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Market Currents (Monday, August 18, 2008)
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  • 4:24 PM Why so many beats? "Analysts with Buy ratings on a stock will have lower earnings numbers going into quarters than their peers, so they don’t inadvertently raise the average of published sell side expectations, 'the consensus number'." - Ultimi Barbarorum Comment!
  • 4:12 PM EA (ERTS) drops its $2B, $25.74/share hostile bid for Take-Two Interactive (TTWO), but will meet with TTWO. "EA is throwing an olive branch out there," analyst Michael Pachter says. If TTWO management is smart, they'll negotiate a $26-27/share bid "and come out as heroes." Comment!
  • 4:09 PM The National Association of Home Builders says homebuilder confidence remained at record lows in August. Sales too. But expectations for sales in the next half-year rose to 25 from 23. Comment!
  • 4:02 PM Closing numbers: Dow -1.44% to 11,492. S&P -1.41% to 1,280. Nasdaq -1.45% to 2,417. Crude -0.82% to $112.82. Gold +1.67% to $805.20. Comment!
  • 3:50 PM Barron's boots Fannie (FNM) and Freddie (FRE): After saying shareholders would almost surely be left penniless, shares drop 19.3% and 21%. Comment!
  • 3:40 PM The NBA, which prides itself for its trailblazing, will this season try something no major has ever tried: Live streaming of in-market games. Comment!
  • 3:31 PM Measuring money manager skill. Fat returns are nice, but evaluating investment returns without assessing to the risk taken offers precious little insight - at best. Comment!
  • 3:20 PM With 40 minutes to go, stock indices show no signs of strength. Dow -1.8% S&P -1.67%. Nasdaq -1.73%. Crude -0.63% to $113.05. Gold +1.77% to $806.40. Comment!
  • 3:10 PM "Small-company U.S. stocks are leaving their bigger brethren in the dust. Investors chasing those outsized returns could wind up choking, too." (WSJ) Comment!
  • 2:59 PM A survey of 146 big institutional investors finds almost 60% expect to see another major banking collapse - within the next six months. Comment!
  • 2:48 PM Lowe's (LOW) CEO Bob Niblock on the impact of a weak housing market. "Our weakest comparable sales tend to be in areas that have experienced the greatest declines. Where home prices have been or have become more stable, our 'comps' have been much better." Comment!
  • 2:35 PM J. Wilbur Ross, speaking on CNBC, on credit crunch: "We went from a mode where no lender was afraid of anything... to a mode where every lender is afraid of everything." Comment!
  • 2:20 PM Economist Robert Frank on fuel subsidies: "When countries adopted bad economic policies in decades past, only their own citizens paid a price. In today’s globalized economy, however, the burden falls more broadly." Comment!
  • 12:37 PM NY Times profiles Dr. Doom - Nouriel Roubini. "He sounded like a madman in 2006. He was a prophet when he returned in 2007." Comment!
  • 12:22 PM "We need to recognize that if this doesn’t qualify as a recession, it surely isn’t normal growth." Comment!
  • 12:12 PM "Dividend-seeking investors should cast their gaze abroad." (WSJ) Comment!
  • 11:57 AM AC/DC's Black Ice - only at Wal-Mart (WMT). Comment!
  • 11:44 AM The recent export boom is being fueled mainly by dollar-cheap commodities, not U.S.-made durable goods. A strengthening dollar could easily reverse the trend - weakening the economy another notch. Comment!
  • 11:31 AM Earlier this year global inflation seemed to be spiraling out of control. But recent ruptures in the energy/commodity complex have most economists thinking unabated inflation fears are no longer a serious risk. Comment!
  • 11:19 AM Calpers, America's biggest public pension fund, is sinking another $2.3B into distressed bonds and bank loans, atop last year's $1.7B. "Trying to catch falling knives is a risky business, but if you know what you are doing, there are some real opportunities." Comment!
  • 11:02 AM Recent pacts between NY AG Andrew Cuomo and Wall Street brokerages (C, UBS, MS, JPM, WB) fall short of helping individual investors who didn't buy their auction-rate securities [ARS] directly, but rather through smaller wealth-management houses. Comment!
  • 10:45 AM Just how toxic is Lehman's (LEH) debt portfolio? Comment!
  • 10:17 AM Sector ETF weakness: Homebuilders– XHB -2.3%. Regional Banks– KRE -2.3%. Commercial Banks– KBE -2.2%. Financials– XLF -2.1%. Regional Banks– RKH -1.9%. Broker/Dealers– IAI -1.9%. Comment!
  • 10:15 AM Sector ETF strength: Gold Miners– GDX +3.2%. Agriculture– DBA +2.9%. Silver– SLV +2.6%. Agribusiness– MOO +2.3%. Clean Energy– PBW +1.4%. Basic Materials– IYM +1.3%. Comment!
  • 10:00 AM Dow laggards: GM -3.5%. AIG -3.1%. BAC -1.9% C -1.8%. AXP -1.7%. HPQ -1.6%. Comment!
  • 9:58 AM Dow leaders: XOM +1.1%. CXV +1.0%. AA +0.8%. BA +0.6%. Comment!
  • 9:45 AM Stocks moving on Barron's recommendations: BRCM +1.8%, RHD +13.1%, ONXX +2.0%, AMLN -1.1%,  FRE -10.9%, FNM -10.6%. Comment!
  • 9:31 AM David Kotok of Cumberland Advisors thinks Merrill Lynch (MER) and Wachovia (WB) are at risk of failure as the cost of raising capital climbs and banks need to pay ARS settlements. "There's another shoe to drop ahead of us and it could be more severe." Comment!
  • 9:24 AM Regional security firms are launching a major counter offensive against NY AG Cuomo's auction-rate securities [ARS] investigation. The firms want Cuomo to shift focus to underwriters of ARS instead of firms that just sold the securities. Comment!
  • 9:05 AM U.S. futures indicate a higher open: Dow +0.2%. S$P 500 +0.3%. Nasdaq +0.2%. Crude -0.3% to $113.43. Gold +0.5% to $796.40. Comment!
  • 9:02 AM Qwest Communications (Q) and unions representing over 20,000 employees agree to extend negotiations, holding off a planned strike. Contract talks have focused largely on health-care benefits. Comment!
  • 9:01 AM Merrill Lynch (MER) raises Monsanto's (MON) target to $165 from $155. Morgan Stanley (MS) puts the target at $170, citing the company's strong pipeline of products. Comment!
  • 9:00 AM Citigroup (C) adds Potash Corp (POT) to their Top Picks Live list with a buy rating and a $264 target. Comment!
  • 9:00 AM European markets are trending up: London +0.5%. Paris +1.0%. Frankfurt +0.3%. Comment!
  • 8:30 AM Recent housing numbers from Zillow offer little encouragement: 24% of homes sold over the last year were at a loss; 29% of buyers over the last five years now have negative equity. Mean home value fell 10% Y/Y in Q2, the worst on record. Comment!
  • 8:19 AM "Tropic Thunder" (VIA) took in about $26M this weekend, knocking The Dark Knight (TWX) out of the No. 1 spot. Comment!
  • 8:07 AM The much-anticipated, and delayed, London-based Turquoise exchange finally rang its opening bell Friday. Comment!
  • 7:56 AM Crude slips below $113.50: -0.27% to $113.46. Gold +0.61% to $796.60. Silver +1.44% to $13. Comment!
  • 7:44 AM "White space," which allows wireless devices to piggyback TV spectrum, has heavy-duty proponents (GOOG, MOT, INTC, DELL...) and opponenents (TV networks, wireless mic. companies...). The FCC's trying its best to referee. Comment!
  • 7:35 AM Follow-on offerings, largely free from the risk and volatility of IPOs, are experiencing increased interest. July follow-on offerings reached $32.5B; the monthly high in 2007 was $17.6B. Comment!
  • 7:21 AM The euro-zone's June trade balance was weaker than expected -  a €0.1B deficit instead of the expected €1.1B surplus. A strengthening euro and weakening global demand are hitting exporters hard. Comment!
  • 7:11 AM U.S. futures are up. Dow +0.27%. S&P +0.27%. Nasdaq +0.32%. Crude +0.2% to $114. Gold +1.04% to $800.20. Comment!
  • 7:11 AM European markets are higher at midday. London +0.3%. Paris +0.8%. Frankfurt +0.2%. Comment!
  • 7:11 AM Asia markets closed lower, with the exception of Tokyo. Nikkei +1.12% to 13,165. Hang Seng -1.09% to 20,931. Shanghai -5.34% to 2,320. BSE -0.53% to 14,646. Comment!
  • 7:04 AM Economists expect Japan's economic downturn to be mild but lengthy. It could be the second half of 2009 before there are signs of improvement. Comment!
  • 7:03 AM Lowe's (LOW): Q2 EPS of $0.64 beats by $0.08. Revenue of $14.5B vs. $14.12B. [PR] Comment!
  • 6:57 AM In now-friendly talks with UnionBanCal (UB), Mitsubishi UFJ (MTU) offers to acquire the 35% of UB it doesn't already own for $3.5B ($73.50/share vs. a previous $63 - a 25% premium to pre-bid). UB will recommend shareholders accept the offer. Comment!
  • 6:54 AM China's economic growth is likely to hold steady thanks to a rise in investment growth. Investment growth has been partially supported by rebuilding efforts in regions struck by natural disasters this year. Comment!
  • 6:53 AM General Motors (GM) held talks with Hunan Changfeng Motor on a possible sale of its Hummer brand. The Chinese SUV maker has backed off from a potential deal. GM has also looked to Russian and Indian buyers for its struggling SUV division. Comment!
  • 6:52 AM Trina Solar (TSL): Q2 EPS of $0.76 misses by $0.05. Revenue of $204M (+171.2%) vs. $198M. Sees 2008 revenue of $850-900M vs. $796M. [PR] Comment!
  • 6:30 AM OPEC's Iran governor Ali Khatibi threatens the cartel may cut crude production in early September, as record high prices come under pressure from higher supplies and lower demand. He says the market's oversupplied by at least 1M b/d. Comment!
  • 6:19 AM The Shanghai Composite Index falls to a 20-month low (-5.3%) on fears that slowing economic growth will impact corporate profits. Airlines and refiners lead the sell-off. (PGJ, FXI) Comment!
  • 6:10 AM Focus Media (FMCN): Q2 EPS of $0.44 beats by $0.04. Revenue of $212M (+106.8%) vs. $192M. Sees Q3 EPS of $0.53-0.54 vs. $0.49. [PR] Comment!
  • 5:51 AM U.K. house prices fell 4.8% Y/Y, the largest yearly decline since at least 2002. BoE's Mervyn King says the housing market faces "a significant adjustment." Comment!
  • 5:44 AM European markets are down: London -0.4%. Paris -0.6%. Frankfurt -0.8%. Comment!
  • 5:42 AM Asian markets are mixed: Nikkei +1.12%. Hang Seng -1.09%. Shanghai -5.34%. BSE -0.66%. Comment!
  • 5:26 AM Falling oil prices may slow or stop the exodus from Europe's financial stocks, making it a good time for bargain hunters. "Valuations are at large discounts to historical norms," a fund manager says. "We see the potential for some outstanding returns." Comment!
  • 5:20 AM BHP Billiton (BHP) reported a 30% jump in H2 profit, but its $131B bid for rival Rio Tinto (RTP) may be in trouble: With Rio also expected to report strong earnings, investors may be hesitant to combine companies doing so well individually. Comment!
  • 5:16 AM BHP Billiton (BHP) posts record profits on higher prices. Yearly net profit was $15.3B (+14.7%), short of $15.86B consensus. Revenue rose to $59.5B (+25.3%). Dividend goes to $0.41 from $0.27, vs. $0.36 consensus. Shares +1.6% in Australia. Comment!
  • 5:06 AM In discussions with UnionBanCal (UB) late Sunday, Mitsubishi UFJ (MTU) is expected to raise its bid to $73-73.50/share (vs. a previous $63), a 25% premium on where UB's shares were trading before the initial bid. Comment!
  • 5:04 AM Japanese investors are moving away from the New Zealand (BNZ) and Australian (AXE) dollars and are turning to the South African rand (SZR), the Turkish lira, and the Brazil real (BZF) in search of higher returns. Comment!
  • 4:55 AM Under intense diplomatic pressure, Russia announces plans to withdraw troops from Georgia. Comment!
  • 4:54 AM Hong Kong's GDP dropped 1.4% in Q2, its first quarter-to-quarter decline in five years. Comment!
  • 12:05 AM Notable earnings before Monday's open: BHP, LOW, PRGO, TSL Comment!
  • 12:00 AM Monday's economic calendar:
    1:00 PM NAHB Housing Market Index Comment!