Weekend Headlines
- Dallas Federal Reserve President Richard Fisher said U.S. credit markets have gotten stronger and the world’s largest economy may grow in 2010. “The credit markets are achieving a better tone and getting stronger,” Fisher said at a briefing in Shanghai today. “Volatility has been dampened. It will take some time to correct the weakness we’re experiencing.” “I expect it will get less worse. The numbers will be less negative through 2009” and the U.S. may see positive growth next year, Fisher said.
Investors in so-called “quantitative momentum” funds – which speculate that the worst stocks in the past 12 months will continue to decline – have become this year’s biggest losers after banks and companies that rely on consumer spending surged. Quant momentum managers may have tumbled 27% this month in the US , the most since at least 1993, while those in Europe may have lost 20% in March and 24% in April, according to data compiled by JPMorgan Chase(JPM). “Not in a million years would we have expected this gyration to be as vicious and enduring as it has been,” Steven Solmonson, the head of Park Place Capital Ltd., a hedge fund that oversees $150 million, said in an interview from NY. “The quants got whipsawed badly.”
- President Mahmoud Ahmadinejad denounced efforts to destabilize Iran after an Iranian court sentenced a U.S.-born journalist to eight years in prison for espionage. The country must remain vigilant against outside threats to its sovereignty and security, the official Islamic Republic News Agency cited Ahmadinejad as saying today. Iran will stick to its policies “with no brake and reverse gear,” Ahmadinejad told security officials, IRNA reported. The U.S. yesterday said it was “deeply disappointed” after an Iranian court convicted Roxana Saberi, a U.S.-Iranian freelance reporter, of spying in a closed-door trial last week. The case risks exacerbating tensions with the U.S. just as President Barack Obama is making overtures to ease the dispute over Iran’s nuclear program and end a 30-year diplomatic freeze. “Iran is sending a clear message that Iranian security is a priority which will not be compromised,” said Mustafa Alani, a regional expert at the Dubai-based Gulf Research Center. The decision to jail Saberi is designed to strengthen Iran’s negotiating hand, he said by phone.
- President Barack Obama said he’s “gravely concerned” about U.S.-born journalist Roxana Saberi, who was sentenced to eight years in prison for espionage by an Iranian court after a closed-door trial last week. “I am gravely concerned with her safety and well being,” Obama said at the end of a news conference today in Trinidad and Tobago as he wrapped up his first Summit of the Americas. “I have complete confidence that she was not engaging in any sort of espionage.”
- The Markit iTraxx Australia index was quoted 10 basis points higher at 315 as of 10:55 am in Sydney The Markit iTraxx Japan Index fell 10 basis points to 305 as of 9:45 am in Tokyo
- “The uncertain demand outlook is going to continue to dominate the outlook for crude,” said Toby Hassall, an analyst at Commodity Warrants Australia Ltd. in Sydney. “The fundamentals really haven’t shown any improvement.” 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 on April 16. 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. Angola, Africa’s second-largest producer, will increase daily crude shipments, including the Palanca grade, by 7.3 percent in June as OPEC’s output cuts stall. BP Plc, Total SA, Chevron Corp., Exxon Mobil Corp. and other companies are scheduled to load an average of 1.83 million barrels a day in June, compared with May’s 1.7 million barrels a day, according to loading programs released through today. Angola’s output totaled 1.6 million barrels a day in March, according to a Bloomberg survey of analysts, traders and producers. That’s 103,000 barrels a day over their quota, set by the Organization of Petroleum Exporting Countries.
- South Korea will follow China and Japan in scooping up U.S. Treasuries following the biggest increase in its foreign reserves in almost three years, the nation’s largest money manager said. “The Bank of Korea will have to handle more dollar reserves,” said Sungjin Park, who helps oversee the equivalent of $46.6 billion as head of fixed income at Samsung Investment Trust Management in Seoul. “U.S. Treasuries are one of their best options.” South Korean investors increased their holdings of U.S. debt by 6.4 percent in February to $33.3 billion, the first increase since August, U.S. Treasury Department figures show. Chang-Ho Yoo, who is in charge of U.S. Treasury investment at the Bank of Korea, declined to comment.
- European Central Bank President Jean-Claude Trichet said he wouldn’t exclude another “very measured” rate cut, though a zero interest-rate policy wouldn’t be appropriate for the bank.
- The euro declined against most of the other major currencies on speculation policy disagreement among the region’s central bankers will undermine efforts to revive economic growth. The greenback rebounded this week to the level where it traded versus the euro on March 18, recovering from losses after the Federal Reserve announced its plan to buy Treasuries to lower interest rates.
- Goldman Sachs Group Inc.(GS) has been called many things over the years. Plenty of people have raged against its power and wealth. If you spend decades as the most successful investment bank, it goes with the territory. Calling it the devil may be going a bit far, though, even for the flinty-hearted employees of the New York-based bank. Last month, a blog called Goldmansachs666.com was set up. Goldman Sachs has taken legal action against the site, alleging it infringes a trademark in the phrase “Goldman Sachs.” The owner of the site, investment adviser Mike Morgan of Jensen Beach, Florida, has promised to contest the litigation and pursue similar campaigns against other banks. “They might think it is just a Mickey Mouse Web site, but we’re coming after them,” Morgan said in a telephone interview. “It would be really stupid for the banks to try and stop us. But banks do stupid things all the time.” On one level, this might seem like a dry legal battle about trademarks. On another, it is about freedom of expression. And while Goldman Sachs’s irritation is understandable, the firm is making a mistake in setting loose its lawyers.
- Banks in the U.S. that have received billions of dollars from the government will first have to rely on private markets if they need more money, National Economic Council Director Lawrence Summers said. “The first resort for more capital is going to the private markets directly to raise equity,” Summers told NBC’s “Meet the Press” program in remarks released today. His comments signal that banks deemed in need of capital at the conclusion of government-run “stress tests” may not get additional funds automatically.
- President Barack Obama said he’ll demand “accountability” from any U.S. banks that require additional taxpayer money following “stress tests” being conducted by regulators. “We’ll try to use as light a touch as we can, but I’m not going to simply put taxpayer money into a black hole where you aren’t going to see results or some exit strategy so the taxpayers ultimately are relieved of these burdens,” Obama said at a news conference today in Trinidad and Tobago as he wrapped up his first Summit of the Americas.
- Dubai house prices have fallen as much as 42 percent in the past six months and are likely to drop further as new homes are completed amid waning demand in the Persian Gulf business hub, Colliers CRE Plc said. Prices will decline even as estimates for the number of new homes coming onto the market are revised lower, to about 64,800 units between now and the end of 2011, the property adviser said today in an e-mailed report. It had previously estimated 140,000 new units by the end of 2010. It’s “reasonable to assume that as new stock continually comes online that the downward trend in the market will continue throughout 2009 and is unlikely to stabilize before the second- quarter of 2010,” Ian Albert, the firm’s regional director, said in the report.
- China ’s steel prices will fluctuate at a low level this year because of the industry’s overcapacity, said Xu Lejiang, chairman of Baoshan Iraon & Steel Co., China China China “We’ll never see an annual production growth of 20% again like that in previous years,” he said. Benchmark steel prices in China
- Representative Henry Waxman said he won’t budge from his proposed 20 percent reduction in greenhouse gases over the next decade even as some lawmakers say the economy could suffer. “I want to keep those caps in place,” Waxman, chairman of the House Energy and Commerce Committee, said in an interview on Bloomberg Television’s “Political Capital with Al Hunt” airing this weekend. “It’s what the scientists are telling us we must do” to avoid a global catastrophe, he said. Waxman, a California Democrat, said he would be willing to compromise in other areas of the measure, which comes up for its opening round of debate in Congress next week. He took issue with President Barack Obama’s plan to use 80 percent of the estimated $646 billion in revenue raised from carbon permits under a so-called cap-and-trade system to help fund middle-class tax cuts. “I don’t think that’s the best use of it,” Waxman said. “By and large” it should be spent on green technologies, he said, and part of it could be used to “help consumers with higher energy costs” and hard-hit industries, “especially coal.” Critics of the bill, including House Minority Leader John Boehner, an Ohio Republican, say the climate-change bill will dramatically raise energy costs, effectively levying a tax on consumers and industries. On the Justice Department’s release of Bush administration legal memos on the treatment of terror suspects, Waxman said he supports the creation of a commission to investigate alleged abuses, with the possibility that the inquiry will lead to prosecution. “It should go all the way to the top,” said Waxman. Investigating the financial meltdown on Wall Street, often Waxman’s target in his former role as the chairman of the House Oversight and Government Reform Committee, is no longer on his agenda. “I’m much too busy,” Waxman said.
- New York-based Quadrangle Group LLC, an investment firm founded by federal auto taskforce head Steven Rattner, used an indicted political adviser to gain the business of the New Mexico State Investment Council.
- President Barack Obama expressed confidence in Steven Rattner, the chief U.S. auto-industry adviser whose former firm was linked to probes of millions of dollars in New York pension-fund kickbacks. Rattner, co-founder of New York-based Quadrangle Group LLC, a private-equity firm, told the U.S. Treasury Department before Obama took office about the investigation of alleged kickbacks made to intermediaries for a New York pension fund, according to a Treasury department spokesperson who declined to be identified.
Wall Street Journal:
- Several of MGM Mirage's(MGM) major bondholders are discussing plans to swap debt for stakes in the company if the casino giant files for bankruptcy, according to people familiar with the situation.
- The strong debut of Rosetta Stone last week likely heralds a turning point for the IPO market in the U.S. -- with some caveats.
Barron’s:
- Gregory Vaughn, who helps manage $11.8 billion at Morgan Stanley in Menlo Park, California, topped the list of the 100 best financial advisers compiled by Barron’s.
MarketWatch.com:
- Since the 2000 debacle most of the action in the computer scene has been moribund. People and companies were finding all sorts of ways to avoid capital expenses in regards to tech purchasing. The potential for a pent-up demand spike in the computer industry lurks. Businesses and individuals have been holding back, especially over the past few years. They do not hold back forever. Most people and companies, as this is written, have one or more computers that are long overdue to be replaced. And the hardware itself has an impact on productivity. Machines that are as much as 100 times more powerful (simply based on Moore's law alone) than those from 1999 are being sold as this is written. At some point users and businesses all say "wow!" at the same time and, after years of waiting, pile on to the bandwagon and buy buy buy. This can and will create an unnatural spike in sales and buzz.
CNBC.com: Investors want to know if the stock market has turned a corner. And who better to ask than legendary investor Barton Biggs! As you might know Bigg’s is somewhat bullish on the current market. In his Newsweek column Biggs writes “green shoots are appearing not just in the shrubbery but in sickly economies.” In fact Biggs is impressed by the economic activity all around the world. He says as of last week he spotted 40 signs that the environment was starting to improve.
- Pershing Square Capital Management tells CNBC it is not short the stocks of any banks. However, the hedge fund said it owns credit default swaps on certain bank holding companies for hedging and other investment purposes. A New York Times article Friday said Pershing Square Manager William Ackman is betting that the share prices of big banks will decline. Ackman disagrees with this statement and has asked the paper for a correction, CNBC has been told.
- U.S. housing sales are near a bottom, and a third of sales are now of foreclosed properties, the chief economist of Freddie Mac, Frank Nothaft, said on Saturday.
- Green Grows on Investors
IBD:
VistaPrint (VPRT), an online business marketing and printing company, made modest adjustments last fall by trimming $35 million from its revenue forecast, which was then $475 million to $515 million.
NY Times:
- Senator Christopher J. Dodd of Connecticut, who is fighting for political survival after a year’s worth of damaging stories and self-inflicted wounds, can count on support from at least one powerful ally: President Obama. “I can’t say it any clearer: I will be helping Chris Dodd because he deserves the help,” the president told The Boston Globe in an interview published on Friday. Mr. Dodd has been battered by revelations about his personal finances, beginning with a report in June that he was on a list of V.I.P.’s who were given preferential rates and discounts on home loans by Countrywide Financial, a lender heavily involved in the subprime mortgage meltdown, even as he bore responsibility for oversight of that industry as a member, and now chairman, of the Senate Banking Committee. More recently, The Hartford Courant raised questions about the seemingly discounted price Mr. Dodd paid for a cottage in Ireland in a 1994 deal that involved Edward Downe Jr., a longtime friend of Mr. Dodd’s. (Mr. Downe pleaded guilty to insider trading in 1993, but, with Mr. Dodd’s help, won a pardon from President Bill Clinton in 2001.) Mr. Dodd has drawn criticism for initially denying his preferential treatment by Countrywide, and then for stonewalling for months before allowing reporters to review documents about his mortgages. Arguably the biggest blow to Mr. Dodd’s standing with voters came last month when he first denied, then a day later acknowledged, his role in making changes to legislation to allow American International Group, the financial giant that has been given billions of dollars in federal bailout money, to pay bonuses to its executives. Douglas Schwartz, director of the Quinnipiac University Poll, cast doubt on how much even the popular president could help Mr. Dodd. “His numbers are really bad,” Mr. Schwartz said. “Fifty-four percent of voters say he’s not honest and trustworthy; 58 percent disapprove of the job he’s doing. And he’s losing to three Republicans who aren’t very well known.”
- President Obama’s top economic advisers have determined that they can shore up the nation’s banking system without having to ask Congress for more money any time soon, according to administration officials.In a significant shift, White House and Treasury Department officials now say they can stretch what is left of the $700 billion financial bailout fund further than they had expected a few months ago, simply by converting the government’s existing loans to the nation’s 19 biggest banks into common stock.
- VIRTUAL worlds for children and teenagers — Web sites like Neopets, Club Penguin and Habbo — are a big business. On these sites, children create an avatar and, with it, explore an imaginary universe. They can play games, chat and decorate virtual rooms or other spaces. By the end of this year, there will be 70 million unique accounts — twice as many as last year — in virtual worlds aimed at children under 16, according to K Zero, a consulting firm. Virtual Worlds Management, a media and trade events company, estimates that there are now more than 200 youth-oriented virtual worlds “live, planned or in active development.” As the number of these virtual worlds grows, so, too, does the demand for sophisticated monitoring software and people, called moderators, who can act as virtual playground monitors.
CNNMoney.com:
- Herb Allison, who has been chief executive of Fannie Mae since it was seized by the government last September, has been tapped to oversee the $700 billion financial rescue fund conceived to restore rattled markets, the White House said on Friday.
Business Week:
Finally, there might be some good news for struggling homeowners. Thousands of mortgage loans that were supposed to reset at a higher rate this spring won't be changing, putting off the grim threat of foreclosure or bankruptcy for many Americans.
- The Biofuel Bubble. A horde of startups have smart ideas. But the challenges are many, and the winners likely will be Shell, BP, DuPont, and other majors .
Politico:
- Former CIA Director Michael Hayden warned Sunday morning that intelligence officers will be constrained operationally as a direct consequence of the White House’s decision to release Justice Department memos detailing interrogation techniques. Hayden said that officers will now be forced to consider the perspectives of the ACLU, the “New York Times editorial board,” and future presidential candidates, when deciding whether or not to follow interrogation orders. “At the tactical level,” Hayden said, “what we have described for our enemies in the midst of the war are the outer limits that any American would go to in terms of interrogating an Al Qaeda terrorists.” Hayden--a retired four-star Air Force general who headed the NSA from 1999 to 2005 and the CIA from 2006 to 2008--worried not just about the limits on what tactics interrogators could employ, but of the “broader effect” President Obama's decision to release the memos will have on CIA officers. “You are going to have this agency, on the front line of defending you in this current war, playing back from the line,” Hayden said.
OpenSecrets.org:
- Goldman Sachs(GS), one of Wall Street’s most prestigious investment banks, was also among the many banks in 2008 and 2009 to receive billions of dollars in taxpayer money to help it stay afloat. Like others in the securities industry, Goldman Sachs advises and invests in nearly every industry affected by federal legislation. The firm closely monitors issues including economic policy, trade and nearly all legislation that governs the financial sector. It has been a major proponent of privatizing Social Security as well as legislation that would essentially deregulate the investment banking/securities industry. The firm tends to give most of its money to Democrats. A number of high-ranking government officials in recent years have spent part of their careers at Goldman Sachs.
Zero Hedge:
- The Goldman Sachs(GS) Web
USA Today:
- A program to expand oil and gas drilling off the coast of the state of Alaska was canceled Friday by a U.S. appeals court that ruled the Bush administration did not properly study the environmental impact. A three-judge panel in Washington found Bush's Interior Department failed to consider the offshore environmental sensitivity and marine life before it began the process in August 2005 to expand an oil and gas leasing program in the Beaufort, Bering, and Chukchi seas.
- Some big banks will need more bailout bucks, Obama administration officials said Sunday, although it is unlikely the government might need to take over any reeling institution.
- The Iraq Stock Exchange is switching from writing on a big board to computers. The ISX launched electronic trading on Sunday, raising hopes the faster method will attract foreign investment to this burgeoning but cash-strapped economy.
Reuters:
- Stocks rose on Friday, with the Dow scoring its biggest six-week gain since July 1938, helped by a reassuring report on the mood of consumers and stabilization in General Electric (GE) and Citigroup's (C) quarterly results. The Dow is up 22.7 percent over the past six weeks, making this the largest six-week gain since July 29, 1938.
- Growing power consumption and the U.S. administration’s plan to rely more heavily on renewable generation sources will increase the demand on America’s already overloaded electricity grid and require major investment in transmission and distribution networks. Upgrading power transmission and distribution systems is likely to cost as much as installing new generating capacity over the next 20 years. While Congress provided an extra $4.5 billion of funding for grid improvements in the recent fiscal stimulus, federal loan guarantees and other support, far more investment will be needed if the administration’s targets for renewable generation are to be realized.
- President Barack Obama said on Saturday he would soon announce the elimination of dozens of wasteful or ineffective government programs as part of a broad effort to restore fiscal accountability to the federal budget. Obama, speaking in his weekly radio address, said he would use his first full Cabinet meeting on Monday to ask department and agency heads for specific ideas to trim their budgets. He named two new officials as part of a team of management, technology and budget experts that will drive the process of trimming the fat and waste from government spending.
- Energy giant Exxon Mobil Corp (XOM) beat discount retailer Wal-Mart Stores Inc (WMT) to regain the top of Fortune magazine's list of the 500 biggest publicly traded companies, based on revenue. The widely watched Fortune 500 list, released Sunday, showed that the world's largest listed oil company regained the top spot, raking in $442.9 billion of revenue in 2008, despite the decline of energy prices late last year. Exxon also was the most profitable, earning $45.2 billion last year.
- GlaxoSmithKline PLC (GSK) is close to a deal to buy U.S. skincare specialist Stiefel Laboratories for about $3 billion, the Wall Street Journal said on its website on Sunday, citing unnamed sources. The deal for Stiefel, which is partly owned by private equity firm Blackstone Group (BX), is expected to be announced on Monday, the report said, adding there is still a chance it could fall apart.
- Drugs commonly used to strengthen bones to prevent osteoporosis may protect people exposed to radiation against developing leukemia, U.S. researchers said on Sunday.
Financial Times:
- Goldman Sachs(GS), JPMorgan Chase(JPM) and other US banks that want to repay government funds received under the troubled asset relief program will have to pass a test of whether the move is in the nation’s economic interest, citing a senior Obama administration official. The paybacks would not be allowed if the banking system is not stable, or if it would create “incentives for more deleveraging,” the report said.
- Rich Europeans, who were the first to invest in hedge funds and once comprised the majority of investors, have been the first to exit in the downturn, according to a study out Monday. High net worth individuals last year accounted for 80 per cent – or more than $500bn – of hedge fund redemptions, though they only held two-thirds of the assets. The outflows were disproportionately European, the study by the Bank of New York Mellon and Casey Quirk, a research firm, said. The shift leaves US pension funds as the hedge fund stalwarts. They are likely to account for the single largest source of new capital in the next four years. Pension funds put net new money into hedge funds last year and plan to put more in again this year, according to the study based on a survey of 158 investors and industry members.
ipodnn:
- E*Trade is in the process of developing an iPhone app, anonymous sources claim. The app from the online investment service is allegedly in a "very secret" beta stage, and should give E*Trade subscribers the ability to order, switch or cancel trades. Other features are said to include portfolio access, stock research, lists of open orders and real-time quote tracking.
Folha de S. Paulo:
Brazil
Handelsblatt:
- The International Monetary Fund will lower its growth forecast for the world economy in an announcement this week, citing an interview with IMF Managing Director Dominique Strauss-Kahn. “Until now we were assuming that the world growth rate would be negative by a half to one percentage point. But now it is becoming more negative,” Strauss-Kahn said.
China Securities Journal:
- China Hainan province.
Nikkei:
- Panasonic Corp. will boost output of LCD televisions at its Latin American plants by 140% to 450,000 this fiscal year to meet increasing demand.
Weekend Recommendations
Barron's:
- Made positive comments on (CHTT), (SNDK), (ANF), (MEE), (AGU), (GOLD), (NBL), (PFG), (NTDOY) and (KMB).
Citigroup:
- Upgraded (AMZN) to Buy, target $97.
- Reiterated Buy on (AAPL), target $147.
Night Trading
Asian indices are -1.25% to -.25% on avg.
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
Conference Calendar
Who’s Speaking?
Upgrades/Downgrades Rasmussen Business/Economy Polling
Earnings of Note
Company/Estimate
- (BAC)/.04
- (HAS)/.15
- (WFT)/.29
- (MMR)/-.41
- (HAL)/.42
- (LLY)/.99
- (ETN)/-.27
- (SYK)/.71
- (LNCR)/.36
- (IBM)/1.66
- (TXN)/.00
- (BSX)/.12
Upcoming Splits
- None of note
Economic Releases
10:00 am EST
- Leading Indicators for March are estimated to decline .2% versus a .4% decline in February.
Other Potential Market Movers
- The Fed’s Evans speaking, Fed’s Kohn speaking, (GPC) shareholder meeting, (TOL) shareholders meeting, (CR) shareholders meeting and the (LLY) shareholders meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and financial shares in the region. I expect US The Portfolio is 100% net long heading into the week.
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