Photo: AP Photo/Jin Lee
Good morning, here’s your daily research roundup from the Street:
- U.S. Financials: Figures released for the week of Sept. 14 were made available by the Fed on Friday which showed loans and leases declining $7.8 billion after two weeks of gains at the 25 largest U.S. institutions. Commercial real estate showed surprising resilience, increasing $0.1 billion to $525.9 billion — something not accomplished since the second quarter of 2009.
- U.S. Life Insurance: Share buybacks may stall going into 2012 as insurers weigh capital level concerns. Specifically, investors are showing concern with Ameriprise Financial, MetLife, Prudential and Hartford Financial.
- Latin American Finance: Brazilian Central Bank stress tests completed last week found banks were better prepared to face a global crisis than in 2008, with institutions seeing low exposure to countries with debt issues. Across the region banks finished down, with Banco Santander Brasil off 10.0%, Banorte shedding 17.2%, and Mexbol declining 13.5%. Part of the sell-off in Brazil due to expiration date of single-stock options which pushed average daily volume at the Bovespa up 35% week-on-week to 7.5 billion reals.
- Dish Network (NASDAQ: DISH): Blockbuster integration continues with the release of Moviepass, a streaming service that will cost subscribers $10 per month. With free sign ups for all new activations, the service could hit 2.7 million users without any additional sign ups.
- Capital Expenditures: Non-financial firms are sitting on roughly $2 trillion in cash that can be deployed for investment, hiring or shareholder returns. Executive fear of a slowdown appears to be hampering capital use.
- Europe Economics: Citi is downgrading its outlook for the Eurozone citing a “rapid timetable for sovereign restructurings and overspills from a Greek default.” The IMF forecasts a capital impact of $405 billion to European banks, but that the U.S. banks face much smaller headwinds, at $45 billion.
- Oil: Analysts are bearish on the commodity, expecting Brent and West Texas Intermediate crude to go to $86 and $72 per barrel, respectively, in 2012. Currently Brent stands at $103.72 in intra-day trading, while WTI is at $79.45. Expecting Exxon Mobil to grow production by 2% and hit one of the highest margins in the covered group. Bloomberg reports that the chief of OPEC believed prices would remain elevated.
- China Economics: Survey of 20 firms found that all were bearish on China, even with a slight slowdown from top growth seen over the past decade. Heading into 2012-13, companies expect China to regain rapid growth rate with construction spend and aerospace to outpace.
- Estimate Changes: Increases: Discover Financial ($30 vs. $29), Nike ($89 vs. $85), Vale ($39 vs. $38); Declines: CarMax ($29 vs. $34), Hasbro ($50 vs. $54), Hewlett-Packard ($24 vs. $30), Ilumina ($47 vs. $62), Mattel ($30 vs. $32), Walgreen Co. ($42 vs. $43)
- Luxury Goods: Sales highly correlated to S&P performance, which would indicate a coming slowdown. Swiss watch imports fell in August, but the overall luxury index still tracked up 8.7% year-on-year.
- KB Home (NYSE: KBH): Margins are keeping the firm from reaching profitability, but new orders were above both Goldman and industry expectations at 1,838, up 40% year-on-year.
- Motorola Solutions (NYSE: MSI): Company remarks on turn to a net-debt firm, from net-cash today, should bode well for shareholders. Free cash flow of $700 million a year will aid return to shareholders, which could range from $4 to $6 billion.
- NCR Corp. (NYSE: NCR): Strong emerging market expansion and regional bank adoption of smart ATMs will be offset by unfunded pension obligations and overly aggressive growth targets.
- United Technologies (NYSE: UTX): Goodrich deal is expected to boost earnings per share in 2013-15. Morgan notes risk will come from timing of deal closure and regulatory approval, but that it will benefit a compound annual growth rate of 13%
- Advanced Micro Devices (NYSE: AMD): Analysts are raising guidance on better channel checks and the coming release of its Trinity processor in the second quarter of 2012. Still, UBS sees better release to market execution needs to occur for AMD to make further headway into server market.
- New York Times (NYSE: NYT): September ad lineage fell 13%, with national autos down 47% and bank ad spend down 23%. At the Wall Street Journal lineage is down 1% for the month.
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