Late-Night Headlines
Bloomberg:
- The yen fell after the Bank of Japan said it will resume a program of buying corporate shares held by financial institutions, helping revive demand for higher- yielding assets. Japan’s currency ended a three-day winning streak against the dollar and the euro as the nation’s central bank said in a statement today that it will purchase 1 trillion yen ($11.1 billion) in equities through April 2010. The Australian and New Zealand dollars also climbed versus the yen after Australia’s government said it will spend A$42 billion to help prevent the economy entering a recession. “The packages being announced by governments worldwide are likely to have a large positive impact on market sentiment,” said Ryohei Muramatsu, manager of Group Treasury Asia in Tokyo at Commerzbank AG, Germany’s second-biggest lender. “The yen may be sold.”
- Australia’s central bank cut its benchmark interest rate by 100 basis points to the lowest level in more than four decades and the government announced it will spend another A$42 billion ($26 billion) to ward off a recession. Governor Glenn Stevens lowered the overnight cash rate target to 3.25 percent in Sydney today, two hours after Treasurer Wayne Swan said the government will spend A$12.7 billion in handouts to families and A$28.8 billion on infrastructure, sending the budget into its first deficit since 2001-2002.
- The U.S. Senate’s proposed stimulus plan would boost the economy faster than an alternative version approved last week by the House, according to the Congressional Budget Office. The nonpartisan agency said in a report today that the Senate plan, which it said would cost $885 billion, would pump about $700 billion into the economy by the end of next year. That would amount to nearly 80 percent of all the spending in the package and would let President Barack Obama meet his goal of getting three-quarters of the money out the door within 18 months. It may also help tamp down complaints from lawmakers in both parties that the House-backed version of the plan would take too long to help the economy.
- General Motors Corp.(GM) and Chrysler LLC, propped up with $13.4 billion in emergency federal loans, are offering new buyout programs to about 91,000 factory employees to reduce labor costs as sales slow. GM’s program covers about 64,000 workers willing to retire or quit and consists of a $25,000 voucher to buy a new auto and $20,000 in cash, said a United Auto Workers official, who didn’t want to be identified because the details are private. Chrysler said all 26,800 U.S. hourly workers are eligible for its plan, without giving details.
- Aflac Inc.(AFL), the largest provider of supplemental insurance, said fourth-quarter profit fell 48 percent on investment losses. Shares rose in extended trading as the company said it doesn’t need to raise capital. The insurer, known for its quacking duck mascot, advanced 6.4 percent to $24.50 at 5:28 p.m. in New York. Shareholders’ equity, a measure of assets minus liabilities, increased by more than 1 percent over three months to $6.6 billion, and the company said its capital position, as measured by U.S. regulators, is “very strong.”
- OSI Pharmaceuticals Inc.(OSIP) said a safety panel recommended ending a clinical trial of the drug Tarceva in lung cancer patients because the treatment significantly extended the time patients lived compared with a placebo. Tarceva, marketed in the U.S. with Genentech Inc.(DNA), was used with Avastin after patients with non-small cell lung cancer were initially treated with Avastin and chemotherapy, Melville, New York-based OSI and Genentech of South San Francisco, California, said in a statement. OSI gained $3.81, or 10.5 percent, to $40.20 at 5:13 p.m. New York time in extended trading on the Nasdaq Stock Market.
- Japan Airlines Tests Camelina Biofuel in Boeing(BA) 747. (video)
- Ningbo Sunhu Chemical Products Co., China Sales in the first two days after the week-long holiday dropped 95% from the same period last year, Kevin Ji, chief analyst, said in a phone interview today. “The global nickel industry seems to be pinning much hope on post-vacation Chinese demand, yet we’re feeling pretty desperate right here,” Ji said. China
- American International Group Inc.(AIG), the insurer selling units to repay a government loan, has enough assets to settle its debt to taxpayers, according to the Federal Reserve. The $60 billion credit line granted to AIG “will not result in any net loss to the Federal Reserve or taxpayers,” Fed Governor Elizabeth Duke said in a Jan. 12 letter to Christopher Dodd, chairman of the Senate Banking Committee. Duke was responding to questions posed after an Oct. 23 hearing on turmoil in U.S. credit markets.
Wall Street Journal:
- Congress is poised this week to delay until June the date when TV stations must begin broadcasting in all-digital format, but industry insiders estimate that 400 to 500 stations could shut off analog signals before then. Early analog cutoffs could catch some viewers off guard. Once TV stations turn off their analog broadcasts, people who rely on over-the-air TV won't receive their signals unless they buy a digital television, a converter box, or subscribe to a cable or satellite TV service.
- Policy makers intent on quickly revamping the U.S. financial-regulatory system say they are discussing expanding the Federal Reserve's authority and extending oversight to currently unregulated products such as derivatives. The moves could bring more scrutiny of lightly regulated hedge funds and private-equity firms that deal extensively in such complex financial instruments.
- International Business Machines Corp.(IBM) has been racking up contracts with immigration agencies around the globe, in part by reusing software originally developed to spot Vegas card counters. In deals worth about $1 billion over the next four years, IBM is helping the U.S., the United Kingdom, Australia and Poland figure out how to automate visa applications and to use software to look for suspicious applicants who may be hiding an unsavory past.
- The global slowdown is taking a toll on China, claiming the jobs of an estimated 20 million migrant workers and dimming their prospects as they set out in search of work after the New Year holiday. The year ahead appears no more promising: Officials forecast the number of migrants looking for jobs will reach at least 25 million. Chen Xiwen, who heads the Chinese Communist Party's office on rural policy, said Monday that about 20 million migrant workers -- nearly a sixth of the total -- lost their jobs in recent months. That number, the first official estimate, underscores the government's challenge in maintaining employment and avoiding unrest. "For those migrant workers who have lost their jobs, what are they going to do for income when they return to their village? How are they going to manage? This is a new factor affecting social stability this year," Mr. Chen said at a news conference in Beijing.
- Lobbyists for industry and labor are gearing up to add costly proposals Tuesday to the Senate's nearly $890 billion economic stimulus plan.
- President Barack Obama will nominate Sen. Judd Gregg of New Hampshire as Commerce secretary Tuesday, adding a third Republican to his Cabinet. The deal was set after Sen. Gregg made clear that he would not take the post unless he was replaced in the Senate by another Republican. Responding to New Hampshire Gov. John Lynch's suggestion that he would pick a GOP replacement, Gregg said in a statement Monday afternoon, "I have made it clear to the Senate Leadership on both sides of the aisle and to the Governor that I would not leave the Senate if I felt my departure would cause a change in the makeup of the Senate. The Senate Leadership, both Democratic and Republican, and the Governor understand this concern and I appreciate their consideration of this position." If Gregg were replaced with a Democrat by New Hampshire's Democratic governor, and if Al Franken prevails in the contested Senate race in Minnesota, the Democrats would have a filibuster-proof, 60-seat majority.
- Avoiding Japan’s Stimulus Miscues
- The Senate confirmed Eric Holder as attorney general Monday, though debate earlier turned partisan when his chief supporter denounced Republicans who sought a pledge not to prosecute intelligence agents who participated in harsh interrogations. To the satisfaction of Democrats and consternation of some Republicans, Mr. Holder told his confirmation hearing, "Waterboarding is torture." The statement about an interrogation technique that simulates drowning was an important signal of a policy change from Mr. Bush's view that the tactic was legal and not torture.
CNBC.com: No Reason to Buy Stocks? Why You Might Be Wrong
NY Times:
- Bank of America(BAC) faces a rising tide of lawsuits over its troubled, shotgun marriage to Merrill Lynch. The latest came late last week, filed in a New York court on behalf of Bank of America shareholders. Lawyers for Coughlin Stoia Geller Rudman & Robbins, which specializes in class-action suits, claim that the bank’s chief executive, Kenneth D. Lewis, along with its chief financial officer, Joe L. Price, and Merrill Lynch’s former chairman and chief executive, John A. Thain — who was recently pushed out of BofA — defrauded investors by issuing materially false and misleading statements regarding the health of Merrill Lynch’s financial results.
- We’re sorry. That’s the message the hedge fund manager and political power player Richard C. Perry sent to his investors recently after his firm, Perry Partners, experienced its first annual loss in its 20-year history. “We are deeply disappointed and apologize for these results,” the firm said in its annual review sent to clients on Jan. 20. Mr. Perry’s flagship fund, Perry Partners International, declined 27 percent in 2008 after experiencing a 20 percent drop in the fourth quarter, according to the client letter, which was obtained by DealBook. In September, Mr. Perry was featured in a glowing profile in Fortune magazine that called him “one of the most successful investors of our time.” In the article, Mr. Perry, who is known for having hosted a meeting between then-presidential hopeful Barack Obama and Caroline Kennedy at his Manhattan penthouse, said he saw opportunities buying bank debt issued by companies involved in leveraged buyouts. That turned out to be one of many wrong bets. According to the letter, part of the fund’s negative performance in the fourth quarter came from “investing prematurely in U.S. leveraged loans on an unhedged basis.” Other losses came from Perry Partners’ short position in the German carmaker Volkswagen, whose shares experienced a fourfold increase in just a few days in October, wiping out positions held by many hedge fund investors including David Einhorn’s Greenlight Capital.
- More money is moving in a new direction in China — out. Some Chinese are so eager to turn their yuan into other assets that when an online real estate brokerage organized a tour of foreclosure auctions in the United States, it received so many applications that it had to turn away nearly 400 people. In Shanghai, cash-rich Chinese companies are buying high-yield bonds issued by distressed American companies at a time when many Western investors are steering clear of bonds even from solid companies. All over the world, Chinese companies are sending home fewer of the billions of dollars they earn from exports, parking them in overseas bank and brokerage accounts instead. And in Hong Kong, wealthy mainlanders are turning up at jewelry stores in growing numbers seeking diamonds, big ones. “They’re looking for five-carat diamond rings and six-carat diamond earrings — three carats for each ear,” said Yollanda Lam, the marketing manager for the King Fook jewelry store chain here. Together, these trends represent a potentially tectonic shift. As Chinese citizens are starting to send more money out of the country, foreign investors are pulling money out too, and slowing the pace of new investment.
CNNMoney.com: 6 companies born during downturns. Think a recession is a bad time to start a company? Imagine if the founders of these major corporations had thought the same…
Reuters:
- Chris Hill, a career U.S. diplomat who has been Washington's lead negotiator with North Korea, is expected to be nominated U.S. ambassador to Iraq, a U.S. official who asked not to be named said on Monday. Hill has spent the last four years as the senior U.S. official in multilateral talks on ending North Korea's nuclear programs and as the assistant secretary of state for East Asian and Pacific affairs.
- Citigroup (C) plans to use some $36.5 billion of its U.S. government capital infusion for new mortgages, credit card loans and to buy mortgage-backed securities in the coming months, the Associated Press reported on Monday. Citigroup will announce details on Tuesday of how it will increase lending by using funds provided under the Troubled Asset Relief Program (TARP), the AP said. "Our responsibility is to put these funds to work quickly, prudently and transparently to increase available lending and liquidity," Citi Chief Executive Vikram Pandit said in a statement seen by the AP.
- Gold extended losses on Tuesday, after posting its biggest daily percentage fall in three weeks the previous day because of profit taking, but record exchange traded fund holdings still boosted sentiment. The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust GLD, said holdings rose 9.78 tons to a new record of 853.37 tons of gold as of Feb. 2 -- an increase of more 9 percent in the past month.
Financial Times: France is considering requiring carmakers to commit to buying specific volumes of parts and services from local suppliers as part of a government aid package for the industry, the Financial Times has learned. According to people familiar with the matter, Nicolas Sarkozy, the president, wants Peugeot and Renault to help support the fragile network of domestic component suppliers and subcontractors in return for soft loans and loan guarantees. This package might also reduce the investment – and risk – suppliers have increasingly been asked to take on in the development of new models.
TimesOnline: The Chinese Prime Minister narrowly avoided being hit by a flying shoe yesterday as his three-day visit to Britain ended with an Iraqi-style protest from a member of the audience at the University of Cambridge. Wen Jiabao was nearing the end of his lecture to a hand-picked audience of Cambridge students when a young man in the auditorium blew a whistle and shouted: “How can the university prostitute itself with this dictator?” As security guards converged on him, the man, who had a pronounced German accent, continued to shout. “How can you listen to these lies?” Before the guards could stop him, the unidentified protester took off his shoe, a heavy grey trainer, and threw it at the stage, missing Mr Wen by a few feet.
Sankei:
- North Korea Preparations may be completed in two months. The country may test an improved version of the Taepodong-2 missile capable of reaching the US
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (HUM), raised target to $53.
- Reiterated Buy on (AMAT), target $14.
Night Trading
Morning Preview
US AM Market Call NASDAQ 100 Pre-Market Indicator/Heat Map Pre-market Commentary Pre-market Stock Quote/Chart Before the Bell CNBC Video Global Commentary WSJ Intl Markets Performance Commodity Movers Top 25 Stories Top 20 Business Stories Today in IBD In Play Bond Ticker Economic Preview/Calendar Daily Stock Events Upgrades/Downgrades Rasmussen Business/Economy Polling
Earnings of Note
Company/EPS Estimate
- (CMI)/.41
- (PNR)/.40
- (COCO )/.15
- (NOC)/1.56
- (EMR)/.57
- (ADP)/.57
- (AVP)/.59
- (MRK)/.74
- (MAN)/.79
- (ADM)/.71
- (MRO)/.89
- (CME)/3.45
- (DHI)/-.56
- (SGP)/.30
- (AMSC)/-.20
- (MYGN)/.34
- (DOW)/.08
- (MOT)/.00
- (UPS)/.85
- (DIS)/.52
- (CTX)/-3.52
- (ILMN)/.17
- (MET)/.13
- (JLL)/1.20
- (ERTS)/.89
- (MEE)/.81
- (YUM)/.45
- (TUP)/.80
- (ADS)/1.16
Economic Releases
10:00 am EST
- Pending Home Sales for December are estimated unch. versus 4.0% decline in November.
Afternoon:
- Total Vehicle Sales for January are estimated to fall to 10.2M versus 10.3M in December.
Upcoming Splits
Other Potential Market Movers
BOTTOM LINE: Asian indices are higher, boosted by financial and technology stocks in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.
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