Market Currents

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

Friday, August 29 2008
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  • 11:13 AM Fannie Mae (FNM) employees had $116M in the employee stock ownership plan at the end of 2006. Now, it's just $17.5M. Yet another case against making ESOPs the designated hitter in a retirement plan.
  • 10:54 AM Out of almost 2,100 diversified retail U.S. mutual funds open to new investors - only 17 are positive for both the past 12 months and YTD. Eaton Vance's (EV) Nancy Tooke runs three of them.
  • 10:37 AM Before Hurricane Katrina "there was demand, demand and more demand - and refineries were doing everything they could to keep running," says Charlie Drevna of the National Petrochemical & Refiners Association. "Today is a different story. We have more capacity... and slightly less demand."
  • 10:15 AM Michael Dell (DELL) on yesterday's stunning profit drop: "Restarting growth... it’s an imprecise process, and we certainly see some parts of our business where we were probably a bit too aggressive - and we are kind of modulating for that now."
  • 9:57 AM Perceived chances of an interest rate hike by year-end fall following today's weak personal income data.
  • 9:44 AM Was Russian oil giant Lukoil (LUKOY.PK) told by authorities to prepare for a retaliatory supply cut as soon as Monday?
  • 9:31 AM Nokia's (NOK) down 3.2%. The rebalancing of a key MSCI index will reduce its NOK holdings.
  • 9:22 AM Crude +2.43% to $118.40. Gold +0.6% to $842.10.
  • 9:22 AM Futures indicate a soft open. Dow -0.36%. S&P -0.29%. Nasdaq -0.35%.
  • 9:21 AM Moody's says it may cut ratings on SLM Corp. (SLM) because the student-lender wants to reduce its credit lines. Too little debt can also be a bad thing. Shares -4.1%.
  • 9:21 AM International Rectifier (IRF) rejects Vishay's (VSH) $21.22/share overture. "In our judgment, IR shareholders will be better served by allowing management to move forward with its strategic plan."
  • 9:15 AM Deutsche Bank downgrades paper-makers International Paper (IP) and Domtar (UFS) to Hold from Buy. Pulp prices, usually a forward indicator for paper, are down on weak demand. Peers: WY, WPP, ABH.
  • 9:05 AM New York City business activity declined at a slower rate in August. Future optimism returned, for now.
  • 9:03 AM Notable Calls. Color on Dell's quarter: "I think DELL will be higher... I will be an oportunistic buyer here, leaving a lot of dry powder to take advantage of [possible] lower levels."
  • 8:50 AM A group of hedge funds and the Huntsman family put up $500M to cinch Apollo's $6.5B buyout of Huntsman (HUN).
  • 8:39 AM Real consumer spending fell 0.4% in July - the biggest drop since June 2004. Personal income fell 0.7% - the biggest drop since Aug. 2005. Real disposable income fell 1.7%. Inflation (core PCE) rose 0.3%. Consensus was -0.4% personal income and +0.3% core PCE.
  • 8:36 AM JPMorgan likes specialty chemicals firm Cabot (CBT). "Raw material costs... reached a relative peak, and Cabot's price increases are contractually delayed by a quarter," it says, upgrading to Overweight. Short squeeze alert.
  • 8:22 AM Popular (BPOP) is selling its U.S. mortgage unit - including $1.17B in loans and mortgage-servicing assets - to Goldman Sachs (GS). With the deal, BPOP boosts its liquidity by $700M, reduces its subprime portfolio - and takes a $450M loss.
  • 8:07 AM Novartis (NVS) ceases development of antibiotic Aurograb after a Phase II trial failed, and takes a $235M writedown. Shares gain 0.9% in Zurich.
  • 7:55 AM Odds increase that Delphi, the #1 U.S. car-parts maker, will not emerge from bankruptcy protection. GM (GM) could be saddled with billions more in debt.
  • 7:40 AM Starbucks (SBUX) perks its percs with coupons and free food - but no price cuts. But do cash-strapped sippers want 'fun' - or cheap?
  • 7:23 AM Commercial banks borrowed $18.47B daily from the Fed over the past week, up from $17.51B last week. Broker/dealers didn't borrow any money from the Fed's emergency program, extending their non-participation streak to four weeks.
  • 7:06 AM FDIC Chairman Sheila Bair says a potential plunge in Fannie Mae's (FNM) or Freddie Mac's (FRE) preferred shares would have limited impact on the banking sector. Smaller institutions could be more vulnerable.
  • 6:55 AM U.S. futures: Dow -0.15%. S&P -0.19%. Nasdaq -0.16%. Crude +1.34% to $117.14. Gold +0.57% to $842.
  • 6:43 AM Europe is up at midday. London +0.48%. Paris +0.48%. Frankfurt +0.19%.
  • 6:32 AM Asia closes higher. Nikkei +2.39% to 13,073. Hang Seng +1.38% to 21,262. Shanghai +2.01% to 2,397. BSE Sensex +3.67% to 14,565.
  • 6:08 AM Japan's core inflation climbs 2.4% Y/Y in July - an 11-year high - up from 1.9% in June. "If inflation continues to accelerate at this pace, we are heading toward 3% or perhaps even in excess of 3%, which is an absolutely unheard of level of inflation in Japan."
  • 5:50 AM Yahoo (YHOO) forfeits the lead in U.S. display advertising to News Corp's (NWS) MySpace and Fox Interactive. NWS sites generated 56.8B ad views in June vs. YHOO's 53.1B, comScore says.
  • 5:30 AM Microsoft (MSFT) is spending $486M to boost its European internet search and e-commerce business, buying Greenfield Online, owner of European price comparison website ciao.com.
  • 5:27 AM Euro-zone consumer inflation eased to 3.8% from 4% in July, 0.1% below consensus. Meanwhile, European consumer confidence fell more than expected - not surprising for an economy on the brink of recession.
  • 5:21 AM Japan unveils an ¥11.7T ($107.4B) stimulus package to prop up an economy weakened by slowing growth and high energy prices. Officials say the measures will reduce the impact of high oil prices, promote energy conservation, and strengthen agriculture.
  • 5:11 AM Lukoil (LUKOY.PK): Q2 net income surges 64% to $4.13B, short of $4.72B consensus. Revenue was up 59% to $20.13B despite a 3.1% drop in production. Lukoil is 20% by ConocoPhillips (COP). Shares are down 2.8% in Moscow. [WSJ]
  • 4:57 AM Shares of Aussie scrap-metal recycler Sims (SMS) climb 12.55% in extended trading after Q4 earnings exceed consensus on strong scrap prices.
  • 4:47 AM Nintendo (NTDOY.PK) soars 8.4% in Japan. It boosted its full-year earnings outlook by 26% to ¥410B ($3.8B) on a projected 42% jump in Wii sales.
  • 4:11 AM India's Q2 GDP growth was 7.9% - its slowest pace since 2004. Economists expected 8%. Even BRIC nations are not immune to inflation and a global slowdown, although analysts don't foresee a dramatic deceleration in India (ETF: INP).
  • 3:16 AM Asian markets are strongly higher: Nikkei +2.4%. Hang Seng +1.8%. Shanghai +1.8%. BSE +3.4%.
  • 2:36 AM Potential hurricanes Gustav and Hanna may run parallel in, respectively, the Gulf of Mexico and the Atlantic. Paul Kedrosky asks, "What's next for Florida? A plague of locusts?"
  • 12:00 AM Fridays's economic calendar:
    8:30 Personal Income and Outlays
    9:00 NAPM - NY Report
    9:45 NAPM Chicago Business Barometer
    10:00 University of Michigan Consumer Sentiment
    10:00 ISM-Milwaukee Business Survey
    10:30 ECRI Weekly Leading Index
    3:00 PM Farm Prices
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