Minyanville's Market Recap: Superconduit by the Treasury, Markets Fall
The Treasury led talks to form a $100 bln Superconduit. Investors may been spooked. Markets fell.
Credit concerns likely spooked investors as news of the Treasury hosting talks over the weekend with Citigroup (C), JPMorgan Chase (JPM), and Bank of America (BAC) topped headlines. The banks will join forces in creating a $100 bln Superconduit that will act as a buyer of last resort to shore up the asset-backed commercial paper market (ABCP). (From WSJ) Professor Depew suggested the move was meaningless because it dealt with the ABCP market and not subprime mortgages. For more, read Professor Depew's Special Edition Five Things You Need To Know.
Compounding the selling pressure was news that Goldman Sachs (GS) downgraded the financial sector to "underweight" before the third quarter earnings season. The firm stated banks were likely to reduce their 2008 profit forecasts due to declining revenue from debt trading and underwriting. (From Bloomberg) Toddo noted the Philadelphia Bank Index (BKX) "poked below its 50-day" with the next point of interest at 105.50. Notable stock performances included Lehman Brothers (LEH) losing -3.5%. Merrill Lynch (MER) lost -2.11%, and Morgan Stanley (MS) fell -1.71%. Read more in Toddo's Random Thoughts.
In earnings news, Citigroup reported results for the third quarter. The company stated earnings per share at $0.47 versus analyst expectations of $0.43. Revenues rose 5.8% to $22.6 billion versus $20.81 billion consensus.
Biotech giant Genentech (DNA) reported third quarter results after the bell. EPS came in at $0.73 versus analyst estimates of $0.72 on revenues of $2.91 billion versus $2.92 consensus.
In a bit of M&A news, Danaher (DHR) agreed to buy electronic test and measurement company Tecktronix (TEK) for $2.8 bln. TEK shareholders will receive $38 per share in a cash tender offer, representing a 34% premium to its closing price from Friday. Danaher's president and CEO H. Lawrence Culp Jr. said the acquisition "provides an excellent complement to our existing Electronic Test business." (From WSJ) Professor Guy Adami first mentioned this company in early August in Gone Fishin' With Danaher.
In commodities action, crude oil surged to new highs, adding +2.47 to 86.16 per barrel. Metals were strong as well. Gold added +9.80 to 763.60, copper added +3.25 to 368.50, and silver added +0.012 to 13.91.
For more summaries of today, check out Minyanville's Buzz Bits and Professor Tuttle's Winners & Sinners.
Here's a preview of Tuesday's trading session. Click here for the full trading radar.
9:00 Net Foreign Purchases: $19.2 bln prev
9:15 Industrial Production: 0.1% cons
9:15 Capacity Utilization: 82.2% cons
Some notable companies reporting:
BMO: JEF, JNJ, WFC
AMC: CSX, INTC, YHOO
Below is a recap of some of the idea flow on today's Buzz & Banter. Please note that stocks may appear in both bullish and bearish categories, due to long and short term trades by our many Minyanville professors.
Some bullish trade or investment ideas: STP, TSL, MSTR, TELK, OIH, CFSG, INSP, PAAS, CROX, WFT, IYT, PRM, ABR, IAT, SHW, BDK
Some bearish trade or investment ideas: HGX, VMW, SPX, GHL, AMG, PLCE, EEM, AAPL, GS, FXI, TM,
Hope y'all had a happy Monday! Have a great night!
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