Bloomberg:
- U.S. stocks are poised for the biggest monthly gain since 1991 as companies from Wells Fargo & Co.(WFC) to Marriott International Inc.(MAR) and Ford Motor Co.(F) beat profit estimates, spurring speculation the recession is easing. Wells Fargo and American Express Co. reported first-quarter earnings that exceeded the average analyst forecast by more than 70 percent, propelling financial stocks in the Standard & Poor’s 500 Index to a record monthly advance of 25 percent. Almost 70 percent of companies in the measure that have reported topped projections, the highest since the end of 2006. The S&P 500 has soared 11 percent this month for the steepest rally since December 1991. The benchmark index for U.S. stocks must rise only 2 percent to erase its 2009 loss after jumping 31 percent from a 12-year low on March 9.
- Credit markets in the U.S. and Europe headed for their biggest monthly rally in a year as better-than-expected corporate earnings triggered speculation the worst of the global debt crisis is over. The cost of protecting corporate bonds from default is set to fall the most since the rescue of Bear Stearns Cos. boosted investor optimism in April last year, traders of credit-default swaps said. “The market is betting we’ve hit the bottom,” said Suki Mann, a credit strategist at Societe Generale SA in London. “The rate of economic decline is slowing quite markedly and corporate earnings are beating expectations.” Credit-default swaps on the Markit iTraxx Europe index of 125 companies with investment-grade ratings dropped about 19 percent so far this month and the index was 3 basis point lower at 141.5, according to JPMorgan Chase & Co. prices at 11:18 a.m. in London. In the U.S., the Markit CDX North America Investment- Grade index is headed for a 16 percent decline and in Japan the benchmark index dropped 19 percent. Spreads on high-yield bonds globally plunged 246 basis points, or 14 percent, to 1,517 in the month, the sharpest decline since the inception of Merrill Lynch & Co.’s Global High Yield Index in 1997.
- Fixed mortgage rates fell for a third consecutive week, matching the record low reached earlier this month, driven by Federal Reserve Chairman Ben S. Bernanke’s plan to buy home-loan securities to bolster the housing market. The average rate of a 30-year mortgage dropped to 4.78 percent, the lowest in records dating to 1970, McLean, Virginia- based Freddie Mac said today in a statement. “We’re all cheering for the mortgage rates to keep moving lower,” said Scott Anderson, senior economist at Wells Fargo & Co. in Minneapolis. “There really isn’t a better place than the 30-year conventional for value.” Mortgage rates at or near four-decade lows are raising optimism that lower home-loan costs may spur home buying.
- After helping to move 23 hedge funds to Switzerland from London in the past two years, David Butler describes the flow as a “steady trickle.” Now he’s bracing for a flood. “Call it the twin pillars of doom,” said Butler, a founding partner at hedge fund consultancy Kinetic Partners LLP in London. “Put together the U.K. tax changes and what the ogres in France and Germany have created and you will see a mass migration.” Butler said inquiries about relocations have gone up “by a factor of 10” since Britain pledged a new 50 percent rate for top earners on April 22. Many came from fund managers already mulling a move after the U.K. tinkered with tax rules for non- domiciled workers last year. They’re calling again after the European Union, backed by France and Germany, proposed yesterday to regulate buyout firms and hedge funds managing more than 100 million euros ($134 million.)
- The Federal Deposit Insurance Corp. may offer investors financing to buy distressed U.S. bank assets without requiring them to share an equity stake with the Treasury, people familiar with the matter said. Treasury capital probably won’t be applied to the FDIC’s pilot program to buy as much as $1 billion of so-called legacy loans that is planned for June, the people said on condition of anonymity because no final decision has been made.
- Goldman Sachs Group Inc.(GS), by selling bonds and stock yesterday, may be signaling that there won’t be any surprises next week when the results of government stress tests are revealed. “You can read between the lines on it that nothing adverse will be coming out next week,” said Ralph Cole, a money manager at Portland, Oregon-based Ferguson Wellman Capital Management Inc., which oversees $2.2 billion. “You could easily see shareholder lawsuits if there was something really bad coming out of the government’s review.”
- The U.S. annual auto-sales rate for April may be unchanged from the previous month, signaling that the market reached bottom.
- U.S. business activity contracted at a slower pace in April as orders and production improved. The Institute for Supply Management-Chicago Inc. said today its business barometer increased to 40.1, the highest level since September, from 31.4 the prior month.
Wall Street Journal:
- Chrysler LLC filed for Chapter 11 bankruptcy protection in New York Thursday, kicking off what the Obama administration predicts will be a 30- to 60-day restructuring of the third-largest U.S. auto maker. At the same time, Chrysler entered into a partnership with Italian auto maker Fiat SpA, Mr. Obama said in a noon address.
- 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 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 236 from the 148 reported Wednesday.
- Walt Disney Co.(DIS) has reached a deal to buy a nearly 30% stake in Web-video aggregator Hulu and put full episodes of its ABC TV shows on the site.
CNBC:
- Although the Senate vote hasn't actually taken place (expected mid-afternoon) bankruptcy "cram down" is effectively dead on the Hill for the time being. The 60 votes needed are simply not there.
TechCrunch:
- Many of us have been saying it for a long time: location based services are the future. But up until now they’ve been a distant, hazy future, because they’ve been so difficult to use. That’s going to change soon, and it looks like Google(GOOG) is going to be leading the way. Google has just announced that it has become the default location provider service in Firefox, which means beginning in the latest Firefox Beta (available here) users will be able to update their location from their web browser without having to install an extra plugins or programs through Google. This is big.
TheDeal.com:
- Undeterred by poor performance and a wave of redemptions in the past year, hedge fund Citadel Investment Group LLC now hopes to wade into mortgage-related securities, said sources familiar with the situation.
TheStreet.com:
- As Research In Motion (RIMM) gets set to open its annual Wireless Enterprise Symposium in Orlando next week, analysts and gadget fans are expecting an introduction to the BlackBerry Niagara. This will sound familiar to Tech Rumor readers who may recall that TheStreet.com reported last month that the Niagara, a so-called 3G world phone, meaning it works on U.S. and European networks, will be available in May at Verizon (VZ).
Lloyd’s List:
- Clarkson Plc expects there to be a “massive oversupply” of supertankers competing to lift Middle East cargoes between May 11 and 20, citing a shipbroker at the company. There are 60 ships competing for 30 cargoes during the 10-day period, citing London-based shipbrokers.
Venture Chronicles:
- On every news story this morning about the pending Chrysler bankruptcy, the narrative included “hedge funds would not agree…” as a central theme. Economic populism still carries the day in Washington. What you won’t hear in these mainstream news stories is that Treasury was demanding a huge haircut for debt holders (forget the “hedge funds” label, these are private investors who lent Chrysler money) in exchange for 15 cents on the dollar, a slap on the back and a hearty “atta boy”. Labor unions, on the other hand, were being subjected to slight changes in work rules and relieving Chrysler of paying $4b to the UAW for retiree benefits, all in exchange for 55% of the equity in the “good Chrysler” and a long term note. So basically the equation that Treasury was using was the debt holders give up 85% and get nothing, the UAW gives up half of that and gets half of Chrysler’s equity in return and long term note paying back (if I recall correctly) $5 billion by 2025. This company is worth more to creditors through bankruptcy than it is under the Treasury plan (creditors are at the top of the waterfall in a bankruptcy case, retiree benefits would resolve below creditors) and anyone who thinks GM could go through a similarly easy restructuring should watch this case under a microscope.
Reuters:
Gabon has no need to draw on an existing stand-by loan agreement with the International Monetary Fund (IMF) at the moment and will consider it as an option only if the price of oil falls below $43 a barrel, an official said on Wednesday. The tiny African state of 1.5 million, one of Africa's longest established oil producers, lowered its assumed market price for benchmark Brent crude LC0c1 to $43 a barrel from $67 in its original budget.
- World oil demand is forecast to fall this year by much more than previously expected, as growth stalls in emerging powerhouses China and India and fuel consumption declines in the developed world. The latest Reuters poll of 11 analysts, banks and industry groups shows oil consumption will decline by an average of 1.56 million barrels per day (bpd) in 2009 to 84.10 million bpd. The forecast drop in 2009 oil demand is nearly four times larger than the 430,000 bpd drop analysts had expected in January, when Reuters last polled them. "Demand has been weaker than most of us predicted in emerging markets in the last 6 months," said Francisco Blanch, head of commodities research at Banc of America Securities-Merrill Lynch. The latest poll sees demand growing in countries outside the OECD by 120,000 bpd in 2009 compared with 650,000 bpd in January's poll. Demand in the OECD is expected to contract by 1.7 million bpd. Crude stockpiles in OECD countries have risen rapidly in 2009, with more than 60 days cover now available despite Organization of the Petroleum Exporting Countries (OPEC) decisions to cut supplies by as much as 4.2 million bpd.
- U.S. officials are leaning toward announcing the "stress test" results of individual banks next week instead of just summary results, a source familiar with administration talks said on Thursday.The source, speaking anonymously because talks are ongoing, also said officials will likely release the capital requirements of the 19 firms at their holding company level, not just the needs of their banking units.
Arabian Business:
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