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The Fokker Chronicles



Heads up:

After the bell, look out for earnings from KB Home(KBH:NYSE), Adobe Systems(ADBE:NASD) and Red Hat(RHAT:NASD). Earnings reports tomorrow include General Mills(GIS:NYSE), Lehman Brothers(LEH:NYSE), and Jabil Circuit(JBL:NYSE).

Looking ahead to tomorrow's headline stories, the tobacco companies will be in focus as they go to trial in Washington for an unprecedented $280 billion suit. Keep in mind this news has been out there since the beginning of the summer when the judge ruled for the case to proceed to trial. Tobacco shares however will most likely see some pressure ahead of the trial tomorrow as the headline risk remains in the traders' headlights. The FOMC will also be meeting and will deliver its decision on monetary policy. Fed Funds futures are pricing in a 25bps rate hike at tomorrow's meeting.

Brokerage Chatter:

Morgan Stanley dropped Pfizer (PFE:NYSE) from overweight to equal weight on weak top line visibility and outlook for '05-'07 for both new and existing products. UBS tossed the New York Times (NYT:NYSE), lowering its rating from buy to neutral. Merrill Lynch Europe raised the drug sector from neutral to overweight noting an acceleration in earnings and dividends while lowering the consumer goods sector from overweight to neutral based on decline in profit.

Goldman Sachs downgraded InterActiveCorp (IACI:NASD) from outperform to in-line. Merrill cut Citigroup (C:NYSE) from buy to neutral. Morgan Stanley raised estimates for offshore drillers, raised its price targets for Ensco Int'l (ESV:NYSE) and GlobalSantaFe (GSF:NYSE) based on higher NAV multiples and rising rig rates. Prudential upped Paccar (PCAR:NASD) from underweight to neutral. Raymond James lowered numbers below consensus on Fairchild Semi (FCS:NYSE).

Financial Headlines:
Stories :

The Washington Post reports that President Bush and John Kerry have preliminarily agreed to hold 3 debates in the coming weeks leading up to the elections.

The WSJ reports that federal regulators will present a report today that is highly critical of the accounting practices of Fannie Mae (FNM:NYSE) to the company's board.

Hewlett-Packard (HPQ:NYSE) announced plans to repurchase $1.3 bln in stock.


Lennar Corp (LEN:NYSE) reported Q3 EPS of $1.36 vs. $1.34 cons on rev's of $$2.75 bln vs. $2.71 bln cons. The company also raised EPS guidance for FY'04 to $5.70 vs. $5.54 cons and FY'05 to $$6.60 vs. $6.03 cons.
Colgate-Palmolive (CL:NYSE) is guiding Q3 EPS lower taking estimates to $0.57-$0.59 vs. $0.67 cons while for Q4 looking for $0.57-$0.59 vs. $0.68 cons based on higher marketing.
PMC-Sierra (PMCS:NASD) is cutting its Q3 revenue forecast to $71-$73 mln vs. $89.15 mln cons based on customer demand and inventory.
Nike (NKE:NYSE) reported Q1 EPS of $1.21 vs. $1.11 on rev's of $3.56 bln vs. $3.46 bln cons.

Around the world in 80 ticks:

According to the International Herald Tribune, the Iranian Minister has rejected the order from the UN energy watchdog to halt its nuclear program and added that it will resume uranium enrichment at any time it sees fit. They further questioned the true ambitions of the IAEA board of governors indicating that it would not leave its doors open for inspectors.

The UK Sunday Times reported that Iraq's interim Prime Minister Ayad Allawi said yesterday that elections would go ahead as scheduled in January despite the unrelenting violence and in addition, the trials of former leader Saddam Hussein and his lieutenants would likely begin by October. In separate news, British intelligence has identified a group of Iranian "warlords" as the main source of funding and training for the Shi'ite insurgency in southern Iraq.

The IAEA was kept busy further by the North Koreans after the UN energy agency's chief said today he could not rule that the blast last week was in fact a nuclear explosion. The chief also added that he wouldn't be surprised if they had produced nuclear weapons in the first place.

Have a great day!

position in gis, kbh, pfe, iaci, c, fnm, cl
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