Late-Night Headlines
Bloomberg:
- International Business Machines Corp.(IBM), the biggest computer-services provider, forecast full-year profit that beat analysts’ estimates, defying an industrywide slump that has curbed growth at other technology companies. The shares rose as much as 5.3 percent in extended trading after IBM said today that net income will rise to at least $9.20 a share in 2009, topping the $8.75 average of estimates compiled by Bloomberg. Fourth-quarter profit also exceeded projections as overhead costs declined 3.1 percent.
- Intel Corp.(INTC), the world’s largest chipmaker, raised the possibility of reporting a loss this quarter, ending its more than 21-year run of profitability. “We are not going to wake up in six months with everything rosy again,” Chief Executive Officer Paul Otellini told employees last week in an internal memo obtained by Bloomberg News. After 87 quarters of profit, the first quarter is “too close to call,” the memo said.
- Emerging-market bonds fell as concern the U.S. banking crisis is spreading to Europe led investors to avoid higher-yielding assets. The yield to the 2015 call date on Brazil’s 11 percent bond due in 2040, one of the most widely traded emerging-market securities, jumped 37 basis points, or 0.37 percentage point, to 6.42 percent at 4:10 p.m. in New York, according to JPMorgan Chase & Co.
- Bank of England Governor Mervyn King said officials may start buying assets within weeks to loosen credit markets as the lowest interest rates since 1694 fail to avert a “marked” recession. The U.K. central bank may acquire securities such as corporate bonds and commercial paper to bolster lending to companies and consumers as banks rebuild balance sheets damaged by the global financial crisis, King said yesterday.
- Iraq needs continuity not “change” from President Barack Obama’s administration as it holds elections this year and moves closer to taking over the security of all 18 provinces, its foreign minister said. “Nobody can afford in 2009 to contemplate any change in military policy,” Hoshyar Zebari said in an interview in Kuwait late yesterday after Obama’s inauguration. We can’t “give any impression that there will be draw-downs, reductions, redeployment because this year Iraq has three elections.” Obama, who campaigned with the slogan of “change” and stood for president as an opponent of the Iraq War, said repeatedly that he would withdraw all combat troops within 16 months, leaving behind a residual force. Since the Nov. 4 election, Obama has reaffirmed that goal, while saying he wants to draw down forces in a safe and responsible manner and will consult with military commanders before making any decisions. “We’ll begin to responsibly leave Iraq to its people and forge a hard-earned peace in Afghanistan,” Obama said in his inaugural speech yesterday. The U.S. won’t abandon Iraq, Zebari said. Even if Afghanistan gets more attention, Iraq is very important in the Middle East and the Persian Gulf for the balance of power, he said.
- Singapore said its economy may shrink an unprecedented 5 percent this year, fanning speculation the government will announce record spending in its budget tomorrow to help companies hurt by the global recession.
- Foreign direct investment in developing nations will drop by $180 billion, or 31 percent, this year as a global recession prompts multinationals to cut spending on factories and mines, according to the World Bank. The decline will put renewed pressure on emerging-market currencies, even as asset sales by fund managers slow, according to Mansoor Dailami, manager of international finance in the global development prospects group. Rallies in the South Korean won, Brazil’s real and the Polish zloty have all faltered since the end of 2008 as companies including Rio Tinto Group and Honda Motor Co. put expansion plans on hold.
- Chinese stock valuations must fall further before they become “more attractive and defensive,” according to Frank Gong, JPMorgan’s China
Wall Street Journal:
- Amid a devastating period for most retailers, videogame seller GameStop Corp.(GME) has posted big sales gains, in part by aggressively marketing used products to cash-strapped consumers. GameStop this month reported a 22% jump in overall sales and a 10% increase in sales at stores open more than 12 months for the holiday sales period ended Jan. 3. It didn't hurt that videogame sales climbed 9% in December to a record $5.3 billion, according to market research firm NPD Group.
- Timothy Geithner will call for a comprehensive and aggressive approach to tackling the U.S. financial crisis when he appears Wednesday at hearings on his confirmation as Treasury secretary, while also trying to assure lawmakers that he simply erred by failing to pay some payroll taxes earlier this decade. At the hearing, Mr. Geithner will likely be grilled over his tax missteps and his role in helping to craft the Bush administration's financial-sector rescue. But senators' seeming reluctance to derail his confirmation while the economy is sputtering and the lending freeze is worsening makes it likely he will be confirmed for the cabinet post.
MarketWatch.com: Health care saw a net gain of 419,000 jobs in 2008 and its growth outlook continues to be strong through 2016, according to the Bureau of Labor Statistics.
CNBC.com: Jacobs said handset shipment may rise 25%.
- If Warren Buffett liked Burlington Northern Santa Fe(BNI) in the high $70s, he must love it in the low $60s. Buffett's Berkshire Hathaway reports in an SEC filing tonight that it bought almost 4.4 million shares in the freight railroad over the last three trading days at prices between $61.65 and $63.43.
NY Times:
- Warning to rich New Yorkers: The tax man might be digging deeper into your pockets in the years ahead. There is a growing sense in the capital that legislators are likely to turn to an income tax increase on the wealthiest New Yorkers to help close the state’s $15 billion deficit, now that Democrats control the Senate, the Assembly and the governor’s office. The Assembly, where Democrats have an overwhelming majority, has long supported increasing taxes on the wealthy, and Sheldon Silver, the Assembly speaker, reiterated this month that there continued to be strong backing for the measure among his colleagues. Gov. David A. Paterson, a Democrat, did not propose any income tax increases in his budget proposal, but acknowledged in last month that “taxing the wealthy is probably going to be part of the solution if the deficit gets any worse, and all indications are that it probably will.” That could leave the matter in the hands of the Senate, where Democrats won a narrow majority in November. Senator Eric T. Schneiderman, a Manhattan Democrat, said that he planned to introduce a bill in the coming weeks that would increase taxes on the rich, and that he expected his colleagues to have an active debate about the issue.
Advertising Age:
- Walt Disney’s(DIS) ABC is seeking $1.4 million for 30-second ads during this year’s telecast of the Academy Awards. ABC initially sought $1.7 million for commercials during its “Oscar” broadcast on Feb. 22.
Reuters:
- Blackstone Group(BX) has invested more than $730 million in India since arriving three years ago, only to see much of it wiped out by the country's weakening economy and stock market plunge. Blackstone's tough start in India is a cautionary tale to other Western private equity firms such as Kohlberg Kravis Roberts & Co. and Permira that are opening offices in Mumbai. If newcomers weren't already wary of India's foreign investing rules, which forbid borrowing and set a purchase price range, certainly Blackstone's performance so far may give them pause. Entrenched firms, too, are likely to wait before pouncing. Shares of Nagarjuna Construction have fallen 71 percent since Blackstone agreed to invest $150 million in Aug. 2007. Garment maker Gokaldas Exports has also lost 71 percent of its value since Blackstone inked a deal that same month for $165 million.Last February, Blackstone said it would invest $60 million in transportation company Allcargo Global Logistics when its stock was at 735.4 rupees per share. Eight months later, the stock was worth less than half that amount.
- European Central Bank Executive Board member Juergen Stark said that there isn’t a general credit crunch in the euro zone and warned of aggressive monetary policy. “The European Central Bank has earned a lot of confidence in the last 10 years that we mustn’t gamble with,” Stark said.
Sueddeutsche Zeitung:
- Deutsche Bank’s US-based hedge funds CQ Capital and Distressed Opportunities will report a full-year loss of more than 40% for 2008, citing documents in an e-mailed preview of an article to be published tomorrow.
Sydney Morning Herald:
- Macquarie Airports has provided further evidence that the boom in Australians traveling overseas has ended, after reporting the sharpest fall in outbound passenger traffic through Sydney Airport since the SARS (viral pneumonia) crisis of 2003.
The Australian:
- Australia’s banks were yesterday sucked into the international crisis of confidence in banking stocks. This came amid renewed pressure on regulators to extend the stock shorting ban to ensure system stability. The corporate regulator, ASIC, is likely to make a decision this week, as fears grow that banks and financial stocks will be savaged by hedge funds. The ban is in place until next Tuesday, but ASIC is understood to be "monitoring closely" the overseas crisis that forced the British government to launch a secondary emergency package for the banking industry.
Late Buy/Sell Recommendations
Jefferies:
- Raised (CHKP) to Buy, target $27.
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
- (PGR)/.35
- (MMR)/-.27
- (COH)/.67
- (USB)/.26
- (ABT)/1.06
- (HCBK)/.27
- (NTRS)/.93
- (APD)/.98
- (UTX)/1.22
- (BNI)/1.74
- (FFIV)/.40
- (PLCM)/.40
- (EBAY).39
- (AB)/.21
- (SLM)/.19
- (NE)/1.48
- (AAPL)/1.40
- (KMP)/.54
- (ADTN)/.28
- (AMR)/-.70
- (ATI)/.89
- (MTH)/-1.01
- (RJF)/.35
- (UAUA)/-4.41
Economic Releases
8:30 am EST
- The NAHB Housing Market Index for January is estimated at 9.0 versus 9.0 in December.
Upcoming Splits
Other Potential Market Movers
BOTTOM LINE: Asian indices are lower, weighed down by financial and commodity stocks in the region. I expect US equities to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.
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