Late-Night Headlines
Bloomberg:
- The US dollar headed for its biggest weekly gain against the yen in two months as oil extended declines from a record, supporting economic growth in the world's largest consumer of the fuel. The euro was on course for its fourth weekly decline, its worst losing streak since May 2007, after European Central Bank President Jean-Claude Trichet said risks to economic growth are ``materializing,'' reducing expectations policy makers will raise interest rates. The Australian dollar fell for a ninth day, its longest losing streak since 1980, as traders added to bets the nation's central bank will cut borrowing costs. ``Oil prices have turned out to be much more supportive of the dollar than I expected,'' said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan's largest currency broker. ``It does temporarily relieve some concern that the U.S. economy will weaken further. This is a plus for sentiment.'' A drop in the European currency below $1.53 signals ``a longer-term dollar bull phase,'' pointing to a further decline to $1.46, Kevin Edgeley, a technical analyst at Goldman Sachs Group Inc. in London, wrote in a research note yesterday.
- Gold fell for a fifth straight session, the longest losing streak since June 2007, as a rebound in the dollar eroded the appeal of the precious metal as an alternative investment. Silver also declined. ``If gold continues to trade under the 200-day moving average, you're going to have people selling left and right into the rallies,'' Zeman of LaSalle Futures said.
- The Australian dollar fell for a ninth day, its longest losing streak since 1980, on speculation the Reserve Bank of Australia will reduce borrowing costs from a 12- year high as a drop in consumer spending cools inflation. ``There is growing talk of RBA rate cuts and commodity prices are plunging,'' said Akifumi Uchida, deputy general manager of the marketing unit at Sumitomo Trust & Banking Co. in Tokyo. ``A selling scenario seems to be under way for the Aussie,'' he said. Traders are betting the Reserve Bank will lower borrowing costs by 97 basis points over the next 12 months, compared with the 32 points of cuts estimated two weeks ago, according to a Credit Suisse Group index based on interest-rate swaps.
- Toyota Motor Corp.(TM), the world's second-largest carmaker, rose most in two weeks on the Tokyo Stock Exchange after the company reported better-than-expected earnings and reiterated its full-year forecast.
- Wheat production in Australia, forecast to be the world's third-largest exporter, may exceed a government prediction after rainfall in July and farmers sowed a record crop, ProFarmer Australia said.
- India, Asia's biggest supplier of soybean meal, may ship a record quantity next year after rain in the biggest growing regions encouraged increased planting, a producers' group said.
- Michael Metz, Oppenheimer Holdings Inc.'s chief investment strategist who cautioned that stocks were overvalued amid the exuberance of the late 1990s, died yesterday. He was 79.
- Sprint Nextel Corp.(S), the third-biggest U.S. wireless carrier, scrapped plans for a $3 billion offering of convertible preferred stock after failing to find the terms it sought.
Wall Street Journal:
- Rumors Drive Options Trading in King(KG), Marvell(MRVL).
- Pushing to put one of the biggest debacles of the credit crisis behind them, Citigroup Inc.(C) and Merrill Lynch & Co.(MER) agreed to buy back $17 billion in auction-rate securities.
- McCain, Obama release names of largest fundraisers.
NY Times:
- The UK Confronts Slowdown as Economy Nears Recession.
CNNMoney.com:
- Gas prices down 21 days in a row. The national average price for a gallon of gas slips to $3.849.
- Cars are getting more reliable, JD Power study shows.
Reuters:
- Borrowing one of nature's best designs, U.S. scientists have built an eye-shaped camera using standard sensor materials and say it could improve the performance of digital cameras and enhance imaging of the human body. The device might even lead to the development of prosthetic devices including a bionic eye, they said.
- A banking group has renewed its plea to the Securities and Exchange Commission to broaden a rule aimed at curbing abusive short selling and market manipulation. The American Bankers Association, a trade group which represents banks of all sizes, said on Thursday that distort-and-short campaigns push stock values below what market and bank conditions warrant. "At a time, when the economy is clearly under stress, the commission has a responsibility to assure that destructive practices such as abusive naked short selling are stopped," said the letter dated August 7. The SEC has said it will consider crafting a rule to crackdown on abusive short selling across the broader market.
- New York Community Bancorp (NYB) is actively looking for acquisitions, which could happen soon if it found the right partner to off-load assets to, said analysts at Morgan Stanley after meeting with the company's management.
- Billionaire Carl Icahn has been confirmed as a member of the board of Yahoo! Inc., as part of an agreement to drop his opposition to the Internet search company’s management.
Financial Times:
- Few people are more likely to need a holiday than Barack Obama. Yet as he heads off on Friday for his first week-long break since he launched his presidential bid 19 months ago, Mr Obama is dogged by rising angst about his campaign's direction. With polls showing him neck-and-neck with John McCain at a stage at which many Democrats expected he would be in the clear lead, they worry about the kind of stray image that helped to defeat John Kerry in 2004.
- Wal-Mart(WMT) , the world's largest retailer, says the new small Marketside grocery stores it is to launch this autumn could expand to a chain of more than 1,000 stores, delivering $10bn-plus in annual sales.
- One of Barack Obama's most important backers is in talks to become an adviser to the Renewable Fuels Association, the most powerful ethanol lobby in the US capital. Tom Daschle, the former Democratic Senate majority leader who has long been an influential champion of the ethanol industry, told the Financial Times about the move in an interview.
- Executives of large private equity firms believe they have found ways of overcoming US rules that make it difficult for their funds to buy large stakes in banks. This would position them to bolster the faltering sector without changes in regulations.
Nikkei English News:
- Tokyo Electric Power Co. plans to develop about 1,000 electric-car recharging sites in the greater
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (WW), target $64.
- Reiterated Buy on (ARE), target $122.
- Reiterated Buy on (NUAN), target $24.
- Lowered (WMG) to Sell, target $7.
CSFB:
- Rated (AAPL) Outperform, target $200. Key factors are enabling Mac momentum to defy macro conditions. We believe Mac performance is due to several unique drivers that were not present in prior downturns. We anticipate that Apple will continue to grow at a multiple of the overall market for many years to come. iPhone economics have changed for the better. We provide a comparative analysis of the old, revenue sharing iPhone business model and the new, subsidy-based model. After considering the economic costs of iPhone unlocking, we find that the new business model is likely to be far more profitable for Apple over the long-term. Apple’s content strategy adds customer switching costs to the iPhone model. As new users invest in software applications and iTunes content for the iPhone, we contend that Apple is once again building material switching costs into its model.
- Rated (LXK) Underperform, target $25.
- Reiterated Outperform on (HLEX), lowered estimates, target $36.
Night Trading
Asian Indices are -.75% to +.25% on average.
S&P 500 futures +.21%.
NASDAQ 100 futures +.29%.
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Company/EPS Estimate
- (FNM)/-.69
- (MBI)/-1.37
- (EIX)/.75
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- Preliminary 2Q Non-farm Productivity is estimated to rise 2.5% versus a 2.6% gain in 1Q.
- Preliminary 2Q Unit Labor Costs are estimated to rise 1.4% versus a 2.2% increase in 1Q.
10:00 am EST
- Wholesale Inventories for June are estimated to rise .6% versus a .8% gain in May.
Other Potential Market Movers
- The Bank of America Specialty Pharma Conference could also impact trading today.
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