Market Currents

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

Thursday, August 21 2008
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  • 4:47 PM "What people believe their businesses are worth have not come in line with where valuations are today." - Phillips-Van Heusen (PVH) CEO Emanuel Chirico on the dearth of apparel industry consolidation
  • 4:08 PM First Marblehead (FMD): FQ4 EPS of -$0.57 misses by $0.18. Revenue of -$34M (-116.9%) in-line. [PR]
  • 4:07 PM Pacific Sunwear (PSUN): Q2 EPS of $0.06 in-line. Revenue of $313M (+0.3%) vs. $310M. Shares -9.9%. [PR]
  • 4:06 PM Wet Seal (WTSLA): Q2 EPS of $0.12 beats by $0.02. Revenue of $149M (+4%) in-line. Shares +1.2%. [PR]
  • 4:05 PM Intuit (INTU): FQ4 EPS of -$0.08 in-line. Revenue of $478M (+10.5%) vs. $470M. Shares -2.4%. [PR]
  • 4:04 PM Aeropostale (ARO): Q2 EPS of $0.31 in-line. Revenue of $377M (+21.2%) in-line. Shares -3.5%. [PR]
  • 4:03 PM Zumiez (ZUMZ): Q2 EPS of $0.09 beats by $0.02. Revenue of $92.3M (+12.6%) in-line. [PR]
  • 4:02 PM Oil and metals were anything but flat. Crude +5.11% to $121.46. Gold +3.01% to $840.90. Silver +6.1% to $13.825. Platinum +6.47% to $1457.50.
  • 4:01 PM Up and down, but mainly flat for the day. Dow -0.04% to 11,413. S&P +0.15% to 1,276. Nasdaq -0.36% to 2,380.
  • 3:54 PM The casual dining sector may be in for an August even worse than its disappointing July, Morgan Keegan says. Strong Olympic viewership has made couch potatoes out of its clientele. (Stocks: DRI, RT, CBRL, EAT...)
  • 3:44 PM Contrary to popular belief, hammering Fannie Mae (FNM) and Freddie Mac (FRE) to a combined market cap that's less than Mattel's (MAT) may not force Paulson's hand - as long as there remain buyers of their debt.
  • 3:35 PM Apple's (AAPL) being sued over unfulfilled iPhone 3G promises. "In the hyper-competitive cell phone market, not even the lofty Apple can afford such bad publicity." Apple "needs to get a handle on these issues -- and fast."
  • 3:26 PM What would you rather: An infected finger that bleeds indeterminately with a hope it may heal; or to sacrifice the finger for the certainty of your health? This is the gory question facing banks.
  • 3:15 PM Earnings previews for companies reporting after today's close: ARO, BCSI, INTU, PSUN, ZUMZ
  • 3:10 PM Notable earnings after Thursday's close: ARO, BCSI, DRYS, FL, FMD, GPS, HIBB, INTU, PSUN, WTSLA, ZUMZ
  • 3:06 PM Coming soon to your produce section: irradiated lettuce. Public health play: Ecolab (ECL).
  • 3:00 PM Dow leaders: CVX +2.9%. XOM +2.4%. HD +2.3%. AA +1.9%. DD +0.7%. Laggards: AIG -4.1%. GM -2.9%. INTC -2.2%. JPM -1.5%. KO -1.6%.
  • 2:59 PM Sector ETF weakness: Financials– XLF -1.2%. Real Estate– IYR -1.2%. Regional Banks– RKH -1.2%. Biotech– IBB -1.1%. Financials– IYF -0.85%.
  • 2:59 PM Sector ETF strength: Gold Miners– GDX +5.6%. Heating Oil– UHN +5.6%. Base Metals– DBB +5.2%. Coal– KOL +4.8%. Commodities– DBC +4.5%
  • 2:57 PM With one hour to go, two up - one down. Dow +0.3%. S&P +0.35%. Nasdaq -0.28%.
  • 2:55 PM "If there's one surefire way to convince everyone Vista (MSFT) is cool... it's hiring a 1990s sitcom star and professional kvetcher! Who, um, very visibly owned a series of Macs (AAPL) on his show." (Gawker)
  • 2:48 PM In the good old days when money was cheap, risk managers 'were just pond life.' Have things changed for good - or will the dust settle and everyone go back to meditating on their bonuses?
  • 2:36 PM Richard Bove says Lehman (LEH -2%) may soon find itself the target of a hostile takeover bid. "Investors are unwilling to accept any positive view of the company; management is unwilling to sell out at a deeply distressed value. The stage is set..."
  • 2:24 PM iPhone (AAPL -0.7%) is coming to Russia as soon as October, sources say. Beneficiary: Mobile TeleSystems (MBT -0.7%).
  • 2:12 PM "We believe commodity costs peaked last month," Burger King (BKC) CEO John Chidsey says, though food prices are settling at a new, higher plateau. Shares are down 6.3% as investors fret lower margins driven by... high commodity costs.
  • 2:03 PM Averages are still lower, but have rallied from earlier weakness. Dow -0.27%. S&P -0.09%. Nasdaq -0.6%. Crude +4.66% to $120.95. Gold +2.83% to $839.40.
  • 1:57 PM Based on Citigroup analyst Prashant Bhatia's track record, today's downgrades of MS, GS and LEH should be viewed with substantial skepticism.
  • 1:45 PM "There will be a global recession." "There was a party going on and the regulator with the same mindset of those in the party didn't want to be a party pooper." - Nobel economists Myron Scholes and Joseph Stiglitz
  • 1:38 PM AT&T's (T) new revenue stream: Home-entertainment and computer installation and repair. Rival to Best Buy's (BBY) Geek Squad.
  • 1:24 PM Back-to-school Mac sales (AAPL) may seem overhyped from an investor's perspective. Less so when you realize each 25 bps increase in market share produces an extra $1B in revenue.
  • 1:05 PM Cadbury's (CBY) a no-brainer vs. Hershey (HSY), Jim Cramer says. Despite HSY's apparent underperformance, it trades at 20x next year's earnings, vs. 17x for CBY.
  • 12:46 PM A year into the credit crisis, Goldman Sachs says half of the world's economies face recession. UBS economists cut their global growth forecast to 2.9% from 3.1%, inching closer to the 2.5% global recession mark.
  • 12:32 PM Intel (INTC) is making progress on wireless recharge for electronic gadgets. The technology may one day be embedded in work surfaces, allowing users to simply place a device on a countertop in order to power it.
  • 11:47 AM Oil analyst Stephen Schork isn't impressed with crude's recent strength: "I think this is still a bear market. Demand is poor... I think we’re going below $100."
  • 11:33 AM The number of companies rated Caa, signaling high credit risk, jumped to 6.2% from 4.3% at the end of 2006 and 5.4% at the end of 2007, Moody's says. It expects the pattern to continue into 2009.
  • 11:20 AM Airlines are preparing to cut over 36,000 jobs in the coming months, the biggest wave of job losses since 2001. Companies with major layoffs planned include American Airlines (AMR), United (UAL), and Continental (CAL).
  • 11:07 AM Merrill (MER) is one of several potential bidders to acquire failed Japanese real-estate developer Urban Corp and its $4.4B of assets - and $2.3B in debt.
  • 10:52 AM People familiar with Icelandic investment group Baugur say it has recently renewed its interest in acquiring UK department store chain Debenhams and its U.S. peer Saks (SKS +4.5%).
  • 10:43 AM Oil punches through $120... and keeps going. +4.44% to $120.80.
  • 10:38 AM U.S. dollar weakness continues. -1.35% vs. Canadian dollar. -1.3% vs. yen. -0.83% vs. euro. -0.73% vs. pound.
  • 10:37 AM EIA Natural Gas saw a build of 88 billion cubic feet to 2,655 bcf vs. consensus of 84 billion. NatGas futures +0.9% but off previous highs.
  • 10:21 AM Sector ETF strength: Heating Oil– UHN +5.9%, Gold Miners– GDX +4.4%, Oil– USO +3.0%, Base Metals– DBB +3.0%, Commodities– DBC +2.9%.
  • 10:20 AM Sector ETF weakness: Financials– XLF -2.0%, Regional Banks– RKH -1.8%, Regional Banks– KRE -1.6%, Financials– IYF -1.5%, Broker/Dealers– IAI -1.5%.
  • 10:19 AM Dow leaders: CVX +1.4%, AA +0.9%.
  • 10:18 AM Dow laggards: AIG -3.3%, GM -2.9%, BAC -2.8%, JPM -1.9%, C -1.7%, KO -1.7%.
  • 10:16 AM The head of the International Air Transport Association says airlines could lose more than $6.1B in 2008 due to high oil prices and geopolitical turmoil. "We are bracing for more situations of airlines collapsing."
  • 10:12 AM August Philly Fed manufacturing survey increased to -12.7 from -16.3, vs. -12.6 consensus. Manufacturing remains weak; price pressures remain but moderated. The index has now been negative for nine consecutive months.
  • 10:08 AM July Leading Indicators index dropped 0.7% vs. -0.2% consensus. Building permits, stock prices, and weekly initial claims made very large negative contributions.
  • 10:06 AM Jim Rogers believes a drop in commodity prices is only temporary; prices will rebound. "I don't see that it's the end of the bull market. Until either a lot of supply comes on stream or the economy collapses, the bull market will continue."
  • 9:56 AM Medical insurers (AET, WLP, MHS) refuse to pay for Alpharma's (ALO) $5 pain patch - a runaway success with doctors. The equivalent pill costs just $0.38. ALO -3%.
  • 9:48 AM The cost of protecting bank debt from default hit a five-week high after reports that Lehman Brothers (LEH) tried - and failed - to sell Asian investors a 50% stake in its company. The rise signals a decline in investor confidence.
  • 9:39 AM Canadian inflation grew at the fastest rate in five years in July (+3.4% Y/Y) on rising fuel prices. Bank of Canada indicated interest rates would remain unchanged for the foreseeable future. (ETF: EWC)
  • 9:32 AM Fannie Mae (FNM) down 18% at the open. Freddie Mac (FRE) down 21%.
  • 9:30 AM Leading economic indicators for July likely worsened for the third consecutive month. Economists expect a 0.2% fall in the index. Official numbers at 10:00.
  • 9:25 AM Stock futures point to a weak open. Dow -0.71%. S&P -0.69%. Nasdaq -0.65%. Crude +3.25% to $119.30. Gold +2.47% to $836.20.
  • 9:23 AM Speaking on CNBC, NY AG Andrew Cuomo says if Merrill Lynch (MER -2.7%) doesn't settle its auction-rate securities issues with him today, they'll be in court tomorrow.
  • 9:22 AM GameStop (GME): Q2 EPS of $0.34 beats by $0.06. Revenue of $1.8B (+34.8%) vs. $1.7B. Shares -5.8%. [PR]
  • 9:20 AM Barnes & Noble (BKS): Q2 EPS of $0.15 beats by $0.06. Revenue of $1.22B (-1.6%) in-line. Shares -0.2%. [PR]
  • 9:17 AM As oil continues to soar (+3.5% to $119.50), airlines struggle premarket. LCC -11%. UAUA -9%. DAL -8%. AMR -8%. CAL -8%.
  • 9:12 AM Trading down premarket on weak earnings: JDSU -13%. CRM -11%. FRO -6%. GME -5%.
  • 9:11 AM Trading up premarket on strong earnings: PLCE +8%. LTD +5%. DKS +4%.
  • 9:09 AM Hit by the credit crunch and inflation, Q2 growth of developed economies was the slowest in almost seven years. Combined GDP growth for the 30 OECD countries was only 0.2% on the previous quarter and 1.9% on the previous year.
  • 9:02 AM New York AG Andrew Cuomo to appear on CNBC very soon; look for lots of hard-line auction-rate rhetoric.
  • 8:52 AM U.S. dollar has had a rough overnight. It's down 1.46% vs. the yen; 0.8% vs. the Canadian dollar; 0.56% vs. the euro; and 0.25% vs. the pound.
  • 8:50 AM Metals and oil move higher. Gold +2.6% to $837.40. Silver +4.6% to $13.64. Platinum +3.2% to $1413. Crude +2.5% to $118.45.
  • 8:43 AM Sick of losing the advertising war to Apple (AAPL), Microsoft (MSFT) enlists Jerry Seinfeld for a $300M ad campaign aimed at an image overhaul for Vista, and the company at large.
  • 8:34 AM Stock futures drift up after jobless claims number, but remain under pressure. Dow -0.49%. S&P -0.49%. Nasdaq -0.51%.
  • 8:31 AM Weekly Jobless Claims of 432,000 - less than 440,000 consensus, down 13K from last week's revised 445,000. Continuing claims: 3.36M. 4-week moving average goes to 445,750, an increase of 7,250.
  • 8:30 AM After a bumper harvest, Russia may run out of storage capacity for corn, wheat and barley, threatening the government's plan to expand agricultural output.
  • 8:28 AM Petrobras (PBR +1.6%) denies media reports it approached the Brazilian government for a capital increase of as much as $100B. [DJ]
  • 8:23 AM Advisory Research, the largest Longs Drug Stores (LDG) shareholder, wants regulators to intervene in the $2.9B CVS (CVS) bid for Longs. At issue is whether the bid represents a fair valuation - Longs' store properties alone are worth over $1B.
  • 8:14 AM RBC Capital Markets says investors should buy Australian dollar (FXA) calls, not New Zealand dollar (BNZ) calls. New Zealand's dollar is likely to drop 8.7% against Australia's as the country's economic slump worsens.
  • 8:07 AM Temasek Holdings, Singapore's sovereign wealth fund, may up its Merrill Lynch (MER) holdings to more than 10% of outstanding shares in yet another bet the firm will rebound.
  • 7:56 AM Boeing (BA) enters critical final contract talks with its machinists union today. It needs to straddle the line between saving on costs, and avoiding a strike that would further delay its backed-up production line.
  • 7:46 AM NBC Universal (GE) will acquire U.K. production agency Carnival Film and Television as part of a new international TV division with an eye towards expansion. Possible deals are also being considered in India, Russia, France, and Spain.
  • 7:36 AM Dick's Sporting Goods (DKS): Q2 EPS of $0.39 beats by $0.03. Revenue of $1.09B (+7.2%) in-line. [PR]
  • 7:34 AM Hormel Foods (HRL): FQ3 EPS of $0.38 misses by $0.01. Revenue of $1.68B (+10.4%) vs. $1.62B. [PR]
  • 7:24 AM The Children's Place (PLCE): Q2 EPS of -$0.03 beats by $0.40. Revenue of $338M (+16.4%) in-line. [PR]
  • 7:23 AM Burger King (BKC): FQ4 EPS of $0.37 beats by $0.03. Revenue of $646M (+9.5%) vs. $635M. [PR]
  • 7:22 AM Heinz (HNZ): FQ1 EPS of $0.72 beats by $0.06. Revenue of $2.58B (+14.9%) vs. $2.46B. [PR]
  • 7:17 AM U.S. futures drifted lower in overnight trading. Dow -0.34%. S&P -0.35%. Nasdaq -0.43%. Crude +1.33% to $117.10. Gold +1.73% to $830.40.
  • 7:17 AM Europe is lower at midday. London -0.43%. Paris -1%. Frankfurt -0.82%.
  • 7:17 AM Asia markets closed broadly lower Thursday. Nikkei -0.77% to 12,752. Hang Seng -2.58% to 20,392. Shanghai -3.63% to 2,432. BSE -2.96% to 14,244.
  • 7:08 AM Heating-oil prices have dropped but so has supply, making a cold winter a potentially expensive one.
  • 6:53 AM Citgroup says Lehman (LEH), Goldman (GS) and Morgan Stanley (MS) may be hit with further writedowns of $2.9B, $1.8B and $1.7B respectively on mortgage-backed assets. Analyst Prashant Bhatia also slashed EPS estimates on LEH and GS.
  • 6:35 AM Stage Stores (SSI): Q2 EPS of $0.25 beats by $0.02. Revenue of $373M (+3.8%) in-line. [PR]
  • 6:30 AM Lehman (LEH) held secret talks to sell a 50% stake to South Korean or Chinese investors at the beginning of August. They balked after concluding Lehman's price was too high.
  • 6:23 AM Europe's manufacturing and service sectors contracted for the third consecutive month as July's record high oil prices hit consumer and business demand. (ETF: IEV)
  • 6:05 AM A small bright spot in the U.K. among grim economic indicators: retail sales rose an unexpected 0.8% in July.
  • 5:59 AM Evercore Partners (EVR) will get a $120M cash infusion from Japan's Mizuho (MFG), the latest in a series of U.S. I-banks seeking capital from abroad. Evercore will use the funds to shore up its struggling private-equity arm.
  • 5:56 AM A 30% drop in nickel prices this year has hurt nickel-producers, leading Xstrata (XSRAF.PK) to close facilities that are no longer profitable and BHP Billiton (BHP) to cut production. (Nickel ETF: JJN)
  • 5:50 AM Tata Motors (TTM), the Indian automaker that bought Jaguar from Ford (F), announces a pared back share-sale plan to fund the acquisition. The stock has lost 33% since the original plan was announced. Shares jumped in Mumbai, but close down 1.1%.
  • 5:43 AM BoE cuts its growth outlook amid increasingly poor economic indicators. A U.S.-style stimulus package is unlikely due to already-high government borrowing, leaving BoE with few options. (ETF: EWU)
  • 5:19 AM Indonesia, the world's largest tin exporter, will limit production of tin, copper, gold, nickel and iron ore in an effort to extend mine life and control prices.
  • 5:13 AM China blocks access to Apple's (AAPL) online iTunes Store after discovering Olympic athletes were downloading a pro-Tibetan music album in protest of China's control over the province.
  • 5:03 AM HSBC thinks Mistubishi UFJ (MTU) will miss its profit target by 43% as growing corporate bankruptcies hurt lenders' earnings. Shares fall 0.9% in Tokyo.
  • 4:40 AM Frontline (FRO): Q2 EPS of $2.18 misses by $0.15. Revenue of $547.5M (+57.8%) vs. $402M. [PR]
  • 4:31 AM China will speed the restructuring of state-owned enterprises [SOE], previously in charge of their own reorganization. China wants to reduce its 150 SOEs to as few as 80 by 2010 - a goal it now feels it can meet only through direct intervention.
  • 4:22 AM The dollar hit a one-week low against the yen on fears of a U.S. manufacturing slump and credit-market losses. It also fell vs. the euro and other major currencies.
  • 4:04 AM Japan's exports rebounded in July (+8.1%) with China replacing the U.S. as Japan's biggest customer.
  • 3:01 AM Asian markets are broadly down: Nikkei -0.8%. Hang Seng -2.1%. Shanghai -2.6%. BSE -1.8%.
  • 12:10 AM Notable earnings after Thursday's close: ARO, BCSI, DRYS, FL, FMD, GPS, HIBB, INTU, PSUN, WTSLA
  • 12:05 AM Notable earnings before Thursday's open: BKC, BKS, DKS, FRO, GME, HNZ, PDCO, PLCE
  • 12:00 AM Thursday's economic calendar:
    8:30 Jobless Claims
    10:00 Leading Indicators
    10:00 Philadelphia Fed Survey
    10:35 EIA Natural Gas Report
    4:30 PM Money Supply
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