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Market Currents (Wednesday, December 3, 2008)
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  • 7:22 PM There is no floor for the price for a barrel of oil, OPEC chief Chakib Khelil says as crude trades below $47. The forward demand cover - the number of days of consumption held in stock - is currently 56 days vs. an average of 52 over the past five years. Comment!
  • 5:12 PM State Street (STT) to reduce its workforce by 6%, or about 1,600-1,800 workers, which it says will save $375-400M annually. Comment!
  • 4:45 PM Investors searching for gains in a depressed global marketplace may want to zoom in on the effects China's mega-stimulus plan will have on oil exploration, specifically for CNOOC (CEO) and its partners Anadarko (APC) and Devon Energy (DVN). Comment!
  • 4:38 PM The UAW will allow Big Three automakers to delay healthcare payments, and will suspend the controversial jobs bank program for laid-off workers - in the hopes of helping automakers secure emergency federal loans. 2 Comments
  • 4:32 PM Collective Brands (PSS): Q3 EPS of $0.42 in-line. Revenue of $863M (+3.9%) vs. $841M. Shares +6.75%. (PR) Comment!
  • 4:29 PM Synopsys (SNPS): FQ4 EPS of $0.43 beats by $0.05. Revenue of $353M (+11.9%) in-line. Shares +12.7%. (PR) Comment!
  • 4:27 PM "We did not actively market or promote auction rate securities, and we did not provide special incentives to brokers to sell them," Wells Fargo (WFC) says in response to the State of Washington's claims against its practices. (PR) Comment!
  • 4:21 PM The Treasury may try to bolster the U.S. housing market by reducing mortgage rates for new home loans to 4.5% using Fannie (FNM) and Freddie (FRE), sources say. 1 Comment
  • 4:18 PM Aeropostale (ARO): Q3 EPS of $0.63 beats by $0.01. Revenue of $482M (+16.8%) in-line. Sees Q4 EPS of $0.84-0.90 vs. $0.98. Shares -3%. (PR) Comment!
  • 4:16 PM Crude couldn't turn a profit from the unexpected draw, -0.2% to $46.90. Gold -1.1% to $773. Comment!
  • 4:14 PM A late-day push leaves major averages with healthy gains. Dow +2.05% to 8,591.69. S&P +2.58% to 870.74. Nasdaq composite +2.94% to 1,492.38. All's well that ends well. Comment!
  • 4:06 PM It "looks as if the bottom has been made" in U.S. stocks, Legg Mason's (LM) famed money-manager Bill Miller says. Miller outperformed the market during previous downturns - but hasn't been able to thus far. 3 Comments
  • 3:50 PM Even as the Big Three await their fate on Capitol Hill, there's no end in sight for the suffering of the real big three (AAPL, GOOG, RIMM). 1 Comment
  • 3:40 PM President-elect Obama's refusal to tip his hand on the Detroit bailout story this morning means he's figured out America is "getting fed up with the thought of bailout nation," Larry Kudlow writes. Kudlow's alternative: massive tax cuts. 2 Comments
  • 3:29 PM Stocks are having a hard time finding a direction, but bonds haven't forgotten they're in a full-fledged rally. 30-year +0.71%. 10-year +0.67%. 5-year +0.41%. 2-year +0.04%. Comment!
  • 3:28 PM Give GM (GM) $18B, and it will come back for seconds. Comment!
  • 3:16 PM For banks, more trouble around the bend: "Commercial real estate and construction loan default rates are on the rise, presenting a new problem area for an already reeling banking sector." Comment!
  • 3:10 PM Notable earnings after Wednesday's close: ARO, CPRT, PSS, SNPS Comment!
  • 3:04 PM Yesterday, JAMA published a study showing that generic heart drugs work just as well as brand-names. Pfizer (PFE), maker of the world's top-selling drug Lipitor, begs to differ. Comment!
  • 3:03 PM With one hour to go, stocks have battled back into positive territory. Dow +0.35% to 8430. S&P +0.4% to 851. Nasdaq +0.8% to 1458. Comment!
  • 2:52 PM Auto industry restructuring means more pain for media industry: Big Three plans "may win sympathy for the auto makers on Pennsylvania Avenue, but will not be received well on Madison Avenue." Comment!
  • 2:43 PM Beige Book: "Even retailers who believe holiday-period sales could exceed current expectations say extensive discounting will mean that there might be 'volume but no profit.'" Comment!
  • 2:36 PM Fed's Beige Book looks pretty blue, but nothing we didn't already know: Weak retail, slowing manufacturing, subdued tourism spending, slow home sales, tough labor markets, and cheaper prices. Comment!
  • 2:24 PM So-called quantitative easing is just another term for printing money, Credit Suisse interest-rate strategist Ira Jersey tells Bloomberg in an interview. He recommends 10-20 year TIPS: "Ultimately this ends with inflation being significantly higher than the market is anticipating right now." Comment!
  • 2:20 PM Crude -0.7% to $46.60. Gold -1.6% to $769. Comment!
  • 2:19 PM Major averages have all relinquished their gains and stand in negative territory. Dow -0.8% to 8350. S&P -0.6% to 844. Nasdaq -0.4% to 1444. Comment!
  • 1:59 PM The billionaire everyone loves to hate may be in trouble: "Donald Trump is suddenly bogged down in a string of legal and financial battles across his property and entertainment empire." So how much is Trump really worth? "Far less than he was the last time anybody took the trouble to calculate." 3 Comments
  • 1:47 PM A carmaker collapse could send the economy spiraling into a depression, Chrysler VC Jim Press says. "If we have a catastrophic failure of one of these car companies, in this tender environment for the economy, it's a huge blow." 4 Comments
  • 1:32 PM The NBER's declaration of recession on Monday "officially confirmed what virtually all economists already knew," Fed's Lacker says. "But conditions downshifted dramatically sometime in September." Still, he thinks a 2009 recovery is doable. 1 Comment
  • 1:21 PM The top-ten profit margins in business equipment. Comment!
  • 1:13 PM Paulson debates whether to ask Congress for the second half of TARP while on Capitol Hill, "the skepticism that almost torpedoed the original legislation in September has turned into full-blown revolt amid distrust over implementation and frequent changes to the program." Comment!
  • 1:01 PM Jos. A. Bank Clothiers (JOSB): Q3 EPS of $0.50 beats by $0.09. Revenue of $149 (+13.7%) vs. $146. Shares +8.7%. (PR) Comment!
  • 12:57 PM UBS's David Bianco, explaining his S&P at 1300 in 2009 call: Recent sharp declines are "an opportunity to buy the leading big-cap growth stocks of the S&P 500 at deep discounts to intrinsic value... These stocks will be sought after when capital returns from the sidelines." Comment!
  • 12:45 PM FT Alphaville isn't ready to back down from its Total (TOT -2%) bidding for Nexen (NXY -12.5%) story. (previously) Comment!
  • 12:33 PM Harvard's top three positions are now in emerging markets, which it apparently hopes will help it out of its rut. Or perhaps, conversely, margin calls forced it to exit some positions. One blogger wonders how colleges will survive. 1 Comment
  • 12:27 PM Harvard University's massive endowment suffers losses of 22% ($8B!) since the end of the school's fiscal year. In a letter, the U. says 22% understates the true loss, because estimates on certain assets weren't yet available. Its previous worst year was 1974, -12.2% - but then it stood at less than $1B. 1 Comment
  • 12:18 PM While the Big Three stand before Congress begging for their lives, Toyota and Honda open new, state-of-the-art, plants. (Auto Show) Comment!
  • 12:03 PM Credit Suisse (CS) is down 11.5% as traders worry it will be the next UBS (UBS -2.8%) due to its investments and their exposure to further economic weakness. "For a long time it looked like Credit Suisse was Mr. Clean as far as the credit and finance crisis was concerned." Comment!
  • 11:51 AM The ten top-yielding gold stocks. Comment!
  • 11:45 AM Mother Nature and a little hocus-pocus have one technician calling a major bottom for financials. Comment!
  • 11:30 AM Oilfield-services giant Schlumberger (SLB) is down 6.8% after warning 2008 profit will not satisfy analyst estimates of $4.76/share. "We have been consistent in our view that our results would be affected in the event of a severe global economic downturn, which we are now facing," CEO Andrew Gould says. Comment!
  • 11:23 AM Looking behind the strong headline numbers for Black Friday sales, there's plenty to worry about, Jim Manzi says, including massive discounting, 15% less shopping days, and a drop in e-spending. "This is shaping up to be an even worse Christmas shopping season than most informed observers anticipated even a week ago." Comment!
  • 11:17 AM Stocks have climbed strongly over the last hour, re-establishing yesterday's trend. Dow +1.2% to 8523. S&P +1.5% to 862. Nasdaq +2.3% to 1483. Comment!
  • 10:59 AM Yesterday's WSJ story claiming former AOL CEO Jonathan Miller was looking to raise $28-30B to acquire Yahoo is dead wrong, Michael Arrington says. Sources tell him Miller's Velocity has had no serious discussions with any backers, and besides - Miller is prohibited from sitting on Yahoo's board. Comment!
  • 10:47 AM Vodafone (VOD) loses a landmark petition against a $2B tax bill relating to its purhcase of an Indian mobile phone company, but says it will appeal. Shares are up 1%. 1 Comment
  • 10:36 AM Petroleum inventories: Crude -0.45M vs. +1.4M consensus. Gasoline -1.5M vs. +0.7M consensus. Distillate -1.7M vs. flat consensus. Crude futures +0.2% to $47.05. Comment!
  • 10:30 AM Cyber Monday winners: Amazon (AMZN), Wal-Mart (WMT), Target (TGT), Best Buy (BBY) and Sears (SHLD). Comment!
  • 10:27 AM BlackRock's Peter Fisher makes the case for 100-year bonds. 1 Comment
  • 10:25 AM Petroleum inventories at 10:35. Analysts expect oil stocks to have risen by 1.4M barrels over the week, gasoline by 700,000 barrels, and no change in distillate stocks. Currently, crude's down 0.9% to $46.58. Comment!
  • 10:20 AM For the first time in 50 years, stocks are yielding more than Treasury notes (3.3% vs. 2.7%). To put this in perspective, the average bond/stock yield spread since 1958 has been 3.7% in favor of bonds. Comment!
  • 10:13 AM Sector ETF weakness: Steel– SLX -7.2%. Oil Services– OIH -7.2%. Basic Materials– IYM -4.7%. Coal– KOL -4.4%. Solar– TAN -4.4%. Comment!
  • 10:13 AM Sector ETF strength: Internet– HHH +5.2%. Comment!
  • 10:12 AM After steep paper losses from U.S. financial firms, sovereign wealth fund China Investment Corp. says flat out it is 'not brave enough' to invest in foreign financial companies anymore and lacks confidence in the U.S. regulatory environment. Comment!
  • 10:09 AM Dow laggards: AA -9.5%. BAC -5.4%. GM -5.0%. C -4.7%. DD -3.8%. Comment!
  • 10:09 AM Dow leaders: PFE +0.7%. Comment!
  • 10:08 AM Economic activity in the non-manufacturing sector decreased by 7.1% in November to 37.3%, ISM says, worse than the 43.0% consensus. This is the second month in a row of sector contraction. Comment!
  • 10:01 AM Stocks inch lower over the first half hour. Dow -2.1% to 8247. S&P -2.3% to 829. Nasdaq -2% to 1421. Comment!
  • 9:56 AM One of the sole optimistic forecasts to surface in recent days, UBS analyst David Bianco sees the S&P at 1,300 by the end of 2009, a 53% jump from its current level. 1 Comment
  • 9:54 AM E-commerce spending jumped 15% on Cyber Monday to $846M, the second biggest online spending day ever, comScore says. But overall online holiday spending to date lags last year's by 2%. Comment!
  • 9:50 AM Research In Motion (RIMM) blamed its FQ3 warning on unfavorable forex rates and a weak economy, but some analysts say the messy launches of Bold and Storm also played a role: "We think the Storm has numerous flaws and the functionality of both devices is largely unchanged from previous devices," Deutsche Bank says. Comment!
  • 9:49 AM Vanity Fair's version of an application form for federal bailout funds. Comment!
  • 9:42 AM "We are now morphing towards a world where the government fist is being substituted for the invisible hand," says Pimco's Bill Gross. The Dow may not fall to 5,000, as Gross once predicted, but heading back to 14,000 could be just as much of a stretch. Comment!
  • 9:37 AM Nexen (NXY) opens way down after media reports Total (TOT) has decided not to bid for NXY. -20% to $15. (previously I, II) Comment!
  • 9:31 AM Dow's down 1.8% at the open to 8271. S&P -1.8% to 834. Nasdaq -2.3% to 1416. Comment!
  • 9:28 AM Research In Motion (RIMM) slashes its FQ3 earnings and revenue targets, one day after Palm (PALM) sent smartphone shares reeling. Sees EPS of $0.81-0.83 vs. $0.91 consensus and revenue of $2.75-2.8B vs. $2.94B. Shares -5%. Comment!
  • 9:27 AM With revenue through September down 96% Y/Y, Merrill Lynch (MER) plans to slash bonuses by 50% on average. Inside sources say traders and I-bankers will face steeper cuts than rank-and-file workers. Comment!
  • 9:23 AM Futures indicate weakness. Dow -2.1% to 8259. S&P -2.4% to 828.50. Nasdaq -2.9%. Crude +0.3% to $47.08. Gold -1.6% to $771.20. Comment!
  • 9:21 AM Premarket losers: FCX -17.5%. RTP -16%. BCS -11%. HE -11%. PLD -9%. AZ -9%. CIT -8%. ANR -8%. PCU -7.5%. S -7.5%. AAUK -7%. JASO -7%. ACGY -7%. MDR -7%. TOT -7%. AA -6%. RIMM -6%. HBAN -6%. CHK -6%. MT -6%. Comment!
  • 9:21 AM Premarket gainers: GW +22%. CEG +21%. WAG +17%. MRVL +11.8%. ETP +4.8%. Comment!
  • 9:01 AM Del Monte Foods Company (DLM): FQ2 EPS of $0.14 beats by $0.02. Revenue of $901M (+11.5%) vs. $905M. Shares +8.5% premarket. (PR) Comment!
  • 8:51 AM "We'd hope that we can pull up something next week," Senate Majority Leader Harry Reid says of an auto-industry bailout. "We're looking to make sure that we do everything we can to take care of the auto industry if in fact it's viable, that is it's not just a plan." Comment!
  • 8:44 AM November's employment loss was again driven by the goods-producing sector, which fell 158K - its twenty-fourth consecutive decline. Manufacturing lost 118K jobs, and services jobs fell 92K. Medium-size businesses shed more jobs than large- and small-. Comment!
  • 8:31 AM Nonfarm Productivity was up 1.3% in Q3, more than the 0.9% economists expected, but down from Q2's 3.6% jump. Unit labor costs were up a less than expected 2.6% (+3.6% consensus), after falling 0.1% last quarter. Comment!
  • 8:22 AM Dow futures down 1.6% to 8281. S&P -1.8%. Nasdaq -2.4%. Comment!
  • 8:21 AM Assuming a monthly addition of 20,000 government jobs, ADP's employment data suggest Friday's nonfarm payroll number will be about -230K. Futures remain weak, although their minimal reaction suggests markets anticipated or are unmoved by swelling unemployment. Comment!
  • 8:17 AM Nonfarm employment fell by 250K in October, ADP says, evidence of deep and broad weakness in the U.S. labor market. Consensus was for -205K. October revised to -179K from -157K. Comment!
  • 8:02 AM Trying to broaden its funding sources, Goldman Sachs (GS) may launch an online bank offering a range of savings products. If Goldman proceeds, it will face competition from firms including BoA (BAC), Citigroup (C) and ING Group (ING). 1 Comment
  • 7:57 AM AIG (AIG) CEO Edward Liddy wants to renegotiate rescue terms once the insurer makes some 'good progress' on asset sales and debt repayment. In particular, Liddy wants to reduce the government's 79.9% stake and 10% dividend payments.  Comment!
  • 7:55 AM China's GDP growth will slow to 9.4% in 2008 and 7.5% in 2009 from 11.9% the World Bank says. China's decision to tighten monetary policy is the primary factor, not global economic weakness, but the latter has amplified the slowdown. Recent moves to loosen monetary policy should put the nation on the path to recovery. (ETFs: FXI, PGJ) Comment!
  • 7:51 AM After dumping its $6.24B bid for Constellation Energy (CEG) in October, Electricite de France offers $4.5B for half of CEG's nuclear business. EDF wants to expand in the U.S., and edge out MidAmerican Energy's (BRK.A) rival bid. CEG +30.6% premarket. Comment!
  • 7:46 AM Corporate layoff announcements jumped 148% in November to 181,671, a seven-year high. More than half stemmed from the financial sector, which announced 91,356 layoffs, including 50,000 at Citigroup (C). Comment!
  • 7:44 AM Read the GAO's full report on TARP and the Treasury (.pdf), or just the highlights (.pdf). Comment!
  • 7:43 AM TARP's first report card gave the Treasury a passing grade and several significant criticisms, including its incomplete management structure and its failure to find a way to make sure aid recipients comply with limits on executive pay and dividends.  Comment!
  • 7:39 AM Mortgage applications surged by a record 112% last week, MBA says, fueled by a huge jump in refinancing. 30-year mortgage rates plunged by more than 50 BPs to 5.47% after the Fed pledged to buy mortgage-backed debt. Comment!
  • 7:20 AM Crude +0.8% to $47.30. Gold -0.8% to $776.80. Comment!
  • 7:19 AM U.S. futures could not hold on to yesterday's late gains overnight. Dow -0.9% to 8352. S&P -1.15% to 840. Nasdaq -1.4%. Comment!
  • 7:17 AM In Europe, markets moved lower from the open. London -0.6%. Paris -1.1%. Frankfurt -1.9%. Comment!
  • 7:15 AM Asia markets closed higher Wednesday, led by China. Nikkei +1.79% to 8,004. Hang Seng +1.36% to 13,589. Shanghai composite +4.01% to 1,965. BSE Sensex +0.09% to 8,747. Comment!
  • 7:02 AM How Iceland melted down - in Fortune. Comment!
  • 5:33 AM Bill Gross: "stocks are cheap when valued within the context of a financed-based economy once dominated by leverage, cheap financing, and even lower corporate tax rates. That world, however, is in our past - not our future." 1 Comment
  • 2:00 AM Some metal prices have fallen further than during the Great Depression. 1 Comment
  • 12:10 AM Notable earnings after Wednesday's close: ARO, CPRT, PSS, SNPS Comment!
  • 12:05 AM Notable earnings before Wednesday's open: DLM Comment!
  • 12:00 AM Wednesday's economic calendar:
    7:00 MBA Mortgage Applications
    7:30 Challenger Job-Cut Report
    8:15 ADP Jobs Report
    8:30 Productivity and Costs
    10:00 ISM Non-Manufacturing Survey
    10:15 Fed's Kroszner speaks on the mortgage crisis
    10:35 EIA Petroleum Status
    1:00 PM Fed's Lacker speaks on the economic outlook
    2:00 PM Fed's Beige Book Comment!