Much like FXI puts
They barely budge when the security's down
Banks running to be dumped?
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US EQUITIES WEEK AHEAD: What Lurks Ahead For The Big Banks
14 minutes ago - Dow Jones News
By Danielle Le Grand Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--When the nation's biggest banks start reporting their fourth-quarter earnings - or losses - next week, investors will be just as focused on the industry's outlook for the year ahead as they will on the quarter's figures. Are there problems still waiting to ambush the battered sector and the wider economy, and are the banks well placed to deal with them?
Citigroup Inc. (C) and Merrill Lynch & Co. (MER) - which collectively wrote down $10.1 billion of supbrime-related mortgage assets in the third quarter - report fourth-quarter results in which they may absorb as much as $25 billion of additional write-downs.
Citigroup, whose shares plummeted about 48% in the last 12 months, is expected to unveil a loss on Tuesday of $1 a share. Merrill, whose stock is down about 45% in the past year, will follow on Thursday with a likely loss of $4.57 a share, according to median estimates of analysts polled by Thomson Financial.
Other big banks, including JPMorgan Chase & Co. (JPM) and Wells Fargo & Co. (WFC) - which each report Wednesday - are expected to eke out profits that are substantially lower than in the fourth quarter of 2006. Wells Fargo, in November, said it would take a $1.4 billion provision in the fourth quarter for loan losses.
Washington Mutual Inc. (WM) reports earnings Thursday, after last month saying that it now expects its fourth-quarter provision for loan losses to be between $1.5 billion and $1.6 billion. WaMu and JPMorgan investors alike will also want to know whether reports of "very preliminary" talks between the banks will lead to a merger.
TD Ameritrade Holding Corp. (AMTD) releases its fiscal first-quarter results Thursday, with analysts expecting earnings per share of 39 cents on revenue of $623 million, according to Thomson Financial. And Knight Capital Group Inc. (NITE) reports fourth-quarter results Wednesday.
CIT Group Inc. (CIT) Friday indicated it would post a fourth-quarter loss amid boosting loan-loss provisions by $300 million and writing off the remaining goodwill from getting into the student-loan business. CIT reports Thursday.
Detroit Rolls Out The Green Carpet At Auto Show
The North American International Auto Show in Detroit kicks off Sunday and the green theme is expected to dominate, with fuel prices rising and the government enacting tough mileage standards.
But while more fuel-efficient models are on the agenda, so are the big drivers for Detroit's profits - pickup trucks. Ford Motor Co. (F) and Chrysler LLC will be showing off their redesigned versions of full-size pickups. General Motors Corp. (GM) will show its latest hybrid technology, but also a souped-up Corvette. The show usually gives auto stocks a bit of a kick, but that may be a stretch this year as the backdrop is gloomy. Auto sales, which took a hit in 2007, are expected to be down even more in 2008 thanks to a slowing economy.
A host of auto suppliers and auto makers will make presentations - some of which will include 2008 outlooks - at the Auto Analysts of New York conference in Detroit from Wednesday though Friday. Among the major companies presenting are General Motors, Ford, Johnson Controls Inc. (JCI), Lear Corp. (LEA), Visteon Corp. (VC), Magna International Inc. (MGA), American Axle & Manufacturing Holdings Inc. (AXL), BorgWarner Inc. (BWA), TRW Automotive Holdings Corp. (TRW), ArvinMeritor Inc. (ARM) and Tenneco Inc. (TEN).
Tech Attention To MacWorld, IBM, Intel Earnings
Now that the Consumer Electronics Show is over, the industry's attention shifts to consumer-electronics giant Apple Inc. (AAPL) and the MacWorld Conference & Expo that begins Monday and runs through the week.
The highlight of the San Francisco show comes Tuesday, when Chief Executive Steve Jobs delivers a keynote address, during which he's expected to unveil a new lineup of ultra-slim laptops and an online movie-rental business.
Jobs often uses MacWorld to set the tone for Apple's efforts for the upcoming year and unveils the company's key upcoming products, such as the iPhone, which was revealed at last year's event.
Meanwhile, technology giants International Business Machines Corp. (IBM) and Intel Corp. (INTC) release earnings next week, offering insights into the state of tech spending in the U.S.
IBM shares have fallen 16% over the past three months as concerns increased about a slowdown in such spending, especially from financial-services companies, a sector where IBM gets 30% of its revenue, according to Thomas Weisel. IBM reports its fourth-quarter results Thursday.
Intel, meanwhile, is expected to post solid fourth-quarter results Tuesday, highlighted by a projected 12% jump in revenue. Some, though, expect a conservative 2008 outlook from Intel, based on the larger economic concerns.
Rival chip maker Advanced Micro Devices Inc. (AMD) is expected to report a significant loss next week as it continues to struggle because of stiffer competition from Intel and the cost of a major acquisition.
Investors Tune In To GE Chief Immelt
General Electric Co. (GE) will provide something of a barometer on the industrial economy when the conglomerate reports fourth-quarter results Friday.
Chief Executive Jeff Immelt was upbeat when he delivered his 2008 outlook in early December, saying he expects strong global growth to continue offsetting slower spending by U.S. consumers.
But, with economic indicators deteriorating since then, analysts will be scrutinizing his comments Friday for evidence of a change in tone. Wall Street also will be listening closely for GE's view of the ongoing strike by Hollywood writers and its potential impact on the conglomerate's NBC Universal unit.
GE is expected to post fourth-quarter earnings of 68 cents a share on about $47.35 billion in revenue.
Genentech, Forest Labs Report; FDA Decides On Tysabri
Genentech Inc. (DNA), the largest biotech company by market capitalization, will report fourth-quarter earnings Monday, with analysts expecting earnings of 67 cents a share on revenue of $2.97 billion, according to Thomson Financial. The company's growth is expected to slow in coming years, though label expansion for cancer drug Avastin could change that expectation. Analysts expect Avastin sales of about $616 million for the quarter.
Drug maker Forest Laboratories Inc. (FRX) will report fiscal third-quarter results Tuesday with analysts looking for earnings of 75 cents a share on revenue of $946.5 million. News to watch includes sales of antidepressant Lexapro, its flagship drug, and any updates on its pipeline or licensing plans as Lexapro faces patent expiration in 2012.
The Food and Drug Administration is expected to decide, likely on Monday, on whether to approve multiple sclerosis treatment Tysabri, co-developed by Elan Corp. (ELN) and Biogen Idec Inc. (BIIB) for treating Crohn's disease in patients for whom other therapies have failed.
Airline Earnings Take Off
Major U.S. airlines begin reporting fourth-quarter earnings next week, with AMR Corp. (AMR) on Wednesday, and Continental Airlines Inc. (CAL) on Thursday. AMR is likely to report a loss for the quarter (the mean estimate is for a 61-cent-per-share loss), a weak one for the industry, on slowing revenue as the carrier cuts domestic capacity. Continental is seen with a narrow loss of 2 cents a share. For full-year 2007, the U.S. airline industry is expected to be in the black. But investors are most interested in the tantalizing possibilities of airline mergers, including a possible hookup between Delta Air Lines Inc. (DAL) and Northwest Airlines Corp. (NWA), Delta and UAL Corp. (UAUA), or Continental and UAL.
Housing Starts, Retail Sales, CPI, PPI On Tap
Economic data next week - forecast to show weakness in retail sales, industrial production, housing starts and consumer sentiment - will add to the worries about recession. Meanwhile, Federal Reserve Chairman Ben Bernanke and his teammates are expected to continue to cement the market's speculation of a 50-basis-point cut this month, with more coming down the road.
-By Danielle Le Grand, Dow Jones Newswires; 201-938-2120; danielle.legrand@dowjones.com
(Dow Jones Newswires staff contributed to this report.)
> Dow Jones Newswires
01-11-08 1351ET
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