Late-Night Headlines
Bloomberg:
- The cost to protect bank debt from default plunged the most ever after Lehman Brothers(LEH) and Goldman Sachs(GS) posted better earnings than analysts estimated, bolstering optimism the world’s biggest financial institutions will weather the credit turmoil. Credit-default swaps on the CDX North America Investment Grade index, a benchmark gauge of default risk tied to the bonds of 125 companies in the US and Canada, fell 23 basis points to 161 basis points. Contracts on Lehman fell to the lowest in almost two weeks and Goldman contracts dropped to an almost three-week low, signaling improvement in investor confidence. “I’m not willing to say this is the bottom for good, but this goes a long way in terms of stabilizing the system for some time,” Gregory Peters, the head of credit strategy at Morgan Stanley in NY, said.
- US regulators are investigating whether traders illegally sought to force Bear Stearns(BSC) into a tailspin last week by spreading false information about the firm’s finances. The SEC probe is focusing on whether hedge funds or other investors bet on a drop in the company’s shares while disseminating rumors that the NY-based firm was nearing collapse. Speculation about a cash shortage spurred customers and lenders to pull money from Bear Stearns last week, driving the shares down 57%. The company’s decline coincided with a surge in investor bets that the stock price would plunge. The SEC is seeking to question traders who profited from options or short sales. The case underscores regulators’ concern that malicious rumors have the potential to fuel market panic and exacerbate shareholder losses on financial stocks. Bear Stearns had more than $17 billion in cash and salable assets on March 11 when lenders and customers began removing funds.
- Federal Deposit Insurance Corp. Chairman Sheila Bair said the agency is considering ways to use “carrot or stick” incentives to get the mortgage industry to increase loan modifications for borrowers facing foreclosure.
- Crude oil fell in NY as the dollar extended the biggest rally in nine years against the yen following the US Fed’s cut in interest rates to strengthen the economy.
- Adobe Systems(ADBE), the biggest maker of design software, said first-quarter profit climbed 53% and predicted earnings for the current period that beat analysts’ estimates, sending the shares up 6.3% in extended trading.
- Focus Media Holding(FMCN) American depository receipts jumped 11% in after-hours trading. China’s largest publicly traded advertising company said it expects at least $160 million in first-quarter sales.
- News Corp.’s(NWS/A) Fox passed CBS as the most-watched television network after its “American Idol” singing contest topped ratings and the Hollywood writers strike limited competition from scripted shows.
- Visa Inc.(V), the largest payment-card network, set a record for US IPOs today by raising $17.9 billion, more than expected.
- The Bank of Japan may cut borrowing costs next month to revive the economy even if the political dispute over the selection of a replacement for Governor Toshihiko Fukui isn’t resolved, Goldman Sachs(GS) said.
- Alibaba.com Ltd., owner of
Wall Street Journal:
- Yahoo(YHOO) Sees Blue Skies, but Clouds Brew in China. Alibaba Group, the Chinese Internet company that is 39% owned by Yahoo, is in advanced talks with investors to finance Alibaba’s purchase of Yahoo’s stake in an effort to expand its management independence should Microsoft’s bid prevail.
- Credit Worries Ease as Fed Cut, Hints at More Relief.
- Facing a perilous moment in his campaign, Barack Obama took on the volatile question of race in America, and in the process may have changed the nature of his candidacy.
MarketWatch.com:
- Disney-ABC capitalizes on popular shows online. Head of digital unit says ABC.com’s ad rates are ‘very healthy.’
- Who’s Buying Bear? Investors in the bonds and other debt of the beleaguered broker may be snapping up shares of the firm. As shareholders, they’ll be able to vote for the deal, giving it a better chance of closing.
- A slowdown in consumer spending would seem to have troublesome implications for Amazon.com(AMZN), but several Wall Street analysts believe the online megaretailer is in a strong position in case of a downturn.
- The best are bullish. Market-beating market timers are more bullish than the laggards.
CNBC.com:
- The Federal Reserve should work to curb the drop in home prices, which threatens to shrink the spending power of consumers and “produce a recession,” Bill Gross, manager of the world’s biggest bond fund, said. “The demon at the moment is deflation as opposed to inflation,” Gross said.
- Lehman(LEH) Goes to the Fed’s Discount Window. Lehman is unlikely to face a liquidity crisis, CFO Erin Callan told the network.
NY Times:
- Blogtalk: Pro-Clinton Bloggers Boycott Daily Kos.
SmartMoney:
- With so many safety nets, investors don’t need to worry about their brokerage assets.
Reuters:
- In housing slump, some places still robust.
- Unilever Plc, the world’s third largest food group, said on Tuesday it has yet to see signs that a slowdown in the US was hitting its foods business or that consumers were switching away from its leading brands to cheaper products.
Financial Times:
- Apple(AAPL) is in discussions with the big music companies about a radical new business model that would give customers free access to its entire iTunes music library in exchange for paying a premium for its iPod and iPhone devices.
- Why today’s hedge fund industry may not survive.
- Investors bet on rival Bear bids.
- Brics recoupling? In relative terms, the Bric index peaked on Halloween last year, October 31. Since then it has under-performed MSCI’s world index by more than 9%.
TimesOnline:
- Despite the pace of domestic-led growth in China, and the exposure of surrounding economies to that dynamic, a slump in global trade might still deal a heavy blow to China, potentially exposing the massive manufacturing overcapacity that has been causing growing concern to investors.
- Sub-prime and banking crisis: Who caused this nightmare? The blame spreads.
El Universal:
- More Venezuelans disapprove of President Hugo Chavez’s government than approve, according to polling firm Alfredo Keller y Asociados. The survey showed that 37% are in favor of the president and some 60% of those surveyed said they don’t think Chavez should be allowed to run for re-election.
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Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (GME), target raised to $66.
Night Trading
Asian Indices are +1.0% to +3.0% on average.
S&P 500 futures -.02%.
NASDAQ 100 futures +.07%.
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Economic Releases
10:30 am EST
- Bloomberg consensus estimates call for a 2,300,000 barrel crude oil build versus a 6,177,000 barrel increase the prior week. Gasoline supplies are expected to fall by -400,000 barrels versus a 1,691,000 barrel build the prior week. Distillate Supplies are expected to fall by -1,550,000 barrels versus a -1,225,000 barrel decline the prior week. Finally, Refinery Utilization is expected to rise by .18% versus a -.92% decline the prior week.
Other Potential Market Movers
- The weekly MBA Mortgage Applications report, Lehman Healthcare Conference, Bear Stearns Oil & Gas Conference, JPMorgan Aviation/Transportation Conference, Cowen Healthcare Conference, Citigroup Small/Mid-cap Emerging Growth Conference, Morgan Stanley Global Automotive Conference and BB&T Manufacturing/Materials Conference could also impact trading today.
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