Wall Street Breakfast: Must-Know News

Seeking Alpha's Market Currents

Get your news while it's current.

• Leaders for GE appliance unit emerge. GE (GE) CEO Jeffrey Immelt says Chinese Haier and Korean LG -- both of which are looking for a foothold in the U.S. market -- are among the leading candidates to buy its appliances unit. A LG deal is seen as a greater threat to Whirlpool (WHR). GE is also considering a spinoff. The unit is thought to be worth about $8B.
• Vodafone buys into Qatar mobile market. Global mobile giant Vodafone's (VOD) Qatar unit (55% ownership) will pay $2.1B for Qatar's second wireless license. Service will begin in Q1 2009. Vodafone is looking to units in Qatar, Turkey and India among others to spur expansion amid slow Europe growth. Shares were up 1.6% in London this morning.
• Home prices fell 2% from a month ago, and a record 14% since last year, according to S&P/Case Shiller's housing index. "There are very few silver linings that one can see in the data," Chairman Davbid Blitzer says.
• Consumer confidence hits 16-year low. "Consumers' inflation expectations, fueled by increasing prices at the pump, are now at an all-time high and are likely to rise further in the months ahead. As for the short-term outlook, the Expectations Index suggests little likelihood of a turnaround in the immediate months ahead," the Conference Board said. The index fell to 57.2 from 62.8 in April.
• Misinterpreted rumors lead to panic that sent clients and banks running from Bear Stearns (BSC). Executives honestly believed the bank was about to turn a corner.
• BofA boosts China stake. Bank of America (BAC) added $1.86B to its $3B stake in China Construction Bank Corp., and thereby dispelled rumors it wanted to dump the investment to raise cash. A NAB Research analyst says the move signals BofA has ample capital on hand to make investments.
• Bad loan sales haunt lenders. Unhappy investors in subprime debt, home-equity loans and other toxic assets are pressuring lenders to repurchase debt that defaulted unusually fast and/or contained errors. The potential liability: billions. Countrywide (CFC) recently estimated its liability for such claims at $935M, up from $365M a year ago. Fannie Mae (FNM) recently told analysts it was reviewing every loan that defaults, and forcing lenders to buy back loans that failed to stand up to quality standards.
• Windows 7 comes out to play. Microsoft (MSFT) demonstrated Vista's successor. Its showcase, "Multi-touch" technology that is able to process multiple screen touches simultaneously, could spawn a new class of PCs. (screenshots)
• JetBlue defers new planes. JetBlue (JBLU) is delaying the delivery of 21 Airbus A320s for up to five years, in order to preserve its liquidity and slow its capacity growth amid a weakening air-travel industry.
• Airfares soar, people keep flying. U.S. airfares are already up a whopping 16% this year amid an 80% jump in fuel costs. The end is not in sight. Still, business travel has not seen any serious drop. Airline stocks rallied Tuesday (LUV +2.9%, DAL +7.6%, UAUA +8.8%, CAL +4.9%, LCC+6.2%) as oil dropped to well below $130/barrel. Fuel costs now account for 40% of airline operating costs, up from 25% last year.
• Indonesia quits OPEC. Indonesia is leaving OPEC due to its disappointment with high oil prices. On Saturday, its government cut back on gasoline subsidies much to the chagrin of Indonesians. "It is not enough to blame speculators only on oil prices, because if there is significant additional supply from OPEC, oil prices will go down," energy analyst Kurtubi said.
• GM downgrade rocks shares. Shares of GM fell 1.02% to $17.42 Citigroup analysts cut its share rating to Hold from Buy. "Auto fundamentals are poised to deteriorate beyond 2008," analysts said. Shares traded to their lowest level ($16.87) since 1982 intraday.
• Cash injection lifts Standard Pacific. Shares of struggling homebuilder Standard Pacific (SPF) soared 48.2% after it announced a $530M equity investment by private-equity firm MatlinPatterson Global Advisers LLC. Morningstar had predicted a distressed sale.

Earnings: Tuesday After Close

• Borders Groups (BGP): Q1 EPS of -$0.53 misses consensus of -$0.47. Revenue of $785M vs. consensus of $801M. -0.88%
• Cogent (COGT): Q1 EPS of $0.16 beats consensus of $0.09. Revenue of $24.6M vs. consensus of $23M. +5.4%.
• Jamba (JMBA): Q1 EPS of -$0.12 in-line. Revenue of $102M in-line. -0.4%.
• Shanda Interactive (SNDA): Q1 EPS of $0.60 beats consensus of $0.51. Revenue of $111M vs. consensus of $107M. -1.3%.

Earnings: Wednesday Before Open

• American Eagle (AEO): Q1 EPS of $0.21 beats consensus of $0.19. Revenue of $640M vs. consensus of $637M. Sees Q2 EPS of $0.28-$0.30 in-line.
• Chico's FAS (CHS): Q1 EPS of $0.07 beats consensus of $0.06. Revenue of $410M vs. consensus of $417M.
• Finlay Enterprises (FNLY): Q1 EPS of -$1.19 beats consensus of -$1.22. Revenue of $205M vs. consensus of $210M. Sees 2008 EPS of -$1.15 to -$1.35, better than consensus of -$2.19.

Today's Markets

• Asia Wednesday: Nikkei -1.32% to 13,709. Hang Seng -0.13% to 24,250. Shanghai +2.48% to 3,459. BSE +0.75% to 16,398.
• Europe at midday: FTSE +0.33%. CAC +1.46%. DAX +1.06%.
• U.S. futures slightly higher. Dow +0.14%. S&P +0.18%. Nasdaq +0.25%.
• Oil down another 1.39% to $127 (low of $126.37). Gold down 1.62% to $893 (low of $888).

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Comments

[nukldrager]

Please explain... how is BSC still a viable entity?

[dectra]

The same way bush is still important....


All hail the WORST PRESIDENT EVER

[Dave M.]

Eli, it's time to ban dectra from posting. That's two days in a row he has to interject politics into this forum. What will you do?

[SA EditorEli Hoffmann]

Indeed. dectra, please keep comments germane to the post.

[jackooo]

Dave M.
Do something with this loser, plz...

[RichardSchweitzer]

Is the S A format (page presentation) being changed?

[SA EditorEli Hoffmann]

Hi Richard,

We've folded the UTR into Market Currents, our new home-page real time market blog. What do you think of it?