- Bob Pisani's ETF Special Monday
- Dow, S&P Down -- But There's Good News
- Dell/Tech Stocks, Gustav Nerves Weigh on Market
- Energy Climbs on Gustav Fears; Japan's $18B Stimulus Plan
- Confusion: Market Rally vs. Dell Disappointment
- Recession Talk Over on GDP Growth
- Fannie Mae Mgt. Shakeup; Oil Shrugs Off Gustav
- Solving the Fannie/Freddie Mystery
- Oil Ignores Gustav, Russia; Oil Cos. Sell Gas Stations
- Housing: The Good & Bad News
- Student Portfolio Managers Offer Stock Picks
- Fishin' For Views on the Economy
- Bond Prices Slip as Traders Focus on Inflation
- As Biomass Power Rises, a Wood-Fired Plant Is Planned in Texas
- Carmakers Deserve Loan Guarantees, GM Official Says
- US Midwest Business Expands Rapidly; Hiring Down
- Consumer Sentiment At 5-month High in August
- Consumer Spending Flags, But Confidence Rises
- Dell's Margin Erosion Prompts Selloff
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Despite good news from our parent General Electric[GE
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], we are again being pushed around by oil at a record price, and by Fannie [FNM
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]and Freddie. [FRE
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]
Both are down big (about 50 percent) this morning, largely on a New York Times story that the federal government was considering placing one or both of them in a conservatorship. What would that mean? It would mean the companies would be under the legal control of the federal government. Traders, or course, began believing a month ago that the equity in the company was nonexistent, and that's why the shares have been sold off every day since then. What about an explicit guarantee of the $5 trillion in mortgage debt? That, apparently, is a step no one is willing to take, at least not yet.
On this Fannie and Freddie decline, home builders are all trading down--Centex[CTX
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], Lennar,[LEN
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] KB Home [KBH
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]all down 6-10 percent.
Elsewhere:
1) Our parent General Electric in line with expectations, ($0.54), with 4 of 6 divisions exceeding expectations. Q3 guidance of $0.50-$0.54 at the low end of $0.54 analyst consensus. They reaffirm full year earnings of $2.20-$2.30 ($2.22 analyst estimate). GE also announced an agreement to sell GE Money Japan for $5.4 b, which analysts agree is a very good price.
So why is the stock trading down? Goldman Sachs, responding to the earnings, is typical of the chatter: "we believe it is still too early to get more positive on the stock until investor expectations for 2009 are reset to expect another year of 0%-5% earnings growth, and importantly GE begins to demonstrate a path to return to 10% earnings growth in 2010."
2) Another merger deal in the chemicals industry: Ashland buying Hercules for $2.6 b, $18.60 in cash and 0.093 of a share of Ashland for each Hercules. That values the deal at about $23 for Hercules, it went out yesterday at $16.60. Both are specialty chemicals manufacturers.
3) InBev raised the price for Anehuser-Busch [BUD
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]to $70 a share, from $65. Up 8 percent to $65 and change.
4) Aviation parts maker Rockwell Collins[COL
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] reported earnings above expectations, and raises full year guidance to $4.05-$4.10 is above analyst expectations of $4.04.
5) Wynn Resorts [WYNN
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]surprised with a stronger than expected earnings report, though earnings fell in Las Vegas, profit in Macau almost doubled. Up 8 percent pre-open. Las Vegas Sands also up.
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