Posted By Optiondragon for myhappytrading.com, a site made by traders for traders, join us for free! Join our trading room for ideas, market thoughts and for fun!
Strawberry Swing - Coldplay
From Briefing.com
Periodicals Wrap-Up for Wednesday, October 1st
WALL STREET JOURNAL: Over the past year General Growth Properties (GGP) stock has fallen about 73%. The company has $27B in debt and $19B is due by the end of 2011. Also, key top executives have been selling their stock since August: 5.6M shares equal to about $112M, mostly to meet margin calls, according to the Wall Street Journal. The company wanted to wait for an economic recovery before repaying its debt, but now that strategy has come unraveled…CNBC: Legislative sources told CNBC that a group of House Republicans is forging together a proposal to stabilize financial markets that can serve as an alternative proposal to the bailout plan proposed by Treasury Secretary Henry Paulson. Components of the alternative plan include requiring the Treasury Department to guarantee bank losses resulting from failed mortgage-backed securities originated “prior to the plan’s enactment” and allowing banks to treat losses on shares of preferred stock in Freddie Mac (FRE) and Fannie Mae (FNM) as ordinary losses, not as capital losses…BBC: Lloyds TSB’s (LYG) takeover of British bank HBOS (HBOOY) will go through despite the recent market turmoil, but the agreed-upon price may be “tweaked slightly” downward, according to BBC columnist Robert Peston. However, the large gap between HBOS’ stock price and Lloyds’ offer may not prevent the deal from being completed at the previously negotiated price, since many Lloyds shareholders also have stakes in HBOS, Peston explained…REUTERS: Reuters reported that, in an early holiday push, Wal-Mart (WMT) is cutting prices on popular stores and will open up its Christmas shops in its U.S. stores by October 10…
Asian Markets Wrap-Up for Wednesday, October 1
Asian markets rebounded on news that the U.S. Senate will okay the $700B bailout package. Most markets there gained. China, Hong Kong, Indonesia, the Philippines, Malaysia and Singapore were closed for holidays…JAPAN: The Nikkei 225 Stock Average advanced 108.40, or 1%, to 11,368.26, while the broader Topix increased 13.72, or 1.3%, to 1,101.13. Nomura (NMR) was up 6% to Y1,405. Shinko jumped 5.9% to Y305. Sumitomo Mitsui Financial Group climbed 4% to Y655,000. Mitsubishi UFJ Financial Group (MTU) rose 3.4% to Y923. T&D Holdings leapt 6.2% to Y5,800. Nipponkoa Insurance Co. surged 7.1% to Y617. Takeda Pharmaceutical Co. was up 5.1% to Y5,520. Sumitomo Chemical Co. dropped 6.8% to Y424…AUSTRALIA: The S&P/ASX 200 Index was up 4.2% to 4,794.60. Westpac (WBK) added A$1.77, or 8.2%, to A$23.25. BHP Billiton (BHP) jumped A$1.75, or 5.7%, to A$32.75. Rio Tinto (RTP) jumped A$10.50, or 12%, to A$95. AWB leapt 22 cents, or 7.9%, to A$3. Henderson Group jumped 26 cents, or 11%, to A$2.58.
U.S. may increase deposit insurance to $250,000 for a year-WSJ
The Bush Administration and Congress are working to increase the level of consumer bank deposits that are guaranteed by the government, increasing the FDIC limit to $250,000 from $100,000 for a year, reports the Wall Street Journal. It would be the first increase in over 20 years to insure depositors when a bank fails.
Expert says turbulent markets taking toll on hedge fund industry-UK Times
According to Andrew Shrimpton, the former head of hedge fund regulation at the Financial Services Authority who now runs the Kinetic consultancy, at least one British hedge fund per week is considering fund liquidations. Shrimpton says the credit crisis, turbulent investment markets and redemption worries are “definitely kicking in” for the hedge fund industry. Individual strategies are also being hit by the FSA’s ban on short-selling shares in the financial sector, Shrimpton says. Additionally, it was revealed yesterday that London-based hedge fund Toscafund is “sitting on substantial paper losses” on its Sovereign Bancorp (SOV) and Washington Mutual (WM) investments.
U.S. equity futures continue to point to a lower open
Stock futures are still pointing to a lower open. Earlier today a report showed that mortgage applications fell -23.0% from the previous week and it also included a big drop in refinancing applications. The Challenger job cuts report jumped to higher levels and was led by an increase in the loss of jobs in the financial sector. The reading jumped to 32.6%, up from last month’s 11.7%. There was one piece of good news for the employment market when the ADP Employment Change report was released: It showed a loss of 8,000 jobs versus an expected loss of 50,000 jobs.
European bank debt coming due is problematic-WSJ
Higher financing costs and lower profits are what a number of European banks are facing as they struggle to refinance debt that soon will be do, according to the Wall Street Journal’s “Heard on the Street”. According to J.P. Morgan, Europe’s top 30 financial institutions have EUR718B maturing in the next 15 months.What they’re facing may not be as bad as being exposed to U.S. subprime assets but its problematic nonetheless.
Oil prices are down but they’ll rise and fall again-WSJ
U.S. crude oil and refined products inventories have been falling since August. With money tight liquidation was the result. Then there was Hurricane Ike. Prices are down and a bad winter may bring them back up if only temporarily because the credit crisis continues to pressure demand. The test, says the Wall Street Journal’s “Heard on the Street”, will be how OPEC manages in a tough environment when they’re used to profiting in bullish economies.
Message to Congress: Don’t trust bankers-WSJ
The Wall Street Journal’s “Heard on the Street” says that if Congress waters down or eliminates mark-to-market-accounting it will be saying that it’s okay for investors to trust bankers whose mortgage lending policies helped spark the mortgage crisis. Rather than helping banks it could make things even worse.
New troubles for securities lending business-WSJ
The failure of Lehman Brothers Holdings (LEH) and Washington Mutual (WM) has increased the problems for public pension funds and other big investors who lend stock from their portfolios to short sellers for a fee. Those funds now face losses that could be permanent if the situation does not reverse itself, according to the Wall Street Journal.
Dry Bulk: Estimates lowered but sell-off may prove overdone@LAZA
Lazard said expects pressure near-term pressure on the group but said if the macro economic outlook improves, for example, from a positive congressional action, and dry bulk freight markets improve, the outlook could change quickly. The analyst vies valuations of GNK, EGLE, and NM as attractive.
Children’s Place-PLCE upgraded to Buy from Hold@WEDB
Wedbush upgraded shares on expectations increased margins could lead to upside. Target remains $42.
Domino’s Pizza sales boosted as consumers eat in-The Guardian
As consumers look to save money due to rising fuel and energy bills and mortgage payments, sales at Domino’s Pizza (DPZ) have increased by 18.9% over the past 39 weeks in the UK and Ireland; sales rose 17.8% in the last 13 weeks. Altium Securities analyst Wayne Brown is impressed with the high levels of SSS being achieved, “especially in light of the tough comparatives but more so in light of the current economic climate.”
Microsoft-MSFT Q1 checks are weak as expected@PACS
PacCrest says while there is risk to Q1 revenue, the risk/reward on the shares looks attractive. Additionally, PacCrest likes the valuation, buyback plan and sees potential positive announcements at an upcoming developers conference. They rate the shares Outperform.
JA Solar-JASO remains top pick after meeting with management@PIPR
After meeting with management, Piper believes the company’s “strong” balance sheet, free cash flow, and diverse portfolio of wafer supply should drive 15%-20% wafer cost reduction in both 2009 and 2010. JASO is the firm’s top pick in solar. Shares remain Buy rated.
Las Vegas Sands-LVS risks outweigh rewards, maintain Sell@BOFA
Banc of America thinks the company’s financing needs in the U.S. and Macau are more a risk than a catalyst. The firm maintains a Sell rating and $30 target.
Petrohawk Energy-HK reduces 2009 capital budget by 33% to $1B
Petrohawk Energy Corporation will reduce its 2009 capital budget by a third and reallocate spending to more heavily weight projects with the highest internal rates of return and highest potential for reserve growth, namely, development in the Haynesville and Fayetteville Shales. The shift allows the Company to further affirm its strong capitalization. The 2009 capital budget, which includes drilling, completions, seismic and facilities, is currently $1.0 billion, revised from a previously announced budget of $1.5 billion. The Company has no current plans or need to access the equity capital markets.
Farmer Mac is in financial trouble-WSJ
The Federal Agricultural Mortgage Corp. (AGM), known as Farmer Mac, and regulated by the Farm Credit Administration, provides funding for agricultural loans in the U.S. The organization is in trouble and top officials met late yesterday to figure out how to stabilize it, according to the Wall Street Journal. It has suffered big losses in part because of its investments in Fannie Mae (FNM) and Lehman Brothers Holdings (LEH). If it can’t raise capital through a stock sale or sell assets, it risks being downgraded for the first time since being founded in 1988, and that will also affect banks that have equity in it.
Estimates may still be too lofty - Barron’s Online
Analysts have sharply cut their Q3 and full-year financial profit estimates for companies in the S&P’s 500 since the summer. Some investors think estimates are still not grisly enough. Ed Yardeni, chief strategist at Yardeni & Co. says, “It’s going to be a challenging environment for corporate profits well into 2009.” A poll by Thomson Reuters shows that the Street expects earnings to fall 2.3% in the quarter ending Tuesday from a year earlier. For the entire year, profits are expected to remain flat, a big change from the 6.7% gain analysts had forecast in July. But some are skeptical about even those modest expectations and expect earnings to be down this year by as much as 8%. And there’s little confidence that the 22% gains predicted in 2009 will materialize given the uncertain economy, falling oil prices and the turmoil plaguing financial markets. Barron’s Online predicted in March that consensus estimates for 2008 were too high. And in June they reported that a turnaround would have to wait until next year. Analysts have been cutting estimates since July in many of the sectors. And Goldman predicts that profits for the tech sector, as well as industrials and materials will fall in 2009. Bottom-line: investors are taking forecasts for 2008 and well into 2009 with more than a grain of salt.
Analysts Upgrade Summary for Wednesday, October 1st
MOST NOTEWORTHY: The Integrated Oil sector, Force Protection (FRPT) and eHealth (EHTH) were today’s noteworthy upgrades: Barclays upgraded the Integrated Oil sector to Positive from Neutral citing valuations. Note that Exxon Mobil (XOM) was upgraded to Overweight from Equal Weight based on valuation. After Force Protection reported that its 1H08 sales increased more than 200%, Stanford thinks that Force Protection could be poised for several new opportunities in 2009 and they believe the company’s risk is already priced into the stock; the firm raised Force Protection to Hold from Sell. Cowen expects eHealth to benefit from the steady decline in employer-sponsored health insurance offered by small businesses and reduced regulatory risk, among other reasons. The firm upgraded shares to Outperform from Neutral…OTHER UPGRADES: Allied Capital (ALD) was upgraded to Market Perform from Underperform at BMO Capital. Caris upgraded Carmike Cinemas (CKEC) to Above Average from Average. International Flavors & Fragrances (IFF) was upgraded to Neutral from Underweight at JP Morgan.
Analysts Downgrade Summary for Wednesday, October 1st
MOST NOTEWORTHY: Philips Electronics (PHG), Hospital Management stocks and Ruth’s Hospitality (RUTH) were today’s noteworthy downgrades: Morgan Stanley downgraded shares of Philips Electronics to Underweight from Equal Weight on expectations for disappointing results in the second half of 2009. UBS downgraded Community Health Systems (CYH) and Universal Health Services (UHS) to Neutral from Buy and Tenet Healthcare (THC) to Sell from Neutral citing the deteriorating economic environment and difficult 2009 comps. The firm lowered Community Health’s target to $32 from $42, Universal Health’s target to $59 from $70, and Tenet’s target to $5 from $6.50. Wachovia cut Ruth’s Hospitality to Market Perform from Outperform citing weakening consumer spending trends…OTHER DOWNGRADES: Boston Scientific (BSX) was lowered to Underperform from Neutral at Merrill Lynch. Crown Castle (CCI) was removed from Goldman’s Conviction Buy List. Network Engines (NENG) was downgraded at Cantor to Hold from Buy.
Analysts Initiation Summary for Wednesday, October 1st
MOST NOTEWORTHY: STMicroelectronics (STM), Peerless Manufacturing (PMFG) and Synchronoss (SNCR) were today’s noteworthy initiations: Deutsche Bank initiated STMicroelectronics with a Hold rating, citing the slowing macro environment and the potential for share losses. Roth Capital believes Peer Manufacturing benefits from higher energy costs that drive increased production of natural gas and lower energy costs that encourage additional use of gas in generating electricity. Shares were initiated with a Buy rating and $18 target. Synchronoss was assumed at Baird with a Neutral rating and $11 target on valuation…OTHER INITIATIONS: Thomas Wiesel initiated Dolby Laboratories (DLB) with an Overweight rating and $42 target. Osiris Therapeutics (OSIR) was initiated with an Outperform rating and $25 target at JMP Securities. Rigel Pharmaceuticals (RIGL) was initiated with a Buy rating and $35 target at Piper.
Wells Fargo still waiting for the right deal-Reuters
Wells Fargo (WFC) Chairman Richard Kovacevich said he ‘feels like a kid in a candy story’ but is taking his time on what to buy. The bank had looked at Wachovia (WB) and Washington Mutual in the past, but both have been scooped up. Possible fits for the bank include National City Corp. (NCC), Fifth Third Bancorp (FITB) and Legg Mason (LM). National City and Fifth Third could help Wells Fargo expand its banking system east while a Legg Mason acquisition would be a ’strategic expansion.
Fast Money Position recap- First Moves: Joe likes long FHN, STT, BBT or BIIB, Karen likes long DVN or OIH, Guy likes INTC and USB, Jeff likes the UUP, WMT and the fetal position..LOL!
But that’s not all. With the market being whipsawed by speculation and negotiations in Washington DC we turn to Jon Najarian for his thoughts on your first trade for Wednesday.
I’m long Goldman (GS), Morgan Stanley (MS), Bank of America (BAC), JP Morgan (JPM), and Citigroup (C), Najarian tells us. “I bought them on the dip and I’m going to hold them. I don’t think we have had enough of a rip yet to sell them.”
And I’m going to keep an eye on regionals such as Fifth Third (FITB) and KeyCorp (KEY) because they could rebound.
And while we’re at it, unusual options action in Noble (NBL), Jabil Circuit (JBL) and UnitedHealth (UNH) suggest to Jon Najarian that these stocks could go higher.
After a much needed bounce, everyone is still waiting to hear from Congress and the Rescue Bill. I am looking at financials and solars. FSLR and ENER are strong in premamrket as rumblings of a solar component are thought to be included in the bill for $17 billion for ITC. Going to be nimble and cautious going forward until this vote is over. Good luck and see you in the trading room at myhappytrading.com.
Submitted By 
's
