- Al-Qaeda and related terrorist networks suffered setbacks last year, even as they remained the “greatest threat” to the U.S. and its allies, the State Department said in a report today. The annual assessment of terrorism threats cited “significant achievements” in 2008, such as the capturing or killing of terrorist leaders in Pakistan, Iraq and Colombia. The number of terrorist incidents worldwide fell 20 percent to 11,770 in 2008 from 14,506 a year earlier, according to the department’s tally. Fatalities dropped to 15,765 from 22,508. “Terrorist leaders were kept on the move, kept in hiding,” Ronald Schlicher, the department’s acting coordinator of counterterrorism, told reporters in Washington. “Dozens of countries passed new counter-terrorism laws,” and worldwide efforts to squeeze terrorist finances may have led al-Qaeda to solicit for money in their recent public messages, he said.
- The Federal Reserve will postpone the release of stress tests on the biggest U.S. banks while executives debate preliminary findings with examiners, according to government and industry officials. The results, originally scheduled for publication on May 4, now may not be revealed until toward the end of next week, said the people, who declined to be identified. A new release date may be announced as soon as tomorrow, they said.
- Gold fell for a second day as rising equity markets added to signs of improvement in the world economy and reduced the investment appeal of the metal. European stocks posted a record monthly gain yesterday, and the Standard & Poor’s 500 Index completed its best monthly performance in nine years. “There was a time when we saw a safe-haven bid for gold and that is clearly not as strong as it was,” David Moore, commodity strategist at Commonwealth Bank of Australia Ltd., said from Sydney. “Without that safe-haven investment, the overall demand for gold is diminishing.” Investment demand, the biggest driver of gold prices the past 18 months, is waning amid stronger equity markets and signs industrial production may have bottomed, Moore said. While demand from jewelry makers, the biggest users, has improved, it remains “tepid,” he said.
- The yen slid to a two-week low against the euro and weakened against the dollar on speculation a report today will show U.S. manufacturing contracted at a slower pace, encouraging investors to buy higher-yielding assets.
Wall Street Journal:
- The U.S. government's restructuring plan for Chrysler LLC is sounding alarm bells for those in the business of lending money who worry that the plan could subvert decades of standing legal precedent and investing principles. Banks, hedge funds and other investors that hold $6.9 billion in secured loans are being asked to release their contractual claims over Chrysler's assets in exchange for a fraction of what they are owed. Many lenders see that as a raw deal, because in the bankruptcy code's priority scheme, secured creditors are supposed to get paid before unsecured creditors such as employees.
- The World Health Organization said Thursday that a new flu strain continued to spread, particularly in Mexico and the U.S., but refrained from declaring a global pandemic even as more European countries confirmed cases. Amid a growing debate around the globe about travel restrictions, the United Nations public-health agency raised the number of confirmed cases of the A/H1N1 virus to 257 from the 148 reported Wednesday.
- Oracle Corp.(ORCL) is developing a set of online software offerings, an expansion of the company's use of a business model it has often resisted. The software giant is working on seven new online products, including offerings to help business run sales campaigns, keep track of employees and job applicants, according to people briefed on the plans and a company document reviewed by The Wall Street Journal.
- How has the recession affected entrepreneurship? So far, it’s helped to drive it up. That’s according to a new study from the Kauffman Foundation, a Kansas City-based organization. The study, out Thursday, found that an average of 320 out of 100,000 adults created a new business each month last year even as the recession took hold, up from 300 out of 100,000 adults in 2007.
- The Federal Reserve is near announcing new terms on one of its lending programs that officials hope will help revive the commercial real estate market, according to people familiar with the matter. The program is the Term Asset Backed Securities Loan Facility, or TALF, in which investors are given low-cost loans from the Fed and in turn use the money to buy securities backed by consumer debt. The loans in this program are three year loans and so far have been aimed at car debt, credit card debt and other consumer loans. The Fed is preparing to announce new loans with five year terms, to better match the needs of investors in commercial mortgage backed securities, an effort to boost that sector.
- The animal-rights group PETA is preparing a campaign against McDonald's Corp., hoping to pressure the fast-food giant into changing the way millions of chickens are raised and slaughtered. With its campaign, budgeted at about $500,000 this year, PETA is hoping to spur industry-wide change by pressuring an iconic chain that uses three billion eggs and 290 million chickens a year.
- “It’s about time…It’s about change.” That was Barack Obama’s campaign slogan. Judging by statements from the White House of late, President Obama’s change extends to definitions like, say, fiduciary duty. Specifically, the fiduciary duty of hedge funds, those private pools of capital that the White House called out today for rejecting the Treasury Department’s offer to cut the auto maker’s debt. “Their failure to act in either their own economic interest or the national interest does not diminish the accomplishments” by Chrysler, its planned alliance partner Fiat SpA and other stakeholders in the company, said an administration official. Wait, the national interest is a standard for hedge-fund investing? Then the SEC had better update its Web site, where the agency says hedge-fund managers have the same fiduciary duties as other investment advisers. And what is fiduciary duty? “Fiduciary duty is the first principle of the investment adviser—because the duty comes not from the SEC or another regulator, but from common law,” said Lori A. Richards, then director of the SEC’s Office of Compliance Inspections and Examinations, in this February 2006 speech. “A fiduciary must act for the benefit of the person to whom he owes fiduciary duties, to the exclusion of any contrary interest.”
- The Japanese government reported Friday that the country's core consumer price index fell 0.1% in March, the first year-over-year decline since late 2007, raising concerns of a potential deflationary spiral.
- Investors still stung by the market downturn may want to consider the recent performance of growth-stock focused mutual funds as an antidote. In the first quarter growth funds beat their value rivals by the largest margin in nine years. And as of April 28, midcap growth funds this year are up 4.3%, small-cap growth funds are up 0.8% while large-cap growth has returned 2.6%, according to investment researcher Morningstar Inc., which provided the data Thursday. By contrast large-cap value funds are down 6%, midcap value funds have lost 1.7% and small-cap value funds have lost 4.4%. As of early Thursday afternoon, the Standard & Poor's 500 Index (SPX) was down about 3% in 2009.
- ‘Sell in May and Go Away’ May Not Be a Good Idea This Year. Despite a massive April rally that gave the indexes their highest monthly percentage gains in years, market pros remain fairly confident even if they do expect some natural pullback to happen along the way. "A lot of the old adages right now are kind of out the window given what we've seen happen," says Dave Lutz, managing director at Stifel Nicolaus. "The economic cycles have changed so much in the last 12 months that it's kind of difficult to pinpoint seasonality." Lutz sees a market that could soon register in the mid-900s on the S&P. "Well if history is any guide—it’s never gospel—investors may be wiser to "turn a deaf ear this year,' " says Standard & Poor's chief investment strategist Sam Stovall, who notes that the S&P has rallied between May and October during or shortly after the 14 bear market bottoms since 1932. Schaeffer's Investment Research, a Cincinnati firm that has taken a mostly contrarian approach to the various rallies since the bear market began, said investors anticipating a retreat could be surprised. Historical trends show that when the S&P posts six consecutive weekly gains, the trend in the ensuing weeks is actually for market gains. "Bullish momentum can last longer than most believe," Todd Salamone, Schaeffer's senior vice president of research, recently wrote to clients. "Therefore, one should be open and positioned for this possibility."
- On Thursday, the Economic Cycle Research Institute said that the recession will probably end before the summer is out. The research group, whose leading indicators have a solid track record of predicting turns in the business cycle, said enough of its key gauges have turned upward to indicate with certainty that a recovery is coming. "The economy is on the cusp of a growth rate cycle upturn—a cyclical acceleration in economic growth," ECRI said in an emailed statement. "In other words, U.S. economic growth...which is still plunging deeper into negative territory, will start becoming less negative in short order."
- Defense Secretary Robert M. Gates suggested on Thursday that as many as 100 detainees at the prison at Guantánamo Bay in Cuba would end up held without trial on American soil, a scenario he acknowledged would create widespread if not unanimous opposition in Congress. The estimate from Mr. Gates was the most specific yet from the Obama administration about how many of the 241 prisoners now at Guantanamo could not be safely released, sent to other countries or appropriately tried in American courts. In January President Obama ordered the prison closed by the end of year, but his administration is still working on what to do with the detainees.
- The Tennessee comptroller plans on Friday to propose a sweeping overhaul of the way the municipal bond market is regulated in the state. The comptroller, Justin P. Wilson, said Thursday that his recommended changes would prohibit small cities and counties from using sophisticated derivatives, which have crashed, causing interest payments to increase by as much as 500 percent and putting a strain on local governments. “I think what we are proposing is a fundamental change in the way we will regulate local government financing,” Mr. Wilson said in an interview. “These changes would be revolutionary.”
- Since last year's DoubleClick acquisition, we've increased our focus on helping marketers and agencies use Google(GOOG) tools for all of their display advertising needs. DoubleClick Rich Media is the part of DoubleClick that provides the technology for the most technically advanced and engaging of these display ads, which are typically created by creative agencies for their brand-focused clients. To help make this process even easier and efficient, today we're launching DoubleClick Studio, our new rich media production and development tool.
- With a flash of anger Thursday morning, President Barack Obama offered a blistering critique of “a small group of speculators” who refused to go along with the government’s plan to keep Chrysler out of bankruptcy. A group calling itself “The Committee of Chrysler Non-Tarp Lenders” put out a statement Thursday complaining that the negotiating process was unfair – because they were forced to deal with the banks that had taken significant government investment, and therefore were unfairly biased toward the government’s negotiating position. The group – which refuses to list its members – claims to represent about $1 billion in loans to Chrysler, and says its members have not taken any government TARP bailout money. “We have been systematically precluded from engaging in direct discussions or negotiations with the government” the group complained. “Instead, we have been forced to communicate through an obviously conflicted intermediary: a group of banks that have received billions of TARP funds.” The group also urges the public not to “succumb to unproductive and unwarranted finger pointing.” Obama’s tough tone sets up a dramatic showdown with the lenders. But it might be exactly the political fight that the White House wants right now. It’s clear that the White House thinks the politics of battling unnamed “speculators” works in its favor.
- Charles Schwab Corp (SCHW), the largest U.S. discount brokerage, said on Thursday it would be an interested buyer if troubled peer E*Trade Financial Corp (ETFC) were willing to sell assets, but it would not launch a hostile bid.
- McAfee Inc (MFE), the No. 2 security software maker, reported a stronger-than-expected quarterly profit, helped by new software modules and partnerships with PC vendors. The company, which competes with No. 1 security software maker Symantec Corp (SYMC), forecast second quarter earnings at the high end of market expectations and its shares rose 3.9 percent in after-hours trading on Thursday
- Hartford Financial Group (HIG) posted its third straight net loss and said it plans to stop selling new policies in Japan and the United Kingdom, as the insurer reeled from the same weak financial markets that triggered a net loss at MetLife Inc (MET). Both posted results worse than analysts had expected, and their shares dropped after hours, with Hartford down 12 percent.
- Citadel Investment Group is expanding into investment banking and has hired three former Merrill Lynch executives to anchor the new operation, a source with knowledge of the matter said on Thursday.
Late Buy/Sell Recommendations
- Reiterated Buy on (IRM), raised target to $32.
- Reiterated Buy on (MDCO), target $29.
- Reiterated Buy on (EXPE), target $19.
- Reiterated Buy on (MFE), raised estimates and target to $46.
- Reiterated Buy on (BEAT, target $29.
- Upgraded (NTDOY) to Overweight.
Asian Indices are -.25% to +.25% on average.
S&P 500 futures -.16%.
NASDAQ 100 futures -.07%.
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Stock Quote/Chart
WSJ Intl Markets Performance
Top 25 Stories
Top 20 Business Stories
Today in IBD
Earnings of Note
10:00 am EST
- Factory Orders for March are estimated to fall .6% versus a 1.8% gain in February.
- ISM Manufacturing for April is estimated to rise to 38.4 versus 36.3 in March.
- ISM Prices Paid for April is estimated to rise to 34.0 versus 31.0 in March.
- Total Vehicle Sales for April are estimated to fall to 9.7M versus 9.9M in March.
- None of note
Other Potential Market Movers
- The (R) shareholders meeting, (MAR) shareholders meeting and the(OXY) shareholders meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and shipping stocks in the region. I expect