James Dicks Daily Digest - February 18, 2009

The White House unveiled a plan to help 9 million "at risk" homeowners modify their mortgages, committing $75 billion of taxpayer money to back the initiative. The plan contains two separate programs. One program is aimed at 4 million to 5 million homeowners struggling with loans owned or guaranteed by Fannie Mae and Freddie Mac to help them refinance their mortgages through the two institutions.

A separate program would potentially help 3 million to 4 million additional homeowners by allowing them to modify their mortgages to lower monthly interest rates through any participating lender. Under this plan, the lender would voluntarily lower the interest rate, and the government would provide subsidies to the lender.

Members of the Federal Open Market Committee agreed that the U.S. economy was weakening further in January, and a gradual recovery wasn't likely until the second half of the year. At the meeting January 27 and 28 FOMC meeting, the committee held its interest-rate target near zero, and promised that it would "employ all available tools" to restore the economy to growth.

Former Fed Chairman Alan Greenspan said the current global recession will "surely be the "longest and deepest" since the 1930s and more government rescue funds are needed to stabilize the U.S. financial system.

The Bank of England revealed that its policy makers had unanimously agreed to ask the government for the authority to create money in a bid to prop up the economy as its ability to cut interest rates further dwindles.

Billions of dollars in government loans to prop up General Motors (GM) and Chrysler won't be enough. The companies, which have received $17.4 billion so far, filed plans with the government more than doubling that request to a staggering total of $39 billion.

U.S. industrial production dropped 1.8% in January. Production has fallen in five of the past six months. Capacity utilization fell to 72% in January from 73.3% in the previous month. This is the lowest level since February 1983.

The Commerce Department reported that construction of new homes and apartments dropped 16.8 percent last month to a seasonally adjusted annual rate of 466,000 units. That’s well below the 530,000 units economists expected, and was the slowest pace on records dating backing a half-century.

The home builders' sentiment index improved for the first time since September, rising one point to 9 from a historic low of 8 in January. The builders said the index was "virtually unchanged" in February.

L-3 Communications Holdings Inc. (LLL) received a contract worth up to $87.4 million from the U.S. Navy to provide software, planning and engineering services. The one-year contract, which was awarded to L-3's "Command & Control Systems and Software" division, has the option of being extended for four additional years.

Scheduled U.S. Economic Reports (Thursday)

Initial Jobless Claims, Producer Price Index, Leading Indicators, Philadelphia Fed Index

In Earnings News

Goodyear Tire & Rubber Co. (GT), the biggest U.S. tire maker, plans to cut 5,000 jobs this year after swinging to a fourth-quarter loss as sales sank 21 percent. Goodyear lost $330 million, $1.37 per share, in the fourth quarter, after a profit of $52 million, or 23 cents per share, a year earlier.

Comcast (CMCSA) earned $412 million, or 14 cents per share, compared with $602 million, or 20 cents per share, in the year-ago quarter. Analysts expected an adjusted profit of 22 cents per share.

Deere & Co.'s (DE) quarterly profit fell 45 percent. Deere reported earnings of $203.9 million, or 48 cents per share, for its fiscal first quarter ended Jan. 31st. Analysts expected 63 cents per share.

OfficeMax Inc. (OMX) posted a $395.2 million loss in the fourth quarter, including a $429 million charge and other write-downs. Excluding one-time costs, the company earned $1.9 million or 2 cents per share while analysts were looking for a profit of 15 cents.

Brink's Home Security Holdings Inc. (CFL) reported its fourth-quarter profit increased 21 percent due to a larger subscriber base and lower royalty expense. Net income rose to $14.8 million or 32 cents per share while the consensus was for 39 cents per share.

Owens Corning (OC) posted a $45 million loss for the period ended Dec. 31, improved slightly from a $46 million loss in the year-earlier period, or 36 cents per share for both periods. Analysts expected earnings of 15 cents per share.

Scheduled Earnings Reports (Thursday)

Intuit, CVS Corp, Sprint, Hormel Foods, Toro, WebMD, Nestle, Regal Entertainment, OSI Pharmaceuticals, Red Robin Gourmet Burgers, Chiquita Brands International, Newmont Mining

Stocks in the News

Mesa Air Group Inc (MESA), the parent of Mesa Airlines and the inter-Hawaiian-Island carrier Go! reported a first-quarter profit from a year-earlier loss on 19% lower revenue. And the Hawaiian Island carrier Go! posted its first profitable quarter.

CuraGen Corp (CRGN) is "undertaking a review of a broad range of strategic alternatives to enhance shareholder value," including selling or licensing its potential cancer treatment.

Elbit Imaging Ltd (EMITF) said it secured the franchise to open and operate Gap and Banana Republic stores in Israel.

Heineken (HINKY) reported 2008 net income dropped to 209 million euros from 807 million euros last year.

General Electric’s (GE) Chairman and CEO Jeffrey Immelt won't get a bonus in 2008, and he is declining the entire $11.7 million earned under his long-term performance award.

Agilent Technologies (A) reported its first-quarter earnings shrank nearly in half to $64 million, or 18 cents a share.

MBIA Inc. (MBI), the largest bond insurer, will split its municipal bond insurance business from the mortgage-related debt guarantees that led to the loss of its top credit ratings.

Westlake Chemical (WLK) reported a fourth-quarter loss of $109.6 million, or $1.68 a share, compared with a profit of $18.8 million, or 29 cents a share, in the same period a year earlier.