Data Feed

S&P futures vs fair value: -1.8. Nasdaq futures vs fair value: -4.0.
Total PPI rose 0.6% (consensus 0.1%) in July, led by a 2.5% jump in energy prices. The more closely-watched core rate rose just 0.1% (consensus 0.2%), but the year/year rate now stands at 2.3%. The Trade Deficit unexpectedly narrowed in June to $58.1 bln (consensus $61.0 bln). After catching a slight bid heading into the data, the futures market has pulled back and continues to signal a sluggish start for stocks.

Trade Balance -$58.1 bln vs -$61.0 bln consensus
Core PPI y/y +2.3% vs +2.5% consensus
PPI y/y +4.0% vs +3.4% consensus
PPI m/m +0.6% vs +0.1% consensus
Core PPI m/m +0.1% vs +0.2% consensus

Gapping up: CBAK +22.3%, MCO +13.7%, GIGM +8.5%, KALU +7.4%, FOSL +7.0%, STEC +6.7%, KRY +5.3%, BIDZ +4.0%, RFMD +3.8%, CSIQ +2.6%… Gapping down: TMA -23.0%, FACE -21.0%, FIG -6.7%, WMT -4.5%, MPEL -3.7%, UBS -2.9%, CFC -1.7%.

Fed says will evaluate whether needs to do operations at usual 9:30 A.M. EDT time, according to web site – Reuters

C Citigroup: Bernstein says worst-case estimate for C’s Q3 gross exposure to credit disruption is $2 bln-$3 bln – Reuters (46.54 )

BIIB Biogen Idec says Phase II clinical trial results for ADENTRI published in Journal of the American College of Cardiology (58.83 )
Co announces that positive results of a Phase II study of oral Adentri, an A1 adenosine receptor antagonist, in stable heart failure patients have been published in today’s issue of the Journal of the American College of Cardiology. Results showed that administration of oral Adentri for 10 days, in addition to standard heart failure therapy, was well tolerated and resulted in clinically significant increases in sodium excretion while preserving renal function. The study showed increases in sodium excretion above baseline and placebo beginning on Day 1, continuing over the 10-day dosing period. Notably, these effects were not accompanied by reductions in renal function nor substantial increases in potassium excretion. Trends toward beneficial effects in clinical measures of heart failure, including body weight, edema, and physician global assessment, were also observed. The safety evaluation did not reveal any significant concerns during dosing nor during 30 days of additional follow-up. The incidence of adverse events was similar to placebo, and higher doses of Adentri were not associated with an increase in adverse events. The pharmacokinetic profile was consistent with once daily dosing.

FIG Fortress Investment: Conference call details I (20.57 ) -Update-
On conference call, FIG says people were stretching themselves during the low volatility period that preceded the recent turbulence. Notes that they are an investment company, and disrupted/volatile times like this provides opportunities for them. Says subprime issues will not fully manifest itself anytime soon, and doesn’t expect those mkts to return to normal anytime soon. Says they have very little exposure to the subprime area, but sees opportunities there. Says subprime was the catalyst for the recent mkt turmoil, and it should have a very modest short-term impact on them, as they have no unfinanced deals. Thinks the hedge fund business should benefit. Notes the price of some of the public equities they own has gone down, but without any forced liquidations, they feel like they have great things ahead of them.

Bond Watch: Hacking Lower
The market is underwater with a bias toward weakness prevailing through the night despite profit warnings from UBS & other such sour notes from a variety of global corporate entities. While a flight to quality remains an undercurrent, the bonds may be pressing on their upper price limit without some hard evidence of growth being impaired more significantly. In the meantime, sentiment may be well divided to sell rallies but also buy dips as the data sorts itself out in light of the recent turmoil. The 2-10-yr yield spread is still batting around 31.5 as yesterday’s action saw some modest unwinding of steepeners. Bond prices in the EuroZone are down with decent data countering UBS’s dire words while in Japan, bonds were bid the flight to quality. The buck took advantage of euro weakness to drive down through 1.3600 while the yen strengthened against most everything but the dollar on carry-trade action. The gold has lost ground as the buck gained but has come back some with spot now 669.29 (-0.21). Crude has been higher 72.22 (+0.62). Data out brings PPI (830) which with any up-ticks pinching prices & the non event of trade balance (830). The euro is at 1.3586 & the yen is at 118.2800 while the 10-yr is -06/32nds yielding 4.782%.

Teletrax announces it has signed an agreement with Millenia 3 Communications. Teletrax is a subsidiary of Medialink Worldwide (MDLK)… Grill Concepts (GRIL) announces that it has completed the review of its accounting treatment for the purchase of certain contractual rights held by Hotel Restaurant Properties and affiliates and filed amended consolidated financial statements for its 3Q06, FY06 and 1Q07. GRIL restated its above-mentioned financial reports to reflect a contract termination cost of $3.1 mln in the three and nine-month periods ended Sep 24, 2006… Dollar Thrifty Automotive Group (DTG), the parent company of Dollar Rent A Car and Thrifty Car Rental, announces the expansion of Rent A Toll prepaid toll service to the metro Denver market. DTG and Thrifty are already offering the service in Dallas and Houston… Bausch & Lomb (BOL) announces that it has filed with the SEC definitive proxy materials in connection with the co’s pending merger agreement with Warburg Pincus… Sinovac Biotech (SVA) announces that it has commenced vaccination of volunteers for the clinical research of Pandemic Influenza Vaccine, which is the continued research for its Phase I clinical trial of whole viron H5N1 vaccine and the beginning of its Phase I clinical trial of split H5N1 vaccine.

FFIV F5 Networks: Downgrade details (72.42 )
As mentioned at 6:34, CIBC initiated F 5 Networks FFIV with an Outperform and an $85 price tgt as they believe the market for application networking solutions still has many years of growth ahead and see F5 as well positioned to capitalize on these strong fundamentals. With a Layer 4-7 chassis product on the way pairing it directly in Cisco’s (CSCO) domain, firm expects continued share gains through ‘08. Furthermore, they expect the integration of F5’s TMOS software into its WAN and security products to support solid growth after a mixed track record in these areas.

JMP Securities notes that eTelecare Global Solutions (ETEL 13.92) surprised the investment community just two days after its earnings call with news that it has lost the Dell (DELL) consumer technical support program, one of two programs that it provides for Dell. Blamed on Dell’s volume cutbacks, the program was to contribute approximately $32 mln of revenue in 2007. Operations managers learned of the development on August 7th and failed to notify the co’s CEO until late Friday. The firm cuts their ests, and lowers their tgt to $16 from $19, which corresponds to about 9x Enterprise Value to 2008 EBITDA… Wachovia says they still think the TXU Corp (TXU 64.50) buyout gets done at the $69.25. They say a new buyer would face increased regulatory hurdles and less favorable financing rates, while the threat of renewed political intervention would be a key overhang. Thus, if the deal collapses, they think the stock could easily drop 10%, but could quickly rally back given the strong L.T. earnings outlook… Jefferies names Airgas (ARG 45.01) as their “Tuesday Value Pick” saying the shares offer a compelling risk/reward, trading at less than 15x FY09 (March fiscal year end) despite an estimated 20% EPS CAGR. Firm thinks the upcoming investor day could provide a favorable catalyst for the shares.

Credit Woes Spread – WSJ
WSJ reports turmoil in the credit markets spread further yesterday when Coventree, a Toronto-based financial co that arranges commercial paper for cos looking for short-term cash, indicated it couldn’t sell $950 mln in new debt. Commercial paper is generally held by low-risk money-market funds whose safety is designed to rival that of insured bank deposits, but the recent disruption in the mkt for subprime mortgages and related securities has spread to some of the safest investments.

Acceleration in seasonal build rate; downside risk demand-driven, not supply – FBR
Friedman Billings notes recent channel checks indicate the PC build rate is accelerating, which bodes well for the DRAM bit-demand growth rate. Some component shortages could dampen PC unit shipments in 2H07, though their analysis still indicates a balanced DRAM supply/demand environment by 4Q. If component shortages do not have an impact on unit shipments, the DRAM industry could actually run into insufficient DRAM capacity by late 4Q, something that was unheard of a few months ago. Firm highlights three stocks here (WFR, TSRA, ASTSF), all unit-driven. They view the sell-off as a buying opportunity.

CFC Countrywide announces mortgage loan fundings for the month of July totaled $39 bln, an increase of 6% from July 2006 (26.61 )
Co released operational data for the month ended July 31, 2007. Key operational results for July 2007 included the following: Mortgage loan fundings for the month of July totaled $39 bln, an increase of 6% from July 2006. Commercial real estate funding volume for the month of July was $803 mln, up 88% from July 2006. Average daily mortgage loan application activity for July 2007 was $2.7 bln, up 5% from July 2006. The mortgage loan pipeline was $62 bln at July 31, 2007, even with the same period last year. The mortgage loan servicing portfolio continued to grow, reaching $1.43 trillion at July 31, 2007. This is an increase of $223 bln, or 18%, from July 31, 2006. Banking Operations’ assets were $90 bln at July 31, 2007, which compares to $85 bln at July 31, 2006. Securities trading volume in the Capital Markets segment of $371 bbln for July 2007 was 33% higher when compared to the same month last year. Net earned premiums from the Insurance segment were $124 mln, up 32% from July 2006. “Total assets in our Banking Operations also increased on a year-over-year basis. In addition, our Capital Markets and Insurance segments posted year-over-year monthly increases in securities trading volume and net earned premiums, respectively.”

Peak time for PCs but DRAM spot prices weak – Theinquirer.net
Theinquirer.net reports that the DRAM Exchange said, “Even though it’s the peak season for PCs, spot market prices on memory chips stays weak. There were lackluster sales in mainland China during July, a month usually characterised by high demand. Prices haven’t risen on the spot mkt, but the contract (O.E.M) mkt has shown a rise of up to 5% for the first half of this month. The differences between spot and contract markets is down to three factors. The first is that many memory firms have piled up mountains of D.I.M.M.s because of the price slump in Q2. Meanwhile, the PC multinationals are packing DRAM content per box to higher levels, so dampening the upgrade mkt. Finally, rising prices are deterring people from buying PCs. The fire at Samsung will affect both DRAM and NAND flash capacity allocations in the second half of this year. Prices may rise slightly but will peak in Sep and then will start falling again.”

TMA Thornburg Mortgage downgraded at 4 brokers on liquidity issues (14.28 )
As mentioned at 6:55, TMA was downgraded at FBR, RBC, Credit Suisse and Jefferies basically all on liquidity issues w/o the co releasing any new information. RBC downgraded TMA and lowered the tgt to $12 from $27 based on liquidity concerns… FBR downgraded TMA to Underperform from Market Perform and cut their tgt to $10 from $23, saying TMA, like others in the space, is facing margin calls on its repurchase lines, and coupled potential reduction in asset valuation, it could materially impact book value… Jefferies downgraded TMA to Underperform from Hold and reduced its price tgt to $10 from $24. The firm believes that the ongoing dislocation of the credit markets has severely impaired TMA’s ability to hold assets, as they believe that margin calls exacerbated by decreased available leverage is forcing asset sales. In addition, with TMA’s stock trading at a substantial discount to book value, they believe the co has no opportunity to raise permanent capital to stem the tide… Credit Suisse downgraded TMA to Underperform from Neutral on heightened concerns surrounding liquidity at the co.

Jacobs Engineering (JEC) announces the following contracts: 1). A contract to provide engineering, procurement, and construction management services to Fujifilm Imaging Colorants for a new manufacturing facility located at Grangemouth, Scotland; 2). A contract from the New Jersey Army National Guard to provide full architectural/engineering design services for a new aviation support facility to be located in Lakehurst, NJ. Officials estimate the project value at $43 mln; 3). Part of a team selected by the Department of Energy to continue remediating the Atlas uranium mill tailings site in Moab, UT. The team received a 4-year $100-mln task order contract; 4). A contract from Pfizer (PFE) to provide construction management services for a new small-scale clinical biotech manufacturing center in Shanbally, Cork, Ireland… Rohm and Haas (ROH) and S.K.C. have announced the formation of a joint venture that will develop, manufacture and mkt advanced optical and functional films used in the flat panel display industry.

Europe’s economic growth slows more than forecast – Bloomberg.com
Bloomberg.com reports that European economic growth slowed more than economists expected in Q2, as a rebound in consumer spending failed to make up for weakness in manufacturing and construction. The economy of the 13 nations that share the euro expanded 0.3% from Q1, when it grew 0.7%. The growth is the slowest since the fourth quarter 2004. From a year earlier, the economy expanded 2.5%.

Filings: Agrium (AGU) files for a $1 bln mixed shelf offering… Pharmacopeia (PCOP) files for an $80 mln mixed shelf offering… Illumina (ILMN) files for a $400 mln convertible notes offering by selling shareholders… Alesco (AFN) files for a $140 mln convertible notes offering by selling shareholders… Offerings: Beckman Coulter (BEC) announces a $600 mln convertible notes offering by selling shareholders… Neurobiological Tech (NTII) announces a $65 mln common stock shelf offering… IPOs: VMware (VMW), a software maker, prices its 33 mln share IPO at $29/share, at the top end of the $27-$29 forecast range.

AMAT Applied Materials: Meet/exceed July Q est with bookings bottoming; Oct qtr ests aggressive – FBR (21.74 )
Friedman Billings expects AMAT to meet/exceed July qtr ests when it reports after the close, with bookings down 10%-13%, vs guidance of down 10%-15%. Consistent with their call from July 11, they expect AMAT to talk about a bottoming in silicon orders by the Oct qtr. Although it is a bit early to make a call on the Jan qtr with strong conviction, the current forecast indicates a 4%-6% increase in the overall orders, driven by flattish silicon, seasonally strong fab solution, and acceleration in solar booking recognition. On the solar side, firm is shifting their focus to the next catalyst: whether AMAT’s customers’ customer(s) would scale their capacity to reach 100MW, at which point AMAT’s Thin Film (TF) technology is expected to become very competitive.

CRM Salesforce.com: Q2 preview – Credit Suisse (43.66 )
Credit Suisse notes CRM is scheduled to report Q2 earnings on Wed, Aug 15. Firm is expecting results to be inline with their forecasts, driven by continued strong demand from SMB customers. This should be generally positive considering the small sales reorganization in the early part of the quarter. Firm is estimating $172 mln in total rev with non-GAAP EPS of $0.08, GAAP EPS of $0.01, and cash flow of $27 mln. Firm expects the co to add somewhere between 125,000 to 135,000 new subscribers in the first half of the year bringing the total to approx 775,000.

Upgrades: Lehman upgrades Qwest (Q 8.50) to Overweight from Equal Weight… Credit Suisse upgrades Aspen Insurance Holding (AHL 23.75) to Outperform from Neutral and raises their tgt to $29 from $28 saying they believe the sell off in the stock due to UK flood loss fears is overdone. After speaking with management the firm says they are more comfortable about the co’s UK flood loss — while there could be some adverse reserve development, they believe it will not be very large and should not be material to book value. Miscellaneous: Lehman initiates Great Lakes Dredge (GLDD 9.01) with an Equal Weight and a $10 tgt.

Upgrades: Citigroup upgrades Assured Guaranty (AGO 22.72) to Buy from Hold… Citigroup upgrades RF Micro Devices (RFMD 6.07) to Buy from Hold. Downgrades: RBC downgrades Thornburg Mortgage (TMA 14.28) to Underperform from Sector Perform… Friedman Billings downgrades Thronburg Mortgage (TMA 14.28) to Underperform from Market Perform and cuts their tgt to $10 from $23 based on the current liquidity crisis in the asset-backed commercial paper (ABCP) and repurchase markets, coupled with the freezing up of the secondary market for jumbo loans… Credit Suisse downgrades Thronburg Mortgage (TMA 14.28) to Underperform from Neutral owing to heightened concerns surrounding liquidity at the company…. JMP downgrades Alexza Pharma (ALXA 9.39) to Market Perform from Outperform following earings. The firm says the key to the story, the pipeline update was underwhelming, with the start of, not data from, clinical trials such as the cardiovascular risk study with lead candidate AZ-001 continuing to play a prominent role on the call. With efficacy data from Phase II with AZ-001 being presented late March ‘07, the firm would have expected these follow-on studies to have been commenced by now. Miscellaneous: Calyon initiates AerCap Holdings (AER 25.18) with a Buy and sets a $32 tgt… Calyon initiates Aircastle Ltd (AYR 33.65) with a Buy and sets a $40 tgt… BofA initiates PharMerica (PMC 16.11) with a Buy and sets an $18 tgt, as they believe the co will grow by expanding in its current markets and entering new geographic territories, both organically and through acqusitions, while maintaining a focus on improving operating efficiency… CIBC initiates F 5 Networks (FFIV 72.42) with an Outperform.

WMT Wal-Mart misses by $0.04, ex items (46.17 )
Reports Q2 (Jul) earnings of $0.72 per share, excluding a net $0.04 gain, $0.04 worse than the Reuters Estimates consensus of $0.76; revenues rose 8.8% year/year to $91.99 bln vs the $92.42 bln consensus.Co issues downside guidance for Q3, sees EPS of $0.62-0.65 vs. $0.68 consensus. Co sees Q2 same store sales +1-3%. Co issues downside guidance for FY08, sees EPS of $3.05-3.13 vs. $3.16 consensus, prior guidance $3.15-3.23.

Upgrades: Lehman Bros. upgrades France Telecom (FTE 27.90) to Overweight from Equal-weight… UBS upgrades Allstate (ALL 52.30) to Neutral from Sell… JP Morgan upgrades Websense (WBSN 20.73) to Overweight from Underweight… Citigroup upgrades TransMontaigne Partners LP (TLP 28.50) to Buy from Hold… J.P Morgan upgrades OSI Pharma (OSIP 30.86) to Overweight from Underweight… Credit Suisse upgrades BT Group (BT 61.40) to Neutral from Underperform… Deutsche Bank upgrades Gentiva Health Services (GTIV 21.48) to Buy from Hold and raises their tgt to $26 from $23, as they have concluded after digesting Q207 results and additional detail from the 10-Q, GTIV has more margin leverage than previously believed and see a more favorable risk profile heading into the Medicare refinement… Wachovia upgrades TransMontaigne Partners LP (TLP 28.50) to Outperform from Market Perform, based on valuation following inline Q207 operating results with EPU that was below consensus. Downgrades: Credit Suisse downgrades Thornburg Mortgage (TMA 14.28) to Underperform from Neutral… Montgomery downgrades China TechFaith Wireless Communication Technology Ltd (CNTF 4.60) to Hold from Buy, following Q207 revenues that were below the firm’s forecast and just within the low end of co guidance while earnings were disappointing as well… Wachovia downgrades Physicians Formula Holdings (FACE 1.92) to Market Perform from Outperform, following a Q207 loss that was at the high-end of its most recent guidance and lowered guidance for the remainder of 2007.

European stocks decline, led by UBS, Morrison, Hochtief, K+S – Bloomberg.com
Bloomberg.com reports European stocks fell, led by financial-services companies after UBS AG said profit growth may slow and bank shares declined in the U.S. and Asia. National benchmarks fell in all 17 western European markets that were open. The U.K.’s FTSE 100 decreased 0.3% and Germany’s DAX lost 0.6%. France’s CAC 40 decreased 0.9%.

Asian financial stocks drop on debt-market concern; Rams falls – Bloomberg.com
Bloomberg.com reports Asian financial stocks fell after Australian mortgage lender Rams Home Loans Group Ltd. said “unprecedented disruptions” in credit markets may reduce its profit. South Korea’s Kospi index slid 1.7%. Japan’s Nikkei 225 Stock Average gained 0.3% to 16,844.61. All other markets open for trading dropped or were little changed, except Hong Kong. Pakistan is closed today for a holiday.

HD Home Depot beats by $0.05; reaffirms FY07 guidance (35.24 )
Reports Q2 (Jul) earnings from continuing operations of $0.77 per share, $0.05 better than the Reuters Estimates consensus of $0.72; revenues fell 1.8% year/year to $22.18 bln vs the $22.32 bln consensus. The Company reiterated in its earnings outlook that it expects its earnings per share from continuing operations to decline by 12-15 percent for fiscal 2007. Consolidated earnings per share are expected to decline by 15-18 percent for fiscal 2007. Co said, “We believe the housing and home improvement markets will remain soft into 2008; we will continue to invest thoughtfully for the long-term health of the business”.

In reversal, Japan’s central bank pulls back $5 bln – NY Times
The NY Times reports the Bank of Japan drained 600 bln yen ($5 bln) from the money supply Tuesday morning, after injecting money into the system for two days to ease fears of a liquidity crisis. The Japanese bank took the action after the overnight call rate stood Tuesday morning at 0.1%, far below the target of 0.5%, a sign of excess liquidity in the system, said a bank official, Hirotaki Hideshima. The goal is to bring the rate back to 0.5%, he said, but it is too soon to gauge the impact.

Sensex ends down 16pts at 15,001 – The Business Standard
The Business Standard reports the Sensex opened with a positive gap of 50 points at 15,067. After touching a high of 15,070, the index slipped marginally into red and displayed lacklustre movement for major part of the trading day. The index touched a low of 14,965 – down 105 points from the day’s high. However, the index pulled back and eventually ended with a marginal loss of 16 points at 15,001.

Companies moving in after hours trading in reaction to earnings: Trading Up: STEC +7.6%; NTO +5.4%; PTEK +4.2%; ACOR +3.1%; CPII +2.7%; EXM +2.4%; NTES +2.0%;… Trading Down: NPLA -20.6%; FACE -17.4%; ANSW -16.6%; ARII -8.0%; CNTF -7.6%; JMBA -6.8%; BDCO -3.5%; DV -3.4%; KCAP -2.4%; DTE -2.3%; HRBN -1.6%; SDXC -1.4%… Companies moving in reaction to news: Trading Up: CBAK +29.2% (signs letter of intent with Hewlett Packard); KBX +17.1% (lowers Q2 EPS below consensus); NLS +3.8% (announces Gregg Hammann to step down as CEO); ABG +3.2% (authorizes 2 mln share repurchase program); CLMS +2.4% (announces COO and CFO Patrick Dudasik to retire in 2008); GETI +2.1% announces delay in filing 10-Q and postponement of earnings call); CR +2.0% (acquires Mobile Rugged Business of Kontron, America; co sees acquisition will be neutral to earnings in 2007)… Trading Down: ETEL -7.0% (announces termination of client program and lowers Q3 and FY07 ADS guidance below consensus; lowers Q3 and FY07 revs guidance); SRDX -3.1% (acquires BioFX Laboratories); HIBB -1.5% (lowers Q2 EPS below consensus); CHH -1.5% (enters into master franchising agreement in Ireland with Kasterlee Limited); SSW -1.2% (to offer 4.5 mln common shares); VRSN -1.3% (announces a $1.1 bln convertible notes offering).

‘Mad Money’ Recap: Sudden Death Round – TheStreet.com
During the “Sudden Death” round, Cramer was bullish on TBS International (TBSI) and Goldman Sachs (GS).

Cramer’s ‘Mad Money’ Recap – TheStreet.com
On Monday’s edition, Jim recommends Vodafone (VOD) and believes the co will bring in more revenue per user. He favors its strong dividend and is part of a still-emerging market. He also recommends Schering-Plough (SGP) but not at current levels.