WALL STREET JOURNAL:
According to people familiar with the matter, the Wall Street Journal reported that Freddie Mac (FRE) is considering raising capital by selling up to $10B in new shares to investors. The sources believe this effort may have the potential to avoid a full-blown government rescue…The Wall Street Journal also reported that, amid U.S. investigations into allegations it helped American clients evade taxes, UBS (UBS) said some Swiss-based private bankers will stop offering American clients Swiss bank accounts and other services…Starbucks (SBUX) will close store in 44 states plus the District of Columbia, including 88 closures in California, 59 in Florida and 57 in Texas, the Wall Street Journal reported…BLOOMBERG: After Cleveland Cliffs (CLF) bought Alpha Natural Resources (ANR), there may be many more acquisitions in the coal industry, Bloomberg said… REUTERS: Reuters noted that, according to a person with knowledge of the plans, Yahoo! (YHOO) could renew talks over News Corp’s (NWS) Web properties if Microsoft (MSFT) gets in the way of discussions with Time Warner’s (TWX) AOL.
More acquisitions may be ahead in the coal industry-Bloomberg
After Cleveland Cliffs (CLF) bought Alpha Natural Resources (ANR), there may be many more acquisitions in the coal industry, Bloomberg believes. The market valuations of some of the largest coal companies are far below the value of their coal deposits, while takeovers of energy and mining companies have soared this year, Bloomberg explains.
Credit crunch is beginning to ease, Deutsche Bank CEO says-FT
The credit crunch has reached “the beginning of the end” stage, Deutsche Bank (DB) CEO Josef Ackermann said yesterday. Banks and regulators have taken steps to deal with the crisis, and many businesses are becoming more normal, Ackermann explained.
Citigroup-C upgraded to Hold from Sell@DBAB
Google-GOOG: Would be buyers of shares on today’s pullback@BOFA
Banc of America believes GOOG’s positive query and revenue growth in all sectors, with the exception of real estate, supports their thesis that search will outperform other advertising in an economic slowdown. The firm maintains a Buy rating and $700 target.
GOOG: Consuemrs are hindering company’s growth@STFG
After Google reported in-line Q2 operating results, Stanford believes the company’s growth is being restrained by the consumer slowdown. Stanford maintained their Hold rating.
Pre-Market Movers: Ahead of the Bell
The story this expiration morning is the mass reversal to long anything financial - even questionable names - to short tech, even the strong. This sentiment shift is likely to provide some kind of bottoming process for the financial names and perhaps the undoing of the favorite long of the Street, tech stocks. The long side volume interest this morning is skewed heavily to the financials. The leader of the pack is Citigroup (C), trading up +7.7% on heavy volume after losses were less than feared. Bank of America (BAC), which reports on Monday before the open, is trading up in sympathy at +3.39% on heavy volume. Merrill Lynch (MER) is one of the few financials trading down (-1.88%), and which traded down to $27.50 last night in the after market, after results that were worse than even the most bearish loss estimates. The name may be helped by expiration pinning at the $30 area but that may not hold given the severity of the losses. Schlumberger (SLB) is trading up +1.97% after reporting better than expected results before the bell. On the downside we have some of the largest tech stocks by weight in the NDX trading down after reports that were less than hoped for. Google (GOOG) is trading down (-7.17%) after it missed earnings estimates and noted rising capital spending. Microsoft (MSFT) is trading down (-4.9%) after it reported weaker results amid rising expenses. Brokers disagree about prospects for the company with Banc of America bearish on the name and cutting its price target while Citigroup defended the name (see note here for details). Gilead Sciences (GILD) is trading down (-5.9%) after inline results with negative broker commentary from Jefferies & Company, which downgraded the name to Hold, and BMO Capital which downgraded the shares to Market Perform.
Markets try to sustain rally despite poor earnings from big tech names
U.S. equity futures are holding steady near fair value although the Nasdaq continues to be the weakest of the major averages. The weakness is to be expected with the poor earnings reports from Google (GOOG) and Microsoft (MSFT) last night. Despite the earnings miss by Google most brokerage firms saw more positives than negatives in the quarter. Most defended the shares, saying they would use the weakness as a buying opportunity. But ThinkPanmure cut their rating on the stock due to the slowing economy and its impact on the business. Most analysts continue to like Microsoft despite its missing estimates and lowered its forecast going forward. Many analysts cut their price target but kept their ratings intact. It will be interesting to see if the Nasdaq can hold up today despite these two reports and how it affects the rest of the market.
