Weekend Headlines
- Freddie Mac(FRE), the mortgage-finance company under federal control, needs as much as $35 billion more in federal aid, and Fannie Mae may soon ask the U.S. Treasury Department for rescue funds as well.
- Pfizer Inc.’s(PFE) potential purchase of Wyeth(WYE) for more than $60 billion may set off a rush to consolidate in an industry buffeted by a thinner pipeline of new products and increasing generic competition. Johnson & Johnson(JNJ), Merck & Co.(MRK), and Bristol-Myers Squibb Co.(BMY) are among the companies that are most likely to strike a major deal, analysts said. The chief executives at these companies have said they are looking for acquisitions, and the three drugmakers have a combined $29 billion in cash and short- term investments to make purchases.
- The United Auto Workers union will end the so-called jobs bank for Chrysler LLC on Jan. 26 as a condition of the $4 billion U.S. loan made to the carmaker. The union sent a letter to local presidents Jan. 22 ordering that workers be sent home from the program, which kept employees on the payroll even though they had no duties to carry out at the company. General Motors Corp. is also in discussions about a similar end to its 25-year-old program, said Tony Sapienza, a GM spokesman.
- A majority of Americans sympathized more with the Israelis than the Palestinians during the recent war in the Gaza Strip, according to a CNN opinion poll that points to a divergence from European views of the conflict. Sixty percent of Americans in the nationwide survey said they were sympathetic toward the Israelis, compared with 17 percent who supported the Palestinians, CNN reported today on its Web site. A recent European poll showed that 23 percent of French people said the Palestinian Hamas group was primarily responsible for the war while 18 percent mainly blamed Israel.
- Gold investors were the most bullish ever in a Bloomberg News weekly survey, predicting gains as investors seek a haven from economic turmoil. Twenty-eight of 31 traders, investors and analysts surveyed from Mumbai to Chicago on Jan. 22 and Jan. 23 advised buying the metal.
Wall Street Journal:
- Business groups are ramping up lobbying efforts to expand tax credits and incentives in President Barack Obama's $825 billion economic-stimulus bill slated for key Senate action this week. The home-building industry wants to broaden and extend a $7,500 tax credit currently available for new-home buyers. The road-construction industry is working to head off strengthened requirements to buy American-made products, which it sees as unnecessary red tape. Small businesses want to extend a set of one-year tax incentives for investing in new equipment. And a broad range of industries want to scrap a requirement that government contractors set aside 3% of the value of contracts to pay for possible cost overruns.
- Comparing himself to a cowboy who is about to be hanged without a fair trial, Illinois Gov. Rod Blagojevich condemned the state Senate Friday afternoon for preparing to remove him from office so it could raise taxes on the middle class and serve the special interests. "The heart and soul of this has been a struggle of me against the system," he said. Meanwhile, a key member of the governor's own posse, lead attorney Edward Genson, deserted him in the likely criminal case he faces over alleged corruption.
- French banks Crédit Agricole SA and Société Générale SA plan to announce on Monday an agreement to combine large parts of their asset-management operations, people familiar with the matter said.
- Container shippers are unleashing a wave of titanic vessels on the oceans during the biggest dip in global trade since World War II. The trend could keep sea freight rates depressed well into 2010. That's good news for their customers, the millions of businesses big and small that import parts and products from overseas. But it's likely to spell pain within the shipping industry itself and could precipitate consolidation as smaller players are pushed out.
Barron’s:
- Billionaire investor Warren Buffett’s equity portfolio may have declined 14% this year through Jan. 22 as the share price of three banks he owns slipped, citing an estimate. Buffett, who is chairman and CEO of insurer Berkshire Hathaway(BRK/A), holds stakes in American Express(AXP), Wells Fargo(WFC) and US Bancorp(USB). The estimate was based on the change in the value of the 16 largest equity stakes in his portfolio, which account for more than 85% of the total.
MarketWatch.com:
- A plunge in commodity prices late last year is causing havoc among first quarter corporate earnings this month, as many companies find themselves caught on the wrong side of their financial programs to hedge against volatile moves in oil, corn and grain prices.
- More money may be needed for the Treasury's Trouble Asset Relief Program, beyond the $700 billion already approved, in order to shore up ailing banks and help them provide credit again, House of Representatives Speaker Nancy Pelosi said Sunday.
CNBC.com: John Paulson is smart enough to know that at this particular moment in history, the less he’s heard from, the better. The simple reason: He is not suffering. In an era in which losers are universal and making a profit seems somehow shady, Paulson is the most conspicuous of Wall Street’s winners. Paulson & Co.’s funds (with an estimated $36 billion under management and growing by the day) were up a staggering $15 billion as the markets teetered in 2007; one fund gained 590 percent, another 353 percent. All this reportedly garnered him a personal payday of $3.7 billion, among the biggest in history. In 2008, his funds didn’t climb nearly as much but were still successful enough to put him at the very top of his profession. By scoring returns of this magnitude, Paulson has dwarfed the success of George Soros, whose currency trades in the 1990s made him so much money that he has spent much of the rest of his career atoning for them. Paulson makes no apologies.
IBD:
Hansen Natural ( HANS) recently got a big jolt from a pact that could build its muscle in the energy-drink field.
NY Times:
- Wal-Mart(WMT) Goes Green to Improve Its Bottom Line
- The Obama administration plans to move quickly to tighten the nation’s financial regulatory system. Officials say they will make wide-ranging changes, including stricter federal rules for hedge funds, credit rating agencies and mortgage brokers, and greater oversight of the complex financial instruments that contributed to the economic crisis.
- College-Educated Chinese Feel Job Pinch. Of 5.59 million college graduates in 2008, an estimated 27 percent were unable to find jobs by the end of the year, according to the Chinese Academy of Social Sciences.
- Brazil’s state-controlled oil company, Petrobras, announced a crisis-busting investment plan Friday to spend more than $174 billion over the next five years, much of it for prodigious deep-water oil and gas exploration. The investment covers the 2009-2013 period and represents a rise of 55 percent over the $112.4 billion the company had vowed to spend on development between 2008 and 2012.
- There was another side to Mr. Madoff, who is 70. Reclusive, at times standoffish and aloof, this Bernie rarely rubbed elbows in Manhattan’s cocktail circuit or at Palm Beach balls. This Bernie was quiet, controlled and closely attuned to his image, down to the most minute details.
Business Week: A Guide to Self-Employment. Advice for recently laid-off workers considering going into business for themselves.
- Here Comes Global Warming Legislation. Washington finally appears ready to take on climate change. But expect an epic battle over what form the laws will take.
NY Post:
- As stocks tank and Wall Street is re-made, even the best and brightest in the financial sector are getting their reputations shredded. Take, for example, Goldman Sachs, whose equity-research department is regarded as the gold standard on Wall Street but whose list of the best stocks to buy couldn't even keep pace with the sharp decline of the S&P 500 index, according to research done for The Post. Indeed, Goldman's "Conviction Buy" list of 44 stocks - as its best bets list is called - of July 23, 2008, exactly six months ago last Friday, fell 38.75 percent over the half-year while the S&P 500 was off 35.55 percent over the same period. Which means Goldman's team of $1 million-a-year equity analysts sold to company clients, for a pretty penny, advice that turned out worse than the performance garnered by a suburban family who invested in a low-cost Vanguard index mutual fund. The worst performer on the Conviction Buy List is The Mosaic Company (MOS), which in July was $135.38 with a target upside of 59 percent to $215. On Friday, Mosaic, the once-trendy fertilizer stock, closed at $35.39.
Institutional Investor:
- Depressing Economics. Governments around the world are resorting to extreme measures to stave off deflation and depression. Fiscal and monetary stimulus on a grand scale is prescribed by Keynesian and monetarist economists alike. But there’s a danger that such moves could hinder the cleansing process of the bust. Although the contraction may be mitigated, the result of depression economics tends to be weak economies overburdened with government debt. Roosevelt engaged in a "soak-the-rich" tax policy and instituted an "excess profits tax." The decade from 1930 to 1940 is the only one in U.S. history when corporate investment declined. Smiley concludes that the New Deal created a "depression within a depression."
Forbes.com:
- Oscar Snubs The Masses. Once again the Academy Awards will go to films few people have actually seen. An even bigger loser: ABC, set to broadcast the award ceremony on Feb. 22. Last year was one of the lowest-rated Oscar telecasts in history with 32 million viewers. Without The Dark Knight in contention, many film lovers will have little reason to watch.
The Sacramento
- A new analysis shows that California would get a whopping $21.5 billion under an economic stimulus plan that's expected to be approved by the House next week, making it the biggest winner among the 50 states. That's according to the National Conference of State Legislatures, which analyzed the new spending proposals offered by House leaders.
CNNMoney.com:
- The Senate is set to meet Monday evening to vote on Tim Geithner's nomination as the next Treasury Secretary. Senate Majority Leader Harry Reid of Nevada has said he expects to hold a vote at 6 p.m. ET. Geithner is expected to easily win confirmation from the Democratic-controlled Senate.
- Ford Motor Co(F) has enough liquidity to fund its restructuring plan and despite the deep downturn in auto sales still sees no need to ask for government loans, chief executive Alan Mulally said Saturday. "We don't want to borrow any more money. We have sufficient liquidity to fund our transformation plan, which means our business is in a relatively good shape," Mulally told reporters on the sidelines of the National Automobile Dealers Association convention.
AP:
- Iraq
Reuters:
- With interest rates already near zero, the Federal Reserve this week will seek to flesh out new unconventional ways to free-up lending, but action may need to await details on how President Barack Obama will tackle the financial crisis. The Fed, which will issue a policy statement around 2:15 p.m. EST on Wednesday at the end of a two-day meeting, is searching for ways to end a deepening year-long recession.
- From arduous trips to the end of the world to bids to reach its highest summit to elephant hunting safaris in Africa, the upper echelons of the outdoor adventure industry seem to rise above the global financial crisis and recession.
Financial Times:
- What do a plane crash, a missing Florida businessman and Bernard Madoff have in common? They are part of a wave of “Ponzi’’ schemes and other financial scams coming to light in recent weeks. The alleged $50bn “Ponzi” scheme by Mr Madoff, the New York broker, is by far the biggest and most high profile. But investigators across the US are chasing a raft of similar, albeit smaller, frauds.
- More large businesses are considering moving their tax base out of Britain according to a survey, deflating hopes that a planned reform of the multinational tax regime would put an end to corporate defections. The proportion considering moving their tax residence out of the UK jumped from 6 per cent in 2007 to 14 per cent in 2008, according to a poll of 50 big businesses by KPMG, the professional services group.
TimesOnline: Western powers believe that Iran is running short of the raw material required to manufacture nuclear weapons, triggering an international race to prevent it from importing more, The Times has learnt. Diplomatic sources believe that Iran’s stockpile of yellow cake uranium, produced from uranium ore, is close to running out and could be exhausted within months. Countries including Britain, the US, France and Germany have started intensive diplomatic efforts to dissuade major uranium producers from selling to Iran.
- Speculation is mounting that eBay, the internet auction website, is preparing to sell Skype, its internet telephone company. Industry insiders believe that eBay signaled its intent last week after John Donahue, its chief executive, described Skype as a “great stand-alone business”.
Guardian:
- Twenty-five people at the heart of the meltdown…
Spiegel:
- The IMF will revise down its 2009 forecast for global growth to between 1% and 1.5% from 2.2%, citing IMF Deputy Director Axel Bertuch-Samuels.
O Estado de S. Paulo:
- Exxon Mobil Corp.(XOM), Hess Corp.(HES) and Petroleo Brasileiro SA’s(PBR) BM-S-22 offshore block in Brazil’s so-called pre-salt area may hold as much as 10 billion barrels of oil. The block operated by Exxon Mobil in Brazil ’s Santos Basin Based on crude prices around $40 a barrel, the oil may be worth as much as $400 billion.
livemint.com:
- The combined assets of around 70 hedge funds aimed at India have decreased by at least two-thirds in 2008, according to about 15 client brokers and hedge fund managers in Mumbai Mint interviewed for this story.
Daijiworld.com:
- Indians flee Dubai as dreams crash. It's the great escape by Indians who've hit the dead-end in Dubai. Local police have found at least 3,000 automobiles -- sedans, SUVs, regulars -- abandoned outside Dubai International Airport in the last four months. Police say most of the vehicles had keys in the ignition, a clear sign they were left behind by owners in a hurry to take flight. The global economic crisis has brought Dubai's economic progress, mirrored by its soaring towers and luxurious resorts, to a stuttering halt.
Gulf News:
- Petrochemical prices in Saudi Arabia
Weekend Recommendations
Barron's:
- Made positive comments on (BHP), (TDS), (GASS), (BP), (XOM), (PBR), (BRK/A), (ORLY) and (HNZ).
Citigroup:
- Upgraded (LEN) to Buy, target $11.
Night Trading
Asian indices are +.25 to +.50% on avg.
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/Estimate
- (FCX)/-1.01
- (COV)/.70
- (DGX)/.80
- (MCD)/.83
- (ETN)/1.04
- (CAT)/1.30
- (TSN)/-.23
- (MCK)/.86
- (NFLX)/.34
- (TXN)/.11
- (AMGN)/1.06
- (VMW)/.25
- (STLD)/-.30
- (AXP)/.22
- (QLGC)/.29
- (SEE)/.33
- (SLG)/1.31
- (KMB)/1.03
- (HAL)/.73
Upcoming Splits
- None of note
Economic Releases
10:00 am EST
- Leading Indicators for December are estimated to fall .2% versus a .4% decline in November.
- Existing Home Sales for December are estimated to fall to 4.4M versus 4.49M in November.
Other Potential Market Movers
- The Dallas Fed Manufacturing Activity report, (CBSH) analyst presentation, (STD) shareholders’ meeting, (ALOG) stockholders meeting, (ENR) shareholders meeting could also impact trading today.
BOTTOM LINE: Asian indices are slightly higher, boosted by financial and technology shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the week.
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