Q3 2009 Earnings Call

November 3, 2009 8:30 AM ET

• Buffett buys Burlington for a cool $44B. Berkshire Hathaway (BRK.A) announced it will acquire the 77.4% of Burlington Northern (BNI) it doesn't already own for $100/share in cash and stock - a 30% premium to Monday's close of $76.07. The transaction is worth $44B, including $10B in outstanding debt. Here's what Warren Buffett had to say: "Our country's future prosperity depends on its having an efficient and well-maintained rail system. Conversely, America must grow and prosper for railroads to do well. Berkshire's $34B investment in BNI is a huge bet on that company, CEO Matt Rose and his team, and the railroad industry. Most important of all, however, it's an all-in wager on the economic future of the U.S. I love these bets."
• Stocks slide; futures fall. Global stock markets painted a gloomy picture Tuesday, with bourses in Asia and Europe taking 2%-plus losses as risk appetite took a breather and investors clamored for safe-haven assets, sending the dollar and U.S. Treasurys climbing and futures tumbling (see data below in Today's Markets). "The basis for the correction seems to rest on three legs," Merrill economist Bill O'Neill said. "Worries over prospects for holders of equity in banks; concern that interest-rate hikes are imminent; and paradoxically, that recovery in 2010 will be crippled by a U.S. consumer unwilling or unable to open his or her wallet." Others took the recent downturn as a sign equity prices had gotten ahead of real improvements in the economy.
• Stanley, B&D craft $8.4B merger. Stanley Works (SWK) agreed to buy rival Black & Decker (BDK) for $4.5B in stock, the culmination of a courtship that spanned 27 years and three other attempts. The bid values B&D at about $57.57/share, a 22% premium to Monday's close. "The more we talked, the more we felt like these were two very complementary and unique companies," BDK CEO Nolan Archibald said, adding both CEOs were "totally swayed" by potential synergies of $350M. Stanley shareholders will own about 50.5% of the combined company; B&D shareholders will get 49.5%.
• Lloyds, RBS diverge on aid. Lloyds (LYG) and Royal Bank of Scotland (RBS) unveiled agreements with the U.K. Treasury over their participation in its program to insure toxic assets, and detailed the divestments they will need to make to satisfy EU regulators. Lloyds opted out of the expensive U.K. asset-protection scheme, saying it would raise £21B, including a £13.5B rights issue; the government will maintain its 43% stake in the bank. The move subjects Lloyds to more modest EU demands: Lloyds said it will dispose of "a retail banking business" with a 4.6% market share and about 19% of its mortgage portfolio; sell £180B in noncore assets; and limit acquisitions over the next 3-4 years. RBS will enter the asset-protection scheme to insure £282B of its illiquid loans, with the first £60B in losses borne by RBS. The government will inject another £25.5B into RBS, raising its stake to 84.4%. RBS will sell its RBS retail network in England and Wales and NatWest branches in Scotland; RBS insurance; Global Merchant Services; and its stake in RBS Sempra Commodities. LYG +2.8% premarket. RBS -8%.
• Outflows continue to plague UBS. Shares of UBS (UBS) are -7% premarket after the Swiss bank said it doesn't expect client inflows to recover anytime soon due to its mangled reputation as a result of its tax dispute with the IRS. UBS posted a fourth straight quarterly loss of 564M francs (-$552M), worse than the 207M loss expected by the Street. Total client outflows rose to 36.6B francs ($35.8B), led by a doubling of outflows at its Americas wealth-management division. On a media call, CFO John Cryan cited UBS's "residual reputational issue" along with "some morale issues among advisers" that it needs to face, and said UBS expects "modest outflows from Swiss clients until we return to profit."
• EU sees gradual recovery. The EU lifted its 2010-2011 growth forecast to 0.75% and 1.5% respectively, but cautioned its outlook is "highly uncertain" given that "significant fiscal and monetary policy measures" are supporting the recovery. Predicting government deficits will swell to 7.5% of GDP, the Commission said a "protracted period of fiscal consolidation will have to follow at some stage to put public debt back on a sustainable footing."
• RBA hikes rates again. Australia's central bank, the first G-20 member to break from super-loose monetary policy, raised interest rates for the second time in two months - to 3.5% - amid a rapidly improving economic outlook. The bank hinted it may not boost rates again in December, saying the rises in October and November would work to temper inflation and ensure a sustainable upswing in the economy, which sent the Aussie dollar (ETF: EWA) lower. The central bank has never hiked rates three months in a row.
• CRE breaks death spiral. Prices of investment-grade commercial real estate rose 4.4% in Q3, according to the MIT CRE's transaction-based index, possibly signaling an end to the sector's year-long downward spiral. "One quarter does not a trend make and we are still well below normal trading volume," David Geltner, director of research at MIT/CRE, said. "Nevertheless, this is the strongest sign of a bottom that we've had in two years." The positive news comes in stark contrast to gloomy remarks from the Fed's John Greenlee, who said Monday (.pdf) that regional banks building up "unprecedented concentrations of CRE loans" will suffer the impact of worsening conditions in real estate markets, and warned, "Poor loan quality, subpar earnings, and uncertainty about future conditions raise questions about capital adequacy for some institutions."
• Hat trick of upside surprises. U.S. manufacturing activity hit its highest level in 3.5 years and pending home sales contracts unexpectedly surged, reducing fears the economy's budding recovery would falter. ISM's manufacturing index climbed 3.1 points to 55.7 (vs. 53.3 consensus) as companies began rebuilding inventories. "Overall, it appears that inventories are balanced and that manufacturing is in a sustainable recovery mode," ISM said. Pending home sales rose for the eighth straight month, the longest streak on record, with NRA's index gaining 6.1% (vs. +0.7% consensus) to 110.1. The index is now at its highest since Dec. 2006. And construction spending (.pdf) rose 0.8% (vs. -0.3% consensus) to an annual $940B, though the gain was offset by a large downward revision to August's number.
• Pensions bulge while market caps shrink. Pensions rose an average of 19% for top executives in 2008, even as their companies' stock prices fell by 37% amid a global downturn, according to an analysis of SEC filings. The growth was largely due to arcane pension formulas that have received little scrutiny.

Earnings: Tue. Before Open

• Alpha Natural Resources (ANR): Q3 EPS of $0.47 beats by $0.09. Revenue of $729M (+5.9%) in-line. Shares -0.9% premarket. (PR)
• American Tower (AMT): Q3 EPS of $0.17 in-line. Revenue of $444M (+8.5%) vs. $430M. (PR)
• AmerisourceBergen (ABC): FQ4 EPS of $0.44 beats by $0.04. Revenue of $18.27B (+9.7%) vs. $18.06B. Shares +5.5% premarket. (PR)
• Archer Daniels Midland (ADM): FQ1 EPS of $0.77 beats by $0.20. Revenue of $14.9B (-29.5%) vs. $17.9B. Shares +0.1% premarket. (PR)
• Cameron International (CAM): Q3 EPS of $0.58 beats by $0.05. Revenue of $1.23B (-18.1%) in-line. Shares -0.3% premarket. (PR)
• Cognizant Technology Solutions (CTSH): Q3 EPS of $0.45 beats by $0.04. Revenue of $853M (+16.2%) vs. $806M. Sees Q4 EPS of $0.45 vs. $0.42 and revenue of at least $880M vs. $830M. Shares +6.9% premarket. (PR)
• Emerson Electric Company (EMR): FQ4 EPS of $0.67 beats by $0.07. Revenue of $5.32B (-20.5%) in-line. Sees 2010 revenue of $19.45-19.87B vs. $20.21B. "We are well positioned for economic recovery, but the shape and speed of the recovery remains unknown and we expect weakness to continue in the near-term." Shares -1% premarket. (PR)
• Expeditors International of Washington (EXPD): Q3 EPS of $0.27 misses by $0.02. Revenue of $1.04B (-33.7%) in-line. "There certainly were significant challenges during the latter part of this quarter as both air and ocean carriers imposed capacity reductions in order to implement very aggressive price increases. While we wouldn't call it 'The Perfect Freight Storm,' the rapidity of these carrier moves created a pricing environment that resulted in our experiencing single digit airfreight yields out of Asia during the first several weeks of September. Ocean yields were also significantly impacted." (PR)
• Frontier Communications (FTR): Q3 EPS of $0.17 beats by $0.02. Revenue of $527B (-5.6%) in-line. Shares -0.3% premarket. (PR)
• Gaylord Entertainment (GET): Q3 EPS of -$0.32 misses by $0.21. Revenue of $199M (-12.2%) vs. $202M. (PR)
• IntercontinentalExchange (ICE): Q3 EPS of $1.18 beats by $0.03. Revenue of $256M (+27.3%) in-line. Shares +0.2% premarket. (PR)
• Marathon Oil (MRO): Q3 EPS of $0.61 beats by $0.04. Revenue of $14.48B (-37.9%) vs. $13.7B. Shares +1.3% premarket. (PR)
• Marvel Entertainment (MVL): Q3 EPS of $0.26 beats by $0.02. Revenue of $106M (-42.1%) vs. $92.5M. Disney (DIS) is due to acquire Marvel by year-end. (PR)
• MasterCard (MA): Q3 EPS of $3.48 beats by $0.54. Revenue of $1.36B (+1.9%) in-line. Gross dollar volume +0.3%. Purchase volume +0.4%. Shares +3.3% premarket. (PR)
• Medco Health Solutions (MHS): Q3 EPS of $0.75 beats by $0.03. Revenue of $14.79B (+17.8%) in-line. Shares +2.5% premarket. (PR)
• Northgate Minerals (NXG): Q3 EPS of $0.03 misses by $0.01. Revenue of $120M. (PR)
• Oshkosh Truck (OSK): FQ4 EPS of $0.27 beats by $0.11. Revenue of $1.49B (-19.8%) vs. $1.4B. "We expect to be solidly profitable in fiscal 2010, led by significant revenue growth in our defense business, which should more than offset anticipated low demand at our construction-related businesses." Shares +3.8% premarket. (PR)
• Petroquest Energy (PQ): Q3 EPS of $0.07 misses by $0.06. Revenue of $50.3M (-35.8%) vs. $52.2M. Shares -6.5% premarket. (PR)
• Polo Ralph Lauren (RL): FQ2 EPS of $1.75 beats by $0.44. Revenue of $1.37B (-3.8%) vs. $1.31B. "We are raising our sales expectations for the remainder of the year, but we continue to be cautious with our outlook and are planning accordingly." Shares +2.7% premarket. (PR)
• Rockwell Collins (COL): FQ4 EPS of $0.84 misses by $0.03. Revenue of $1.19B (-7%) in-line. Shares -2.7% premarket. (PR)
• Royal Caribbean Cruises (RCL): Q3 EPS of $1.07 beats by $0.07. Revenue of $1.8B (-14.5%) in-line. Sees "a slight loss" in Q4 vs. consensus of +$0.04. "Like many other travel companies, we saw more strength than we expected during our peak season but have been experiencing more pricing pressure on some of our traditionally softer fall season sailings." Shares -3.2% premarket. (PR)
• St. Joe Company (JOE): Q3 EPS of -$0.08 misses by $0.02. Revenue of $43.2M (+30.1%) vs. $28.9M. (PR)
• Teva Pharmaceutical Industries (TEVA): Q3 EPS of $0.89 beats by $0.01. Revenue of $3.55B (-7.6%) vs. $3.63B. Shares -2% premarket. (PR)
• Viacom (VIA): Q3 EPS of $0.69 beats by $0.12. Revenue of $3.32B (-2.7%) in-line. Shares +0.7% premarket. (PR)
• Vornado (VNO): Q3 FFO of $1.25 beats by $0.08. Revenue of $671M (-0.7%) vs. $637M. Shares -0.5% premarket. (PR)

Earnings: Mon. After Close

• Anadarko (APC): Q3 EPS ex-items of $0.40 may not compare to estimate of -$0.33. Gains that may affect comparability, including reversed accrual and unrealized derivatives loss, of $0.51/share. Revenue of $2.7B (-55%) vs. $2B. Shares +0.7% AH. (PR)
• Avis Budget Group (CAR): Q3 EPS of $0.54 misses by $0.01. Revenue of $1.5B (-14%) vs. $1.6B. Shares +6.5% AH. (PR)
• Axis Capital (AXS): Q3 EPS of $1.05 beats by $0.33. Revenue of $452M (-29%) vs. $581M. (PR)
• Chesapeake Energy (CHK): Q3 EPS of $0.70 beats by $0.05. Revenue of $1.8B (-76%) vs. $2B. Shares -1.1% AH. (PR)
• Forest Oil (FST): Q3 EPS of $0.48 misses by $0.04. Revenue of $177M (-50%) vs. $252M. Shares -1.8% AH. (PR)
• Hecla Mining (HL): Q3 EPS of $0.09 beats by $0.09. Revenue of $95.2M (+39%) vs. $68.7M. Shares +2.4% premarket. (PR)
• Kinross Gold (KGC): Q3 EPS of $0.00 misses by $0.12. Revenue of $582M (+16%) vs. $578M. Shares +0.4% AH. (PR)
• MannKind (MNKD): Q3 EPS of -$0.42 beats by $0.06, on no revenues. "While we continue to be fully engaged in the task of navigating our NDA through the FDA review process, we are continuing to run additional studies of AFRESA." Shares +4.5% AH. (PR)
• Republic Services (RSG): Q3 EPS of $0.32 misses by $0.04. Revenue of $2.07B (+149%) in-line. Sees full-year EPS of $1.46-1.48 vs. $1.46. Shares -0.2% AH. (PR)
• Principal Financial Group (PFG): Q3 EPS of $0.74 beats by $0.09. Revenue of $2.3B (-9%) vs. $2.5B. Shares +2.4% AH. (PR)
• St. Mary Land (SM): Q3 EPS of $0.23 beats by $0.03. Revenue of $186M (-43%) vs. $187M. (PR)

Today's Markets

China was the lone gainer on an otherwise dismal Tuesday in Asia. Europe shares are getting pummeled. Stock futures are under severe pressure. Treasurys and the dollar are up strongly.

Intercontinental Exchange

Guidance

Analysts are looking for a profit of $1.15 on revenue of $255.72M. The consensus range for EPS is $1.12-$1.21, while the consensus range for revenue is $245.09M-$260.20M, according to First Call. Intercontinental Exchange investors have several reasons to be relatively optimistic about the company's Q3 results. Intercontinental competitor NYSE Euronext (NYX) on Friday reported higher than expected Q3 EPS and revenue. In addition, there are signs that Intercontinental's newly launched CDS clearinghouses are growing quickly. Intercontinental earlier this month said that it had handled more than $3T in credit derivatives this year. The company launched its U.S. credit default swap clearinghouse in March, and it started a European CDS clearinghouse in July. Last month the Wall Street Journal reported that Wall Street banks intend to send all of their swaps through clearinghouses by the end of this year.

What a crazy month we had!

The Dow began the month of October at 9,712 and finished the month of October at EXACTLY 9,712. Now I don’t want to say the market is manipulated but… No, I’ve got nothing, there are no buts - the market is totally manipulated! Either that or you believe that the random outcome of tens of millions of traders around the globe trading hundreds of billions of shares of stock would just so happen to begin and end the month within .50 after going as low as 9,378.77 (on the 5th) and as high as 10,157.94 (on the 21st). So that is literally a 1 out of the 779-point swing coincidence to hit that 9,712 nail on the head.

Sentiment

Stocks opened broadly lower following a round of mostly disappointing stock news Friday. GE (GE) is down 4 percent and weighing down the Dow Jones Industrial Average after the company reported quarterly earnings of 22 cents per share on $37.8 billion in revenues. Analysts were looking for 20 cents on $39.5 billion.

IBM (IBM) is the Dow's biggest loser, falling 4.7 percent after the computer maker reported better-than-expected earnings and revenues, but also made cautious comments about corporate technology spending. Bank of America (BAC) reported a 26-cent per share loss for the quarter, which was a nickel worse than expectations. Revenues also missed estimates and BAC is down 4.2 percent on the news.

The Ends Justifies the Means

Watching the end of a blowout NFL game and the financial markets close out 2009 could be eerily similar this year. If over the next three months it seems that market participants are simply trying to run out the clock and close this year on a high, you might be absolutely right.

Sentiment

The major averages are deep in the red Thursday, as the historically volatile month of October kicked off with a bang. Two days of disappointing jobs data is partly to blame. A report released before the opening bell on Wall Street showed weekly jobless claims increased by 17,000 to 551,000 last week, which was significantly worse than the 1,000 increase economists had predicted. The news comes the day after ADP reported the economy lost a worse-than-expected 254,000 jobs in September and the day before the Labor Department releases key monthly jobs data Friday morning.

The day's other economic numbers were mixed. Data on personal incomes / spending, pending home sales, and construction spending all exceeded economist estimates. However, the ISM Index, a gauge of manufacturing activity nationwide, showed a decline to 52.6 in September; which was not much changed from the 52.9 in August, but also below economist estimates of 54.0.

Sentiment

Stocks opened steady on better-than-expected GDP numbers, but the early gains faded fast after manufacturing data missed to the downside. The Dow Jones Industrial Average headed higher early after a report released pre-market showed the US economy contracting at a .7 percent annual rate in the second quarter. The decline was less than the 1 percent previously reported and also better than the -1.2 percent economists had expected.

The better than expected GDP print seemed to overshadow a separate report from ADP, which showed the US economy losing 254,000 private sector jobs in September, which was more than the 200,000 economists had expected. August numbers were revised to -277,000, from an initial reading of -298,000.

The S&P 500 moved into the green in May and has never looked back. So far in Q3, it's up a whopping 16.8%, even better than Q2's 15.9% total return. Despite the large advance, 40 of the members are actually down QTD. Thinking that there might be some opportunities from the long side, I wanted to take a closer look, so I created a screen in StockVal to narrow the list. Here is how I constrained the group:

• 50dma > 200dma (maximum 10%)
• PE F12M <120% of 5yr Median
• Net Debt to Capital < 60%

The first constraint is to assure that the trend is up but it isn't overextended. The second constraint makes sure the PE isn't super-inflated. The final factor kicks out balance-sheet disasters. Here are the 15 stocks:

Buy, Hold, Or Fold?

As we sit at consolidation levels around 1,000 on the S&P 500, we are witnessing the critical nexus point of a binary event waiting to happen.

We’re entering a new era of disclosure which will likely change the landscape for derivative investments for years to come. Tuesday, a group of 15 different Swap dealers including JPMorgan Chase & Co. (JPM) and Goldman Sachs Group, Inc. (GS) agreed to increase the amount of trades they send to clearinghouses. A clearinghouse is simply an intermediary which acts as a guarantor for both parties involved so that the risk of counterparty default is minimized.

For the last decade, the number of unregulated “Over The Counter” contracts between financial institutions has grown and eventually these extensive derivative positions threatened to bring down the nations financial infrastructure. To a large degree, the calamity came as a result of counterparty failure where large players like American International Group, Inc. (AIG) were unable to meet their obligations relating to these complicated agreements.

Only 39 stocks in the S&P 500 are trading below their 50-day moving averages. That means nearly 93% of stocks in the index are trading above their 50-days, which is the highest reading in at least three years. Below we highlight the stocks in the index that are the most overbought and oversold versus their 50-days.

As shown, AIG is the furthest above its 50-day at 61.06%, followed by GCI, EK, HIG, LEN, and C. These are names that have been in perpetual trouble over the last few years, so clearly investors are going out and buying up beaten down, risky names. Other notable stocks on the most overbought list include COF, WYNN, WFMI, and BAC.

Bullish Calls:

Apple (AAPL): "I think AAPL's data for the smart phones is so explosive, I am going to continue to say buy, buy, buy"

Q2 2009 Earnings Call

August 04, 2009 8:30 am ET

• BoA's Lewis closer to exit. Bank of America (BAC) reshuffled its senior management yesterday, replacing the head of consumer banking with Brian Moynihan, who had previously run wealth management, and hiring Sallie Krawcheck as the new wealth management chief. The bank is also setting up a five-way competition for a new CEO to replace Ken Lewis "at the appropriate time," with candidates including Moynihan, who is the front runner for the position, Krawcheck, CFO Joe Price, home-lending chief Barbara Desoer and Goldman Sachs veteran Tom Montag. Shares -1.4% premarket (7:00 ET). (Read BoA's press release)
• BoA settles Merrill suit. Bank of America (BAC) agreed to a $33M settlement with the SEC over charges that it made false and misleading statements to investors about bonuses at Merrill Lynch. The settlement was announced almost immediately after the allegations, which the bank neither confirmed nor denied, but the SEC emphasized it will continue its investigation. Though the $33M payment is high for disclosure-related cases not connected to fraud, the fine seems small compared to the $3.6B in bonuses paid at Merrill in 2008 and damages CEO Ken Lewis' once-golden reputation far more than BoA's bottom line. (Read the SEC's complaint (.pdf) and statement on the settlement)
• No surprises from UBS loss. UBS (UBS) posted a Q2 net loss of 1.4B Swiss francs ($1.32B), its third consecutive quarterly loss, on costs related to job cuts and charges related to the company's debt. Its wealth and asset management divisions saw outflows of 39.4B francs. CEO Oswald Gruebel said markets improved in the second quarter but a sustainable economic recovery 'is not yet visible.' Shares -8.3% premarket (7:00 ET). (Read UBS' letter to shareholders (.pdf))
• Bank regulators oppose financial reforms. Several top banking regulators, including the FDIC's Sheila Bair, will testify in Congress today against some key elements of Obama's proposed financial reforms. The regulators feel parts of Obama's plan are unnecessary, and Bair doesn't "see merit or wisdom in consolidating federal supervision" under a single regulator since combining agencies is 'no panacea' for effective oversight. The testimony comes in spite of strongly-worded exhortations from Geithner, who wants regulators to end their turf battles and public criticism and to get in line behind the reforms. (See the Senate's full list of witnesses for today's hearing)
• Monday's market climb. The S&P 500 broke through the 1,000 mark for the first time since November, climbing 1.5% to close at 1,002.63, and the Nasdaq broke the 2,000 mark, closing up 1.5% at 2,008.61. All three major U.S. indexes, including the Dow Jones Industrial Average, are now at their highest levels since last autumn. Speculation that the recession may be ending helped commodities surge and sent Treasurys and the dollar down.
• Google's Schmidt leaves Apple board. Google (GOOG) CEO Eric Schmidt resigned from Apple's (AAPL) board of directors, with Apple releasing a statement that "as Google enters more of Apple's core businesses... Eric's effectiveness as an Apple Board member will be significantly diminished, since he will have to recuse himself from even larger portions of our meetings due to potential conflicts of interest." The resignation, which Apple described as mutual, highlights not just the growing overlap between Apple and Google, but also increased antitrust scrutiny from the Federal Trade Commission. The move failed to mollify the FTC, which said it "will continue to investigate remaining interlocking directorates between the companies."
• ANZ picks up Asian assets. Australia and New Zealand Banking Group (ANZBY.PK) agreed to buy some Asian units from Royal Bank of Scotland (RBS) for around $550M. ANZ will pick up retail, wealth management and commercial businesses in Taiwan, Singapore, Indonesia and Hong Kong, as well as RBS' institutional banking businesses in Taiwan, the Philippines and Vietnam, as a 'further stepping stone' in the bank's Asian growth strategy.
• Clunker program lifts car sales. July U.S. motor vehicle sales reached their highest pace in eleven months, thanks in large part to the 'Cash for Clunkers' program which sent consumers rushing to dealerships. Car firms sold 997,824 cars and light trucks in July, pushing the annualized selling pace to 11.24M vehicles vs. June's rate of 9.69M, and a slump in luxury auto demand showed signs of lessening. Here's the breakdown:
  -Ford (F): +2.3% to 158,838 vs. consensus of -5%, making it the first U.S. manufacturer to report a monthly sales increase this year.
  -Chrysler: -9% to 88,900. Car sales -14% to 22,109. Sales up 30% M/M. "We are seeing encouraging signs that consumer confidence is building, and more consumers are considering purchasing a new vehicle."
  -General Motors: -19.4% to 189,443. Chevrolet was the best-performing brand at -9.3% to 124,948. Saturn, the worst performer, was -66.1% to 5,968.
  -Honda (HMC): -17.3% to 114,690. Truck sales -20.6% to 37,996.
  -Toyota (TM): -11.4% to 174,872, up 27.7% M/M. Lexus division -16.5% to 18,517. Hybrids +19.3% to 24,295.
  -Nissan (NSANY): -24.6% to 71,847. Trucks -48.4% to 20,448.
  -Daimler (DAI): -24% to 17,646 for the Mercedes-Benz car division.
  -Volkswagen (VLKAY.PK): +0.7% to 20,590. Diesels accounted for more then 30% of total sales.
• CIT sweetens buyback offer. CIT Group (CIT) raised its tender offer on $1B in notes to a purchase price of $875 per $1,000, up from $825. CIT also lowered its minimum tender condition to 58% of notes, and has already received tenders for 64.97% of notes. The improved terms all but guarantee the buyback's success, pulling CIT one step farther away from bankruptcy court. (Read CIT's press release)
• AIG gets new chief. Robert Benmosche will become CEO and President of AIG (AIG), replacing Edward Liddy as of August 10. Benmosche is the former CEO of MetLife (MET), and will be AIG's fifth chief since 2005.
• Manufacturing still contracting. The ISM Manufacturing Index came in at 48.9 in July vs. 46.5 consensus, its 18th consecutive month of contraction. Nonmetallic Mineral Products and Paper Products reported growth. Machinery, Plastics & Rubber Products, and Wood Products led the laggards.
• Construction spending inches up (.pdf). June Construction Spending rose 0.3% to $966B/year, beating consensus estimates of -0.5%. Compared to a year ago, construction was down 10.2%. For the first half of the year, spending of $456B was 11.4% below last year.

Earnings: Tuesday Before Open

• Allegheny Energy (AYE): Q2 EPS of $0.43 in-line. Revenue of $815M (-15%) vs. $868M. (PR)
• Archer Daniels Midland (ADM): FQ4 EPS of $0.10 vs. consensus of $0.45 (may not be comparable). Revenue of $16.5B (-24%) vs. $15.2B. (PR)
• ArvinMeritor (ARM): FQ3 EPS of -$0.25 beats by $0.06. Revenue of $993M (-47%) vs. $1.2B. (PR)
• Cameron International (CAM): Q2 EPS of $0.60 beats by $0.13. Revenue of $1.3B (-14%) vs. $1.2B. Issues upside Q3 EPS guidance of $0.50-0.55 vs. $0.42 consensus. Issues upside FY '09 EPS guidance of $2.15-2.25 vs. $1.89 consensus. (PR)
• Cincinnati Bell (CBB): Q2 EPS of $0.11 beats by $0.01. Revenue of $328M (-7%) vs. $336M. (PR)
• Cognizant Technology Solutions (CTSH): Q2 EPS of $0.50 beats by $0.13. Revenue of $777M (+13%) vs. $762M. Issues upside Q3 guidance: sees EPS of $0.44 vs. $0.39 consensus, revenue of at least $800M vs. $781M consensus. (PR)
• CVS Caremark (CVS): Q2 EPS of $0.65 beats by $0.01. Revenue of $25B (+18%) vs. $24B. (PR)
• Discovery Communications (DISCA): Q2 EPS of $0.43 beats by $0.11. Revenue of $881M (-0.5%) in-line. (PR)
• D.R. Horton (DHI): FQ3 EPS of -$0.45 misses by $0.22. Revenue of $922.5M (-43%) vs. $792M. (PR)
• Duke Energy (DUK): Q2 EPS of $0.26 beats by $0.01. Revenue of $2.9B (-10%) vs. $3.2B. (PR)
• Emerson Electric Company (EMR): FQ3 EPS of $0.56 misses by $0.01. Revenue of $5.1B (-22.5%) vs. $5.3B. (PR)
• Entergy (ETR): Q2 EPS of $1.23 misses by $0.03. Issues in-line guidance for FY '09, sees EPS of $6.20-6.80 vs. $6.56 consensus. (PR)
• Expeditors International of Washington (EXPD): Q2 EPS of $0.25 in-line. Revenue of $895M (-38%) vs. $999M. (PR)
• Frontier Communications Corporation (FTR): Q2 EPS of $0.11 misses by $0.02. Revenue of $532M (-5%) vs. $534M. (PR)
• HCP (HCP): Q2 EPS of $0.55 beats by $0.04. Revenue of $267M (+7.5%) vs. $249M. (PR)
• Henry Schein (HSIC): Q2 EPS of $0.81 beats by $0.05. Revenue of $1.6B (-2%) in-line. (PR)
• Iconix Brand Group (ICON): Q2 EPS of $0.30 in-line. Revenue of $56M (+9%) vs. $51M. (PR)
• IntercontinentalExchange (ICE): Q2 EPS of $1.12 misses by $0.01. Revenue of $250M (+27%) vs. $243M. Shares +0.6% premarket (7:40 ET). (PR)
• Louisiana-Pacific (LPX): Q2 EPS of -$0.26 beats by $0.07. Revenue of $266M (-31%) vs. $241M. (PR)
• Marvel Entertainmnet (MVL): Q2 EPS of $0.37 beats by $0.06. Revenue of $116M (-26%) vs. $106M. (PR)
• NiSource (NI): Q2 EPS of $0.02 beats by $0.01. Revenue of $1B (-35%) vs. $1.6B. (PR)
• Pinnacle West Capital (PNW): Q2 EPS of $0.77 misses by $0.10. Revenue of $840M (-5%) vs. $834M. (PR)
• PPL (PPL): Q2 EPS of $0.32 misses by $0.08. Revenue of $1.7B (+65%) in-line. (PR)
• Progress Energy (PGN): Q2 EPS of $0.64 misses by $0.05. Revenue of $2.3B (+3%) in-line. (PR)
• Rowan Companies (RDC): Q2 EPS of $0.78 beats by $0.03. Revenue of $482M (-18%) vs. $435M. (PR)
• Spectra Energy Corp. (SE): Q2 EPS of $0.22 beats by $0.02. Revenue of $937M (-17%) vs. $1.1B. (PR)
• St. Joe Company (JOE): Q2 EPS of -$0.49 misses by $0.33. Revenue of $41M (-40%) vs. $24M. (PR)
• Tenet Healthcare (THC): Q2 EPS of -$0.03 misses by $0.02. Revenue of $2.2B (+5.5%) in-line. (PR)
• TRW Automotive (TRW): Q2 EPS of -$0.11 vs. consensus of -$0.83 (may not be comparable). Excluding charges, reports $0.08 per share. Revenue of $2.7B (-39%) vs. $2.6B. (PR)
• Valeant Pharmaceuticals International (VRX): Q2 EPS of $0.51 beats by $0.07. Revenue of $192M (+25%) vs. $181M. Shares +5.6% premarket (8:20 ET). (PR)
• W&T Offshore (WTI): Q2 EPS of -$0.07 beats by $0.41. Revenue of $150M (-67%) vs. $138M. (PR)

Earnings: Monday After Close

• Anadarko (APC): Q2 EPS of -$0.48 beats by $0.20. Revenue of $1.8B (-37%) in-line. (PR)
• Arena Pharmaceuticals (ARNA): Q2 EPS of -$0.48 beats by $0.01. Revenue of $2.4M (-8%) vs. $3.1M. (PR)
• Atmel (ATML): Q2 EPS of $0.00 beats by $0.05. Revenue of $285M (-32%) vs. $279M. Sees Q3 sales up 4-8% sequentially. (PR)
• Axis Capital (AXS): Q2 EPS of $1.22 beats by $0.05. Revenue of $781M (-4%) vs. $747M. (PR)
• Centex (CTX): Q2 EPS of -$2.63 misses by $1.46. Including tax benefit, reported EPS of $0.68. Revenue of $574M (-49%) vs. $563M. (PR)
• Chesapeake Energy (CHK): Q2 EPS of $0.62 beats by $0.11. Revenue of $1.7B vs. $1.9B. (PR)
• Comstock Resources (CRK): Q2 EPS of -$0.26 in-line. Revenue of $65M (-62%) vs. $63M. (PR)
• Extra Space Storage (EXR): Q2 FFO of $0.24 beats by $0.10. Revenue of $69M (+3%) vs. $67M. (PR)
• Forest Oil (FST): Q2 EPS of $0.52 beats by $0.06. Revenue of $182M (-65%) vs. $240M. (PR)
• Herbalife (HLF): Q2 EPS of $0.78 beats by $0.06. Revenue of $572M (-11%) vs. $550M. Sees Q3 EPS of $0.66-0.69 vs. $0.81. Sees Q3 revenue down 4-6%. (PR)
• Hologic (HOLX): FQ3 EPS of $0.29 beats by $0.03. Revenue of $403M (-6%) vs. $395M. Sees full-year EPS of $1.14-1.16 vs. $1.12. (PR)
• Principal Financial Group (PFG): Q2 EPS of $0.69 beats by $0.06. Revenue of $2.2B (-19%) vs. $2.5B. (PR)
• Pulte Homes (PHM): Q2 EPS of -$0.74 misses by $0.17. Revenue of $679M (-58%) vs. $647M. (PR)
• STEC (STEC): Q2 EPS of $0.42 beats by $0.08. Revenue of $86M (+54%) vs. $83M. Sees Q3 EPS of $0.45-0.47 vs. $0.39. Files to sell 7.5M shares of common stock. (PR)
• WMS Industries (WMS): FQ4 EPS of $0.49 beats by $0.02. Revenue of $196M (+5%) vs. $197M. Sees full-year revenue of $760M-780M vs. $707M. (PR)

Today's Markets

Little movement in Asian markets, which closed mixed. European markets are heading down and U.S. markets are unlikely to sustain yesterday's gains.

Intercontinental Exchange

Guidance

Analysts are looking for EPS of $1.13 on revenue of $242.92M. The consensus range for EPS is $1.07 to $1.16, while the consensus range for revenue is $215.49M to $249.60M, according to First Call.

It’s a busy day for the Commodity Futures Trading Commission (CFTC) as testimony is heard regarding the controversial proposal to limit position sizes on all finite commodities. The two primary investments affected by this discussion are IntercontinentalExchange (ICE), CME Group Inc. (CME). Earlier this month, ZachStocks discussed how further limits to position sizes could have unintended consequences and actually increase volatility instead of helping to stabilize wildly swinging markets.

Jeff Sprecher, the CEO of IntercontinentalExchange voiced a similar perspective in his remarks to the committee today: