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Periodicals Wrap-Up for Thursday, September 25th
WALL STREET JOURNAL: With the list of its potential buyers rapidly dwindling, Washington Mutual (WM) is talking with private equity firms about a possible takeover, the Wall Street Journal reported. Potential candidates are said to include the Carlyle Group and the Blackstone Group (BX)…The terms tied to American International Group’s (AIG) $85B loan from the Fed, including fees and interest payments, has placed the company under intense pressure to sell big assets. CEO Edward Liddy will next Wednesday update the firm’s “future direction,” the Wall Street Journal reported…FINANCIAL TIMES: In an effort to challenge online rivals and loosen Apple’s (AAPL) grip on the U.S. music industry, the Financial Times reported that News Corp’s (NWS) MySpace will today launch MySpace Music, a new online music service…NEW YORK POST: Sources told the New York Post that Lehman Brothers’ (LEH) CEO Richard Fuld reached out to Jeff Immelt, General Electric’s (GE) CEO, about taking an investment in the investment bank before it collapsed. While Fuld hoped Immelt would take a stake in Lehman of up to 20%, Immelt opted to pass…
Asian Markets Wrap-Up for Thursday, September 25
Stocks declined in most Asian countries on fears of a sharp U.S. recession. JAPAN: Shares fell after the government reported that declining auto exports to the U.S. last month sparked a 22% decline in Japan’s exports to America. The Nikkei 225 sank 0.9%, to 12,006.53. Nissan (NSANY) dropped 5%, while Honda Motor (HMC) fell 3.2%. A number of banks moved from losses early in the day to gains after President Bush’s speech calling on Congress to pass the administration’s bailout plan. Shinsei (SKLKY) gained 3%, while Mizuho Financial (MFG) added 1.5%. Shipping company Mitsui & Co. (MITSY) sank 4.9% after the Baltic Dry Index tumbled 6.1% yesterday. CHINA: Stocks gained on speculation that state-owned companies will take advantage of new shareholding rules designed to spur more stock purchases. The CSI 300 Index jumped 3.96% to 2,223.53. China Oilfield Services (CHOLY) rallied 7.8%, while Offshore Oil Engineering Co. jumped 10% and Citic Securities also climbed 10%. China United Telecommunications Corp. added 2.5%, after it announced that its parent company had purchased about 50M of its shares. AROUND ASIA: South Korea’s KRX 100 Index inched up 0.37%, while Taiwan’s Taiex lost 1.17% and Indonesia’s Jakarta Composite fell 0.72%…Taiwan surprised investors by cutting its interest rates, as the country’s central bank reduced rates by 12.5 basis points.
Earnings expectations for 2009 are likely to be trimmed-WSJ
There are some Wall Street analysts who think earnings will significantly grow in 2009. That’s not going to happen, says the Wall Street Journal’s “Heard on the Street”. Corporate budgets are more likely to be redone to reflect lower expectations and the optimism of the Street is likely to be lessened as well.
U.S. equity futures point to a higher open
Stock futures are now pointing to a higher open. The futures lost value after General Electric (GE) reduced its earnings forecast for both the quarter and the full year based on unprecedented weakness in the financial sector. The company also suspended its stock buyback program in an attempt to maintain its AAA rating. Investors received early economic news when the durable goods orders report came in at -4.5% versus an expected decline of -1.9%. However, if you remove transportation items the number was -3.0% versus an expected decline of -0.5%. Also released was the initial jobless claims which came in at 493,000 versus an expected 450,000.
“RTC” Package Speculation Buoys Futures
There are rumors swirling that the package may be passed this morning and that is buoying the futures and some financial firms in the early going. Most of the upside is in names such as Fannie Mae (FNM), Freddie Mac (FRE) and American International Group (AIG). This has been a pattern all week. It is possible that an announcement of the bailout could come at any time. We may swing back and forth in price in a volatile manner on every hope or disappointment. It would be reasonable to expect a surge when the news actually is announced. Bear in mind there is risk news could come overnight as well even if it does not come this morning or later in the day.
Apple-AAPL estimates lowered on lower CPU units@BMOC
BMO Capital lowered AAPL September quarter and FY09 estimates based on lower CPU unit forecasts. The firm said AAPL’s systems business and difficult iMac comps are being impacted by the weak consumer. The firm lowered FY09 EPS estimate to $5.82 from $5.80 and remains positive on shares long-term. Target to $180 from $190.
Airline Sector initiated@STFL
Stifel believes the surviving carriers have entered an era of “newfound discipline” and that new capacity is unlikely given limited worldwide capital. The firm initiated the following stocks: Buy rated: AMR (tgt $18), CAL ($27), DAL ($16), and UAUA ($19); Neutral rated: LUV.
WFR upgraded to Outperform from Market Perform@JMPS
JMP Securities upgraded WFR citing valuation and good visibility into growth. Target $48.
New SEC NYSE Short Sale Prohibited List additions for 9/25
Names added to the SEC NYSE Short Sale Prohibition List: FUR, LPS, CVS, UDR, SLG, KRG, WSH, ATN, and MVC.
Vertex Pharma-VRTX upgraded to Outperform from Market Perform@JMPS
Jim Cramer’s “Mad Money”
Cramer said that Treasury Secretary Henry Paulson is doing a terrible job of selling the bailout plan. Cramer said without this plan, unemployment could skyrocket to 20% to 30%. He told viewers they need to stop looking at the plan as a bailout and start looking at the facts. Cramer advocates doing whatever it takes to get the Paulson plan passed and passed quickly. In his hunt for stocks that can survive even the worst of economic times, Cramer recommended spice-maker McCormick (MKC). Cramer’s thesis for McCormick is simple: In hard, uncertain economic times, McCormick’s spices sell well because people eat out less and cook more at home. The company commands 50% of the herb, spice and marinade market in the U.S. and France and 40% of the market in the UK. Cramer likened McCormick to his earlier recommendation of private-label food maker Ralcorp (RAH). Cramer said McCormick is also a play on healthier eating. Cramer called McCormick very shareholder friendly, with a 2.3% dividend yield and $49M left in its share repurchase program. Cramer would only be a buyer of McCormick if it reports a better-than-expected quarter this week. If the company misses the estimates, Cramer told viewers to take a pass. Then Cramer welcomed Dan Deinst, CEO of Sims Metal Management (SMS) for another take on the health of the economy outside of Wall Street. Deinst said that while the scrap metal business is, a volatile one, his company is still thriving. Sims has been able to use its size to both foresee and capitalize on falling commodity prices, and lock in lower prices. Cramer said Sims is another example of a “real world” company thriving outside of the financial chaos. LIGHTNING ROUND: (Bullish) RIMM; AAPL; Sociedad Quimica; XCO; UPL; ER; AMX; NAT; FRO; CMCSA. (Bearish) F; GU; JRCC; DSX; NYX.
Fast Money position recap- Macke Owns (MSFT), (CY), (WMT); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Najarian Owns (AAPL) And (AAPL) Puts; Najarian Owns (BBBY) Put Spread; Najarian Owns (BIIB) Calls; Najarian Owns (MS) And (MS) Puts; Najarian Owns (NOK); Najarian Owns (RIMM) Call Spread; Najarian Owns (WB) Put Spread; Najarian Owns (XLF) Call Spread; Finerman Owns (GS); Finerman’s Firm Owns (DELL), (JNJ), (MSFT), (NOK), (SUN), (TSO), (VLO), (WM); Finerman’s Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (COF).
Waiting on the “Rescue Bill”. The market could find that as a positive and could run on rumor before passage. The swaps are trading at 2 week high and is a scary fact showing that the credit system is starting to freeze again. Hoping for the best, preparing for the worst. I am mostly in cash and only trading lightly. Pick Plays with a high probability of success, have focus and patience, run technicals through supply and demand. Great luck and HappyTrading! See you in the Trading Room at myhappytrading.com to discuss plays, ideas, new news and info in realtime!