If yesterday was the beginning of the end of one of the top-10 bear market rallies of all time, there are many that will point to Burlington Northern’s (BNI) disappointing outlook as the straw that broke the camel’s back.

I think instead that it was news released by the National Retail Federation which recently published the results of its annual Halloween Consumer Intentions and Actions Survey (they actually have one of these?) which found that the average consumer was planning to spend 15% less on Halloween items this year including: candy, decorations and costumes. That works out to $56.31 per family, down from $66.54 in 2008. “The economy has caught up to Halloween this year,” Tracey Mullin, CEO of the NRF said.

• CIT snags $4.5B lifeline. A group of hedge funds including many of its bondholders offered to lend CIT Group (CIT) $4.5B to build creditor support for a controversial debt exchange, pitting them against activist investor Carl Icahn, who wants the swap voted down. The lifeline comes as CIT's lenders must decide by midnight tonight whether to support its proposed debt exchange, a pre-packaged bankruptcy plan, or neither. Sources say the funds bought up CIT debt last summer on a bet the government would bail out the troubled lender, and stand to lose from a freefall bankruptcy, which Icahn is pushing for.
• Mutual funds use Fed bucks to buy bonds. Mutual funds - including those run by T. Rowe Price (TROW) and BlackRock (BLK) - are using Fed financing to reap 15%-plus returns with limited risk. The Fed's TALF (Term Asset-Backed Securities Loan Facility) offers low-cost financing to buy AAA-rated bonds backed by consumer and business loans, as well as commercial mortgages. Investors can borrow up to 95% of the bonds' value by pledging the securities and some additional collateral, and have no obligation to repay the loan beyond the collateral - in essence shifting most of the potential losses to the government. In the words of one fund manager: "This is one of those opportunities that, as an investor, we have to take advantage of."
• IMF boosts Asia growth outlook. The IMF raised its 2009-2010 growth forecast for Asia's economy, but warned that a fragile recovery in advanced economies and lingering problems in the global financial system still pose risks. IMF now sees Asia growth of 2.8% and 5.8% this year and next, up from previous estimates of 1.2% and 4.3% - far higher than the 1.25% growth expected from G-7 economies, but well short of the region's 6.66% average. The report says the region is outpacing other parts of the world, with 'green shoots' of recovery appearing earlier and taking firmer root than elsewhere. (IMF Asia Outlook)
• U.S.-China trade talks open on sour note. China/U.S. trade talks opened on a discordant note Thursday as fresh frictions surfaced after China announced plans to investigate dumping allegations against Detroit's Big Three automakers. Punitive measures are unlikely to cause much harm since most of the vehicles they sell are made in China, but another row - on top of disputes over steel pipes, chicken, movies and music - could further stress their tenuous relationship ahead of Obama's Nov. 15 visit.
• Economists shave GDP estimates after weak orders. Durable goods orders rose 1% in September, short of the 1.5% gain economists expected, but a reverse of August's 2.4% drop. Following the weaker-than-expected gain, Goldman Sachs economist Ed McKelvey dropped his Q3 GDP growth estimate - due out this morning - to 2.7% from a previous 3%. "The headline gain in orders was in line with expectations but not as firm as we had thought," he said. Later, Morgan Stanley and Merrill Lynch followed suit, with Morgan shaving its outlook to 3.8% from 3.9%, and Merrill to 2.3% from 2.5%.
• AIG recoups CDS losses. AIG (AIG) is seeing billions of dollars in inflows from recovering credit-default swaps - the very securities that helped level the insurer. Q2 inflows may have topped $3B, including at least $1B from Goldman Sachs (GS). Credit-default swaps - a type of insurance policy on securities backed by assets such as mortgages - required AIG to put up huge amounts of collateral when the investments they backed fell in value. Many of the sour trades were closed out last year by the government, a move that saved AIG, but may have deprived it of billions of dollars.
• Homebuyer credit extension nears approval. Key senators voiced support for extending and expanding the soon-to-expire homebuyer tax credit, and a vote on the measure could come next week. The current plan would see the $8,000 first-time homebuyer tax credit, set to expire at the end of November, extended through April 2010, and would allow for people who have been in their home for at least five years to receive a $6,500 tax credit if they purchase a new primary residence. The income limit on the credit would also rise to $125,000 from $75,000.
• House panel approves credit rating rules. The House Financial Services Committee signed off (49-14) on legislation aimed at ratings agencies, including barring them from consulting for companies they're also rating, and requiring raters to have outsiders on their boards. The bill also enables investors to sue firms for failing to carry out their duties.
• Fed: To grow or to shrink? A draft bill of new financial-regulation legislation moving through Congress would give the Fed substantial new powers, including the authority to force large firms to shrink if their size threatens the broader economy. The view is likely to conflict with the Senate's, where financial regulation is moving at a much slower pace, and members of both parties remain wary of offering the Fed - seen by many as partially responsible for the collapse - any new authority.
• New home sales flatline. New home sales fell 3.6% in September to an annual rate of 402K, well short of economist consensus of 440K and last month's downward-revised 417K. Months' supply rose to 7.5 from 7.3 in August. Sales were down 7.8% year-over year, and, from the peak of the residential construction boom back in mid-2005, sales are down 71.1%. After adjusting for population growth since the pre-2009 all-time low in 1981, sales are now 15% below previous records. (Census Bureau's New Home Sales (.pdf))
• Norway tightens rates. Norway became the first European country to hike interest rates post-crisis, lifting its key rate by 25 bps to 1.5%. Governor Svein Gjedrem noted inflation is higher than expected, while unemployment was "considerably lower than previously projected," and indicated rates would rise gradually. On Oct. 6, Australia became the first G-20 nation to tighten. (Norges Bank statement)

Earnings: Thur. Before Open

• ABB Ltd. (ABB): Net income of $1.03B (+12%). Sales $7.9B (-10%). Orders $7.06B (-21%). "It remains unclear when and how quickly capital investments by customers will recover from the downturn. In addition, the volatility of raw material prices and the limited availability of project funding continue to influence the timing of many power and industrial investment decision." ABB preannounced on Oct. 19. Shares -2.1% premarket. (PR)
• Aetna (AET): Q3 EPS of $0.69 beats by $0.03. Revenue of $8.72B (+14.4%) in-line. Sees full-year EPS of $2.75 vs. $2.86 consensus. (PR)
• Allegheny Energy (AYE): Q3 EPS of $0.59 beats by $0.06. Revenue of $794M (-6.6%) vs. $952M. (PR)
• Allergan (AGN): Q3 EPS of $0.70 in-line. Revenue of $1.13B (+4.2%) vs. $1.08B. Shares +0.8% premarket. (PR)
• American Electric Power Company (AEP): Q3 EPS of $0.93 beats by $0.08. Revenue of $3.5B (-16.7%) vs. $3.97B. (PR)
• AstraZeneca (AZN): Q3 EPS of $1.46 beats by $0.06. Revenue of $8.2B (+5.5%) vs. $7.9B. Sees full-year core EPS of $6.20-6.40 vs. consensus of $5.99. Shares +0.7% premarket. (PR)
• AutoNation (AN): Q3 EPS of $0.36 beats by $0.01. Revenue of $2.92B (-13.2%) vs. $3.13B. "Cash for Clunkers was a highly effective stimulus program that provided a much needed lift in auto sales and has set the stage going forward for a gradual recovery of new vehicle sales." Says CARS boosted Q3 EPS by $0.07. Approves $250M buyback. (PR)
• Avon (AVP): Q3 EPS of $0.42 beats by $0.02. Revenue of $2.55B (-3.5%) in-line. (PR)
• Barrick Gold (ABX): Q3 EPS of $0.54 beats by $0.07. Revenue of $2.1B (+11.6%) in-line. Significantly reduced gold hedges, and will eliminate within 12 months. (PR)
• BioCryst Pharmaceuticals (BCRX): Q3 EPS of -$0.28 misses by $0.06. Revenue of $10.5M (+18%) vs. $4.6M. BioCryst recently received FDA approval to use its flu I.V. drug peramivir as an emergency treatment against H1N1. (PR)
• Brookfield Properties (BPO): Q3 FFO of $0.34 in-line. Revenue of $657M (-7.1%) vs. $580M. (PR)
• Burger King (BKC): FQ1 EPS of $0.34 misses by $0.03. Revenue of $637M (-5.4%) vs. $653M. Expects the unpredictable consumer environment will persist in fiscal 2010. (PR)
• Brunswick (BC): Q3 EPS of -$1.53 misses by $0.19. Revenue of $666M (-35.9%) vs. $701M. Shares -5.1% premarket. (PR)
• CME Group (CME): Q3 EPS of $3.35 beats by $0.06. Revenue of $650M (-17.4%) in-line. "As the economy continues to stabilize, there is room for further organic growth in our core business. At the same time, we are actively working to ensure that the benefits our business model brings to the financial system are communicated to the legislators and regulators who are charged with regulatory reform." (PR)
• CNOOC (CEO): Q3 revenue of 23.8B yuan ($3.47B, -23.1%) vs. estimate of 21.6B. Avg. selling price -36.6% to $67.83/barrel. Net daily production +18.4% to 647K. Capital expenditure +10.3% to 11.24B yuan. Shares -0.9% premarket. (Bloomberg, PR)
• Colgate-Palmolive (CL): Q3 EPS of $1.12 beats by $0.01. Revenue of $4B (+0.3%) in-line. (PR)
• Corinthian Colleges (COCO): FQ1 EPS of $0.37 beats by $0.09. Revenue of $388M (+34.2%) vs. $378M. Total student population +25% to 93.5K. Sees full-year EPS of $1.55-1.60 vs. $1.35. Shares +5% premarket. (PR)
• Cott (COT): Q3 EPS of $0.18 beats by $0.02. Revenue of $405M (-3.7%) in-line. To sell $200M in senior notes due in 2017, and use proceeds to fund a previously announced tender offer for notes due in 2011. (PR)
• Deutsche Bank (DB): Q3 net profit €1.4B from €414M a year ago. Pre-tax profit of €1.3B from €93M. Net writedowns of €300M. Risk provision of €544M, up from €236M a year ago, but down from €1B in Q2. Return on equity 15% vs. 1% last year. Says it reduced levels of trading risk, "even at the expense of short-term revenue gains." DB released preliminary results last week. Shares -2.6% premarket. (PR)
• Digital Realty Trust (DLR): Q3 FFO of $0.74 beats by $0.02. Revenue of $163M (+14.9%) in-line. Shares (PR)
• Eastman Kodak (EK): Q3 EPS of -$0.23 misses by $0.04. Revenue of $1.78B (-25.9%) vs. $1.89B. Sees revenue decline at high-end of previous 12-18% range. (PR)
• Expedia (EXPE): Q3 EPS of $0.48 beats by $0.05. Revenue of $852M (+2.3%) vs. $829M. "Travelers are clearly responding to our improving value proposition, as we broaden our fee cuts and increase the depth and breadth of our global supply." Shares +6.8% premarket. (PR)
• ExxonMobil (XOM): Q3 EPS of $0.98 misses by $0.05. Revenue of $82.3B (-40.3) vs. $85.2B. Shares -1.5% premarket. (PR)
• France Telecom (FTE): Q3 Ebitda of €4.56B (-8%), in line with consensus. Revenue of €12.69B (-6.4%) vs. €12.85B. Expects Q4 to be similar to Q3, and will thus continue to implement cost savings plans to prevent its Ebitda margin from declining further. Shares -0.5% in Paris. (PR, WSJ)
• GrafTech International (GTI): Q3 EPS of $0.15 beats by $0.09. Revenue of $165M (-47.8%) vs. $162M. (PR)
• Kellogg Company (K): Q3 EPS of $0.94 beats by $0.10. Revenue of $3.28B (-0.3%) in-line. "The current economic environment has placed significant pressure on our consumers." (PR)
• KBR Inc. (KBR): Q3 EPS of $0.45 beats by $0.04. Revenue of $2.84B (-5.9%) in-line. (PR)
• Mack-Cali Realty (CLI): Q3 FFO of $0.81 beats by $0.05. Revenue of $194M (-5.3%) vs. $175M. (PR)
• Monster Worldwide (MWW): Q3 EPS of $0.01 beats by $0.01. Revenue of $215M (-35.2%) vs. $223M. (PR)
• Moody's (MCO): Q3 EPS of $0.43 beats by $0.05. Revenue of $452M (+4.2%) vs. $417M. Declares quarterly dividend of $0.10. (PR I, II)
• Motorola (MOT): Q3 EPS of $0.01 beats by $0.01. Revenue of $5.45B vs. $5.54B. Appoints Edward Fitzpatrick as CFO. Sees Q4 continuing operations EPS of $0.07-0.09 vs. $0.06. Shares +4.3% premarket. (PR)
• MPS Group (MPS): Q3 EPS of $0.06 beats by $0.04. Revenue of $408B (-29.4%) vs. $403B. MPS is being acquired by Adecco. (PR)
• Mylan Laboratories (MYL): Q3 EPS of $0.32 beats by $0.05. Revenue of $1.26B (-23.7%) in-line. Sees 2010 EPS of $1.24-1.28 vs. $1.17. (PR)
• Newmont Mining (NEM): Q3 EPS of $0.79 beats by $0.24. Revenue of $2.05B (+49.5%) vs. $1.72B. (PR)
• Nintendo (NTDOY.PK): H1 net profit of ¥69.5B ($768M, -52%). Sales of ¥548B (-34.5%). Cuts H1 dividend by 37% to ¥270. Sold 5.75M Wii consoles (-43%) and 11.7M DS hand-held player sales (vs. 13.7M last year). Sees full-year net income of ¥230B vs. ¥270B consensus, full operating profit of ¥370B (-33%), sales of ¥1.5T (-18%), and Wii sales of 20M (vs. previous 26M). (PR I, II, III, Bloomberg)
• Noble Energy (NBL): Q3 EPS of $1.10 beats by $0.28. Revenue of $621M (-43.4%) vs. $657M. (PR)
• NRG Energy (NRG): Q3 EPS of $1.02 misses by $0.12. Revenue of $2.92B vs. $2.18B. (PR)
• Office Depot (ODP): Q3 EPS of -$0.08 beats by $0.02. Revenue of $3.03B (-17.2%) in-line. (PR)
• OfficeMax (OMX): Q3 EPS of $0.08 misses by $0.06. Revenue of $1.83B (-12.6%) in-line. Same-store sales -11.5%. Continues to anticipate macro employment trends will not turn positive until well into 2010. (PR)
• Patterson-UTI Energy (PTEN): Q3 EPS of -$0.12 beats by $0.04. Revenue of $176M (-71%) vs. $163M. (PR)
• PG&E (PCG): Q3 EPS of $0.93 beats by $0.02. Revenue of $3.23B (+12.3%) vs. $3.48B. (PR)
• PPL Corp. (PPL): Q3 EPS of $0.52 beats by $0.07. Revenue of $1.8B vs. $3B. (PR)
• Procter & Gamble (PG): FQ1 EPS of $1.06 beats by $0.07. Revenue of $19.8B (-6%) in-line. (PR)
• Shell (RDS.A): Adjusted net income of $2.62B vs. consensus of $2.5B. Revenue of $75B, down from $131.6B a year ago. "Q3 results were affected by the weak global economy. Upstream and downstream profitability has been sharply reduced compared to year-ago levels. We see some indications that energy demand and pricing are improving, but the outlook remains very uncertain, and we are not expecting a quick recovery." Shares -3.5% in London. (PR)
• Smith International (SII): Q3 EPS of $0.07 misses by $0.08. Revenue of $1.88B (-34.1%) in-line. (PR)
• Sprint Nextel (S): Q3 EPS of -$0.17 misses by $0.02. Revenue of $8.04B (-8.8%) in-line. Net subscribers -135K. Post-paid churn 2.17% vs. 2.05% in Q2, due to seasonality and heightened competition. Pre-paid churn 6.65% vs. 6.38% in Q2. (PR)
• Taiwan Semi (TSM): Q3 EPS of $0.18 in-line. Revenue of $2.74B (-8.1%) in-line. Gross margin +1.5 points from Q2 to 47.7%. Sees Q4 revenue of NT$90-92B vs. consensus of NT$85.8B. (PR)
• Ventas (VTR): Q3 EPS of $0.66 beats by $0.03. Revenue of $236M (+0.3%) vs. $230M. (PR)
• Virgin Media (VMED): Q3 operating cash flow of £348M (+7%) vs. consensus of £337M. Ebitda of £348M. Revenue of £953M (+1.3%) vs. £942M. Net additions of 8,100 vs. 8,000. (PR)
• Williams Companies (WMB): Q3 EPS of $0.24 beats by $0.05. Shares +2.2% premarket. (PR)
• Xcel Energy (XEL): Q3 EPS of $0.48 misses by $0.02. Revenue of $2.31B (-18.8%) vs. $3.01B. (PR)

Earnings: Wed. After Close

• AFLAC (AFL): Q3 EPS of $1.25 beats by $0.05. Revenue of $4.5B (+23%) vs. $4.7B. Shares -0.2% AH. (PR)
• Agnico-Eagle Mines (AEM): Q3 EPS of -$0.11 vs. estimate of $0.20; results include foreign exchange loss and other items accounting for cost of $0.14/share. Revenue of $159M (+91%) vs. $183M. Shares -8.3% AH. (PR)
• Akamai Technologies (AKAM): Q3 EPS of $0.38 beats by $0.03. Revenue of $207M (+5%) vs. $199M. Shares +9.6% AH. (PR)
• Annaly Mortgage Management (NLY): Q3 EPS of $0.75 beats by $0.03. Net interest income of $436M (+24%). Shares +2.3% AH. (PR)
• AvalonBay Communities (AVB): Q3 FFO of $1.09 beats by $0.01. Revenue of $224M (+0.3%). Sees Q4 FFO of $0.61-0.64 vs. $0.97 and full-year FFO of $3.86-3.90 vs. $4.19. (PR)
• Brandywine Realty Trust (BDN): Q3 FFO of $0.44 beats by $0.08. Revenue of $147M (+2%) vs. $141M. Raises full-year FFO guidance to $1.82-1.85 from $1.75-1.80, vs. $1.78. Sees fiscal 2010 FFO of $1.23-1.34 vs. $1.38. Shares -1.9% AH. (PR)
• Cadence (CDNS): Q3 EPS of $0.03 beats by $0.04. Revenue of $216M (-7%) vs. $215M. Sees Q4 EPS of $0.02-0.04 vs. $0.01, and full-year EPS of -$0.08 to -$0.10 vs. -$0.14. (PR)
• Cerner (CERN): Q3 EPS of $0.61 in-line. Revenue of $409M (-3%) vs. $421M. Sees Q4 EPS of $0.68-0.74 vs. $0.74. Shares -1.9% AH. (PR)
• CB Richard Ellis Group (CBG): Q3 EPS of $0.08 misses by $0.02. Revenue of $1B (-23%) in-line. Shares -4% AH. (PR)
• Duke Realty (DRE): Q3 FFO of $0.32 beats by $0.01. Revenue of $224M (+4.1%) vs. $219M. (PR)
• Equity Residential (EQR): Q3 FFO of $0.53 beats by $0.01. Revenue of $493M (-4%) vs. $487M. Sees Q4 FFO of $0.49-0.53 vs. $0.49. (PR)
• Express Scripts (ESRX): Q3 EPS ex-items of $0.99 beats by $0.19. Revenue of $5.6B (+3%) vs. $5.5B. Sees full-year EPS of $3.76-3.82 vs. $3.49. Shares +0.8% AH. (PR)
• First Solar (FSLR): Q3 EPS of $1.79 beats by $0.05. Revenue of $481M (+38%) vs. $529M. Shares -15.9% AH. (PR)
• Genco Shipping & Trading (GNK): Q3 EPS of $1.09 beats by $0.08. Revenue of $93M (-14%) vs. $91M. Shares -2.9% AH. (PR)
• Helix Energy Solutions Group (HLX): Q3 EPS of $0.04 misses by $0.01. Revenue of $216M (-65%) vs. $249M. Shares -0.3% AH. (PR)
• LSI Logic (LSI): Q3 EPS of $0.18 beats by $0.14. Revenue of $578M (-19%) vs. $556M. Sees Q4 EPS of $0.07-0.13 vs. $0.06 and Q4 revenue of $605M-645M vs. $587M. Shares +7% AH. (PR)
• Lincoln National (LNC): Q3 EPS of $0.84 beats by $0.08. Revenue of $2.1B (-8%) vs. $2.4B. Shares +9.2% AH. (PR)
• O'Reilly Automotive (ORLY): Q3 EPS of $0.63 beats by $0.07. Revenue of $1.26B (+13%) vs. $1.23B. Comparable store sales up 5.3%; "Continued improvement in our gross margin results fueled by improved acquisition costs as the result of our increased purchasing power." Shares -0.2% AH. (PR)
• Owens-Illinois (OI): Q3 EPS of $0.74 misses by $0.19. Revenue of $1.9B (-7%) in-line. Shares -6% AH. (PR)
• Questar (STR): Q3 EPS of $0.60 beats by $0.09. Revenue of $600M (-21%) vs. $542M. Raises full-year EPS guidance to $2.45-2.55 from $2.35-2.45, vs. $2.57. (PR)
• Realty Income (O): Q3 FFO of $0.47 beats by $0.01. Revenue of $82M (flat) in-line. Sees full-year FFO of $1.86-1.92 vs. $1.83. Shares +2.3% AH. (PR)
• Ryland Group (RYL): Q3 EPS of -$1.20 misses by $0.31. Revenue of $328M (-40%) vs. $352M. Shares -0.5% AH. (PR)
• Symantec (SYMC): FQ2 EPS of $0.36 beats by $0.03. Revenue of $1.48B (-3%) vs. $1.43B. Shares +6.1% AH. (PR)
• Teck Resources (TCK): Q3 EPS of $0.59 beats by $0.09. Revenue of $2.1B in-line. Sees 2009 coal sales of 19.5-20.5M tons, slightly higher than previous guidance. Shares +4.1% AH. (PR)
• Teradyne (TER): Q3 EPS of $0.14 beats by $0.03. Revenue of $262M (-12%) vs. $256M. Sees Q4 EPS of $0.12-0.17 vs. $0.12 on Q4 revenue of $255M-270M vs. $252M. Shares +2.2% AH. (PR)
• Trinity Industries (TRN): Q3 EPS of $0.29 beats by $0.04. Revenue of $557M (-52%) vs. $564M. Sees Q4 EPS of $0.08-0.13 vs. $0.06. Shares -1.3% AH. (PR)
• XL Capital (XL): Q3 EPS of $0.89 beats by $0.26. Revenue of $1.5B (-15%) vs. $1.7B. Shares +5.2% AH. (PR)

Today's Markets

Asia markets moved sharply lower Thursday, but losses in Europe were mild and U.S. futures have moved higher overnight following Wednesday's losses.

By Hao Jin

The Fed is going to keep interest rates near zero for the foreseeable future. With 10-Year Treasury yields around 3.5%, solid blue chip companies offering decent dividends become popular. Not only do they offer current income and the possibility of capital gains, they also have better protection against inflation than regular bonds. No wonder Warren Buffett wrote, “Buy American. I Am.” in The New York Times last October.

The Fed is going to keep interest rates near zero for the foreseeable future. With 10 year treasury yields around 3.5%, solid blue chip companies offering decent dividends becomes popular. Not only do they offer current income and the possibility of capital gains, they also have better protection against inflation than regular bonds. No wonder Warren Buffett wrote “Buy American. I Am” article on The New York Times last October. (source: NY Times)

However, the economy is still in the bottoming process. There is a potential risk for the economic to backslide. Which blue chips are relatively safe?

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:

Many investors thought that they could time the market to their advantage. But actually they just guessed about the psychology of other investors, trying to figure out when others might start selling. In fact this explains why so many investors were holding stocks while they also thought the market was overpriced, according to Robert Shiller from The Washington Post.

In today’s low interest rate environment, yield-hungry investors might want to invest in financially strong blue chip companies that offer the potential for stable and solid dividends. I filtered the 200 largest U.S. stocks (by market cap), and below are 20 highest dividend yield companies (sort by yield %).

This is the second quarter 2009 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out our series preface on hedge fund 13F filings.

Next up is George Soros' hedge fund firm, Soros Fund Management. Soros is one of the gurus we track on the blog due to his excellent track record and insightful macro take on things. His current take on the crisis and financial markets is laid out in his latest book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means. If you want to get a better sense as to how Soros formulates his investment theses, we highly recommend reading his first book, The Alchemy of Finance. This book is a staple in our recommended reading list and after you read it, you'll understand why.

You read Seeking Alpha and you are involved with the market every day. You know what is going on and you are skeptical about the market here with the SPX at 1005. So am I, but that is really irrelevant. I want you to think about another group of investors.

These investors have these common traits:

Q2 2009 Earnings Call

August 4, 2009 9:00 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.

Q1 2009 Earnings Call Transcript

May 1, 2009 9:00 am ET

• Chrysler goes bankrupt. It's official - Chrysler has filed for Chapter 11 bankruptcy protection, and announced a deal with Fiat giving the Italian carmaker an initial 20% stake. Obama thanked everyone from unions to executives for fighting to keep the automaker alive, and blamed 'a small group of speculators' for making bankruptcy inevitable. The plan now is for Chrysler to leave bankruptcy protection in a month or two with a lighter balance sheet, new management, fewer dealers, lower labor costs, a Fiat alliance and possibly even a new name.
• Cramdowns get voted down. The Senate rejected an amendment that would have given bankruptcy judges the ability to ease a homeowner's monthly payments and stave off foreclosure. Cramdown fans said the amendment would have helped keep millions of Americans in their homes, but critics argued the plan's arbitrary rules would scare off investors and prolong the housing slump. The defeat of the cramdown bill in the Senate came as the House voted to cap the fees credit card companies can charge.
• Citi's Nikko sale. Citigroup reached a deal to sell Nikko Cordial Securities to Sumitomo Mitsui Financial (SMFJY.PK) for around ¥774.5B ($7.9B), ending Citi's ambitions to create a full-service bank in Japan. The deal will turn Sumitomo Mitsui into a major player in Japan's securities industry. The deal will create an accounting loss for Citigroup, but will raise its tangible common equity, an important move in light of the capital shortfall identified by stress tests.
• Cuomo pension probe widens. New York Attorney General Andrew Cuomo is expanding his probe of pension-fund kickbacks, saying the probe has exposed "a national network of actors" whose schemes are ongoing, and has charged a money manager with making illegal payments to a political consultant in exchange for investment business. The charge is at least the fifth since Cuomo's investigation began.
• BoA board wants Lewis to stay. Bank of America (BAC) directors showed continued support of CEO Ken Lewis despite outside pressure to accelerate a search for his replacement. The subject of succession didn't come up during a board meeting Wednesday, or during recent conversations with regulators. However, the board's continued public support for Lewis will likely raise tensions with angry shareholders who already voted Lewis out of the chairman position. Separately, lawmakers will likely call for hearings on the involvement of the Treasury and Federal Reserve in Bank of America's acquisition of Merrill Lynch.
• Stress test results delayed. The Federal Reserve postponed the release of banks' stress test results while bank executives argue with regulators over the tests' preliminary findings. Originally scheduled for publication May 4, the results likely won't be published until the end of next week.
• UBS demurs on tax case disclosures. Responding to the U.S. lawsuit on tax evasion, UBS said revealing the names of 52,000 U.S. customers would violate Swiss criminal law prohibiting such disclosures and trample on Swiss sovereignty. According to UBS' filing, the disclosure request also violates tax treaties between the U.S. and Switzerland, and is "fundamentally an issue for diplomats, not litigators."
• Fed eyes TALF terms. The Federal Reserve is reportedly preparing to announce new terms for TALF to help revive the commercial real estate market. The Fed will likely roll out new loans with five-year terms to better match the need of investors in commercial mortgage-backed securities, up from the current three-year loan terms.
• AmEx cut to junk. S&P downgraded American Express' (AXP) credit rating amid concerns about the company's long term liquidity. Its counterparty credit rating was cut by two notches to BBB+, while its preferred stock rating was cut to junk territory with a three-notch drop to BB. Further downgrades are possible.
• Disney does the Hulu. Disney (DIS) joined up with video site Hulu (GE, NWS) and will distribute films from Walt Disney Studios and programs from ABC and the Disney Channel through the site. The deal marks a shift in strategy for Disney, which will cede some control over the distribution of its programming in exchange for an equity stake, and brings together three of the biggest broadcast and cable network owners under the same banner. GE's NBC Universal, News. Corp and Disney will each hold roughly a 27.5% stake in the venture.
• Hasbro, Discovery build kids' network. Hasbro (HAS) and Discovery Communications (DISCA) have teamed up to launch a children's entertainment network in 2010. The new network will replace the Discovery Kids network in around 60M homes, and will help Hasbro transform itself into an entertainment company as toys face increased competition from videogames, the internet, movies and TV.
• Personal income falls. U.S. consumer spending fell in April together with incomes. Personal Income fell 0.3% ($34.4B) in March, while disposable income decreased less than 0.1% ($1.8B). Personal consumption expenditures (PCE) declined 0.2% ($24.2B).
• Employment costs rise. Employment costs rose a record low 0.3% in Q1, in-line with consensus. Over the past year, employment costs have risen a record low 2.1%.
• Jobless claims better than consensus. Initial jobless claims were 631K, down from last week's 645K (revised) and better than consensus of 640K. Continuing claims rose 133K to 6.27M.
• Business conditions improve (.pdf). Business conditions in the Chicago area surged to their best reading in seven months, according to the NAPM Chicago Business Barometer. Varied "general comments" included "Record setting Federal debt will harm economic recovery," and "Small business lending is picking up..."

Earnings: Friday Before Open

• American Axle & Manufacturing (AXL): Q1 EPS of -$0.37 beats by $0.18. Revenue of $402M (-31.5%) vs. $427M. (PR)
• Aon (AOC): Q1 EPS of $0.76 misses by $0.12. Revenue of $1.85B (-2.7%) vs. $2.08B. (PR)
• Apartment Investment and Management Company (AIV): Q1 FFO of $0.42 beats by $0.08. Revenue of $349M (+0.4%) vs. $311M. Sees Q2 FFO of $0.37-0.43 vs. $0.44, and full-year FFO of $1.65-1.95 vs. $1.65. (PR)
• Brookfield Properties (BPO): Q1 EPS of $0.32 misses by $0.03. Revenue of $592M (-9.1%) vs. $533M. (PR)
• Chevron (CVX): Q1 EPS of $0.92 beats by $0.11. Revenue of $36.13M vs. $21.14M. Shares +0.4% premarket. (PR)
• Clorox (CLX): FQ3 EPS of $1.17 beats by $0.27. Revenue of $1.35B (-0.2%) in-line. Sees full-year EPS of $4.00-4.15 vs. $4.21, and sales growth of 3-4% vs. a previous 3-5%. Shares +1.6% premarket. (PR)
• Cott (COT): Q1 EPS of $0.28 vs. consensus of -$0.07. Revenue of $367M vs. $377M. (PR)
• Dean Foods (DF): Q1 EPS of $0.52 beats by $0.10. Revenue of $2.7B (-12.2%) vs. $2.9B. "We have significant momentum in our business with an exceptionally strong first quarter behind us and indications of a solid start to the second quarter." (PR)
• Domtar (UFS): Q1 EPS of -$0.07 misses by $0.03. Revenue of $1.39B (+1.3%) vs. $1.39B. "The rapid decline of paper volumes in recent months has been abating." (PR)
• DryShips (DRYS): Q1 EPS of $0.36 beats by $0.17. Revenue of $197M (-15.3%) in-line. Shares +15.3% premarket. (PR)
• FLIR Systems (FLIR): Q1 EPS of $0.35 beats by $0.05. Revenue of $272M (+14.8%) vs. $277M. Full-year guidance in-line. (PR)
• Fortune Brands (FO): Q1 EPS of $0.30 beats by $0.08. Revenue of $1.44B (-20.3%) in-line. (PR)
• James River Coal (JRCC): Q1 EPS of $1.03 beats by $0.22. Revenue of $192M (+39%) vs. $193M. (PR)
• MasterCard (MA): Q1 EPS of $2.80 beats by $0.19. Revenue of $1.16B (-2.2%) vs. $1.21B. Gross dollar volume and purchase volume up 0.3%. Transactions up 5.8%. Shares +1.9% premarket. (PR)
• NiSource (NI): Q1 EPS of $0.62 in-line. Revenue of $2.72B (-17.2%) vs. $2.66B. (PR)
• PPL Corp. (PPL): Q1 EPS of $0.60 beats by $0.14. Revenue of $2.36B (+54.6%) vs. $1.69B. (PR)
• Simon Property Group (SPG): Q1 FFO of $1.61 beats by $0.13. Revenue of $918.5M (+2.6%) vs. $886M. Says it raised $1.6B in Q1. Shares -0.2% AH. (PR)
• TECO Energy (TE): Q1 EPS of $0.16 beats by $0.01. Revenue of $824M vs. $764M. Shares (PR)

Earnings: Thursday After Close

• Ariba (ARBA): FQ2 EPS of $0.15 beats by $0.01. Revenue of $84.7M (+5.2%) vs. $85M. Shares +5.1% AH. (PR)
• Chiquita (CQB): Q1 EPS of $0.49 beats by $0.21. Revenue of $842M (-9.9%) vs. $910M. "While Q1 results were better than expected... the company's full-year expectations remain the same." Shares +14.4% AH. (PR)
• Curtiss-Wright (CW): Q1 EPS of $0.35 beats by $0.01. Revenue of $424M (-2.2%) vs. $420M. Reaffirms full-year guidance. (PR)
• DENTSPLY International (XRAY): Q1 EPS of $0.43 in-line. Revenue of $507M (-9.6%) vs. $524M. (PR)
• Evergreen Solar (ESLR): Q1 EPS of -$0.40 vs. consensus of -$0.08. Revenue of $55.8M (+26.2%) vs. $49.2M. Shares -14% AH. (PR)
• Hartford Financial (HIG): Q1 EPS of -$3.77 misses by $0.72. Sees full-year EPS of $0.05-0.45 vs. $0.98 consensus. Book value per share down 57% to $24.15. Net unrealized investment losses $6.9B, up from $6.8B in Q4. Shares -12.6% AH. (PR)
• Ingram Micro (IM): Q1 EPS of $0.23 beats by $0.10. Revenue of $6.75B (-21.4%) in-line. "With the recession now affecting all regions, we do not expect a pick-up in sales for several more months, perhaps for the remainder of the year. However, we don't feel the market getting worse at this stage..." Shares +3.3% AH. (PR)
• Manitowoc (MTW): Q1 EPS of $0.18 beats by $0.05. Revenue of $1.03B (+4%) in-line. Shares -2.5% AH. (PR)
• McAfee (MFE): Q1 EPS of $0.54 beats by $0.06. Revenue of $448M (+21.1%) in-line. Q2 guidance in-line. Shares +3.9% AH. (PR)
• MetLife (MET): Q1 EPS of $0.20 misses by $0.14. Revenue of $10.22B (-12.%) vs. $11.93B. Net realized investment losses of $618M. Shares -3.8% AH. (PR)
• Monster Worldwide (MWW): Q1 EPS of $0.00 beats by $0.11. Revenue of $254M (-30.6%) in-line. Shares -4% AH. (PR)
• PerkinElmer (PKI): Q1 EPS of $0.26 beats by $0.06. Revenue of $432M (-5.9%) vs. $411M. Shares flat AH. (PR)
• Republic Services (RSG): Q1 EPS of $0.35 beats by $0.05. Revenue of $2.06B (+164.4%) in-line. (PR)
• QLogic (QLGC): FQ4 EPS of $0.20 misses by $0.01. Revenue of $130.5M (-18.3%) vs. $135M. Shares -3.2% AH. (PR)

Today's Markets

Japan moved higher Friday. London was lower. Elsewhere markets were closed. Volume in overnight futures is unusually low.

Bullish Calls:

A news headline out of Capitol Hill Tuesday makes the Electric Utilities a Screaming Buy. Senator Kent Conrad (D), the Senate Budget Committee Chairman said Tuesday that Obama’s budget does not have the votes to pass through the Senate in its present form.

Of particular concern for many of the Senators is the carbon cap-and-trade provisions that will place very costly legislation onto the production of electricity generation and hit the utilities very hard. Chart work shows a rapid sell-off in most all the utilities experienced when the budget was introduced. Just a brief review of the charts of the largest utilities in the country (NYSE: SO, FPL, ED, D, DUK, ETR, EXC, FE, AEE, AEP, AYE, PEG, PPL and PGN) showed dramatic declines in these stocks over the past 3 weeks.

In the classic book, Security Analysis, Benjamin Graham presents an in depth thesis on how the "margin of safety" determines the attractiveness of an investment. Graham wrote the book based on a thorough analysis of one of the most severe investing environments of this country, the Great Depression from 1929 – 1939.

Currently, our security market is on a downward trend comparable to that historic time. Looking at the historical data regarding the fall of earnings of the industrial companies during the Great Depression, you can see why there was a 90% drop in market cap from peak to trough.

Bullish Calls:

IBM (IBM): “I am bullish on IBM… they had a great quarter… they are buying back stock… now a lot of people say, hey listen the chart looks like it is rolling over I like the company… I am recommending it.”
Nucor (NUE): “NUE we recommended it at $28, $29… it is an accidentally high yielding stock, it then shot up to the mid $40’s where we said sell, sell, sell… when it gets back to $28, $29 we will pull the trigger..”
PPL Corp (PPL): “PPL, I like…I don’t like it as much as Exelon Corp.”
Exelon (EXC): “Exelon’s got good growth.”
Con Edison (ED): “I like Consolidated Edison (more than PPL Corp.)”
KBR (KBR): “KBR is cheaper (than Foster Wheeler) because it has got a lot of cash.”

Q4 2008 Earnings Call

February 04, 2009, 9:00 am ET

• Obama limits exec pay. Obama will announce today a policy of capped compensation for top executives at companies receiving 'exceptional' federal aid in the future. The cap will go into effect at $500,000 annually. Any additional compensation will have to be paid in restricted stock that won't vest until taxpayers have been paid back. The new cap will also require increased transparency in the use of corporate jets, office renovations, holiday parties and golden parachute offers. The cap will not be applied retroactively to companies that have already received rescue money.
• Backing toxic assets. Toxic-asset guarantees are gaining momentum as talks continue on possible bank-rescue plans. Treasury's Geithner is skeptical of setting up an official 'bad bank' and the guarantees would focus on troubled illiquid assets without taking them off banks' balance sheets. Senator Charles Schumer called debt guarantees 'a favorite choice' vs. a bad bank plan that could cost as much as $4T. Not everyone is on board, however. Former Fed governor Mishkin is one of the supporters of the bad bank idea, warning "you have to make sure that when all is said and done, you actually have financial firms that are either healthy and the ones that are not healthy can’t stay in business." Obama will likely release a comprehensive plan sometime next week.
• Live Nation Ticketmaster? Sources say Ticketmaster (TKTM) and Live Nation (LYV) are in merger talks and could announce a deal as early as this week. Combining the two companies would create a music industry powerhouse with a combined market value of over $700M and ties to over 200 artists. If the companies move forward with a merger, they could potentially face antitrust issues from managers, record companies, ticketing companies and concert promoters. Talks are said to be in an advanced stage, but it is not yet clear which company will be acquiring the other.
• AT&T eyes wireless assets. Verizon Wireless (VZ) needs to divest around $3B in wireless assets as part of its purchase of Alltel Corp., and rival AT&T (T) is emerging as a strong bidder. Though other companies are interested in the assets as well, AT&T is in the strongest financial position and could walk away with a large chunk of the assets. Critics say the assets, including 2.1M wireless subscribers in 22 states, shouldn't be transferred from one giant telecom provider to another since it's not in the interest of consumers. The Department of Justice has already said it will examine the sales to make sure there are no competitive issues.
• Panasonic pans to loss. Panasonic (PC) warned it will post an annual loss of ¥380B ($4.2B) vs. previous guidance for a ¥30B profit, and will cut 15,000 jobs as it faces slowing demand and a stronger yen. Panasonic is the world's No. 1 plasma TV maker but the strong yen has taken away the company's competitive edge overseas. "Sales fell in all our business segments in the third quarter," said Panasonic director Makoto Uenoyama. "We expect sharper sales declines in this quarter, and profits are likely to shrink in every segment."
• Mining giant takes profit hit. BHP Billiton (BHP) reported H1 profit fell a larger-than-expected 57% on the costs of closing mines and plants after a precipitous fall in metal prices. Net income fell to $2.6B. CEO Marius Kloppers said reduced demand for steel will have a 'pronounced impact' on this half's earnings along with the weak outlook for the global economy. Cashflow from operations rose 74% to $13B, and the company raised its H1 dividend 41% to $0.41.
• Elpida may seek aid. Japan's Elpida (ELPDF.PK), the world's third-largest maker of memory chips, may seek public funds under a Japanese government program designed to help non-financial companies during the global economic crisis. Elpida could ask for hundreds of millions of dollars and would likely be granted the money in exchange for issuing stock to the Development Bank of Japan. Elpida has been hit by falling chip prices and declining demand. Shares +6.2% in Tokyo.
• Retail sales. Retail chain store sales rose 1.6% from a week ago, ICSC reported, and dropped 2.5% Y/Y. "Though January ended with a solid sales increase for the week, sales volatility clearly continues for retailers and the industry amid a weak year-over-year trend." According to Redbook, national chain store sales fell 2.7% in the first four weeks of January, worse than the expected 2.2% fall. Sales -2.3% Y/Y. Bad weather hurt sales, though snack foods and beverages got a Super Bowl bump.
• Home sales improve. December's pending home sales rose 6.3% to 87.7, NAR said, citing improved affordability conditions. The gain, "spurred by buyers responding to lower home prices and mortgage interest rates, more than offset an index decline in the previous month."
• Mortgage apps rise. Mortgage applications rose 8.6% from a week ago, MBA says, on a seasonally adjusted basis. The average interest rate on 30-year fixed-rate mortgages increased to 5.28% from 5.22%.

Earnings: Wednesday Before Open

• Alcatel-Lucent (ALU): Q4 loss of €3.89B, its eighth straight, including a writedown of €3.91B on goodwill and intangible assets. Analysts expected a profit of €159M net of any writedowns. Sales fell 5.3% to €4.95B, vs. €4.8B consensus. (PR)
• ITT Industries (ITT): Q4 EPS of $0.82 beats by $0.05. Revenue of $2.9B (+16.5%) vs. $2.7B. (PR)
• Kraft (KFT): Q4 EPS of $0.43 misses by $0.01. Revenue of $10.77B (+6.2%) vs. $11.29B. Sees 2009 EPS of $1.88 vs. $2.02 due to currency effect and pension costs, partially offset by improved performance. (PR)
• PP&L (PPL): Q4 EPS of $0.46 in-line. Revenue of $2.5B (+56.6%) vs. $1.5B. (PR)
• Thermo Fisher (TMO): Q4 EPS of $0.88 beats by $0.05. Revenue of $2.6B (+1.0%) in-line. (PR)
• Time Warner (TWX): Q4 EPS of $0.23 misses by $0.03. Revenue of $12.3B (-2.7%) vs. $12.7B. (PR)
• Time Warner Cable (TWC): Q4 EPS of $0.35 beats by $0.03. Revenue of $4.4B (+7.7%) in-line. (PR)
• Windstream (WIN): Q4 EPS of $0.25 in-line. Revenue of $777.5M (-4.8%) vs. $780.9M. (PR)

Earnings: Tuesday After Close

• Ace Ltd. (ACE): Q4 EPS of $1.87 beats by $0.07. (PR)
• Alliance Data Systems (ADS): Q4 EPS of $1.19 beats by $0.03. Revenue of $508M (-2.7%) vs. $528M. Sees 2009 EPS of $5.15-5.20 vs. $5.07. (PR)
• BRE Properties (BRE): Q4 FFOs of $0.68 misses by $0.04. Revenue of $88.3M (+4.6%) vs. $89.6M. (PR)
• Centex (CTX): FQ3 EPS of -$5.34 misses by $2.07. Revenue of $872M (-53.4%) vs. $895M. Finishes quarter with $1.47B in cash. "We continued to move with urgency to reduce our cost structure, accelerating overhead reductions and further reducing land-related spending." (PR)
• Disney (DIS): FQ1 EPS of $0.41 misses by $0.10. Revenue of $9.6B (-8.2%) vs. $10.07B. (PR)
• Electronic Arts (ERTS): FQ3 EPS of $0.56 misses by $0.32. Revenue of $1.65B vs. $1.9B. To reduce workforce by 11% (1,100 jobs). Sees 2009 EPS of -$0.35 vs. $0.60 and revenue of $4.2-4.25B vs. $4.68B. (PR)
• Illumina (ILMN): Q4 EPS of $0.24 beats by $0.07. Revenue of $161M (+42.9%) vs. $155M. (PR)
• Leggett & Platt (LEG): Q4 EPS of $0.03 misses by $0.05. Revenue of $882M (-15.1%) vs. $863M. (PR)
• Massey Energy (MEE): Q4 EPS of $0.63 misses by $0.16. Revenue of $755M vs. $799M. (PR)
• MetLife (MET): Q4 EPS of $0.19 beats by $0.05. Revenue of $13.96B vs. $12.51B. (PR)
• Nalco (NLC): Q4 EPS of $0.36 beats by $0.13. Revenue of $1.03B (-0.3%) in-line. "It will be a difficult year, with expectations for unusually negative currency impacts and continued downward pressure across the global, industrial economy. Our expectation is that we will outperform relative to our competitors." (PR
• Pioneer Natural Resources Company (PXD): Q4 EPS of -$0.15 misses by $0.21. Revenue of $473M (-11%) vs. $477M. (PR)
• Riverbed Technology (RVBD): Q4 EPS of $0.19 beats by $0.01. Revenue of $92.2M (+20.8%) vs. $90.2M. (PR)
• Trimble Navigation (TRMB): Q4 EPS of $0.24 beats by $0.01. Revenue of $268M (-14.3%) vs. $272M. (PR)
• UnumProvident (UNM): Q4 EPS of $0.63 beats by $0.01. Revenue of $2.32B (-12.1%) vs. $2.62B. Sees 2009 EPS of $2.45-2.55 vs. $2.64. (PR)
• Yum! Brands (YUM): Q4 EPS of $0.46 beats by $0.01. Revenue of $3.38B (+3.7%) in-line. "It is important to note that we do not need to access the credit markets in 2009 to finance our company and our strong cash flow and balance sheet provide us with the flexibility to successfully navigate through these challenging financial times." (PR)

Today's Markets

• Asia markets closed in the green. Nikkei +2.7% to 8,039. Hang Seng +2.25% to 13,064. Shanghai +2.3% to 2,108. BSE +0.6% to 9,202.
• In Europe at midday, London +0.4%. Paris +1.1%. Frankfurt +0.8%.
• U.S. futures: Dow -0.1%. S&P +0.01%. Nasdaq -0.2%. Crude +1.7% to $41.49. Gold +0.9% to $900.20.

Wednesday's Economic Calendar

• 7:00 MBA Mortgage Applications
  7:30 Challenger Job-Cut Report
  8:15 ADP Jobs Report
  10:00 Treasury Refunding Announcement
  10:00 ISM Non-Manufacturing Survey
  10:30 EIA Petroleum Status
• Notable earnings before Wednesday's open: AGN, ALU, ARM, CLX, DVN, FNF, GR, ITT, KFT, NI, NOV, PM, PPL, R, RL, SLE, TMO, TWC, TWX, WIN
• Notable earnings after Wednesday's close: AIZ, AKAM, ATML, ATW, AVB, BMC, CBL, CNQR, CSCO, EFX, EOG, EQR, FMC, HAR, HRS, NDN, NVLS, ONNN, PHM, PRU, REG, SUN, THQI, TMK, V, XRAY

Seeking Alpha editor Eli Hoffmann contributed to this post.

Q3 FY08 Earnings Call

November 4, 2008, 09:00 AM ET