Late-Night Headlines
Bloomberg:
- Industrial & Commercial Bank of China Ltd., the world’s largest by market value, said Allianz SE and American Express Co.(AXP) sold a combined $1.9 billion of shares as a lockup on their stakes in the Chinese lender ended today.
- Baidu.com Inc.(BIDU), operator of China’s most-used Internet search engine, posted a 24 percent increase in first-quarter profit as Web usage continued to grow in the world’s third-biggest economy. Baidu’s American depositary receipts rose $5.17, or 2.3 percent, to $230.03 in extended trading after closing at $224.86 on the Nasdaq Stock Market.
- Northern Trust Corp.(NTRS) plans to sell $1.25 billion in common stock and senior notes to fund a repurchase of the stake it sold to the U.S. Treasury.
- Petroleo Brasileiro SA(PBR), Brazil’s state-controlled oil company, plans to spend $111 billion through 2020 to develop the so-called pre-salt oil fields, Chief Executive Officer Jose Sergio Gabrielli said. The company and partners expect to produce 1.8 million barrels of oil a day from the pre-salt fields by 2020, Gabrielli said today at an event in Santos, Brazil. Petrobras’s total spending plan through 2013, including pre-salt investments, of $174.4 billion will likely create 243,000 jobs, Gabrielli said. Petrobras in November 2007 announced the discovery of the Tupi offshore field, which may hold as many as 8 billion barrels of oil beneath up to 3,000 meters of water and 7,000 meters of seabed, making it the largest find in the Americas since Mexico’s Cantarell. Tupi and nearby fields in Brazil’s pre-salt basin may almost double Petrobras’s oil reserves, the company said in January. The Iara field may start producing by 2013 and could hold as much as 4 billion barrels, Gabrielli said. Petrobras plans to set up a base in Rio de Janeiro or Sao Paulo states for exploration, development and production from the Santos Basin, Gabrielli said.
- Microsoft Corp.(MSFT), set to release a near-finished version of the Windows 7 operating system this week, said the program may go on sale by the year-end holiday season.
- A White House official apologized for sending an Air Force One backup plane swooping over New York Harbor for a photo shoot that frightened Wall Street workers and evoked fears of another terrorist attack. The director of the White House Military Office, Louis Caldera, said he had approved today’s flight and would take responsibility for “any distress” it caused. While federal officials “took the proper steps to notify state and local authorities in New York and New Jersey, it’s clear that the mission created confusion and disruption,” he said. “I thought, ‘Oh, hell,’ that it was 9/11 all over again,” said Kate Geraghty, a Verizon Communications Inc. sales executive who saw the airplane from Jersey City, New Jersey, across the Hudson River from Manhattan. “I thought, ‘Oh my God, this plane is going to crash.’”
- U.S. Steel Corp.(X), the largest U.S.- based steelmaker, reported a first-quarter net loss that was more than twice analysts’ estimates and cut its dividend as prices plunged. Moody’s Investors Service downgraded about $1.6 billion of the company’s debt to junk status. U.S. Steel fell $1.90, or 6.9 percent, to $25.81 at 6:32 p.m. in trading after the regular close of the New York Stock Exchange.
- ArcelorMittal(MT), the world’s biggest steelmaker, will probably seek to renegotiate terms on 27.5 billion euros ($36 billion) of loans after cutting production by almost half amid collapsing demand. The Luxembourg-based company, which will likely report a second consecutive quarterly net loss tomorrow, has to boost earnings over the rest of the year to avoid a breach of debt covenants, said Jonathan Pitkanen, a bond analyst at Aviva Plc. Steel demand must recover to avoid such an outcome, said Ingo Schmidt, an analyst at Hamburger Sparkasse in Hamburg.
- European Central Bank Governing Council member Ewald Nowotny said the ECB is prepared to expand its range of policy tools if necessary to ease the flow of credit through the economy. Officials “stand ready to use unconventional measures of quantitative easing to assure European firms and consumers access to credit at appropriate conditions,” Nowotny said in the text of a speech in New York yesterday. The central bank will also keep rates low for “as long a time as is required.”
Wall Street Journal:
- Regulators have told Bank of America Corp. and Citigroup Inc. that the banks may need to raise more capital based on early results of the government's so-called stress tests of lenders, according to people familiar with the situation. The capital shortfall amounts to billions of dollars at Bank of America, based in Charlotte, N.C., people familiar with the bank said. Executives at both banks are objecting to the preliminary findings, which emerged from the government's scrutiny of 19 large financial institutions. The two banks are planning to respond with detailed rebuttals.
- China Faces a Grad Glut After Boom at Colleges
- DUBAI -- Developers here are scrambling to prevent a wave of investor defaults as they struggle to survive this city-state's real-estate bust. During a frenzied property boom, many investors bought property on speculation, expecting to be able to quickly flip homes -- sometimes entire floors in buildings -- before construction was finished. But in recent months, prices have cratered, some falling by more than 50%.
- As unemployment rises and discretionary income shrinks, millions fewer Americans are driving. For commuters, that means some of the worst bottlenecks in the country are easing. Americans drove 8.6 billion fewer miles in January and February than during the same months in 2008, according to the U.S. Department of Transportation. Mileage has been declining since the end of 2007.
- Negotiations continued unsuccessfully throughout the weekend between Senate Democratic lawmakers and mortgage industry representatives over legislation that would grant bankruptcy judges the ability to modify mortgage terms during bankruptcy proceedings. With no deal in sight, the bill's champion in the Senate, Sen. Richard Durbin, D-Ill., is facing the possibility that housing legislation may be brought to the Senate floor without the bankruptcy provisions, known as "cramdown," included.
- India’s Infrastructure Funds Fall
- The United Auto Workers union would eventually own 55% of the stock in a restructured Chrysler LLC under the deal reached by the union and the auto maker, according to a summary of the agreement that was reviewed by the Wall Street Journal. Fiat SpA will "eventually" own 35% of Chrysler, and that the U.S. government and Chrysler's secured lenders together will end up owning 10% of the company, once it is reorganized, that summary said. The summary was distributed Monday afternoon at a gathering of union leaders in Sterling Heights, Mich., to discuss the pact. According to the summary, Chrysler will also issue a $4.59 billion note to the health care trust fund that the union will manage for retired workers. The agreement says Chrysler will pay $300 million in cash into the trust fund in 2010 and 2011, and increasing amounts up to $823 million in the years 2019 to 2023. The trust fund will also own a "significant" amount of Chrysler stock and will be allowed to appoint a representative to Chrysler's board, the summary says.
- Securities and Exchange Commission Chairman Mary Schapiro told a group of business journalists Monday that the agency is pursuing more than 50 investigations involving credit-default swaps and another 150 into active hedge funds. "In the short time I've been chairman, I have begun efforts to revitalize the agency," Schapiro said in prepared remarks before the Society of American Business Editors and Writers in Denver, Colo. "I've looked at things we can do differently. And I have let it be known far and wide that things must change." Both hedge funds and credit-default swaps are among the things that the Obama Administration is targeting for new regulations as Congress prepares to embark on a sweeping overhaul of the country's financial regulatory structure.
- The number of confirmed cases of a deadly new strain of the flu continued to rise Monday, as the World Health Organization moved one step closer to declaring a pandemic. The United Nations public health agency raised its global alert one notch, moving to a phase 4 alert from phase 3. The change recognizes that the new A/H1N1 virus spreads from person to person, and it signals that governments should prepare for outbreaks. Phase 6 declares a pandemic.
NY Times:
- Seeking to strengthen its presence on the iPhone and iPod Touch, Amazon has acquired Lexcycle, the company behind Stanza, a popular free e-book application for the iPhone, according to Lexcycle’s blog.
Reuters:
- Nigerian crude oil exports will exceed its implied OPEC production target in June with shipments averaging 1.83 million barrels per day (bpd), against 1.82 million scheduled for May, trade sources said on Monday. The Organization of the Petroleum Exporting Countries (OPEC) has set Nigeria an implied production target of 1.67 million bpd that came into effect on Jan. 1. Nigeria is one of a handful of countries that industry surveys have found to be significantly exceeding its OPEC production limit. Iran, Venezuela and Angola have also been exceeding their implied OPEC production targets, analysts say.
- A switch by some big investors chastened by the Madoff scandal and the credit crisis into managed accounts at hedge fund firms could end up penalizing smaller clients in mainstream funds. Managed accounts offer greater visibility and flexibility for larger investors such as funds of funds and big institutions by giving them direct ownership of underlying assets and the option to sell the portfolio if they want to get out quickly. However, investors in the mainstream hedge funds such as so-called high net worth individuals and small institutions unable to stump up $25 million (17.12 million pounds) or more to set up a managed account could be disadvantaged if managed account holders pull out of an asset before they do. "Who pays for your better liquidity? With managed accounts the problem doesn't go away, it's just been shifted on to investors who don't go down that route," said Robert Macrae, managing director of hedge fund firm Arcus Investment.
South China Morning Post:
- Harbin Power Equipment, one China’s three largest producers of power generation equipment, plans to cut output this year by 10 per cent to 20 per cent after customers delayed delivery or pulled orders.
- Shanghai, the mainland's financial and port hub, registered less than expected economic growth of 3.1 per cent for the first three months of the year, sparking concerns it might miss the 9 per cent target for the year.
China Securities Journal:
- China
Financial Express:
- India
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (URBN), target $20.
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
- (FPL)/.78
- (BDX)/1.17
- (PFE)/.49
- (VLO)/.51
- (SMG)/1.26
- (JEC)/.88
- (CVH)/.25
- (BMY)/.47
- (MHP)/.18
- (UA)/.03
- (JAVA)/-.16
- (BEC)/.60
- (PNRA)/.56
- (CERN)/.51
- (AG)/.20
- (BWLD)/.47
Economic Releases
10:00 am EST
- Consumer Confidence for April is estimated to rise to 29.9 versus 26.0 in March.
Upcoming Splits
Other Potential Market Movers
(CB) shareholders meeting, Barclays Retail/Restaurant Conference, (X) shareholders meeting and the (FO) shareholders meeting
BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and financial stocks in the region. I expect US
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