WEEK OF JUNE 23 - 29
Wall Street Looking
for Interest Rate Cut
After a blazing three-month stock market rally, investors are waiting to see if the Federal Reserve this week dishes up a single or double dose of interest rate cuts in a bid to shore up sagging U.S. growth.
Wall Street is expecting the Fed to cut interest rates by a quarter of a percentage point at its two-day monetary policy meeting Tuesday and Wednesday, but whether it will opt for a more aggressive half-point cut is up in the air.
Uncertainty about the Fed’s intentions, along with possible corporate profit warnings as the quarterly “confession” season heats up, may keep investors walking on eggshells.
“Until we get into the earnings season, there may not be a lot of positive catalysts for the market, and, absent that, some folks may decide to go ahead and take some money off the table,” said Rich Nash, chief market strategist at Victory Capital Management.
Earnings reports from a handful of companies will garner attention, including results from Walgreen Co., FedEx Corp., Kroger Inc., Goldman Sachs Group Inc., General Mills Inc. and ConAgra Foods Inc.
A number of economic reports due out this week also are likely to catch investors’ attention as Wall Street searches for signs that consumer spending -- the linchpin of U.S. growth -- will hold strong.
Among those reports is the Conference Board’s consumer confidence index, due Tuesday. It is expected to show a slight decline in June from May. The University of Michigan’s final consumer sentiment report for June will be the focus Friday. The government’s report on personal income and spending, also due Friday, is expected to show both rose slightly in May.
Here is a quick look at some of the key business events and economic events set for this week.
Monday:
* Biotech Industry Organization opens three-day annual meeting in both Washington and San Francisco.
* Todd Geiger, a former vice president of El Paso Corp. charged with reporting fake trades to influence energy prices, goes on trial.
* The Supreme Court is expected to issue a decision this week on a challenge to minority preferences at the University of Michigan.
Tuesday:
* Federal Reserve’s Open Market Committee meets for the first day of a two-day session to discuss interest rates.
* The Conference Board releases the results of its monthly survey on consumer confidence.
* Senate Judiciary Committee takes up asbestos litigation bill.
* Senate Judiciary panel holds hearing on media concentration.
Wednesday:
* Commerce Department reports on durable goods orders and new home sales for May.
* National Assn. of Realtors reports on existing-home sales for May.
* Federal Reserve’s Open Market Committee announces its decision on interest rates.
* House Financial Services Committee holds hearings on Fannie Mae and Freddie Mac.
Thursday:
* Commerce Department reports on gross domestic product, first quarter, final.
* Labor Department reports on weekly jobless claims.
* Freddie Mac reports on mortgage rates.
Friday:
* Commerce Department reports on personal income and spending for May.
* University of Michigan’s consumer sentiment index for June.
From Times Wire Services
Bids Due for Freedom Communications
Shareholders of Irvine-based Freedom Communications Inc. will soon learn what potential buyers are willing to pay for all or part of one of the nation’s last family-owned media companies.
Preliminary bids are due Thursday, after which they will be evaluated by investment bank Morgan Stanley on behalf of a committee of independent Freedom board members.
Freedom will not say how many bids are expected or how many potential bidders requested confidential information about the company, whose shares are not publicly traded.
But analysts expect major media companies, including Gannett Co., to be interested in Freedom’s 28 daily newspapers, including its flagship, the Orange County Register; 37 weeklies and eight TV stations
“The assets have attracted an enormous amount of attention because they have not been on the market ever,” Freedom Chief Executive Alan Bell said.
The Federal Communications Commission recently made it easier for large media companies to buy more TV stations and for newspaper publishers to own broadcast outlets in the same market. Those relaxed rules make Freedom’s properties even more attractive, analysts say.
Independent analysts have pegged the company’s value at $1.5 billion to $2 billion.
This week’s bids are the first round in a process that will result in a recommendation from the board to shareholders sometime this fall.
From Associated Press
*
Former Enron Energy Trader to Be Arraigned
A former top Enron Corp. energy trader will be arraigned in federal court in San Francisco on charges stemming from Enron’s manipulation of power markets during California’s energy crisis.
John Forney, 41, was arrested in Ohio on June 3 on charges alleging he was an architect of several illegal trading schemes used to inflate power prices.
Power prices soared tenfold during the 2000-01 energy crisis, bankrupting California’s biggest utility, PG&E;, and costing the state billions of dollars in emergency power purchases.
Forney is the third former Enron executive charged with a federal crime in connection with schemes to manipulate energy prices in California.
From Reuters
*
Trial to Begin for
Former El Paso Exec
A former El Paso Corp. energy trader goes on trial today in federal court in Houston, accused of reporting false trades to an industry newsletter.
Todd Geiger is also charged with wire fraud. A federal grand jury indicted him in December, accusing him of reporting 48 fake trades in November 2001. He has pleaded not guilty to all the charges.
Geiger, who was a vice president at El Paso, resigned Nov. 12, 2002, a day before his company disclosed it had found “one incident in which it appears that inaccurate pricing information might have been provided to a trade publication.”
The company has since exited the trading business and has been cooperating with investigators, who are looking into several energy companies.
The industry newsletter, Inside FERC, which refers to the Federal Energy Regulatory Commission, uses information on energy trades to calculate index prices for the subsequent month. Movement in the index prices often affect the level of profits traders can generate.
Geiger’s indictment was the first to emerge from the investigations into energy companies.
From Reuters
*
Jurors to Be Questioned in Rite Aid Exec’s Trial
The lawyer for indicted former Rite Aid Corp. executive Franklin C. Brown will question jurors today during a closed-door session to determine if anyone has been tainted by pretrial publicity stemming from recent guilty pleas by two other former executives with the company.
Brown, 75, is the drugstore chain’s former vice chairman and chief counsel. He faces multiple felony counts in one of the biggest corporate fraud scandals in U.S. history.
The trial had been scheduled to begin today in federal court in Harrisburg, Pa., but U.S. District Judge Sylvia Rambo postponed that last week after granting a defense motion to question jurors in the wake of guilty pleas entered by former Chief Executive Martin Grass and former Chief Financial Officer Frank Bergonzi. The jury was selected last month.
Prosecutors have been pursuing criminal cases against a handful of former executives of the drugstore chain, which overstated profit by $1.6 billion during the late 1990s.
From Reuters
*
House to Hold Hearing on Freddie, Fannie
The House Financial Services Committee on Wednesday will hold a hearing on the oversight of Freddie Mac and Fannie Mae, the two largest financiers of the U.S. housing market.
The hearing was scheduled after Freddie Mac this month ousted its three top executives amid a restatement of earnings for the last three years. Some lawmakers are concerned that Freddie Mac and Fannie Mae -- government-sponsored enterprises that own or guarantee more than 40% of the $7-trillion U.S. mortgage market -- are taking undue risks that may jeopardize the country’s financial system.
From Bloomberg News
