mobile (CHL) 2.1%. Taipei listings continued to rise following the Kuomintang's victory, with China Airlines (CHAWF.PK, up 6.8%) and Huaku Construction (up 6.9%) leading gainers.
• Europe: European shares fell Tuesday, led by retailers, on consumer spending fears. The FTSE lost 1.1%, the DAX 0.5% and the CAC 0.8%. British supermarket Tesco (TSCDY.PK) shed 2.7% following a disappointing comps report and luxury retailer Burberry fell 9.2% after it said it might miss estimates.

Must-Know News for Tuesday

• Citigroup expected to announce dividend cut, cash infusion and writedowns. The bank's (C) Q4 earnings report is expected to include news of a dividend reduction -- possibly by half -- and cost-cutting measures that could include over 20,000 layoffs, as well as a writedown of $20 billion in mortgage-related investments. Beijing rejected a $2 billion investment by the China Development Bank, but Citi is seeking at least $5 billion from the Government Investment Corp. of Singapore in addition to cash injections from Kuwait and Saudi Prince Alwaleed bin Talal.
• IBM surprises to the upside; shares rise. IBM (IBM) preannounced Q4 EPS of $2.80, 7.7% ahead of analyst expectations and 24% above last year's quarter. IBM shares led a rally on the Dow, closing up 5.39% at $102.93.
• Merrill receives capital injection from Japanese megabank. Merrill Lynch (MER) is expected to announce Tuesday that it will receive a ¥140 billion ($1.3 billion) recapitalization from a unit of Mizuho Financial Group (MFG).
• Harman International slashes outlook; shares plunge. The audio equipment and GPS manufacturer (HAR) reduced its fiscal 2008 EPS estimate to $3.00-3.10 from $4.14. Analysts had been expecting $4.30. Shares closed down 37.65% at $43.00.
• Sun Capital to launch hostile bid for Kellwood. Cardinal Integrated LLC, an affiliate of Sun Capital, is offering $21 per share for the shares of the apparel manufacturer (KWD) it does not already own. Kellwood has already rejected that price twice.
• Three French companies to co-build nuclear power plant in MidEast. In an announcement that coincided with the visit of French President Nicolas Sarkozy to the region, French oil company Total SA (TOT), utility Suez SA (SZEZY.PK) and nuclear engineering company Areva said they will construct a civil nuclear power plant in the U.A.E.
• Samsung posts Q4 earnings beat. Samsung Electronics (SSNLF.PK) reported a 6.6% drop in net income to 2.21 trillion won ($2.4 billion) from 2.37 trillion won a year ago, ahead of the 1.95 trillion won expected by analysts. Revenues were up 11% to 17.48 trillion won. Liquid-crystal display earnings tripled to set a company record.
• Trial shows popular drug offers no medical benefit. Merck (MRK) and Schering-Plough (SGP) said Monday that Zetia, the cholesterol treatment prescribed to a million people a week, does not reduce heart attacks, strokes or atherosclerosis. Schering-Plough's shares fell 7.97% and Merck's 1.27%.
• Coldwater Creek warns on Q4; shares tumble. The women's clothing retailer (CWTR) said it now forecasts a Q4 EPS loss of $0.16-0.20 versus earlier guidance of break-even. Analysts had been expecting a loss of $0.01. Shares fell 12.82% after hours.
• Legg Mason sells senior notes; offers Q3 earnings guidance. The money-management firm (LM) sold 2.5% nonvoting convertible senior notes valued at $1.25 billion and due in 2015 to an affiliate of Kohlberg Kravis Roberts. It also said it is forecasting Q3 EPS of $1.04-1.09, including a $0.16 charge. Analysts had been expecting $1.21.
• Sovereign Bancorp warns that Q4 will be hurt by charges. The Philadelphia bank (SOV) said results will reflect about $1.61 billion in pretax charges. It also announced it has discontinued its automobile lending originations in the Southeast and Southwest.
• Virgin Atlantic to fly biofuel-powered 747. As part of a joint project with Boeing (BA) and General Electric (GE), the British airline will fly a plane from London to the Netherlands next month powered by an alternative fuel-kerosene combination. The flight will be ten months ahead of schedule.
• FDA approves Tysabri for use in Crohn's disease. The medication, sold by by Elan Corp. (ELN) and Biogen Idec (BIIB), has been approved for use by Crohn's patients who have not had success with other treatments, including Johnson & Johnson's (JNJ) Remicade and Abbott Laboratories' (ABT) Humira.

Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up. ]]> Tue, 15 Jan 2008 06:04:27 -0500 SA Editor Judith Levy U.S. Markets
• The DJIA gained 1.36% Monday, in part on interest rate hopes, closing at 12,778.2. IBM (IBM) led gainers with a strong preliminary Q4 earnings report. The S&P 500 climbed 1.1% to 1,416.25 and the Nasdaq 1.6% to 2,478.30. Oil closed up $1.85 at $92.92 Monday on frosty U.S. weather forecasts and unrest in the Mideast. It continued upward in morning trading Tuesday on tensions in Iran and Nigeria. The dollar slipped against the yen and the euro in response to last week's remarks by Fed Chairman Ben Bernanke advocating "substantive" action at the central bank's next policy meeting. Gold closed up $5.50 at $901.60 an ounce.
• Former Fed Chairman Alan Greenspan said Monday that the U.S. is either already in or likely to soon enter a recession. "The symptoms are clearly there," he said.
• Retail sales are expected to rise 3.5% -- their slowest rate in six years -- according to the National Retail Federation. The Commerce Department will report December's total retail sales figures on Tuesday, which will provide a final figure for 2007. That year's sales growth is currently estimated at 4.0%.
• Senate investigators have issued subpoenas to Citigroup (C), Lehman Brothers Holdings (LEH), Morgan Stanley (MS), and UBS AG (UBS) concerning the alleged structuring of derivatives transactions to help offshore investors avoid U.S. withholding taxes.

Global Markets

• Asia: Most Asian markets declined Tuesday following intraday volatility. The Nikkei dipped below 14,000 for the first time since November 2005 on concerns that the yen's strength will hurt exports. Honda Motor Co. (HMC) was off as much as 4.4% and Sony (SNE) 2.2%. Bank of Japan Governor Toshihiko Fukui said again Tuesday that Japan's economic growth will likely continue to slow, suggesting the central bank will not raise interest rates this year. The Hang Seng declined 1.5%, in part reflecting the Chinese government's rejection of a proposed investment in Citigroup (C). HSBC Holdings (HBC) fell 1.9% and China Mobile (CHL) 2.1%. Taipei listings continued to rise following the Kuomintang's victory, with China Airlines (CHAWF.PK, up 6.8%) and Huaku Construction (up 6.9%) leading gainers.
• Europe: European shares fell Tuesday, led by retailers, on consumer spending fears. The FTSE lost 1.1%, the DAX 0.5% and the CAC 0.8%. British supermarket Tesco (TSCDY.PK) shed 2.7% following a disappointing comps report and luxury retailer Burberry fell 9.2% after it said it might miss estimates.

Must-Know News for Tuesday

• Citigroup expected to announce dividend cut, cash infusion and writedowns. The bank's (C) Q4 earnings report is expected to include news of a dividend reduction -- possibly by half -- and cost-cutting measures that could include over 20,000 layoffs, as well as a writedown of $20 billion in mortgage-related investments. Beijing rejected a $2 billion investment by the China Development Bank, but Citi is seeking at least $5 billion from the Government Investment Corp. of Singapore in addition to cash injections from Kuwait and Saudi Prince Alwaleed bin Talal.
• IBM surprises to the upside; shares rise. IBM (IBM) preannounced Q4 EPS of $2.80, 7.7% ahead of analyst expectations and 24% above last year's quarter. IBM shares led a rally on the Dow, closing up 5.39% at $102.93.
• Merrill receives capital injection from Japanese megabank. Merrill Lynch (MER) is expected to announce Tuesday that it will receive a ¥140 billion ($1.3 billion) recapitalization from a unit of Mizuho Financial Group (MFG).
• Harman International slashes outlook; shares plunge. The audio equipment and GPS manufacturer (HAR) reduced its fiscal 2008 EPS estimate to $3.00-3.10 from $4.14. Analysts had been expecting $4.30. Shares closed down 37.65% at $43.00.
• Sun Capital to launch hostile bid for Kellwood. Cardinal Integrated LLC, an affiliate of Sun Capital, is offering $21 per share for the shares of the apparel manufacturer (KWD) it does not already own. Kellwood has already rejected that price twice.
• Three French companies to co-build nuclear power plant in MidEast. In an announcement that coincided with the visit of French President Nicolas Sarkozy to the region, French oil company Total SA (TOT), utility Suez SA (SZEZY.PK) and nuclear engineering company Areva said they will construct a civil nuclear power plant in the U.A.E.
• Samsung posts Q4 earnings beat. Samsung Electronics (SSNLF.PK) reported a 6.6% drop in net income to 2.21 trillion won ($2.4 billion) from 2.37 trillion won a year ago, ahead of the 1.95 trillion won expected by analysts. Revenues were up 11% to 17.48 trillion won. Liquid-crystal display earnings tripled to set a company record.
• Trial shows popular drug offers no medical benefit. Merck (MRK) and Schering-Plough (SGP) said Monday that Zetia, the cholesterol treatment prescribed to a million people a week, does not reduce heart attacks, strokes or atherosclerosis. Schering-Plough's shares fell 7.97% and Merck's 1.27%.
• Coldwater Creek warns on Q4; shares tumble. The women's clothing retailer (CWTR) said it now forecasts a Q4 EPS loss of $0.16-0.20 versus earlier guidance of break-even. Analysts had been expecting a loss of $0.01. Shares fell 12.82% after hours.
• Legg Mason sells senior notes; offers Q3 earnings guidance. The money-management firm (LM) sold 2.5% nonvoting convertible senior notes valued at $1.25 billion and due in 2015 to an affiliate of Kohlberg Kravis Roberts. It also said it is forecasting Q3 EPS of $1.04-1.09, including a $0.16 charge. Analysts had been expecting $1.21.
• Sovereign Bancorp warns that Q4 will be hurt by charges. The Philadelphia bank (SOV) said results will reflect about $1.61 billion in pretax charges. It also announced it has discontinued its automobile lending originations in the Southeast and Southwest.
• Virgin Atlantic to fly biofuel-powered 747. As part of a joint project with Boeing (BA) and General Electric (GE), the British airline will fly a plane from London to the Netherlands next month powered by an alternative fuel-kerosene combination. The flight will be ten months ahead of schedule.
• FDA approves Tysabri for use in Crohn's disease. The medication, sold by by Elan Corp. (ELN) and Biogen Idec (BIIB), has been approved for use by Crohn's patients who have not had success with other treatments, including Johnson & Johnson's (JNJ) Remicade and Abbott Laboratories' (ABT) Humira.

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Complete Story »]]> BA BIIB C CHL CWTR ELN GE HAR HBC HMC IBM KWD LEH LM MER MRK MS SGP SNE SOV TOT UBS SA Editor Judith Levy http://seekingalpha.com/article/60052-wall-street-breakfast-must-know-news?source=feed 60052 U.S. Markets
• U.S. stocks declined Friday, with the DJIA closing down 1.92% at 12,606.30, the Nasdaq down 1.95% at 2,439.94 and the S&P 500 down 1.36% at 1,401.02. The S&P 500 has fallen 4.59% on the year so far, making 2008 the fourth-worst start to any year in the history of the index. Investors were put off on Friday by the announcement of rising credit-card defaults at American Express (AXP), which sent its shares down 10%, and by news of weakening consumer spending. Luxury jeweler Tiffany & Co. (TIF) fell 11.21% to a 52-week low after it lowered the top end of its 2007 profit forecast, while McDonald's Corp. (MCD) fell 6.62% to a four-month low. Gold penetrated $900 an ounce for the first time Friday before settling at $897.70. Oil fell $1.02 to $92.90 a barrel, and the dollar closed down against the euro and the yen. The yield on 10-year Treasurys gained 0.08% to 3.785%.
• Consumer spending, excluding sales of gasoline and autos, fell 0.7% in December, according to SpendingPulse, a retail data service. The last time consumer spending fell during a presidential election year was 1980, a trend that helped Ronald Reagan take the White House from incumbent Jimmy Carter.
• Federal Reserve Chairman Ben Bernanke pledged to speak more openly and more frequently about the state of the nation's economy.
• U.S. gasoline prices have risen almost $0.10 over the past three weeks, according to the Lundberg Survey of 7,000 stations, released Sunday. The average price of regular gasoline was $3.07 a gallon on Friday, mid-grade was $3.19, and premium was $3.30. The country's least expensive gasoline was in Cheyenne, WY and the most expensive in San Francisco, CA.

Global Markets

• Asia: Asian markets were bumpy Monday, with the Taiwanese Taiex index posting a 1.79% advance following the landslide electoral victory of pro-China opposition party Kuomintang. Japan was closed for a holiday. The Hang Seng ascended to 27142.88 before declining 1.48% to 26468.13. The Shanghai Composite gave up early gains to slide 0.5%, pulled down by U.S.-listed stocks like China Petroleum & Chemical (SNP) and PetroChina (PTR). Apple (AAPL) and China Mobile (CHL) have terminated discussions on launching the iPhone in China, possibly because of technical and revenue-sharing issues. Chinese auto production and sales grew 22% in 2007, national media reported Sunday.
• Europe: European markets slipped in early trading Monday, with the FTSE declining 0.2%, the DAX 0.03% and the CAC 0.1%. French utility Suez (SZEZY.PK) fell 4.6% after Credit Agricole said it will cut its stake. Supermarket group Tesco (TSCDF.PK) fell 2.2% following a downgrade.

Must-Know News for Monday

• Citigroup could write off up to $24 billion. A CNBC report published Monday said the banking giant (C) might write off up to $24 billion in subprime and credit-related losses and lay off as many as 20,000 jobs. Analysts also speculate that the bank will either cut or suspend its dividend.
• Saudi prince might boost stake in Citi together with Chinese -- provided the Chinese government gives OK. Prince Alwaleed bin Talal is rumored to be considering adding to his stake in Citigroup (C), together with the China Development Bank. The prince's potential stake has not been disclosed, but China Development is believed to want to invest about $2 billion. The WSJ reports, however, that opposition from the Chinese government to the investment was expressed over the weekend.
• Merrill is seeking another capital infusion; SEC probes front-running. The Financial Times reported Sunday that the U.S. investment bank is pursuing a new, $4 billion capital raising. The Kuwait Investment Authority is expected to be a "significant investor." Other investors might come from Europe. In other Merrill news, the SEC is investigating whether employees at the brokerage placed trades for Merrill's own account ahead of client orders from Fidelity Investments from 2002 through 2005.
• UBS, facing more writedowns, might split up. European banking giant UBS AG (UBS) might divide its investment banking and money management operations into two companies, SonntagsZeitung reported. The bank might also take another $5-8 billion in writedowns in addition to the $10 billion in writedowns it announced December 10.
• Lockheed's helicopter contract hits flak. After a series of delays and engineering problems concerning Lockheed Martin's (LMT) multibillion-dollar contract to manufacture a Marine One 28-helicopter fleet for the President's use, the Navy is considering several options, including cancellation.
• BHP Billiton might sweeten offer for Rio Tinto, paper says. Australian Business reported Monday that BHP Billiton (BHP) is considering adding cash to its proposal to buy Rio Tinto (RTP) and raising the proportion of shares in the offer ahead of a February 6 deadline. The speculation sent Rio Tinto shares up 2% in London trading.
• L.G. Philips posts best-ever quarterly profit. The Korean flat-screen manufacturer (LPL) reported a 760 billion won ($811.2 million) October-December net profit, well ahead of analyst expectations of 665.6 billion won and reversing a year-ago loss.
• Toyota to bring plug-in car to market. Toyota (TM) said Sunday it plans to produce its first plug-in hybrid car by 2010. The vehicle will compete with General Motors' (GM) Chevrolet Volt, also scheduled for a 2010 release.
• General Motors takes stake in Coskata. General Motors (GM) announced Sunday that it has bought a portion of Coskata Inc., a biofuel company that has developed a "commercially viable" means of producing ethanol from cellulose.
• Boeing sells 24 Dreamliners to Gulf Air. In a deal worth $6 billion, the national airline of Bahrain has agreed to purchase 16 Boeing (BA) 787-8 planes and options for another eight. Delivery is to begin in 2016.
• Wal-Mart to challenge Tesco in smaller-format stores. Wal-Mart (WMT) plans to open grocery stores in Arizona in 2008. They will be about double the size of Tesco's (TSCDF.PK) Fresh & Easy markets (though only one-tenth the size of traditional Wal-Marts) and will be located a mile from Tesco locations.
• Kazakhstan to double stake in Kashagan oil field. JSC NC KazMunaiGaz will pay $1.78 billion for an additional 8% of the huge field in the Caspian Sea, bringing its stake to 16.6%. The purchase will reduce the stakes of all the other shareholders, who include Eni SpA (ENI), Exxon Mobil (XOM), Total SA (TOT) and Royal Dutch Shell (RDSA).
• NYSE Euronext to buy Wombat. The stock exchange operator (NYX) said Monday it will buy privately-held Wombat Financial Software, which has a high-speed market data and messaging platform, for $200 million in cash.

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• U.S. stocks declined Friday, with the DJIA closing down 1.92% at 12,606.30, the Nasdaq down 1.95% at 2,439.94 and the S&P 500 down 1.36% at 1,401.02. The S&P 500 has fallen 4.59% on the year so far, making 2008 the fourth-worst start to any year in the history of the index. Investors were put off on Friday by the announcement of rising credit-card defaults at American Express (AXP), which sent its shares down 10%, and by news of weakening consumer spending. Luxury jeweler Tiffany & Co. (TIF) fell 11.21% to a 52-week low after it lowered the top end of its 2007 profit forecast, while McDonald's Corp. (MCD) fell 6.62% to a four-month low. Gold penetrated $900 an ounce for the first time Friday before settling at $897.70. Oil fell $1.02 to $92.90 a barrel, and the dollar closed down against the euro and the yen. The yield on 10-year Treasurys gained 0.08% to 3.785%.
• Consumer spending, excluding sales of gasoline and autos, fell 0.7% in December, according to SpendingPulse, a retail data service. The last time consumer spending fell during a presidential election year was 1980, a trend that helped Ronald Reagan take the White House from incumbent Jimmy Carter.
• Federal Reserve Chairman Ben Bernanke pledged to speak more openly and more frequently about the state of the nation's economy.
• U.S. gasoline prices have risen almost $0.10 over the past three weeks, according to the Lundberg Survey of 7,000 stations, released Sunday. The average price of regular gasoline was $3.07 a gallon on Friday, mid-grade was $3.19, and premium was $3.30. The country's least expensive gasoline was in Cheyenne, WY and the most expensive in San Francisco, CA.

Global Markets

• Asia: Asian markets were bumpy Monday, with the Taiwanese Taiex index posting a 1.79% advance following the landslide electoral victory of pro-China opposition party Kuomintang. Japan was closed for a holiday. The Hang Seng ascended to 27142.88 before declining 1.48% to 26468.13. The Shanghai Composite gave up early gains to slide 0.5%, pulled down by U.S.-listed stocks like China Petroleum & Chemical (SNP) and PetroChina (PTR). Apple (AAPL) and China Mobile (CHL) have terminated discussions on launching the iPhone in China, possibly because of technical and revenue-sharing issues. Chinese auto production and sales grew 22% in 2007, national media reported Sunday.
• Europe: European markets slipped in early trading Monday, with the FTSE declining 0.2%, the DAX 0.03% and the CAC 0.1%. French utility Suez (SZEZY.PK) fell 4.6% after Credit Agricole said it will cut its stake. Supermarket group Tesco (TSCDF.PK) fell 2.2% following a downgrade.

Must-Know News for Monday

• Citigroup could write off up to $24 billion. A CNBC report published Monday said the banking giant (C) might write off up to $24 billion in subprime and credit-related losses and lay off as many as 20,000 jobs. Analysts also speculate that the bank will either cut or suspend its dividend.
• Saudi prince might boost stake in Citi together with Chinese -- provided the Chinese government gives OK. Prince Alwaleed bin Talal is rumored to be considering adding to his stake in Citigroup (C), together with the China Development Bank. The prince's potential stake has not been disclosed, but China Development is believed to want to invest about $2 billion. The WSJ reports, however, that opposition from the Chinese government to the investment was expressed over the weekend.
• Merrill is seeking another capital infusion; SEC probes front-running. The Financial Times reported Sunday that the U.S. investment bank is pursuing a new, $4 billion capital raising. The Kuwait Investment Authority is expected to be a "significant investor." Other investors might come from Europe. In other Merrill news, the SEC is investigating whether employees at the brokerage placed trades for Merrill's own account ahead of client orders from Fidelity Investments from 2002 through 2005.
• UBS, facing more writedowns, might split up. European banking giant UBS AG (UBS) might divide its investment banking and money management operations into two companies, SonntagsZeitung reported. The bank might also take another $5-8 billion in writedowns in addition to the $10 billion in writedowns it announced December 10.
• Lockheed's helicopter contract hits flak. After a series of delays and engineering problems concerning Lockheed Martin's (LMT) multibillion-dollar contract to manufacture a Marine One 28-helicopter fleet for the President's use, the Navy is considering several options, including cancellation.
• BHP Billiton might sweeten offer for Rio Tinto, paper says. Australian Business reported Monday that BHP Billiton (BHP) is considering adding cash to its proposal to buy Rio Tinto (RTP) and raising the proportion of shares in the offer ahead of a February 6 deadline. The speculation sent Rio Tinto shares up 2% in London trading.
• L.G. Philips posts best-ever quarterly profit. The Korean flat-screen manufacturer (LPL) reported a 760 billion won ($811.2 million) October-December net profit, well ahead of analyst expectations of 665.6 billion won and reversing a year-ago loss.
• Toyota to bring plug-in car to market. Toyota (TM) said Sunday it plans to produce its first plug-in hybrid car by 2010. The vehicle will compete with General Motors' (GM) Chevrolet Volt, also scheduled for a 2010 release.
• General Motors takes stake in Coskata. General Motors (GM) announced Sunday that it has bought a portion of Coskata Inc., a biofuel company that has developed a "commercially viable" means of producing ethanol from cellulose.
• Boeing sells 24 Dreamliners to Gulf Air. In a deal worth $6 billion, the national airline of Bahrain has agreed to purchase 16 Boeing (BA) 787-8 planes and options for another eight. Delivery is to begin in 2016.
• Wal-Mart to challenge Tesco in smaller-format stores. Wal-Mart (WMT) plans to open grocery stores in Arizona in 2008. They will be about double the size of Tesco's (TSCDF.PK) Fresh & Easy markets (though only one-tenth the size of traditional Wal-Marts) and will be located a mile from Tesco locations.
• Kazakhstan to double stake in Kashagan oil field. JSC NC KazMunaiGaz will pay $1.78 billion for an additional 8% of the huge field in the Caspian Sea, bringing its stake to 16.6%. The purchase will reduce the stakes of all the other shareholders, who include Eni SpA (ENI), Exxon Mobil (XOM), Total SA (TOT) and Royal Dutch Shell (RDSA).
• NYSE Euronext to buy Wombat. The stock exchange operator (NYX) said Monday it will buy privately-held Wombat Financial Software, which has a high-speed market data and messaging platform, for $200 million in cash.

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Complete Story »]]> AAPL AXP BA BHP C CHL ENI GMGMQ.PK LMT LPL MCD MER NYX PTR RTP SNP TIF TM TOT UBS WMT XOM SA Editor Judith Levy http://seekingalpha.com/article/59841-wall-street-breakfast-must-know-news?source=feed 59841 U.S. Markets
• Stocks rose Thursday on investor relief that Countrywide Financial (CFC), the largest mortgage lender in the country, will likely be saved from bankruptcy as well as hopes that interest rate cuts will avert a recession. The DJIA, which closed up 0.92% at 12,853.09, has rallied 264 points over the past two days. The S&P 500 closed up 0.79% at 1,420.33, led by the financial sector: Washington Mutual (WM) gained almost 15%, Fannie Mae (FNM) 6% and Citigroup (C) over 2%. The Nasdaq closed up 0.56% at 2,488.52. The yield on 10-year Treasurys gained 2.37% to end the day at 3.89%. Oil fell $1.96 to close at $93.71 Thursday on consumer spending concerns, but rose to $94.49 in midday trading in Asia on Friday on rate cut optimism and an attack on six oil ships by Nigerian rebels. The dollar declined against the yen and the euro.
• Federal Reserve Chairman Ben S. Bernanke pledged "substantive additional action" to guard against downside risks to the economy, prompting HSBC Securities USA and Morgan Stanley (MS) to forecast a half-percentage-point reduction of the benchmark fed-funds rate this month.
• 70% of retailers reported December sales below expectations. Consumers appear to have bought fewer items over the holiday season, and what they did buy was less expensive than usual. The poor retail showing is contributing to concerns about a looming recession. Wal-Mart (WMT) and Costco (COST) exceeded expectations, but Limited (LTD), Ann Taylor (ANN) and Kohl's (KSS) all cut profit forecasts following poor December sales.
• A survey of 54 economists put the chance of recession at 42%, up from 38% in December and 23% six months ago.
• On the other hand, the Institute of International Finance forecast that the U.S. will avoid recession in 2008 and growth will rebound in H2.
• Initial jobless claims fell unexpectedly to 322,000 -- a two-month low -- during the week ended January 5, the Labor Department said Thursday. The holiday-shortened week is notoriously difficult for the government to assess, however, in view of seasonal variations. Economists were expecting a rise to 340,000 from 336,000 the week before.

Global Markets

• Asia: The Nikkei closed down 1.93% at 14,110.79 Thursday, its lowest close in over two years, after Merrill Lynch (MER) was reported to be facing more additional writedowns than expected. Mitsubishi UFJ Financial Group (MTU) led decliners in the financial sector with a 1.2% drop. Property shares also fell, with K.K. DaVinci Advisors dropping 11%. Japanese retailing giant Seven & I Holdings and department store operator J. Front Retailing suffered their worst one-day declines ever. Japan's market cap has shrunk 3.1% to $4.4 trillion since 2008 began, enabling China to surpass it as the world's second-largest stock market. In a sign that China's stratospheric expansion might have hit a top, the country's trade surplus narrowed for a second month on slowing export growth. The Hang Seng closed down 1.34%.
• Europe: The FTSE closed down 0.33%, the DAX up 0.12%, and the CAC down 0.15% on Thursday. Downgrades and subprime anxiety weighed down European stocks in early trading Friday, with Unilever (UL) sinking 6.3% and L'Oreal (LRLCY) 4.6%.

Must-Know News for Friday

• Merrill Lynch might face another $15 billion in writedowns. The New York Times reported Friday that the investment bank (MER) is expected to disclose the writedown -- which is almost twice its original estimate and greater than the $12 billion expected by analysts -- when it reports earnings next week.
• Countrywide buyout could saddle BofA with legal trouble. Shares of mortgage lender Countrywide Financial (CFC) surged 51.56% to close at $7.76 Thursday after news broke that it is about to be acquired by BofA (BAC) for over $4 billion. Countrywide is facing a host of lawsuits, however, for which its acquirer will have to assume at least partial responsibility.
• Infosys reports Q3 earnings beat. Infosys Technologies (INFY) posted a 25.2% rise in Q3 net, ahead of expectations, but said the global business environment remains "challenging."
• United Rentals forecasts earnings boost in 2008. The equipment rental company (URI) is projecting 2008 EPS at $2.80-3.00, up from $2.55-2.60 a share in 2007. Shares rose 6.6% on the news.
• Huntington Bancshares warns on Q4. The Midwestern regional bank (HBAN) said Thursday it is forecasting a Q4 loss of $239 million, sending its shares down 4.4%.
• Delta pursues merger with either Northwest or United. Delta Air Lines (DAL) will seek permission from its board on Friday to begin merger negotiations with Northwest Airlines (NWA) and United Airlines parent UAL Corp (UAUA). Delta ultimately plans to choose one or the other. Delta shares rose 18.2%, Northwest shares 32% and UAL shares 23.7%.
• Invitrogen to buy CellzDirect. The drug discovery company (IVGN) said Thursday it will purchase CellzDirect, which provides cell products and services used in drug testing, for $57 million.
• Wal-Mart's December comps surprise. Wal-Mart (WMT) posted a 2.4% rise in December same-store sales, exceeding expectations. The retailer added that while Q4 EPS from continuing operations should come in within its prior $0.99-1.03 forecast, earnings will be more pressured by high interest expense than they were a year ago.
• Even Amex cardholders are defaulting. American Express (AXP) said Thursday it will take a $440 million pretax charge against Q4 earnings to cover bad loans. Amex shares fell 12% before the Friday open.
• ConocoPhillips in lead for UAE gas project. The WSJ reported Thursday that ConocoPhillips (COP) is the front-runner to land a multibillion dollar project to develop sour gas reserves at the Shah Field in the UAE. Other contenders include Occidental Petroleum (OXY), Royal Dutch Shell (RDS), and Exxon Mobil (XOM).
• Blackstone buys GSO Capital Partners. The world-leading buyout firm (BX) has agreed to pay up to $930 million for hedge fund manager GSO, a signal that Blackstone CEO Stephen Schwarzman anticipates a rebound in the debt markets.
• New York AG probes Intel. The NY state attorney general began an investigation Thursday to establish whether Intel (INTC) violated antitrust laws in an effort to exclude competitor Advanced Micro Devices (AMD) from the chip market.
• Northern Rock to sell mortgages to JPMorgan. U.K. bank Northern Rock Plc will sell $4.3 billion in mortgages to JPMorgan Chase (JPM) as part of its effort to gather funds to repay the Bank of England for its bailout.

Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up. ]]> Fri, 11 Jan 2008 06:07:37 -0500 SA Editor Judith Levy U.S. Markets
• Stocks rose Thursday on investor relief that Countrywide Financial (CFC), the largest mortgage lender in the country, will likely be saved from bankruptcy as well as hopes that interest rate cuts will avert a recession. The DJIA, which closed up 0.92% at 12,853.09, has rallied 264 points over the past two days. The S&P 500 closed up 0.79% at 1,420.33, led by the financial sector: Washington Mutual (WM) gained almost 15%, Fannie Mae (FNM) 6% and Citigroup (C) over 2%. The Nasdaq closed up 0.56% at 2,488.52. The yield on 10-year Treasurys gained 2.37% to end the day at 3.89%. Oil fell $1.96 to close at $93.71 Thursday on consumer spending concerns, but rose to $94.49 in midday trading in Asia on Friday on rate cut optimism and an attack on six oil ships by Nigerian rebels. The dollar declined against the yen and the euro.
• Federal Reserve Chairman Ben S. Bernanke pledged "substantive additional action" to guard against downside risks to the economy, prompting HSBC Securities USA and Morgan Stanley (MS) to forecast a half-percentage-point reduction of the benchmark fed-funds rate this month.
• 70% of retailers reported December sales below expectations. Consumers appear to have bought fewer items over the holiday season, and what they did buy was less expensive than usual. The poor retail showing is contributing to concerns about a looming recession. Wal-Mart (WMT) and Costco (COST) exceeded expectations, but Limited (LTD), Ann Taylor (ANN) and Kohl's (KSS) all cut profit forecasts following poor December sales.
• A survey of 54 economists put the chance of recession at 42%, up from 38% in December and 23% six months ago.
• On the other hand, the Institute of International Finance forecast that the U.S. will avoid recession in 2008 and growth will rebound in H2.
• Initial jobless claims fell unexpectedly to 322,000 -- a two-month low -- during the week ended January 5, the Labor Department said Thursday. The holiday-shortened week is notoriously difficult for the government to assess, however, in view of seasonal variations. Economists were expecting a rise to 340,000 from 336,000 the week before.

Global Markets

• Asia: The Nikkei closed down 1.93% at 14,110.79 Thursday, its lowest close in over two years, after Merrill Lynch (MER) was reported to be facing more additional writedowns than expected. Mitsubishi UFJ Financial Group (MTU) led decliners in the financial sector with a 1.2% drop. Property shares also fell, with K.K. DaVinci Advisors dropping 11%. Japanese retailing giant Seven & I Holdings and department store operator J. Front Retailing suffered their worst one-day declines ever. Japan's market cap has shrunk 3.1% to $4.4 trillion since 2008 began, enabling China to surpass it as the world's second-largest stock market. In a sign that China's stratospheric expansion might have hit a top, the country's trade surplus narrowed for a second month on slowing export growth. The Hang Seng closed down 1.34%.
• Europe: The FTSE closed down 0.33%, the DAX up 0.12%, and the CAC down 0.15% on Thursday. Downgrades and subprime anxiety weighed down European stocks in early trading Friday, with Unilever (UL) sinking 6.3% and L'Oreal (LRLCY) 4.6%.

Must-Know News for Friday

• Merrill Lynch might face another $15 billion in writedowns. The New York Times reported Friday that the investment bank (MER) is expected to disclose the writedown -- which is almost twice its original estimate and greater than the $12 billion expected by analysts -- when it reports earnings next week.
• Countrywide buyout could saddle BofA with legal trouble. Shares of mortgage lender Countrywide Financial (CFC) surged 51.56% to close at $7.76 Thursday after news broke that it is about to be acquired by BofA (BAC) for over $4 billion. Countrywide is facing a host of lawsuits, however, for which its acquirer will have to assume at least partial responsibility.
• Infosys reports Q3 earnings beat. Infosys Technologies (INFY) posted a 25.2% rise in Q3 net, ahead of expectations, but said the global business environment remains "challenging."
• United Rentals forecasts earnings boost in 2008. The equipment rental company (URI) is projecting 2008 EPS at $2.80-3.00, up from $2.55-2.60 a share in 2007. Shares rose 6.6% on the news.
• Huntington Bancshares warns on Q4. The Midwestern regional bank (HBAN) said Thursday it is forecasting a Q4 loss of $239 million, sending its shares down 4.4%.
• Delta pursues merger with either Northwest or United. Delta Air Lines (DAL) will seek permission from its board on Friday to begin merger negotiations with Northwest Airlines (NWA) and United Airlines parent UAL Corp (UAUA). Delta ultimately plans to choose one or the other. Delta shares rose 18.2%, Northwest shares 32% and UAL shares 23.7%.
• Invitrogen to buy CellzDirect. The drug discovery company (IVGN) said Thursday it will purchase CellzDirect, which provides cell products and services used in drug testing, for $57 million.
• Wal-Mart's December comps surprise. Wal-Mart (WMT) posted a 2.4% rise in December same-store sales, exceeding expectations. The retailer added that while Q4 EPS from continuing operations should come in within its prior $0.99-1.03 forecast, earnings will be more pressured by high interest expense than they were a year ago.
• Even Amex cardholders are defaulting. American Express (AXP) said Thursday it will take a $440 million pretax charge against Q4 earnings to cover bad loans. Amex shares fell 12% before the Friday open.
• ConocoPhillips in lead for UAE gas project. The WSJ reported Thursday that ConocoPhillips (COP) is the front-runner to land a multibillion dollar project to develop sour gas reserves at the Shah Field in the UAE. Other contenders include Occidental Petroleum (OXY), Royal Dutch Shell (RDS), and Exxon Mobil (XOM).
• Blackstone buys GSO Capital Partners. The world-leading buyout firm (BX) has agreed to pay up to $930 million for hedge fund manager GSO, a signal that Blackstone CEO Stephen Schwarzman anticipates a rebound in the debt markets.
• New York AG probes Intel. The NY state attorney general began an investigation Thursday to establish whether Intel (INTC) violated antitrust laws in an effort to exclude competitor Advanced Micro Devices (AMD) from the chip market.
• Northern Rock to sell mortgages to JPMorgan. U.K. bank Northern Rock Plc will sell $4.3 billion in mortgages to JPMorgan Chase (JPM) as part of its effort to gather funds to repay the Bank of England for its bailout.

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Complete Story »]]> AMD ANN AXP BAC BX C CFC COP COST DAL FNM HBAN INFY INTC IVGN JPM KSS LTD MS NWA OXY UAUA URI WAMUQ.PK WMT XOM SA Editor Judith Levy