U.S. stock futures were lower Tuesday morning as oil prices continued to decline, with crude falling below $120 a barrel on demand concerns due to the economic slowdown in the U.S. Commodities in general have been declining. Also today, the Federal Reserve will announce its decision regarding interest rates and it is widely expected they will remain unchanged. Similarly, the Fed's outlook statement about outlook and focus may also remain largely the same according to expectations. Meanwhile, overseas, both the ECB and BoE are expected to leave rates unchanged.
One of Yahoo! Inc. (NASDAQ: YHOO)'s largest shareholders, Capital Research Global Investors, had asked to review the vote in last week's re-election of the Internet giant's board. Specifically, I guess, it was surprising the vote showed strong support -- 85% -- for CEO Jerry Yang. There's no sense dancing around this issue; basically the shareholder implies suspicions of wrongdoings (or really really incompetent tallying of votes).
Bloomberg reports that analysts now expect Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) to report net losses through the first quarter of 2009 as home-loan delinquencies rise to the highest on record. The the biggest U.S. mortgage-finance companies report tomorrow and according to estimates will show a loss of 74 cents and 60 cents per share respectively. The losses may be greater than expected as we've seen before analysts underestimating the credit losses. It will not be pretty.
3 Blue Chip Stocks to Watch After nearly a decade, these growth stocks are finally showing some signs of life. They include Wal-Mart, ConocoPhillips and Burlington Northern. Blue chips: A growth spurt - CNNmoney
The One Stock to Buy Now We asked eight up-and-coming and top mutual fund managers what one stock they would buy now. Some of their recommendations are household names. Others might surprise you. They include Nike, Cisco, ExxonMobil, Noble Corp., Canon, Valeant Pharmaceuticals, Nalco Holding Co and Cognizant. The One Stock They Would Buy - Kiplinger
After a day that saw U.S. equity markets decline in the neighborhood of 2%, U.S. stock futures earlier this morning pointed to a rough start Tuesday as well. News late Monday the Merrill Lynch said it's selling a big slice of its asset-backed securities and $8.5 billion in stock, renewed concerns over the financial sector health. But futures have started creeping upward, ahead of the latest readings on house prices with the Case-Shiller home price index for May and Conference Board reading of consumer confidence for July.
Meanwhile, we're still in the middle of earnings season and today
Northrop Grumman (NYSE: NOC), Viacom (NYSE: VIA), Valero Energy Corp. (NYSE: VLO), United States Steel Corp. (NYSE: X)
Electronic Arts (NASDAQ: ERTS) will report after the close of tradin
The big story making headlines since late Monday is the bombshell Merrill Lynch (NYSE: MER) that it is taking an enormous $5.7 billion write-down on losses from mortgage-backed securities (MBSs) and plans to raise $8.5 billion. MER shares already dropped 11.6% Monday before the news was out, and while they're rebounding 2.75% this morning, many are very uncomfortable with Merrill's current situation and actions.
Alcatel-Lucent (NYSE: ALU), the French telecommunications giant, is finally getting rid of its CEO Patricia Russo and Chairman Serge Tchuruk who will both resign later this year. It's no surprise shares are rebounding over 6% in premarket trading. ALU also reported its sixth consecutive quarter of losses. Alcatel-Lucent reported a net loss of 1.1 billion euros ($1.73 billion) for the second quarter including an euro810 million ($1.3 billion) goodwill writedown.
Alcatel-Lucent (NYSE: ALU) Chief Executive Patricia Russo held her job for so long and through so many periods of brutal earnings and staff reductions that it appeared that she had nine lives.
She went through the ninth one today. She and the company Chairman Serge Tchuruk will leave the company later this year. According toThe Wall Street Journal, "With Alcatel-Lucent facing a sluggish market and fierce competitive pressures, the departures of the company's two figureheads does not come at an easy time." It does, however, come at the right time. Russo did everything in her power to scuttle the company.
Over the last year, shares in ALU have dropped from $14.55 to just above $5 in May. They have since recovered to about $6.
Supporters may say that the financial problems at Alcatel-Lucent were not of Russo's making. The market for telecom equipment has indeed been weak. But, the integration of the merger between the two companies was ill-conceived at the start and poorly executed moving forward.
It is time to let someone else have a turn at trying to fix the company.
Douglas A. McIntyre is an editor at 247wallst.com.
MOST NOTEWORTHY: Wachovia, American International Group and BT Group were today's noteworthy downgrades:
Oppenheimer downgraded shares of Wachovia (NYSE: WB) to Underperform from Perform as they believe the outlook is "bleak" for equity shareholders. The firm thinks Wachovia's expenses can't come down fast enough too offset earnings erosion.
Wachovia downgraded shares of American International Group (NYSE: AIG) to Market Perform from Outperform as they believe AIG's CDO valuations worsened in Q2, which could result in a $2B-$7B after tax "valuation adjustment." Wachovia expects the value of AIG's core insurance franchise to be obscured by its credit exposure.
Collins Stewart cut BT Group (NYSE: BT) to Hold from Buy on concerns surrounding the company's fiber network expansion.
OTHER DOWNGRADES:
Nokia (NYSE: NOK) was downgraded to Add from Buy at WestLB; the firm also lowered Ericsson (NASDAQ: ERIC) to Hold from Buy and Alcatel-Lucent (NYSE: ALU) to Sell from Hold.
Third Wave (NASDAQ: TWTI) was cut to Hold from Buy at Deutsche Bank.
AT&T (NYSE: T) was removed from Goldman's Conviction Buy List.
MOST NOTEWORTHY: NCR Corp, Medivation and Teva Pharma were today's noteworthy upgrades:
Baird upgraded NCR Corp (NYSE: NCR) to Outperform from Neutral following its North American ATM managers survey that indicates a solid ATM environment and opportunity for margin improvement.
Rodman & Renshaw upgraded Medivation (NASDAQ: MDVN) to Outperform from Market Perform citing valuation of the firm's pipeline given recent catalyst of positive Phase II results in Huntington's disease with lead candidate, Dimebon.
Goldman added Teva Pharma (NASDAQ: TEVA) to its Conviction Buy List citing valuation, upcoming catalysts, and defensive characteristics.
OTHER UPGRADES:
Marsh & McLennan (NYSE: MMC) was raised to Buy from Hold at Citigroup.
RBC lifted Bankrate (NASDAQ: RATE) to Outperform from Sector Perform.
Alcatel-Lucent (NYSE: ALU) was upgraded at WestLB to Hold from Sell.
MOST NOTEWORTHY: Symantec, Cardinal Financial and BP Plc were today's noteworthy upgrades:
ThinkPanmure upgraded Symantec (NASDAQ:SYMC) to Buy from Accumulate based on improved execution, stable growth in core business, and ramping competitive position in some high-growth businesses.
Baird upgraded Cardinal Financial (NASDAQ:CFNL) to Outperform from Neutral based on valuation, the company's favorable credit risk profile in Northern Virginia, and its excess capital position.
Societe Generale raised BP Plc (NYSE: BP) to Hold from Sell as it believes the bad news is priced into shares and earnings could be better than expected.
OTHER UPGRADES:
Alcatel-Lucent (NYSE:ALU) was upgraded at Merrill Lynch to Neutral from Underperform.
Jefferies lifted Hunsman (NYSE: HUN) to Hold from Underperform.
Alcatel-Lucent (NYSE:ALU) was raised to "neutral" from "underperform" at Merrill Lynch, according to24/7 Wall St. The financial website also reports that Whole Foods Market (NASDAQ:WFMI) was cut to "neutral" from "buy" at UBS.
Citigroup added Google (NASDAQ:GOOG) to its Top Picks Live list, according toBriefing.com. The news service reports that Time Warner (NYSE:TWX) was also added to the list.
Societe Generale raised its rating on BP (NYSE:BP) to "hold" from "sell" according toMarketWatch.
Any relief we would have been seen in financial stocks was knocked down by a solid PPI reading and by more worries about banking stocks. We also saw a report from The Federal Reserve reporting that industrial productions fell by -0.2% in May, and plants were running at the lowest capacity in almost three years at 79.4%. As you'd expect, we also saw a decline of -3.3% in new housing starts to an annual rate of 975,000, and that represented more than a 10-year low. These are the unofficial closing bell levels for major US index levels:
When Alcatel and Lucent agreed to merge in April 2006, there were the typical phrases in the press release: "new growth opportunities," "cost synergies," "global convergence," "increased scale," "global capabilities" and so on. Oh, and yes, it would "create enhanced value for shareholders."
Yet, there was something that was curious. The CEO of the new entity, Patricia Russo, said she would not learn French, even though Alcatel was based in France. Might this be a sign that there would be some cultural issues?
Alas, the fact remains that the benefits of the deal haven't materialized as Alcatel-Lucent's (NYSE: ALU) stock price has gone from $14.50 to $7.50.
Well, this week, Alcatel-Lucent had its annual meeting. No doubt, it wasn't fun as shareholders provided an earful. After all, the company had to write down $4.55 billion in asset value because of the merger (there were also thousands of layoffs).
Interestingly enough, shareholders passed a resolution that allows Alcatel-Lucent's board to rid its chairman/CEO with a majority vote instead of a two-thirds of a vote.
Unfortunately, I don't see this amounting to much. Keep in mind that -- with consolidation of wireless carriers -- its tough for equipment providers to get any leverage. Plus, the competition is still intense.
By the way, Russo apparently is learning to speak French now. And she even spoke some words at the meeting. However, she will need to learn a more important language: profits.
MOST NOTEWORTHY: Alcatel-Lucent, Opnext and American Axle were today's noteworthy upgrades:
Goldman upgraded shares of Alcatel-Lucent (NYSE:ALU) to Neutral from Sell to reflect the recovery of U.S. corporate bond yields which they believe is positive for the company's long-term pension liability. Goldman also thinks analyst estimates may have bottomed.
Thomas Weisel raised Opnext (NASDAQ:OPXT) to Overweight from Market Weight after their research indicated an acceleration in optical communications component industry revenue growth.
Deutsche Bank upgraded American Axle (NYSE:AXL) to Buy from Hold to reflect the cost savings from the UAW contract.
OTHER UPGRADES:
MFA Mortgage (NYSE:MFA) was upgraded at Keefe Bruyette to Outperform from Market Perform.
Recovery? Not These Stocks Not all stocks in battered sectors will bounce back in a second-half economic upturn. Here are some that could be left behind. Recovery? Not for These Stocks - BusinessWeek
Egypt's Bread Lines Highlight Dangers of Food Crisis Well before 8 o'clock on a late April morning, a line of about 30 eager customers forms at a modest bakery in this working-class neighborhood. With a global food crisis roiling countries from Asia to the edge of Europe, at least 11 people have been killed recently in such lines here, struggling to get their daily bread. Tension in Egypt shows potency of food crisis - USATODAY.com
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U.S. stock futures were lower Tuesday morning as oil prices continued to decline, with crude falling below $120 a barrel on demand concerns due to the economic slowdown in the U.S. Commodities in general have been declining. Also today, the Federal Reserve will announce its decision regarding interest rates and it is widely expected they will remain unchanged. Similarly, the Fed's outlook statement about outlook and focus may also remain largely the same according to expectations. Meanwhile, overseas, both the ECB and BoE are expected to leave rates unchanged. 
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