Submitted By Optiondragon
From Briefing.com
Periodicals Wrap-Up for Tuesday, July 15th
WALL STREET JOURNAL: The market for private mortgage insurance has narrowed and is tougher to obtain, further pressuring home buyers and affecting the market, the Wall Street Journal reported. “Clearly, the pendulum had swung a little too far in terms of flexibility in underwriting,” said Len Sweeney, the chief risk officer at AIG United Guaranty, a part of American International Group (AIG)…In a agreement with Viacom (VIA), Google (GOOG) said it will remove visitor data from YouTube before it fulfills a judge’s order to send data to Viacom, as a part of a larger copyright lawsuit, the Wall Street Journal reported…DETROIT NEWS: As part of its effort to emerge from bankruptcy protection, the Detroit News reported that Delphi Corp (DPHIQ) announced plans to sell its brake business. Delphi has retained W.Y. Campbell and Co to help sell the unit, which has around 1,000 employees worldwide…NEW YORK POST: The New York Post learned that Dick Fuld, the CEO of Lehman Brothers (LEH), is seriously considering ways to take the company private. The Post said that talks centering on the privatization of Lehman have “gotten very serious consideration,” according to sources, although details on how a maneuver may work remain unclear…
AAPL: Short-Term negative, expect EPS guidance below Street estimates@BMOC
BMO Capital expects AAPL to guide September quarter EPS to approximately $1.00 vs. the Street’s $1.24 estimate. The firm said past revenue guidance of 3%-3.5% QoQ indicates the company will guide to $7.7B-$7.75B vs. the Street’s estimate for $8.27B. Even though the firm expects September guidance to be below Street estimates, they expect actual results to be roughly in line with current September quarter estimates. Shares are Outperform rated.
U.S. equity futures continue to point to a lower open
U.S. equity futures continue to point to a lower open. Fannie Mae (FNM) and Freddie Mac (FRE) continue to cause volatility in the markets. The shares of both companies are down more than -16.5% in pre-market trading despite the Fed’s best efforts to calm fears by detailing how they would help both companies survive. The concerns regarding the U.S. banking system spread to Asia and Europe as the financial stocks on exchanges there have brought their regions averages lower. The dollar has reacted by losing ground against other currencies, most notably the euro which hit a record $1.60 against the dollar.
GOOG: Would be buyers ahead of earnings@CSTI
Collins Stewart expects an in-line to modest beat quarter with strong international trends when GOOG reports on July 17. Collins points out shares are currently trading below where they closed one day after the company delivered a blockbuster March quarter. The firm reiterates a Buy rating and $615 target.
INTC: Reiterate Neutral rating ahead of Q2 results@JPMS
JP Morgan expects solid Q2 results to lead to a short-term rally in the stock, but sees downside risk to consensus estimates due to decelerating PC demand.
Gutierrez doesn’t expect government to bail out automakers-Detroit Free Press
Carlos Gutierrez, the U.S. Secretary of Commerce, said yesterday in Detroit that he does not expect the government to bail out auto companies. While he acknowledged the challenges facing the Detroit economy, he said he believes that the state’s resources will aid its recovery and urged Congress to make the Bush tax cuts permanent and pass free-trade agreements with South Korea, Colombia and Panama.
AAPL: Expect Q3 earnings beat to be more limited this quarter@BERN
Bernstein expects AAPL to report Q3 upside but expects the beat to be more limited as gross margin is unlikely to show significant upside as it did throughout 2006 and 2007. Shares are Market Perform rated.
Google experimenting with variation on Digg-TechCrunch
TechCrunch reports that Google (GOOG) is planning to bucket test new features based on last year’s test of search features that allows users to vote on search results and recommend other results. Reader Adrian Pike provided initial screen shots of the bucket test, in which users may actually be able to change their vote.
US Bancorp-USB capital position remains strong
“Our capital position remains strong, with the Tier 1 capital ratio at June 30, 2008, on target at 8.5 percent. Although we have capacity in our current authorization, we do not anticipate buybacks between now and the end of the year. We will utilize our strong internal capital generation to support our growth initiatives, and rely on our earnings capacity to sustain our dividend and maintain our well-capitalized position,” said Richard Davis, CEO
DNA: Remain buyers of shares into mid-$80s@BARD
Baird said if you look past the headline disappointment, the quarter operationally was impressive driven by across-the-board top line strength. The firm remains buyers of DNA into the mid-$80s given 2H08 EPS acceleration, Avastin upside, and expected clinical newsflow in 2H08. Shares are Outperform rated.
DNA target raised to $85 from $83, maintain Buy@DBAB
Deutsche Bank attributes the EPS miss in the quarter to one time items and points out DNA actually raised guidance. The firm raised their target to reflect the Avastin upside as sales grew the first time sequentially since Q3 of 2007.
RIG initiated with a Buy, target $231.88@JSLC
Jesup & Lamont believes RIG is the market leader in deepwater drilling rigs and premium jackups.
MSFT: Company’s shares are attractive in the short-term@OPCO
Oppenheimer believes the company’s stock is attractive heading into its results on Thursday, as they expect its shares to jump about 10% following the results. The firm expects the company to report at least in-line results and reiterate its guidance for its 2009, and they would be buyers of the stock before the results.
Ads on Yahoo could cost 22% more-NYT
Advertisers are skeptical of of Yahoo’s (YHOO) deal to have search ads sold by Google (GOOG) because the premium could go up as much as 22% if Google sells the ads.A study conducted by Search Ignite, looked at 12 million paid clicks for 15,000 keywords to determine the price variance.
Ackman says common, preferred equity should be extinguished-Bloomberg
Ackman said he would buy Fannie stock in a ‘newly, restructured’ model.
AXP estimates lowered on higher credit losses@PIPR
Piper lowered their 2008 estimate to $3.22 from $3.40 and 2009 estimate to $3.40 from $3.75 to reflect higher credit losses and lower spending growth. However, Piper maintains a Buy rating given AXP’s franchise example.
U.S. Banks: Expect significant writedowns, capital pressure well into 2009@OPCO
Oppenheimer believes that banks’ valuations of mortgage-related assets are still too high. The firm believes that all the banks they cover have unrealistic housing price appreciation assumptions, and they expect this situation to result in continued writedowns and capital pressure on the banks.
GOOG: Expect solid, ‘not spectacular,’ Q2 results@WBLR
William Blair maintains an Outperform rating on GOOG shares buts expect that an in-line quarter will have only a minor impact on the stock.
PGR: Reiterate Outperform following June operating results@FBRC
Friedman Billings admits the June results were lackluster, but believes one month does not make a trend. The firm lowered their target to $23 from $24 but reiterates an Outperform rating.
COF announces June charge-offs and 30+ days delinquency rates
Capital One reports June annualized net charge off rate of 6.42% and a 30 days + delinquency rate of 3.85%.
Asian Markets Wrap-Up for Tuesday, July 15
Stocks dropped on worries about banks’ profits. JAPAN: Shares slumped, with financials spearheading the decline. The Nikkei 225 sank 1.96% to 12,754.56. Sumitomo Mitsui Financial (SMFNF), a bank, lost 6.1%, while Mizuho Financial Group (MFG), another bank, retreated 5% and Sumitomo Realty & Development (SURDF) fell 6.5%. A number of exporters also dropped, with Mazda (MZDAF) declining 3%, and Toshiba (TOSBF) losing 3%. CHINA: The CSI 300 Index tumbled 4.13% to 2,852.98. Insurance company Ping An (PNGAY) declined 6% and China Life Insurance (LFC) also fell 6%. Bank of China (BACHF) retreated 3.1% and Industrial & Commercial Bank of China finished 3.4% lower. COFCO Property and Poly Real Estate both tumbled by the maximum 10%. AROUND ASIA: Hong Kong’s Hang Seng Index declined 3.81%, while South Korea’s KRX 100 dipped 3.07% and Taiwan’s Taiex sank 4.51%…Fitch reduced India’s credit rating to negative.
WB downgraded to Underperform from Perform@OPCO
Oppenheimer downgraded shares as they believe the outlook is “bleak” for equity shareholders. The firm thinks Wachovia’s expenses can’t come down fast enough too offset earnings erosion.
FCX: Estimates raised on copper prices@MSCO
Morgan Stanley raised 2008 and 2009 EPS estimates for FCX based on higher copper prices. The firm’s 2009 EPS estimate is 7% above consensus, which they do not believe reflects higher copper prices. Shares are Overweight rated.
Jim Cramer’s “Mad Money”
Cramer says, “The best way to invest is not to buy a bunch of stocks and just sit on them.” He also said that paying taxes on gains is a good thing, much better than posting a loss. Instead of buy and hold, he said investors should buy and do the homework. Cramer says, “When it’s time to sell, then sell and move on.” He recommended mutual funds as great investment vehicles for those who don’t have the time to do the homework and manage their portfolios. Cramer urged investors to remain involved in their portfolios. Cramer reminded viewers of another rule in book Real Money. Control your losses and the winners will take care of themselves, he said. He then instituted a new rule for the financial stocks: If a bank stock falls below $5 a share, it’s time to sell. Cramer said he doesn’t believe anything remotely positive has happened yet for the banking industry. He said he’s most worried about Downey Financial (DSL), Corus Bankshares(CORS), FirstFed Financial (FED) and BankUnited (BKUNA). He is also deeply concerned with National City (NCC), Washington Mutual (WM), and First Horizon (FHN). Cramer was also bearish on Citigroup (C), Wachovia (WB) and Bank of America (BAC), and even brokers such as Lehman Brothers (LEH) and Merrill Lynch (MER). Next, Cramer proclaimed his “year of natural gas is back!” With the successful secondary offering of shares by Chesapeake Energy (CHK) last week, Cramer said it’s finally safe to invest in natural gas stocks. He says the next opportunity is the pipeline companies. While he still believes in Spectra Energy (SE), Cramer feels that Williams Companies (WMB) is another great company to own. Cramer said his thesis is simple: the more gas there is, the more demand for gas infrastructure there will be. Williams Companies are expanding further the mid-Atlantic region, where there are millions of potential customers. The company is also building pipelines to transport more gas from the Rocky Mountains. Cramer also finds Williams’ drilling operations attractive. Williams is a company that can make money now, he said. In his quest to find stocks not levered to mortgages or the rising price of oil, Cramer talked with Catherine Burzik, President and CEO of Kinetic Concepts (KCI), for an update on her business. Burzik said she feels the company’s stock is grossly undervalued, but hopes investors begin to see the synergies realized from the LifeCell merger. Cramer said he likes the healthcare group, but wants to see one more quarter of results before recommending Kinetic. LIGHTNING ROUND: (Bullish) HERO; ARG; LH. (Bearish) WIRE; STO; DGX.
Louis Navellier’s Quantum Growth Update
Louis Navellier’s Quantum Growth Update is positive on CRMT, BPT, and PBT; cautious on ATVID, AUO, DECK, and GFA.
Louis Navellier’s Global Update
Louis Navellier’s Global Update is positive on FMS, ELN, and ESLT; cautious on KNDI and JASO.
Fast Money position recap- First Moves: Jeff says sell INTC ahead of earnings, Joe likes NKE, Karen likes PDE, Tim likes ICA as a play on infrastructure build in Mexico.
Macke Owns (US), (WMT), (MSFT), (INTC), (USO); Finerman Owns (CSCO), (GS); Finerman’s Firm Owns (MSFT), (SUN), (TSO), (VLO), (PDE); Finerman’s Firm Is Long SPX Index Puts; Finerman’s Firm And Finerman Own (C) And (C) Leaps; Finerman’s Firm Is Short (IYR), (IJR), (MDY), (IWM), (SPY); Seymour Owns (TSL), (AAPL), (CSCO), (INTC), (MER), (MSFT)
Terranova Owns (VLO), (SA), (YHOO), (FCX), (IYT), (GOOG), (CME), (INTC), (BNI), (LUV), (XLF), (SU); Terranova Is Short 30 Year US Bond Futures (September); Terranova Owns Dollar Index Futures (September)
Terranova is chief alternatives strategist at Phoenix Investment Partners; Phoenix Investment Partners Owns (IGE),(DBC), (DBV), (RWX), (AAPL), (AMD), (ATI), (AW), (BA), (BAC), (BNI), (BSC), (BUD), (C), (CHK), (COH), (COP), (CSCO), (CME), (CVX), (DAL), (DNA), (DVN), (FCX), (FNM), (FRE), (GOOG), (GS), (HAL), (HOT), (IBM), (INTC), (ICE), (JNJ), (JNPR), (JPM), (LEH), (LUV), (M), (MEE), (MON), (MOS), (MS), (MSFT), (NCC), (NUE), (NYX), (NDAQ), (OC), (POT), (RBN), (RSG), (SU), (SUN), (SWKS), (TIE), (TSO), (USB), (VLO), (WB), (X), (XOM), (YHOO)
Overseas markets were hit hard last night and this morning on worries of more financial pain in global financial markets. I have been shorting select financials and will be looking for other high probability setups within the sector until we bottom. Art Cashin said that the government may need to do a financial triage which means going into this financial battlefield and figuring out who needs help, who is worthy of help and who will be let to pass away. We may need to get a washout event in order to attain a solid short term bottom, will be looking for a VIX spike well above 30 (35ish) as a leading indicator of a possible upcoming near term bottom. Also watch the 13 week T-Bill since this is also a leading indicator of a possible cresendo (last one was the BSC event as you can see on the chart and the ^IRX leading moves going into that event) and has been showing the Fed pumping liquidity into the system in order for the market to sustain a possible future shock (IMO that event could be more bank failures like Indy Mac). These events are out of our control as traders and investors. The best thing you can do is to be defensive and to be prepared for all outcomes and to look for opportunity. I will post my watchlist in the trading room. Have focus, pick plays with a high probability of success, plan the trade and trade the plan. Great luck and great trading.
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