Friday, November 28, 2008

Wall Street Breakfast: Must-Know News

Wall Street Breakfast: Must-Know News

by SA Editor Eli Hoffmann

  • Chesapeake seeks cash. In a series of filings with the SEC late Wednesday (I, II,III), Chesapeake (CHK) revealed plans to issue almost $2B in common shares to raise cash for day-to-day operations and to subsidize drilling leases it is in the process of renegotiating. Such a move would hurt already-battered shareholders, who have seen shares plunge 70% since July. The financial crisis, falling gas prices and concerns over oversupply have pushed the natural gas producer to renegotiate some of its drilling lease-purchase agreements at a cheaper price. The $1B slated for "general corporate purposes" will not be used immeditately, it said.
  • Nokia gives up on Japan. Nokia (NOK) will no longer sell phones in Japan, except for its luxury brand Vertu, after struggling to expand its presence. Nokia said previously it will cut costs 'decisively' in the face of declining global mobile phone sales. "In the current global economic climate, we have concluded that the continuation of our investment in Japan-specific localized products is no longer sustainable," executive VP Timo Ihamuotila said. Shares are -1.5% premarket. More here.
  • States feel the squeeze. Municipal-debt issuance has dropped sharply over the past few months, as the credit crunch has elevated interest rates and scared away investors, and some brokers dealing in the debt have disappeared. Municipalities have issued 9.1% fewer bonds YTD, but since September, muni issuance has plunged by 41% compared with the same period in 2007. 10-year munis now yield about 4% - one full percentage more than Treasurys - despite the former's huge advantage of being tax-exempt. Governers have begun warning constituents of cutbacks due to a lack of funds; the government has yet to bailout states and localities, but Obama has vaguely described some kind of help.
  • Eurozone inflation posts record drop. Euro area inflation probably plunged to 2.1% in November from October's 3.2% Eurostat says (.pdf) - the biggest-ever drop - fueling expectations the ECB will cut its key rate of 3.25% by at least another 50 BPs at its Dec. 4 meeting. Economists expected inflation to drop to 2.4%. As recently as July, Eurostat's flash inflation estimate was 4.1%.

Earnings: Friday Before Open

  • Frontline (FRO): Q3 EPS of $1.76 misses by $0.20. Revenue of $577M (+10.89%) vs. $399M. Shares (PR)
  • STMicroelectronics (STM): Sees Q4 revenue of $2.2-2.35B vs. $2.62B consensus due to recent and substantial changes in customers' demand and order push-outs. Shares -5.5% in Paris. (PR)

Today's Markets

  • Most Asia markets closed higher Friday. Nikkei +1.66% to 8,512. Hang Seng +2.48% to 13,888. Shanghai -2.44% to 1,871. BSE +0.73% to 9,093.
  • In Europe, markets are mostly lower at midday. London +0.05%. Paris -1.2%. Frankfurt -0.9%.
  • U.S. stock futures are pointing down. Dow -0.5% to 8650. S&P -0.8% to 879. Nasdaq -1.1%.
  • Crude -1.3% to $53.80. Gold +0.1% to $812.

Friday's Economic Calendar

Seeking Alpha editor Rachael Granby contributed to this post.

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