Late-Night Headlines
Bloomberg:
- Michael Price, who said the market now is “ideal for a stock picker,” said he bought shares of BB&T Corp. and that community banks are attractive investments. “This is what you wait for: Being prepared on valuations and waiting for the market to hand you things at big discounts,” Price, who managed some of the best-performing mutual funds during the 1980s and 1990s and now runs New York- based MFP Investors LLC, said in an interview with Bloomberg Radio.
- Prudential Financial Inc., Hartford Financial Services Group Inc. and Allstate Corp. are among six insurers approved by the U.S. government for bailout funds after investment declines eroded capital across the industry. Hartford won preliminary approval for $3.4 billion from the Treasury Department’s capital purchase program, the Connecticut- based insurer said today in a statement. A person familiar with the matter said five other carriers won preliminary approval, including Lincoln National Corp., Principal Financial Group Inc. and Ameriprise Financial Inc.
- Nordstrom Inc.(JWN), the U.S. department- store chain with more than 100 namesake locations, raised its annual forecast and said first-quarter profit fell less than analysts estimated after it controlled inventories. Earnings this year will be as much as $1.50 a share, compared with the company’s previous projection for as much as $1.40. The average of analysts’ estimates compiled by Bloomberg is $1.26. Nordstrom rose 4.2 percent in late New York trading after the earnings were released. Earlier, the shares rose 68 cents, or 3.4 percent, to $20.95 in New York Stock Exchange composite trading. They have surged 57 percent this year.
- China’s stock-market boom is as clear a bubble as you will find, the conventional wisdom says. With the U.K., Germany and much of the euro area in recessions, feel free to engage in the fiction that China’s $3.2 trillion economy will save the world. Far from that happening, global trends will increasingly close in on export-driven China. The flaw in this assumption is that it takes for granted that all those stimulus yuan will be spent wisely and productively on worthy projects and companies. It assumes that those investments, much of them funded with debt, will morph into well-paying jobs that generate wealth for China’s people. An even more fantastic assumption is that little of China’s stimulus efforts will be squandered by corruption. It’s hard to know how China can avoid vast amounts of public money being siphoned off by local government officials to speculate on stocks or property or to make luxury-good purchases. Even if China ekes out healthy growth this year, the question is what it will cost. China may be setting the stage for a Japan-like bad-loan crisis a few years from now. One also has to wonder if China is moving fast enough to rebalance its economy away from exports toward domestic demand. China’s public-relations machine is working overtime to spin this story. Its success in getting the global media to play along explains why investors are rushing into Chinese shares. Just because China has built a more sustainable bubble, supported by the promise of ever more government largess, doesn’t explain away the challenges facing the fastest-growing major economy.
- A gene test performed on colon cancer samples may identify patients with a higher risk of relapse, giving doctors a new tool to decide whether early-stage patients should undergo chemotherapy after surgery, researchers said. The test, called Oncotype DX by its developer, Genomic Health Inc., of Redwood City, California, found patients who showed a pattern of 18 selected genes had more than a two-fold greater chance of cancer coming back, compared with patients who had lower-risk genes, according to a research preview reported today by the American Society of Clinical Oncology. The test failed to find genes that predict whether two standard chemotherapy drugs could prevent recurrance. Doctors can’t predict when colon cancer, diagnosed in 146,970 people yearly in the U.S., will return in early stage patients. While the new test may be useful “as a tie-breaker” in patients whose need for chemotherapy is unclear, it isn’t the final answer, said Alan Venook, professor of medicine at the University of California San Francisco.
- OSI Pharmaceuticals Inc.’s(OSI) tumor- fighting drug Tarceva slowed the progression of lung cancer when given earlier in treatment for the disease, a study found, though the benefits were deemed modest in initial reviews by investors and physicians. Tarceva, a once-a-day pill that OSI markets in the U.S. with Roche Holding AG’s Genentech unit, increased the time it took for patients’ cancer to worsen compared with those on a placebo, when given immediately after chemotherapy, according to data released today in advance of a medical meeting. The Saturn study involved 889 patients with advanced lung cancer.
- U.S. Secretary of State Hillary Clinton said North Korea won’t be offered concessions to return to six-nation nuclear talks and called on the communist state to abide by its commitments to disarm. “The ball is in the North Korean court,” Clinton told reporters yesterday. “We are not concerned about chasing after North Korea, about offering concessions to North Korea.”
- Foreign direct investment in China fell for a seventh month from a year earlier as companies cut spending to weather the world’s worst financial crisis since World War II. Investment dropped 22.5 percent to $5.89 billion in April, the commerce ministry said at a briefing in Beijing today. That compares with a 9.5 percent decline in March. For the first four months of this year, spending fell 21 percent to $27.67 billion.
Wall Street Journal:
- This week Congress is set to release the details of the Waxman-Markey American Clean Energy and Security Act, a bill that purports to combat global warming by setting strict limits on carbon emissions. I'm not a candidate for any office -- now or ever again -- and I've approached the "climate change" debate with an open-mind. But it's clear to me that the nation, and in particular Indiana, my home state, will be terribly disserved by this cap-and-trade policy on the verge of passage in the House. The largest scientific and economic questions are being addressed by others, so I will confine myself to reporting about how all this looks from the receiving end of the taxes, restrictions and mandates Congress is now proposing. Quite simply, it looks like imperialism. This bill would impose enormous taxes and restrictions on free commerce by wealthy but faltering powers -- California, Massachusetts and New York -- seeking to exploit politically weaker colonies in order to prop up their own decaying economies. Because proceeds from their new taxes, levied mostly on us, will be spent on their social programs while negatively impacting our economy, we Hoosiers decline to submit meekly.
- Iraq expects to award the contract to develop the giant Nassiriyah oil field in the southern part of the country to one of three competing international companies in June, Iraq's oil minister said Thursday. He also said his ministry is planning to invite international companies to compete for developing the southern portion of the East Baghdad oil field near the Iraqi capital. Italy's Eni SpA (E), Japan's Nippon Oil Corp. (5001.TO) and Spain's Repsol YPF SA (REP) have submitted bids to develop the Nassiriyah oil field, located in the Dhi Qar region. Iraq had invited the three companies in January to compete for the field, which has estimated crude oil reserves of around 4 billion barrels. Shahristani previously has said the field could produce 100,000 barrels a day within 18 months from the start of development. The East Baghdad oil field currently produces only about 17,000 barrels a day, and the ministry is planning to further develop the field, which has estimated reserves of 7.5 billion barrels. Iraq has announced two rounds of bidding, offering 19 oil and gas fields for development to international oil companies with the aim of boosting crude oil output to 6 million barrels a day in five years, from about 2.4 million barrels a day currently. The oil ministry wants to develop the Nassiriyah oil field and the southern portion of the East Baghdad field as quickly as possible and so it is offering these two areas outside of the bidding process under engineering, procurement and construction, or EPC, contracts, Shahristani said. One of the conditions set by the ministry for these contracts is that the companies should have done joint studies with the ministry or worked in the field before. He said Iraq's crude oil production has risen by 30,000 barrels to 2.43 million barrels a day in the last few days following the drilling of new oil wells and the repair of oil installations at southern oil fields.
- Investments in US junk bonds are at a six-year high, citing AMG Data Services. The four-week moving average of money flowing into high-yield funds was about $1.17 billion as of yesterday. For the week ended yesterday, inflows were $885.3 million for high-yield funds.
- The Obama administration is expected Friday to announce plans to retool military commission trials for some terrorism suspects now detained at Guantanamo Bay, aiming to expand legal rights for defendants while stopping short of the due-process protections provided to defendants in civilian courts. Administration officials have deliberated for weeks over how to restart the trials, which were begun during the George W. Bush administration. The system garnered criticism from human -- rights and civil -- liberties groups, and from President Barack Obama himself before he became president.
- YRC Worldwide Inc.(YRCW), one of the nation's largest trucking companies, will seek $1 billion in federal bailout money to help relieve pension obligations, the chief executive said Thursday. The move comes as the trucking giant struggles to shore up its finances. The company's ability to weather the recession will have significant implications for the trucking industry and large customers across the country. Chief Executive William Zollars said the company will seek the money to help cover the cost of its estimated $2 billion pension obligation over the next four years. Under a complicated system that Mr. Zollars labeled unfair, roughly half of YRC's contributions to a multi-employer union pension fund cover the costs of retirees who never worked for the Overland Park, Kan., company.
- Hewlett-Packard Co.(HPQ), seeking to revive the sagging desktop-computer business, has tried to woo consumers with sleek personal computers with glossy, touch-sensitive screens. But the touch-screen PCs, which can cost twice as much as typical machines, have been slow to catch on. H-P only sold about 400,000 of its TouchSmart desktops last year, compared with 54 million traditional desktops and laptops, estimates research firm IDC. So H-P is embarking on a new strategy to find commercial uses for the technology. Last month, H-P installed 50 touch-screen PCs in Chicago's O'Hare International Airport for travelers to access online maps and restaurant listings.
- Egypt's Muslim Brotherhood is on the defensive, its struggles reverberating throughout Islamist movements that the secretive organization has spawned world-wide. Just recently, the Brothers' political rise seemed unstoppable. Candidates linked with the group won most races they contested in Egypt's 2005 parliamentary elections, gaining a record 20% of seats. Across the border in Gaza, another election the following year propelled the Brotherhood's Palestinian offshoot, Hamas, into power.
- Asked this week about Mrs. Pelosi's variable recollections, Senator Feinstein, who chairs the Intelligence Committee, responded: "I think it's a tempest in a teapot really to say, Well, Speaker Pelosi should have known all of this, she should have stopped this, she should have done this or done that. I don't want to make an apology for anybody, but in 2002, it wasn't 2006, '07, '08 or '09. It was right after 9/11, and there were in fact discussions about a second wave of attacks." Indeed there were discussions about a second wave of attacks in 2002. In an interview two years ago, former CIA Director George Tenet said of that post-attack period: "I've got reports of nuclear weapons in New York City, apartment buildings that are going to be blown up, planes that are going to fly into airports all over again." It was precisely in this atmosphere, months after the initial, horrific attack on the World Trade Center and Pentagon, that the CIA asked the Justice Department for legal guidance on the now-famous "EITs," or enhanced interrogation techniques at the center of this current tempest. Bush lawyers such as John Yoo and Jay Bybee produced memorandums carefully setting out the legal limits of what the CIA could do. Also in 2002, the CIA began the briefings of Congress on these interrogations that now haunt Speaker Pelosi.
IBD:
- In a gaming industry where many contenders are on a losing streak, slot machine maker WMS Industries (WMS) keeps hitting the jackpot. Armed with novel games popular with casino operators and players, WMS has been on a roll. Earnings have climbed by at least 24% the past 10 quarters.
CBS:
- CBS News has learned that two attorneys at the Securities and Exchange Commission (SEC) are under "active" criminal investigation by the FBI for trading stocks based on inside information.
TheDeal.com:
- OTC regulation possible winners & losers
Politico:
- House Speaker Nancy Pelosi’s claim Thursday that CIA officials lied to her about waterboarding prompted a sharp rebuke from Republicans some pushback from intelligence officials and a lukewarm response from at least one high-ranking member of her own party.
Silicon Alley Insider:
- Facebook Investor Peter Theil’s Hedge Fund Misses April Rally(Leaked Docs).
Seeking Alpha:
- Swap spreads have accurately forecast conditions in the economy and in the financial markets. They started rising in 2007, well before the financial storm of 2008 hit. They peaked in early October '08, months before the bottom in equity prices in early March '09. They have now returned almost to what might be considered normal. Meanwhile, the debate over the current state of the economy rages, with some (including moi) arguing we've seen the worst and the economy is on the mend, and others arguing that the worst is yet to come. I think this dramatic improvement in swap spreads is really significant. It reflects the return of liquidity to the bond market; the return of confidence in counterparty risk; the return of an appetite for risk; and a significant reduction in uncertainty.
Washington Post:
- The Obama administration's plan to reshape the opaque world of derivatives trading, unveiled on Wednesday, is only a preview of sweeping financial reform proposals that may be announced as soon as next week. The White House and Treasury, responding to the global financial crisis, have firm ideas about tightening oversight of hedge funds, streamlining bank regulation, shaking up executive pay standards and protecting consumers. But two key components of the administration's approach -- policing "systemic risk" and winding down troubled financial firms -- are dividing senior officials and lawmakers, which will likely cause delays in getting broad reforms enacted.
Reuters:
- General Motors Corp said on Thursday night it would most likely pursue the same legal strategy as Chrysler if it spirals into bankruptcy, while Chrysler unveiled details for slashing its dealer network. Rattling the industry further, the Financial Times reported on its website that Toyota Motor Co is planning one of the most drastic management shakeups in its 70-year history next month when Akio Toyoda, grandson of the company's founder, takes over as chief executive. Toyota will replace 40 percent of its senior managers and is said to be preparing a sweeping reorganization of its North American business that would unify sales and manufacturing arms, the report said. In a bright spot, Ford Motor Co, the only Detroit automaker not taking government bailout funds or dogged by bankruptcy or bankruptcy expectations, assured shareholders it is on track to at least break even in 2011, sending shares higher.
- Shares in Sony Corp. gained 5 percent on Friday after the Japanese electronics maker forecast a smaller loss than expected for this year, showing it was making progress in its restructuring.
- The biggest seawater desalination plant in the Western Hemisphere, north of San Diego, can begin construction by year's end after a six-year effort to win regulators' approval, the developer said on Thursday. The San Diego Regional Water Quality Control Board voted unanimously on Wednesday to approve permit revisions for the $300 million facility, which will produce 50 million gallons of drinking water daily, enough for 110,000 households. That volume represents about 10 percent of the drinking water needs of San Diego County, home to roughly 3 million people in a region facing freshwater shortages due in part to a prolonged drought.
Financial Times:
- Barclays(BCS) is in talks about selling asset management arm Barclays Global Investors for about $10bn, with potential bidders including US money manager BlackRock (BLK), according to people familiar with the matter. Talks on the potential sale of BGI are the outcome of an initial auction for iShares, the fast-growing exchange-traded funds unit of BGI, which Barclays agreed to sell to CVC Capital Partners, the private equity group, for $4.2bn last month.
China Securities Journal:
- China
Sankei:
- Japan The Japanese government, which last month said the economy was worsening rapidly, may say that the pace of deterioration is moderating. The upgrade would be the first since February 2006.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (APH), target $37.
- Rated (CNQR) Buy, target $35.
- Reiterated Buy on (AMAT), target $14
- Reiterated Buy on (COV), target $42, added to Top Picks Live list.
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
- (JCP)/.10
Economic Releases
8:30 am EST
- The Consumer Price Index for April is estimated unch. versus a .1% decline in March.
- The CPI Ex Food and Energy for April is estimated to rise .1% versus a .2% gain in March.
- Empire Manufacturing for May is estimated at -12.0 versus -14.65 in April.
9:00 am EST
- Net Long-term TIC Flows for March are estimated to rise to $35.0B versus $22.0B in February.
9:15 am EST
- Industrial Production for April is estimated to fall .6% versus a 1.5% decline in March.
- Capacity Utilization for April is estimated at 68.8% versus 69.3% in March.
10:00 am EST
- Preliminary Univ. of Mich.
Upcoming Splits
Other Potential Market Movers
BOTTOM LINE: Asian indices are higher, boosted by financial and technology stocks in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.
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