Tuesday, September 18, 2007

Morning Note...

Futures looking higher this morning ahead of the FOMC meeting and on the back of better-than-expected (although lower year-over-year) earnings from LEH.  August PPI down 1.4% and the energy component was off 6.6%.  However, with oil up over $80 of late, the energy number is a bit dated and is not sustainable.  Core PPI was in line with expectations at +0.2%. 

Fed policy statement due at 2:15pm – most pundits expect a ¼ point cut and a “cautious” approach to future cuts.  However, considering the lower PPI number, a surprise is certainly possible.  

GM downgraded at GSCO.  ETFC downgraded at GSCO.  AXP agreed to sell its American Express Bank to Standard Chartered for approximately $1.1B. The company expects the deal to be completed in Q108 and expects break-even impact to earnings from the deal.  EXC reaffirmed guidance for FY07 and sees FY07 EPS at the upper end of the $4.15-$4.30 range (Reuters consensus was $4.29) and expects "robust growth" over the next five years.  Breeden Capital (8%) and SAC (5%) report stakes in ZLC. 

Announced Deals: Standard Chartered for AXP Bank ($1.1B)

Rockbay News:  Debt sale road show begins for FDC financing lenders, FDC confirms Sept 25th as closing date, dR reports KKR may seek to divest some of FDC’s payment processing platforms, NY Post reports UBS is looking to escape funding GCO’s bid for FINL, Dutch minister clears RBS bid for ABN Amro, 3045 TT seeking strategic investor from US or Europe, Statoil/NHY NO merger effective October 1, 12 potential WEN bidders have signed confidentiality agreements,

Vito’s Advanced Trivia:   Early during WW1 the British Army made the switch from cloth caps to metal helmets because of the number of head injuries reported.  From then on, all soldiers wore metal helmets.  However, soon after the switch the British War Office was shocked to discover that there were more soldiers hospitalized with head injuries than ever before.  Assuming the intensity of fighting was relatively constant, can you explain why?

Yesterday’s Answer:  A French wooden peasant shoe is a “sabot.”  Thus, when French peasants in the 19th Century trampled crops to show their displeasure with the way they were being treated, they were performing “sabotage.”