Daily Highlights: 9.24.09

• Crude Oil drops nearer to $68 after unexpected US supply gain.
• EU raids cement makers, Holcim & Cemex in Spain, as part of a price-fixing probe.
• Euro falls from one-year high versus Dollar before meeting of G-20 leaders.
• European Commission proposed new bloc-wide regulatory bodies to supervise banks.
• Fed highlighted signs of recovery as it left rates steady.
• Japanese exports fell 36% in August from year ago, 11th straight decline.
• Most Asian stock markets fall on drop in commodity prices; Japan advances.
• Abbott emerges as strong competitor to buy pharmaceutical unit of Solvay.
• Aiful to cut 2,000 jobs, forecasts loss of $3.4B as claims increase.
• Areva SA received 3 offers of less than $5.9B for its transmission, distribution unit.
• AutoZone Inc.'s Q4 net falls 3% to $236.1M; revs up 1% at $2.23B.
• Bed Bath & Beyond Q2 profit up 14% to $135.5M as revs rise 3.3% to $1.91B.
• CanWest Global sells its 50.1% stake in Ten Network for A$680M.
• China Metallurgical shares decline 12% in Hong Kong on first day of trading.
• Cintas Corp. reported Q1 EPS of $0.43, beating average analyst estimate by 9.4%.
• Copart Q4 profit down 15% at $34.6M on lower sales, currency effects.
• General Mills' Q1 net rises 51% to $420.6M on sales growth, lower costs; ups Y09 f'cast.
• GMAC is using its new access to low-cost capital to compete more directly with banks.
• Hercules Offshore f'casts Q3 sales below cons. est., offers 17.5M shares to repay debt.
• Japan Airlines will consider a breakup of the company along with other options.
• Marriott plans to take a Q3 pretax charge of $760M in its timeshare business.
• Microsoft says it has 'no plans to acquire EA'.
• Nintendo cuts Wii price by $50 to $199 for first time after reductions at Sony, Microsoft.
• Paychex Inc. expects Y09 revenue to come in lower than previously estimated.
• Red Hat beats est., Q2 net rises 36.9% to $28.9M; revs up 12% at $183.6M.
• United Steelworkers, three others file antidumping petitions against China, Indonesia.
• Xilinx sees Q2 sales at $413.9M (cons $392.5M) on rebounding demand.

Economic Calendar: Data on Initial Claims to be released today.
Earnings Calendar: ALOG, AM, CBK, COMS, FINL, MKC, RAD, RIMM, SCHL, SCS, TIBX.
Companies to watch: American Greetings, Analogic Corp, Christopher & Banks, McCormick & Co,
RIM, Rite Aid Corp, Scholastic, Steelcase, Vail Resorts.

Recent Egan-Jones Ratings Actions:
DENBURY RESOURCES INC (DNR)
CHESAPEAKE ENERGY CORP (CHK)
UNION PACIFIC CORP (UNP)
NORFOLK SOUTHERN CORP (NSC)
CONAGRA FOODS INC (CAG)
CARNIVAL CORP (CCL)
ARCH COAL INC (ACI)
COOPER TIRE & RUBBER CO (CTB)
CLOROX CO (CLX)
DIAMOND OFFSHORE DRILLING INC (DO)
AMERICAN INTERNATIONAL GROUP INC (AIG)
MOLSON COORS BREWING CO (TAP)
ENSCO INTERNATIONAL INC (ESV)

Data provided by Egan-Jones Ratings And Analytics

Comments

[Anonymous]

Has anyone else seen this rather interesting new story re mortgages? From Matt Taibii:

440 views | 3 recommendations | 36 comments
Waking up to discover the mortgage market was a giant criminal enterprise
A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. MERS is an acronym for Mortgage Electronic Registration Systems, a private company that registers mortgages electronically and tracks changes in ownership. The significance of the holding is that if MERS has no standing to foreclose, then nobody has standing to foreclose – on 60 million mortgages. That is the number of American mortgages currently reported to be held by MERS. Over half of all new U.S. residential mortgage loans are registered with MERS and recorded in its name. Holdings of the Kansas Supreme Court are not binding on the rest of the country, but they are dicta of which other courts take note; and the reasoning behind the decision is sound.

via Landmark Decision: Massive Relief for Homeowners and Trouble for the Banks.

This is a potentially gigantic story. It seems that a court has ruled that about half of the mortgage market has been run as a criminal enterprise for years, which would invalidate any potential forelosure proceedings for about, oh, 60 million mortgages. The court ruled that the electronic transfer system used by the private company MERS — a clearing system for mortgages, similar to a depository, that is used for about half the mortgage market — is fundamentally unreliable, and any mortgage sold and/or transferred through MERS can’t be foreclosed upon, at least not in Kansas.

Coincidentally I’d been working on something related to this all day yesterday. All over the country, lawyers are contesting foreclosures because of similar chain-of-custody issues. I have some material about this coming out in my next Rolling Stone story, so I can’t get into this too much, but suffice to say the lenders and the banks were extremely sloppy about their paperwork (at best — there is a fraud angle as well) and jammed up the system with missing and/or mismarked mortgage notes. Since a sale isn’t legal unless there’s full transfer of the physical note, a lot of the sales of mortgage-backed securities were not entirely legal, since the actual notes were often not transferred.

Nothing like waking up in the morning and finding out a whole sector of the economy is completely screwed. Are these good times or what?

Although this particular case pertains to MERS, non-MERS mortgages were often even worse. Anyway I have more on this coming next week. Thanks again to Eric at MonkeyBusiness for the heads-up.

[Anonymous]

Yes, this was discussed in the comment section for a Mish article a couple of weeks ago. Agree, it is potentially huge.

[ratava]

whoosh

[docj]

Crude Oil drops nearer to $68 after unexpected US supply gain.

Energy stockpiles "unexpectedly" rise at the same time that we continue to hear that RECOVERY IS HERE!!  YIPPEE!!!

Yep, I'm sure that always happens.

[Anonymous]

"Japanese exports fell 36% in August from year ago, 11th straight decline"

Apologies for stating the obvious but the worlds second biggest economy is in a deflationary recession that has been intensifying.

THIS IS SHOWING US THERE IS NO END DEMAND !!

[SWRichmond]

Nice smackdown in precious metals this morning to clear out the longs by hitting their stops.  If you're a trader and you don't expect this sort of thing you're not much of a trader.  This sort of thing is old hat.  It is also one of the beauties of buy-and-hold wrt PMs: they can't legally steal it from you.

http://www.kitco.com/charts/livegold.html

I can't wait for the two week period prior to the closeout of the December '09 contract.  Stocking up on popcorn.

http://data.tradingcharts.com/futures/quotes/GC.html

[Gilgamesh]

Sub-1000 stops taken out.  Time to look for the next one to whipsaw.

[Hephasteus]

Oh my god they only got it down to 994? That's not a smack down. They should have hit 958 3 days ago if they could drop it.