Late-Night Headlines
Bloomberg:
- Speculative-grade bonds, with yields an average of 801 basis points more than similar-maturity Treasuries, now offer a favorable risk-reward ratio, according to Martin Fridson, CEO of Fridson Investment Advisors. “It probably makes sense to at least be scaling into high yield at these levels,” he said. Fridson led Merrill’s(MER) high-yield strategy group until he left in 2003 and formed his own research firm. He was the top-ranked high-yield analyst in Institutional Investor magazine’s annual poll for nine years in a row.
- Pacific Investment Management Co., which runs the world’s largest bond fund, is increasing its holdings of Fannie Mae(FNM) and Freddie Mac(FRE) debt. The two biggest
- U.S. Treasury Secretary Henry Paulson said he expects to reach ``a very acceptable result'' by next week in negotiations with lawmakers on his plan to aid mortgage buyers Fannie Mae and Freddie Mac.
- The US dollar gained, headed for a weekly advance against the euro, on signs Wall Street investment banks can weather credit-market losses following the U.S. subprime mortgage collapse.
- Soybeans fell the most in more than a week after legislators in Argentina, the third-biggest exporter of the oilseed, rejected a tax on international sales that had curbed shipments. Corn dropped the most in six months.
- Merrill Lynch & Co.(MER), the third- biggest U.S. securities firm, reported a wider-than-forecast quarterly loss as the credit contraction saddled the company with $9.7 billion of writedowns.
- Microsoft Corp.(MSFT), the world's biggest software maker, posted fourth-quarter profit that trailed analyst estimates and gave a disappointing forecast after a sluggish U.S. economy crimped sales, sending the shares down 6.4 percent.
- Google Inc.(GOOG) fell 7.6% in late trading after reporting earnings that missed analysts' estimates on a surge in spending on new projects and costs to defend YouTube in a copyright lawsuit. Google reported revenues of $5.37 billion for the quarter ended June 30, 2008, an increase of 39% compared to the second quarter of 2007 and an increase of 3% compared to the first quarter of 2008.
- International Business Machines Corp.(IBM), the world's largest computer-services provider, reported a 22 percent increase in second-quarter profit and boosted its full-year forecast as sales climbed in emerging markets.
- China’s Economic Fortunes Swing Toward Recession. Global developments may prove dangerous for a nation that needs to create millions of jobs to keep people from protesting on Tiananmen Square. The breakdown of China's GDP data may be a harbinger of a difficult year ahead.
- Tomatoes sold in the U.S. are safe to eat again, according to the Food and Drug Administration, which lifted its warning about the risk of salmonella contamination.
Wall Street Journal:
- Earnings reports from four technology giants suggest the tech sector is weathering the economic slowdown better than other industries -- though not always as well as Wall Street has hoped.
- Former Vice President Al Gore urged Congress not to overturn a federal ban on offshore drilling and complained that lawmakers are "being stampeded by lobbyists for special interests" eager to lift the moratorium.
NY Times:
- Defrauded Fund Investors Sue Goldman Sachs(GS).
Reuters:
- Yahoo Inc (YHOO) is unlikely to get into a bidding war over AOL with Microsoft Corp (MSFT) because if Microsoft gets in the way, Yahoo could instead renew talks over News Corp's (NWSa) Web properties, a person with knowledge of the plans said on Thursday.
Financial Times:
- Josef Ackermann, Deutsche Bank's chief executive, yesterday said the credit crunch was at "the beginning of the end" because banks and regulators had taken action to deal with the crisis and many businesses were slowly returning to normal.
- Conservative fund management firms and custody banks are making billions of dollars from short-selling by lending stocks to facilitate such trades in exchange for lucrative fees. US prime brokerage firms, most of which are owned by big Wall St banks, will reap revenue of $11bn this year, according to a recent study by Tabb Group, a research business.
- Central and eastern Europe's recent rapid economic growth could be thwarted in "a number of countries" by rising inflation, the new president of the European Bank for Reconstruction and Development warned on Thursday. "We must realise that inflation has the potential to destroy part of the progress that has been made in many of these societies - inflation which is double-digit or which is even above 20 per cent," Thomas Mirow told the Financial Times in his first interview since taking up the job at the beginning of the month.
- Emerging economies must make the fight against inflation their "top priority", the International Monetary Fund said on Thursday as it sharply raised its forecast for price increases in the developing world this year and next. Many emerging markets had to raise interest rates, cut government deficits and let currencies appreciate more to contain the inflation risk, the IMF said.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (ONNN), target $14.
- Reiterated Buy on (NUE), target $90.
Morgan Stanley:
- Rated (CE) Outperform, target $66.
- Rated (ACE) Outperform, target $62.
- Rated (CB) Underperform, target $51.
Caris & Co.:
- Rated (SNDK) Above Average, target $20.50.
RBC Capital:
- Rated (PTNR) Outperform, target $30.
Night Trading
Asian Indices are -1.0% to +.25% on average.
S&P 500 futures -.80%.
NASDAQ 100 futures -.73%.
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Company/EPS Estimate
- (C)/-.61
- (HON)/.94
- (LAB)/.04
- (MAN)/1.50
- (MAT)/.02
- (OSTK)/-.28
- (SLB)/1.12
- (BMI)/.43
- (GAP)/-.41
Upcoming Splits
- None of note
Economic Releases
- None of note
Other Potential Market Movers
- The (DELL) annual meeting could also impact trading today.
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