Friday, February 04, 2011

Today's Headlines

Posted by Gary .....at 3:14 PM

Bloomberg:
  • U.S. Jobless Rate Falls to 9%; Payrolls Rise by Only 36,000. The U.S. jobless rate unexpectedly fell in January to the lowest level in 21 months, while payroll growth was depressed by winter storms. Unemployment declined to 9 percent from December’s 9.4 percent, the Labor Department said today in Washington. Employers added 36,000 workers, short of the 146,000 median gain projected by economists in a Bloomberg News survey. Payrolls in construction and transportation, industries most affected by bad weather, declined in January, while factory employment rose the most since August 1998. “Snow suppressed payrolls, but look past it and the labor market is clearly improving,” said Ward McCarthy, chief financial economist at Jefferies & Co. in New York. Private hiring, which excludes government agencies, rose 50,000 in January. Factory payrolls increased by 49,000, exceeding the survey forecast of a 10,000 gain. The jobless rate, which was projected to rise to 9.5 percent, declined as the number of unemployed fell by 590,000. Those people who said they were not in the labor force increased by 162,000 in January, according to the Labor Department’s survey of households. The drop from November’s 9.8 percent marked the biggest two-month decline since 1958. December’s gain in payrolls was revised to 121,000 from a 103,000 increase reported earlier, while November’s rise was revised to 93,000 from 71,000. Average hourly earnings increased to $22.86 from $22.78 in the prior month. The average work week for all workers slipped to 34.2 hours from 34.3 hours. Employment at service providers rose 18,000. Construction payrolls dropped 32,000 and transportation and warehousing jobs fell by 38,000. Retailers added 27,500 jobs. A storm that spread from the Midwest and the South to New England during the week covered by the Labor Department’s employer survey likely depressed January numbers as businesses temporarily closed. Bad weather prevented 886,000 Americans from going to work in the January survey week, the Labor Department’s survey of households showed. That compares with an average of 282,000 over the previous five Januarys. Economists at Morgan Stanley said the storms may have subtracted about 150,000 workers from the payrolls count, they said in a note to clients. Government payrolls decreased by 14,000. State and local governments struggling to close budget deficits reduced employment by 12,000, while the federal government trimmed 2,000 workers. The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- decreased to 16.1 percent from 16.7 percent. The number of people unemployed for 27 weeks or more decreased as a percentage of all jobless, to 43.8 percent from 44.3 percent.
  • Copper Reaches Records as Supply May Tighten on Rising Demand. Copper extended a rally to a record on mounting concern that the global economic recovery will boost consumption of the metal used in cars, homes and appliances while mining companies struggle to increase production. Freeport McMoRan Copper & Gold Inc., the world’s largest publicly traded copper miner, said the market will be “tight in 2011, and for the foreseeable future.” Copper futures for March delivery rose 6.45 cents, or 1.4 percent, to $4.609 a pound at 10:06 a.m. on the Comex in New York.
  • Crude Oil Falls as U.S. Adds Fewer Jobs Than Forecast, Fuel Demand Drops. Crude fell after a U.S. government report showed that the economy added fewer jobs in January than economists forecast, bolstering concern that fuel demand will slip in the world’s biggest oil-consuming country. Futures dropped as much as 1.5 percent after the Labor Department said employers added 36,000 workers last month. Payrolls were projected to climb 146,000, according to the median forecast in a Bloomberg News survey. Gasoline stockpiles rose to the highest level in almost 18 years as demand decreased, according to an Energy Department report on Feb. 2. Supplies of gasoline rose 6.15 million barrels to 236.2 million last week, the highest level since March 1993, the report showed. Total fuel demand decreased 0.3 percent to 18.8 million barrels a day last week, the lowest level since November, the department said. Gasoline consumption fell 1 percent to 8.55 million barrels a day, the lowest amount since the week ended Feb. 12, 2010.
  • Franco-German Divide May Mark European Debt Crisis Summit Seeking Solution. Germany and France carried a quarrel over the euro rescue fund and a revamp of economic management into today’s European summit intended to sketch a path out of the debt crisis. The euro region’s two leading economic powers are at odds over possible bond buybacks and a “competitiveness pact” that is German Chancellor Angela Merkel’s condition for strengthening the safety net for debt-strapped countries, according to three European officials involved in the talks who declined to be identified because the deliberations remain private. Signs of discord snuffed out a three-day rally in European bond markets yesterday and knocked the euro off a three-month high, as investors questioned when Europe will come up with an anti-crisis formula.
  • Emerging-Market ETF Outflows Reach Record as Egypt Spurs Hedge Fund Exit. Emerging-market exchange traded funds had their biggest-ever weekly outflows as violent clashes in Egypt and record world food prices heightened concern that inflation may spur social unrest and curb consumer spending. Investors pulled $4.6 billion from ETFs that track developing-nation stocks during the week ended Feb. 2, Bank of America Merrill Lynch wrote in a note today, citing data compiled by research firm EPFR Global. Outflows from all emerging-market equity funds totaled $7.2 billion, the most since January 2008. Withdrawals from ETFs, which are listed on an exchange and change hands throughout the day like stocks, signal hedge funds are paring bets on the fastest-growing nations, Morgan Stanley wrote in a Feb. 1 report. The MSCI Emerging Markets Index has dropped 1.5 percent this year as countries from Brazil to Hungary and Indonesia raised interest rates to combat inflation. “The people who were hoping to make a fast buck in emerging markets at the start of 2011 have seen that the world is a slightly different place to what they had thought it might be,” Nigel Rendell, an emerging-market strategist at RBC Capital Markets in London, said in a phone interview today. Investors poured more than $90 billion into emerging-market stock funds last year.
  • New Jersey Population Growth Slows as Taxes Push Some to Flee. New Jersey is among the slow- population-growth states in the U.S., and an analysis of economic data shows that it shares a trait with other Northeastern states losing political power: high income taxes. New Jersey’s population grew 4.5 percent to 8.79 million from 2000 to 2010 as its most prosperous areas were little changed, including Bergen County with a 2.4 percent gain, according to 2010 Census figures released yesterday in Washington. New York, Rhode Island, Vermont and Maine had increases ranging from 0.4 percent to 4.2 percent, less than half the 9.7 percent national rate. Those states also have income-tax rates of 6.5 percent or more, some of the highest in the U.S., according to a report by the nonpartisan Tax Foundation in Washington. That contrasts with high-growth states such as Nevada and Texas, which have no income tax. “The census data make it quite clear that high-tax states aren’t growing compared to other states,” William Dunkelberg, the chief economist of the National Federation of Independent Business, who is based in Philadelphia, said. “States are like firms: Bad management equals loss of capital and people. Good management attracts capital and people.”
  • Goldman Sachs(GS) Turns Bullish on Europe Banks as Debt Risk Eases. Goldman Sachs Group Inc. turned bullish on European banks for the first time since September 2009 as concern about the region’s sovereign-debt crisis eased and the industry remained among the cheapest. The U.S. bank that makes the most revenue from trading advised investors to take an “overweight” position on banks, raising its previous “neutral” recommendation, according to a group of equity strategists led Peter Oppenheimer. Investors should pay for the trade by lowering holdings of consumer shares, he wrote. “For financials the narrowing of sovereign spreads in peripheral eurozone, which our economists expect to continue, is a clear positive,” London-based Oppenheimer wrote in the report dated Feb. 3. “Banks are one of the least expensive sectors in the market and the trade-off between their growth prospects and earnings in the next few years looks especially attractive.”

Wall Street Journal:
  • Defense Minister Visits Protesters. Regime Ups Pressure; Arab Allies Urge Mubarak to Hold On. Tens of thousands of protesters filled central Cairo's Tahrir Square Friday, deepening the standoff with a regime that continues to reject their demand that Egyptian President Hosni Mubarak step down. Despite its size, the demonstration remained peaceful, a sharp change in atmosphere from the middle of the week, when pro-Mubarak protesters set at the crowd with sticks, rocks and Molotov cocktails, sparking brutal clashes.
  • New Imam Quits Islamic Center Near Ground Zero. The new imam for the planned Islamic community center near Ground Zero has stepped down from the job just weeks after his appointment was announced.
  • GM(GM) Expanding Financing Arm. General Motors Co. is planning to expand its newly-formed auto lending arm, GM Financial, a move that sets the stage for a showdown with a another big auto lender, GM-spinoff Ally Financial Inc.
CNBC:
Business Insider:
Zero Hedge:
market folly:
  • Shumway Capital Returns Capital to Investors, Will Manage Internal Assets. Chris Shumway's hedge fund Shumway Capital Partners sent out a letter to investors today notifying them that the fund will be returning capital to outside investors. The firm will live on, instead only managing internal capital. Shumway, who has seen 17% annual returns, is one of the widely regarded Tiger Cub hedge funds started by former members of Julian Robertson's Tiger Management.
AppleInsider:
Real Clear Politics:
Politico:
  • Finger-Pointing Begins on Egypt. The debate over who “lost” Egypt seems to have begun. Critics are openly questioning the quality of information and analysis given to President Barack Obama by U.S. intelligence agencies in the days leading to the dramatic uprising against Egyptian President Hosni Mubarak. And they are raising questions about the effectiveness of his efforts to force the 82-year-old strongman to step down.
USA Today:
Reuters:
  • JPMorgan's(JPM) Dimon Calls for U.S. Mortgage Reform. The U.S. mortgage business is in need of a major overhaul, JPMorgan Chase Chief Executive Jamie Dimon told Reuters in an interview for a special report published on Friday. Dimon won't rule out another large acquisition if the right opportunity comes up, though he doesn't feel the need to do a deal to seal his legacy.
  • Investors Fear Anti-Market Regime in Egypt. Investors fear escalating protests against the 30-year rule of Egypt's President Hosni Mubarak could spill over to other Arab countries and lead to regimes more hostile to western investment practices in the region. A more democratic government in Egypt may encourage investment in Egypt, as the country has until now been seen as the barometer for stability in the Middle East and North Africa. But Egypt's political situation is fluid, the outcome of the popular protests of the past 10 days is unknown, and investors worry that a new regime will oppose Western capitalism.
  • Jordan Islamists Demand Speedy Political Reform. Hundreds of Jordanians, inspired by demonstrations in Egypt, protested on Friday against King Abdullah's government reshuffle saying it did not meet their calls for political reform. Protesters, drawn mainly from Jordan's powerful Muslim Brotherhood, said the hundreds of thousands of Egyptians demanding an immediate end to President Hosni Mubarak's 30-year rule were charting a road to freedom and democracy for all Arabs against autocratic rulers.
  • Developed Market Stocks Win Investor Favor in Week - EPFR. Investors spurned emerging market equities and bonds in the latest week, moving more cash into developed market stocks on a brightening economic environment, fund-tracker EPFR Global said on Friday. Cash came off the sidelines in the week ended Feb. 2, with a net $14.6 billion in outflows from money market funds while bond funds, overall, took in a net $2.4 billion. Municipal bond funds had $761 million in outflows, extending their redemption streak to 12 weeks.
  • Aetna(AET) Sees 2011 Ahead of Street, Boost Dividend. Health insurer Aetna Inc forecast 2011 earnings at least 13 percent above Wall Street's target on Friday and dramatically increased its dividend to the highest in the industry, sending its shares up as much as 14.5 percent.
  • Corning(GLW) Forecasts $10 Billion in Sales by 2014. Corning Inc said it would boost sales by more than 50 percent by 2014, banking on the popularity of tablets and smartphones to increase demand for its glass, lifting shares by more than 1 percent.
Sueddeutsche:
  • U.K. Prime Minister David Cameron said his country won't participate in new attempts to stabilize the euro, citing an interview. "Others won't convince us to take part in any new efforts to support the euro," Cameron said.
Business Standard:
  • Global Funds, ETFs Dump India Index Stocks En Masse. The week couldn't have ended on a sourer note for Indian equity markets. Selling by some of the largest global investors continued in the backdrop of fears about inflation and rising interest rates. More importantly, analysts feel Indian indices have not yet hit bottom. Market experts add that foreign institutional investors (FIIs) have been selling index stocks — companies that are part of the Sensex or Nifty — in large numbers as crucial support levels are breached, triggering stop-loss orders. On Friday, the 50-share Nifty fell below the crucial level of 5,400 to end the day at 5,395.75, down 131 points, or 2.37 per cent. The index last fell below this level in July 2010. As several foreign investors, including exchange-traded funds (ETFs), track the Nifty’s movement when deciding on India investments, any fall below a crucial level triggers huge selling. “India-focused ETFs and global funds are selling index stocks to meet redemptions,” says Vikas Khemani, head of institutional equities at Mumbai-based Edelweiss Securities.
The Australian:
  • China, Biggest Produce of Rare Earths, Expects to Import More. CHINA'S chief rare earths research body says it expects the nation to become a net importer, even though it is the world's biggest producer. The news is bound to fuel supply concerns from big consumers like Japan and the US. In a presentation in Vancouver, Chinese Society of Rare Earths director Chen Zhanheng said Chinese consumption of the substances was growing rapidly. "(There are) early signals that China is moving from sell-side to buy-side. China becomes a new market opportunity for producers outside China," he said. Chinese exports of rare earths peaked at nearly 60,000 tonnes, but slipped to about 39,000 tonnes in 2009.
Fars News Agency:
  • Ali Larijani, speaker of Iran's parliament, said protests in Egypt and Tunisia represent an "Islamic Awakening" and that Egyptians don't want a "camel democracy."

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