Style Outperformer:
Large-cap Growth (+.03%)
Sector Outperformers:
Road&Rail (+4.21%), Airlines (+3.65%) and HMOs (+.81%)
Stocks Rising on Unusual Volume:
SIG, CSX, ALB, DOW, SUN, FTO, USMO, PBR, WFC, NTRS, STT, USB, ACTL, JOYG, WYNN, PHW, AGN, IVC and LDR
Stocks With Unusual Call Option Activity:
1) AGN 2) HOLX 3) IMCL 4) WM 5) HOG
Late-Night Headlines
Bloomberg:
- The US dollar rose to the highest in almost a year against the euro as crude oil prices fell, supporting the outlook for economic growth in the world's largest consumer of the fuel. The euro fell to the lowest in 13 months against the yen before a government report tomorrow that economists say will show industrial production shrank in the 15 nations that use the currency. The New Zealand dollar dropped to its lowest level since October 2006 after the central bank Governor Alan Bollard cut the benchmark interest rate by more than economists expected.
- The Australian dollar will extend its 19% drop, judging by a plunge in the costs to ship coal and iron ore, the nation’s biggest export earners, TD Securities Ltd. said. The currency will slide 2.6% to 78 US cents by year-end because a slump in the Baltic Dry Index, a measure of shipping costs for commodities, signals demand for the raw materials Australia exports is waning, said Stephen Koukoulas, London-based head of global foreign exchange and fixed-income strategy for TD.
- New Zealand's central bank cut its benchmark interest rate by a half point to 7.5 percent, more than forecast by most economists, saying the economy is in a recession and inflation will slow.
- Japanese machinery orders fell for a second month in July, signaling manufacturers expect the global slowdown to crimp demand into next year.
- Aluminum producers will cut the fee they charge buyers in Japan, Asia’s biggest importer, by as much as 14%, the biggest drop in five years, as a slump in home and car sales slows demand.
- The cost of protecting Dubai government bonds from default doubled in the past three months on concern the emirate will be unable to maintain the borrowing that's driven its real-estate boom. Credit-default swaps protecting Dubai debt for five years traded at 220 basis points, CMA Datavision prices show, up from 110 at the beginning of June, according to data compiled by Merrill Lynch & Co. Contracts on Abu Dhabi bonds rose 57 percent in the same period to 74 basis points, CMA prices show. The Dubai Financial Market Real Estate Index tumbled 31 percent since June as traders bet the emirate won't remain immune from the fallout of the U.S. subprime-mortgage collapse. Banks worldwide are tightening lending and may be wary of Dubai, which doesn't have a credit rating or disclose data on public debt. ``Major concerns include Dubai's relatively weak macro balances and hydrocarbon assets compared to Abu Dhabi, as well as supply overhang in the real-estate market,'' said Turker Hamzaoglu, a London-based economist at Merrill Lynch. Among the real-estate projects underway in the emirate are the Disneyland-style ``Dubailand'' theme park that will be three times the size of Manhattan and a $54 billion Las Vegas-style hotel strip in the desert.
- Oil futures were little changed in New York after falling to a five-month low on a U.S. government report yesterday that showed supplies increased along the Gulf Coast as Hurricane Gustav cut refinery output. Refinery operating rates nationwide declined to 78.3 percent of capacity in the week ended Sept. 5, the lowest since 2005, when hurricanes Katrina and Rita struck the Gulf, the Energy Department said yesterday in a weekly report. Regional oil supplies rose to the highest since May. Crude has fallen about 30 percent from a record $147.27 a barrel on July 11 as high prices and slowing global economic growth reduced demand for fuels. Demand for fuels averaged over the past four weeks declined 3.8 percent, the Energy Department report showed.
- Wheat fell to a one-year low, dropping for a fourth straight session, on concern that demand for U.S. supplies is slackening as global production rises. Advance sales of U.S. wheat from June 1 to Aug. 28 were down 13 percent from the same period in 2007, U.S. Department of Agriculture data show. World production may rise 9.9 percent to a record 670.8 million metric tons in the year through May, the USDA has said. Wheat has dropped 18 percent this year after global growers planted more to take advantage of higher prices.
- Mexican billionaire Carlos Slim acquired a 6.4 percent stake in New York Times Co.(NYT), making him the third-largest investor in the newspaper publisher outside of the controlling Sulzberger family.
- Brazil's central bank raised its benchmark interest rate to the highest in almost two years in a bid to cool accelerating economic growth that's stoking inflation. Policy makers led by Henrique Meirelles voted 5-3, without a bias, to increase the so-called Selic rate to 13.75 percent from 13 percent, as forecast by 40 of 41 economists in a Bloomberg survey. That raised the country's real interest rate, which is the Selic minus inflation, to the highest of all 54 countries tracked by Bloomberg. Central bankers will raise the Selic rate further to 14.75 percent by the end of the year, according to the most recent central bank survey of 100 economists published Sept 5.
- Petroleo Brasileiro SA(PBR), Brazil's state-controlled oil company, said its previously discovered Iara oil field contains an estimated 3 billion to 4 billion barrels of recoverable light crude oil, enough to supply the country for about five years. The estimate is the first for the field, which was announced in August. Iara is in the Santos Basin to the north of Tupi, a 5 billion- to 8 billion-barrel field announced in November that is the largest oil find in the Americas since 1976. If confirmed, Iara and Tupi, which sit in non-adjacent parts of the same BM-S- 11 exploration block, could almost double Brazil's 12.6 billion barrels of proven oil reserves, according to London-based BP Plc.
- The Bank of Korea kept interest rates unchanged today as policy makers await evidence last month's increase will be enough to cool the fastest inflation in 10 years. Governor Lee Seong Tae and his colleagues left the seven- day repurchase rate at 5.25 percent in Seoul.
- Al-Qaeda is planning to release a video message within 24 hours to mark the seventh anniversary of the Sept. 11 attacks on the World Trade Center and Pentagon, a U.S.-based intelligence group said.
Wall Street Journal:
- Much of the world may be struggling with the economic downturn, but life has been getting better in Columbus, Ind., Kingsport, Tenn., and Waterloo, Iowa. These out-of-the-way places have become trade hot spots as U.S. exports, fueled by the dollar's fall, continue to provide a rare spark in an otherwise gloomy economy.
- Some of the country's biggest investment banks and brokerage firms -- including Morgan Stanley, Lehman Brothers Holdings Inc., Citigroup Inc., and Merrill Lynch & Co. -- marketed allegedly abusive transactions that helped foreign hedge-fund investors avoid billions of dollars in U.S. taxes over the past decade, Senate investigators assert.
NY Times:
- China has joined the United States, Britain, Spain and others on the list of nations suffering a real estate decline. Real estate brokers say prices are down from peaks reached earlier this year, while the number of transactions has plunged. This downturn comes as the growth rate of Chinese exports has slowed — sharply in yuan terms — and stock markets have plummeted. Brokers say that sales volumes first dropped precipitously here in southeastern China, and then the decline spread across the country. Faced with few buyers, sellers started cutting their prices for residential and commercial real estate. In some neighborhoods in the southeast, prices have dropped by 10 to 40 percent.
- Hours after suffering a rare setback in a negotiating session at OPEC’s headquarters, Saudi Arabian officials assured world markets on Wednesday that they would ignore the wishes of other cartel members and continue to pump plenty of oil. The meeting could be a harbinger of things to come for the Organization of the Petroleum Exporting Countries as the cartel faces its most difficult challenge in years: how to respond to falling oil prices in a weakening global economic climate. The cartel’s president, Chakib Khelil, said the group was particularly concerned that slowing demand for oil was creating a glut in the market that might provoke a collapse in prices. The Saudi view is that lowering prices moderately now will shore up the world economy and prevent a recession that would cause oil prices to collapse. “This seems to set Saudi Arabia up as the unilateral decision-maker on output for the fall,” said Greg Priddy, an energy analyst at Eurasia Group, in a research note. “Clearly, other OPEC members are not going to trim their own production without Saudi Arabia returning to its quota. Saudi Arabia also seems to be eager to avoid headlines about it cutting production in advance of the U.S. elections.” Moderate and pro-Western states like Saudi Arabia and the United Arab Emirates are aware that high energy costs are hurting demand and might push consumers to seek alternatives to oil. These countries want to see prices fall below $100 a barrel to ease political enmity against the cartel. now that demand is weakening and prices are falling, some analysts say they believe that tensions within the group are resurfacing. In past years, OPEC has been notoriously bad at maintaining discipline in its ranks when prices fall.
- Three members of Congress, armed with a new report that they say proves that excessive oil speculation is distorting consumer energy prices, are renewing their efforts to exclude many institutional investors from the nation’s commodity markets. Using publicly available data, the report argues that institutional commodity investors, specifically through index funds, drive up commodity prices. If the nation’s oil use continues to fall at this rate, “this will be the weakest annual demand since the early 1980s,” said Kevin Norrish, director of Barclays Capital commodity research in London. “Due to data lags, that is just now becoming apparent.”
CNBC:
- Hedge fund manager Jim Chanos, who makes money betting that companies' stock prices will fall, said financial stocks have probably seen the worst and his fund has fewer short positions now than it did in the past.
- Director compensation at the biggest U.S. companies continued to rise in 2007, in contrast to chief executive pay, which dropped sharply last year amid a slowing economy and weakening corporate performance, a study found.
CNNMoney.com:
- 20 best countries for startups.
IBD:
- Global Payments(GPN): Credit Card Transaction Processor Grows As the World Goes Plastic.
BusinessWeek.com:
- Best US Entrepreneurs 25 and Under.
Reuters:
- The health of the largest U.S. financial firms is on the mend as the fallout from the subprime mortgage crisis begins to moderate, the managing director of a leading international banking lobby said on Thursday. "The health of the largest 20 to 30 U.S. financial institutions is improving," Charles Dallara of the Institute of International Finance (IIF) said at a news conference in Tokyo. The IIF is based in the United States and represents more than 380 of the world's biggest financial institutions.
- The average team in the National Football League is now worth more than $1 billion, marking the first time any sports league has surpassed that level, according to a report released on Wednesday.
- The U.S. Labor Department should provide pension plans with guidance on investing in hedge funds and private equity, a report issued by the Government Accountability Office (GAO) said on Wednesday. The report found that pension plans are investing more and more in alternate investments like hedge funds, which are traditionally less transparent and riskier.
- Home Depot Inc (HD) is touting everyday low prices and energy saving products while cutting back on special offers as the home improvement retailer caters to increasingly cost-conscious consumers.
Financial Times:
- Outflows from emerging markets bond and equity funds reached $29.5bn over the past three months, the highest level since at least 1995, with withdrawals gathering pace over the past week. Investors headed for the exits as rising fears over slowing world growth and the state of the banking system over the past week added pressure on emerging markets - which were already reeling from weaker commodity prices, inflationary pressures, a stronger dollar and geopolitical concerns.
- Dmitry Medvedev, Russian president, tried to bolster confidence in the country's plunging stock market on Wednesday as the central bank injected more than $10bn (€7.1bn, £5.7bn) into the banking system to alleviate a chronic credit shortage. The RTS stock market index fell 4.4 per cent as investors ignored his remarks.
Late Buy/Sell Recommendations
Piper Jaffray:
- Rated (ITRI) Buy, target $120.
Oppenheimer:
- Rated (AUXL) Outperform, target $44.
William Blair:
- Rated (AIRM) Outperform.
Night Trading
Asian Indices are -2.25% to -.5% on average.
S&P 500 futures -.44%.
NASDAQ 100 futures -.55%.
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
Upgrades/Downgrades
Rasmussen Business/Economy Polling
Earnings of Note
Company/EPS Estimate
- (CPB)/.25
Economic Releases
8:30 am EST
- The Trade Deficit for July is estimated to widen to -$58.0 billion versus -$56.8 billion in June.
- The Import Price Index for August is estimated to fall -1.8% versus a +1.7% increase in July.
- Initial Jobless Claims for last week are estimated to fall to 440K versus 444K the prior week.
- Continuing Claims are estimated to rise to 3460K versus 3435K prior.
2:00 pm EST
- The Monthly Budget Deficit for August is estimated to shrink to -$107.3 billion versus -$117.0 billion in July.
Upcoming Splits
- None of note
Other Potential Market Movers
- The weekly EIA natural gas inventory report, BMO Capital Real Estate Conference, Jeffries Tech Conference, Deutsche Bank Tech Conference, Keybanc Basic Materials Conference and Morgan Stanley Industrials Conference could also impact trading today.
Bloomberg:
- The International Energy Agency, an adviser to 27 nations, cut its forecast for global oil demand in 2008 and 2009 as high crude prices and the economic slowdown reduce U.S. consumption. ``A combination of weak economic prospects and persistently high prices appears to be having an impact on consumer behavior and choices,'' David Fyfe, the head of the IEA's oil industry and markets division, said in a telephone interview. There is evidence of a ``marked shift to more efficient vehicles, changing mobility and driving habits, signs that suburban living is gradually losing its appeal and ongoing modifications in business practices,'' it said. OPEC pumped 32.5 million barrels a day last month, 195,000 barrels a day less than in July because of field and pipeline outages in Iraq, Angola, Libya and Nigeria, according to IEA estimates. Global oil supply fell about 1 million barrels a day to 86.8 million barrels a day because of North Sea field maintenance and the shutdown of the BTC pipeline from Azerbaijan to Europe, according to the report.
- Commodity index investors, blamed for record oil prices, sold $39 billion worth of oil futures between their July record and Sept. 2, causing crude to plunge, according to a report released today. The work by Michael Masters, president of the Masters Capital Management hedge fund, blames investors who buy and hold an index of commodities for driving prices to records, and for their subsequent drop. It comes a day before the U.S. Commodity Futures Trading Commission is set to discuss its own study of energy trading with a congressional committee. Masters testified three times before Congress this year, arguing that limits on traders would cut oil prices to $65 to $70 a barrel. Congressional pressure on the CFTC to step up enforcement and restrict anonymous trades has pushed index traders out of their positions, Masters said. ``The speculators that drove prices up basically deflated the bubble,'' said Fadel Gheit, director of oil and gas research at Oppenheimer & Co. in New York. JPMorgan Chase and Co., Goldman Sachs Group Inc., Barclays Plc and Morgan Stanley control 70 percent of the commodities swaps positions, and swaps dealers are the largest holders of Nymex crude oil futures contracts, Masters said. Masters earlier this year reported that index speculators such as those that trade on Standard & Poor's GSCI accounted for $260 billion of assets, up from $13 billion in 2003. As of Sept. 2 that number was down to $223 billion, Masters said. ``For the supply and demand people, what I would like for them to explain is how from the supply-and-demand rationale you could have oil at $95 in January, at $150 in June and back to $100 in September,'' Masters said.
- The US dollar rose to an 11-month high against the euro as crude oil declined and Lehman Brothers Holdings Inc.'s plan to sell assets assured investors. The yen fell the most in two week versus the dollar on bets the Wall Street firm's attempt to shore up capital will encourage traders to buy higher-yielding assets funded by loans in Japan. ``Today's price action is an unequivocal vote of confidence for the U.S. dollar,'' said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon, the world's largest custodial bank, with more than $23 trillion in assets under administration.
- The European Commission cut its growth outlook for the euro area for the rest of this year and predicted a recession for Germany, the region's largest economy.
- European Central Bank President Jean-Claude Trichet said the euro-region economy is likely to recover from the current slump toward the end of the year and that bringing down inflation remains the bank's primary focus.
- Russia's RTS Index had its biggest two-day drop in more than seven years as equity funds sold because of redemptions from investors and margin calls from their brokers. OAO Surgutneftegaz, Russia's fourth-biggest oil producer, sank 8.8 percent to the lowest in almost five years. The dollar-denominated RTS dropped 4.4 percent to 1,334.33. Combined with yesterday's 7.5 percent decline, it marked the biggest two-day drop for the index since December 2000. ``We see little support for Russian equities today with redemptions and forced selling due to margin calls dictating the market,'' JPMorgan strategist Peter Westin in Moscow wrote in a note to investors. JPMorgan today reiterated its ``underweight'' recommendation on Russian equities, saying the country's economic outlook is replacing geopolitical risk and politics as the primary concern for investors. Russia's economic growth slowed to an annual 7.5 percent in the second quarter, compared with 8.5 percent in the previous quarter, the Federal Statistics Service announced today. Inflation from the beginning of the year through Sept. 8 rose to 9.8 percent, the government said today.
- Kenneth Heebner, manager of the top-ranked U.S. stock mutual fund, is seeking as much as $5 billion for his first hedge fund. Heebner, who has worked in the mutual-fund business almost four decades, formed a private investment partnership in June called Wayfarer Capital LP, according to Aug. 14 regulatory filings. The size of the fund, which had raised $73 million from wealthy investors and institutions, may vary from the target, Wayfarer Capital said in the filings.
- Fannie Mae(FNM) raised $7 billion in its largest individual sale of senior debt, after a government takeover of the company led to a record drop in yields relative to benchmarks.
- RK Capital Management LLP, the metals hedge-fund firm co-founded by Michael Farmer, lost as much as 30 percent last month amid falling copper and aluminum prices, according to an investor with the firm.
- Oil futures fell to a five-month low in New York following a U.S. government report that showed fuel demand declined and refinery production dropped after Hurricane Gustav shut plants along the Gulf Coast. Operating rates declined to 78.3 percent of capacity in the week ended Sept. 5, the lowest since 2005, when hurricanes Katrina and Rita struck the Gulf, the Energy Department said today in a weekly report. Demand for fuels averaged over the past four weeks declined 3.8 percent, the department's report showed.
- Gold tumbled to the lowest price since October on speculation a drop in commodity costs and a stronger dollar will reduce demand for the metal as a hedge against inflation. Silver plunged to the lowest since 2006. The Reuters/Jefferies CRB Index of 19 raw materials dropped for a ninth straight session and is down as much as 24 percent from a record reached in July. Gold has declined 26 percent from an all-time high in March and the euro is trading 13 percent below its July peak against the dollar. ``Gold's diseased,'' said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. ``A lot of the inflationary fear has eased because we've seen energy and commodity prices come spiraling down. The dollar has not given up a lot of its gains. That's leaving traders up in the air about what to do with gold. I wouldn't want to touch it with at 10-foot pole.''
- Lehman Brothers Holdings Inc.(LEH), reporting the biggest loss in its 158-year history, said it will sell a majority stake in its asset-management unit, spin off real-estate holdings and cut the dividend in an effort to shore up capital and regain investor confidence.
Wall Street Journal:
- Credit Suisse will start charging some new clients to speak to their stock analysts, in the latest effort by a Wall Street firm to squeeze more value out of its stock-research division.
- Palin Will Close Congress’s Favor Factory, Says DeMint.
- The Best Deals in Bank Stocks.
Die Zeit:
- The International Monetary Fund said a recession in German, Europe’s largest economy, is “possible” this year, citing a draft of the fund’s World Economic Outlook, due to be published in October. Next year, the German economy will grow less than 1% on average.
Interfax:
-
Etemade Meli:
- A top Iranian cleric, Hassan Rohani, attacked President Mahmoud Ahmadinejad’s government for failing to take advantage of “golden opportunities” since coming to power three years ago. Ahmadinejad’s administration hasn’t made use of the “exceptional” revenue from high oil prices and it is unclear where the funds have gone, Rohani said.