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It has long been thought that Goldman Sachs Group Inc. (NYSE: GS) was going to escape this credit crisis mostly unscathed and that the firm would never have capital issues. The good news is that both of those may still remain true. The bad news is that the (now) bank holding company has just filed a shelf registration statement with the SEC to allow it to raise funds for itself and its units.
Daily Archives: October 10, 2008
Goldman Sachs Files To Raise Cash (GS)
Margin Calls Wipe Out Chesapeake CEO Holdings (CHK)
If there has been one manager that has made serious cash on his investments in his own company’s stock, it is Aubrey McClendon of Chesapeake Energy Corporation (NYSE: CHK). But "has" is just what it sounds like. A press release from the company today noted that Mr. McClendon involuntarily sold substantially all of his Chesapeake shares over the last three days in order to meet margin loan calls.
- Chesapeake Drilling For Cash?
- Legislation Risks to Nat Gas
- This was Jim Cramer’s Big Nat Gas Play
- Its secondary offering of 20 million shares
10/10/08: A Rally For The Ages
There was absolutely no reason for the market to rally today. At one point the Dow was down 700 points. Investors have watched the decimation of the indexes all week as large cap stock hit 52-week lows, and some, like GM (GM), hit levels that they had not seen in two generations.
The only way to look at what happened is that people got tired of selling. There must have been something that they saw beyond the news of a deep and long recession, predictions of more bank failures, and unemployment which might go above 10%. It was a bit of hope which may kindle something better or a notion which could be beaten to a pulp within a few days.
At the end of the trading the numbers, as close as anyone could count them, were that the Dow ended down 117 points or 1.4% to 8,462. It was an superb comeback. The Nasdaq actually rose a fraction, up .3% to nearly 1,650.
The market may rally to the skies next week or sell to new multi-year lows. But, no one will forget the sharp climb after a dismal open today. It was too unexpected.
Douglas A. McIntyre
Alec Baldwin’s professional opinion of the market
Saturday Night Live’s take on the health of your portfolio and what you should do about it, circa dotcom crash, 2001
Ford’s CFO Walking The Plank (F)
In the climate of today, this may come as no real surprise. Ford Motor Company (NYSE: F) has announced that CFO Don Leclair will retire November 1. He will be replaced by Lewis Booth. Leclair’s departure brings up some interesting questions.
S&P: Watch Out For Chapter 11 At Ford (F) And GM (GM)
Yesterday JD Power said that the global car market could "collapse" and GM (GM) fell 31%. Today S&P is saying that "General Motors Corp., Ford Motor Co. and Chrysler LLC may be forced into bankruptcy by slowing economies and dwindling U.S. auto sales," according to Bloomberg.
While a number of large businesses, particularly airlines, have worked in and out of Chapter 11 for decades, most research shows that consumers will not buy a car from an insolvent auto company. Buyers are concerned that parts and service may not be available to them in the future when they need work done on their vehicles. They are also worried that a bankrupt company may not honor a warranty.
Transocean Taking Taxes To Switzerland From Cayman (RIG)
Transocean Inc. (NYSE:RIG), one of the world’s largest offshore drilling companies, is proposing to move its incorporation location from the Cayman Islands to Switzerland. To make the move, the company needs approval from the Cayman courts and stockholders. Transocean expects to receive both and to make the move in late 2008 or early 2009.
Chevron, The Economic Mess, and Tumbling Oil (CVX)
Yesterday’s interim update report from Chevron (NYSE:CVX) came out pretty much as we expected. The company projects significant improvement in downstream earnings and a drop in upstream earnings. Hurricanes in the Gulf of Mexico are expected to cause production for September to fall by 150,000 b/d. Chevron also plans to write off $400 million for hurricane damage.
Market Holidays Challenging Morgan Stanley Financing (MS, MTU)
This highly anticipated deal to fund Morgan Stanley (NYSE: MS) with $9 billion from Japan’s largest bank, Mitsubishi UFJ Financial Group, Inc. (NYSE: MTU), cannot come fast enough. Both sides have come public to say the deal is still on, yet Morgan Stanley shares have plunged this week along with the rest of the market. Its stock trades at roughly half of what it traded just on Monday. This is a pretty sad affair right now, but holidays closing key markets on Monday are actually blocking this deal from funding until Tuesday, October 14, 2008.
OPEC’s Chance To Kick The West While It’s Down
OPEC ministers have moved up the date of their annual Christmas meeting. This year they will be together for Thanksgiving. Odds are excellent that they may move that gathering up to next week.
Brent crude broke down over $7 to trade under $80. The fall from $147 to these levels will cost the oil-producing nations hundreds of billions of dollars over the next year.
OPEC is about to cut production and cut it sharply, at least enough to push oil back over $100. It will add another weight to be added to the list of things which could deepen the recession.
Beacon Power Secures Additional Financing (BCON)
Beacon Power Corporation (NASDAQ: BCON) has received an investment commitment to fund ongoing operations and for further development. This will help to assist in the completion of manufacturing of flywheel systems for commercial deployment of 5 Megawatts of frequency regulation service by the end of 2008.
IBM Shows Credit Markets Aren’t Entirely Closed (IBM)
IBM (NYSE: IBM) is showing that some companies can still raise cash in these troubled times. Big Blue is selling $4 billion in debt in a multiple maturity offering. The company is showing that the credit market terms may not be ideal but the credit markets are at least somewhat available for strong companies.
Top Pre-Market Analyst Downgrades (EYE, CRL, LLY, ESLR, INTC, SPWRA)
These are some of the top pre-market analyst downgrades we are seeing this Friday morning:
- Advanced Medical Optics (EYE) Cut to Underperform at Jefferies.
- Charles River (CRL) Cut to Market Perform at William Blair.
- Eli Lilly (LLY) Cut to Neutral at Credit Suisse.
- Evergreen Solar (ESLR) Cut to Reduce at Calyon.
- Intel (INTC) Cut to Sell from Buy at ThinkPanmure.
- SunPower (SPWRA) Cut to Add at Calyon.
Jon C. Ogg
October 10, 2008
Top Pre-Market Analyst Upgrades (BXP, DWA, DUK, MET, MTB, PRXL, POR, PFG, PSA, UDR)
These are some of the top pre-market analyst calls we are seeing this Friday morning:
- Boston Properties (BXP) Raised to Outperform at FBR.
- DreamWorks Animation (DWA) Raised to Buy at Jefferies.
- Duke Energy (DUK) Raised to Neutral at Goldman Sachs.
- MetLife (MET) Resumed at Overweight at Morgan Stanley.
- M&T Bank Corp (MTB) Raised to Neutral at Baird.
- Parexel (PRXL) Raised to Outperform at William Blair.
- Portland General (POR) Raised to Buy at Goldman Sachs.
- Principal Financial (PFG) Raised to Equal-weight at Morgan Stanley.
- Public Storage (PSA) Raised to Outperform at Wachovia.
- UDR Inc. (UDR) Raised to Outperform at FBR.
Jon C. Ogg
October 10, 2008
Hard Times, But GE Looks Like a Safe Harbor (GE)
General Electric Co. (NYSE: GE) has posted its awaited earnings report and the giant conglomerate posted earnings of $0.45 and revenue of $47.2 billion. First Call had earnings of $0.45 and $47.34 billion in revenues, and its earnings guidance was $0.43 to $0.48 per share. The company also said it will maintain its $1.24 annual dividend through 2009.
Dow 7,000 May Make Sense
While no one would have imagined several weeks ago that the Dow could drop to 7,000, it may make sense and could build a base from which the markets might recover.
The last time the Dow spent any time under 7,000 was in 1997. The markets had seen the tail end of the S&L crisis. The Resolution Trust Corporation, which began its work in 1989, closed shop in late 1995. The DJIA had been moving up as the banking crisis ended. It moved higher until 2000 when the tech bubble burst.
If the Dow hits 7,000 now, it will be on the way down, and not on the way up.
Merrill Lynch (MER), Wachovia (WB), And Morgan Stanley (MS) Deals Could Fail
A few days ago, it would have been nearly impossible to believe that the deals for Bank of America (BAC) to buy Merrill Lynch (MER), for Mitsubishi UFJ to buy 20% of Morgan Stanley (MS), or for Wells Fargo (WFC) to buy Wachovia (WB) could fall apart.
That may have changed in the last 24 hours. Moody’s has warned it may cut the long-term debt ratings of Morgan Stanley (MS) and its stock has been down as much as 30% during several of the most recent trading sessions. It closed yesterday at $12.45.
Borrowing By Banks And AIG (AIG) Hits Extraordinary Levels
AIG (AIG) moved rapidly to sell assets and borrowed heavily from it US government loan. According to The Wall Street Journal, "The insurer has now borrowed $70.3 billion from the government in three weeks."
The news raises the question of whether AIG can sell units fast enough, especially in a major credit crisis, to shore up its own balance sheet before it runs through its $125 billion loan from the Fed.
Government May Back US Bank Debt And Deposits: Too Little, Too Late
In a move which may end up trying to save the US banking system, the Treasury is considering backing all bank deposits and guaranteeing billions of dollars in bank debt.
The backing of deposits might slow the outflow of deposits which is damaging bank balance sheet.
According to The Wall Street Journal, the plan "would be aimed at preventing a further exodus of cash from financial institutions, including small and regional banks."
Media Digest 10/10/2008 Reuters, WSJ, NYTimes, FT, Bloomberg
According to Reuters, the US is looking at guaranteeing billions of dollars of bank debt and temporarily insuring all bank deposits.
Reuters reports that Citigroup (C) has ended talks about taking over Wachovia (WB), leaving Wells Fargo (WFC) free to conclude a deal.
Reuters writes that AIG (AIG) has borrowed $70 billion of the US government loans available to it.
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Today’s top tickerspy Indexes Platinum and Pall... +6.6% Uranium Stocks +6.4% Modular Building ... +5.7% Manufacturing Equ... +5.7% Discrete Semicond... +5.5% 
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