Late-Night Headlines
Bloomberg:
- Asia-Pacific bond risk declined after JPMorgan sold $3 billion in bonds and reported profit that beat analysts’ estimates, spurring confidence the worst of the global credit crunch has passed. The Markit iTraxx Japan index of credit-default swaps fell 12.5 basis points to 292.5 at 10 :08 am in Tokyo The iTraxx Asia index of 50 investment-grade borrowers outside Japan was 5 basis points lower at 295 at 9:10 am in Hong Kong , according to BNP Paribas SA. The Markit iTraxx Aust4alia index fell 2.5 basis points to 302.5 at 10 :30 am in Sydney
- Senate Democrats are scaling back legislation that would let bankruptcy judges alter mortgage terms because lawmakers don’t have enough votes for passage, a spokesman for Senate Majority Whip Richard Durbin said. The main “sticking point” is whether the measure, which passed the House of Representatives in March, should be limited to certain loans or a specific timeframe, Max Gleischman, a spokesman for Durbin, an Illinois Democrat, said today.
- Google Inc.’s(GOOG) YouTube reached agreements with Hollywood studios including Sony Corp., CBS Corp. and Metro-Goldwyn-Mayer Inc. to put movies and television shows on the Internet. YouTube will add two tabs to its homepage to highlight shows from sites such as Sony’s Crackle, and offer new material to subscribers who log in, the San Bruno, California-based company said today on its Web site. The accord extends efforts by Hollywood studios to offer mostly older full-length movies and television shows on advertiser-supported Web sites. Google is also separating professional clips on YouTube from home videos to charge more for ads. The site will increase its use of so-called in-stream ads that viewers must sit through, similar to a TV show. “Our initial focus is on advertising,” Google Chief Executive Officer Eric Schmidt said of the company’s plans to add content to YouTube. “We do expect over time to see micro- payments and other forms of subscription to come,” Schmidt said today on a conference call after quarterly earnings.
- Hynix Semiconductor Inc. led shares of computer-memory chipmakers higher in Asia as rising prices helped fuel expectations that the industry may be recovering from record losses. Hynix gained 9.1 percent to 14,450 won, while top memory chipmaker Samsung Electronics Co. rose 2.9 percent at 9:56 a.m. in Seoul trading. Japan’s Elpida Memory Inc. added 3.3 percent on the Tokyo Stock Exchange. In Taiwan, all five listed memory chipmakers, including Nanya Technology Corp., advanced. Prices of the benchmark dynamic random access memory, or DRAM, chips climbed 7.6 percent to $1.13 yesterday, the highest since Oct. 14, according to Dramexchange Technology Inc., operator of Asia’s biggest spot market for semiconductors. Nanya Technology, Taiwan’s second-biggest DRAM maker, said yesterday it plans to raise prices for the second time this month after industrywide production cuts helped ease a glut. The “price recovery has just started, in line with our bullish expectation,” Henry Kim, an analyst at Citigroup Inc., wrote in a note yesterday. Kim predicts spot prices of the DRAM chip will increase 50 percent in the current period.
- Crude oil fell, poised for the biggest weekly decline since February, amid forecasts the recession will curb demand at a time when U.S. inventories are already at their highest in almost 19 years. U.S. crude-oil inventories rose 5.67 million barrels to 366.7 million last week, the highest since September 1990, the Energy Department said April 15. The International Energy Agency reported April 10 that worldwide consumption will shrink by 2.8 percent in 2009 as the global economy contracts. “There’s potential for oil prices to slide off the current plateau and fall back to perhaps a number like $40 a barrel, just because inventories are at such an elevated level and may not have peaked yet,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York. U.S. fuel demand in the first quarter fell to the lowest for the period in 11 years, the American Petroleum Institute said in a monthly report yesterday. Deliveries of petroleum products, a measure of consumption, averaged 19.2 million barrels a day, 3.4 percent less than during the same period in 2008, the industry-funded API said.
- Gold and silver fell to the lowest prices in a week on speculation that the pace of inflation will be slower than investors expected, eroding demand for the precious metals as a store of value. U.S. consumer prices slipped in March to the first 12-month decline since 1955, the Labor Department said yesterday. The euro declined for a third straight day against the dollar, the longest losing streak in six weeks, as industrial output fell. “Gold is showing signs of weakness amid the drop in prices of goods to consumers, indicating that inflation has yet to rear its head,” Miguel Perez-Santalla, a sales vice president at Heraeus Precious Metals Management in New York, said in an e- mailed note. “Investor- and industrial-demand remain weak at these levels as well.” “With gold prices continuing to be capped under $915 an ounce, I would look for the market to roll over and play bear,” Ralph Preston, a commodity analyst at Heritage West Futures Inc. in San Diego, said in an e-mail. “A close under $853 an ounce projects another move down towards $800 an ounce.”
- Research In Motion Ltd.(RIMM) Co-Chief Executive Officer Mike Lazaridis plans to keep hiring to spur the flow of new BlackBerry models, signaling the phone maker is withstanding a recession that forced rivals to trim payrolls. The mobile-phone maker has more than 600 positions to fill, mostly in North America. RIM boosted its workforce by 50 percent to about 12,000 last year.
- Luxury cars in the U.S., for those who can afford them, have never been cheaper. General Motors Corp. knocked an average $6,724 off the price of Cadillacs last month, Bayerische Motoren Werke AG discounted cars by $5,234 and Daimler AG sweetened the purchase of a Mercedes-Benz by $4,697, according to Edmunds.com, a Santa Monica, California-based auto data provider. Overall, incentives on luxury cars in March jumped 45 percent from a year ago. “It’s ‘buy-low’ time, almost across the board,” said Jack Nerad, executive market analyst for Kelley Blue Book in Irvine, California, which tracks vehicle pricing. “We’re seeing brands that had not discounted as much, really doing so now.”
- President Barack Obama and Mexican president Felipe Calderon announced a new framework for the two countries to lower carbon output, promote clean energy technology and combat climate change. The agreement seeks to promote renewable energy, energy efficiency and green jobs, Obama said at a news conference with Calderon in Mexico City. The pact also aims at strengthening the reliability of cross-border electricity grids and encourages border states to cooperate on energy.
- Jean-Claude Trichet is facing the biggest split on the European Central Bank’s Governing Council in his six years as president. Months after other central banks cut their key interest rates close to zero and started pumping money into their economies, the ECB’s 22-member council is still divided over whether to follow suit. The stand-off has delayed new measures to stem the euro region’s deepest recession since World War II. “I fear the ECB will be bogged down by internal squabble,” said Ken Wattret, chief euro region economist at BNP Paribas in London. “It seems to be turning into a battle between the activists and those with a more conservative persuasion. It’s the biggest dispute under Trichet.”
Wall Street Journal:
- Steven Rattner, the leader of the Obama administration's auto task force, was one of the executives involved with payments under scrutiny in a probe of an alleged kickback scheme at New York state's pension fund, according to a person familiar with the matter. A Securities and Exchange Commission complaint says a "senior executive" of Mr. Rattner's investment firm met with a politically connected consultant about a finder's fee. Later, the complaint says, the firm received an investment from the state pension fund, then paid a $1.1 million fee. The "senior executive," not named in the complaint, is Mr. Rattner, according to the person familiar with the matter. He is co-founder of the investment firm, Quadrangle Group, which he left to join the Treasury Department to oversee the auto task force earlier this year.
- In its latest attempt to restart financial markets, the Federal Reserve is weighing a twist in one of its rescue programs that it hopes will encourage investors to buy long-term commercial-mortgage-backed securities. The Term Asset-backed Securities Loan Facility, or TALF, offers three-year loans to investors who use them to buy asset-backed securities. Fed officials are considering whether to offer investors in commercial real-estate securities loans of as long as five years to make the program more appealing.
- Danny Pang, the California investment-fund manager whose credentials have come under question, has stepped aside as chairman and chief executive of PEMGroup pending the outcome of an internal probe, the firm said in a press release.
- In a move likely to be watched by peers, the giant California pension fund Calpers is considering expanding its own internal hedge-fund investments even as it presses established external funds to cut fees and make other client-friendly changes that many money managers have resisted. Calpers is raising the prospect of providing start-up money to new and relatively unknown teams of traders and portfolio managers, with hopes that the best would spin out later as bigger, independent firms with many additional clients, according to public documents from Calpers.
- The Federal Bureau of Investigation earlier this year launched a nationwide operation targeting white supremacists and "militia/sovereign-citizen extremist groups," including a focus on veterans from Iraq and Afghanistan, according to memos sent from bureau headquarters to field offices. The initiative, dubbed Operation Vigilant Eagle, was outlined in February, two months before a memo giving a similar warning was issued on April 7 by the Department of Homeland Security. Disclosure of the DHS memo this week has sparked controversy among some conservatives and veterans groups. Appearing on television talk shows Thursday, Homeland Security Secretary Janet Napolitano defended the assessment, but apologized to veterans who saw it as an accusation.
Dow Jones:
- Verizon Communications(VZ) is still interested in buying out Vodafone Group’s(VOD) share of their joint wireless business.
CNBC.com: Google's(GOOG) quarterly profit topped expectations, helped by cost controls, but Chief Executive Eric Schmidt said the economic environment remains tough with users still searching but buying less. Shares of the No. 1 U.S. Internet search company initially rose 5 percent on the stronger-than-expected results, but then erased gains to trade flat after hours. The stock had risen about 30 percent in the past three months.
- U.S. mortgage rates fell back toward record lows this week and stayed a percentage point below levels a year ago just as the important spring sales season heats up. Freddie Mac said Thursday. Low mortgage rates are a boon for owners looking to cut monthly payments by refinancing and should attract new buyers.
NY Times:
- Chrysler is close to a deal with the United Automobile Workers to finance retiree health care that is crucial to the company’s bid for more government aid, according to people with knowledge of the negotiations.
- Edward M. Liddy, the dollar-a-year chief executive leading the American International Group since its bailout last fall, still owns a significant stake in Goldman Sachs(GS), one of the insurer’s trading partners that was made whole by the government bailout of A.I.G.
- Just three short months ago, many of the nation’s biggest banks were on life support. Now, a number are showing glimpses of a recovery, aided by a tentative improvement in some corners of the economy and new business picked up from rivals that stumbled in the wake of the financial crisis. On Thursday, JPMorgan Chase became the latest bank, after Goldman Sachs and Wells Fargo, to announce blockbuster profits in the first quarter. The reports fed a rally in financial stocks that began more than five weeks ago, when Citigroup and Bank of America, two of the banks hit hardest by the crisis, suggested the worst might already be over.
TechCrunch:
- Amazon’s(AMZN) Kindle 2, which first shipped in late February, is selling at roughly double the rate of the first generation device, says a source close to Amazon. Approximately 300,000 of the Kindle 2s have been shipped to date, suggesting Amazon has made over $100 million in revenue from sales of the $359 device alone this year.
Seeking Alpha:
- A Visit to Kingdom Hedge Fund 2009.
Investors.com:
- A lot of IBD's New America stories will tell you how a company will benefit from President Obama's stimulus package. But LHC Group (LHCG) is prospering in spite of the administration rather than because of it.
Politico:
- Here's quite a blockbuster from the Connecticut Post: Out of the $1 million that Sen. Chris Dodd (D-Conn.) raised this quarter, only $4,250 -- less than a half-of-a-percent -- of it came from home-state donors:
USA Today.com:
- The federal government agreed Thursday to begin taking public comment on a proposal that could boost the amount of ethanol in gasoline by 50% — a small, early victory for suppliers seeking to expand sales of ethanol, usually made from corn.
Reuters:
- Shopping malls sold in bankruptcy by General Growth Properties may finally set prices in a stalled market and release billions of dollars stockpiled for good buys in U.S. commercial real estate. "The public companies we think are best positioned to capitalize on General Growth's unraveling are Simon Group Inc SPG.N, Taubman TCO.N, Westfield WDC.AX, and Vornado VNO.N," J.P. Morgan real estate investment trust (REIT) analysts wrote in a research note.
- The United States is in a "bone-crushing recession" but wide-ranging Federal Reserve policies to unlock credit markets should accelerate a recovery, Dallas Fed President Richard Fisher said on Thursday. Fisher, in remarks prepared for a forum at Tsingua University in Beijing, reiterated his recent themes: the U.S. jobless rate will top 10 percent by year-end; inflation is not an imminent threat; and the Fed will not "monetize" the huge increase in its balance sheet. "The innovative policies being pursued by the Federal Reserve will facilitate and, indeed, expedite the recovery process," he said.
- Sony Corp's Sony Pictures on Thursday became the sixth major studio to support a theater-chain upgrade to digitally convert 20,000 U.S. and Canadian cinema screens, at an estimated cost of more than $1 billion. Other studios announced in October they would back a theater-upgrade program with the Digital Cinema Implementation Partners (DCIP), a group of theater chains comprising Regal Entertainment Group, Cinemark Holdings Inc and AMC Entertainment Inc. The other studios include Walt Disney Co, Viacom Inc Paramount Pictures, News Corp's Twentieth Century Fox, General Electric Co's Universal Pictures and Lions Gate Entertainment. In October, the DCIP estimated it could complete the conversion within 3 to 3-1/2 years of a start date in early 2009, although some of the conversions have gotten pushed back due to the credit crisis. Once outfitted with digital projectors, theaters can then be modified to show 3-D films. Hollywood studios are investing heavily in 3-D on expectations these films will draw bigger audiences at premium ticket prices.
- GMAC LLC, the General Motors Corp (GM) financing affiliate that received a government bailout, said its mortgage unit is hiring 1,000 people to handle a surge in refinancings and jumbo loans.
- Two top Federal Reserve policy-makers took divergent views on the U.S. economy on Thursday, with the head of the Atlanta Fed seeing a return to growth later this year, while the head of the San Francisco Fed saw the potential for an even deeper contraction. Both policy-makers -- Dennis Lockhart, president of the Atlanta Fed, and Janet Yellen, president of the San Francisco Fed -- told a conference in New York that it was important to address how to regulate systemically important institutions, those seen as "too big to fail." Lockhart said he expects the recession to end by mid-year with growth slowly picking up in the following months."Today, the economy is still very weak, but there are some encouraging signs that support cautious optimism," Lockhart told the conference at the Levy Economics Institute in New York.
- Giant-screen movie theater company Imax Corp is not seeing the recession damage its box-office performance, its chief executive said on Thursday. "It seems that consumers are willing to pay a premium price for a premium experience, even in this environment," Richard Gelfond told Reuters in an interview. "I would be surprised to see the economic factors affect our box office unless (the environment) materially worsens."
Financial Times:
Credit default swaps, the derivatives instruments that have figured prominently in the global financial crisis, are now being blamed for playing a role in two bankruptcy filings this week. Bankers and lawyers involved in restructuring efforts say they are concerned some lenders to troubled companies, such as newsprint producer AbitibiBowater and mall owner General Growth Properties , stand to benefit from a default because they also hold default swaps, which entitle them to payments in such events. “We have seen CDS becoming a significant factor” when negotiations on out-of-court restructurings fail, said Alan Kornberg, the partner in charge of the bankruptcy practice at Paul, Weiss, Rifkind, Wharton & Rice, speaking generally. “We used to talk about the practice theoretically but now we see cases where it is hard to get lenders to agree to tender or to compromise and then you find out that these holdouts had significant CDS protection.” Abitibi , which filed for bankruptcy protection on Thursday, ran into trouble as the dire state of the newspaper industry eroded its cash flow and left it unable to service its debt load. It sought to persuade debt holders to exchange bonds due in August for new debt with longer dated maturity and higher yields, but failed to do so as creditors squabbled. Such exchange offers require the support of a significant number of lenders, 97 per cent in the case of bondholders in this case. But those who withhold support often have powerful incentives to do so, either because they hope to be made whole or because they are seeking to force a filing that would trigger payments under their credit protection agreements, bankers and lawyers say. Some creditors, including Citigroup , which held a small exposure to AbitibiBowater, hedged themselves in the CDS market, meaning their economic interest in the deal was different to lenders who had not bought credit insurance, according to people familiar with the matter.
- General Motors (GM) is prepared to argue that hundreds of its suppliers are “critical vendors” who require timely payments if it seeks bankruptcy protection, setting the stage for what would be the most sweeping attempt ever to win special treatment for such contractors, people close to the matter say. Bankruptcy experts say GM would stand a good chance of winning protection for more suppliers than is usual because of the large number that provide “just-in-time” car parts to the company. By seeking permission to pay hundreds of suppliers, GM could mitigate damage to the car parts industry. People close to GM say the company would make the request regardless of where it filed its bankruptcy petition. “No matter what court they go into, they’ll get authority to pay whatever suppliers they need,” said one person close to GM. “In a GM bankruptcy, there won’t be very much fallout for suppliers except perhaps for suppliers of Saturn and Hummer.” Those two brands will be shut if they are not sold. More suppliers could drop outside the key vendor pool if GM is pressed to cull its portfolio further, targeting brands such as Pontiac.
- Barack Obama is “not always up to standard on decision-making or efficiency”, José Luis RodrÃguez Zapatero is “perhaps not very intelligent” while Angela Merkel “had no choice but to come round to my position” when she saw the state of German banks. President Nicolas Sarkozy is well known for his blunt speaking and ascerbic observations. But even by his standards, insulting his American, Spanish and German counterparts – three of his closest allies – over a brief lunch is quite an achievement. In the space of three courses at the Elysée palace on Wednesday the French president suggested the new US president was inexperienced, hesitant and vague on certain policy issues, that the Spanish prime minister lacked brain power while the German chancellor did not share Mr Sarkozy’s foresight about the financial and industrial crisis unfurling across Europe last autumn.
China Business News:
- The China “As far as I know the report is untrue,” Luo said. Contract prices should fall more than 40% as steel prices have dropped to 1994 levels, citing the association’s general secretary Shan Shanghua.
Nation:
- Thailand
Business Times:
- Singapore Landlords are in negotiations for rents of less than S$10 per square foot in buildings including OUB Centre and Equity Plaza Raffles Place Tenants in Singapore Land Tower
The Economic Times:
- NEW DELHI: For the first time in the past five years, Mumbai’s commercial real estate market is headed for an oversupply with a total of 16.02 million sq ft of new commercial office space expected to enter the market in 2009. However, demand has been dipping steadily. According to property consultancy Jones Lang LaSalle Meghraj (JLL-M), the demand for office space has dropped 60-80% compared to the peak period from late 2005 to early 2008. “Rentals are set to go down a further 20-25% in Mumbai owing to the mismatch in supply and demand. BFSI, which generated the most demand for the Mumbai market, has been hit the most in the recent times,” said Vivek Dahiya, CEO of property consultancy GenReal. The first quarter of 2009 saw a total supply of 2.47 million sq ft of new space in Mumbai, of which the total absorption of space is only 35%. The total absorption was only 896,454 sq ft. Rentals have been steadily falling in most major micro-markets of Mumbai. Rentals in Nariman Point are down 13% compared to last quarter and about 30% down compared to a year-ago. Worli, Lower Parel, Bandra Kurla Complex and Andheri-Kurla are the worst-hit, with rentals declining by 38%, 39%, 27% and 33%, respectively, over the last one year.
Nikkei:
- Toshiba Corp.may beat its full-year operating loss forecast because of cost cuts and a halt in chip-price declines.
Asahi:
- Nippon Steel Corp. and other Japanese steelmakers agreed with Toyota Motor Corp. to cut the price of steel by more than 10% for the year through March 2010. The price will be cut by about $151 a metric ton, the first reduction in seven years. Toyota
Late Buy/Sell Recommendations
Citigroup:
- Rated (SPN) Buy, target $25.
- Reiterated Buy on (APH), target $37.
CSFB:
- Reiterated Underperform on (SQM), lowered target to $28.
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Economic Releases
10:00 am EST
- The Preliminary Univ. of Mich.
Upcoming Splits
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BOTTOM LINE: Asian indices are mostly higher, boosted by technology and financial stocks in the region. I expect US
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