TheStreet.com's Jim Cramer says the only action in the sector is that the rumor mill is spinning overtime.
There are tons of ridiculous stories that can be written in the Naked City. Notice that every day we are blessed with a story about how there are three private-equity firms examining Lehman Brothers (NYSE: LEH) (Cramer's Take) and Neuberger Berman (NYSE: NEU) (Cramer's Take). I think I have read that story a dozen times now.
You can list them, too: Blackstone (NYSE: BX) (Cramer's Take), KKR (NYSE: KFN) (Cramer's Take), Apollo (NASDAQ: AINV) (Cramer's Take), maybe Cerberus. What are they going to do, deny it? "No, we are not looking at it?" Their investors would love that: "Well what the heck are they doing with our money?" would be the reaction of investors if they issued denials. I predict weeks more of phantom tire-kicking of Lehman by nonexistent private-equity firms.
How about private equity about to swarm over collateralized debt obligations? Usual cast of characters there. Right? Come on, those stories are a penny a dozen. Every day I read about them. But nobody, other than Lone Star, is doing anything, anything at all on this front. If there were buyers, you can bet that Lehman and AIG (NYSE: AIG) (Cramer's Take) wouldn't be in the woods, lost, hopeless, with tons of bad European paper.
Temasek Holdings is one of Singapore's sovereign wealth funds (SWFs), managing $130 billion. Over the past few years, the fund has been diversifying into emerging markets as well as developed economies.
In fact, Temasek was one of the early investors in some major U.S. financial institutions. It has invested $5 billion in Merrill Lynch (NYSE: MER) back in December.
While Temasek hasn't tracked well, SWFs focus on the long term. Temasek still appears to be bullish on U.S. financial services companies as the portfolio concentration is a whopping 40%. And there are even rumors that Temasek may invest in Lehman Brothers (NYSE: LEH).
According to its annual report, Tamasek reported a $12.8 billion net profit for the past year as of the end of March. Keep in mind that the fund has engaged in a variety of asset sales.
Going forward, Tamasek is glum on its forecast, though. Basically, the fund thinks that the credit crunch will last another two years – which is certainly depressing.
TheStreet.com's Jim Cramer says that even in lousy markets -- and this is one of them -- you can find stocks to buy.
When nothing's working, something's working. I know sounds counterintuitive. but there is simply no reason to think, as bad as this market is -- and it is really, really bad -- that there isn't something to buy.
But are they really hurting General Mills (NYSE: GIS) (Cramer's Take)? Can I see selling Procter & Gamble (NYSE: PG) (Cramer's Take) because of them? After we know the price increases are all baked in? And don't hit me with that strong-dollar stuff, because GIS doesn't have that much overseas exposure. Same with Pepsi (NYSE: PEP) (Cramer's Take): This is a national company with an international arm that is generating oodles of cash and doesn't have as much bad commodity exposure as it did a few months ago.
U.S. stock futures were mixed on Tuesday. Following Monday's broad sell-off and volatile session, which was also marked by low volume, today might not be different -- volatile and low volume. Several reports are in focus today, specifically some housing data that could shine more light on the sector, and consumer confidence, which could also move stocks. Meantime, oil prices declined and the dollar strengthened against major currencies.
Rio Tinto (NYSE: RTP) shares are down over 3% in premarket trading after the mining giant reported fiscal first-half profit more than doubled. RTP's acquisition of Alcan and soaring commodity prices helped Rio achieve the results. RTP shares have been declining due to worldwide slower growth.
Meanwhile, Anadarko Petroleum (NYSE: APC) shares were 2.4% higher in after-hours after it announced a plan to buy back up to $5 billion of stock.
Staying with share buybacks, Coach (NYSE: COH) are also 1.7% higher in premarket trading after announcing a buyback program of up to $1 billion, which follows the completion of a similar repurchase.
And of course, Lehman Brothers (NYSE: LEH). Shares of the embattled banker are rising this morning following speculation that Kohlberg Kravis Roberts may be interested in buying Neuberger Berman, according to CNBC, while Blackstone Group backed away.
The Observer reports that Lehman Bros. (NYSE: LEH) CEO Richard Fuld could be out of a job by the end of the year. The Observer states that "Whether a Lehman suitor emerges or not, well-placed sources within the bank are certain that Fuld is set to hand over the reins before the end of the year. 'He is involved less and less with day-to-day executive affairs, and his credibility is shot,' one senior Lehman source said."
The sources for the story are extraordinarily vague, and even if they are reasonably credible, it's hard to imagine who would be able to say with certainty that Fuld is on the way out.
It's not a difficult rumor to believe. The incredible part is that Fuld hasn't already been ushered out to a cushy retirement with a thoroughly undeserved severance package. The stock is off more than 80% in 2008, and Lehman's future as a stand-alone public company is very much in doubt.
While Fuld's firing would obviously be well-deserved, it's probably too late for it to matter one way or another. The distraction and expense of paying him to go away and finding someone else with nothing better to do than leap aboard a sinking ship makes it hard to say whether his departure would even do shareholders any good.
Stock futures were mixed Monday morning, indicating stock would start on a down note a week full of economic data. This morning, investors are focusing on rising oil prices and existing home sales data to be released at 10:00 a.m. EDT. Also, over the weekend, Federal Reserve Chairman Bernanke commented from the Fed's yearly retreat, saying that problems in credit markets not yet over and are a threat to economy. Meanwhile, economists are saying inflation is catching up to the credit crisis as the major concern for the economy.
American International Group's (NYSE: AIG) credit ratings may be downgraded by Fitch due to uncertainties over AIG's exposure to mortgage backed securities. AIG was down 1.5% in after-hours Friday.
The Australian government approved Chinalco 14.99% stake in Rio Tinto's (NYSE: RTP) but warned the Chinese firm against buying more shares without prior approval. Alcoa (NYSE: AA) backed the purchase. RTP shares were up over 1% in Australian trading.
Broadcom Corp. (NASDAQ: BRCM) will pay around $192.8 million in cash to acquire chipmaker Advanced Micro Devices Inc.'s (NYSE: AMD) digital TV business, the companies announced Monday.
Today was a nice finish for a volatile weak. Ben Bernanke talked down the economy and talked down inflation, making Wall Street push out the chances of a rate hike further and further out. Oil fell over $3.00 as US-Russian tensions are at least a tad less and after the US Dollar gained ground today. Today's unofficial closing bell levels are as follows:
Akamai Technologies Inc. (NASDAQ: AKAM) was a very unusual stock today. We saw major call option trading activity in the stock, making some wonder if this stock was in play. Shares were up in today's final minutes.
The shares of Wachovia Corporation (NYSE: WB) opened on a gain of nearly 6% this morning, thanks to a positive note from brokerage firm UBS. The analysts raised their price target on WB from $12.50 to $16, and reiterated a "neutral" rating. However, the stock has wasted no time in whittling its early morning gains, and slipped into negative territory before midday.
Yesterday, Wachovia shares closed lower after Friedman Billings & Ramsey reinitiated coverage at "underperform." No surprise there -- but, in today's session, the equity is declining on what should have been a bullish boost from UBS. In fact, most financial stocks are higher today following speculation on a potential buyout bid for Lehman Brothers (NYSE: LEH). The Select Sector SPDR Financial Fund (NYSE: XLF) is sitting on a gain of more than 2% at last check.
The New York Times reports that since we've had such a catastrophic run with home mortgages, it's time to watch the collapse of commercial ones. The same names surface when it comes to the collapse of our financial system -- in the case of commercial mortgages Deutsche Bank (NYSE: DB) ($25.1 billion), Morgan Stanley (NYSE: MS) ($22.1 billion), Lehman Brothers (NYSE: LEH) ($40 billion in commercial mortgages and property), and Citigroup, Inc. (NYSE: C) ($19.1 billion) are among the biggest holders. They are also big names in Auction Rate Securities (ARS).
Why do people think that commercial real estate could be tanking? Here are four reasons:
Declining property prices. The Times reports that the Moody's/REAL Commercial Property Price Index has dropped 12% since its peak last October.
Commercial mortgage write-downs. According to the Times, Morgan Stanley reported commercial mortgage write-downs of $400 million and Wachovia (NYSE: WB) said it would take at least $1 billion worth of such write-downs.
Potential Riverton default. The Times reports that Riverton, a 1,230 unit Harlem development, was premised on the idea that developers could convert "lower-priced rentals to apartments priced closer to the higher market average." But the Times reports that Monday Fitch "issued a negative watch on part of the Riverton Apartments trust" since the developers had not made much progress -- threatening commercial mortgages that Citi and Deutsche Bank hold.
Lehman Brothers Holdings Inc. (NYSE: LEH) stock is up over 10% as of 9:44 a.m. on reports that Korea Development Bank (KDB) is "open to" acquiring Lehman, according to Bloomberg News. Can you say short-covering?
Bloomberg reports that KDB said, "We are studying a number of options and are open to all possibilities, which could include (buying) Lehman." But this statement requires some context. Bloomberg reports that The Financial Times wrote yesterday that "Lehman failed to sell a 50 percent stake to [KDB] and China's Citic Securities Co. The buyers walked away after deciding Lehman demanded too high a price."
Meanwhile, this announcement must be scaring those who bet that Lehman would not be able to pay its bondholders. "Credit-default swaps protecting against a default on Lehman's bonds dropped 74 basis points today to 315," according to Bloomberg. Who knows where this latest chapter in the Lehman saga will lead?
U.S. stock futures were higher this morning, pointing to a potential positive start on Wall Street. Investors this morning await Federal Reserve Chairman Ben Bernanke speech on financial stability scheduled for 10:00 a.m. from the Fed's annual retreat at Jackson Hole. In the face of recent financial turmoil, namely talk of a government bailout for Fannie and Freddie, as well as troubles at Lehman, Bernanke's speech will likely be today's highlight. Meanwhile, oil dropped a little from Thursday's advance.
Indeed, the Wall Street Journalreports that Freddie Mac (NYSE: FRE) "executives are sounding out private-equity firms and other investors about the possibility of buying new common or preferred shares in the mortgage company." But of course, investors are worries their investments in Freddie or Fannie Mae (NYSE: FNM) may be lost in case of a government bailout. Even Warren Buffett opined on the matter on CNBC this morning, saying he expects the government to take action to support troubled mortgage financiers.
Lehman Brothers (NYSE: LEH) is rebounding this morning after an analyst at Ladenburg Thalmann upgraded LEH to Buy Thursday, saying it is vulnerable to a hostile takeover.
Verizon Communications (NYSE: VZ) is close to an agreement with Google (NASDAQ: GOOG), according to the Wall Street Journal. Conceding they need help with search, the deal could make Google the default search provider on Verizon devices.
Now eight large brokerage firms have settled with Auction Rate Securities (ARS) investors. This afternoon Bloomberg News reports Goldman Sachs (NYSE: GS) and Deutsche Bank settled with state regulators. Merrill Lynch & Co., Inc. (NYSE: MER) announced another prong of its settlement earlier in the day.
What are the terms of the settlement for the latest two? Bloomberg writes that "Goldman will buy back $1.5 billion of the securities and pay a $22.5 million fine. Deutsche Bank will redeem $1 billion of debt and was fined $15 million." In addition to the rogues gallery of big ARS issuers who have yet to settle, investigators are targeting medium-sized brokers -- Charles Schwab (NYSE: SCHW), Fidelity Investments and E*Trade Financial Corp. (NYSE: ETFC).
This leaves major ARS issuers lagging behind their peers. Here are three holdouts (with their 2007 municipal ARS issuance in parentheses):
Bloomberg News reports that Merrill Lynch & Co., Inc. (NYSE: MER) has extended its Auction Rate Securities (ARS) redemption offer in response to what I thought was pressure from New York Attorney General Andrew Cuomo who threatened to take Merrill to court. But what is interesting is that Massachusetts Secretary of State William Galvin was the one who announced the settlement.
While the politics of this intrigue me, those who held Merrill ARSs (pun intended) care about the terms of the settlement. Bloomberg reports that Merrill "will begin the buyback on October 15 for individuals, nonprofits and small business with $3 million or less on deposit. Redemptions for clients with $100 million or less start on January 15." This Merrill deal adds to the one it announced on August 7 -- a voluntary buyback of $10 billion worth of ARS. Merrill has a total of "30,000 clients who held an estimated $12 billion" according to Bloomberg.
This leaves many major ARS issuers lagging behind their peers. Here are four holdouts (with their 2007 municipal ARS issuance in parentheses):
U.S. stock futures were lower this morning, pointing to a weaker start Thursday following a reprieve Wednesday. Concerns over financials toll center stage again as oil continued to swing higher. Some economic data released later today may affect trading as well: Philadelphia-area poll of activity for August, leading indicators for July and weekly jobless claims.
Investors continued to fear nationalization of mortgage finance giants Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE), each of which declined 27% and 22% Wednesday respectively. FNM and FRE are declining about 4.5% and 9% respectively in premarket trading. Jim Cramer thinks trading in the shares should be stopped for fear of manipulation as the short-selling rules ended.
Staying with financials, Citi lowered its third-quarter earnings estimates for Goldman Sachs (NYSE: GS), Lehman Brothers (NYSE: LEH) and Morgan Stanley (NYSE: MS) as it fears further writedowns, and a weaker business flow in addition to the seasonal slowdown. It cut its price target on Lehman to $35 from $50, but kept as Buy. Citi forecasts write-downs of $2.9 billion for Lehman, $1.8 billion for Goldman and $1.7 billion for Morgan Stanley.
As if that wasn't enough to raise concerns, the Wall Street Journal reports that the Federal Reserve called Credit Suisse (NYSE: CS) last month to check a rumor that the bank was preparing to pull a line of credit for Lehman Brothers, which CS told the FED wasn't true. At least this shows the Fed is serious about taking and implementing the moral authority it should be.
TheStreet.com's Jim Cramer says the only action in the sector is that the rumor mill is spinning overtime. 
Temasek Holdings is one of Singapore's sovereign wealth funds (SWFs), managing $130 billion. Over the past few years, the fund has been diversifying into emerging markets as well as developed economies. 
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U.S. stock futures were mixed on Tuesday. Following Monday's broad sell-off and volatile session, which was also marked by low volume, today might not be different -- volatile and low volume. Several reports are in focus today, specifically some housing data that could shine more light on the sector, and consumer confidence, which could also move stocks. Meantime, oil prices declined and the dollar strengthened against major currencies.
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U.S. stock futures were higher this morning, pointing to a potential positive start on Wall Street. Investors this morning await Federal Reserve Chairman Ben Bernanke speech on financial stability scheduled for 10:00 a.m. from the Fed's annual retreat at Jackson Hole. In the face of recent financial turmoil, namely talk of a government bailout for Fannie and Freddie, as well as troubles at Lehman, Bernanke's speech will likely be today's highlight. Meanwhile, oil dropped a little from Thursday's advance.
Now eight large brokerage firms have settled with Auction Rate Securities (ARS) investors. This afternoon 
U.S. stock futures were lower this morning, pointing to a weaker start Thursday following a reprieve Wednesday. Concerns over financials toll center stage again as oil continued to swing higher. Some economic data released later today may affect trading as well: Philadelphia-area poll of activity for August, leading indicators for July and weekly jobless claims.
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