Late-Night Headlines
Bloomberg:
Microsoft Corp.(MSFT), the world's largest software maker, reported profit and sales that beat analysts' projections as demand for Office and the Xbox video-game console held up amid the economic slowdown.
- Ford Motor Co.'s(F) reliability increased this year and is now close to Toyota Motor Corp. and Honda Motor Co., according to a survey by Consumer Reports. The Yonkers, New York-based magazine disclosed the results today at an Automotive Press Association meeting in Detroit. ``This has been a systematic, structural change within Ford,'' said David Champion, director of the magazine's auto test center. Almost all Ford vehicles have above-average reliability, he said.
- A fake Internet report that Apple Inc.(AAPL) Chief Executive Officer Steve Jobs had suffered a heart attack was posted by a teenager, and investigators haven't found evidence he tried to profit from driving down the stock, two people with knowledge of the matter said. The U.S. Securities and Exchange Commission is examining the 18-year-old's motives after the article on CNN's iReport.com sent Apple shares down as much as 5.4 percent Oct. 3.
- Since the era of Charles de Gaulle, France has rebelled against the American-style capitalism that put a ``Made in U.S.A.'' stamp on the world economy. Now, as convulsions on Wall Street shake the global financial system, French President Nicolas Sarkozy is seizing the opportunity to remake the free-enterprise model along more state-managed Gaullist lines. Emboldened by the U.S. pursuit of a European-style bailout, Sarkozy has packed his wish list for an upcoming international summit with calls for everything from stiffer bank supervision and limits on executive pay to state aid for hand-picked industries. While the moment is in his favor, history is working against him: throughout the postwar era, French attempts to subdue globalization and come up with an exportable economic model have misfired.
- Brazil's central bank will pump the equivalent of $50 billion into currency markets, its boldest move yet to stem a two-month, 28 percent tumble in the real that has saddled companies with losses and stoked inflation. The real soared after the announcement, climbing 5.2 percent and erasing an initial slump of as much as 5.8 percent. Today's plan responds to concerns that the real's tumble will bankrupt companies in Latin America's biggest economy after some of the biggest exporters reported more than 5 billion reais ($2.22 billion) in derivatives losses. Those worries stem in part from the collapse in Mexico of retailer Controladora Comercial Mexicana SAB this month following a rout in the peso.
- The euro headed for its biggest weekly decline against the yen since the common European currency's debut in 1999 on speculation the global credit crisis is spreading through the region. The euro was also set for a week of losses against the US dollar after Belarus, Ukraine, Hungary and Iceland joined Pakistan in requesting at least $20 billion of emergency loans from the International Monetary Fund. Standard & Poor's Ratings Services yesterday threatened to cut Russia's debt ratings.
- Crude oil rose for a second day on speculation OPEC will agree to cut production to stem a slump of more than 50 percent in prices from July's record. Venezuela and Iran are among members to have called for a cut at today's meeting in Vienna. OPEC President Chakib Khelil said there is a consensus to trim output without agreement on the size of the reduction. Oil is poised to drop for a fourth week, the longest losing streak since January last year. ``Prices have fallen a great deal, so a gain should be expected,'' said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut. ``I think we are in a bear market where every rally will be followed by a move to a new low.'' Oil has lost its appeal among investors as a hedge against inflation, along with other commodities, as the U.S. dollar advances. The euro has fallen 20 percent versus the dollar since July 15.
Wall Street Journal: Two Chinese railroad companies disclosed a total of more than $300 million in losses on currency investments, just days after a Hong Kong conglomerate said it could lose as much as $1.9 billion from its own currency agreements. The disclosures came amid selloffs in several other stocks, in what some analysts described as an overreaction, in many cases, that underscored broader market jitters about exposure to currencies and commodities.
- The nation's largest business lobby, the U.S. Chamber of Commerce, has raised ire among Democratic leaders for pouring millions of dollars into an advertising push to prevent the party from winning dominance in the Senate next year. The Chamber says it has raised enough money this year from corporations to spend about $35 million on the election, double its budget for House and Senate races in the 2006 election. The group is supporting pro-business candidates, almost exclusively Republicans in contested Senate races. Business executives fear that Democrats, bouyed by heavy spending from organized labor, could gain enough muscle in the Senate to spark policies favoring increased unionization, higher taxes, more restrictions on trade and more regulation on the financial-services and housing sectors. Democrats currently control 51 Senate seats and are expected to add more. Should U.S. voters give Democrats a 60-seat majority in the Senate and elect Sen. Barack Obama president, the party would be able to thwart Republican filibusters and other procedural motions to enact sweeping policy changes.
MarketWatch.com: U.S. fixed-rate mortgages declined in the latest week, according to Freddie Mac's survey released Thursday. The national average interest rate on the benchmark 30-year, fixed-rate loan averaged 6.04% in the week ending Thursday, down from last week's 6.46% and the year-ago 6.33%.
- Bottom my be in sight. Stocks are getting into the range of historic lows .
BusinessWeek:
- Treasury is expected to announce as soon as Friday a new round of banks to get cash injections, including the first regional banks.
IBD:
- NuVasive(NUVA): When In Pain, Back Surgery Doesn’t Wait For Economic Recovery.
USA Today.com:
- YouTube tosses 10-minute limit to show full TV episodes.
Reuters:
- Standard & Poor's on Thursday slashed its ratings on the New York Times Co (NYT) into junk territory and cited concerns about the newspaper publisher's revenue outlook, after it posted a third-quarter loss. Moody's Investors Service also said it may follow the move, adding the publisher faces risks in refinancing its debt.
Financial Times: Hedge funds have held meetings in London this week with the Bank of England and the Financial Services Authority in an attempt to speed up the return of their assets stuck in Lehman Brothers (LEH) , the collapsed bank. The Managed Funds Association, which represents some of the largest US hedge funds, is pressing for a fast resolution, warning that the current log jam poses a systemic risk as funds struggle to value their frozen holdings and reconcile their positions.
- Signs are emerging that the European Central Bank will soon cut eurozone interest rates again, as plummeting growth prospects and tumbling inflation clear the way for a sustained loosening of monetary policy.
International Herald Tribune:
- Chinese banks brace for housing aftershock. As in the United States, Britain and Spain, the real estate bubble in China has turned into a bust in many cities; only one of the two dozen towering cranes at projects near Liu's home was in operation one recent afternoon. Banking experts and economists expect the bust to produce, by next spring or summer, a sharp increase in loan defaults that could erode the high profits earned by Chinese banks over the past three years.
Late Buy/Sell Recommendations
Citigroup:
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Earnings of Note
Company/EPS Estimate
- (EXC)/1.13
- (FO)/1.07
- (IDXX)/.40
- (IR).99
- (ITT)/1.06
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Economic Releases
10:00 am EST
- Existing Home Sales for September are estimated to rise to 4.95M versus 4.91M in August.
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BOTTOM LINE: Asian indices are sharply lower, weighed down by technology and automaker stocks in the region. I expect US equities to open lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.
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