Late-Night Headlines
Bloomberg:
- U.S. stocks may keep rallying from their November lows as investors speculate the economy will improve, according to investors Barton Biggs and Robert Doll. Airline shares may gain after crude oil fell 71 percent from its July record, said Biggs, managing partner at hedge fund Traxis Partners LLC. Stocks with the biggest price swings will rise as the recession ends, said BlackRock Inc. chief investment officer Doll. Both spoke on Bloomberg television. “Sometime around the middle of the year there’s going to be pretty conclusive evidence that the economy has stabilized,” Biggs said. “That’s what the stock market is now looking forward and seeing, and that’s why I think that this rally carries further.”
- Brazil’s economy may grow as little as 1.5% this year as the global recession reduces demand for commodities and curbs consumer spending, said Itau Corretora de Valores SA, the brokerage unit of the nation’s biggest bank. JPMorgan Chase today reduced its 2009 forecast to 1.5% from a previous estimate of 2%. Brazil’s economy grew 5.6% last year. Vehicle production plunged 54% to a nine-year low last month., the country’s automaker assoc. said yesterday. JPMorgan joined Morgan Stanley in saying Brazil had entered a “technical recession,” as defined by two consecutive quarters of negative growth.
- Investors should sell Australia’s dollar as prices of commodities that the nation exports may fall further and the central bank is likely to lower interest rates, according to Australia & New Zealand Banking Group Ltd., the country’s fourth largest bank.
- China and Hong Kong stocks had their weighting recommendations downgraded to “underweight” from “overweight” at Macquarie Group Ltd., while raising its rating on India “China has now become a consensus trade, its relative earnings risk is growing and, while the market is not expensive, in the past valuations have not been a good predictor of future performance for China,” Hong Kong-based Daniel McCormack and Tim Rocks wrote.
- Hedge funds lost 18.3 percent in 2008, their worst year on record, as managers misjudged the severity of the biggest financial crisis since the Great Depression.
- The Bank of Korea cut its benchmark interest rate by a half-point to a record low, saying the economy is deteriorating faster than expected as domestic demand and exports falter.
- Israel pressed on with its military operation to end rocket fire from the Gaza Strip as the United Nations Security Council approved a resolution calling for an immediate cease-fire.
- Almost a month after Bernard Madoff was arrested for securities fraud, investigators are still struggling to learn how the investment adviser directed an alleged $50 billion Ponzi scheme and how widespread it may have been, a person familiar with the probe said.
Wall Street Journal:
- The pharmaceutical industry has a recurring nightmare: Drug-safety crusader Sidney Wolfe becomes a player at the Food and Drug Administration. Dr. Wolfe also has a nightmare: One of his children goes to work for a drug maker. Of the two, the doctor is sleeping more soundly. Over three decades, Dr. Wolfe, head of the health group at advocacy organization Public Citizen that Ralph Nader founded, has helped push 16 drugs off the market and slap restrictions on several multibillion-dollar products. He has been so hostile to the FDA under President George W. Bush that he decried its 100th-anniversary celebration in 2006 as a "propaganda campaign" to hide its "unprecedented assault on the American public." Now the outsider is going inside, mirroring a larger shift in the Washington pendulum toward tougher company regulation. To the consternation of the drug industry, Dr. Wolfe has been appointed to a four-year term on the FDA's Drug Safety and Risk Management Committee, which plays a key role in telling the agency which drugs are safe.
- Advanced Micro Devices Inc.(AMD) announced plans to build a massive supercomputer to process and electronically distribute games and other complex content to users -- avoiding the need for specialized hardware and software that adds to the cost of computers and other devices.
- The business of recruiting investors to hedge funds boomed over the past decade and helped drive the hedge-fund frenzy. Now, investors burned by big losses in hedge funds are dumping these middlemen. The combination of market losses and investor panic resulting from money manager Bernard Madoff's alleged Ponzi scheme is putting the heat on firms that pool money from clients and invest in hedge funds. Last year, these so-called fund-of-funds assets overall shrank for the first time since 1996, according to industry tracker Hedge Fund Research, or HFR.
- Fannie Mae(FNM) is testing a new program to stave off foreclosures by preapproving "short sales" of homes, in which mortgage companies allow homeowners to sell houses for less than the value of existing loans, forgiving the difference.
- President-elect Barack Obama has banned corporations and big donors from funding his Jan. 20 inauguration. But 90% of donations received so far have been raised by well-heeled fund-raisers, including Wall Street executives whose companies have received billions of dollars in federal bailout money. A total of 207 fund-raisers have collected $24.8 million of the $27.3 million in contributions disclosed by Mr. Obama through Thursday, according to an analysis by nonpartisan campaign finance group Public Citizen commissioned by The Wall Street Journal. Wall Street employees, as a group, have been the biggest single source of these private donations, according to the analysis. Much of their donations -- $5.7 million total -- has been channeled through financial-services executives who each have bundled together donations worth hundreds of thousands of dollars.
MarketWatch.com: Shares of Whole Foods Market Inc.(WFMI) surged 22% Thursday after the investment fund run by Ron Burkle, who made a fortune in investing in supermarkets, bet the high-end grocery chain can turn its business around. In a regulatory filing Thursday, Yucaipa Companies LLC said it owned 9.8 million shares, or 7% of Whole Foods' outstanding common stock. Yucaipa's investment funds have been aggressive buyers of Whole Foods shares since Nov. 24, spending a net $98 million to amass the stake.
- Chevron Corp.(CVX), in its interim quarterly update, warned late Thursday its fourth-quarter earnings are shaping up to be "significantly lower" than third-quarter results due to a steep drop in energy prices and narrower refining margins.
NY Times:
- Accenture(ACN), IBM(IBM) May Benefit From Satyam(SAY) Scandal . The financial fraud at Satyam is rippling through the technology services industry, as customers scramble to line up other suppliers and rivals look to pick up business.
- Under pressure from federal authorities, the Swiss bank UBS is closing the hidden offshore accounts of its well-heeled American clients, potentially allowing their secrets to spill into the open. In a step that would have once been unthinkable in the rarefied world of Swiss banking, UBS will shut about 19,000 accounts that prosecutors suspect have gone undeclared to the Internal Revenue Service. UBS will transfer the assets to other banks or other divisions within UBS, or will mail checks directly to the account holders, creating paper trails for federal prosecutors who are examining whether UBS clients used such accounts to evade taxes.
Reuters:
- The chief executive of Nasdaq OMX (NDAQ) pushed for a merger of U.S. securities and futures regulators, saying it was incomprehensible that they both monitored the same products. "Two different agencies with two very different approaches essentially monitor the same securities," Nasdaq CEO Robert Greifeld said at a National Press Club event in Washington.
- Financial giant Citigroup Inc(C) will support a proposal in Congress to rewrite U.S. bankruptcy law to help troubled mortgage borrowers avoid foreclosure, Chief Executive Vikram Pandit said on Thursday.
- General Motors Corp (GM) Chief Executive Rick Wagoner said on Thursday he was confident the automaker will win the concessions it needs from the United Auto Workers union to meet the restructuring terms dictated by the $13.4 billion federal bailout. "I'm confident that we'll be able to get the kinds of changes we'll need," Wagoner told NBC's Matt Lauer in an interview for the "Today" show broadcast live from Detroit. GM and UAW officials are to meet on Monday in talks aimed at key changes in the union's 2007 contract.
South China Morning Post:
- Home buying on the Chinese mainland by Hong Kong residents dropped significantly last year because of the deteriorating market and the global financial crisis, property agents said.
- SAIC Motor Corp., the largest Chinese carmaker, and its parent will spend $878 million to develop hybrid and electric vehicles. The investment is part of a plan to introduce the company’s first “green” vehicle by 2010. SAIC is the second Chinese automaker after BYD Co. to announce plans to sell the environmentally-friendly vehicles.
Shanghai Securities News:
- Chinese steelmakers want contract iron ore prices to fall as much as 45% in negotiations with Brazilian and Australian suppliers. The demand echoes Japanese steelmakers’ comments this week that iron ore and coking coal prices next fiscal year should fall to at least 2007 levels.
Late Buy/Sell Recommendations
Citigroup:
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Earnings of Note
Company/EPS Estimate
Economic Releases
8:30 am EST
- The Change in Non-farm Payrolls for December is estimated at -525K versus -533K in November.
- The Unemployment Rate for December is estimated at 7.0% versus 6.7% in November.
- Average Hourly Earnings for December are estimated to rise .2% versus a .4% gain in November.
10:00 am EST
- Wholesale Inventories for November are estimated to fall .7% versus a 1.1% decline in October.
Upcoming Splits
Other Potential Market Movers
BOTTOM LINE: Asian indices are mostly higher, boosted by financial and technology stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.
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