Thursday, November 20, 2008

Friday Watch

Late-Night Headlines

- Fannie Mae and Freddie Mac, the mortgage-finance companies seized by the U.S. government, will suspend foreclosures and evictions over the holidays. The six-week halt will begin Nov. 26, a day before the U.S. Thanksgiving holiday, and last through Jan. 9, the companies said in separate statements today. The hiatus is designed to give servicers more time to implement a streamlined loan modification program for struggling borrowers. “It’s a giant time out,” Paul Miller, an analyst at FBR Capital Markets in Arlington, Virginia, said today in a Bloomberg Television interview. “I wouldn’t be surprised to see this across the board.”

- Emerging market corporate profits will probably decline in 2009 as the global economy slips into recession and lower commodities prices hurt earnings in the region, UBS AG said, citing a survey of UBS analysts' forecasts. UBS analysts now expect earnings of emerging-market companies to drop 6 percent in 2009, compared with a previous estimate of 13 percent growth.

- The Markit iTraxx Japan index traded 54 basis points higher at 380, according to prices from Credit Suisse Group AG. The Markit iTraxx Australia index was quoted 40 basis points higher at 395 in Sydney, Citigroup Inc. data show.

- Komatsu Ltd., the world's second- largest maker of earthmoving equipment, dropped in Tokyo trading after Nomura Securities Co. said demand is ``slightly weaker'' than the company's estimate on a slowdown in emerging nations. Middle East customers ``it appears'' have been cancelling some orders due to financial difficulties, analyst Katsushi Saitou at Nomura said in a report dated yesterday. Falling prices for crude oil and iron ore and other resources might have further slowed demand, he said.

- Powerchip Semiconductor Corp., Taiwan’s largest maker of computer-memory chips, forecast industry supply of DRAM chips will fall as much as 30% in the next two months amid production cuts.

- Dell Inc.(DELL) posted profit that beat analysts' estimates, overcoming a decline in revenue as the computer maker cut jobs and switched to cheaper production methods.

- Gap Inc.(GPS), the largest U.S. clothing retailer, said third-quarter profit climbed 3.4 percent as the retailer reduced markdowns of sweaters, jeans and khaki pants.

- Argentina’s stock market is fading as the state seizure of the nation’s biggest shareholders undermines investor confidence and threatens an equity sell-off. The Argentine Senate last night approved President Cristina Fernandez de Kirchner’s plan to nationalize about $24 billion in private pensions, a move opposition parties called a cash grab and the government said is a way to protect retirees from the worst financial crisis since the Great Depression.

- The Federal Reserve has limited room to cut its target interest rate and may shift the focus of monetary policy more to increasing liquidity, said James Bullard, president of the Federal Reserve Bank of St. Louis. ``At least over the near term, any additional influence through interest rate reductions will be limited, and the focus of monetary policy may turn to quantity measures,'' Bullard said today in a speech in Evansville, Indiana.

Wall Street Journal:

- As the economic signs grow ever more grim, the opportunities for the Obama administration to drive through its agenda actually are getting better. The thing about a crisis -- and crisis doesn't seem too strong a word for the economic mess right now -- is that it creates a sense of urgency. Actions that once appeared optional suddenly seem essential. Moves that might have been made at a leisurely pace are desired instantly. This opportunity isn't lost on the new president and his team. "You never want a serious crisis to go to waste," Rahm Emanuel, Mr. Obama's new chief of staff, told a Wall Street Journal conference of top corporate chief executives this week. He elaborated: "Things that we had postponed for too long, that were long-term, are now immediate and must be dealt with. This crisis provides the opportunity for us to do things that you could not do before."

- The Big Three are on their own for now. Congressional efforts to rescue Detroit's auto makers collapsed Thursday, with lawmakers saying the industry lacked credible plans to return to profitability.
- Treasury Secretary Henry Paulson on Thursday said he wants to see more hedge fund regulation as part of his proposal for creation of a new systemic risk regulator.

"To ensure the market stability regulator can fulfill its role, large, systemically-important institutions, including hedge funds, should be required to have a charter that would permit some type of oversight," Paulson said.
- Senior officials at Citigroup(C) concede that they have to make a strategic change in the firm's direction, including finding a possible merger partner or raising cash in the coming days to arrest a sharp slide in the firm's stock price, senior officials told CNBC.

NY Times:
- Duff Capital Advisors has recently laid off dozens of its employees and is holding off on its plans to raise as much as $1.5 billion just eight months after the hedge fund firm began business, according to people briefed on the actions. The Greenwich, Conn.-based firm was started in March by Philip N. Duff, a former chief financial officer of Morgan Stanley, with $500 million of capital from the New York private equity firm Lindsay Goldberg. At the time, Duff Capital said then that it was in discussions with several financial institutions to provide seed money for its investment strategies, beginning in the past spring.

- Citigroup(C) urged the Securities and Exchange Commission to reinstate the agency’s expired ban on short selling of financial stocks, The Wall Street Journal and Bloomberg News report, citing people familiar with the matter. Citigroup also is urging lawmakers to reinstate the so-called uptick rule, The Journal reports. Earlier Thursday, a prominent corporate law firm, Wachtell, Lipton, Rosen & Katz, repeated its call for the reinstatement of the uptick rule.

- Google(GOOG) is set on Thursday to significantly change the way some people use its search engine. The company is introducing a new feature called SearchWiki that will allow people to modify and save their results for specific Google searches.


- Facebook’s Land Grab in the Face of a Downturn. The social-networking site is moving aggressively to sign up more users around the world while much of Silicon Valley hunkers down.

Financial Week:

- Hobbled hedge funds fleeing trophy buildings.


- DeVry(DV): For-Profit Education Company Works To Upgrade Its Offerings.


- Citigroup Inc (C) lost more than one-quarter of its market value on growing worries over whether it has enough capital to withstand billions of dollars of potential losses and despite new support from its largest individual investor. Saudi Prince Alwaleed bin Talal said he plans to increase his stake in Citigroup, the No. 2 U.S. bank by assets, to 5 percent from less than 4 percent, calling its shares "dramatically undervalued."

Financial Times:
- Support is building for an anti-foreclosure plan proposed by Sheila Bair, the head of the Federal Deposit Insurance Corporation, in spite of resistance from the Bush administration that appointed Ms Bair to office. Ms Bair told Reuters on Thursday she expects her agency to be able to "very quickly" obtain money from the $700bn troubled asset relief program (Tarp), although she was still in talks with Hank Paulson, Treasury secretary.

Folha de S. Paulo:

- Cia. Vale do Rio Doce(RIO), the world’s biggest iron-ore producer, laid off 400 workers because of a drop in purchases from Chinese customers. Vale cut the jobs at its copper unit in the state of Para, at its railway unit in Minas Gerais and at it pellet processor in Espirito Santo.

Hindustan Times:

- In a precursor to possible large-scale retrenchment in the construction sector, ACC Concrete Ltd, a subsidiary ACC Ltd, has laid off 190 of its permanent employees, 25 per cent of its total work force, across various locations in India. ACC Ltd, India’s largest cement maker, is a subsidiary of Switzerland’s Holcim, the world’s second-largest cement producer.

Late Buy/Sell Recommendations
- Upgrading (MYGN) to Buy, target raised to $72.

- Upgrading (BMRN) to Buy, target $22.

- Reiterated Buy on (AMGN), target $66, added to Top Picks Live list.

- Upgraded (LTD) to Buy, target $9.50.

- Reiterated Buy on (LRCX), target $35.

- Upgraded (GPS) to Buy, target $12.

Night Trading
Asian Indices are -2.5% to +3.0% on average.
S&P 500 futures +2.11%.
NASDAQ 100 futures +1.88%.

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(bottom right)
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
Rasmussen Business/Economy Polling

Earnings of Note
Company/EPS Estimate
- (ANN)/.01

- (CSIQ)/.54

- (HNZ)/.76

- (SJM)/1.01

Economic Releases
- None of note

Upcoming Splits
- None of note

Other Potential Market Movers
- The Fed’s Evans speaking, Fed’s Plosser speaking, Fed’s Lacker speaking, (DUK) Analyst Meeting, (MHS) Analyst Day, (NSTC) Analyst Day, (ALGN) Analyst Meeting and Bank of America Credit Conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by technology and financial stocks in the region. I expect US equities to open modestly higher and to maintain gains into the afternoon. The Portfolio is 50% net long heading into the day.

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