Late-Night Headlines
Bloomberg:
- U.S. stocks trading above their 200- day average price shrank to the fewest since at least 1994 this week as benchmarks dropped to the lowest level in 12 years, signaling that the market may rally because the decline was overdone. The percentage of common stocks listed on the New York Stock Exchange trading above their 200-day moving average fell to 1.2 percent on March 2, the smallest since Bloomberg data began in 1994.
- The euro fell, snapping two days of gains versus the yen, on speculation the European Central Bank will cut interest rates today and signal further reductions in borrowing costs to counter the region’s deepening recession. The euro also headed for a fourth weekly loss versus the dollar before a statistics office report that economists say will reiterate Europe’s economy shrank the most in at least 13 years last quarter. The yen traded near the weakest in four months against the greenback after government data showed Japanese companies slashed spending at the fastest pace in a decade.
- JPMorgan Chase & Co.(JPM), the second- largest U.S. bank, had its rating outlook cut to negative from stable by Moody’s Investors Service, reflecting expectations the lender will suffer from provisions for bad loans and credit costs for at least the next year.
- The cost of protecting against default by Warren Buffett’s Berkshire Hathaway Inc. soared to record levels more typical of junk-rated companies amid concern the firm faces losses on derivatives. Credit-default swaps used to guard against losses on Berkshire’s debt climbed 15 basis points to 515 basis points at 3:45 p.m. in New York, according to CMA DataVision, and earlier reached 535. The contracts yesterday traded as if the company, rated Aaa by Moody’s Investors Service, were 11 grades lower at Ba2, according to data from Moody’s capital markets research group. The price may be rising on concern the Omaha, Nebraska- based firm will lose bets on the direction of world equity markets, high-yield corporate bonds and municipal debt. That scenario assumes Berkshire would drain its $25.5 billion cash hoard and then find itself unable to raise more from stock or bond sales or the company’s historically profitable insurance and utility businesses.
- Chinese steelmakers, the largest buyer of iron ore, want Cia. Vale do Rio Doce, BHP Billiton Ltd. and Rio Tinto Group to cut prices of the material by between 40 percent and 50 percent this year, Anshan Iron & Steel Group said.
- Steel prices in China “A 20% cut may be suitable for the current demand situation,” Shougang’s Chairman Zhu Jimin said today on the sideline of the National People’s Congress. Shougang is China China More than 60% of Chinese mills are losing money, the China Iron and Steel Assoc. said. Feb. 23.
Wall Street Journal:
- The Obama administration announced details of a housing-rescue plan it said would help as many as one in nine homeowners, from low-income Americans struggling to avoid foreclosure to well-off borrowers who owe more than their homes are worth.
- After a slew of downgrades, weakened sales and capital woes at many life insurers, the battered industry appears headed for consolidation. Slammed with back-to-back credit downgrades and its stock in free fall, Hartford Financial Services Group Inc.(HIG), which has both property-casualty and life-insurance units, has entertained options from selling the company to breaking it up, according to people familiar with the situation.
- Google Inc.'s(GOOG) YouTube and Universal Music Group are discussing a partnership under which YouTube would build a new hub for music videos. YouTube would also provide technology and advertising-sales support to help distribute Universal's video content to other Web sites, people familiar with the matter say.
- At a time when the news is filled with large companies announcing major layoffs, some small businesses are determined to buck the trend. For some companies, it's a matter of pride: They've never had a layoff and they don't want to start now.
- Foreign lenders who rushed into China in recent years are watching nervously as a number of companies there teeter on the brink of insolvency. Their worry: The nation's bankruptcy laws may leave them with virtually nothing. Several big Western investors -- Citigroup Inc., hedge-fund manager Citadel Investment Group LLC, Credit Suisse Group and CLSA Capital Partners -- are seeking to get back between $100 million and $200 million in loans extended to a Chinese steelmaker, according to people familiar with the matter.
NY Times:
- The billionaire financier Carl C. Icahn put another $250 million into his hedge fund at the beginning of the year after suffering further losses in the fourth quarter on investments in Motorola and Yahoo, according to a letter he sent to investors. The Icahn Fund Ltd. was down about 33 percent through the end of January after plummeting 22 percent in the fourth quarter, according to the letter. After receiving more than $1 billion in redemption requests from investors, Mr. Icahn put $250 million of his own cash into the fund in November to avoid selling shares to meet the redemptions.
Politico:
- Sen. Mel Martinez (R-Fla.) said Wednesday Republican opponents of the $410 billion omnibus spending bill are within "striking distance" of bringing down the massive measure. Derailing the spending bill would be a huge victory for Republicans, and they might accomplish the goal with the help of a few reform-minded Democrats. Opposition to the sprawling measure has been growing for a variety of reasons, including a proposed change of Cuba policy, the inclusion of thousands of earmarks and the spending bill's overall price tag.
Lloyd’s List:
- The world’s bloated bulk carrier orderbook “spells disaster” for shipping markets and could produce “a wave of destruction for banks to rival the sub-prime crisis”, one of London’s most respected shipbrokers forecast on Wednesday. Shipping is in “the eye of the storm” as the global economy and world trade faces its most serious crisis in 60 years, Howe Robinson said. At the same time there are more than 3,000 bulk carriers on order at 155 different yards in 15 countries by 479 known owners. All are scheduled for delivery by 2011. “Even if you slash the orderbook it’s still too big and banks may not realize that with these defaults and moving into a recession they may become one of the biggest shipowners around,” a Howe Robinson spokesman said. Analysis reveals a staggering mismatch between supply and demand. “The supercycle era is bust,” the report bluntly concluded.
newsday.com:
- Over budget $1 Billion, NASA gets $1 Billion more from stimulus; more discipline needed, auditors say.
AP:
- Kansas Gov. Kathleen Sebelius, President Barack Obama's choice to head the Health and Human Services Department, is facing questions about increased state payments to a social services group whose board includes the chairman of the state Democratic Party.
Reuters:
- Google Inc(GOOG) CEO Eric Schmidt said the economic storm will affect all forms of advertising, including the online ads that Google depends on, but said that he doesn't expect Google to experience a decline in revenue.
- General Electric Co (GE) shares fell as much as 16 percent on Wednesday, touching their lowest point since 1991, as investors worried about a possible downgrade of GE's credit rating and how its finance arm would get through the recession.
TimesOnline:
- The European Commission has begun an inquiry into petrol pricing amid allegations that the full benefit of recent steep falls in the global price of oil are not being passed on to motorists. Details of the inquiry emerged in correspondence seen by The Times from Neelie Kroes, the EU’s Competition Commissioner.
Telegraph: European banks face a US dollar “funding gap” of almost $2 trillion as a result of aggressive expansion around the world and may have difficulties rolling over debts, according to a report by the Bank for International Settlements. The BIS said European and British banks have relied on an “unstable” source of funding, borrowing in their local currencies to finance “long positions in US dollars”. Much of this has to be rolled over in short-term debt markets. The currency mismatch has become a potential risk for banks as the dollar continues to climb against the euro and Swiss franc, and especially sterling and Sweden’s krona. “The build-up of large net US dollar positions exposed these banks to funding risk, or the risk that their funding positions could not be rolled over,” said the BIS. The report, entitled “US dollar shortage in global banking”, helps explain why there has been such a frantic scramble for dollars each time the credit crisis takes a turn for the worse. Many investors have been wrong-footed by the powerful rally in the dollar against almost all currencies, except the yen.
easyBourse:
- Hedge funds, once defined as investment pools for the rich, now get most of their assets from institutions such as pension funds, according to a report Wednesday.
Straits Times:
- Minister Mentor Lee Kuan Yew yesterday raised the possibility of Singapore's economy shrinking by as much as 10 per cent this year. This would happen if the country's exports continue to drop at the same speed as they did earlier this year, he predicted. They fell 35 per cent in January. Said Mr Lee: 'If the second quarter shows a further drop of another 30, 40 per cent, it (economic growth) will go down to -10 (per cent).' If so, this would be a performance four times worse than 2001's record low when the economy shrank 2.4 per cent.
Business Standard:
- Global IT giant IBM(IBM) is understood to be the front-runner to acquire Satyam Computer Solutions, a company it named as one of its main competitors in a filing to the New York Stock Exchange in February.
Australian Financial Review:
- Australia
South China Morning Post:
- Chinese Vice President Xi Jinping said unemployment in Hong Kong is likely to climb to 6.5% as exports decline, citing Xi. The worst of the financial crisis is yet to come, he said. Exports may drop by a double-digit percentage in the first half and the unemployment rate my increase to 6.5% or even higher, Xi said.
Late Buy/Sell Recommendations
Citigroup:
- Upgraded (LZ) to Buy, target $32..
- Reiterated Buy on (FL), target $10.
Night Trading
Morning Preview
US AM Market Call NASDAQ 100 Pre-Market Indicator/Heat Map Pre-market Commentary Pre-market Stock Quote/Chart Global Commentary WSJ Intl Markets Performance Commodity Futures Top 25 Stories Top 20 Business Stories Today in IBD In Play Bond Ticker Economic Preview/Calendar Earnings Calendar
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Who’s Speaking? Upgrades/Downgrades Rasmussen Business/Economy Polling
Earnings of Note
Company/EPS Estimate
- (URBN)/.28
- (COO)/.39
- (WIND)/.12
- (IPI)/.29
- (GCO)/1.05
Economic Releases
8:30 am EST
- Final 4Q Non-farm Productivity is estimated to rise 1.0% versus a 3.2% prior estimate.
- Final 4Q Unit Labor Costs are estimated to rise 3.8% versus a prior estimate of a 1.8% increase.
- Initial Jobless Claims for last week are estimated to fall to 650K versus 667K prior.
- Continuing Claims are estimated to rise to 5155K versus 5112K prior.
10:00 am EST:
- Factory Orders for January are estimated to fall 3.5% versus a 3.9% decline in December.
Upcoming Splits
Other Potential Market Movers
BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and construction stocks in the region. I expect US
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