Late-Night Headlines
Bloomberg:
- Democrats’ drive for a government-run program to provide health coverage to some of the nation’s uninsured ran into resistance today from lawmakers in both political parties. A day after President Barack Obama said he “strongly” supports offering a government-run insurance program to compete with private coverage, some Republicans on the Senate Finance Committee said such a plan must be dropped from any health-care overhaul to draw their support. A group of House Democrats from Republican-leaning states said any “public option” must be tightly restricted so it doesn’t undermine private industry. “We cannot create a public option that stacks the deck -- through rate-setting and forced participation -- against a system that currently provides coverage to 160 million Americans,” said Representative Mike Ross of Arkansas, chairman of the health-care task force of conservative “Blue Dog” House Democrats. Obama has called the next few months a “make-or-break period” for his top domestic priority.
- France’s budget deficit may exceed the record set 16 years ago as the government lifts spending and the recession erodes revenue, Budget Minister Eric Woerth said. Woerth said in an interview yesterday the 2009 shortfall could be more than 1993’s 6.4 percent of gross domestic product. “It’s possible that we will surpass the ‘93 record,” Woerth said in Paris.
- Venezuela moved to nationalize the country’s chemicals industry as President Hugo Chavez tightens his grip over South America’s third-largest economy. A law requiring private sector chemicals-makers to become minority partners in joint ventures with the state passed its first reading in the national legislature today and will be debated Tuesday, National Assembly Deputy Angel Rodriguez said. Chavez, a self-described revolutionary socialist, has already forced all of the country’s private oil companies into minority positions in joint ventures. In the past month, Venezuela ordered the seizure of property from at least 74 oilfield service companies and also this week started taking over gas compression plants, Chavez said yesterday.
- Former Countrywide Financial Corp. Chief Executive Officer Angelo Mozilo and two of his top deputies were sued by regulators for allegedly hiding the home lender’s deteriorating finances as the subprime mortgage crisis unfolded. While publicly reassuring investors about the quality of his loans, Mozilo issued “dire” internal warnings and engaged in insider trading accelerating stock sales to reap about $140 million, the agency said in the suit at Los Angeles federal court. In one e-mail, he described a “particularly profitable subprime product as ‘toxic.’” He also wrote that Countrywide was “flying blind” and had “no way” to determine the risks of some adjustable-rate mortgages, the SEC said.
Wall Street Journal:
- As companies give mobile-phone advertising a try, many are starting to focus on the search ads that have worked so well on personal computers. After years of sticking largely to mobile display or banner ads, such companies as Marriott International, Honda Motor and 1-800-FLOWERS.com have boosted their spending on mobile search ads. The ads can be targeted to specific consumer requests, and they are more easily measured and less intrusive, which some see as positives given the limited screen sizes on many mobile phones. This time, the trend is being driven by the growing adoption of high-end phones like Apple's iPhone that have full Web browsers and are being used to do everything from search for the nearest restaurant to make a hotel reservation. The growing interest in mobile search ads benefits companies with Internet search businesses like Yahoo and particularly Google. Google, which accounts for more than two-thirds of the U.S. search-ad market, is now trying to make it easier for marketers to buy ads that show up when people search for everything from celebrities to restaurants using their phones. Since December, the Internet search giant has updated its search advertising system to allow any advertiser that purchases regular search ads to automatically have those ads run on high-end mobile phones, like the iPhone or phones running Google's own Android software. "We're seeing some nice, robust growth in mobile search," says Doug Garland, Google's vice president of product management for mobile and local ad products.
- After months of uncertainty about Steve Jobs's health, the Apple Inc.(AAPL) chief executive appears on track to return from medical leave this month, said people familiar with Apple. The big question now among Apple's business partners, investors and fans: Will Mr. Jobs make his reappearance at Apple's annual software developers' conference next week in San Francisco, possibly to unveil a new iPhone?
- Flush with $30 billion in new capital from the U.S. government, General Motors Corp. has agreed to finance a private-equity firm's buyout of bankrupt auto-parts company Delphi Corp. GM will provide more than $2.5 billion of the $3.6 billion necessary for Beverly Hills-based buyout firm Platinum Equity to gain control of Delphi, according to a person familiar with the matter.
- After getting millions of people to dump their boxy television sets for sleek flat-panel models, manufacturers are now pitching even thinner screens. Some of the new liquid-crystal-display (LCD) and plasma TVs that have begun appearing in stores around the world are less than one inch thick. They weigh 15% to 25% less than previous models -- which were about four inches thick -- and are easier to hang on a wall.
- The oil-and-gas industry is gearing up for a battle over the regulation of a high-tech drilling technique that has opened up huge new fields for drilling, but that environmentalists fear could contaminate ground water. On Thursday, a congressional subcommittee held a hearing on the practice, known as hydraulic fracturing, and two Democratic lawmakers said they would introduce legislation that would regulate it at the federal level for the first time. Environmental groups and members of Congress are also pushing the Environmental Protection Agency to investigate the impact of fracturing on drinking-water resources. Hydraulic fracturing -- known within the industry as "hydro-fracking," or simply "fracking" -- involves the injection of millions of gallons of water and chemicals into oil or natural-gas wells at high pressure. The process cracks open rock formations thousands of feet underground, allowing trapped hydrocarbons to flow to the surface. Fracking has been used since the 1940s, but it has become far more common in recent years, as the industry has increasingly drilled in dense rock formations that require fracking to produce significant quantities of oil and gas. The industry estimates 60% to 80% of new wells require fracking to be profitable.
MarketWatch.com: House Republican leaders outlined $375 billion in federal budget savings on Thursday, telling President Barack Obama that their proposals will save taxpayers money and help to shrink the deficit. In a letter to Obama, House Republican Leader John Boehner of Ohio and Republican Whip Eric Cantor of Virginia called the American fiscal situation grave and said it's up to both parties to slash wasteful and unnecessary spending. Last month, Obama released details of his $3.6 trillion budget for fiscal 2010, a number Republicans say is far too big.
CNBC.com: With takeover talk rampant and two big catalysts on the horizon, tech stocks could be making some big moves, very soon.
NY Times:
- Federal prosecutors indicted a former top executive of a prominent investment firm on Thursday on charges involving questionable tax shelters made and sold by the firm up until 2006. The executive, Jeffrey I. Greenstein, is a former chief executive and a co-founder of the Quellos Group, whose core business was bought by BlackRock for $1.7 billion in 2007. He faces 18 counts of conspiracy, fraud and tax evasion. Quellos, which was based in Seattle and catered to wealthy investors, had star clients, including former President Bill Clinton and his wife, Hillary Rodham Clinton; Robert Wood Johnson IV, the owner of the New York Jets football team; and the Hollywood mogul Haim Saban, the producer of the “Mighty Morphin Power Rangers” children’s show, according to public records.
IBD:
- The federal comprehensive energy bill could change the whole game for the solar industry. If the bill passes Congress and becomes law, it would require U.S. utility companies to supply around 15% of their electricity from renewable sources like solar and wind power by 2020.
LA Times:
- Amid the economic downturn and slow growth for retail and outpatient medical care services, pharmacy giants Walgreen Co. and CVS Caremark Corp. are rolling out new specialized services at their in-store clinics, going beyond treatment of routine maladies. Launched over the last four years to care for such simple ailments as ear and sinus infections, strep throat or pink eye, retail clinic operators now are training nurses to do specialized injections for such chronic conditions as osteoporosis and asthma. In addition, they are offering treatments for advanced skin conditions that include removal of warts and skin tags or closing minor wounds. Care for minor "sprains and strains" also is being offered at some retailers, and pilot projects are underway for breathing treatments and special infusions of drugs derived from biotechnology.
cnet:
- Universal Music Group and YouTube have answered the question of whether any of the major labels will be interested in joining the new all music video Web site, Vevo. Sony Music Entertainment has joined the venture, the companies said Thursday in a statement. Vevo will launch sometime later this year featuring video content from at least the two largest recording companies. (Universal is the largest.)
Lloyd’s List:
- SPOT freight rates that have halved over the past year dictated the terms for annual service contracts covering transpacific cargo, leaving lines with income that will not cover running costs. That is the picture emerging from this year’s round of contract negotiations that is drawing to a close. Singapore line APL has warned that transpacific carriers are faced with unsustainable annual contracts because of the influence of the spot market on rates agreed from the coming 12 months. “Levels are simply not sustainable and that is of great concern to us. The rates are not covering the carrier’s variable cost,” said APL vice-president Bob Sappio.
Reuters:
- Global miners Rio Tinto and BHP Billiton said on Friday they will combine their major Australian iron ore operations, scuppering a $19.5 billion bid by China's Chinalco to secure a stake in Rio and long-term access to its key ore supplies. BHP and Rio, the world's second and third largest iron ore miners, have agreed to combine the operations into a 50-50 joint venture, the companies said in a joint statement, generating savings of at least $10 billion.
- The U.S. government should close a loophole that allows unregulated firms to sell commodity contracts that may have swindled consumers out of millions of dollars, a U.S. lawmaker said on Thursday.
Financial Times:
- Apple plans to introduce a cheaper version of its popular iPhone as soon as Monday, in a move that could dramatically increase the company’s share of the market for web-surfing devices, people familiar with the initiative said on Thursday. Analysts said that the company wanted to show off either a $149 phone or a $99 phone, down from the current low end of $199 and still subsidized in exchange for an AT&T communications service contract. “It’s either a $50 or a $100 cut,” said Morgan Stanley analyst Kathryn Huberty. Citing a firm survey of consumers, she said that a $50 price cut could increase demand by 50 per cent and a $100 cut by 100 per cent. Apple sells about 11 per cent of the world’s smart phones, trailing Nokia’s 41 per cent volume and Research in Motion’s 20 per cent, according to Gartner figures from the first quarter. An even bigger impact on market share could come with new pricing from AT&T, which remains in an exclusive deal with Apple.
TimesOnline:
- The European Central Bank spurned pressure for more radical action to jumpstart the eurozone economy yesterday, sticking to a gradual, step-by-step strategy despite savagely cutting its forecasts for the 16-nation bloc. In drastic downgrades to its assessment of the eurozone’s prospects, the ECB said that it expects GDP to plummet this year by between 4.1 and 5.1 per cent — a far deeper slump than the 2.2 to 3.2 per cent decline it foresaw only three months ago. The Frankfurt-based central bank also unveiled a far bleaker view of recovery prospects for next year, warning that the eurozone recession will drag on into next summer. It now forecasts that GDP will tumble by up to a further 1 per cent in 2010, and at best grow by a meager 0.4 per cent. That compares with its March prediction for GDP to shrink by no more than 0.7 per cent, and possibly expand by as much as 0.7 per cent. Despite this grim view, the ECB again held official eurozone interest rates at 1 per cent.
Nikkei English News:
- Hybrid vehicles accounted for 12% of new car sales in Japan This was the first time hybrid sales exceeded 10%.
- JPMorgan Chase(JPM) can maintain a strong capital position even without funds from US taxpayers, citing an interview with CEO Jamie Dimon. The NY-based company is ready to repay funds from the TARP as early as this month, Dimon said. JPMorgan would have a Tier 1 Capital ratio of 9.3%, even without the funding, he said.
Edaily:
- The Bank of Korea doesn’t plan to cut the portion of the nation’s foreign-currency reserves invested in US Treasuries.
Mainichi:
- The Bank of Japan may upgrade its economic assessment for two months in a row at a two-day policy meeting that begins June 15. The bank may say this month that the pace of economic deterioration is slowing.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (XL), target $15, added to Top Picks Live list.
- Downgraded (HOG) to (SELL), target $16, 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
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Earnings of Note
Company/EPS Estimate
Economic Releases
8:30 am EST
- The Change in Non-farm Payrolls for May is estimated at -520K versus -539K in April.
- The Unemployment Rate for May is estimated to rise to 9.2% versus 8.9% in April.
- Average Hourly Earnings for May are estimated to rise .1% versus a .1% gain in April.
3:00 pm EST
- Consumer Credit for April is estimated at -$6.0B versus -$11.1B in March.
Upcoming Splits
Other Potential Market Movers
BOTTOM LINE: Asian indices are higher, boosted by commodity and automaker stocks in the region. I expect US equities to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.
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