Late-Night Headlines
Bloomberg:
Stephen Schork, president of the Schork Report, sees a ‘good chance’ of $50 crude oil by year’s end. (video)
- National Australia Bank Ltd., the nation's biggest by assets, said commodity prices may decline ``sharply'' amid expectations global economic conditions will continue to deteriorate. ``Global commodity prices are already falling and their elevated starting levels shows the potential for them to fall sharply and still be high by historical standards,'' the Melbourne-based company said today in a statement. The bank, the largest lender to Australian farmers, today reported full-year profit dropped 11 percent. The pace of growth in big emerging economies should slow considerably through the next two years, National Australia said today.
- Threats of a ``global catastrophe'' have declined in recent weeks as policy makers around the world work to restore liquidity and confidence in the financial system, Australian central bank Governor Glenn Stevens said. ``At moments like this, it's hazardous to make predictions,'' Stevens said today in a speech in Sydney. ``However, it seems to me that the key elements of dealing with the root issues in the crisis are starting to come into place.''
- Investors should sell the euro versus the dollar because the European Central Bank is likely to cut its benchmark rate toward 2.5 percent as oil prices fall and growth slows, Citigroup Global Markets Inc. said. ``We believe that there is potentially a perfect storm building against the euro,'' wrote Tom Fitzpatrick, New York- based global currency head of strategy at Citigroup Global Markets, in a research note yesterday. The currency may fall to ``at least $1.28 by year-end and maybe even continue lower in 2009.'' The ECB's target rate of 3.75 percent is ``way too tight in Europe even under a misguided single mandate,'' Fitzpatrick wrote in a separate note dated Oct. 17. The benchmark rate is 1.5 percent in the U.S. and 0.5 percent in Japan.
- Oracle Corp.(ORCL), the world's second- largest software maker, said it will buy back as much as $8 billion in stock after the global financial crisis sent the shares down 20 percent this year. The repurchase brings its total buyback allowance to as much as $9.3 billion, the Redwood City, California-based company said today in a regulatory filing.
- Novartis AG will tap its ``strong cash flow'' to make acquisitions, taking advantage of biotechnology companies' inability to raise capital, said Chief Executive Officer Daniel Vasella.
- Increased risks to Australia's economy and signs that inflation will cool gave the central bank a ``strong economic case'' for this month's 1 percentage point interest-rate cut, the biggest since a recession in 1992. ``The material change to the balance of risks surrounding the outlook for growth and inflation in Australia meant that a significantly less-restrictive stance of monetary policy was now appropriate,'' members of the Reserve Bank's board said in minutes of their Oct. 7 meeting, released in Sydney today.
- Texas Instruments Inc.(TXN), the second- largest U.S. semiconductor maker, reported a 27 percent decline in third-quarter profit on fewer orders for mobile-phone chips. Its forecast missed estimates, sending the shares 6.1% lower.
- American Express Co.(AXP), the biggest U.S. credit-card company by purchases, rose 9 percent in late trading after beating some analysts' estimates for third-quarter earnings.
- BNP Paribas SA, Societe Generale SA and four other French banks will get 10.5 billion euros ($14 billion) from the government, tapping for the first time the 360 billion-euro state rescue package unveiled this month.
- The cost of protecting investors in Japanese and Australian corporate bonds from default declined, according to traders of credit-default swaps. The Markit iTraxx Japan index fell 6 basis points to 201 at 9:14 a.m. in Tokyo, according to prices from Morgan Stanley. The Markit iTraxx Australia index fell 22.5 basis points to 222.5 in Sydney, Citigroup Inc. data show.
Wall Street Journal: Google Inc. (GOOG) Chief Executive Eric Schmidt said Monday that the Web search giant "is not completely immune" to the U.S. economic downturn, but he said the shift in advertising towards cheaper, online methods like Google's search business should intensify during hard times.
- Pimco Backs Up the Truck for MBS. High-quality mortgage-backed securities are the investment of choice for bond fund giant Pacific Investment Management Co., in a way they haven’t been for more than eight years. Pimco’s Total Return Fund, the world’s largest bond fund, raised its holdings of mortgage-backed securities to 79% by the end of September, a level not seen since at least June 2000, from 69% a month earlier, according to data from the company’s Web site.
CNBC.com:
- Warren Buffett’s high-profile call to buy US stocks may have its skeptics, but the often-pessimistic Doug Kass isn’t among them. Kass sees more evidence that an upturn is coming in the lukewarm response to Buffett’s call to action. "I would also observe that the widespread dismissal of the Oracle's positive remarks by so many (including the typically permabullish media) is classic evidence of an inflating negativity bubble, which leads me to believe that an advance might be closer at hand."
MarketWatch.com: Citadel Investment Group is developing a series of new hedge funds in a move away from its traditional focus on managing one, large so-called multi-strategy fund, a person familiar with the situation said on Monday.
- Under their new government-appointed chief executives, Fannie Mae and Freddie Mac are focused on reducing foreclosures, improving liquidity in the mortgage market and restructuring aspects of their business, according to a panel discussion of the executives and their government regulator at the Mortgage Bankers Association annual conference here Monday.
NY Times: The prime brokerage landscape seems to be changing amid the shake-up on Wall Street, according to Investment Dealers’ Digest. Two major prime brokers — Bear Stearns and Lehman Brothers — are gone, while two more — Morgan Stanley and Goldman Sachs — have had hundreds of clients pull their money out of their prime brokerage units. The result has been a boom for rivals like Deutsche Bank and Credit Suisse, as well as independent prime brokers, which have all fought for years to lure prime brokerage clients away from their big rivals.
- 3 Oil Countries Face a Reckoning. As the price of oil roared to ever higher levels in recent years, the leaders of Venezuela, Iran and Russia muscled their way onto the world stage, using checkbook diplomacy and, on occasion, intimidation. Now, plummeting oil prices are raising questions about whether the countries can sustain their spending — and their bids to challenge United States hegemony. For all three nations, oil money was a means to an ideological end.
- In a step that could accelerate a shakeout of the nation’s banks, the Treasury Department hopes to spur a new round of mergers by steering some of the money in its $250 billion rescue package to banks that are willing to buy weaker rivals, according to government officials.
CBS News:
- John McCain ratcheted up his attacks on Barack Obama’s foreign policy credentials by using his running mate’s words against him. “If Sen. Obama is elected, Sen. Biden said, we will have an international crisis to test America's new president. We don't want a president who invites testing from the world at a time when our economy is in crisis and Americans are already fighting in two wars,” McCain said, referring to Biden’s remarks at a fundraiser where he said “we're going to have an international crisis, a generated crisis, to test the mettle of this guy."
Forbes.com: Negotiations to end a 45-day machinists union strike against the Boeing Co.(BA) will resume Thursday with a federal mediator in Washington, D.C. Boeing's commercial aircraft assembly plants have been shut down throughout the strike, costing the company an estimated $100 million or more a day in deferred revenue - $4.5 billion or more as of Monday.
Lloyd’s List:
- The relative financial strength of drybulk owners and charterers and the risk of default by one side or the other is one of the real risks of the current financial crisis, according to Daebo Shipping chairman and chief executive Kim Chang-jung. He added that the bulk market was also being affected by what he thought was a collapse in forward freight agreements and other derivatives. “They were played by the US investment banks — Merrill Lynch, Goldman Sachs — who now do not have any money,” Mr Kim said.
Reuters:
- The Conference Board's index of Leading Economic Indicators rose a surprising 0.3 percent in September -- its first increase in five months -- suggesting the economy may be stabilizing, the research group said on Monday."Latest data suggest that conditions in the nonfinancial economy are not falling apart," said the Conference Board's labor economist, Ken Goldstein, in a statement. "Data on hand reflect a contracting economy but not one in free fall."
Financial Times: Investors are pumping a record amount of cash into money market funds as they rush to the safest instruments amid the market turmoil. In spite of co-ordinated central bank action to inject liquidity into the markets and sweeping measures from governments to shore up the beleaguered banking sector, investors are still shunning riskier investments. Money market funds, which are considered safe because they tend to buy US Treasuries, absorbed $44.4bn last week, the largest inflow since 2001, according to fund tracker EPFR Global.
- Money market rates fell again on Monday in a sign that the programmes of central bank liquidity are thawing the recent freeze in short-term lending. By a number of measures, conditions across the money markets improved. With the banking system now supported by governments and hefty amounts of short-term central bank funding, traders reported renewed lending in both the money and commercial paper markets.
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
- (EAT)/.33
- (SGP)/.31
- (FCX)/1.45
- (SWK)/.97
- (LXK)/.66
- (CSL)/.87
- (DGX)/.82
- (BIIB)/.89
- (RF)/.27
- (BLK)/1.88
- (NCC)/-.37
- (MMM)/1.38
- (LMT)/1.89
- (USB)/.48
- (PFE)/.60
- (COH)/.43
- (OMC)/.68
- (FRX)/.70
- (DD)/.51
- (CAT)/1.41
- (KEY)/.16
- (MAN)/1.42
- (AKS)/1.45
- (BRCM)/.44
- (NSC)/1.20
- (CEC)/.59
- (VMW)/.20
- (AAPL)/1.11
- (QLGC)/.30
- (BSX)/.10
- (PNRA)/.43
- (CERN)/.56
- (RJF)/.51
- (ILMN)/.16
- (YHOO)/.08
- (SY)/.50
Economic Releases
8:30 am EST
- None of note
Upcoming Splits
Other Potential Market Movers
BOTTOM LINE: Asian indices are higher, boosted by commodity and financial stocks in the region. I expect US
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