Market Currents

Real-time commentary on the market, with links to key sources.

Tuesday, August 19 2008
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  • 5:54 PM Could Ken Rogoff's ominous prediction of a major U.S. bank failure in coming months trigger one?
  • 5:39 PM Consumers are skimping on back-to-school shopping in a big way, a Deloitte survey finds; 71% plan to spend less this year. "They are using last year's clothes absolutely, but they're also using last year's crayons and different things that I have left over."
  • 4:14 PM Hewlett-Packard (HPQ): FQ3 EPS of $0.86 beats by $0.03. Revenue of $28.03B vs. $27.41B. Sees FQ4 EPS of $1.01-1.03 vs. $1.00. Shares +0.6%. [PR]
  • 4:10 PM Veriphone (PAY) sees FQ4 EPS of $0.36-0.39 vs. consensus of $0.21. Sees 2009 EPS of $1.35-1.55 vs. $1.01. Sees revenue of $260-268M vs. $230M. Shares +9.8% AH. [PR]
  • 4:06 PM Chevron (CVX +1.8%) will ink a $6B deal to develop Canada's Hebron oil field tomorrow, the Canadian government says.
  • 4:03 PM Analog Devices (ADI): FQ3 EPS of $0.44 misses by $0.01. Revenue of $659M in-line. Sees FQ4 EPS of $0.44-0.46 vs. $0.46. [PR]
  • 4:01 PM Nasdaq led the way down, -1.35% to 2,384. Dow -1.1% to 11,353. S&P -0.89% to 1,267. Crude +2.15% to $115.30. Gold +1.81% to $820.30.
  • 3:58 PM Sirius XM Radio (SIRI) +4.3% after signing Mad Dog Russo to a five-year deal.
  • 3:47 PM AIG (AIG) down 5.8% after Goldman notes its "dangerous balance sheet posing as an inexpensive entry point." "Goldman won’t say it, but we will," says FT Alphaville. "AIG is going the way of the monolines... but on a much larger scale."
  • 3:41 PM Credit spreads are a fairly good predictor of future stock performance. They don't look good. "The divergence we have seen take place in the past month (widening spreads / stock market rally) is unlikely to be sustained," Merrill's David Rosenberg warns.
  • 3:31 PM Corn futures climed 2.1% to $5.85 - a three-week high. "Fundamental measures of physical supply/demand remain very bullish, and any global event... could reignite the commodity markets."
  • 3:27 PM Before leaving VMware (VMW -4.4%), ex-CEO Diane Greene arranged meetings with Red Hat (RHAT -1%) as a prelude to a possible buyout. Sam Dean says the move makes a lot of sense.
  • 3:15 PM Earnings previews for companies reporting after today's close: ADI, HPQ
  • 3:10 PM Notable earnings after Tuesday's close: ADI, HPQ, NVTL
  • 3:09 PM Freddie Mac (FRE) did sell its $3B in 5-year notes, but it had to pay 113 bps above the 5-year Treasury benchmark. Before the auction, the spread was 105 bps, and last week it was 96 bps - this despite an implicit government guarantee.
  • 3:04 PM Sector ETF weakness: Regional Banks– KRE -5%. Homebuilders– XHB -4.4%. Commercial Banks– KBE -3.7%. Retailers– XRT -3.5%. Financials– XLF -3%.
  • 3:03 PM Sector ETF strength: Coal– KOL +2.9%. Gasoline– UGA +2.8%. Energy– XLE +2.8%. Oil Services– OIH +2.7%. Gold Miners– GDX +2.7%
  • 3:02 PM Dow strength: XOM +1.8%. CVX +1.8%. AA +0.5%. Dow weakness: AIG -5.4%. BAC -3.9%. AXP -3.8%. GM -3.7%. HD -3.5%. GE -2.9%. JPM -2.9%. C -2.7%.
  • 2:59 PM After initial weakness, gold and crude joined forces to move strongly higher. Crude +1.33% to $114.37. Gold +1.39% to $817.
  • 2:57 PM Approaching the final hour, stocks aren't far from their lows. Dow -1.13%. S&P -0.92%. Nasdaq -1.28%.
  • 2:56 PM GM (GM -3.5%) takes a u-turn: Instead of weaning itself off incentives, it's extending employee discounts to all buyers.
  • 2:38 PM A recent survey of the wealthy found 80% looking closely at all their expenses to see where they could save, up from 68% in April. Saks (SKS), their benefactor, is down 8% on a weak Q2.
  • 2:31 PM Auction-rate probe to include secondary dealers (brokers that resold the illiquid debt, underwritten by banks, to their clients). "Nobody is getting a pass," SEC chairman Christopher Cox says.
  • 2:29 PM Move over Edgar, the SEC's got an IDEA. "This is not just a new name for EDGAR, this is a fundamental change in the way the SEC collects, manages and distributes information," Chairman Cox says.
  • 2:03 PM Bondholders show regional banks no respect as they bet on defaults. "There's still a lot of potential shoes to drop." (Stocks: NCC, KEY, FITB. ETF: RKH)
  • 1:50 PM Banks' tight wallets are turning hedge funds into lenders. "When the big banks come back, they may find they have much more competition than they're used to."
  • 1:34 PM Explanations for gold's recent plunge range from sinister conspiracies to IMF sales, Kitco's Jon Nadler says. "Hardly any of the apologists have pointed a finger at index and hedge funds, at metals ETFs, and at deteriorating technicals."
  • 1:23 PM July money supply data saw the sharpest contraction in modern history, heightening the risk of a liquidity crunch and severe economic slowdown in coming months. "Broad money growth has almost collapsed."
  • 1:09 PM Does Mitsubishi UFJ Financial's (MTU) 35% premium for UnionBanCal (UB) set the standard for Roche's (RHBBY.PK) courtship of Genentech (DNA)? If so, Roche has a long way to go.
  • 12:54 PM Jeff Miller doubts Barron's inside Bush source that triggered yesterday's Fannie (FNM) and Freddie (FRE) selloff was intentional. "Political maneuvering is our sweet spot. This is not the way that political actors float 'trial balloons.'"
  • 12:47 PM The failure of default risk to moderate, despite recent market strength, means someone's guessing wrong.
  • 12:32 PM Talk that Lehman (LEH -4.1%) is shopping serious assets could signal management is taking bold steps to shore up its balance sheet. It may also mean its FQ3, which ends this month, has turned ugly.
  • 12:18 PM Tech blogger Michael Arrington, a noted Mac (AAPL) enthusiast, laments a recent string of bad apples. "It’s time for Apple to stop screwing around and start paying attention to product quality."
  • 12:04 PM MGM (SNE, CMCSA) is raising $600M to produce some of its biggest films, including The Hobbit and Pink Panther. In the past, studios haven't given Wall Street the chance to participate in their biggest and best.
  • 11:48 AM A defective chip made by Nvidia (NVDA), affecting an unknown number of Dell (DELL) and HP (HPQ) laptops, is causing problems for all three. Consumers are frustrated that Dell and HP won't repair affected laptops until they fail.
  • 11:34 AM BMO says Hasbro's (HAS) overvalued. "Macroeconomic headwinds may keep it from achieving the performance the Street may be anticipating." Shares -3.4%.
  • 11:26 AM Gold (+0.4% to $809) and crude (+0.65% to $113.56) venture into the green.
  • 11:18 AM China may further tighten visa restrictions to Macau, hurting its growing casino and hotel industry. Casino stocks respond: WYNN -7%, MGM -10.9%, LVS -10%.
  • 11:05 AM Stocks continue their descent. Dow -1.3%. S&P -1.2%. Nasdaq -1.17%. Crude -0.44% to $112.40. Gold -0.86% to $798.80.
  • 10:53 AM Fed's Fisher. Too early to tell if inflation has peaked. Fed must be ready to act if soft growth doesn't curb inflation. Expect 'painful' economic growth in coming quarters.
  • 10:36 AM YRC Worldwide (YRCW) is spending up to $83M over the next two years to buy Shanghai Jiayu Logistics, one of China's largest truckers. Shares -6.5%.
  • 10:23 AM Sector ETF weakness: Regional Banks– KRE -4.7%. Commercial Banks– KBE -3.1%. Regional Banks– RKH -3.0%. Homebuilders– XHB -2.6%. Financials– XLF -2.5%.
  • 10:21 AM Sector ETF strength: Solar– KWT +1.1%. Oil Services– OIH +0.8%. Energy– XLE +0.7%.
  • 10:14 AM Medical devices firm Smith & Nephew (SNN) up 2.4% on chatter of a bid from orthopedic device maker Zimmer (ZMH).
  • 10:08 AM Dow laggards: AIG -4.2%. BAC -3.3%. AXP -2.7%. JPM -2.6%. GE -1.6%. HPQ -1.6%.
  • 10:07 AM Markets continue to inch lower. Dow -1.03%. S&P -0.98%. Nasdaq -1%. Crude -0.56% to $112.25. Gold -1.4% to $794.10.
  • 9:59 AM Russian coal-miner Mechel (MTL) +4% after PM Putin commends its steps towards observing competition laws. MTL shed $8B in market cap after Putin accused it of abusing its dominance.
  • 9:57 AM Redbook says U.S. retail sales fell 2.0% in the first two weeks of August vs. July but rose 1.4% vs. a year ago. Contrast with ICSC's retail sales, also released today.
  • 9:45 AM Despite this morning's smoking-hot PPI numbers, short-term interest rates futures were little changed. Fed fund futures imply a 14% chance of a Sep. rate hike vs. 16% late Monday.
  • 9:32 AM Top premarket losers: CNTF -23.7%. FMD -12%. SPLS -9%. SKS -8%. LVS -7%.
  • 9:30 AM Top premarket gainers: WCG +16%. XFML +11%. FRE +3.4%. UAUA +2%. FNM +1%.
  • 9:25 AM American consumer satisfaction dipped 0.1 points in Q2 after a 0.3 point uptick in Q1. Weaker demand for exports combined with declining domestic satisfaction make it unlikely the U.S. will be the 'locomotive' to spark global growth.
  • 9:19 AM Futures point to a weak open. Dow -0.88%. S&P -0.88%. Nasdaq -0.78%. Crude -0.25% to $112.59. Gold -1.34% to $794.80.
  • 9:13 AM Staples (SPLS) warns Q2 results will be weaker than expected as U.S. consumers cut back on spending. Shares -7.45%.
  • 9:11 AM WellCare (WCG) will pay $35.2M in a Medicaid fraud investigation. The payment doesn't formally settle the case, but analysts say a feared 'catastrophic outcome' is now very unlikely. Shares are up 17% premarket.
  • 9:07 AM Medtronic (MDT): FQ1 EPS of $0.72 beats by $0.03. Revenue of $3.71B (+19%) in-line. Shares +0.5%. [PR]
  • 9:02 AM Freddie Mac's (FRE) up 2.5%, while Fannie Mae's (FNM) down 1.5% premarket.
  • 9:01 AM Coca-Cola (KO) pins its China hopes on a Beijing marketing blitz, trying to pull ahead of rival Pepsi (PEP) for China's 1.3B consumers. Coke thinks the Chinese market could be its biggest in the future.
  • 9:00 AM Saks (SKS): Q2 EPS of -$0.22 misses by $0.03. Revenue of $669M (-3.6%) vs. $679M. Shares -14%. [PR]
  • 8:50 AM Researchers say Merck's (MRK) 'study' of Vioxx, a painkiller, was actually a marketing tool to boost sales. The drug study was "marketing masquerading as science."
  • 8:41 AM Equities gap down on weak housing and red-hot inflation data. Dow -0.78%. S&P -0.84%. Nasdaq -0.75%.
  • 8:35 AM July Housing Starts were 965,000, 5,000 above consensus. Much-watched permits came in at 937K, short of the 970K consensus. Prior numbers were 1,084K and 1,138K respectively.
  • 8:33 AM The July Producer Price Index soared 1.2% vs. 0.6% consensus. Core PPI gained a hot 0.7% vs. 0.2% consensus. Year-over-year PPI stands at a screaming 9.8% and core PPI is 3.5%.
  • 8:28 AM Target (TGT): Q2 EPS of $0.82 beats by $0.06. Revenue of $15.47B (+5.8%) in-line. [PR]
  • 8:23 AM Growth in labor costs accelerated in most developed economies during Q1. The OECD reports a 0.5% rise in industrial labor costs, vs. 0.1% in Q4. Economists fear inflation will induce higher pay, leading to further price increases.
  • 8:13 AM Economists expect U.S. housing starts to have dropped 9.9% in July to a 17-year low, signalling the slowdown in residential construction will continue to hurt the economy. Official numbers at 8:30.
  • 8:11 AM ICSC says retail sales were up 0.1% wk/wk and 2.4% from the same week last year. Falling gas prices helped prop up discretionary spending despite weaker traffic.
  • 8:09 AM "We're not just going to see mid-sized banks go under in the next few months, we're going to see a whopper, we're going to see a big one, one of the big investment banks or big banks." - Kenneth Rogoff, former IMF chief economist
  • 8:07 AM Lowe's (LOW) smaller girth enables it to more nimbly navigate housing-market woes than bigger brother Home Depot (HD), Ockham Research says. It calls LOW's $24.50 shares very compelling for the patient.
  • 8:01 AM Strong accusations of Overstock.com (OSTK) paying off the Utah attorney general to silence a critic. More details here.
  • 7:55 AM More important than Home Depot's (HD) beat quarter was that it stuck to its guidance, Doug McIntyre says. Apparently consumers still feel their homes are worth investing in - a sign their deep pessimism may be overestimated.
  • 7:38 AM Sources say EA (ERTS) hopes dropping its $2B bid for Take-Two (TTWO) will sink TTWO, making the bid more attractive. TTWO hopes opening its books to EA will lead to a higher bid. Some say EA doesn't like TTWO's current management.
  • 7:03 AM Crude -0.5% to $112.31. Gold -0.66% to $800.40. Platinum -4.15% to 1,336.
  • 7:03 AM U.S. futures are all lower. Dow -0.37%. S&P -0.35%. Nasdaq -0.35%.
  • 7:03 AM Europe is down sharply at midday, mirroring yesterday's U.S. drop. London -1.4%. Paris -1.6%. Frankfurt -1.3%.
  • 7:02 AM Asia markets closed lower, save for a much-needed bounce in Shanghai. Nikkei -2.28% to 12,865. Hang Seng -2.13% to 20,484. Shanghai +1.06% to 2,344. BSE -0.7% to 14,544.
  • 6:51 AM Lehman Brothers (LEH) is circulating a detailed profile of financial information about the money management division it is trying to sell. Blackstone Group (BX) recently expressed interest and several private equity firms have been approached.
  • 6:29 AM Nymex Holdings (NMX) shareholders approve the CME Group's (CME) $8.3B takeover bid. The combined company will guarantee around 98% of exchange-listed futures traded in the U.S. CME shares +1.0%, NMX shares +1.7%.
  • 6:28 AM General Dynamics (GD) agrees to buy Jet Aviation, a business-plane fitter, for $2.25B. The acquisition should be completed by the end of the year.
  • 6:22 AM H1 net profit at China Southern Airlines (ZNH) more than quadruples to $123M on foreign exchange gains. However, the company warns of challenges ahead in declining market growth, rising costs, and tight industry competition.
  • 6:09 AM Mesa Air Group (MESA): FQ3 EPS of -$0.09 misses by $0.02. Revenue of $354M vs. $327.5M. [PR]
  • 6:07 AM Home Depot (HD): Q2 EPS of $0.71 beats by $0.10. Revenue of $21B vs. $20.58B. Same-store sales fell 7.9%. Sees 2008 EPS down 24%, vs. a previous 19-24%. [PR]
  • 5:34 AM German investor confidence rebounded to -55.5 in August after July's record low of -63.9, aided by lower oil prices and a weaker euro. Economists had expected a milder bounce to -62.
  • 5:30 AM Earnings previews for companies reporting early this morning: HD, MDT, SKS, TGT
  • 5:22 AM European stocks fall sharply on continued concern over the global financials sector and the threat of inflation.
  • 5:19 AM European markets: London -1.0%. Paris -1.6%. Frankfurt -1.1%.
  • 5:18 AM Asian markets: Nikkei -2.3%. Hang Seng -2.1%. Shanghai +1.1%. BSE -1.2%.
  • 5:11 AM German producer-price inflation jumped to 8.9%, a 27-year high. The data reinforces speculation that the ECB will keep interest rates at a seven-year high even as the economy slows down.
  • 4:57 AM The euro falls to a six-month low against the dollar ahead of a survey that could show investor confidence in Germany, Europe's largest economy, near a record low.
  • 4:44 AM Bank of Japan, calling the economy "sluggish," keeps interest rates at an anemic 0.5%. Some economists think it could be 2010 before the Japanese economy starts to recover.
  • 4:33 AM Russian troops seized control of the economically critical Georgian port, Poti. Yesterday Moscow said it was pulling its troops out.
  • 4:24 AM Renewed concerns about the credit crunch and its effect on corporate profits drove Asian stocks to a two-year low. Financial companies were the biggest losers, accounting for 30% of the fall in the MSCI Asia Pacific Index.
  • 4:11 AM Japanese banks halt lending to a growing number of companies as bounced checks rise to new records.
  • 4:10 AM India, the world's second-biggest sugar producer, won't ban sugar exports to cool soaring domestic prices. The government has already restricted exports of rice, wheat, and corn to help contain rampant inflation.
  • 3:59 AM Xstrata (XSRAF.PK), the world's fourth-largest nickel refiner, suspends operations totalling 2% of global nickel production on soaring costs and a drop in metal prices. The suspension could last for months.
  • 2:59 AM Asian markets are mixed: Nikkei -2.3%. Hang Seng -0.8%. Shanghai +0.5%. BSE -0.9%.
  • 1:11 AM Latest projected track for hurricane-wannabe Fay puts it traveling north through Florida, away from Gulf of Mexico oil rigs and tanker traffic.
  • 1:05 AM Japanese markets are sharply down on fears of U.S. weakness, with almost all Asia markets following suit. Nikkei -2.45%, Seoul -1.91%, Hang Seng -0.55%, Shanghai +0.18%.
  • 12:10 AM Notable earnings after Tuesday's close: ADI, HPQ, NVTL
  • 12:05 AM Notable earnings before Tuesday's open: HD, MDT, MYGN, SKS, SOL, TGT
  • 12:00 AM Tuesday's economic calendar:
    7:45 ICSC Retail Store Sales
    8:30 Housing Starts - consensus 0.95M
    8:30 Producer Price Index - consensus M/M 0.5%
    8:55 Redbook Chain Store Sales
    10:00 State Street Investor Confidence Index
    10:00 Fed's Fisher speaks on economy
    5:00 PM ABC Consumer Confidence Index
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