JDfn Daily Digest - August 27, 2008
The president of the Federal Reserve Bank of Atlanta came down squarely on the side of Fed Chief Ben Bernanke, by arguing that inflationary pressures should ease in coming months. Dennis Lockhart said in a speech at Georgia State University's business school that although recent measures of inflation are higher than he would like to see, he expects “CPI inflation will peak near the July level of 5.6%.”
The Commerce Department says orders for durable goods rose 1.3 percent last month, far above the slight 0.1 percent increase economists had been expecting. The July increase matched a 1.3 percent rise in June. Both months turned in the strongest gains since a 4.1 percent surge last December.
According to the Mortgage Bankers Association's weekly application survey, mortgage application volume rose less than 1 percent during the week ended Aug. 22nd. The trade group's application index rose to 421.6 during the week, from 419.3 a week earlier, which had been the lowest index level in nearly eight years.
The Federal Deposit Insurance Corp. is considering a plan to borrow funds from the U.S. Treasury Department, as it seeks to prop up its finances in the course of an expected wave of bank failures. Funds borrowed from the Treasury would be used to cover short-term cash-flow needs related to reimbursing depositors in the aftermath of any bank failure.
Pacific Investment Management Co., the biggest manager of bond funds, is looking for as much as $5 billion to purchase mortgage-backed debt that plunged in value after the subprime market collapsed. Pimco, a unit of Munich-based insurer Allianz SE, manages $830 billion, including the $129.5 billion Pimco Total Return Fund, the largest bond mutual fund.
Eli Lilly (LLY) and Amylin Pharmaceuticals Inc. (AMLN) reported four new deaths in patients taking Byetta, even as the companies tried to shore up the safety profile of their popular diabetes medication. The FDA said it would seek a stronger, more prominent warning for the medication, but details of the new label are still in the works.
Dell Inc. (DELL) unveiled four low-cost computer models designed for China, India and other emerging economies in a new bid to tap the potential of high-growth markets outside the United States.
Aflac Inc. (AFL) said it is paying Goldman, Sachs & Co. (GS) $825 million to buy back Aflac's common shares as the health and disability insurer reaffirmed its profit outlook. Goldman will deliver shares to Aflac in December and January, with a final settlement in February.
Boeing Co. (BA) has withdrawn an offer to begin replacing its traditional pension plan with an employer-sponsored plan, such as a 401(k), after its machinist union threatened to strike. Instead, the company said it is offering to lift its monthly pension payments by 11.4% and give its machinists raises totaling 9%.
Ricoh Company Ltd. said that it will acquire Ikon Office Solutions (IKN) for $17.25 a share, or about $1.62 billion. The Tokyo-based office-products company said the boards of both firms have approved the deal, which is expected to close in the fourth quarter.
Scheduled U.S. Economic Reports (Thursday)
Initial Jobless Claims (Week of August 23rd), Gross Domestic Product (2Q)
In Earnings News
Dillard's Inc. (DDS) reported its loss widened in the second quarter as its sales fell. The company lost $38.3 million, or 51 cents a share, in the quarter ended Aug. 2 compared with a loss of $25.2 million, or 31 cents a share, a year ago.
Brown Shoe Co. Inc. (BWS), which operates the Famous Footwear shoe store chain, reported an almost 80 percent drop in second-quarter profits. The company said it earned $2.2 million, or 5 cents per share. That compares with $9.83 million, or 22 cents per share, in the year-ago period. Analysts expected 6 cents per share.
Talbots Inc. (TLB) said it lost $25 million in its second quarter, nearly doubling year-ago losses as sales fell 8 percent and restructuring charges mounted. The company lost 47 cents per share in the quarter. Talbots lost $13.3 million, or 25 cents per share, in the year-ago quarter. Analysts expected a loss of 34 cents a share.
Dollar Tree (DLTR) reported that second-quarter earnings were $37.6 million, or 42 cents a share, compared to $32.6 million, or 33 cents a share, in the same period a year ago. Analysts expected earnings per share would be 38 cents.
Scheduled Earnings Reports (Thursday)
Dell, PetSmart, Sears Roebuck, Layne Christensen, Marvell Technology, Fleetwood Enterprises, Novell, Tiffany
Stocks in the News
ConocoPhilips (COP) plans to sell the rest of its company-owned gasoline stations to closely held PetroSun West for $800 million.
Fannie Mae (FNM) and Freddie Mac (FRE) both had several ratings cut by Standard & Poor's.
China Mobile (CHL) reported a 45% jump in first-half profit, boosted by growth in its subscriber base.
PetroChina Company (PTR), China's biggest listed oil firm by capacity, missed expectations with a 34.4% decline in first-half net income from a year earlier.
Gen-Probe (GPRO) said its board authorized a buyback of as much as $250 million of common stock over the next two years.
The Commerce Department says orders for durable goods rose 1.3 percent last month, far above the slight 0.1 percent increase economists had been expecting. The July increase matched a 1.3 percent rise in June. Both months turned in the strongest gains since a 4.1 percent surge last December.
According to the Mortgage Bankers Association's weekly application survey, mortgage application volume rose less than 1 percent during the week ended Aug. 22nd. The trade group's application index rose to 421.6 during the week, from 419.3 a week earlier, which had been the lowest index level in nearly eight years.
The Federal Deposit Insurance Corp. is considering a plan to borrow funds from the U.S. Treasury Department, as it seeks to prop up its finances in the course of an expected wave of bank failures. Funds borrowed from the Treasury would be used to cover short-term cash-flow needs related to reimbursing depositors in the aftermath of any bank failure.
Pacific Investment Management Co., the biggest manager of bond funds, is looking for as much as $5 billion to purchase mortgage-backed debt that plunged in value after the subprime market collapsed. Pimco, a unit of Munich-based insurer Allianz SE, manages $830 billion, including the $129.5 billion Pimco Total Return Fund, the largest bond mutual fund.
Eli Lilly (LLY) and Amylin Pharmaceuticals Inc. (AMLN) reported four new deaths in patients taking Byetta, even as the companies tried to shore up the safety profile of their popular diabetes medication. The FDA said it would seek a stronger, more prominent warning for the medication, but details of the new label are still in the works.
Dell Inc. (DELL) unveiled four low-cost computer models designed for China, India and other emerging economies in a new bid to tap the potential of high-growth markets outside the United States.
Aflac Inc. (AFL) said it is paying Goldman, Sachs & Co. (GS) $825 million to buy back Aflac's common shares as the health and disability insurer reaffirmed its profit outlook. Goldman will deliver shares to Aflac in December and January, with a final settlement in February.
Boeing Co. (BA) has withdrawn an offer to begin replacing its traditional pension plan with an employer-sponsored plan, such as a 401(k), after its machinist union threatened to strike. Instead, the company said it is offering to lift its monthly pension payments by 11.4% and give its machinists raises totaling 9%.
Ricoh Company Ltd. said that it will acquire Ikon Office Solutions (IKN) for $17.25 a share, or about $1.62 billion. The Tokyo-based office-products company said the boards of both firms have approved the deal, which is expected to close in the fourth quarter.
Scheduled U.S. Economic Reports (Thursday)
Initial Jobless Claims (Week of August 23rd), Gross Domestic Product (2Q)
In Earnings News
Dillard's Inc. (DDS) reported its loss widened in the second quarter as its sales fell. The company lost $38.3 million, or 51 cents a share, in the quarter ended Aug. 2 compared with a loss of $25.2 million, or 31 cents a share, a year ago.
Brown Shoe Co. Inc. (BWS), which operates the Famous Footwear shoe store chain, reported an almost 80 percent drop in second-quarter profits. The company said it earned $2.2 million, or 5 cents per share. That compares with $9.83 million, or 22 cents per share, in the year-ago period. Analysts expected 6 cents per share.
Talbots Inc. (TLB) said it lost $25 million in its second quarter, nearly doubling year-ago losses as sales fell 8 percent and restructuring charges mounted. The company lost 47 cents per share in the quarter. Talbots lost $13.3 million, or 25 cents per share, in the year-ago quarter. Analysts expected a loss of 34 cents a share.
Dollar Tree (DLTR) reported that second-quarter earnings were $37.6 million, or 42 cents a share, compared to $32.6 million, or 33 cents a share, in the same period a year ago. Analysts expected earnings per share would be 38 cents.
Scheduled Earnings Reports (Thursday)
Dell, PetSmart, Sears Roebuck, Layne Christensen, Marvell Technology, Fleetwood Enterprises, Novell, Tiffany
Stocks in the News
ConocoPhilips (COP) plans to sell the rest of its company-owned gasoline stations to closely held PetroSun West for $800 million.
Fannie Mae (FNM) and Freddie Mac (FRE) both had several ratings cut by Standard & Poor's.
China Mobile (CHL) reported a 45% jump in first-half profit, boosted by growth in its subscriber base.
PetroChina Company (PTR), China's biggest listed oil firm by capacity, missed expectations with a 34.4% decline in first-half net income from a year earlier.
Gen-Probe (GPRO) said its board authorized a buyback of as much as $250 million of common stock over the next two years.
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