Late-Night Headlines
Bloomberg:
- Hewlett-Packard’s(HPQ) third-quarter profit rose 29% after the world’s largest personal-computer market took share from Dell Inc.(DELL). The company also forecast earnings that topped estimates, driving up the shares.
- Whole Foods Market’s(WFMI) $565 million purchase of Wild Oats(OATS) doesn’t violate federal antitrust law and can proceed, a federal judge ruled, allowing the two largest US natural foods grocers to combine.
- Bear Stearns(BSC) shares surged the most since October 1998 amid speculation the nation’s fifth-biggest securities firm may raise money from an outside investor.
- JC Penney(JCP), Kohl’s(KSS) and Nordstrom(JWN) posted second-quarter profit gains and forecast higher annual earnings on rising apparel sales.
- Countrywide Financial(CFC) credit default swaps fell 100 basis points, as bankruptcy speculation eased.
- MBIA Inc.(MBI) and Ambac Financial Group(ABK) shares rose today after a Morgan Stanley analyst estimated that the bond insurers’ losses on securities backed by subprime mortgages will be less than what many investors anticipated.
- The Fed should reduce interest rates “pretty soon” because mortgage market losses have created a “credit crunch,” Barton Biggs of Traxis Partners said. “Absolutely, I am positive on the market,” he said during an interview. “Senile, delusional, maybe both. But positive on the market.”
Wall Street Journal:
- Speculation intensified that the Federal Reserve is going to cut interest rates soon – or even has already in effect done so – without any clear signal from the Fed to encourage it.
CNNMoney.com:
- Paulson sees more bad news ahead. But the Treasury Secretary tells Fortune’s Nina Easton that the economy is strong enough to withstand the volatility.
Forbes.com:
- With Wall Street under pressure for most of the past five sessions, investors – most likely hedge funds – threw in the towel on Thursday and began to liquidate commodities holdings, apparently to raise cash.
- The Sunshine Economy. Solar power is the ultimate alchemy, using what’s free to create something valuable. Over the next 25 years solar is expected to be the fastest-growing alternative source of electric energy.
Financial Times:
- Kohlberg Kravis Roberts, PAI Partners and Carlyle Group are among more than 50 private-equity firms seeking to raise at least $52 billion of European leveraged buy-out funds, as they shrug off recent difficulties in the credit markets.
Reuters:
- A remarkable end-of-day rally pushed the benchmark S&P 500 higher on Thursday after investors snatched up financial stocks that looked cheap after weeks of pummeling by global credit market turmoil.
Late Buy/Sell Recommendations
Citigroup:
- Hewlett Packard(HPQ), a primary customer of PC-related semiconductor companies, reported strong 3Q07 (Aug) revenues and earnings and guided for above consensus 4Q07 (Oct) revenues and earnings. While share gain was an element to HP’s success, the company’s report underscores our view of a strong underlying PC market. Importantly, HP indicated that they have seen non deterioration in sales, indeed suggesting the quarter ended strongly. With OEM inventories under control, we reiterate our view that the industry inventory environment in solid. Despite recent reports of component tightness, HP suggested they were comfortable with current component availability. Nonetheless, the company did suggest that advantageous component pricing in 3Q07 would not be repeated in 4Q07. We note that y/y ASP trends for microprocessors continue to show improvement after bottoming in 3Q06. DRAM contract prices have increased 32% from their bottom. HP’s strong notebook performance(+71% y/y) bodes well for Intel(INTC), the dominant player in notebook MPU’s.
Night Trading
Asian Indices are -2.0% to -.75% on average.
S&P 500 futures -.20%.
NASDAQ 100 futures -.20%
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- Preliminary Univ. of Mich. Consumer Confidence for August is estimated to fall to 88.0 versus 90.4 in July.
Other Potential Market Movers
- None of note
BOTTOM LINE: Asian indices are lower, weighed down by automaker and commodity 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.
