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Sara Lee Is a Work in Progress


Company's restructuring is yet to show results.

Minyan Morning Memo

One to watch: Sara Lee (SLE) shares are in retreat after the supermarket staple reported a fiscal fourth quarter shortfall of $14 million. While the narrower loss ex-items actually beat the Street, unfavorable FX headwinds had an adverse overall impact. Of greater concern is the downcast guidance delivered by the company headquartered in Downers Grove, Illinois. Sara Lee's four year old restructuring efforts, aimed at making the manufacturer of Jimmy Dean lean and mean, are a work in progress. While waiting for its effects to become more fully apparent, shareholders can take solace in owning a company that has paid dividends for 254 consecutive quarters. Plus the company has had a better year than Sarah Palin.

What just happened: Stocks slipped the most in over a month yesterday. The "alphabet zombies" bore the brunt as MBIA (MBI) fell 12.6% following a downgrade at JP Morgan and CIT (CIT) slid 19% after a quarterly filing delay. Rounding out an unholy trinity, AIG (AIG) dropped 13% after an admittedly impressive recent run up (news its brand new CEO is already vacation planning likely didn't help). Orange juice futures are at an 11 month high as hurricane season heats up. Nickel and Zinc reached peaks for the year.

What's happening: Economists surveyed in today's Wall Street Journal declare the recession over. Less auspiciously, CNBC selected "Doctor Doom" Nouriel Roubini to guest host Squawk Box this morning. Asia ended off across the board, Europe is eking out gains and here at home stocks have opened higher. Ask not for whom the (opening) bell tolls - Toll Brothers (TOL) shares are off to an stellar start on strong earnings.

What will happen: In economics, at 8:30 AM Eastern June's U.S. trade defect widened to $27 billion, better than expected though still a severe test of how many numbers that clock can accommodate. Imports were up for the first time in almost a year. Oil inventories are out at 10:30 AM. The Fed communicates its decision on interest rates at 2:15PM. And we'll be learning about earnings from Advance Auto Parts (AAP), BHP Billiton (BHP), Hillenbrand (HI), ING (ING), Kinross Gold (KGC), Liz Claiborne (LIZ), Macy's (M), and Progressive (PGR).

Happenstance: Some sobering news was buried in the bowels of last week's apparently encouraging payroll report, namely that the number of long term jobless is at an all time high. Since such unfortunates are close to exhausting their unemployment benefits, it seems scandalous that common criminals have had no trouble getting handouts.
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No positions in stocks mentioned.
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