JDfn Daily Digest - December 23, 2008
U.S. Stock markets will close early (1 pm Eastern Time) tomorrow (on Christmas Eve) and will be closed all day Thursday in observance of Christmas Day.
The Commerce Department, in its final revision, said the decline in gross domestic product in the third quarter versus the previous three months was the steepest since the third quarter of 2001, in the aftermath of the September 11th attacks on the United States. The economy shrank at a 0.5 percent annual pace in the third quarter as expected after consumers and businesses cut spending and the country's recession gathered steam.
U.S. new home sales fell to their lowest level in over 17 years in November. New home sales fell 2.9% to a seasonally adjusted annual rate of 407,000. This is the lowest level since 401,000 in January 1991. New home sales are 35.3% below their level in November 2007.
The National Association of Realtors reported resale of U.S. single-family homes and condos dropped 8.6% in November to a seasonally adjusted annual rate of 4.49 million. Resales are down 10.6% in the past year.
According to a report from Challenger, Gray & Christmas Inc., the labor market faces persistent weakness in 2009, with more than 1 million jobs cuts expected due to weak spending among consumers and businesses. The group said that the incoming administration is working on a massive economic stimulus package to save or create millions of jobs but it will take time for the stimulus measure to work.
The International Council of Shopping Centers and Goldman Sachs said chain-store sales for the week ended Dec. 20th fell 0.6% from the year-ago period. On a week-over-week basis, sales rose 2.6%. ICSC Research expects December monthly same-store sales will be down 1% or slightly more.
The British economy contracted by more than previously thought during the third quarter of 2008, stoking market expectations that the Bank of England may cut interest rates to near zero percent in the New Year.
French consumer spending unexpectedly rebounded in November, up 0.3% compared to a 0.5% decline in October. The report suggests stimulus measures and the continued decline in oil prices are helping cushion the economic downturn.
The European Union approved bank rescue measures for many of the continent's major economic powers, clearing the way for cash injections and loan guarantees expected to help lenders through the financial crisis.
CIT Group Inc. (CIT) said it received preliminary approval to obtain $2.33 billion as part of the government's $700 billion bank investment program. The approval comes just hours after the government approved CIT's application to become a bank holding company. The change in structure to become a bank holding company was a prerequisite to obtaining the funds.
Landry's Restaurants Inc. (LNY) said it signed an $81 million credit agreement and is using the financing to refinance debt under a prior credit deal. The new agreement includes a senior credit facility of $50 million and a $31 million term loan.
Unisys Corp. (UIS) said it will slash 1,300 jobs globally as part of an effort to cut costs by more than $225 million a year. The company has struggled as demand for its services has waned due to tightening credit and curbed customer spending. Unisys said that the job cuts would continue into next year.
Hong Kong Disneyland wants to expand the size of its park grounds by 30% under a plan currently in negotiation with the government. Discussions between Walt Disney Co. (DIS) and Hong Kong officials are underway over the park's possible expansion, which may include adding attractions that would be unique to the Hong Kong venue.
ProLogis (PLD) announced it has agreed to sell its Chinese operations and the remaining stake in its Japanese property funds to a Singapore government-owned real estate company for $1.3 billion in cash.
Scheduled U.S. Economic Reports (Wednesday)
Initial Jobless Claims (Week of Dec. 20th), Personal Income & Spending (Nov), Consumer Spending (Nov), Durable Goods (Nov)
In Earnings News
American Greetings (AM) reported a third-quarter loss as hefty charges, a decline in sales, and a tough economy hurt quarterly results for the greeting card company. American Greetings posted a loss of $193.3 million, or a loss of $4.25 per share, compared with a profit of $29 million, or 52 cents per share, last year.
Worthington Industries (WOR) said that it posted a loss of approximately $160 million in its fiscal second quarter due to a major drop in steel prices and worsening economic conditions. The company plans to permanently close its Louisville cold-rolled steel plant in Kentucky by the end of 2009.
Gold Fields Ltd. (GFI) reiterated its gold production forecast for its fiscal second quarter. The South African gold mine operator said it still expects to produce about 840,000 ounces of gold in the three-month period. Gold Fields said it is anticipating lower costs due to gains from foreign exchange. The company expects to release financial results for the 2009 second quarter on Jan. 29th.
Old Dominion Freight Line (ODLF) citing "difficult" economic conditions has revised its 2008 profit range lower. As revised, the less-than-truckload carrier said it sees earnings for the year in a range of $1.73 to $1.76 a share.
Scheduled Earnings Reports (Wednesday)
No major earnings reports are scheduled on Christmas Eve
Stocks in the News
American International Group’s (AIG) Asia-Pacific unit, American International Assurance Co., may list in Hong Kong after selling a minority stake of up to 49%.
General Dynamics Corp (GD) said its Electric Boat unit and Northrop Grumman Shipbuilding, a unit of Northrop Grumman Corp (NOC), received a $14 billion contract from the U.S. Navy to build eight Virginia-class submarines.
Red Hat Inc (RHT) said that earnings for the third fiscal quarter grew nearly 20% despite a hit to revenue from unfavorable exchange rates.
Las Vegas Sands Corp (LVS) has cut the staff of its Venetian Macau project by 500 and will reduce working hours.
Starwood Hotels & Resort Worldwide (HOT) had its corporate-credit rating cut by Standard & Poor's.
The Commerce Department, in its final revision, said the decline in gross domestic product in the third quarter versus the previous three months was the steepest since the third quarter of 2001, in the aftermath of the September 11th attacks on the United States. The economy shrank at a 0.5 percent annual pace in the third quarter as expected after consumers and businesses cut spending and the country's recession gathered steam.
U.S. new home sales fell to their lowest level in over 17 years in November. New home sales fell 2.9% to a seasonally adjusted annual rate of 407,000. This is the lowest level since 401,000 in January 1991. New home sales are 35.3% below their level in November 2007.
The National Association of Realtors reported resale of U.S. single-family homes and condos dropped 8.6% in November to a seasonally adjusted annual rate of 4.49 million. Resales are down 10.6% in the past year.
According to a report from Challenger, Gray & Christmas Inc., the labor market faces persistent weakness in 2009, with more than 1 million jobs cuts expected due to weak spending among consumers and businesses. The group said that the incoming administration is working on a massive economic stimulus package to save or create millions of jobs but it will take time for the stimulus measure to work.
The International Council of Shopping Centers and Goldman Sachs said chain-store sales for the week ended Dec. 20th fell 0.6% from the year-ago period. On a week-over-week basis, sales rose 2.6%. ICSC Research expects December monthly same-store sales will be down 1% or slightly more.
The British economy contracted by more than previously thought during the third quarter of 2008, stoking market expectations that the Bank of England may cut interest rates to near zero percent in the New Year.
French consumer spending unexpectedly rebounded in November, up 0.3% compared to a 0.5% decline in October. The report suggests stimulus measures and the continued decline in oil prices are helping cushion the economic downturn.
The European Union approved bank rescue measures for many of the continent's major economic powers, clearing the way for cash injections and loan guarantees expected to help lenders through the financial crisis.
CIT Group Inc. (CIT) said it received preliminary approval to obtain $2.33 billion as part of the government's $700 billion bank investment program. The approval comes just hours after the government approved CIT's application to become a bank holding company. The change in structure to become a bank holding company was a prerequisite to obtaining the funds.
Landry's Restaurants Inc. (LNY) said it signed an $81 million credit agreement and is using the financing to refinance debt under a prior credit deal. The new agreement includes a senior credit facility of $50 million and a $31 million term loan.
Unisys Corp. (UIS) said it will slash 1,300 jobs globally as part of an effort to cut costs by more than $225 million a year. The company has struggled as demand for its services has waned due to tightening credit and curbed customer spending. Unisys said that the job cuts would continue into next year.
Hong Kong Disneyland wants to expand the size of its park grounds by 30% under a plan currently in negotiation with the government. Discussions between Walt Disney Co. (DIS) and Hong Kong officials are underway over the park's possible expansion, which may include adding attractions that would be unique to the Hong Kong venue.
ProLogis (PLD) announced it has agreed to sell its Chinese operations and the remaining stake in its Japanese property funds to a Singapore government-owned real estate company for $1.3 billion in cash.
Scheduled U.S. Economic Reports (Wednesday)
Initial Jobless Claims (Week of Dec. 20th), Personal Income & Spending (Nov), Consumer Spending (Nov), Durable Goods (Nov)
In Earnings News
American Greetings (AM) reported a third-quarter loss as hefty charges, a decline in sales, and a tough economy hurt quarterly results for the greeting card company. American Greetings posted a loss of $193.3 million, or a loss of $4.25 per share, compared with a profit of $29 million, or 52 cents per share, last year.
Worthington Industries (WOR) said that it posted a loss of approximately $160 million in its fiscal second quarter due to a major drop in steel prices and worsening economic conditions. The company plans to permanently close its Louisville cold-rolled steel plant in Kentucky by the end of 2009.
Gold Fields Ltd. (GFI) reiterated its gold production forecast for its fiscal second quarter. The South African gold mine operator said it still expects to produce about 840,000 ounces of gold in the three-month period. Gold Fields said it is anticipating lower costs due to gains from foreign exchange. The company expects to release financial results for the 2009 second quarter on Jan. 29th.
Old Dominion Freight Line (ODLF) citing "difficult" economic conditions has revised its 2008 profit range lower. As revised, the less-than-truckload carrier said it sees earnings for the year in a range of $1.73 to $1.76 a share.
Scheduled Earnings Reports (Wednesday)
No major earnings reports are scheduled on Christmas Eve
Stocks in the News
American International Group’s (AIG) Asia-Pacific unit, American International Assurance Co., may list in Hong Kong after selling a minority stake of up to 49%.
General Dynamics Corp (GD) said its Electric Boat unit and Northrop Grumman Shipbuilding, a unit of Northrop Grumman Corp (NOC), received a $14 billion contract from the U.S. Navy to build eight Virginia-class submarines.
Red Hat Inc (RHT) said that earnings for the third fiscal quarter grew nearly 20% despite a hit to revenue from unfavorable exchange rates.
Las Vegas Sands Corp (LVS) has cut the staff of its Venetian Macau project by 500 and will reduce working hours.
Starwood Hotels & Resort Worldwide (HOT) had its corporate-credit rating cut by Standard & Poor's.
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