Monday, February 22, 2010

Tuesday Watch

Late-Night Headlines
  • House Democrats Seek to Revoke Insurers' Antitrust Exemption. House Democrats agreed to exclude medical malpractice insurers from legislation that would apply antitrust laws to health insurance companies, clearing the way for a vote on the measure this week. Given state regulation, the bill would have little effect on the industry and amounts to a political diversion in the broader debate over health care, said Robert Zirkelbach, spokesman for America's Health Insurance Plans, an industry trade group that represents Wellpoint Inc., Aetna Inc. and other insurers. “This is politics as usual,” Zirkelbach said in an interview. “There’s been an effort throughout this debate to shift the focus to the insurance industry rather than address rising health-care costs.” Abolishing the exemption “is likely to precipitate litigation” challenging the industry’s data-sharing practices, the Congressional Research Service predicted in a Jan. 14 report. If small insurers can’t get aggregated claims data, industry consolidation “is a likely, albeit ironic, possibility,” the report said.
  • Seidenberg, Dimon Among CEOs Said to Dine with Obama Tomorrow. Verizon Communications Inc.(VZ) Ivan Seidenberg and JPMorgan Chase & Co.'s(JPM) Jamie Dimon are among more than a dozen chief executive officers invited to dinner tomorrow night with President Barack Obama at the White House.
  • Gold may slip below $1,000 an ounce in March, historically the "worst month of the year," because of slowing jewelry demand and likely interest-rate increases, according to Credit Suisse Group AG. Stefan Graber, a commodity analyst in Singapore at Credit Suisse, said the metal will trade at $900 to $1,000 an ounce at March 31.
  • China Isn't a Realistic Candidate for IMF Gold, Council Says. China, the world’s biggest gold producer, isn’t a “realistic candidate” to buy bullion from the International Monetary Fund, the World Gold Council said.
  • Copper production outpaced demand by 75,000 metric tons in November, the International Copper Study Group said. The surplus for the first 11 months of the year was 144,000 tons, compared with a surplus of 58,000 tons a year earlier, the group said.
  • Grain stockpiles worldwide will climb to the highest level in eight years as production exceeds demand for a second year, the UN's Food and Agriculture Organization said.
Wall Street Journal:
  • Brookfield to Battle Simon for Mall Giant. Canadian property giant Brookfield Asset Management Inc. is readying a bid to take a large stake in U.S. mall owner General Growth Properties Inc., according to several people familiar with the matter, aiming to top an unsolicited bid made last week by mall rival Simon Property Group Inc. Brookfield's planned bid, which could be unveiled as soon as this week, would allow General Growth to exit Chapter 11 bankruptcy proceedings as a standalone company, with Brookfield as its largest shareholder, these people said. The Simon bid values General Growth equity at about $3 billion, or about $9 a share.
  • ObamaCare at Ramming Speed. The White House shows it has no interest in compromise. A mere three days before President Obama's supposedly bipartisan health-care summit, the White House yesterday released a new blueprint that Democrats say they will ram through Congress with or without Republican support. So after election defeats in Virginia, New Jersey and even Massachusetts, and amid overwhelming public opposition, Democrats have decided to give the voters what they don't want anyway.
  • Google(GOOG)-China Talks to Resume.
  • EPA Delays Start of New Rules on Emissions. The head of the U.S. Environmental Protection Agency said Monday the agency would delay subjecting large greenhouse-gas emitters such as power plants and crude-oil refiners to new regulations until 2011, and would raise the threshold for using the Clean Air Act to regulate carbon dioxide emissions. After an outcry from state regulators and members of Congress, EPA Administrator Lisa Jackson said the agency would also limit regulations for the first half of 2011 to emitters already required to apply for new construction and modification permits under the Clean Air Act. Between 2011 and 2013, "I expect the threshold for permitting will be substantially higher than the 25,000-ton limit that EPA originally proposed," Ms. Jackson told lawmakers in a letter. Late last week, eight Senate Democrats wrote Ms. Jackson expressing concern about the potential economic and energy impacts of the new rules the EPA is drafting. Robert Dillon, a spokesman for Sen. Lisa Murkowski, (R., Alaska), said the proposed delays didn't address concerns about what impact EPA rules would have on the economy. Sen. Murkowski is leading the effort to block the EPA curbs.
  • The Stimulus Evidence One Year On. Over five years, my research shows an extra $600 billion of public spending at the cost of $900 billion in private expenditure. That's a bad deal.
  • Banks Buy Time Restructuring Loans, For the Moment. More U.S. banks are restructuring troubled loans as commercial real-estate problems replace pressure from the residential housing bust. Restructuring buys more time for borrowers to get back on track and may help banks avoid bigger loan losses. However, it may only buy banks time before problems re-emerge once again.
  • Morgan Stanley In Late-Stage to Sell CICC to KKR, TPG. Morgan Stanley(MS) is in late stage talks to sell its stake in China International Capital Corp to Kohlberg Kravis Roberts & Co and TPG Capital for more than $1 billion, according to three sources familiar with the situation.
  • Financial Watchdog's Power Crucial: Obama Aide. An Obama administration spokesman on Monday stressed the importance of "independent authority" for a proposed U.S. financial consumer watchdog and said where it was "housed" was another issue. The comment from Robert Gibbs, spokesman for the White House, came as two U.S. senators tried to forge a bipartisan agreement on tighter financial regulation, with analysts watching closely for signals of compromise.
NY Post:
  • Bill Loves American Health Care. With President Obama hoping this week's "bipartisan summit" will move his health-care bill out of the ICU, it's worth taking a look at a recent high-profile operation -- the heart work done on former President Bill Clinton. Clinton, of course, got the best of care -- a cardiac stent (a tiny metal cylinder) coated with a drug to help keep his artery open. Recent studies in the New England Journal of Medicine and elsewhere have shown that these drug-eluting stents are more effective than bare metal ones. But they cost two-to-four times more -- and the technology is relatively new. That combination has left government-run health-care systems slow to adopt them. The disparity between the US and Canada is striking.
Business Insider:
cnet news:
  • U.S. Subprime Prices Down Nearly 6%: Fitch. Subprime is a word that’s now ostracized within the industry, but the repercussions of the housing boom days when subprime loans were commonplace are still resounding. The ratings agency’s U.S. Subprime RMBS Price Index fell by just under 6 percent month on month to 7.17 as of February 1, down from 7.62 as of January 1. All vintages dropped in value, highlighting concerns about the valuation of all RMBS subprime assets. Driving the declines was the 2007 vintage, which dropped by 17.7 percent, followed by the 2005 vintage falling by 9.5 percent month on month. Recent loan level analysis conducted by Fitch Solutions on the indices’ constituents found that the 2007 vintage showed a significant jump in 90-day plus delinquencies rising from 13.7 percent to 14.2 percent. “The rise in delinquencies is signaling a potential increase in 2007 loan defaults,” explained Thomas Aubrey, managing director at Fitch Solutions.
Twitter Blog:
  • Measuring Tweets. Folks were tweeting 5,000 times a day in 2007. By 2008, that number was 300,000, and by 2009 it had grown to 2.5 million per day. Tweets grew 1,400% last year to 35 million per day. Today, we are seeing 50 million tweets per day—that's an average of 600 tweets per second.
Rasmussen Report:
  • Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Monday shows that 22% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. That matches yesterday’s result as the lowest level of strong approval yet recorded for this President. Forty-one percent (41%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -19 (see trends).
  • New Health Care Plan, But With Same Old Problems. The White House opened its last-ditch push for health reform Monday by releasing a $950 billion plan that signaled a new phase of hands-on presidential involvement. But by day’s end, President Barack Obama was staring down all the same old problems. Republicans called it a retread of the same bills Americans have panned, even though it included some GOP ideas. “Déjà vu all over again,” said Sen. Judd Gregg (R-N.H.). Democrats and labor unions didn’t rush to embrace it, either, with some disappointed by the absence of a public insurance option. Congressional Democratic aides also complained of being left in the dark by the White House, asking for a preview of the bill Friday, only to be denied by White House aides, according to multiple sources. And Obama’s plan did nothing to answer the central question facing Democrats: how to get a bill through the Senate — now one vote shy of a filibuster-proof majority — in one of the most toxic environments for incumbents in recent memory. Even with the first presidential plan on the table, there was no guarantee Democrats could pull off health reform this year.

  • Airport Scanners Still in Storage. President Barack Obama’s 2009 stimulus plan included $25 million for airport screening machines capable of detecting explosives like those carried by the Christmas Day bomber. But more than a year after passage of the stimulus, the Department of Homeland Security has yet to install a single scanner paid for by the bill. "We have not outlined our deployment schedule as yet," said Amy Kudwa, a DHS spokeswoman. "We're very actively working on a deployment plan. That process has not been completed."

Financial Times:
  • European banks 'need €240bn a year in fund-raising' Europe's biggest banks may need to raise €240bn (£211bn) annually for the next three years to fund existing and new businesses, Citigroup analysts have warned. The analysts, who include Stefan Nedialkov, said 24 European banks – accounting for almost 70pc of the sector's assets – will face an increased need for funds due to the volatility of the bond markets and new Basel III capital regulations. The banks issued €56bn of long and medium-term funding in January, but investors' appetite for new issuance has fallen in February as concerns over the state of the European economy has grown.
Bangkok Post:
  • Supply Glut Weighs on Precious Revenue. Revenue at Precious Shipping Plc, Thailand's second largest dry-bulk carrier, has plunged sharply this year because of an expected drop in time charter rates in line with the dry-bulk supply glut, says managing director Khalid Hashim. "This year's time charter rates are expected to reach US$12,500 (414,874 baht) per day per ship on average, a drop from $13,459 in 2009. This is due to both the glut of ship supply in the overall market and also the reduction of our fleet," said Mr Hashim. He said that although there was high demand for commodities from China because of its heavy stimulus spending, the supply of ships was rising much faster than the demand. Assuming a 50% slide in new ship deliveries in 2010, he said the new supply in the world market would still show a double-digit percentage increase. "Supply looks extremely aggressive and there are new ships coming in [in the world market]," he said.
  • China Wouldn't Survive a US Double-Dip Recession, Says Permel Chairman. Isaac Souede, chairman of $20 billion fund of hedge funds Permal, says China does not respect the euro and that an American double-dip recession would spark protectionism in the US. Permal, a stand-alone business in the Legg Mason group, is a fund of hedge funds with $20 billion in assets under management. Chairman Isaac Souede spoke to AsianInvestor while he was on a recent visit to Hong Kong.
South China Morning Post:
  • Home Prices Scary, Bank Chief Says. The head of state-owned conglomerate China Everbright Holdings has warned of the dangers of rising property prices on the mainland and said that because of market volatility the group would be cautious about investing in the sector this year. Chen Shuang, its CEO, said rising prices in some areas were "frightening" and that he believes a bubble exists in the mainland housing market. He also expects the central bank to announce an interest rate increase before the market consensus of the third quarter.
Evening Recommendations
  • Reiterated Buy on (CVC), raised target to $27.
Night Trading
  • Asian indices are -.75% to +.50% on average.
  • Asia Ex-Japan Investment Grade CDS Index 110.50 -2.5 basis points.
  • S&P 500 futures +.05%
  • NASDAQ 100 futures +.01%
Morning Preview
Earnings of Note
  • (MHS)/.75
  • (FSS)/.12
  • (TGT)/1.17
  • (LIZ)/-.20
  • (CKP)/.45
  • (JOE)/-.27
  • (SHLD)/3.70
  • (HD)/.16
  • (MDT)/.76
  • (M)/1.32
  • (CBRL)/.90
  • (ODP)/-.21
  • (ONXX)/.27
  • (ADSK)/.23
  • (BKS)/1.34
Economic Releases
8:30 am EST
  • The S&P/CaseShiller Composite-20 (YoY) for December is estimated to fall -3.1% versus a -5.3% decline in November.
10:00 am EST
  • Consumer Confidence for February is estimated to fall to 55.0 versus a reading of 55.9 in January.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Bullard speaking, weekly retail sales reports, Treasury's $44B 2-Year Note Auction, Richmond Fed Manufacturing Index, ABC Consumer Confidence reading, API energy inventory data, could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and financial stocks in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 100% net long heading into the day.

1 comment:

Anonymous said...

Like the new layout..