Late-Night Headlines
Bloomberg:
Intel Corp.(INTC) posted higher-than- anticipated third-quarter profit and said sales may rise in this period on demand for laptops, easing concern that the credit meltdown will curb orders and sending the shares higher. ``The results were excellent,'' said Michael Shinnick, a portfolio manager at 1st Source Bank in South Bend, Indiana, which owns Intel shares. ``It should reassure people that PC demand did not fall off a cliff during the third quarter.'' Intel rose 71 cents, or 4.5 percent, to $16.64 in late trading after closing at $15.93 on the Nasdaq Stock Market.
- Lehman’s Hedge Fund Clients Face Margin Calls on Frozen Assets. Lehman Brothers Holdings Inc.’s(LEH) hedge-fund clients may have to pay more collateral on $65 billion of assets frozen when the investment bank went bankrupt a month ago. Lehman's London-based prime brokerage has about 3,500 active clients including hedge funds that own about $45 billion in securities, Steven Pearson, the partner at PricewaterhouseCoopers responsible for unraveling the unit, said in an interview. They hold an additional $20 billion in short positions, or bets that prices will fall. While investors are largely unable to access their Lehman accounts, the value of the securities continues to fluctuate along with the markets. The clients may be required to put up more collateral if the value of those securities drops, a process known as a margin call. ``Every second that they waste hurts,'' said Edward Chin, who runs Pride Revelation Fund, one of dozens of hedge funds in Hong Kong that used Lehman as their sole prime broker. ``We're looking at many hedge funds that will have to shut down, but they can't even shut down because they don't know what they have left. The thing is I cannot now even liquidate the fund.''
- Genentech Inc.(DNA), the U.S. cancer-drug maker being pursued by its majority owner Roche Holding AG, said third-quarter profit rose 6.7 percent as sales of its tumor- fighting medicines beat analysts' estimates. Shares of Genentech rose $2.63, or 3.3 percent, to $81.75, at 6:02 p.m. in extended trading on the New York Stock Exchange.
- Posco(PKX), Asia's third-biggest steelmaker, fell in Seoul trading after warning that demand will decline this quarter and three brokerages including JPMorgan Chase & Co. said profits and prices may deteriorate.
Wall Street Journal: Sen. John McCain expanded his response to the financial crisis by proposing new tax cuts for investors, including a sharp, temporary reduction of the capital-gains tax and breaks aimed at older Americans who may need to cash in assets while the market is down.
- Barack Obama and John McCain each said Tuesday that he would put his own stamp on the massive financial-rescue plan, going beyond buying up bank stocks and distressed assets to exert influence on how the firms are structured and managed.
- Thousands of suspicious voter registrations turned in by a group called Acorn have become a rallying cry for Republicans, who claim left-leaning activists may be trying to rig votes in the 2008 elections. Faulty registrations in recent months include those in the names of Mickey Mouse in Florida, Batman in New Mexico and Dallas Cowboys football players in Nevada. State and federal authorities have opened investigations in about a dozen states; as many as 16,000 registrations in Pennsylvania are under suspicion.
- When the real-estate market was booming, General Electric Co.'s(GE) commercial-property business earned the nickname "the honey pot" among insiders because the company could increase earnings simply by selling a building or two. But now, the opposite is true: GE's difficulty selling its office buildings, shopping centers and other commercial property is dragging down its financial results.
MarketWatch.com: Cisco Systems Inc.(CSCO) Chief Executive John Chambers told a huge crowd Tuesday at the Gartner ITxpo that there won't be any cutbacks at his company, despite industry concerns of lower tech spending.
CNNMoney.com: Overnight lending rate falls. Bank-to-bank rates decline, indicating that the global efforts to ease pressure in the credit markets may be working.
Business Week:
- Bloomberg Hires TV Vet Andy Lack. Expect Them To Go Bigger Online And On TV.
hedgeweek:
- Up to 1,000 hedge funds could close in aftermath of market turmoil, says Tabb report. In the future, investment banking will be more tightly regulated and dominated by risk-averse commercial banks, while new firms that are structured as partnerships but are much smaller will take on many of the industry's more risky (but well remunerated) activities, according to industry analyst Larry Tabb.
Reuters:
- The average U.S. retail gasoline price fell 33.3 cents over the last week to $3.15 a gallon, the biggest price decline ever recorded by the government, the Energy Department said on Tuesday. Gasoline demand is off 5.3 percent from a year ago, and crude oil costs have fallen to $79 a barrel from a peak of more than $147 in July. "Right now, I don't know any of us that have seen reductions in price or reductions in demand at the almost warp speed that we're seeing at the present time," Red Cavaney, president of the American Petroleum Institute, said. Cavaney would not speculate how low pump prices could go, but he said the drop in petroleum demand will "put incredible downward pressure" on fuel costs.
- An unprecedented cash crunch is choking the ability of banks to lend and creating an opportunity for hedge funds to launch, or ramp up corporate lending facilities. Companies that have relied on bank borrowing to grow, or even maintain their business, are turning to hedge funds in a move that some say may signal a broad shift of lending from banks to asset managers.
- General Motors Corp's (GM) Brazilian market will grow by much less in 2009 and exports at its Brazilian unit will be hit by the financial crisis, the automaker's chief executive in Brazil said on Tuesday. Jaime Ardila said GM's Brazilian market would grow up to 5 percent in 2009 compared with an expected growth of more than 20 percent in 2008, when it was forecast to sell around 600,000 units.
Financial Times: The rescue plan unveiled by the US authorities to protect the nation's banks represents "a major step towards stabilizing the system", Hank Paulson told the Financial Times. In an interview, the US Treasury secretary said "for the first time you have seen an action that is systematic, that is getting at the root causes" of the financial crisis.
The Standard:
- Consumer confidence has plummeted in Hong Kong to the 2003 SARS levels, according to a Chinese Univ. of Hong Kong survey.
South China Morning Post:
- Hong Kong ’s office sales fell to a five-year low as investors cancelled purchases or reopened negotiations on concern that occupancy rates will decline as the economy weakens. Third-quarter sales slumped 41% to 476 deals, the least since the final quarter of 2003, citing Centaline Property Agency Ltd.
Late Buy/Sell Recommendations
Citigroup:
Night Trading
Morning Preview
US AM Market Call NASDAQ 100 Pre-Market Indicator/Heat Map Pre-market Commentary Pre-market Stock Quote/Chart Before the Bell CNBC Video Global Commentary WSJ Intl Markets Performance Commodity Movers Top 25 Stories Top 20 Business Stories Today in IBD In Play Bond Ticker Economic Preview/Calendar Daily Stock Events Upgrades/Downgrades Rasmussen Business/Economy Polling
Earnings of Note
Company/EPS Estimate
- (ABT)/.78
- (STT)/1.20
- (DAL)/.02
- (SCHW)/.24
- (JPM)/-.18
- (STJ)/.57
- (WFC)/.40
- (EBAY)/.41
- (NVLS)/.04
- (XLNX)/.37
- (STLD)/1.10
- (PJC)/-.40
- (AMR)/-1.41
Economic Releases
8:30 am EST
- The Producer Price Index for September is estimated to fall .4% versus a .9% decline in August.
- The PPI Ex Food & Energy for September is estimated to rise .2% versus a .2% gain in August.
- Advance Retail Sales for September are estimated to fall .7% versus a .3% decline in August.
- Retail Sales Less Autos for September are estimated to fall .2% versus a .7% decline in August.
- Empire Manufacturing for October is estimated to fall to -10.0 versus -7.4 in September.
10:00 am EST
- Business Inventories for August are estimated to rise .5% versus a 1.1% gain in July.
2:00 pm EST
- Fed’s Beige Book
Upcoming Splits
Other Potential Market Movers
BOTTOM LINE: Asian indices are mostly lower, weighed down by automaker and commodity stocks in the region. I expect US
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