S&P 500 1,101.60 -.09%*
The Weekly Wrap by Briefing.com.
*5-Day Change
Friday, July 30, 2010
Weekly Scoreboard*
Indices
- S&P 500 1,101.60 -.09%
- DJIA 10,465.94 +.40%
- NASDAQ 2,254.70 -.65%
- Russell 2000 650.89 +.04%
- Wilshire 5000 11,372.08 -.13%
- Russell 1000 Growth 490.63 -.59%
- Russell 1000 Value 566.35 +.28%
- Morgan Stanley Consumer 676.04 -.35%
- Morgan Stanley Cyclical 858.29 -.83%
- Morgan Stanley Technology 555.55 -1.40%
- Transports 4,422.94 +1.22%
- Utilities 385.53 -.32%
- MSCI Emerging Markets 41.22 +.85%
- Lyxor L/S Equity Long Bias Index 959.70 +1.07%
- Lyxor L/S Equity Variable Bias Index 848.79 +.54%
- Lyxor L/S Equity Short Bias Index 861.65 -2.16%
- NYSE Cumulative A/D Line +92,376 +2.69%
- Bloomberg New Highs-Lows Index +34 +45
- Bloomberg Crude Oil % Bulls 33.0 +13.79%
- CFTC Oil Net Speculative Position +44,313 +22.60%
- CFTC Oil Total Open Interest 1,240,029 +2.13%
- Total Put/Call .80 -3.61%
- OEX Put/Call 1.37 -52.26%
- ISE Sentiment 102.0 -10.53%
- NYSE Arms 1.21 +18.63%
- Volatility(VIX) 23.50 +.13%
- G7 Currency Volatility (VXY) 11.24 -8.69%
- Smart Money Flow Index 8,810.75 +1.09%
- Money Mkt Mutual Fund Assets $2.801 Trillion +.10%
- AAII % Bulls 40.0 +24.38%
- AAII % Bears 33.33 -25.98%
- CRB Index 274.35 +2.90%
- Crude Oil 78.95 +.07%
- Reformulated Gasoline 212.24 +.35%
- Natural Gas 4.92 +8.38%
- Heating Oil 208.81 +.49%
- Gold 1,183.90 -.79%
- Bloomberg Base Metals 204.72 +3.84%
- Copper 331.15 +3.57%
- US No. 1 Heavy Melt Scrap Steel 322.96 USD/Ton -.11%
- China Hot Rolled Domestic Steel Sheet 4,217 Yuan/Ton +1.91%
- S&P GSCI Agriculture 354.14 +6.78%
- ECRI Weekly Leading Economic Index 121.10 +.41%
- Citi US Economic Surprise Index -37.4 -.4 point
- Fed Fund Futures imply 66.20% chance of no change, 33.80% chance of 25 basis point cut on 8/10
- US Dollar Index 81.54 -1.12%
- Yield Curve 236.0 -4 basis points
- 10-Year US Treasury Yield 2.91% -8 basis points
- Federal Reserve's Balance Sheet $2.308 Trillion -.31%
- U.S. Sovereign Debt Credit Default Swap 36.84 +1.45%
- U.S. Municipal CDS Index 207.88 -4.87%
- Western Europe Sovereign Debt Credit Default Swap Index 114.92 -10.05%
- 10-Year TIPS Spread 1.77% unch.
- TED Spread 31.0 -4 basis points
- N. America Investment Grade Credit Default Swap Index 104.88 -2.36%
- Euro Financial Sector Credit Default Swap Index 99.62 -17.86%
- Emerging Markets Credit Default Swap Index 213.55 -7.63%
- CMBS Super Senior AAA 10-Year Treasury Spread 253.0 -14 basis points
- M1 Money Supply $1.706 Trillion +.06%
- Business Loans 591.20 -.72%
- 4-Week Moving Average of Jobless Claims 452,500 -1.0%
- Continuing Claims Unemployment Rate 3.6% +10 basis points
- Average 30-Year Mortgage Rate 4.54% -2 basis points
- Weekly Mortgage Applications 720.60 -4.37%
- ABC Consumer Confidence -48 -3 points
- Weekly Retail Sales +2.80% -10 basis points
- Nationwide Gas $2.74/gallon +.02
- U.S. Cooling Demand Next 7 Days 17.0% above normal
- Baltic Dry Index 1,942 +7.83%
- Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 40.0 -5.88%
- Rail Freight Carloads 230,443 +1.22%
- Iraqi 2028 Government Bonds 84.06 +.44%
- Small-Cap Value +.43%
- Mid-Cap Growth -.77%
- Hospitals +2.77%
- HMOs +2.77%
- Airlines +2.32%
- REITs +1.98%
- I-Banks +1.88%
- Steel -2.39%
- Networking -3.07%
- Disk Drives -3.07%
- Oil Tankers -4.49%
- Education -4.80%
One-Week High-Volume Losers
*5-Day Change
Stocks Reversing Higher into Final Hour on Heatlhcare Stock Strength, Short-Covering, Bargain-Hunting
Broad Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Most Sectors Rising
- Volume: Around Average
- Market Leading Stocks: Outperforming
- VIX 24.35 +.91%
- ISE Sentiment Index 103.0 -.96%
- Total Put/Call .78 -21.21%
- NYSE Arms 1.22 -9.16%
- North American Investment Grade CDS Index 104.88 bps +1.18%
- European Financial Sector CDS Index 99.0 bps +.05%
- Western Europe Sovereign Debt CDS Index 115.0 bps +2.56%
- Emerging Market CDS Index 209.85 bps -2.12%
- 2-Year Swap Spread 17.0 unch.
- TED Spread 31.0 -1 bp
- 3-Month T-Bill Yield .14% -1 bp
- Yield Curve 235.0 -5 bps
- China Import Iron Ore Spot $136.30/Metric Tonne +.15%
- Citi US Economic Surprise Index -37.40 +3.4 points
- 10-Year TIPS Spread 1.77% -2 bps
- Nikkei Futures: Indicating -7 open in Japan
- DAX Futures: Indicating +12 open in Germany
- Higher: On gains in my Biotech, Medical, Technology and Retail long positions
- Disclosed Trades: None
- Market Exposure: 100% Net Long
Today's Headlines
Bloomberg:
- U.S. Economy: Growth Slows as Consumer Spending Decelerates. The U.S. economy slowed in the second quarter as a scarcity of jobs eroded consumer spending, leaving the rebound dependent on a surge in business investment. Gross domestic product grew at a 2.4 percent annual pace, less than forecast, after a 3.7 percent first-quarter gain that was larger than previously estimated, according to Commerce Department data issued today in Washington. Other reports showed business activity unexpectedly accelerated in July and consumer sentiment fell less than projected. “The economy is muddling through,” Ethan Harris, head of North America economics at Bank of America-Merrill Lynch Global Research in New York, said in an interview. “We’re probably not going to see a really strong number for a while. We need to see some pickup in job growth.”
- Business Activity in U.S. Expanded Faster in July. Business activity in the U.S. expanded in July at a faster pace than projected, signaling manufacturing is driving growth in the world’s largest economy. The Institute for Supply Management-Chicago Inc. said today its business barometer rose to 62.3 this month, exceeding the median forecast of economists surveyed by Bloomberg News, after 59.1 in June. The employment measure rose to 56.6 from 54.2 in June, and the production gauge increased to 65 from 64.2. The gauge of new orders climbed to 64.6 from 59.1. The index of backlogs rose to 57.6 from 50.7. The gauge of inventories increased to 50.8 from 46.5.
- Bank Debt Swaps Headed for Biggest Monthly Drop Since April 08'. An index of credit-default swaps insuring against losses on European bank bonds is heading for the biggest monthly drop since April 2008. The Markit iTraxx Financial Index linked to 25 banks and insurers has fallen 43.5 basis points this month and is near the lowest level since April 23. The gauge pared the decline today, rising 3.5 basis points to 118.5, according to JPMorgan Chase & Co. prices at 1:30 p.m. in London. “We believe the best course of action for investors is to go with the flow,” said Aziz Sunderji, a London-based strategist at Barclays Capital. “We would advise investors to spend the remainder of the summer adding risk.”
- Acquisition Spree May Point to Second-Half Pickup in Dealmaking. A spate of mergers and acquisitions during the past two weeks may signal the start of a comeback for global dealmaking in the second half of 2010. There have been 787 announced deals since July 19 with a total disclosed value of $86.4 billion, according to data compiled by Bloomberg. The surge pushed global deal volume past the $1 trillion mark for the year, more than a 10 percent increase over the first seven months of 2009. Companies are now getting more confident as they increasingly hoard cash and borrowing costs fall, according to some dealmakers. “While boards have been reluctant to pull the trigger, they’re getting more comfortable with the economic environment and so there may be a pickup,” said Wilhelm Schulz, head of European M&A at Citigroup Inc.
- Soybeans, Corn Gain as Small World Crops May Aid U.S. Exports. Soybeans jumped to a 12-week high and corn rose for a third day as hot, dry weather damaged crops from Russia to Germany, boosting demand for supplies from the U.S., the world’s largest grower and exporter. Russia, the seventh-largest feed-grain exporter and oilseed processor, declared emergencies in 27 crop-producing regions, four more than a week ago, as drought harmed crops across at least 10.3 million hectares (25.5 million acres). German grain production will fall as much as 11 percent to 44 million metric tons from last year, Alfred C. Toepfer International GmbH said. “People have underestimated the damage and the crops are still shrinking,” said Mark Schultz, the chief analyst for Northstar Commodity Investment Co. in Minneapolis. “There is a tightening global supply, and that means more U.S. exports.” Soybean futures for November delivery climbed 9.25 cents, or 0.9 percent, to $9.9725 a bushel at 11:03 a.m. on the Chicago Board of Trade, after rising to $10.0175, the highest price since May 3. The most-active contract was up 10 percent in July, heading for the biggest monthly gain since May 2009. Corn futures for December delivery rose 7.25 cents, or 1.8 percent, to $4.01 a bushel on the CBOT, after touching $4.025, the highest level since July 19. Corn has advanced 7.4 percent this month, which would be biggest monthly increase since April.
- Congress to Vote on Lifting Obama Ban on Deep-Water Drilling. Lawmakers will vote today on a proposal to overturn President Barack Obama’s suspension of deep-water drilling as the House debates legislation toughening rules for companies producing oil and natural gas offshore. An amendment that would end the Obama administration’s moratorium on exploration is among nine scheduled for debate before the House votes on an overhaul of drilling rules in the aftermath of BP Plc’s Gulf of Mexico oil spill.
- 'Meaningful Correction' Looms for China Housing, Economists Say. China’s housing prices, which have tripled in major cities in the past 10 years, face a “meaningful correction” in the next year or two, according to a paper from the U.S. National Bureau of Economic Research. Prices of like-for-like-quality land at auction in Beijing climbed almost 800 percent between 2003 and this year, economists Jing Wu, Joseph Gyourko and Yongheng Deng wrote in the working paper published by the Cambridge, Massachusetts- based arbiter of U.S. business cycles. Their calculations showed Beijing prices could fall as much as 40 percent if investors lost confidence in the market.
- McAfee Advances the Most in 17 Months on Third-Quarter Forecast. McAfee Inc., the second-largest maker of security software, rose the most in 17 months in New York trading after the company’s forecast allayed investors’ concerns about slowing growth. McAfee jumped $2.65, or 8.8 percent, to $32.90 at 1:53 p.m. in New York Stock Exchange composite trading. Earlier, it climbed 10 percent to $33.30 in the biggest gain since February 2009.
Wall Street Journal:
- BP(BP) Well-Plugging Effort Hits Snag. The government's point man for the Gulf oil spill said Friday there has been a delay in a procedure that will help stop the gusher for good.
NY Times:
- Moody's Says Spain's Credit Rating Likely to Slip. Moody’s said on Friday that Spain’s sovereign debt, whose triple-A rating was put on review late last month, would likely be downgraded at the end of a three-month study, given the country’s growth prospects and the challenges it may face in implementing fiscal austerity. The cost of credit default swaps on Spanish sovereign debt widened to 185 basis points, 7 more than the previous day. By comparison, the cost of protecting Greek sovereign debt swung out by 15 basis points to 739, while the C.D.S. on Portuguese sovereign debt moved 3 basis points to 221. The Spanish national statistics agency said Friday that unemployment had edged higher for a second quarter, hitting 20.09 percent, up 0.04 percent since the last measure was announced in March. Despite the ratings review, Moody’s said “the credit fundamentals of Spain continue to be very strong.”
- US Shippers Wary as Box Shortages Continue. SOME of the largest shippers in the US are continuing to suffer from container shortages as the back-to-school and pre-Christmas peak shipping season gets underway on the transpacific trade. During what is a traditional financial results season for US-listed corporations, executives leading firms shipping toys, clothing and household goods reported facing problems with both capacity on vessels and a shortage of boxes.
Rasmussen Reports:
- Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Friday shows that 26% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-two percent (42%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -16 (see trends).
- Budget-Cutting Democrats Are Undercut. A Democratic spending fight broke out behind closed doors Thursday, as party leaders successfully pressured four junior lawmakers not to offer an amendment slashing housing and transportation programs by $1.02 billion. House Appropriations Committee Chairman David R. Obey argued passionately against the amendment and its authors — though not by name — in a speech to the Democratic Caucus in the morning, according to Democratic insiders.
- Democrats Race Republican Party to Health 'Repeal'. For the first time, House Democrats are proposing repealing a piece of the health care overhaul, one that small businesses have been warning is going to be overly burdensome. The move comes just four months after the Democrats' health plan passed in March. The provision would have required businesses to file 1099 tax forms for all transactions with vendors that total over $600. Due for implementation in 2012, it would have raised $19 billion over 10 years to pay for the health care overhaul. Rep. Scott Murphy (D-NY) offered the bill on Friday morning. Ways and Means Chairman Sander Levin (D-Mich.), spoke in favor of the bill on the House floor Friday. The move comes after Republicans threatened to attach a similar amendment to a vote on the Democrats? jobs legislation late Thursday.
MailOnline:
CESR:
Vedomosti:
- Russia will boost defense spending 60% by 2013 to 2.03 trillion rubles to upgrade its arms, fleet and air forces, citing a three-year budget approved by the government yesterday.
- Brazil's economy will continue to have a "weak" expansion in the third quarter, after growth decelerated in the second quarter as a result of the withdrawal of fiscal and monetary stimulus, citing Economic Policy Secretary Nelson Barbosa. Growth is Latin America's biggest economy will be closer to .5% than to 1% in the second quarter over the first three months of the year, Barbosa said. Barbosa forecast the economy contracted .1% in July.
Bear Radar
Style Underperformer:
- Mid-Cap Value (-.30%)
- 1) Oil Tankers -1.70% 2) Oil Service -.86% 3) Alt Energy -.74%
- THOR, CVD, COHR, FSLR, CTV, VLCM, APKT, NTRI, CSTR, CAVM, CTCT, PLCE, ARBA, FNSR, OCLR, ANW and GNW
- 1) JDSU 2) WFR 3) CSTR 4) K 5) UPL
- 1) AEP 2) ATI 3) X 4) MNI 5) KRNY
Bull Radar
Style Outperformer:
- Small-Cap Value (+.20%)
- 1) HMOs +2.13% 2) Hospitals +1.52% 3) Biotech +1.47%
- ABAX, CQB, VOLC, BG, QDEL, MNTA, TWC, CHA, TLK, CVC, MFE, QSFT, VECO, CPL, COP, PWER, PRAA, WCRX, MXWL, SHOO, ACOM, VPRT, GPRO, HMSY, ABAX, EXPE, CHDX, ASIA, IDSA, ROVI, VOLC, LIFE, MNTA, NFLX, ITRI, BPO and AGP
- 1) LPX 2) APKT 3) PWER 4) VPRT 5) CSTR
- 1) CVX 2) ACI 3) GOOG 4) MSFT 5) AAPL
Friday Watch
Evening Headlines
Bloomberg:
- Yields Dropping to '04 Levels Spark Busiest July for Sales: Credit Markets. U.S. corporate bond sales soared 31 percent this month, the busiest July on record, as yields fell to the lowest in more than six years on growing investor confidence in the economic recovery. Issuance of $85.7 billion exceeded the previous high for the month of $71.1 billion set last year, according to data compiled by Bloomberg. The cost of borrowing fell to 5.04 percent, the lowest since April 2004, and down from the 2010 high of 5.75 percent on Jan. 4, according to Bank of America Merrill Lynch’s U.S. Corporate & High Yield index. That decline would save issuers about $7.1 million of interest per $1 billion of bonds.
- Health Law Needs Repeal: Douglas Holtz-Eakin and Michael Ramlet. The new health-care law is a threat to the health of small businesses. Its heavy dosage of mandates and penalties will be a financial burden, and the law is riddled with hidden barriers to stronger job growth. The small business implications of the legislation are important because data from the ADP National Employment Report shows that since January 2001 companies with one to 49 employees were responsible for 36 percent of job growth, while those with 50 to 499 workers accounted for 44 percent of new jobs. Small business vitality is crucial to the economic fortunes of U.S. workers, and substantial new costs that curtail their hiring should be of concern to companies, workers and policymakers alike. Sadly, the new health-care law is an assault on small business, beginning with the 3.8 percent Medicare tax on net investment income -- a direct tax on many business owners. Of even greater concern is the law’s most celebrated feature -- the mandate to cover full-time employees with health insurance. For businesses with more than 50 workers, this means paying a penalty if any full-time workers receive subsidized coverage. For larger companies already providing insurance, the law codifies the status quo. For every other company, the mandate will compete for scarce capital that might be used for hiring and expansion. It is even worse for firms with 50 employees or fewer, as the mandate presents a tremendous growth hurdle. For a business not offering insurance, hiring the 51st worker will trigger a penalty of $42,000. How many firms will choose not to expand?
- Citigroup(C) Said to Pay $75 Million to Settle SEC Subprime Case. Citigroup Inc. will pay $75 million to settle U.S. regulatory claims that it misled investors by understating holdings linked to subprime mortgages by billions of dollars as the housing crisis unfolded in 2007.
- Iceland's Credit Outlook Cut to Negative at Moody's on Foreign Loan Ruling. Iceland’s rating outlook was cut to negative at Moody’s Investors Service after a court ruling on foreign currency loans threatened to trigger bank losses that may require a government cash injection to offset. Iceland’s Baa3 sovereign rating, the lowest investment grade, may be lowered to junk if the bank ruling hurts the island’s economic recovery and forces the government to raise its debt levels by bailing out the banks, Moody’s said in a statement. “The magnitude of the banking system losses that will result from the recent court ruling is not known at this time but it is clear that Iceland still faces significant risks to its economic and financial recovery,” said Kathrin Muehlbronner, a Moody’s vice president and lead analyst for Iceland, in the statement.
- Orexigen's(OREX) Two-Drug Obesity Pill Cuts Hunger, Cravings, Weight in Study. Obese patients who took Orexigen Therapeutics Inc.’s experimental pill combining an anti- addiction drug and an antidepressant lost more weight than those who took a placebo, a company-sponsored study found. Patients who took the Orexigen pill, Contrave, and were given diet and exercise suggestions shed 5 percent to 6 percent of their body weight compared with an average weight loss of 1.3 percent among those taking placebos. La Jolla, California-based Orexigen is racing with Vivus Inc. and Arena Pharmaceuticals Inc. to bring weight-loss drugs to market. Applications from all three are pending before the U.S. Food and Drug Administration.
- Samsung Electronics Profit Jumps 83% to Record on Recovery in Memory Chips. Samsung Electronics Co., Asia’s biggest maker of semiconductors, flat screens and mobile phones, said second-quarter profit jumped 83 percent to a record, fueled by a recovery in demand for computer-memory chips. Net income climbed to 4.28 trillion won ($3.6 billion) in the three months ended June 30, from 2.33 trillion won a year earlier, the Suwon, South Korea-based company said in a statement today. Revenue increased 17 percent to 37.9 trillion won, Samsung said. Samsung joined technology companies including Intel Corp., Apple Inc. and Hynix Semiconductor Inc. in posting higher earnings for the latest quarter after prices increased on demand.
- Mexican Authorities Find 15 Bodies Near Monterrey; Drug Cartels Suspected. Mexican authorities discovered at least 15 bodies in a garbage ditch outside of the city of Monterrey, said David Perales, spokesman for the Nuevo Leon state investigation agency. The agency suspects the dead were killed by drug cartels, Perales said, speaking in a telephone interview from Monterrey, which is 280 miles south of San Antonio, Texas. Officials are investigating whether there were more victims, he said. Separately, investigators in the southern town of Taxco uncovered at least 77 bodies in an abandoned mine last month.
- Republicans Press FDA Head on Chinese Heparin. Two Texas Republicans want FDA Commissioner Peggy Hamburg to press Beijing on what Chinese health authorities did to track the contaminated heparin linked 81 deaths in the U.S. in 2008. Hamburg is visiting China next month, and Reps. Joe Barton and Mike Burgess see an opportunity to figure out how the how the contamination occurred and what is being done now to ensure supplies are pure. “The case of the tainted blood thinner remains unsolved,” the two said in a letter to Hamburg. “You are going to the source country of that crime,” and added: “Your trip represents the best hope of a breakthrough in solving this case.”
- From Tiananmen Square to Possible Buffett Successor. Twenty-one years ago, Li Lu was a student leader of the Tiananmen Square protests. Now a hedge-fund manager, he is in line to become a successor to Warren Buffett at Berkshire Hathaway Inc. Mr. Li, 44 years old, has emerged as a leading candidate to run a chunk of Berkshire's $100 billion portfolio, stemming from a close friendship with Charlie Munger, Berkshire's 86-year-old vice chairman. In an interview, Mr. Munger revealed that Mr. Li was likely to become one of the top Berkshire investment officials. "In my mind, it's a foregone conclusion," Mr. Munger said.
- Computer Evidence Ties Leaks to Soldier. Investigators have found concrete evidence on computers used by Pfc. Bradley Manning that link him with the leak of classified Afghanistan war reports, a U.S. defense official said. The disclosure came as Defense Secretary Robert Gates pledged Thursday to "aggressively investigate the leak" and find ways to prevent further breaches, and told reporters that he had invited the Federal Bureau of Investigation to assist the probe. Defense officials said the FBI was investigating whether civilians aided Pfc. Manning in providing the information to WikiLeaks, a Web-based group that this week released 76,000 secret reports from Afghanistan.
- Democrats Under Fire Over Health-Law Reporting Mandate. Congressional Democrats may water down or repeal new tax-reporting rules that are supposed to raise $16 billion for health-care legislation, facing a chorus of criticism about the rules. House Democrats were forced to postpone a vote late Thursday on a GOP motion calling for repeal of the reporting requirement. That, in turn, delayed action on an $11 billion bill that expands federally-subsidized bonds for infrastructure projects. House lawmakers may add language to the infrastructure bill to weaken or repeal the IRS reporting regime, Democratic aides said. "This is an issue we want to address and now we have an opportunity to do so," said Kristie Greco, a spokeswoman for House Majority Whip James Clyburn (D., S.C.).
- U.S. Nuclear Projects Tied Up Awaiting Federal Loan Guarantees. The so-called nuclear renaissance that was supposed to boost U.S. capacity to generate emissions- free power may stall as developers await decisions from the Obama administration on federal aid.
- The New Abnormal. Americans are broke and depressed—and also swilling $3 lattes and waiting in line for iPhones. Welcome to the schizophrenic economy.
Business Insider:
- With Case Against The Wyly Brothers, The SEC Goes To War Against Offshore Finance. We're still reading and digesting the details of the just-announced insider trading charges against Texas investors The Wyly brothers, but one thing is already clear: this is a major shot across the bow aimed at offshore tax.
- Obama to Raise Money in Dallas. President Barack Obama is expected to be in Dallas in early August as part of a two-city Texas trip to raise money for Democratic candidates, Democratic sources said Wednesday. The Dallas fundraiser, at a private residence, has apparently replaced plans for a presidential visit to either Houston or San Antonio. Obama is also scheduled to be in Austin on Aug. 9 for a fundraiser sponsored by the Democratic National Committee. Republican Gov. Rick Perry has asked for a meeting with him after he arrives in Texas to discuss concerns over border security and the administration's planned deployment of 250 National Guard troops to the border, far fewer than the 1,000 Perry requested. Obama's campaign travels this week called for fund-raisers in Washington, D.C., and New York City as well as the taping of an interview with ABC's "The View." His schedule next month, according to press reports, includes Democratic events in Atlanta and Chicago, as well as the Texas stops.
- Patrick Yields Ground on Casino Bill, Says One Slot Parlor OK. In a significant shift in his public position, Massachusetts Governor Deval Patrick said this afternoon that he would sign a casino gambling bill with one slot parlor and three full-scale casinos if legislators agreed to break a "logjam" on other unrelated measures.
AppleInsider:
- Apple(AAPL) Job Listing Hints at 'Revolutionary' New Mac OS X 10.7 Feature. A new corporate job listing from Apple boasts of a "revolutionary" new feature for the foundations of Mac OS X that will "truly amaze everyone." The new job listing posted this week and discovered by AppleInsider makes numerous references to a specific, singular feature said to be a part of the Mac OS X operating system. Of course, it declines to reveal what that feature could be, but the ad does use the word "revolutionary" on three separate occasions.
- EPA Rejects Challenge to Climate Rules. The Environmental Protection Agency Thursday rejected an effort to keep it from regulating greenhouse gas emissions, saying that e-mails released in last fall’s “Climategate” scandal gave it no reason to reconsider the science of global warming. In a sternly written opinion, EPA Administrator Lisa Jackson said she didn’t agree with requests from the GOP attorneys general from Texas and Virginia, the U.S. Chamber of Commerce and other conservative groups that questioned the underlying science linking humans to global warming and also warned of the potential economic burdens from new climate rules. EPA last December concluded that greenhouse gases are a threat to public health and welfare, a decision clearing the way this spring for climate-based regulations for new cars and trucks. Next year, the agency is expected to write standards for power plants and other major industrial sources of heat-trapping gases. In their petitions, EPA’s opponents had highlighted stolen e-mails from prominent climate scientists that they allege showed collusion to hide contrary information debunking global warming. Texas Attorney General Greg Abbott had also warned that the EPA rules would lead to “unprecedented bureaucratic licensing and regulatory burdens on farmers, ranchers, small businesses, hospitals and even schools.” But Jackson said the groups’ arguments lack merit.
- Ethics Unveils 13 Rangel Charges. A scathing House ethics report charges that Rep. Charles Rangel, an iconic New York powerbroker, violated 13 ethics and federal regulations covering public officials, including pressuring lobbyists and corporations to cough up millions for a New York college building bearing Rangel’s name. In releasing a "Statement of Alleged Violation" of against Rangel, investigators drew a portrait of a veteran lawmaker who used his office and staffers for his own personal benefit and aggrandizement, repeatedly running afoul of House financial disclosure rules. He now faces an ethics “trial” unless he’s able to cut a deal with the ethics committee.
- Republican Concerns Could Stall START Treaty. Senate Republicans voiced objections on Thursday to the new START nuclear arms treaty with Russia. At a Senate Armed Services Committee hearing, Republicans said the accord could impede U.S. plans for an anti-missile defense system and pressed the Obama administration to release the full treaty negotiating record to answer their questions. "We originally were told that there would be no references to missile defense in the treaty and no linkage drawn between offensive and defensive weapons," Senator John McCain said, adding that one section included a "clear, legally binding limitation on our missile defense options." "Why did the administration agree to this language after saying they would do no such thing?" he asked. "We're insisting on an opportunity to review the negotiating record for ourselves, specifically those parts dealing with the ambiguous references to missile defense."
- Wynn(WYNN) Q2 Profit Doubles, Shares Decline. Casino operator Wynn Resorts Ltd's (WYNN) quarterly profit more than doubled as revenue in Macau rose 74 percent, but much of the beat came from a spike in casino winnings, and shares fell more than 3 percent.
- First Solar(FSLR) Profit Tops Street, Trims Sales View. First Solar (FSLR) reported better-than-expected quarterly profits on Thursday, but trimmed its 2010 sales forecast because of weaker prices. Its shares fell 4 percent in after hours trading.
- US Banks in Rush for Cheap Finance. US banks are taking advantage of improving earnings and growing investor demand to raise billions of dollars in debt at historically low interest rates, a move that could boost the sector’s profits in coming years. The burst of fundraising in the US is in stark contrast to Europe where banks have struggled to issue debt as the eurozone crisis and worries about the financial industry have undermined market confidence. The cheap finance locked in by big institutions such as JPMorgan Chase, US Bancorp, Goldman Sachs and Morgan Stanley in recent days marks a remarkable comeback for a sector that was shunned by investors during the financial crisis. Less than two years after the government was forced to intervene to ease a dramatic credit crunch, US banks sold more than $7bn in debt last week – the largest weekly total since September 2009, says Dealogic. US Bancorp, a Minneapolis-based lender, raised $1bn in five-year bonds at an interest rate of 2.45 per cent – one of the lowest ever paid by a bank. Lower funding costs boost profits because they increase the margins earned by banks on their loans to consumers, companies and investors.
- Chinese central bank adviser Zhou Qiren said the nation can consider a small yuan depreciation to help stabilize export growth.
- Shanghai will announce tightening measures for the real estate market in the second half of the year, citing Zhou Bo, head of Shanghai's National Development and Reform Commission.
Citigroup:
- Reiterated Buy on (IRM), raised target to $32.
- Reiterated Buy on (NIHD), target $50.
- Reiterated Buy on (JNPR), target $36.
- Reiterated Overweight on (POT), raised estimates, target $135.
- Asian equity indices are -1.0% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 118.0 +1.0 basis point.
- Asia Pacific Sovereign CDS Index 113.0 -.5 basis point.
- S&P 500 futures -.50%.
- NASDAQ 100 futures -.47%.
Earnings of Note
Company/Estimate
- (NWL)/.44
- (FSS)/.07
- (SPG)/1.34
- (MCK)/1.07
- (ACI)/.25
- (WY)/.13
- (ITT)/1.07
- (CVX)/2.46
- (AEP)/.69
- (FO)/.75
- (BWA)/.67
- (MSTR)/.86
- (MRK)/.82
8:30 am EST
- 2Q Advance GDP is estimated to rise+2.6% versus a +2.7% gain in 1Q.
- 2Q Advance Personal Consumption is estimated to rise +2.4% versus a +3.0% gain in 1Q.
- 2Q Advance GDP Price Index is estimated to rise +1.1% versus a +1.1% gain in 1Q.
- 2Q Advance Core PCE is estimated to rise +1.0% versus a +.7% gain in 1Q.
- The 2Q Employment Cost Index is estimated to rise +.5% versus a +.6% gain in 1Q.
- Chicago Purchasing Manager for July is estimated to fall to 56.0 versus a reading of 59.1 in June.
- Final Univ. of Mich. Consumer Confidence for July is estimated to rise to 67.0 versus a prior estimate of 66.5.
- None of note
- The Fed's Bullard speaking on CNBC, Bloomberg FCI for July and the NAPM-Milwaukee for July could also impact trading today.
Thursday, July 29, 2010
Stocks Lower into Final Hour on Profit-Taking, Fed Comments, Earnings Reports
Broad Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Mixed
- Volume: Above Average
- Market Leading Stocks: Outperforming
- VIX 23.54 -2.93%
- ISE Sentiment Index 101.0 -44.51%
- Total Put/Call 1.0 +4.17%
- NYSE Arms 1.02 -23.17%
- North American Investment Grade CDS Index 103.66 bps -.58%
- European Financial Sector CDS Index 105.0 bps +5.53%
- Western Europe Sovereign Debt CDS Index 112.0 bps -.60%
- Emerging Market CDS Index 214.26 bps -1.42%
- 2-Year Swap Spread 17.0 unch.
- TED Spread 32.0 -1 bp
- 3-Month T-Bill Yield .15% unch.
- Yield Curve 240.0 +1 bp
- China Import Iron Ore Spot $136.10/Metric Tonne +.74%
- Citi US Economic Surprise Index -40.80 +.2 point
- 10-Year TIPS Spread 1.79% unch.
- Nikkei Futures: Indicating -10 open in Japan
- DAX Futures: Indicating +21 open in Germany
- Slightly Higher: On gains in my Biotech and Retail long positions
- Disclosed Trades: Covered all of my (IWM)/(QQQQ) hedges and covered some of my (EEM) short
- Market Exposure: Moved to 100% Net Long
Today's Headlines
Bloomberg:
- Falling U.S. Mortgage Rates May Aid Economy Outside Housing. Mortgage rates for U.S. homes set a record low for the sixth straight week, potentially freeing up money for consumers to spend elsewhere. Investors seeking the relative safety of bonds backed by government-controlled home finance companies Fannie Mae and Freddie Mac drove the average rate for a 30-year fixed mortgage down to 4.54 percent in the week ended today from 4.56 percent last week, McLean, Virginia-based Freddie Mac said. The average 15-year rate was 4 percent, also a record in the data going back to 1971, the company said in a statement. “It’s not going to help out everybody but it will help,” said Dana Johnson, chief economist at Comerica Inc. in New York. “Lower rates are a mechanism by which the economy can strengthen over time.”
- Well's Fargo's(WFC) Stumpf Sees New Costs for Customers. Wells Fargo & Co. Chief Executive Officer John Stumpf said customers, not just the bank, will bear the financial burden for U.S. regulations that cover services ranging from home loans to credit cards. “I can’t guarantee that we won’t pass on some of those costs,” Stumpf, 56, said in an interview at his San Francisco office. “We’ll try to tighten our belt and absorb some of the costs of compliance, but some costs may change and customers might pay for their financial services in new ways.” Stumpf’s comments add to evidence that new rules mean new expenses for consumers as banks make up for lost revenue and increased costs. JPMorgan Chase & Co. CEO Jamie Dimon said July 15 the legislation may translate into higher fees and credit- card rates, and Bank of America Corp.’s Brian T. Moynihan told shareholders a day later he’s looking for ways to soften the impact on annual revenue, which the lender said could be $2.3 billion. Wells Fargo, with the biggest U.S. branch network, is already passing on costs by charging for checking accounts and raising interest rates on credit cards and loans, said Richard Bove, a banking analyst at Rochdale Securities LLC. The bank ended free checking last month by adding a $5 monthly fee for customers who don’t meet certain conditions. “This bank does not intend to sit there and get nailed,” said Bove, who recently upgraded Wells Fargo shares to a “buy.” “Wells Fargo has moved well ahead of the crowd, and everyone will follow.”
- Jobless Claims in U.S. Declined 11,000 Last Week to 457,000. The number of Americans filing first-time claims for unemployment insurance fell to 457,000 last week, a figure that signals the labor market will be slow to improve even as the economy grows. Initial jobless claims dropped by 11,000 in the week ended July 24 from a revised 468,000, Labor Department figures showed today in Washington. “The underlying pace of claims has not made any measurable improvement,” said Ellen Zentner, senior U.S. macro economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Businesses are investing in equipment but other than that there’s little impetus” for them to hire, she said. The four-week moving average of claims, a less-volatile measure, dropped to 452,500 last week, the lowest since May 8, from 457,000, today’s report showed. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, rose to 3.6 percent in the week ended July 17 from 3.5 percent in the prior week.
- Exxon(XOM) Profit Rises Most Since 2003 as Output Climbs. Exxon Mobil Corp. posted its biggest profit increase since 2003, exceeding analysts’ estimates, as rising production helped the largest U.S. oil company take advantage of gains in energy prices. Second-quarter net income jumped 91 percent to $7.56 billion, or $1.60 a share, from $3.95 billion, or 81 cents, a year earlier, Irving, Texas-based Exxon said today in a statement. Exxon and Royal Dutch Shell Plc, Europe’s biggest energy company, capitalized on jumps in oil and fuel prices by boosting production. Exxon’s output climbed 8.4 percent to the equivalent of 4 million barrels of oil a day.
- Fed's Fisher Says Firms May Not React to More Accommodation. Federal Reserve Bank of Dallas President Richard Fisher said the U.S. economy faces a “slow slog” and further monetary accommodation may not help revive “dispirited” businesses. “As long as our economic players, businesses and consumers, are beset by unmanageable uncertainty, they will refrain from making decisions that provide the stuff of economic growth,” Fisher said in a speech today in San Antonio. The regional Fed chief, 61, said he expects growth below 3 percent for a “prolonged period,” buttressing the Fed’s Beige Book business survey yesterday which showed the recovery slowing in some areas over the past two months. Businesses “are increasingly distressed by the lack of consistent direction coming from Washington,” Fisher said. “They are confused and dispirited by random refereeing.” It’s possible “further monetary accommodation might make the situation worse” if the Fed is seen as “politically pliable” and “prone to substituting such accommodation for fiscal discipline.” Fisher reiterated his view that the Fed will not “monetize” the nation’s debt by effectively printing money to finance the shortfall, and said “neither inflation nor deflation will be tolerated” by policy makers. The banking industry “appears to be on a very slow mend,” and yet “uncertainty reigns,” he said.
- North Korea Gets China Cooperation Deal After U.S. Sanctions. North Korea signed an economic and technical cooperation agreement with China today, a week after U.S. Secretary of State Hillary Clinton announced further trade sanctions to halt the regime’s nuclear-weapons program. Liu Hongcai, the Chinese ambassador to North Korea, and Ri Ryong Nam, the nation’s Minister of Foreign Trade, signed the agreement during a ceremony held in Pyongyang, according to the state-run Korean Central News Agency. China has so far refused to condemn North Korea for the attack on the Cheonan, which killed 46 South Korean sailors. China accounted for 79 percent of the North’s 2009 international trade, according to the Seoul-based Korea Trade-Investment Promotion Agency. China provides almost 90 percent of energy imports and 45 percent of the country’s food, according to a July 2009 report by the New York-based Council on Foreign Relations.
- Bunge(BG) Cuts Profit Forecast as Soybean Margins Shrink. Bunge Ltd., the world’s second- largest sugar trader, reduced its full-year earnings forecast after soybean-processing margins in the U.S. and South America shrank. The shares dropped the most in more than a year. Profit excluding some one-time items will be $3.25 to $3.50 a share this year, the White Plains, New York-based company said today in a statement. It had previously forecast earnings of $5.30 to $5.80, and analysts had projected $5.25, the average estimate in a Bloomberg survey. “The miss was broad-based across all segments, though agribusiness, sugar, and fertilizer were the clear underperformers,” Vincent Andrews, a New York-based analyst at Morgan Stanley, said in a report today. Bunge dropped $5.61, or 10 percent, to $48.36 at 9:30 a.m. in New York Stock Exchange composite trading, the biggest intraday percentage decline since April 23, 2009. The shares fell 15 percent this year through yesterday.
- Volatility Trade Buffett Embraces Backfiring for Hedge Experts. A bullish stock market trade embraced by the smartest money is backfiring. And that has investors wondering if what Warren Buffett and Goldman Sachs Group Inc.(GS) know about derivatives is obsolete. Goldman Sachs, the world’s most profitable securities firm, reported losses from derivatives last quarter after selling insurance that protected clients against stock swings during the Standard & Poor’s 500 Index’s biggest retreat in more than a year. Buffett, the chairman of Omaha, Nebraska-based Berkshire Hathaway Inc., underwrote $37 billion of the contracts since 2004, filings with the Securities and Exchange Commission show. The combination of hedging by insurance companies, tighter regulation of bank speculation and reluctance among securities firms to write derivatives known as variance swaps means speculators who sold them are now facing losses, according to Morgan Stanley and Societe Generale SA. Money-losing trades in both rising and falling markets show the hazards of the business for even Wall Street’s most sophisticated investors.
- German Unemployment Fell for 13th Straight Month as Exports Boom. German unemployment fell for a 13th month in July as companies from Infineon Technologies AG to Deutsche Lufthansa AG benefit from the strengthening global economy. The number of people out of work declined a seasonally adjusted 20,000 to 3.21 million, the Federal Labor Agency in Nuremberg said today. That’s the lowest since November 2008. Unemployment was forecast to fall 20,000, according to the median of 34 estimates in a Bloomberg News survey. The adjusted jobless rate declined to 7.6 percent.
- JPMorgan(JPM) to Open Full Saudi Branch in Emerging-Market Expansion. JPMorgan Chase & Co. plans to become the first U.S. bank to open a full-service commercial branch in Saudi Arabia this year, six years after Citigroup Inc. exited a venture in the world’s biggest oil exporter.
- High-Frequency Trading Faces EU Probe, Regulator Says. High-frequency trading will be investigated by regulators to “better understand any risks,” Europe’s top market watchdog said in a report on proposed industry rules.
- Most Pakistanis View U.S. as Enemy, Want War Over, Survey Finds. Two-thirds of Pakistanis oppose the U.S.-led war in Afghanistan and roughly six in 10 think the U.S. is an enemy, according to a new survey.
- Bullard Urges FOMC Purchase Treasuries If Deflation Risk Grows. Federal Reserve Bank of St. Louis President James Bullard said the central bank should resume purchases of Treasury securities if the economy slows and prices fall rather than maintain a pledge to keep rates near zero. “‘The U.S. is closer to a Japanese-style outcome today than at any time in recent history,” Bullard said, warning in a research paper released today about the possibility of deflation. “A better policy response to a negative shock is to expand the quantitative easing program through the purchase of Treasury securities.” “The most likely possibility from where we sit today is that the recovery will continue through the fall, inflation will start to move up and this issue will all go away,” Bullard said to reporters on a conference call today. “Suppose we get another negative shock, another surprise. We have to be prepared in that event to have a plan in place to do something.” Bullard, a voting member of the Federal Open Market Committee this year, said using Fed communications to pledge rates will stay near zero may prove to be detrimental. While some people say rates near zero will accelerate inflation, such an interest rate policy may also cause a broad-based decline in prices, he said. “Under current policy in the U.S., the reaction to a negative shock is perceived to be a promise to stay low for longer, which may be counterproductive because it may encourage a permanent, low nominal interest rate outcome,” he said in a paper released by the St. Louis Fed.
- Oil Rises for First Time in Week as Dollar Weakens Versus Euro. Oil gained as much as 2.5 percent as the dollar fell to a 12-week low against the euro. Unemployment also dropped in Germany, and confidence in Europe’s economy improved.
Wall Street Journal:
- Evidence Ties Manning to Afghan Leaks. Investigators have found concrete evidence linking Pfc. Bradley Manning with the leak of classified Afghanistan war reports, a U.S. defense official said.
- Redbox Parent Coinstar(CSTR) Explores Beauty Kiosk Business. Coinstar Inc. (CSTR) may try to do for makeup what its Redbox unit has done for movie DVDs. The DVD-vending and coin-counting machine maker is recruiting a vice-president-level manager to oversee a new venture in the beauty or cosmetics space.
- U.S. Needs to Articulate Credible Fiscal Consolidation Plan - Moody's. The U.S. government needs to articulate clearly a credible plan to tackle its bulging debt profile in order to keep its triple-A credit rating, Moody's Investors Service's lead sovereign analyst for the country said Thursday. In contrast to the U.S., the credit health of Asian countries remains broadly positive and their resilience has been highlighted by Europe's debt crisis, which looks to have peaked, Steve Hess, senior credit officer in the sovereign risk group at Moody's told Dow Jones Newswires in an interview.
NY Times:
- Comeback Heralded for Japanese Electronic Giants. Buoyed by a long-awaited turnaround in its television and video game businesses, said Thursday it swung to a net profit of ¥25.7 billion, or $293.9 million, in the April-June quarter and raised its outlook for the full year. The company’s chief financial officer said it was time for Sony to “go on the offensive” amid signs that a global economic recovery was finally pulling Japan’s electronics giants out of a long slump.
- White House Proposal Would Ease FBI Access to Records of Individual's Internet Activity. The Obama administration is seeking to make it easier for the FBI to compel companies to turn over records of an individual's Internet activity without a court order if agents deem the information relevant to a terrorism or intelligence investigation. The administration wants to add just four words -- "electronic communication transactional records" -- to a list of items that the law says the FBI may demand without a judge's approval. Government lawyers say this category of information includes the addresses to which an Internet user sends e-mail; the times and dates e-mail was sent and received; and possibly a user's browser history. What officials portray as a technical clarification designed to remedy a legal ambiguity strikes industry lawyers and privacy advocates as an expansion of the power the government wields through so-called national security letters. These missives, which can be issued by an FBI field office on its own authority, require the recipient to provide the requested information and to keep the request secret. To critics, the move is another example of an administration retreating from campaign pledges to enhance civil liberties in relation to national security. The proposal is "incredibly bold, given the amount of electronic data the government is already getting," said Michelle Richardson, American Civil Liberties Union legislative counsel. The critics say its effect would be to greatly expand the amount and type of personal data the government can obtain without a court order. "You're bringing a big category of data -- records reflecting who someone is communicating with in the digital world, Web browsing history and potentially location information -- outside of judicial review," said Michael Sussmann, a Justice Department lawyer under President Bill Clinton who now represents Internet and other firms.
- D.C. Area Jobless Rate Rises Again as Labor Force Grows. Unemployment in the Washington region rose to 6.4 percent in June from 6 percent the previous month, according to federal government data released Wednesday, highlighting the fragility of the recovery in the local labor market. The Bureau of Labor Statistics data contrasted with numbers it released last week on the District, Maryland and Virginia that showed their unemployment rates had dropped in June. The difference is attributable in part to Wednesday's data not taking in the entire states of Maryland and Virginia. At the same time, experts say the Washington area's relatively positive labor market has been drawing job seekers from outside the region faster than it has been adding jobs.
- OMB Nominee Got $900,000 After Citigroup(C) Bailout. President Obama's choice to be the government's chief budget officer received a bonus of more than $900,000 from Citigroup Inc. last year -- after the Wall Street firm for which he worked received a massive taxpayer bailout. The money was paid to Jacob Lew in January 2009, about two weeks before he joined the State Department as deputy secretary of state, according to a newly filed ethics form. The payout came on top of the already hefty $1.1 million Citigroup compensation package for 2008 that he reported last year.
- Obama Mocks Polls But Spends More On Them($4.4M) Than Bush Did. During his daily press briefing on July 13, White House Press Secretary Robert Gibbs was peppered with questions about why the president's popularity numbers are in decline and his policy positions are so difficult to sell. ABC News's Jake Tapper sought reaction to the network's newest poll showing that 51 percent of respondents would rather have Republicans running Congress. CNN's Ed Henry wanted to know why, in that same poll, "six in 10 Americans have little or no faith in the President to make the right decisions." CBS's Chip Reid then pointed to his own network's poll showing that only 13 percent of respondents thought the president's economic programs had affected them personally. Exasperated, Gibbs deployed a classic rejoinder: mocking the polling-obsessed media culture.
- Cable News Rating July 2010: Fox Dominates, MSNBC Tops CNN. Fox News continued its domination of cable news ratings in July. The network averaged 1.85 million viewers in primetime for the month--more than CNN, MSNBC and HLN combined. How did individual programs do? Below see the top 30 programs in cable news for July 2010.
- Big Drop in U.S. Agricultural Sales to Cuba. U.S. agricultural exports to Cuba fell 35 percent in the first five months of this year compared with the same period in 2009, largely because of the island's shortage of hard currency, according to a recent report. The report by the U.S.-Cuba Trade and Economic Council, a New York-based group that monitors bilateral trade, showed U.S. sales to Cuba from January to May of this year hit $182 million, compared with $278 million for the same period last year. U.S. exports to Cuba already had seen a 24 percent drop in 2009 -- $528 million, compared with 2008, when they hit a record of $710 million, according to the report issued Tuesday.
- The Barack Obama-Nancy Pelosi Event. President Barack Obama’s endless summer of fundraising is heating up — with the addition of a big-money August house party to help out House Speaker Nancy Pelosi’s imperiled Democrats, POLITICO has learned. Obama plans to headline an Aug. 16 fundraiser for the Democratic Congressional Campaign Committee in Los Angeles — the first such appearance by the president on behalf of Pelosi since White House press secretary Robert Gibbs rankled House Democrats by suggesting they could lose their majority.
- US Commercial Paper Market Grows for 3rd Week - Fed. The U.S. commercial paper market expanded for the third straight week, showing companies are able to use it to borrow as an alternative to tight bank lending, Federal Reserve data showed on Thursday.
Bild Zeitung:
- 20 Years after German reunification, labor costs in the eastern part of the country are still almost 28% lower than in the west.
- China may face deflationary pressures in the second half of this year, citing Wang Ziaoguang, head of macroeconomic research under the National Development and Reform Commission. China's economic growth path may be "W-shaped," Wang said. The effects of China's property curbs should be seen in the first quarter of next year, Wang said.
Bear Radar
Style Underperformer:
- Mid-Cap Growth (-1.07%)
- 1) Networking -2.85% 2) Utilites -1.80% 3) Computer Hardware -1.80%
- BG, NETL, CL, VLTR, K, CEG, TNE, VPRT, TAYC, GSIC, AMAG, AKAM, TNDM, SRDX, ASIA, SYMC, LIFE, LKQX, MPWR, BMC, ATHR, MBLX, PPDI, CVD, HSC, CTV, CRI, EEP, EEQ and KEX
- 1) ACI 2) CL 3) BG 4) CTXS 5) FXE
- 1) K 2) MNI 3) TRB 4) CNX 5) MF
Bull Radar
Style Outperformer:
- Small-Cap Value (+.19%)
- 1) I-Banks +1.17% 2) Gold +.90% 3) Insurance +.72%
- FTE, MFC, TEF, SLF, CLF, HES, GMCR, TER, AVP, SCMR, ITRI, CTXS, GENZ, LOGI, PSSI, ESRX, CLNE, OII and TGI
- 1) GMCR 2) TER 3) AKAM 4) BG 5) CHS
- 1) XOM 2) LUV 3) CL 4) AMZN 5) NOC
Thursday Watch
Evening Headlines
Bloomberg:
- Mortgage-Bond Spreads Surpass Lows Reached During Federal Reserve Buying. Yields on Fannie Mae and Freddie Mac mortgage securities that guide U.S. home-loan rates reached record lows relative to 10-year Treasuries as investors search for higher returns amid limited refinancing by borrowers. Fannie Mae’s current-coupon 30-year fixed-rate mortgage bonds narrowed 0.02 percentage point to about 0.58 percentage point more than 10-year Treasuries as of 1:45 p.m. in New York, according to data compiled by Bloomberg. The gap reached 0.59 percentage point on March 29, two days before the Federal Reserve ended its buying of $1.25 trillion of so-called agency mortgage bonds.
- Gross Calls Spending to Maintain Consumption a Waste. Pacific Investment Management Co.’s Bill Gross said deficit spending by governments that seek to maintain artificial levels of consumption “can be compared to flushing money down an economic toilet.” Without acceleration in population growth, developed countries finance more consumption to maintain economic growth, the world’s biggest bond-fund manager wrote in his August commentary today on Newport Beach, California-based Pimco’s website. Leveraged spending, he said, is not a substitute for demand created by people. “I will go so far as to say that not only growth but capitalism itself may be in part dependent on a growing population,” Gross wrote. “Production depends upon people, not only in the actual process, but because of the final demand that justifies its existence.” Deficit spending will be unsuccessful in what Pimco calls the “new normal” because deleveraging, re-regulation and de- globalization produces structural headwinds that lead to slower growth and lower-than-average investment returns, Gross said. Japan is the modern-day example of what deleveraging in the face of a slowing and now negatively growing population can do, Gross said.
- Pickens, Home Depot(HD) Beat Wind-Turbine Makers in Energy Measure. T. Boone Pickens, the billionaire energy hedge-fund manager, and Home Depot Inc., the largest U.S. home-improvement retailer, are winners in energy legislation that fails to help solar-panel and wind-turbine makers. The measure proposed yesterday by Senate Democrats would give Pickens victory in his lobbying campaign for more use of natural gas, providing $3.8 billion in rebates for cars and trucks powered by the fuel. Home Depot would benefit from provisions to channel $5 billion in rebates to homeowners who upgrade to more efficient appliances or add insulation that reduces energy use. The provisions were the main survivors among proposals to reshape U.S. energy use under the measure that would also set tougher rules for offshore drilling after BP Plc’s Gulf of Mexico oil spill, the worst in U.S. history. Absent from the measure were limits on carbon dioxide or requirements that utilities add solar and wind power to their portfolios.
- CIC Sells Morgan Stanley Shares for Total of $396.5 Million in Past Week. China Investment Corp., the Chinese sovereign wealth fund that bought a 9.9 percent stake in Morgan Stanley in 2007, sold $132.8 million of shares in the investment bank yesterday, bringing the total amount sold in the last week to $396.5 million. CIC sold 4.88 million shares at a weighted average of $27.25 yesterday, the Beijing-based fund said in a regulatory filing. CIC still owns 161.6 million Morgan Stanley shares, according to the filing. The fund sold 14.6 million shares since July 21, the day Morgan Stanley jumped by the most in more than a year after reporting better-than-expected earnings.
- Oliver Stone's Showtime Series Should be Canceled, Billionaire Saban Says. called on CBS Corp.’s Showtime Networks to cancel Billionaire Haim SabanOliver Stone’s planned “Secret History of America” documentary series after the filmmaker made remarks that were criticized as anti-Semitic. Saban, creator of the “Power Rangers” franchise and an investor in Univision Communications Inc., urged New York-based CBS to cancel the 10-hour series, his spokeswoman, Stephanie Pillersdorf, said today in an e-mail. “Anyone who works with this guy should be ashamed,” Saban, who is Jewish and a supporter of Israel, said in comments posted at HuffingtonPost.com and confirmed by Pillersdorf. “Oliver Stone should be given a helping hand --indeed, a vigorous shove -- into the land of forced retirement.”
- Dendreon's(DNDN) Vaccine for Prostate Cancer Extends Life in Published Study. Dendreon Corp.’s prostate cancer vaccine, Provenge, extended lives by 4.1 months in a study published in the New England Journal of Medicine. The data, released previously, led to the drug’s U.S. approval in April. Provenge is the first drug designed to train the body’s immune system to fight cancer and is the most effective treatment for certain patients with advanced prostate tumors, said Philip Kantoff, a professor of medicine at Harvard Medical School and the study’s lead author.
- Illinois Will Probably Raise Income-Tax Rate to 5%, Budget Director Says. Illinois, which is in its worst financial position ever, will raise the income-tax rate in January to address its deficit, Governor Pat Quinn’s budget director said. Lawmakers will likely increase the personal tax to 5 percent from 3 percent, generating $6 billion of new revenue, the budget director, David Vaught, said in an interview.
- Avis Budget Offers $1.33 Billion for Dollar Thrifty. Avis Budget Group Inc.’s $1.33 billion offer for Dollar Thrifty Automotive Group Inc., which topped Hertz Global Holdings Inc.’s agreement to buy the rental- car company, may signal a bidding war is under way. The $46.50-a-share offer includes $39.25 in cash and 0.6543 of an Avis share for each Dollar Thrifty share, Parsippany, New Jersey-based Avis said yesterday in a statement. The proposal is 4.5 percent less than Dollar Thrifty’s closing price yesterday.
- Vietnam's Debt Rating Lowered by Fitch on Foreign Borrowing, 'Weak' Banks. “Vietnam’s sovereign creditworthiness has deteriorated on the back of weaker external finances and rising external financing requirements amid an inconsistent macroeconomic policy framework,” Ai Ling Ngiam, a director in Fitch’s Asia Sovereign team, said in today’s release. She also cited a “weak banking system.”
- Arizona Ruling Sparks Political Firestorm. A federal judge's decision to block the most controversial elements of Arizona's immigration law offered a fresh hot-button issue for the already heated political season. Jane Norton, a Republican candidate for the U.S. Senate in Colorado, had a hunch that by dinnertime Wednesday, conservative voters across the state would have heard about a federal judge blocking much of Arizona's immigration law. She had a hunch they would be angry.
- Sanofi Likely to Make Formal Bid to Genzyme(GENZ) Board. Sanofi-Aventis SA is increasingly likely to make a formal takeover offer to Genzyme Corp.'s board, people familiar with the matter said, in an effort to win enough support among the U.S. biotechnology company's directors to secure a deal that could be valued at about $20 billion. There is growing expectation in both camps that the French pharmaceutical company will send a so-called "bear hug" letter to Genzyme, publicly detailing its proposal, these people said.
- Americans Cut Back on Visits to Doctor. Insured Americans are using fewer medical services, raising questions about whether patients are consuming less health care as they pick up a greater share of the costs. The drop in usage is showing up as health-care companies report financial results. Insurers, lab-testing companies, hospitals and doctor-billing concerns say that patient visits, drug prescriptions and procedures were down in the second quarter from year-ago levels. "People just aren't using health-care like they have," said Wayne DeVeydt, WellPoint Inc.'s chief financial officer, in an interview Wednesday. "Utilization is lower than we expected, and it's unusual." Others say that consumers are beginning to forgo elective procedures like knee replacements. "We have a very weak economy and it's just a different environment for the elective parts of health care," said Paul Ginsburg, a health economist who runs the Center for Studying Health System Change and has been analyzing health-company earnings.
- DirectTV(DTV) Plays Offense With NFL Ads. Satellite Provider Will Kick Off $100 Million Marketing Blitz to Boost Its Sunday Program Package. DirecTV Group Inc. is launching its biggest advertising campaign yet for its marquee property, NFL Sunday Ticket, as it faces mounting pressure from pay-television competitors increasingly offering rival NFL packages.
- Kindle to Go 'Mass Market'. Amazon(AMZN) Digs in Heels by Introducing New, Cheaper Version of E-Book Reader.
- Bruce Berkowitz Bets on Financials, Buys Morgan Stake(MS). Well-known mutual-fund manager Bruce Berkowitz is still betting on the U.S. financial sector, saying he recently accumulated a stake in Morgan Stanley (MS).
- Fannie Mae, Freddie Mac Still Too Big to Nail: Jonathan Weil. The White House says it’s finally ready to consider new ideas for what to do about Fannie Mae and Freddie Mac. Still absent from the government’s agenda is any serious effort to hold anyone accountable for their ruin or investigate why they collapsed.
- Dodd, Frank Plan Congressional Hearings on Basel Bank-Capital Regulations. Christopher Dodd and Barney Frank, authors of the U.S. financial overhaul, plan hearings on the status of global talks to revise bank-capital standards amid worries that proposed rules are being watered down. “I am concerned the recent proposals out of Basel will result in weak and perhaps even nonbinding provisions that provide credit to banks for holding forms of capital that have little or no value in absorbing losses,” said Senator Ted Kaufman, Democrat of Delaware. “The financial reform bill includes only a promise of higher capital requirements for U.S. banks, which we were told were going to be negotiated on an international level.”
- China's Stocks Rally Will Wane on Inflation Outlook, HSBC's Mahendran Says. HSBC Private Bank’s Arjuna Mahendran, who predicted a decline in China’s stocks in January, said the the country’s month-long equities rally may falter if the government isn’t able to boost the economy and contain inflation.“It’s not going to be an easy ride to regain losses,” said Mahendran, the head of investment strategy for Asia in Singapore at HSBC Private Bank, a unit of Europe’s largest bank overseeing $460 billion globally. “We might see some short-term gains on the index, but there could be reversals until the picture of overall inflation is clearer.”
- What Weeks of Real Usage Tells About New iPhone by Walt Mossberg.
- Taxes: A Defining Issue. Barack Obama knows taxes define worldview. The GOP should offer voters an alternative.
- Barring BP(BP) From Drilling Would Cost U.S. Jobs, Company Says. BP Plc objected to proposed legislation that would bar the oil company from operating new drilling leases in U.S. waters, saying it could trigger job losses and threaten the nation’s energy security. A provision of the House bill may have a “drastic impact,” David Nagel, executive vice president of BP America, said in a July 28 letter to Democratic Speaker Nancy Pelosi of California and Republican Minority Leader John Boehner of Ohio. BP said it contributes “significantly” to U.S. oil output as the largest producer in the deep waters of the Gulf. “If this provision were to limit our ability to develop new and existing energy sources, it would harm the ongoing effort to increase America’s energy independence,” Nagel wrote. While BP supports stronger drilling regulation, it is concerned that the provision of the House measure “could have profound consequences for the Gulf Coast economy and jobs, and for the nation as a whole,” Nagel said in the letter.
- SEC Investigates Trading in Anadarko Shares. Trading in shares of the oil and gas exploration company Anadarko Petroleum late this spring are under investigation by the Securities and Exchange Commission, according to someone familiar with the matter.
- Visa(V) Results Improve, Top Analysts' Expectations. Visa turned in a quarterly profit of $716 million, outpacing Wall Street estimates, as consumers resumed spending.
- This Is Real: The White House Wants To Stimulate The Economy By Building More Cheap Housing. We must admit to being a tad perplexed by this post up at The White House blog: Affordable Housing in the Recovery Summer. That's right, apparently our central planners, in their infinite wisdom have decided that what the economy is really lacking right now is more cheap housing. Here's what Rosie Rios, the US Treasurer wrote:
- Al-Qaeda's New Magazine. ''Inspire'' aims to turn Muslims in the Western world toward violent jihad. Can American publishers meet the challenge? So in case you missed it, al Qaeda has a brand new magazine. Yes, really. Just when publishing titans like Hearst and Conde Nast have closed the doors on classics such as Gourmet and O At Home and Newsweek struggles for its future, our friends at al Qaeda headquarters have come up with Inspire, an English-language, online publication aimed at turning Muslims in the English-speaking (Western) world toward violent jihad.
- The Comeback in Airlines and Aerospace. In an economic setting less than perfect, but still expansive, airlines are a leveraged earnings play.
Crain's Chicago Business:
- Bill Calls for Study Delinking Lake Michigan, Chicago River to Stall Asian Carp. A U.S. House water projects bill introduced Wednesday would require the Army Corps of Engineers to study separation of Lake Michigan from the Chicago River and the local canal system to prevent the migration of Asian carp and other invasive species. The bill, introduced by Rep. Jim Oberstar, D-Minn., chairman of the House Transportation and Infrastructure Committee, is expected to clear the panel Thursday and head to the full House for a vote soon. While many Midwest politicians have pushed the idea lately, separating the Great Lakes from the Mississippi River Basin has been highly controversial locally because it would disrupt industrial barge shipping and recreational boating in the Chicago area. The 108-page House bill contains hundreds of specific flood control and environmental projects across the country.
- Viking Global Investors Suffers Bad 2Q, Large Redemptions. Viking Global Investors LP, a "Tiger Cub" hedge fund manager with $12.1 billion in assets under management as of June 30, suffered a bad second quarter with losses for both of its funds, according to its investor letter. Viking also has received large redemption requests when it offered a " liquidity option" to investors after its chief investment officer stepped down in the spring, the letter said. The letter, written by its Chief Executive O. Andreas Halvorsen and posted on website Dealbreaker.com, said its Viking Global Equities fund lost 5% and its Viking Long Fund lost 11.9% net in the second quarter, net of all fees on a composite basis. Gross external redemptions for Aug. 1 amounted to about 10.5% of capital in Viking Global Equities fund and about 13% for Viking Long Fund, as it offered investors a one-time liquidity option following the resignation of chief investment officer David Ott.
- Apple's(AAPL) Newly Updated Mac Desktops Feature Only ATI Graphics. In this week's refresh of the Mac Pro and iMac lineup, Apple chose to only offer ATI graphics options in all configurations of the company's latest desktops. That's a change from last October, when the iMac line was redesigned, and buyers of the the 21.5-inch iMac had the option of integrated graphics via the Nvidia GeForce 9400M. The discrete graphics options available in last year's iMac line were all ATI cards. But with Tuesday's updates of the iMac and Mac Pro lines, ATI is now the sole graphics option on Apple's Mac desktop lineup. David Baumann, product manager for AMD's graphics division, which oversees the ATI graphics products, spoke with AppleInsider about the new lineup.
- 28% Say U.S. Heading in Right Direction. Twenty-eight percent (28%) of Likely Voters say the country is heading in the right direction, according to a new Rasmussen Reports national telephone survey taken the week ending Sunday, July 25. Just over half (53%) of Democrats feel the country is heading in the right direction, but 91% of Republicans and 73% of voters not affiliated with either major party believe the country is heading down the wrong track. Sixty-seven percent (67%) of all voters say the country is heading down the wrong track, unchanged from last week.
- Rangel to Dems: Drop Me If You Must. Not even his colleagues know what Rangel will do Thursday, when the House ethics committee reveals what is expected to be a scathing slate of allegations of wrongdoing to open the congressional version of a trial. Rangel declined to comment on the specifics of his case, but his remarks suggest that he knows more calls for his resignation may be coming. Despite that possibility, he was prepared for a fight, according to some fellow black Democrats. There’s a lot riding on Rangel’s decisions — for him, his party and the integrity of the institution he has served in since 1971. “I think he’s going to have to go, maybe tomorrow,” said a member of the Congressional Black Caucus who asked not to be named.
- Students Looking for Jobs Boost Metro Unemployment. The unemployment rate in about three-quarters of the nation's largest metro areas rose last month as nearly one million teenagers entered the work force looking for summer jobs. The Labor Department said Wednesday that the unemployment rate rose in 291 of 374 areas in June from May.
- Getting a Grip on Government Debt. Continuous annual federal budget deficits have led to a big increase in the nation's overall debt. Explore this interactive to see:
- Sarkozy Orders Illegal Roma Immigrants Expelled. French President Nicolas Sarkozy on Wednesday ordered authorities to expel Gypsy illegal immigrants and dismantle their camps, amid accusations that his government is acting racist in its treatment of the group known as Roma. Sarkozy called a government meeting Wednesday after Gypsies clashed with police this month following the shooting death of a youth fleeing officers in the Loire Valley. Sarkozy said those responsible for the clashes would be "severely punished" and ordered the government to expel all illegal Roma immigrants, almost all of whom have come from eastern Europe. He pushed for a change in France's immigration law to make such expulsion easier "for reasons of public order." He said illegal Gypsy camps "will be systematically evacuated," calling them sources of trafficking, exploitation of children and prostitution.
- Downward pressure on the Chinese economy is increasing because of property market curbs, government debt vehicle controls, and carbon emission reduction efforts, citing Zhang Jianhua, the head of the People's Bank of China's research bureau.
- Moody's: Regions Bank on Watchlist for Possible Downgrade.
- Moody's: SunTrust Bank on Watch for Possible Downgrade.
- Juniper(JNPR) To Be Key AT&T(T) Supplier, Details Due Thurs. Juniper Networks Inc (JNPR) said on Tuesday it will be named a key supplier to AT&T Inc's (T) network build-out, a move that could help it gain business with the country's top telecommunications carrier. Juniper will be chosen as a supplier for AT&T's IP (Internet Protocol), MPLS (Multi Protocol Label Switching), Ethernet and Evolved Packet Core domain, it said.
- Akamai(AKAM) Profit and Cost Outlook Weigh on Shares. Akamai Technologies Inc's (AKAM) business outlook disappointed investors who expected greater profit from the growing popularity of online entertainment, sending the shares down 5 percent after-hours on Wednesday.
- US Jobless Rate to Stay High-Ex Fed No.2. The United States will suffer high unemployment for some time as it slowlyrecovers from the deep recession that ended in 2009, a former second in command at the Federal Reserve said on Wednesday. "I see a very slow, uneven recovery. It will not be fast enough to put a dent in the painfully high unemployment rate for some time," Roger Ferguson, the Federal Reserve's vice chairman from 1999 to 2006, told Reuters after a speech in Cambridge, Massachusetts.
- VistaPrint(VPRT) Sees Weak 2011; Shares Plunge. Vistaprint N.V., a provider of online printing and design services, posted weaker-than-expected quarterly revenue hurt by currency fluctuations and forecast 2011 results well short of the market consensus, sending it shares down 26 percent.
- Challenging Half at RAB Capital. RAB Capital, one of the worst-hit hedge fund managers during the financial crisis, said hopes of pushing ahead with its recovery had been dampened by a challenging first half to 2010. Revenues fell 14 per cent to £8.2m, the group’s pre-tax loss worsened to £3.3m from a loss of £2.7m the year before, and the group proposed to cut the interim dividend to 0.1p, against 0.6p a share last year. After two years of restructuring funds, disposals and cutting costs, assets under management fell to $1.26bn from $1.35bn in December. At RAB’s peak in 2007, RAB managed more than $7bn in assets until a wave of redemptions hit its funds.
- Banks Plan for Loss of Eurozone Member. Banks have started early-stage planning to deal with the potential fallout on the derivatives and bond markets of a European country being forced to leave the euro. After having received queries by some banks about the impact of such an event, the body representing the swaps and derivatives industry last week contacted some of its members to form a group to consider what they may need to do if a eurozone state is ejected. One person close to the process said that because of the sensitivity of the issue only a small number of members, about 12, predominantly banks but also investors, had been approached. A spokeswoman for the International Swaps and Derivatives Association (ISDA) said the move expressed “no view as to the likelihood of such an event occurring”, but that the organisation had decided to establish a group to “explore the different scenarios in which a country may leave the eurozone and consider what legal and documentation issues could arise in each for the (over-the-counter) derivatives markets and what steps would be necessary in order to address them”.
- China PBOC Official Calls for Policy Adjustment Against Inflation. Inflation is the "main threat" to the Chinese economy in the current half of the year, and the central bank will need to adjust policies to drain interbank market liquidity and ease price pressures, a People's Bank of China official said Wednesday. Jiao Jinpu, a former central bank researcher and currently deputy-director of the bank's graduate school, told a forum here that the strength in M1 money supply growth seen during the first half will impact price indicators after a six month lag. "Money supply growth was a bit too fast," he said. "That money, will sooner or later translate into inflationary pressure." M1 growth ended the first half up 24.6% after hitting nearly 39% in January. Managing inflation will be the main challenge for monetary policy in the second half, Jiao said, though the broader policy picture will remain unchanged, with the government continuing with its moderately loose monetary policy stance. "The central bank needs to adjust its operations to drain excess liquidity and control inflation," Jiao said.
- China will keep its property market curbs in place after the policies successfully stemmed the rapid rise in home prices in some cities, said Liu Yingjie, head of the comprehensive department at the State Council Research Office.
Citigroup:
- Reiterated Buy on (PX), raised target to $99.
- Asian equity indices are -.25% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 117.0 +2.0 basis points.
- Asia Pacific Sovereign CDS Index 113.5 +4.0 basis points.
- S&P 500 futures +.24%.
- NASDAQ 100 futures +.13%.
Earnings of Note
Company/Estimate
- (CME)/4.36
- (GT)/.03
- (ADP)/.42
- (WMB)/.30
- (IRM)/.24
- (GR)/1.07
- (XEL)/.27
- (MCO)/.44
- (CNX)/.66
- (DPS)/.69
- (MOT)/.08
- (F)/.94
- (BEN)/1.50
- (KLAC)/.59
- (FSLR)/1.62
- (GNW)/.28
- (AMGN)/1.30
- (MWW)/-.05
- (MET)/1.00
- (EXPE)/.42
- (AVP)/.35
- (WYNN)/.42
- (NOC)/2.20
- (BDX)/1.24
- (CELG)/.66
- (LUV)/.26
- (XOM)/1.45
- (MFE)/.41
- (CL)/1.17
8:30 am EST
- Initial Jobless Claims for last week are estimated to fall to 460K versus 464K the prior week.
- Continuing Claims are estimated to rise to 4500K versus 4487K prior.
- None of note
- The Fed's Fisher speaking, $29 Billion 7-Year Treasury Note Auction, weekly EIA natural gas inventory report and the (MSFT) analyst meeting could also impact trading today.
Subscribe to:
Posts (Atom)