Late-Night Headlines
Bloomberg:
- Regulators conducting the stress tests on the 19 largest U.S. banks are increasingly focusing on the quality of loans the companies made after finding wide variations in underwriting standards, a regulatory official said. Supervisors concluded that banks’ lending practices would need to be given as much weight as macroeconomic scenarios after finding a wide variation in standards for mortgages and other loans as about 200 examiners poured through the portfolios, the official said.
- International Business Machines Corp.(IBM), the world’s biggest seller of technology services, missed first-quarter revenue estimates after demand for services and computer hardware shrank and currency changes ate into sales. IBM declined $1.81 to $98.62 in extended trading, after closing at $100.43 on the New York Stock Exchange. The shares have climbed 19 percent this year.
- Texas Instruments Inc.(TXN), the second- largest U.S. chipmaker, reported earnings and gave forecasts that beat analysts’ estimates as chip orders recovered, sending the stock higher in extended trading.
- Toyota Motor Corp., the world’s largest automaker, will cut the base price of its Prius gas- electric hybrid model by $1,000 to $21,000, as it competes with Honda Motor Co.’s Insight, said a person familiar with the matter. Honda introduced the Insight on March 24 with a sticker price starting at $19,800, undercutting the 2009 Prius, which starts at $22,000. Toyota will announce prices on the 2010 model tomorrow, with details about the new car tomorrow, said the person, who asked not to be named because the statement is pending.
- Emerging-market governments’ credit quality “markedly” deteriorated in the past six months and policy responses will be key to avoid ratings downgrades, Standard & Poor’s Ratings Services said. The agency lowered 10 of 43 sovereign ratings among such debt issuers, including one default, and another 10 had their outlooks cut to negative in the six months ended March 31, S&P said in a report yesterday. Eighteen emerging markets are on negative outlook and none have positive outlooks, according to the statement.
Wall Street Journal:
- Just when you think the political class may have learned something in months of trying to fix the banking system, the ghost of Hank Paulson returns to haunt the Treasury. The latest Beltway blunder -- and it would be a big one -- is the Obama Administration's weekend news leak that it may insist on converting its preferred shares in some of the nation's largest banks into common equity. The stock market promptly tumbled by more than 3.5% yesterday, with J.P. Morgan falling 10% and financial stocks as a group off 9%, as measured by the NYSE Financials index. Note to White House: Sneaky nationalizations aren't any more popular with investors than the straightforward kind.
- China's government is considering measures to regulate the torrent of bank lending, arising from concerns that much of the credit surge that has helped keep the economy growing could be wasted. A senior official at a local branch of the China Banking Regulatory Commission, who declined to be named, said the commission is considering rules aimed at ensuring that loans go to the real economy, such as government stimulus projects, rather than being diverted into the asset markets or bank deposits.
- The Treasury Department kicked off meetings Monday with the heads of Chrysler LLC, Fiat SpA and the United Auto Workers union in Washington as signs increased that Chrysler could be headed for liquidation. Some officials in the Obama administration have come to conclude that Chrysler isn't worth trying to save because of its weak product line and lack of international reach, said people familiar with the matter.
- MBA Graduates Discover They Can’t Change Careers
- Treasury Secretary Timothy Geithner indicated that the health of individual banks won't be the sole criterion for whether financial firms will be allowed to repay bailout funds, a position that might complicate their efforts to give back the cash. In an interview, Mr. Geithner laid out some broad principles, including the need to consider the overall health of the financial system and the flow of credit in judging whether banks can repay their government investment. Among large banks, Goldman Sachs Group Inc. and J.P. Morgan Chase & Co. have both said they want to repay the government. "We want to make sure that the financial system is not just stable, but also not inducing a deeper contraction in economic activity. We want to have enough capital that it's going to be able to support a recovery," Mr. Geithner said.
- Federal Reserve Vice Chairman Donald Kohn said Monday that the pieces were falling into place for a modest economic recovery this year, with some chance it could be stronger than expected.
CNBC.com: Airplanes of the future may not look like something out of the "Jetsons" or "Star Trek," but they'll be powered by anything from vegetable oil to algae.
NY Times:
- Spain’s Falling Prices Fuel Deflation Fears in Europe.
- Cash in Hand, Technology Giants Go Shopping.
NY Post:
- Disgraced political consultant Hank Morris pocketed a placement fee on an $85 million deal between the city's largest employee pension fund and the investment firm headed by a President Obama appointee, The Post has learned. It's the first link between the accused pay-to-play power broker -- indicted for demanding kickbacks from firms looking to do business with the state's retirement fund -- and the New York City Employees Retirement System, which has an estimated worth of $30.4 billion.
Business Week: India’s Outsourcers Should Worry about Delta’s Move.
CNNMoney:
- President Obama told his Cabinet on Monday to come up with ways to collectively cut $100 million from their agencies' budgets. Call it a slow start to curbing Uncle Sam's spending. In essence the president has asked government agencies to trim the equivalent of .003% of the federal budget. Looked at another way, $100 million is .006% of this year's estimated budget deficit.
- The Fortune 500’s 20 biggest winners
Investors.com:
- The stars are aligning for CardioNet (BEAT). Its focus on monitoring cardiac patients in their homes dovetails with the Obama administration's plans to both improve delivery and reduce costs of medical services.
The Detroit
- General Motors Corp.(GM) will get up to $5 billion and Chrysler LLC $500 million in short-term aid, according to a 250-page government report obtained Monday by The Detroit News.
Forbes.com:
- The agribusiness bubble was great for fertilizer bulls, and the rebound hasn't been bad either. But watch out.
AP:
- Wealthy Wall Street executives may be outcasts to some Americans, but not to Democratic Sen. Chris Dodd. Facing his toughest re-election fight, the chairman of the Senate Banking Committee is reaching out to the financial sector's deep-pocketed donors for the campaign cash he needs to hang onto his Connecticut seat. It's a practice that worked for Dodd in the past as millions flowed in and the five-term lawmaker cruised to victory. Down in the polls and looking at a tough Republican challenge next year, Dodd again is turning to the financial industry for campaign money, undeterred by the populist Main Street anger.
Financial Times: The European Commission’s plans to regulate hedge funds and private equity for the first time threaten to become a central issue in the European parliamentary election campaign. Some key parliamentarians criticized draft proposals on Monday as being “almost worthless”. In a letter to José Manuel Barroso, the Commission president, leaders of the Socialist group, the second-largest bloc in the parliament, said the proposal was so “filled with loopholes” that it would be “highly ineffective” in regulatory terms. Poul Nyrup Rasmussen, president of the Party of European Socialists and a former Danish prime minister, accused Mr Barroso of failing to live up to personal commitments given last year, and of falling short of the demands of this month’s G20 summit in London. He thought it was “a scandal” that the European parliament had had to wait six months for the legislation, only to find it so inadequate, and said the hedge fund issue would be “central” to campaigning for June’s poll.
Chosun Ilbo:
- The International Monetary Fund will cut its forecast for South Korea The estimate, which will be announced in the IMF’s World Economic Outlook report tomorrow, is a downgrade from the fund’s previous projection of 4.2% growth. The Bank of Korea this month forecast the economy will expand 3.5% in 2010, after shrinking 2.4% in 2009.
Nikkei:
- Morgan Stanley(MS) may acquire regional banks in the US “We are looking for potential opportunities to buy a bank that has a presence in an important market in the United States
Oriental Morning Post:
- China
Late Buy/Sell Recommendations
Deutsche Bank:
- Rated (ESI) Buy, target $125.
- Rated (APOL) Buy, target $80.
CSFB:
- Upgraded (AUO) to Outperform..
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
Conference Calendar
Who’s Speaking? Upgrades/Downgrades Rasmussen Business/Economy Polling
Earnings of Note
Company/EPS Estimate
- (CSL)/.16
- (KO)/.65
- (JCI)/-.17
- (USB)/.22
- (MAN)/-.09
- (LMT)/1.65
- (LXK)/.62
- (UNH)/.68
- (UTX)/.78
- (DGX)/.82
- (BLK)/.80
- (CMA)/-.10
- (BRCM)/.02
- (DD)/.53
- (BK)/.63
- (CAT)/.05
- (KEY)/-.21
- (AKS)/-.75
- (GILD)/.61
- (COF)/-.04
- (AMD)/-.63
- (NSC)/.55
- (ILMN)/.26
- (ALTR)/.16
- (SNDK)/-.86
- (YHOO)/.08
- (COH)/.36
- (MRK)/.77
- (STT)/1.03
- (EAT)/.44
- (UAUA)/-4.37
- (SGP)/.47
- (DAL)/1.00
- (NTRS)/.97
- (BJS)/.24
- (AMTD)/.23
Economic Releases
- None of note
Upcoming Splits
Other Potential Market Movers
Fed’s Hoenig speaking, weekly retail sales reports, (C) shareholders meeting, (GR) shareholders meeting, (CF) annual meeting, (AGU) annual meeting, (WFR) shareholders meeting, (NTRS) shareholders meeting and the (V) shareholder meeting
BOTTOM LINE: Asian indices are lower, weighed down by commodity and financial stocks in the region. I expect US equities to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.
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