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From Briefing.com
Periodicals Wrap-Up for Wednesday, September 24th
WALL STREET JOURNAL: According to senior law-enforcement officials, the Wall Street Journal reported that the FBI opened preliminary probes that focus on whether fraud helped cause some of the financial turmoil at Freddie Mac (FRE), Fannie Mae (FNM), American International (AIG) and Lehman Brothers (LEH)…FINANCIAL TIMES: The Financial Times reported that Nomura (NMR) agreed to create a $1B bonus pool in an effort to retain the nearly 2,500 from the investment banking and equities divisions of Lehman Brothers that the bank acquired earlier this week. In other Lehman news, Bain Capital and Hellman & Friedman are reportedly teaming up to make a bid for Lehman’s investment management arm, including Neuberger Berman…The Financial Times also reported that Yahoo!’s (YHOO) new board approved a new round of discussions with Time Warner’s (TWX) AOL, a person familiar with the matter said, which may reignite negotiations for a combination…NEW YORK TIMES: According to two sources with direct knowledge of the matter, the New York Times reported that Freddie Mac reportedly paid $15,000 a month through last month from the end of 2005 to a firm owned by Rick Davis, Senator John McCain’s campaign manager. Earlier this week, McCain, whose campaign has attacked Senator Barack Obama for ties to former officials of the mortgage giants, claimed that Davis had not been involved with the company for several years…
Freddie Mac reportedly paid McCain aide’s firm-NY Times
According to two sources with direct knowledge of the matter, Freddie Mac (FRE) reportedly paid $15,000 a month through last month from the end of 2005 to a firm owned by Rick Davis, Senator John McCain’s campaign manager. Earlier this week, McCain, whose campaign has attacked Senator Barack Obama for ties to former officials of the mortgage giants, claimed that Davis had not been involved with the company for several years. In return for the money, the people said they did not recall Davis’s “doing much substantive work for the company,” and that Davis Manafort was kept on the payroll due to close ties to McCain.
Asian Markets Wrap-Up for Wednesday, September 24
Asian stocks were generally higher as financial firms gained following the news that Warren Buffett would invest $5B in Goldman Sachs (GS)…JAPAN: The Nikkei 225 Stock Average rose 24.44, or 0.2%, to 12,115.03, while the broader Topix index lost 0.72, or under 0.1%, to 1,167.97. Mitsubishi UFJ Financial Group (MTU), which announced it will buy as much as 20% of Morgan Stanley (MS) for about $8.4B, jumped 4.2% to Y936. Nomura Holdings (NMR) increased 5.2% to Y1,505, and said it would purchase the European operations of Lehman Brothers Holdings (LEH). Sumitomo Mitsui Financial Group (SMFJY) was up 1.2% to Y684,000. Mitsui O.S.K. lost 4.8% to Y1,078 Nippon Yusen K.K. sank 3.9% to Y804. Mitsubishi Corp. slid 5.5% to Y2,685. Honda (HMC) was down 2% to Y3,430. Toyota (TM) dropped 1.2% to Y4,810. Sony (SNE) tumbled 2.6% to Y3,430…CHINA: The CSI 300 Index advanced 15.38, or 0.7%, to 2,138.85…AUSTRALIA: The S&P/ASX 200 Index increased 58.40, or 1.19%, to 4,981.90. Macquarie jumped 11% to A$40. National Australia Bank (NABZY) gained 7.3% to A$25.60. Babcock & Brown soared 33% to A$1.70…AROUND ASIA: In Hong Kong, the Hang Seng Index advanced 89.14, or 0.5%, to 18,961.99. China Petroleum & Chemical Corp. (SNP) was up 2.8% to HK$6.66. Cathay Pacific added 2% to HK$13.10. China Eastern Airlines Corp. (CEA) rose 1.5% to HK$1.33. Sinopec increased 2.8% to HK$6.66. PetroChina (PTR) climbed 2.5% to HK$8.56. CLP was up 0.2% to HK$61.30. Bank of East Asia (BKEAY) slumped HK$1.85, or 6.9%, to HK$25.15.
T. Boone Pickens funds are down about $1B-WSJ
“It’s like mashing all your fingers in the door…This has been a pretty bad period for us,” say investor T. Boone Pickens, whose funds have lost about $1B year to date, including $270M personally. “It’s my toughest run in 10 years. We missed the turn in the market, there’s nothing fun about it.” But Pickens still believes oil prices will head higher but for now he has his funds in a more neutral position.
Microsoft announces Windows Mobil 7 will be delayed-Boy Genius
The Boy Genius reports that Microsoft (MSFT) has delayed Windows Mobile 7 until 2H09. The timing is an issue amid increasing competition from Apple (AAPL), RIM (RIMM), and Google (GOOG).
U.S. equity futures still point to a higher open
U.S. equity futures are still pointing to a higher open but they are off of their best levels of the morning. The futures jumped on the report that Goldman Sachs (GS) would receive a $5B investment from Warren Buffett. Goldman also raised additional capital by selling another $5B of common stock.The deal was well received and due to its response Goldman doubled the amount of shares they had planned to offer. There were other financial institutions that filed to sell shares as well to the public in an attempt to raise capital and take advantage of the short selling ban. Some of those include: Stifel Financial (SF), Capitol One Financial (COF), and First Niagara Financial Group (FNFG).
Goldman Sachs-GS target lowered to $165 from $170 on capital raise@BERN
Bernstein lowered their target to reflect the impact of the capital raise.
Goldman Sachs-GS capital raise positive, but comes at steep price@JPMS
JP Morgan believes the capital raise is positive as it brings respected investor Warren Buffet, but notes that it comes at a steep price with preferreds yielding 10% and $5B of warrants priced at $115 per share. The firm lowered their estimates on the dilution but maintains an Overweight rating.
Energy Conversion-ENER sell-off overdone. recommend purchase@FBCO
Credit Suisse said ENER is on track to meet September quarter and full year guidance and said Solar Integrated Tech is not canceling products. Shares are Outperform rated.
IBM Corp-IBM: Short-Sale Ban List Pop
The shares are up +1.5% in the pre-market after the name was added to the short-sale ban list today. Major resistance levels to watch are at the $118 to $120 area. The downtrend from August would still be in place even if these levels are met. Support is at $116.50.
First Solar-FSLR volatility Up into Senate passing renewable energy bill
FSLR is recently up $9.10 to $220 in pre-open trading. The Senate passed H.R. 6049, a bill that will offer $17 billion to the renewable energy sector. FSLR over all option implied volatility of 77 is near its 26-week average according to Track Data, suggesting non-directional price movement.
Alexion Pharma-ALXN : Expect a continued robust Soliris sales trajectory@CSTI
Collins Stewart expects a positive near-term National Coverage Decision (NCD) in the U.K. for Soliris in paroxysmal nocturnal hemoglobinuria (PNH). Collins believes the potential for Soliris success in various other indications represents a free-call option.
Buffett: Says certainly has confidence in Goldman-CNBC
Buffett: Betting on Congress to do the right thing with the bill-CNBC
Buffett: Believe economy will be strong over long-term once develeraged-CNBC
Buffett: May get worse if Paulson plan is dropped-CNBC
Buffett: Paulson plan ‘absolutely necessarry’ to avoid going over precipice-CNBC
SunPower-SPWR volatility Up into Senate passing renewable energy bill
SPWR is recently up $5.49 to $93 in pre-open trading. The Senate passed H.R. 6049, a bill that will offer $17 billion to the renewable energy sector. SPWR over all option implied volatility of 78 is above its 26-week average of 64 according to Track Data, suggesting larger price movement.
Solar Sector upgraded to Outperform following cautious stance@RBCM
RBC Capital expects the pending passage of the U.S. energy tax bill, which includes an 8-yr extension and expansion of the solar tax credit, to drive growth in the solar sector. The firm upgraded WFR to Outperform from Sector Perform and ESLR to Sector Perform from Underperform.
Senate energy bill most positive for Akeena Solar@KBRO
Kaufman Bros. believes the passed Senate energy bill is most positive for Akeena Solar (AKNS) since the company has all its business here in the U.S. and is dependent on the tax credit. The firm also finds the news positive for Evergreen Solar (ESLR), First Solar (FSLR), and SunPower (SPWR).
Google-GOOG target lowered to $570 from $657@KBRO
Kaufman Bros. lowered their estimates as they believe the economic weakness will impact GOOG if it continues. However, Kaufman thinks GOOG continues to take market share in search and maintains a Buy rating.
Memc Electronic Mat-WFR provides operational and financial update following Ike
“As stated in our press release from last week, our Pasadena facility did not experience any apparent major damage, and we were able to start up the plant systems in preparation for production to begin Monday, September 14, as planned,” stated Nabeel Gareeb, MEMC’s chief executive officer. “However, some of our regional suppliers had startup difficulties primarily due to power availability, plant issues, and pipeline damage as a result of the Hurricane, preventing them from starting high volume delivery of some raw materials until yesterday. This resulted in the Pasadena facility running at very low utilization levels through the early part of this week. We now believe we are at the tail end of these raw material issues, which should allow us to achieve normal production rates within the next few days. Assuming there are no significant issues during this ramp, we now expect the cumulative impact of these delays to be approximately 15 days worth of production instead of the 5 days originally forecasted. Consequently, we are now targeting third quarter 2008 revenue to be approximately $530 million, plus or minus $10 million, with gross margin of approximately 51%, plus or minus 1%. Operating expenses are still targeted to be approximately $43 million.”
Senate approves package to extend $18B in energy tax credits-Reuters
“Solar is the winner here,” Raymond James analyst Pavel Molchanov said after the U.S. Senate Tuesday approved a package that will, for using renewable energy sources, extend $18B in tax credits. Additionally, the package, which alternative energy companies have been lobbying for this year, will provide incentives to cut energy consumption. Under the terms of the package, the credit for renewable sources such as ocean tide projects that generate power will be extended for two years, while the tax credit for producing electricity from wind will be extended for an additional year.
US Oilfield Services & Eqt Sector initiated with an Overweight@FBCO
Credit Suisse initiated the U.S. Oilfield Services & Equipment Sector with an Overweight rating based on valuations and growth opportunities. The firm initiated the following stocks: Outperform rated: BHI, FTI, SII, NOV, and WFT; Neutral rated: SLB, HAL, OII, EXH, CAM, and GLBL; and Underperform rated: BJS.
Google unveils G1, its first smartphone powered by Android-FT
According to Paul Taylor of the Financial Times, Google’s (GOOG) recently unveiled G1, the first smartphone powered by Android open-source technology, could be the right move for Google. Google, which hopes the device will help define the emerging mobile internet, will go on sale next month for less than Apple’s (AAPL) 3G iPhone at $179 with a T-Mobile (DT) voice and data plan. Taylor also says that, at least initially, the phone “probably poses little threat” to Research in Motion’s (RIMM) BlackBerry, but it may slow its push into the consumer market.
Solar: Expect stocks to react positively on passage of tax extenders bill@SBSH
Citigroup notes that the Senate voted 93-2 to pass and send to the House HR 6049, the tax extender bill, which includes the solar ITC and wind PTC. The firm expects solar stocks to react positively as the bill affords a longer extension to the solar investment credits (8 years) than other sources of renewables. First Solar (FSLR) remains Citigroup’s favorite solar name.
Chairman Bernanke of the Federal Reserve System speaks at 2:30pm on 9/24
Chairman Bernanke appears before the House Financial Services Committee to speak on The Future of Financial Services: Exploring Solutions for the Market Crisis
Treasury Secretary Paulson speaks on Future of Financial Services 2:30pm 9/24
Secretary Paulson appears before the House Financial Services Committee
Memc Electronic Mat-WFR upgraded to Outperform from Sector Perform@RBCM
RBC Capital upgraded WFR on expectations of improved demand growth following the likely 8-year extension of the US solar tax credit program. Target $53.
Solar: Implications of energy tax bill passed by Senate@JEFF
Jefferies believes the $17B bipartisan energy tax bill that would extend tax credits for renewable energy projects in the U.S. stands a good chance of passing the House of Representatives and receiving approval from the White House. The firm thinks names that could benefit from U.S. exposure include SunPower (SPWR), Evergreen Solar (ESLR), and Energy Conversion (ENER).
Solar: Expect final Energy Bill to pass this week@COWN
Cowen said the bill passage is not appear priced into PV stocks and that the entire group should rally. The fimr said the best positioned names are Outperform rated SPWR, FSLR, ENER and STP.
United Therapeutics-UTHR initiated with a Buy, target $141@JEFF
Jefferies believes the company can solidify its position as a market leader in PAH (pulmonary arterial hypertension).
Jim Cramer’s “Mad Money”
Cramer said the bailout plan proposed by Treasury Secretary Henry Paulson focuses on one thing, curtailing mortgage foreclosures. Without the plan, he warned, the banking and financials stocks will continue to collapse. Cramer dispelled what he called the top five “lies” about the Paulson plan. Bottom-line: Cramer says, “we need this deal if only to save Washington Mutual (WM).” Next, Cramer talked with Michael Ward, pres/chair/CEO of CSX (CSX), which Cramer recommended on Aug. 21 at $61.96 a share. CSX recently reported a solid quarter, and raised guidance. Ward said CSX is still growing, with demand for coal, fertilizer, ethanol and metals still strong. He said while auto and housing related shipments are sluggish, the rail industry is still taking marketshare from trucking as concerns over congestion and high fuel prices continue. Ward said the modest moves in the dollar have had little impact on the company’s export businesses because 85% to 90% of the company’s business is domestic. He said CSX continues to innovate and focus on productivity and cost savings. Cramer said rails are still the place to be, as he gave the nod to both CSX and competitor Union Pacific (UNP). Then, Cramer reiterated his long-held prediction that the bottom to the housing market is just 281 days away. He said the way to play this coming bottom is invest in companies in the early phase of the cycle, like best-of-breed Masco (MAS). Cramer says the stock has already priced in the lower housing starts, leaving only upside potential, he said. Moreover he said the company boasts a 4.9% dividend yield. Cramer said he also likes the company’s huge cash flow, and it has 33M shares left in its stock repurchase program and trades at just 22.8x its growth rate. MAD MAIL: Cramer said gold is a better metal play than silver and other metals, since gold is more in demand around the world. He reiterated support for Barrick Gold (ABX), and Agnico-Eagle Mines (AEM). LIGHTNING ROUND: (Bullish) UPL; AMTD. (Bearish) CRM; XOM; ELON; WRES; DISCA.
Fast Money Position Recap- Macke Owns (MSFT), (WMT); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE): Najarian Owns (AAPL) And (AAPL) Collar:Najarian Owns (BBBY) Put Spread:Najarian Owns (MS), Is Long (MS) Puts, Is Short (MS) Calls:Najarian Owns (WB) Put Spread:Najarian Owns (XLF) Call Spread: Finerman Owns (GS); Finerman’s Firm Owns (JNJ), (MSFT), (SUN), (TSO), (VLO); Finerman’s Firm And Finerman Own (WM); Finerman’s Firm Is Short (IYR), (IJR), (SPY), (IWM), (MDY), (COF), (BBT).
Staying nimble and going to hawk the solars for follow through and support, trying not to make any prejudgements yet. See you in the trading room at myhappytrading.com! Pick plays with a high probability of success, have focus and patience, run technicals through supply and demand.
Great Luck to you! Happytrading!
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