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Market Currents (Tuesday, August 12, 2008)
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  • 5:14 PM The two strongest credit-crisis banks - JPMorgan (JPM) and Goldman Sachs (GS) - led the way down today, JPM down 9.5% on a $1.5B writedown, and GS off 6% after analysts fretted its exposure to global equity markets. Comment!
  • 4:44 PM CVS Caremark (CVS) is acquiring Longs Drug Stores (LDG) for $71.50/share cash, vs. today's close of $54.04. Comment!
  • 4:38 PM Nvidia (NVDA): Q2 EPS of $0.13 beats by $0.01. Revenue of $893M vs. $908M. Increases stock buyback program by $1B to $2.7B. Shares +4%. [PR] Comment!
  • 4:35 PM Ameriprise Financial (AMP) is buying H&R Block Financial Advisors from H&R Block (HRB) for $315M in cash. HRBA employs 900 advisors in 135 locations. Comment!
  • 4:28 PM Sources say Citigroup (C) is trying to raise $2-3B in a debt issue. Judging by investors' lack of appetite for corporate debt, it will have to pay up to get the deal done. Shares fell 6.5% today. Comment!
  • 4:27 PM Limelight Networks (LLNW): Q2 EPS of -$0.02 beats by $0.01. Revenue of $30.3M (+29.5%) vs. $28.9M. [PR] Comment!
  • 4:07 PM Applied Materials (AMAT): FQ3 EPS of $0.17 beats by $0.03. Revenue of $1.85B in-line. [PR] Comment!
  • 4:06 PM Tween Brands (TWB): Q2 EPS of -$0.27 misses by $0.26. Revenue of $223M vs. $245M. Announces restructuring. [PR] Comment!
  • 4:01 PM Everything closes in the red. Dow -1.11% to 11,651. S&P -1.12%. to 1,291. Nasdaq -0.38% to 2,431. Crude -0.97% to $113.32. Gold -0.65% to $822.90. Comment!
  • 3:50 PM For those expecting the oil downtrend to continue, it pays to know which sectors will continue to show relative strength. Comment!
  • 3:39 PM Dell (DELL +0.3%) unveils its comeback lineup: 2.2 lbs, 19-hour battery life, business pink. Comment!
  • 3:27 PM The Fed's $25B auction wasn't the only one oversubscribed: ECB's $10B attracted $38.5B in bids, and SNB's $2B drew $9.8B. "There’s more severe credit problems out there. The banking sector just can’t get one foot in front of the other." Comment!
  • 3:15 PM Earnings previews for companies reporting after today's close: AMAT, CREE, NVDA Comment!
  • 3:13 PM With under an hour to go, stocks are struggling even as oil and gold sag. Dow -1.22%. S&P -1.17%. Nasdaq -0.53%. Crude -1% to $113.30. Gold -0.57% to $823.60. Comment!
  • 3:10 PM Notable earnings after Tuesday's close: AMAT, BZP, CREE, DNDN, MELI, NVDA Comment!
  • 3:06 PM We are "increasingly cautious about the ability of the dollar to sustain gains, and believe that a period of consolidation is more likely over coming days... It is all happening too quickly, especially as there is still a lot of bad news out there." - Calyon's Mitul Kotecha Comment!
  • 2:57 PM Goldman (GS) gets sacked by analysts, who say its elitist standing among brokers may be crumbling. Shares -5.4%. Comment!
  • 2:50 PM June's Treasury Budget deficit soars to $102.8B on stimulus payments and $15B to protect bank deposits, worse than the $97B economists warned of. Comment!
  • 2:38 PM Need evidence that foreign trade is juicing the GDP? The June import/export gap was almost double the much-touted $2.6B gain in retail sales, ex-auto. Comment!
  • 2:27 PM You know markets are tough when... hedge fund managers do stand-up comedy. "Chrysler today announced they're no longer going to be offering leases... Millions of Americans are losing their houses - and now they're not even going to have cars to sleep in." Comment!
  • 2:15 PM After grilling ex-employees, Citron Research concludes Amedisys's (AMED -12.5%) 'secret sauce' software - which supposedly gives it an edge on competitors - is not the source of its startlingly good margins. Shares plunge. Comment!
  • 2:05 PM "It's no secret that China has government officials everywhere and a culture particularly inclined to gift-giving," Financial Week says. Expect the DoJ to keep a watchful eye on the Games' games. Comment!
  • 1:50 PM Citigroup says there's too much competition from discounters like Wal-Mart (WMT) and Target (TGT) to get excited about Best Buy (BBY). Possibe positive catalyst: If "a major competitor collapses." Circuit City (CC)? Comment!
  • 1:24 PM Thomson Reuters (TRI +1.1%) sees earnings fall 54% to $173M in its first combined quarter. Comparable revenue was up 11%. CEO Glocer says the combo's integration is ahead of plan. Comment!
  • 1:13 PM The Fed's newest liquidity-boosting innovation, 84-day loans, prove popular. $25B offered, bids for $54.8B. That's up from 28-day loans, which used to be loaned for only a sleepover. Comment!
  • 1:02 PM Undaunted by an advertising recession, CNN (TWX) is doubling its newsgathering staff. Comment!
  • 12:43 PM Options investors are convinced the greenback's seven-year downtrend is over, with euro puts at multi-year highs. "People are actually panicking as to how low the euro can go." Comment!
  • 11:59 AM So what does the prescient Hulbert think about gold two weeks later? "Unfortunately for the gold bulls, it's not clear that enough gold timers have thrown in the towel to convince contrarians that a bottom is at hand." Comment!
  • 11:42 AM Mark Hulbert's July 29 warning signal about gold timers' stubbornly bullish stance "was one of the better calls of the year," Jon Nadler concedes. "Cries of 'nonsense' went up after the alarm was sounded. The silence among the perma-bulls today, is deafening." Comment!
  • 11:25 AM National Federation of Independent Business says small-business optimism fell 1 point to a recessionary 88.2, vs. an average of about 95 in 2007. Ominously, capital spending plans dropped to the lowest level since 1975. Comment!
  • 11:12 AM Freddie (FRE) says a NY law that creates a new category of subprime mortgages makes it too risky to continue buying subprime debt in the state. Could mean higher borrowing costs, and potentially a frozen market if enough players lose confidence. Comment!
  • 11:01 AM Markets down but flattening. Dow -0.84%. S&P -0.67%. Nasdaq -0.33%. Crude +0.28% to $114.80. GOld -0.24% to $826.30. Comment!
  • 10:55 AM Fed's Stern on CNBC: U.S. economy is very subdued. Whether this period will ultimately be termed a recession looks like it will be a close call. Comment!
  • 10:39 AM Philly Fed's Forecasters Survey sees Q3 GDP growth of just 1.2%/year, down from 1.7%. By year, they see 1.7% growth in 2008 and 1.5% in 2009 - the latter down from a previous 2.2%. Comment!
  • 10:24 AM Moody's says New York Times (NYT) may have to slash its $132M/year dividend - or risk desceding to junk. Comment!
  • 10:21 AM Sector ETF strength: Solar– TAN +3.7%. Basic Materials– XLB +1.7%. Agribusiness– MOO +1.4%. Basic Materials– IYM +1.1%. Retailers– XRT +1.0%. Comment!
  • 10:19 AM Sector ETF weakness: Solar– TAN -2.9%. Regional Banks– RKH -2.8%. Financials– XLF -2.6%. Financials– IYF -2.2%. Broker/Dealers– IAI -2.2%. Comment!
  • 10:18 AM Food, ag-chem stocks higher on healthy corn crops. PPC +5.3%. TSN +3.3%. SFD +2.8%. ADM +1.7%. BG +2.9%. Comment!
  • 10:13 AM Hiring activity stayed at 3.1% in June. Job openings were unchanged at 2.6% and employment terminations were slightly down at 3.1%. Comment!
  • 10:11 AM 2008 could yield the second-largest corn and fourth-largest soybean crops in history. USDA expects 12.3B bushels of corn, up sharply from a previous 11.7B estimate. It also lowered its forecast for corn, soybean and wheat prices. (Crop Production) Comment!
  • 10:03 AM Dow leaders: GM +7.6%. AA +1.3%. Laggards: JPM -5.2%. AIG -3.1%. MCD -2.7%. C -2.6%. BAC -2.5%. Comment!
  • 9:59 AM After 1/2 hour, stocks seem to be losing traction. Dow -0.51%. S&P -0.46%. Nasdaq -0.36%. Crude +0.09% to $114.55. Gold -0.3% to $825.70. Comment!
  • 9:52 AM While GM's (GM) 1-mpg mileage gains are better than nothing, some question whether the modest change warrants a separate model - assumably at a premium. Comment!
  • 9:45 AM GM (GM), struggling to sell pickups and SUVs amid soaring gas prices, rolls out extra fuel economy trucks that offer one mile more per gallon. Doesn't sound like a ton - but it's a 7% improvement for city driving and 5% on the highway. Comment!
  • 9:38 AM Redbook says U.S. retail sales fell 1.9% in August vs. July but rose 1.5% vs. a year-ago. Contrast with ICSC's retail sales, also released today. Comment!
  • 9:28 AM State lawmakers are considering a tax on retail e-commerce sales, estimated at over $130B annually. If passed, 'iTax' legislation could impact major retailers including Apple (APPL) and Amazon (AMZN). Comment!
  • 9:25 AM A sudden climb in crude futures means stock markets are likely to open up red. Dow -0.35%. S&P -0.33%. Nasdaq -0.06%. Crude +0.59% to $115.12. Gold +0.19% to $830. Comment!
  • 9:23 AM Carl Icahn raises his stake in Biogen (BIIB) to 6% from 4.3%, suggesting that despite a previous failure, he may once again try to prompt a sale of the biotech company. Comment!
  • 9:08 AM Sovereign wealth funds are now among the biggest speculators in U.S. commodities. The jury's still out as to what extent speculation has contributed to sharp swings in oil prices. Comment!
  • 8:57 AM As prices have fallen at the gas pump, consumers are losing their single-minded focus on smaller, more fuel-efficient vehicles. Comment!
  • 8:47 AM June's trade deficit shrinks to an unexpected $56.8B, the smallest in three months - and much better than the $61.5B economists expected. Comment!
  • 8:32 AM JPMorgan (JPM) says credit-market turbulence forced it to take a $1.5B writedown on mortgage-backed assets in July, as conditions substantially deteriorate. Bankers say July was the worst month for mortgage-backed bonds since the crisis began. Comment!
  • 8:14 AM ICSC Retail Sales: Sales were down 1.1% wk/wk but up 2.6% from the same week last year. Sales were held back by cautious back-to-school spending. Comment!
  • 8:07 AM Dissatisfied with the performance of Telecom Corp. of New Zealand (NZT), a U.S. hedge fund will push for two new candidates for the NZT board and for a structural separation of the company. Comment!
  • 7:54 AM Big I-banks are transferring key employees to growing financial hubs in Asia, the Middle East, Europe, and Latin America. Leaders in this trend: Morgan Stanley (MS), Merrill Lynch (MER), and Goldman Sachs (GS). Comment!
  • 7:45 AM Morgan Stanley (MS) offers to buy back $4.5B in auction-rate securities. NY Attorney General Andrew Cuomo calls the proposal offer too little, too late. He's expected to press for fines on top of a more substantive settlement. Comment!
  • 7:26 AM Middleby (MIDD) to acquire TurboChef (OVEN) for approximately $200M. TurboChef shareholders will receive a cash-stock payout combination worth about $6.47/share (vs. Monday close of $5.60). Comment!
  • 7:24 AM JA Solar (JASO): Q2 EPS of -$0.01 vs. consensus of $0.15. Revenue of $180M (+170.7%) vs. $170M. [PR] Comment!
  • 7:14 AM U.S. futures: Dow -0.08%. S&P -0.04%. Nasdaq +0.15%. Crude -0.74% to $113.63. Gold -0.65% to $822.80. Comment!
  • 7:13 AM Europe at midday: London +0.2%. Paris +0.05%. Frankfurt -0.05%. Comment!
  • 7:11 AM Fossil (FOSL): Q2 EPS of $0.36 beats by $0.11. Revenue of $353M (+15.2%) vs. $347M. [PR] Comment!
  • 7:07 AM Mitsubishi UFJ (MTU) plans to spend $3B to buy-out minority investors in UnionBanCal (UB). The deal represents an 8.3% premium over UnionBanCal's closing price on Monday. Comment!
  • 7:03 AM The IEA says tight global oil supply is easing, but cautions that heavy China consumption and geopolitical tensions still have the potential to send prices back up. Comment!
  • 6:49 AM Gazprom Neft proposes swapping assets with Chevron (CVX), Eni SpA (E), and Royal Dutch Shell (RDS.A). Comment!
  • 6:37 AM Verasun Energy (VSE): Q2 EPS of $0.15 beats by $0.13. Revenue of $1.01B (+498.7%) vs. $925M. [PR] Comment!
  • 6:29 AM Gold, platinum, and silver hit 7-month lows, leading commodities into a bear market on concerns of reduced demand for raw materials. Comment!
  • 6:20 AM Bowing to shareholder pressure, UBS (UBS) announces plans to split its troubled investment bank from its wealth-management division. Shares are down 53% this year. Comment!
  • 6:20 AM Swiss banking giant UBS (UBS) reports a Q2 net loss of CHF358M ($329M), including $5.1B in writedowns. Looking ahead, it doesn't expect any improvement "in the adverse economic and financial market trends" for H2. [WSJ] Comment!
  • 5:38 AM After almost a year of waiting, HSBC's (HBC) bid for Korea Exchange Bank will receive a regulatory review, raising the likelihood that the $6B deal will be completed. Comment!
  • 5:30 AM Earnings previews for company reporting early Tuesday: TJX Comment!
  • 5:15 AM The German government will vote on August 20 on a bill that could be used to prevent foreigners from buying 25% or more in German companies deemed crucial to the country's security. Opponents say it will deter foreign investment. (EWG) Comment!
  • 5:02 AM European markets are trading lower. London -0.76%. Paris -0.21%. Frankfurt -0.75%. Comment!
  • 4:59 AM Asian markets closed lower on Tuesday. Nikkei -0.95% to 13,304. Hang Seng -1.0% to 21,641. Shanghai -0.52% to 2,457. BSE -1.88% to 15,213. Comment!
  • 4:59 AM Japan's stocks fell for the first time in three days (-0.95%) on concerns that steelmakers' earnings will be hurt by the fastest wholesale inflation in nearly three decades and record exports from China. (EWJ) Comment!
  • 3:54 AM India's production in six key industries, accounting for a quarter of the country's industrial production, grew 3.4% in June from a year earlier. (INP, EPI) Comment!
  • 3:48 AM China's inflation slows to a ten-month low, allowing the government a chance to focus on sustaining economic growth instead of fighting rising prices. (FXI, PGJ) Comment!
  • 12:10 AM Notable earnings after Tuesday's close: AMAT, BZP, CREE, DNDN, MELI, NVDA Comment!
  • 12:05 AM Notable earnings before Tuesday's open: CNO, FOSL, GOL, JASO, TJX, VSE Comment!
  • 12:00 AM Tuesday's economic calendar:
    7:45 ICSC Retail Store Sales
    8:30 Trade Balance
    8:55 Redbook Chain Store Sales
    10:00 IBD/TIPP Economic Optimism
    10:00 Job Openings and Labor Turnover
    10:30 Fed's Gary Stern on CNBC
    2:00 PM Treasury Budget
    5:00 PM ABC Consumer Confidence Index Comment!