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From Briefing.com
Periodicals Wrap-Up for Monday, September 15th
WALL STREET JOURNAL: The Wall Street Journal reported that in a statement, the Federal Housing Finance Agency, the regulator of Fannie Mae (FNM) and Freddie Mac (FRE), said it will not allow the companies to make “big bar” severance payments to the ousted CEOs, Daniel Mudd and Richard Syron…According to the Wall Street Journal’s “Heard on the Street,” it is likely that only Morgan Stanley (MS) and Goldman Sachs (GS) will remain of the large independent Wall Street brokers, having so far made the right bets and managed risk well. The WSJ said that even if the two are able to dodge immediate danger, they will need to lock in a funding model “that is not susceptible to a sudden loss of confidence”…NEW YORK TIMES: According to a person briefed on the company’s strategies, insurance giant American International Group (AIG) is planning a “major restructuring effort” as well as a sale of its aircraft leasing business and other units, the New York Times reported. The company may need an additional $30B or more in capital to preserve its credit rating, despite already raising $20B this year, the people briefed said; another source said several private equity firms could inject billions of dollars in capital into the firm…REUTERS: Reuters reported that shares of UBS (UBS) dropped more than the banking sector as a whole, following reports that the Swiss bank will have to write down an additional $5B in 2H08. A Swiss newspaper reported that UBS will announce the charges before October 2…
AIG attempted to obtain loan from the Fed-NY Times
AIG (AIG) was trying to obtain a $40B bridge loan last night from the Federal Reserve, as the insurer attempted to avoid a potentially fatal downgrade from the ratings agencies, a source said. A looming downgrade by the agencies would enable counterparties to withdraw capital from their contracts with the insurer. If counterparties withdraw their capital, AIG may only survive for 2-3 days, an inside source said.
UBS shares fall sharply on writedown fears-Reuters
Shares of UBS (UBS) dropped more than the banking sector as a whole, following reports that the Swiss bank will have to write down an additional $5B in 2H08. A Swiss newspaper reported that UBS would announce another $5B in writedowns. The newspaper expects the bank to announce the charges before October 2.
Apple-AAPL: Loved too much? - Barron’s
Technology Trader columnist Eric Savitz re-caped the latest in what has become an annual series of September events by Apple (AAPL) to refresh its iPod line. event featured the unveiling of a new line of iPod Nanos at lower price points, new and cheaper versions of the Touch and some nice new touches to iTunes. Savitz says expectations were high last week, but in general, the Street came away disappointed. Savitz says, Apple fans have become so zealous about tracking what the company is doing, that it is now nearly impossible for Apple to hold an event that surprises anyone. Savitz concludes that Apple has become, in a funny way, loved too much.
Life after the Fannie / Freddie bailout - Barron’s
In the near term, the federal bailout of Fannie Mae (FNM) and Freddie Mac (FRE), the quasi-governmental mortgage giants, which occurred last week, will improve conditions in the secondary mortgage market, and already has begun to lower mortgage rates. Longer-term, some in government and the financial markets think Fannie and Freddie should remain under federal control, while others favor privatization or the outright elimination of the agencies — an outcome that, by some estimates, could boost mortgage rates to as high as 9%-10%. The feds are likely to write down to near-zero Fannie’s $36B and Freddie’s $28B in deferred-tax assets that the two companies claim but are unlikely ever to use. Both have under-reserved materially for credit losses on mortgages carried on their balance sheets, and on mortgage-backed securities owned by others that they guaranteed. Bottom-line: If the two are restructured and lose their government backing, however, rates could rise sharply.
Weekly additions to the Investors Business Daily-100
The following are additions to the Investors Business Daily-100 list for the week of September 12: CSX Corp (CSX), CF Industries Holdings (CF), Gmarket Inc (GMKT), Syniverse Holdings (SVR), Activision Blizzard (ATVI), Potash Corp Saskatchewan (POT), Aerovironment (AVAV), Angiodynamics (ANGO), ITC Holdings (ITC), M & F Worldwide (MFW), Northern Trust Corp (NTRS), Covance Inc (CVD), Northwest Pipe (NWPX), Balchem Corp (BCPC), NN Inc (NNBR), Koppers Holdings (KOP), Shaw communications (SJR), Agrium (AGU),
Weekly subtractions from the Investor’s Business Daily-100
The following are subtractions from the Investors Business Daily-100 list for the week of September 12: China Medical Tech (CMED), Flowserve (FLS), Circor International (CIR), Sohu.com (SOHU), Psychiatric Solutions (PSYS), Charles Schwab Corp (SCHW), Symantec (SYMC), AZZ Incorporated (AZZ), Dorchester Minerals (DMLP), Gorman-Rupp (GRC), Synaptics (SYNA), NCI Inc. (NCIT), Lufkin Industries (LUFK), First Solar (FSLR), IPG Photonics (IPGP), FMC Corp (FMC), TD Ameritrade (AMTD), Costar Group (CSGP),
Asian Markets Wrap-Up for Monday, September 15
Markets in Japan, China, Hong Kong and Korea were closed for holidays…In Australia, the S&P/ASX 200 Index retreated 86.10 points, or 1.8%, to 4,817.70. The effects of the Lehman Brothers Holdings (LEH) bankruptcy was felt as Macquarie Group was down A$4.55, or 10%, to A$39.46. National Australia Bank (NABZY) slid A$1.14, or 4.8%, to A$22.82. Meanwhile, Newcrest Mining (NCMGY) jumped A$1.60. or 8.2%, to A$21.10. Lihir Gold (LIHR) soared 23 cents, or 13%, to A$2.05. Santos (STOSY) sank 57 cents, or 2.9%, to A$18.80…In Singapore, the Singapore’s Straits Times Index fell 84.12, or 3.3%, to 2,486.55…In Taiwan, the Taiex Index lost 258.23, or 4.1%, to 6,052.45.
AIG’s bad debt being eyed by J. Christopher Flowers-NY Post
The New York Post has learned that American International Group (AIG) may be able to offload billions of dollars worth of bad debt to private-equity guru J. Christopher Flowers. Sources say J.C. Flowers & Co is backed by $4B in equity from China Investment, which is said to have a pool of capital of nearly $200B. Additionally, sources say other private equity investors may purchase some of AIG’s “bad” assets and that AIG could also speed up its plan to sell assets or raise capital before the September 25 deadline. Further, Flowers may look to help Bank of America (BAC) form a deal to buy Lehman Brothers (LEH); under that deal, Flowers could buy nearly $40B in mortgage assets from Lehman.
Bove says taxpayers may need to rescue Washington Mutual-NY Post
According to Landeburg Thalmann’s Dick Bove, the government will be forced to guarantee up to $24B in losses on defaulted option-ARM and subprime mortgages, as well as home-equity lines of credit due to the $32.5B in mortgages defaults it is estimated Washington Mutual (WM) is facing. In an interview with the New York Post, Bove says the possibility that WaMu will be sold has increased and that a sale price for the bank could be around $2 per share.
Buffett now in rescue talks with AIG-The Insurance Insider
According to a report on The Insurance Insider, Warren Buffett is now in rescue talks with American International (AIG).
Marvel Entertainment’s filmmaking move increases its potential rewards-IBD
By taking greater control of its proprietary characters and for the first time producing its own movies, Marvel Entertainment (MVL) has set itself up to cash in on the rewards it once only licensed, according to Investor’s Business Daily’s “The New America”. “It makes all the difference in the world,” says David Miller at Caris & Co. “Iron Man” had $571M in worldwide box office receipts as of early August, and the “The Incredible Hulk” had $246M. More films are in the making and some analysts point to 2009 as a banner year. “They’re increasing the power of their brand globally,” says Cowen & Co.’s Doug Creutz. “Domestically, they have a pretty wide reach, but internationally, they have a lot of room to expand familiarity with their characters.” Marvel had earnings per share of $1.70 in 2007 on revenue of $486M. That followed 67 cents per share and $352M of revenue in 2006. Analysts see $1.79 per share for this year.
Yen/Australian Dollar against the US Dollar
One peculiar aspect of the broader global equity melt down this morning is the stability of the US Dollar against other currencies. Digging below the surface at the pairs, one unusual relationship is way the Japanese Yen and Australian Dollar have been trading overnight and this morning. While the Yen at one point had gained nearly three percent against the US Dollar, the Australian Dollar had depreciated by nearly as much. We had flagged this last week as an unwind of the carry trade. With the pairs in mirror opposition and at an extreme, it would appear carry is unwinding at an accelerating pace. Ultimately, when this relationship between the two currency normalizes, that may well be the first sign of an abatement of liquidation.
Research in Motion-RIMM: Expect good quarter and increased guidance@AMTR
Am Tech’s checks indicate that the company’s subscriber trends and shipments were strong in Q3, and they believe RIMM’s EPS may beat expectations by 2c-3c. The firm reiterated their Buy rating.
U.S. equity futures continue to point to a much lower open
Stock futures continue to point to a much lower open. At this point the die has been cast regarding the news in the financial sector and how it will affect the group. But how the day plays out remains to be seen. The world markets are tumbling and the U.S. market looks poised to follow that pattern at the start. It will be interesting to see if the markets drop to a level where buyers come in because of a perception that the markets have at least touched a bottom. That’s the optimist’s view. The pessimistic viewpoint is that there are more bombshells to follow and that this is the beginning of a larger financial crisis. Time will tell.
Research in Motion-RIMM sell through checks weaker than expected@PACS
PacCrest’s sell-through checks reveal September sell-through is trending flat with August versus their expectations of it being up. PacCrest believes BlackBerry sell-through is slightly disappointing but finds it too early to gauge the impact of November quarter product launches. Shares remain Outperform rated.
Citigroup-C says unprecedented time in financial markets-Dow Jones
Citigroup says it has been in active dialog with regulators/peers and is pleased with liquidity measures taken by regulators. Citigroup also said it was able to be a supportive participant in liquidity facility. The bank said it is confident in its ability to stand by clients, it sees strong/consistent demand for Citi’s credit in the market but is unclear how events of the last few days will play out and that the potential impact on its Q3 performance is unclear.
Goldman Sachs-GS downgraded to Neutral from Buy@MLCO
Merrill downgraded GS citing the repercussions from Lehman’s bankruptcy and the difficult issues it creates. Target to $159 from $187.
US Airlines upgraded@UBSW
UBS upgraded AAI, ALGT, AMR, CAL, DAL, LCC, NWA and UAUA to Buy from Neutral and JBLU to Neutral from Sell.
Fast Money position recap- First Moves: Jeff likes GM on a dip, Tim likes long EEM, Joe long GS, Pete likes HOLX. Macke Owns (WMT), (MSFT), (UUP); Macke Is Short (TM); Seymour Owns (AAPL), (F), (GM), (MER), (SHLD), (TSO); Seygem Asset Management Owns (EEM); Najarian Owns (AAPL) And (AAPL) Collar; Najarian Owns (GE) Put Spread; Najarian Owns (HOLX) Calls; Najarian Owns (MS) And Is Short (MS) Calls; Najarian Owns (NOK) And Is Short (NOK) Calls; Najarian Owns (RIMM) Call Spread; Najarian Owns (TSO) Call Spread; Najarian Owns (XLF) And (XLF) Collar; Terranova Owns (AAPL),(RIMM), (GS), (VLO), (SA), (YHOO), (NOV), (POT), (EOG), (FCX), (X); Terranova Owns (AIG) Puts And Owns (AIG).
Markets are in turmoil big time….I am not going to rehash what you already know…..I am sitting out the first hour and will watch the market range before making any decisions…..The ^IRX is tanking and that means the Fed is pumping liquidity in big time….it also means that it is highly probable theat the Fed will cut rates, probably by 50 basis points so be careful pressing shorts for too long. I’m covering alot of my shorts and taking the profit. Great Trading and Great Luck!
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