BloggingStocks

Before the bell: CROX, JNPR, CCU, FO, MSFT, DAL, GOOG, WB, WM, LEH ...

Melly Alazraki — 2008-07-25T08:13:00+00:00

Filed under: Before the bell, Earnings reports, Analyst reports, Analyst upgrades and downgrades, Deals, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Market matters, Netflix, Inc. (NFLX), Black and Decker (BDK), Merrill Lynch (MER), Clear Channel Commun (CCU), Chipotle Mexican Grill'A' (CMG), Fortune Brands (FO), Morgan Stanley (MS), Wachovia Corp (WB), Washington Mutual (WM), Economic data, Juniper Networks (JNPR), Crocs Inc (CROX), Delta Air Lines (DAL), Lehman Br Holdings (LEH), Housing

U.S. stock futures were lower Friday morning, a day after a selloff triggered by housing data. Today investors are bracing for more housing data at 10:00 a.m. EDT after already hearing that foreclosures soared 121% during the second quarter. Other point of interest will be durable goods data reported an hour before the opening bell. Meanwhile, oil continued the steady climb that started Thursday as the dollar weakens, trading above $126 a barrel. It's Friday, and no many earnings reports are due.

While there aren't many earnings reports today, there are a few including Fortune Brands (NYSE: FO), Netflix (NASDAQ: NFLX) and Black & Decker (NYSE: BDK) among others.

Crocs (NASDAQ: CROX) shares are tanking over 44% to $5 after after it cut its earnings outlook significantly on softer demand for its plastic shoes. With all those knockoffs around, is it any wonder? Robert W. Baird downgraded Crocs from Outperform to Neutral, slashing the target price from $21 to $5.

Meanwhile, Juniper Networks (NASDAQ: JNPR) surged 12% in premarket trading after the company not only beat estimates when reporting quarterly results Thursday, but also increased its sales forecast for the third-quarter much higher than analyst estimates. Friedman Billings and Citigroup both upgraded Juniper to Outperform and Buy respectively.

In deal news, Clear Channel Communications (NYSE: CCU) shareholders on Thursday approved a $17.9 billion takeover by private equity funds Thomas H. Lee Partners and Bain Capital. This ends the 20-month long effort.

Chief Executive Steve Ballmer said Microsoft (NASDAQ: MSFT) will continue its internet push and that the company was "done" Yahoo (NASDAQ: YHOO) for now.

Meanwhile, Soleil upgraded internet search giant Google (NASDAQ: GOOG) from Hold to Buy.

Merrill Lynch also upgraded Delta Air Lines (NYSE: DAL) from Neutral to Buy and Chipotle Mexican Grill (NYSE: CMG) from Underperform to Neutral.

Financials:

Wachovia (NYSE: WB) said late Thursday that its CFO, Thomas Wurtz, was stepping down as soon as a replacement is found. That's after two weeks ago, the company brought in a new chief executive. For now Wall Street is not jumping up and down with joy as WB shares are down about 1.5% in premarket trading.

CNBC reports that "Morgan Stanley (NYSE: MS), which currently employs only 8,000 brokers, is targeting the massive Merrill Lynch (NYSE: MER) brokerage sales force in a major recruitment drive." Both MS and MER shares are up in premarket action.

Washington Mutual (NYSE: WM) shares seem to have stabilized after declining over 13% Thursday over an analyst note claiming creditors are pulling funds from the company. The company responded, saying that "WaMu funds all of its business through its banking operations and does not rely on commercial paper."

CNBC also reports that Lehman Brothers (NYSE: LEH) may be weighing the sale of at least part of its Neuberger Berman asset management unit.

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Option Update: Lehman & Merrill Lynch volatility stays elevated

Paul Foster — 2008-07-24T10:31:00+00:00

Filed under: Merrill Lynch (MER), Options, Lehman Br Holdings (LEH)

Lehman (NYSE: LEH) closed at $21.10 Wednesday. LEH August option implied volatility of 114 is above its 26-week average of 64 according to Track Data, suggesting larger price movement.

Merrill Lynch (NYSE: MER) closed at $33.81 Wednesday. MER August option implied volatility is at 66; January is at 52. MER average option implied volatility over the last 26-weeks is 55 according to Track Data, suggesting decreasing price movement in the next four-months.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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Cramer on BloggingStocks: Shorts are not and should not be equal

Jim Cramer — 2008-07-22T08:41:00+00:00

Filed under: Short stories, Market matters, Citigroup Inc. (C), American Express (AXP), Merrill Lynch (MER), Options, Lehman Br Holdings (LEH), Cramer on BloggingStocks

TheStreet.com's Jim Cramer says they're not just the opposite of longs -- they have the power to destroy companies.

Today will be riotously ugly. Today's a day where you could take down a Capital One (NYSE: COF) (Cramer's Take) or a Citigroup (NYSE: C) (Cramer's Take) -- some bad credit card exposure there -- off of American Express (NYSE: AXP) (Cramer's Take). You can bang down Nat City (NYSE: NCC) (Cramer's Take) into oblivionville off of it and hammer Merrill Lynch (NYSE: MER) (Cramer's Take) to the point where you could hear the rumors fly of capital needs. Freddie (NYSE: FRE) (Cramer's Take), merciless Freddie, right at ya. Today's the day when the uptick rule would be the only friend to the notion of owning stocks without fear every minute, fear that they will break your stock. Today's the day that the uptick rule can save Lehman (NYSE: LEH) (Cramer's Take) from $14 or lower. Today's why we need it.

Yet, every time I do a piece that talks about the need to reinstate the uptick rule or enforce the naked short laws, I am immediately greeted with the same nonsense: why should the longs get protection the shorts shouldn't? In fact, other than the usual gang of two -- Patrick Byrne and David Patch -- I don't get any positive feedback on these pieces like the one I did last night on "Mad Money."

Why aren't they treated equally? First, I question constantly how anyone could even think they are treated equally: I think the shorts are now heavily favored because they can instill fear and panic that the longs don't have the ability to do. They can destroy businesses -- the ultimate goal -- and the longs can't. I don't like that, I don't like it because the great history of the stock market shows that it works better if we regulate the shorts, to make it so they can't overwhelm the longs. The creation of wealth, not the destruction of wealth, is what the market is supposed to be about, it is why it is worth participating in at all, otherwise the mattress or bonds -- only good for the most solvent of operations -- make more sense. Wealth creation is what the stock market's about. That's not what the shorts are about. They can exert a well-needed discipline on valuation. They can even exert a regulatory role in the absence of any serious regulation about the finances of a company. But otherwise, their contribution to society can't really be stressed as something that should be the republic's goal to preserve and protect. The public's interest could do better without them.

Let's say the goals of the stock market are equal, wealth destruction and wealth creation. Then I would 100% favor total equivalence and would laugh at the uptick rules and the naked shorts rule that makes it so easy to sell stock without borrowing it. If you believe that wealth destruction deserves equal protection, I am dead wrong. I think that's a preposterous proposition, right down to the preamble of the Constitution.

Right now, today, we all know the truth: If you are a short-seller, the shorts are able to create an environment that can destroy the companies underneath, not just the stocks themselves. Certainly any company that has more capital than it needs does not need to be protected and can use the short-selling to buy in stock. But any company that needs credit as a method of operation, as all financials that are not levered do, can be effectively destroyed overnight by the shorts pushing the stocks down and sowing that panic that makes the companies vulnerable to closing.

Another joke of "equivalence," another edge the shorts have over the longs is the amount they can short vs. the amount that a company can buy. Using naked shorting, short-sellers can sell short as much stock they want on a given day. They can overwhelm any stock. The companies themselves, though, are strictly and severely limited to what they can buy. Why can't the rule be changed for the companies that do the buying to they are equivalent and not helpless to the shorts just flooding their stocks with supply on a given day? Why can't they buy as much as they want? Why are the companies regulated about what they can buy, but the shorts are able to sell an unlimited amount of stock -- at least for all but the sainted few financials in the temporary protection order that SEC Chairman Cox served up last week that went into effect yesterday?

More important, does anyone think that the fear created by shorts is less punishing than the greed longs can create? Does anyone think they are equivalent? Does anyone think that you can hype a financial, for instance, higher and quicker than you can destroy it?

There are sound psychological and financial reasons, not just historic reasons, for my view.

Notice, I am never for a minute denying that there aren't a lot of fraudulent companies out there or overvalued companies. Never for a minute am I against shorting. I made millions of dollars shorting. I did it following the old rules. I can tell you, when the old rules were in place and hedge funds weren't running the joint, often bigger than their target, I never heard anyone complain that the schematic was wrong or evil or misplaced or unfair. It was accepted that it wasn't in the market's interest to be able to raid companies down and it was acknowledged by all that you could destroy a company by attacking its stock recklessly through driving down all the bids with short sales that weren't legitimately borrowed.

The fact that there are so many people who defend this new system shocks me. Since when is it in the government or the peoples' interests NOT TO PROTECT solvent firms from needless runs on the bank caused by shorting?

The day I have to defend the right of legitimate institutions to exist and not be prey to short-sellers armed with rumors and no borrowed stock is a day I just think it is worth saying that the goal of the market is to lose as much as can be made or more. That's not how I view the goal of the markets. If you do, I think that you simply believe that I am dead wrong, and I welcome the disagreement.

These rules need to be put back in place. The slippery slope of ETF HOLDRs, that basically say, "You can bang down stocks, so why not get rid of the rules?" should also be turned upside down with a 10-cent tick rule, meaning you have to wait until you have a buyer willing to pay 10 cents higher. All of the academic work supporting this nonsense was done in a bull market vacuum encouraged by a laissez-faire administration that truly believes capitalism can regulate itself. If anything, if left to its own devices, it destroys itself. Even the communists, morons that they were, knew this.

Think about this view today as you lose huge amounts of money in this declining bear market.

You just might agree with me.

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RELATED LINKS:
All You Need to Know About Short-Selling
Ask TheStreet: Naked Shorts
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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.

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Sovereign wealth funds: Still an appetite for US financial institutions?

Tom Taulli — 2008-07-21T13:51:00+00:00

Filed under: Deals, Merrill Lynch (MER)

So far, sovereign wealth funds have had bad luck with investments in U.S. financial institutions such as with Citigroup (NYSE: C) and Merrill Lynch (NYSE: MER).

Despite this, there still may be interest in dealmaking. Just take a look at the situation with Merrill Lynch. There was talk that the troubled firm would unload its 49.8% stake in BlackRock Inc (NYSE: BLK), and apparently there was interest from sovereign wealth funds, according to the Financial Times.

The potential suitors: Kuwait Investment Authority and Temasek (Singapore).

However, one issue was valuation. Why sell when the markets are in dire straights?

But there were some other key considerations. For example, BlackRock has been able to escape much of the turbulence from the credit crunch. More importantly, the firm has a lot of growth potential in global markets.

BlackRock must give consent for a sale -- at least for the next 14 months. So, in the end, it has a lot of power in the situation.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

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Earnings highlights: Citigroup, eBay, IBM, Merrill Lynch, Microsoft and others

Trey Thoelcke — 2008-07-19T09:40:00+00:00

Filed under: Earnings reports, Microsoft (MSFT), eBay (EBAY), International Business Machines (IBM), Citigroup Inc. (C), Johnson and Johnson (JNJ), Cintas Corp (CTAS), Merrill Lynch (MER), Procter and Gamble (PG), Kimberly-Clark (KMB), Allegheny Technologies (ATI), Harley-Davidson (HOG), United Technologies (UTX)

Here are some highlights from this past week's earnings coverage from BloggingStocks:

Activision Blizzard Inc. (NASDAQ: ATVID) sees strong Q1 results driven by Guitar Hero.
Allegheny Technologies Inc. (NYSE: ATI) raised its Q2 earnings guidance ahead of its report.
Cintas Corp. (NASDAQ: CTAS) strong Q4 and full-year results included a record quarterly revenue.
Citigroup (NYSE: C) posted better-than-expected results despite a big loss on further write-downs.
eBay Inc. (NASDAQ: EBAY) reported better-than-expected results and offered a soft outlook (see transcript).
Fastenal Co. (NASDAQ: FAST) posted strong Q2 earnings despite the housing slump but lower revenues.
Grainger Inc. (NYSE: GWW) posted strong Q2 results on expansion in Mexico and China.
Harley-Davidson Inc. (NYSE: HOG) beat Q2 expectations despite profit and revenue declines.
International Business Machines Corp. (NYSE: IBM) easily topped Wall Street earnings expectations.
Johnson & Johnson (NYSE: JNJ) beat Q2 estimates and raised its full-year forecast (see transcript).
Kimberly-Clark Corp. (NYSE: KMB) warned of lower Q2 earnings due to energy and distribution costs.
Merrill Lynch & Co. (NYSE: MER) reported worse-than-expected Q2 results on further write downs.
Microsoft Corp. (NASDAQ: MSFT) earnings surged but investors were put off by its full-year guidance.
Procter & Gamble Co. (NYSE: PG) reaffirmed its guidance following the Kimberly-Clark warnings.
United Technologies Corp. (NYSE: UTX) beat Q2 estimates, lifting shares from a recent 52-week low.
ValueClick Inc. (NASDAQ: VCLK) posted weak results and warned about the second half of the year.

For more highlights from this week, see: Google, Intel, JPMorgan, Coca-Cola, Nokia and others

The earnings crunch continues next week. Among companies scheduled to report are Apple (NASDAQ: AAPL), Bank of America (NYSE: BAC), Merck (NYSE: MRK), Texas Intruments (NYSE: TXN), Caterpillar (NYSE: CAT), Halliburton (NYSE: HAL), United Parcel Service (NYSE: UPS), Wachovia (NYSE: WB), Yahoo! (NASDAQ: YHOO), Amazon (NASDAQ: AMZN), Anheuser-Busch (NYSE: BUD), AT&T Inc. (NYSE: T), McDonald's (NYSE: MCD), PepsiCo (NYSE: PEP), Pfizer (NYSE: PFE), Boeing (NYSE: BA), Hershey (NYSE: HSY), and Southwest Airlines (NYSE: LUV).

Visit AOL Money & Finance for more earnings coverage.

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Bank secrets, save thousands on medical bills & states help battle foreclosure - Today in Money 7/18

Allan Halprin — 2008-07-18T09:23:00+00:00

Filed under: Google (GOOG), Microsoft (MSFT), Time Warner (TWX), Starbucks (SBUX), International Business Machines (IBM), Citigroup Inc. (C), Advanced Micro Dev (AMD), Money and Finance Today, Merrill Lynch (MER), Mattel, Inc (MAT), Wachovia Corp (WB), Teva Pharm Indus ADR (TEVA)

In the News:

· Citigroup Posts $2.5 Billion Quarterly Loss, But Not As Bad As Expected

· Is Google Ordinary After All? Earnings Miss Expectations, Stock Sinks

· Merrill Lynch Earnings Worst-Than-Expected With $4.9 Billion Loss

· Microsoft's $4.3 Billion Profit Falls Short

· IBM Profits Surge Past Estimates

· Teva to buy Barr Pharma for More Than $7 Billion

· Starbucks Finally Releases List of 600 Stores It Will Close

· Embattled AMD CEO Steps Down

· Wachovia Raided Over Frozen Accounts

· Mortgage Rates Tumble This Week

· Will the Dark Knight Bring Light to Time Warner?

· Barbie & Bratz Are Sisters, Court Rules

· Holiday Travel Will Get Costlier This Year

Which States Are Helping Homeowners Battling Foreclosure?
Frustrated by the slow pace of federal relief, states around the country are pouring hundreds of millions of dollars into their own programs to stem the rising tide of home foreclosures. See if your state is stepping up to the plate.
States battle mortgage foreclosure threat; see chart - USATODAY.com

10 Things Your Bank Won't Tell You
With the recent bank failures the industry has been front page news recently. For all that fine print they don't disclose very much. All those branches aren't just about convenience; they're a bank's primary sales floor. Brochures for services as varied as retirement accounts and home loans are on display, and everyone from the teller on up is trained to make a sale. Regardless of what your credit card agreement says, you can never be sure how much interest banks will charge you.
Shhh! Secrets Your Bank Keeps - SmartMoney.com

Save Thousands on Your Medical Bills
Don't let a big IOU ruin you financially. You have more ways to cut the price than you think. Here are practical ways you can trim your health costs.
Save Thousands on Your Medical Bills - Kiplinger.com
Plus: How to Negotiate to Reduce Your Medical Costs

Crack Down on Credit Cards on College Campuses
Been turned down for a credit card lately? Probably not if you're a teenager with no job and no credit history. Unprepared students have been increasingly targeted by card issuers, and some lawmakers are taking notice.
Credit card issuers target college students - CNNmoney

Facebook Creeps Me Out
It's become the most hyped workplace obsession since the BlackBerry. But something about the social-networking site makes executives squirm.
Facebooks Impact on CEOs - Portfolio.com

Cocktails Guys Can Order and Not Feel Like Wusses
Filled with less-than-masculine mixtures ordering a cocktail for a man won't win you any style points. So put down that fruit garnish, take the umbrella out of your straw, and sip in style with these drinks that guys shouldn't be afraid to order.
Drinks Guys Can Order and Not Feel Like Wusses | MainStreet

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Pre-market movers (MER) (C) (AMD) (UAUA) (MSFT)

Douglas McIntyre — 2008-07-18T08:16:00+00:00

Filed under: Google (GOOG), Microsoft (MSFT), Citigroup Inc. (C), Advanced Micro Dev (AMD), Merrill Lynch (MER)

Merrill Lynch (NASDAQ:MER) is down over 5% on poor earnings.

Google (NASDAQ:GOOG) is down 8% on disappointing earnings.

AMD (NYSE:AMD) is down 7% on poor earnings.

UAL (NASDAQ:UAUA) is up over 8% on an anlyst upgrade.

Micrososft (NASDAQ:MSFT) is down over 5% on poor earnings.

Stocks may trade differently in the pre-market than they do the regular session.

Douglas A. McIntyre is an editor at 247wallst.com.

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Before the bell: Citi earnings push futures higher despite MER, GOOG, MSFT disappointments

Melly Alazraki — 2008-07-18T07:42:00+00:00

Filed under: Before the bell, Major movement, Earnings reports, Google (GOOG), Microsoft (MSFT), Market matters, International Business Machines (IBM), Citigroup Inc. (C), JPMorgan Chase (JPM), Merrill Lynch (MER), Oil

U.S. stock futures turned higher Friday morning after earnings from Citigroup that beat expectations offset disappointment from Merrill, Google and Microsoft. There was also some pressure from oil as prices rebounded to above $131 a barrel, following Nigeria cutting output.

Many on Thursday started wondering if we have seen the bottom. Stocks rallied for a second straight session as oil continued its price drop. Better -than-expected earnings for JPMorgan Chase (NYSE: JPM) again lifted banks. The Dow Jones Industrial Average gained 207.38 points, or 1.9%, the S&P 500 index rose 15.7 points, or 1.2%, and the Nasdaq Composite Index gained 27.45 points, or 1.2%.

Without any economic releases today, the market will continue to focus on earnings, and investors have a lot to mull, especially after Thursday's wave of financial results releases after the close, and with financials and techs being in the center of attention.

After JPMorgan Chase brought on some optimism with its results Thursday morning, Merrill Lynch (NYSE: MER) reported after the close a wider-than-expected loss of $4.65 billion, or $4.9 a share, on $9.7 billion of credit-market writedowns. The loss per share was larger than any analyst had expected according to Bloomberg survey. MER shares are declining over 4.8% in premarket trading.

But then, Citigroup Inc. (NYSE: C) reported this morning a smaller-than-expected loss. The largest U.S. bankposted a $2.5 billion second-quarter loss, or 54 cents per share on about $7.2 billion of credit-market writedowns. Analysts estimated the loss would be $3.67 billion, according to a Bloomberg survey. Citi shares are up over 4% this morning in premarket trading.

Also, three tech giants reported after the close Thursday: Microsoft Corp. (NASDAQ: MSFT), Google Inc. (NASDAQ: GOOG) and IBM (NYSE: IBM). Google missed expectations despite posting a 35% growth in profit and its stock is over 7.2% lower in premarket trading. Similarly, Microsoft also missed Wall Street's expectations despite posting a 13% profit growth and MSFT shares are down over 5.5% in premarket trading. IBM, however, topped estimates with its 22% profit growth.

Many more earnings were reported Thursday and this morning. Will the ones that beat expectations offset the disappointments? This is how today's session will likely play out.

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Merrill gets gored

Peter Cohan — 2008-07-17T18:33:00+00:00

Filed under: Merrill Lynch (MER)

Reuters reports that Merrill Lynch (NYSE: MER) reported worse than expected results for the second quarter. Merrill lost $4.9 billion and is selling $8 billion in fresh assets to raise capital.

Merrill's news is the latest of the asset write-down capital raising dances that have taken place in the last year. This dance pairs the write-down of mortgage-backed securities that nobody wants to buy with a desperate effort to raise capital to keep its capital ratios from collapsing. To that end, Merrill took $9.4 billion of write-downs of repackaged debt, including CDOs, as well as exposure to bond insurers. And it raised $4.425 billion from selling its 20% stake in Bloomberg. Merrill may also sell a controlling interest in Financial Data Services for $3.5 billion.

Its loss of $4.42 a share was more than twice the $1.94 loss that analysts had expected. There is not likely to be an end to this asset write-down capital raising dance until people are willing to trade CDOs. And that's the optimistic scenario. If CDOs remain illiquid, it will be ever more difficult to raise capital. And in that case, the prospect of bankruptcy or government bailout loom large. Meanwhile, Merill's stock lost 7.3% in after-hours trading.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

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Earnings roundup: Merrill to lose, tech to win?

Peter Cohan — 2008-07-17T08:57:00+00:00

Filed under: Earnings reports, Google (GOOG), Microsoft (MSFT), International Business Machines (IBM), JPMorgan Chase (JPM), Merrill Lynch (MER), Wells Fargo (WFC)

Reuters reports that today is a big one for bank and technology earnings. It looks like Merrill Lynch (NYSE: MER) will lose big and will try to soften the blow with an announcement about selling its 20% of Bloomberg LP for $4.5 billion to its founder, New York mayor, Michael Bloomberg. JP Morgan Chase (NYSE: JPM) and a handful of big technology companies are expected to report profits. But will they be enough?

Meanwhile, how can we make sense of yesterday's 276 point rally on Wall Street? Nobody knows what happened, but theories abound: the price of oil fell -- possibly due to anticipation that the Fed would raise interest rates to deal with inflation that is roaring out of control. Higher interest rates would strengthen the dollar, which would drive down the price of oil since it's traded in dollars. But I think yesterday's market was a short-covering frenzy. With the SEC foolishly squeezing the shorts, they needed to cover their bets that financials would fall further. Of course good news from Wells Fargo (NYSE: WFC) didn't hurt.

Today's earnings -- with estimates courtesy of a Reuters analyst survey -- are likely to move the market. Here's a roundup:

Merrill Lynch is expected to lose $1.94
JPMorgan was expected to make $0.44, down 63% from 2007. At a Price/Earnings to Growth (PEG) ratio of 0.4 and a P/E of 12 on earnings forecast to grow 31% to $3.34 in 2009, it looks cheap. CNNMoney reports it made 54 cents -- well ahead of expectations and its shares are up 5% in premarket.
Microsoft Corp. (NASDAQ: MSFT) will earn 47 cents a share, a 21% increase from last year. At a PEG ratio of 1.1 and a P/E of 15 on earnings forecast to grow 14.3% to $2.16 in 2009, it looks reasonably priced.

Google Inc. (NASDAQ: GOOG) is likely to earn $4.72, up 61% from last year. At a PEG ratio of 1.7 and a P/E of 36 on earnings forecast to grow 25% to $21.57 in 2009, it looks expensive.
International Business Machines (NYSE: IBM) is anticipated to earn $1.82, 21% higher than 2007. At a PEG ratio of 1.3 and a P/E of 16 on earnings forecast to grow 12% to $9.57 in 2009, it looks priced about right.

As always, I predict the market will boost the shares of companies that beat these expectations and raise their revenue and profit growth forecasts. For those that fail to beat and raise, investors could slash their shares. JPMorgan beat expectations this morning and the upside surprise is rewarding those who bet on it prior to the announcement.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns Wells Fargo shares and has no financial interest in the other securities mentioned.

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Before the bell: Futures higher ahead of housing data and a wave of earnings; JPM, KO already reported

Melly Alazraki — 2008-07-17T07:38:00+00:00

Filed under: Before the bell, Earnings reports, Google (GOOG), Microsoft (MSFT), eBay (EBAY), Coca-Cola (KO), International Business Machines (IBM), JPMorgan Chase (JPM), Merrill Lynch (MER), Economic data, Wells Fargo (WFC), Housing

U.S. stock futures edged higher Thursday morning, a day after market staged a big rally. Investors this morning are bracing for some housing data, but more importantly, a wave of earnings. Already better-than-expected earnings from J.P. Morgan Chase boosted stock index futures from earlier declines this morning.

On Wednesday, bulls finally came back in drove to but equity as oil price continued its decline and airlines and Wells Fargo (NYSE: WFC) reported results that Wall Street found encouraging, sending airline and financials stocks through the roof. The Dow Jones Industrial Average ended a three-day losing streak, jumping 276.74 points, or 2.5%. The S&P 500 climbed 30.45 points, or 2.5%, and the Nasdaq Composite gained 69.14 points, or 3.1%.

Still, all this sentiment might yet evaporate, or be seriously damped after housing data is released at 8:30 a.m. EDT. Building permits and housing starts for June are due out at that time. Also, weekly jobless claims will continue to paint the picture of the goings on in the labor market. At 10:00 a.m., the Philadelphia Fed index for July will be reported.

It would be interesting to see how the data and earnings play out. Already, J.P. Morgan Chase (NYSE: JPM) reported it profit sank 53% in the second quarter to $2.00 billion, or 54 cents per share. That beat estimates of 44 cents share. JPM shares are up over 5.5% in premarket trading.

Meanwhile Coca-Cola (NYSE: KO) shares are also rising 2.2% in premarket trading despite reporting a 23% decline in second-quarter profit to $1.42 billion, or 61 cents per share. Excluding one-time items, per-share earnings were $1.01, beating estimates of 96 cents per share. Revenue rose 17%.

Still due to report today are: From financials, Merrill Lynch (NYSE: MER) is due to post earnings after the market close. Then we also have a wave of heavyweight tech companies reporting today like Google (NASDAQ: GOOG), Microsoft (NASDAQ: MSFT) and IBM (NYSE: IBM), all reporting after the close as well.

On Wednesday, online auctioneer giant eBay (NASDAQ: EBAY) reported a 22% jump in quarterly profit, but gave a soft outlook for the current third quarter. EBAY shares are declining over 9% in premarket trading.

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Before the bell: JAVA, STX, S, CLF, FNM, GS, LEH ...

Melly Alazraki — 2008-07-16T08:10:00+00:00

Filed under: Before the bell, Apple Inc (AAPL), Sprint Nextel Corp (S), Merrill Lynch (MER), Federal Natl Mtge (FNM), Goldman Sachs Group (GS), Sun Microsystems (JAVA), Lehman Br Holdings (LEH)

Before the bell: Futures lower ahead of data, earnings, despite Intel

Sun Microsystems (NASDAQ: JAVA) shares are trading nearly 8% higher in premarket action after announcing earnings forecast that was better analysts had expected.

Seagate (NYSE: STX) shares, however, dropped over 9% in after-hours trading Tuesday, after it forecast first quarter earnings below Street's estimates.

Sprint Nextel (NYSE: S) saw its shares jump 9.44% Tuesday. Reports say that SK Telecom is in talks with Sprint over potential deals.

Cleveland-Cliffs (NYSE: CLF) said it's going to buy Alpha Natural (NYSE: ANR) for $10 billion in cash and stock, putting a 35% premium on Alpha's stock. ANR shares are trading 27% higher in premarket action. CLF's, 4.5% lower.

U.S. securities regulators issued an emergency rule Tuesday to limit certain types of short selling in major financial firms, including Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). Following the demise of Bear Stearns, the SEC wants to make sure company stocks are not being manipulated. The emergency rule applies to 19 financial firms.

Meanwhile, according to Bloomberg, the U.S. Securities and Exchange Commission subpoenaed Wall Street's biggest firms and hedge-fund advisers including Goldman Sachs (NYSE: GS) and Merrill Lynch (NYSE: MER) as it tries to crack down on suspected manipulation of Lehman Brothers Holdings Inc. (NYSE: LEH) and Bear Stearns Cos. shares.

Staying with Fannie Mae and Freddie Mac, they may cut common stock dividends to preserve capital, according to Bloomberg. It's probably about time!

Finally, after an Apple Inc. (NASDAQ: AAPL) iPhone 3G launch marred with technical difficulties and glitches, O2 said its system is back to normal.

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Newspaper wrap-up: Wall Street firms subpoenaed by SEC

Laurie Pasternack — 2008-07-16T08:00:00+00:00

Filed under: Newspapers, Magazines, Intel (INTC), Advanced Micro Dev (AMD), Merrill Lynch (MER), Federal Natl Mtge (FNM), Goldman Sachs Group (GS), News Corp'B' (NWS), Lehman Br Holdings (LEH)

MAJOR PAPERS:

People familiar with the issue said that European regulators are gearing up to file new antitrust charges against Intel Corporation (NASDAQ: INTC). The charges, the Wall Street Journal reported, would allege Intel gave major European retailers an incentive not to sell computers that use Advanced Micro Devices Inc (NYSE: AMD) chips.

OTHER PAPERS:

The New York Times reported that News Corporation's (NYSE: NWS) New York Post and The Daily News, owned by Mortimer Zuckerman, are exploring a print pact and have been in talks to find ways to combine some business functions of the papers, according to people briefed on the matter.
According to sources, the San Francisco Business Times reported that Washington Mutual Incorporated (NYSE: WM) may be planning more layoffs in September. It is unclear how many employees will be affected and from which departments.

WEB SITES:

In an effort to preserve capital, data compiled by Bloomberg showed that troubled mortgage companies Federal National Mortgage Association (NYSE: FNM), or Fannie Mae, and Federal Home Loan Mortgage Corporation (NYSE: FRE), or Freddie Mac, may cut dividends after more than $11B in combined losses since last year.
Three people familiar with the matter said that the SEC subpoenaed Wall Street investment banks including The Goldman Sachs Group Inc (NYSE: GS), Deutsche Bank AG (NYSE: DB) and Merrill Lynch & Co Inc (NYSE: MER) in its hunt and crack down on suspected manipulation of Bear Stearns and Lehman Brothers Holdings Inc (NYSE: LEH) shares. Bloomberg reported that two of the people said the SEC, which yesterday curtailed short selling in financial stocks, is looking for e-mails and trading records and is also examining whether securities firms have "adequate controls" to deal properly with misconduct.

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Will Bush throw a change-up at Yankee Stadium?

Sheldon Liber — 2008-07-15T14:45:00+00:00

Filed under: Other issues, Rants and raves, JPMorgan Chase (JPM), Charles Schwab Corp (SCHW), Merrill Lynch (MER), Southwest Airlines (LUV), Wells Fargo (WFC), Politics, Presidential elections, Commodities, Lehman Br Holdings (LEH), Federal Reserve, Recession

There are many ironies in the fact that President George W. Bush will throw the first pitch at Major League Baseball's All-Star Game in New York. For one, President Bush is the first managing general partner of a Major League team (the Texas Rangers) to become President of the United States.

President Franklin Roosevelt was the first to attend an All-Star Game and throw out the first pitch, starting the tradition. He too had to deal with a poor economy and by the time he threw out that first ball the groundwork was being laid for World War II. President Bush has had to contend with his own war.

While there are differing views as to whether we should have gone into Iraq and whether we should stay or get out, this will always be viewed as George's war, fair or not. And the state of our economy in 2008 will also be viewed as George's economy, fair or not.

The ultimate irony for me is that Yankee Stadium is scheduled to be torn apart at the end of the season. This is YANKEE Stadium and the last president to set foot in it will be George W. Bush. The stadium with the greatest heritage in baseball, the 'House That Ruth Built', is going to be torn apart while our economy is also being torn apart. It is being torn out at its roots.

Major manufacturing jobs are being lost every day. But that's not the roots. The financial sector is crumbling to dust, but that is not the roots. Housing and construction are gasping for air. But that is not the roots. The roots of the United States of America have been and always will be the people and their ideas. We are a nation founded on ideals and ideas. These are being tested severely.

The negativity in the marketplace creates a dampening of our spirit but not the end of our reign as a nation of ideals and ideas. The confidence that people are lacking and that the Federal Reserve is trying to shore up will be restored, even as things are at their worst.

In my mind, President Bush has been a man with ideals. Unfortunately, he has not been a man with many ideas nor has he had much respect for people of differing ideas. This was underscored by the trio of "my way or the highway" guys -- Dick Cheney, Donald Rumsfeld and Karl Rove.

However, when Bush throws that baseball it will symbolize to me the rounding of third base for his administration, the end of a grand piece of Americana and the bottom of our recession. A new president, be he Democrat or Republican, will bring new ideas and a new stadium and be the beginning of a new era. The bottoming out of our bad situation does not mean a rapid rise but we are a nation of success stories and the new stories will soon be set in motion even as the old ones wear on. But it is hard to see it sometimes when you are in the middle of the storm.

Food for thought:

When folks are taking money out of one bank they are usually putting it in another. That we have not read about. Are deposits increasing at J. P. Morgan Chase (NYSE: JPM) or Wells Fargo (NYSE: WFC)? A quick call to my Wells Fargo VP, Sherry, informed me deposits have been on the rise, significantly.
Brokerage houses and investment banks like Merrill Lynch (NYSE: MER) and Lehman Brothers (NYSE: LEH) are suffering but Charles Schwab (NASDAQ: SCHW) did not stick its neck out and looks to clean up going forward.
After the airlines go down for the third time, what will emerge? Is the stage being set for Southwest Airlines(NYSE: LUV) to make another three decade run?

While the economy is doing poorly, many sectors are built to last and have the cash to back it up. Pharmaceuticals, energy, software, metals, defense, food, communications and many more are down but will continue to prosper even if it is at a slower pace.

By the time the "Boys of Summer" start spring training next year everything will look very different.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of WFC.

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Option Update: Blackrock volatility elevated into EPS & outlook

Paul Foster — 2008-07-15T10:00:00+00:00

Filed under: Merrill Lynch (MER), Options

Blackrock (NYSE: BLK), an investment management firm, closed at $166.63 Monday. BLK is expected to announce Q2 EPS on July 17. Merrill Lynch (NYSE: MER) owns 52,395,082 shares of BLK as of March 21, 2008. BLK July 165 straddle is priced at $14. BLK August option implied volatility of 63 is above its 26-week average of 47 according to Track Data, suggesting larger price movement.

Financial Select Sector-XLF overall volatility at 54; 26-week average is 36.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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Cramer on BloggingStocks: The breadth of the danger is staggering

Jim Cramer — 2008-07-15T08:56:00+00:00

Filed under: Bad news, Industry, Ford Motor (F), General Motors (GM), Market matters, Citigroup Inc. (C), Advanced Micro Dev (AMD), Regions Financial (RF), AutoNation Inc (AN), Bank of America (BAC), BB and T (BBT), Merrill Lynch (MER), Sears Holdings (SHLD), Federal Natl Mtge (FNM), Comerica Inc (CMA), D.R.Horton (DHI), Amer Intl Group (AIG), Lennar Corp'A' (LEN), Southwest Airlines (LUV), Wachovia Corp (WB), Washington Mutual (WM), IndyMac Bancorp (IMB), Lehman Br Holdings (LEH), Cramer on BloggingStocks, MBIA Inc (MBI)

TheStreet.com's Jim Cramer says our problems are so widespread, he sees lots more IndyMacs before we're out.

You don't need me to tell you it's awful out there. You don't need me to tell you that there's no quick fix for any of these things. But what might help you understand why it feels so bad this time is that I have never, in my career, seen so many companies go off track at the same time. This is one unbelievable moment, and it is made more horrible by the day as companies' stocks just get pummeled, causing people to then question the very viability of the companies involved.

First, obviously, are Fannie Mae (NYSE: FNM) (Cramer's Take) and Freddie Mac (NYSE: FRE) (Cramer's Take). We don't know what will happen, but we do know that their futures are much darker than their pasts. Their best hope: a Democrat becomes president and shows the usual love to both. But as investments, they are pretty much perma-losers going forward. The losses are that heavy. Yes, it is true that two years from now they will be better, but will the government let them limp through to that? View them as calls on a Democratic win.

We all know that Citigroup (NYSE: C) (Cramer's Take), Wachovia (NYSE: WB) (Cramer's Take), Washington Mutual (NYSE: WM) (Cramer's Take) and National City (NYSE: NCC) (Cramer's Take) are in trouble. Bank of America (NYSE: BAC) (Cramer's Take) says it isn't in trouble, but obviously the market doesn't believe management because the stock failed to rally when it said its dividend was safe. Any short-selling hedge fund could hire 30 actors and have them line up at a Washington Mutual or two and get a bank run going. Then we would have to hear about a "hasty" Treasury department plan to bail out WM. Hasty? How can these guys not see it coming?

No revelation that Lehman (NYSE: LEH) (Cramer's Take) or Merrill's (NYSE: MER) (Cramer's Take) in the soup, although I do marvel that at no price do they seem interesting to anyone -- value guys, takeover guys, or acquirers in general. But how about Comerica (NYSE: CMA) (Cramer's Take), Regions Financial (NYSE: RF) (Cramer's Take), Sovereign (NYSE: SOV) (Cramer's Take), Huntington Bancshares (NASDAQ: HBAN) (Cramer's Take), Suntrust (NYSE: STI) (Cramer's Take), Fifth Third (NASDAQ: FITB) (Cramer's Take), First Horizon (NYSE: FHN) (Cramer's Take), Marshall & Ilsley (NYSE: MI) (Cramer's Take), Zions (NASDAQ: ZION) (Cramer's Take), Key (NYSE: KEY) (Cramer's Take), Colonial (NYSE: CNB) (Cramer's Take) and BB&T (NYSE: BBT) (Cramer's Take)? Their charts are indicating there is much more devastation ahead. Every one of them is small enough to fail, and no one would give a darn. If the FDIC follows the trail blazed by IndyMac (NYSE: IMB) (Cramer's Take) it would be great because IndyMac Federal isn't foreclosing anymore. Get rid of the foreclosures, get rid of some of the overhang. But is that the plan, or do they have no place to put the foreclosed loans?

We know that the Gang of Four -- MBIA (NYSE: MBI) (Cramer's Take), MGIC (NYSE: MTG) (Cramer's Take), PMI (NYSE: PMI) (Cramer's Take) and Ambac (NYSE: ABK) (Cramer's Take) -- has been obliterated, a long-running saga of puffing by management and disastrous numbers. These companies are important, even if everyone seems to think that they have gone down without much repercussion other than the 40th story about how private mortgage insurers are now raising rates. Golly gee, who is paying them anything? They don't have enough money to pay the bank back for heaven's sake!

For example, they are very important to AIG (NYSE: AIG) (Cramer's Take), which seems to have found no bottom. None at all. Remember that funny dividend boost at AIG? What was that about?

There are tons of other financial insurers no one's paying attention to that seem to go down pretty constantly. An outfit like XL (NYSE: XL) (Cramer's Take) seems like it is a wasting asset. Or how about Genworth (NYSE: GNW) (Cramer's Take), which is selling well below book value?

Then there is everything auto, not just Ford (NYSE: F) (Cramer's Take) and GM (NYSE: GM) (Cramer's Take) (although do you really need anything else to go wrong there?) -- outfits like Visteon (NYSE: VC) (Cramer's Take) or Autonation (NYSE: AN) (Cramer's Take) or Carmax (NYSE: KMX) (Cramer's Take) aren't going to get through this one unscathed.

Or how about the homebuilders? Does anyone think that Hovnanian (NYSE: HOV) (Cramer's Take), Lennar (NYSE: LEN) (Cramer's Take), Pulte (NYSE: PHM) (Cramer's Take) and Horton (NYSE: DHI) (Cramer's Take) will all make it? I don't. How about that nifty Lennar upgrade by UBS? Sold to you, UBS (NYSE: UBS) (Cramer's Take), along with all of the toxic mortgages you STILL OWN!

I am not even going to include the airlines, they are all hopeless in my opinion, except for maybe Southwest (NYSE: LUV) (Cramer's Take). They are charities.

Other areas have problems -- retail has some busted stocks, and so do restaurants. Chico's (NYSE: CHS) (Cramer's Take)? Charming Shoppes (NASDAQ: CHRS) (Cramer's Take)? How about Macy's (NYSE: M) (Cramer's Take) -- where's that headed? Sears (NASDAQ: SHLD) (Cramer's Take)? OUCH!

You can see some techs folding, but only a handful. Maybe because only AMD (NYSE: AMD) (Cramer's Take) is on the fiscal ropes do people see "relative strength" in tech, whatever that means.

The problem is that the dire stocks, the ones I have listed, are so numerous and so concentrated with so little hope for rescue that it is hard to imagine anything but more downside for these stocks and therefore more downside for the rest of the market, simply because they are so glaring, are owned by so many mutual funds and have so many roles to play in the real economy.

We know that things have gotten out of control because the IndyMac collapse -- widely predicted -- used a huge amount of the surplus the FDIC has, suddenly making the safety net seem like a flimsy piece of Brawny.

The bottom line here -- there is too much going wrong right now, too much to put us anywhere near sound footing. I suspect that every rally will be met with selling until we see a multitude of collapses like IndyMac.

I am not going to search for positives in any of these groups yet, and if they rally off the decision by the Treasury to make more explicit the Fannie and Freddie guarantees, I would scale out of them once again on any short squeeze like the one we had at yesterday's opening.

Someone asked me yesterday, "When do we bottom?" I said it wouldn't be until all the banks that have to fail do so and GM files bankruptcy along with Ford. I said it matter-of-factly, because I meant it and because it is obvious.

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RELATED LINKS:
IndyMac Insurance Tab Could Hit $8B
Fannie, Freddie Plan Staves Off Housing Disaster
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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.

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