Thursday, March 31, 2011

Today's Headlines

  • U.S. Jobless Claims Fall, Consumer Confidence Improves. Fewer Americans filed claims for jobless benefits last week and consumer confidence stabilized, a sign the world’s largest economy is weathering the jump in commodity prices heading into the second quarter. The number of applications for unemployment insurance payments fell by 6,000 to 388,000 in the week ended March 26, a one-month low, Labor Department figures showed today in Washington. The Bloomberg Consumer Comfort Index rose to minus 46.9 last week from a seven-month low of minus 48.9. Business activity expanded in March at close to the fastest pace in two decades, a report from members of a Chicago purchasing managers group also showed, indicating strengthening sales in the U.S. and overseas are helping manufacturers like United Technologies Corp. (UTX) The group’s employment measure climbed to the highest level since 1983, and its index of order backlogs increased to a 37- year high. A report tomorrow is projected to show the February pickup in payrolls was sustained this month.
  • Sentiment Near August Low Means Stock Gains: Technical Analysis. The rebound in the Standard & Poor’s 500 Index isn’t over because when pessimism about the market was this high in August, equities rose in five of the next six months, said Bay Crest Partners LLC. The benchmark index for U.S. equities slipped as low as 1,249.05 on March 16 amid concern rising energy costs will hurt global economic growth and Japan’s 9.0-magnitude earthquake may tip the world’s third-biggest economy into recession. The next day, the weekly survey from the American Association of Individual Investors showed the ratio of bulls to bears fell to 0.71, the lowest since Aug. 26, Bloomberg data shows. Christian Bendixen, director of technical research at Bay Crest, said the increase in pessimism may reverse and help the S&P 500 climb to 1,425, or 7.3 percent above yesterday’s close of 1,328.26. The bearish sentiment on Aug. 26 coincided with a bottom for the S&P 500. The benchmark rose in five out of the following six months, rallying 28 percent to a 32-month high on Feb. 18. Since its 2011 low on March 16, the S&P 500 has climbed 6.3 percent.
  • Oil Advances, Heads for Third Quarterly Increase, on Libyan Supply Concern. Oil rose the most in two weeks in New York and was poised for its third quarterly gain amid concern that the Libyan conflict will prolong production cuts. Prices advanced as much as 2.4 percent after troops loyal to Libyan leader Muammar Qaddafi retook control of the oil port of Ras Lanuf and were shelling Brega, another energy hub to the east. Futures traded as high as $106.77 a barrel, poised to test a 30-month high of $106.95 reached in intraday trading March 7. “Events in the Middle East, particularly the fighting that continues to be going on in Libya, are providing support for the market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “We’re ranging just below our two-and-a-half-year highs, and the market seems to be searching for a catalyst to continue the rally.” Crude for May delivery climbed $2.09, or 2 percent, to $106.36 a barrel at 12:29 p.m. on the New York Mercantile Exchange. Futures have increased 16 percent from January through March, the strongest first-quarter gain since 2005. Brent oil for May settlement on the London-based ICE Futures Europe exchange rose $2.14, or 1.9 percent, to $117.27 a barrel. Prices are up 24 percent this quarter.
  • Corn, Soybeans Surge as Supplies Ebb, Heightening Food-Inflation Concerns. Corn rose the most allowed by the Chicago Board of Trade as concerns mounted that food-price inflation will accelerate after the latest U.S. government forecasts on supplies and acreage. Soybeans and wheat also jumped. U.S. corn stockpiles at the beginning of March dropped to 6.52 billion bushels, the lowest for the date since 2007, the Department of Agriculture said today. Last month, the prices of corn, soybean, wheat and rice climbed to the highest since 2008, when surging food costs spurred riots from Haiti to Egypt. Today, cattle rose to a record for a second straight day, and cotton jumped. “What’s unique about 2011, unlike 2008, is that corn and soybeans are equally tight, cotton is tight and wheat isn’t comfortable either,” said Hussein Allidina, the head of commodity research at Morgan Stanley in New York. “The takeaway is that prices are not high enough to ration demand.”
  • World's Biggest Shipping Lines Are Still Taking Cargoes to Tokyo Bay Ports. The world’s biggest oil-tanker firms, dry bulk carriers and container lines are servicing Japanese ports, judging there to be no threat to vessels or crew from radiation leaking from a crippled nuclear plant.
  • Facebook is Tool for Trial Lawyers Scouring Juror Profiles to Unearth Bias. Facebook, Twitter Inc. and other services have become a major resource for both prosecutors and defense attorneys, letting them glean more insight than they can get from jury questionnaires, said Joseph Rice, chief executive officer of Jury Research Institute in Alamo, California. “Social media has given us an incredible tool, because it’s something jurors voluntarily engage in, and they post information about their activities or affiliations or hobbies,” Rice said. That reveals “their life experience or attitude that may have an impact on how they view the facts of the case.”
  • Spanish Cajas Block Four-Way Merger in Obstacle to Bank Industry Overhaul. Three Spanish savings banks rejected a plan to merge into the nation’s third-largest caja, forcing Caja de Ahorros del Mediterraneo (CAM) to seek a state bailout.
  • Portugal Misses 2010 Deficit Target, Raising Chances of European Bailout. Portugal reported a budget deficit of 8.6 percent of gross domestic product last year, missing a government target of 7.3 percent and causing a jump in borrowing costs that increases the risk of a bailout. The revisions won’t affect the government’s goal for a 4.6 percent shortfall in 2011, the national statistics agency said today in an e-mailed statement. The agency also revised the 2009 budget gap to 10 percent from 9.3 percent, after European Union accounting changes prompted Portugal to add more than 2 billion euros ($2.8 billion) to the 2010 deficit. The yields on the country’s two, five and 10-year bonds rose to euro-era records.
  • Fed Releases Discount-Window Loan Records Under Order. The Federal Reserve released thousands of pages of secret loan documents under court order, almost three years after Bloomberg LP first requested details of the central bank’s unprecedented support to banks during the financial crisis. The records reveal for the first time the names of financial institutions that borrowed directly from the central bank through the so-called discount window. The Fed provided the documents after the U.S. Supreme Court this month rejected a banking industry group’s attempt to shield them from public view. “This is an enormous breakthrough in the public interest,” said Walker Todd, a former Cleveland Fed attorney who has written research on the Fed lending facility.
  • U.S. Government Pensions Gain 5.5% as Stock Market Rises. U.S. state and local government pension-fund assets rose in value by 5.5 percent in the last three months of 2010 as stock market gains helped recoup losses incurred since the financial crisis. The assets of the hundred largest government employee retirement systems grew by $138 billion to $2.64 trillion by the end of 2010 from three months earlier, the U.S. Census Bureau reported today.
  • Buffett Misses Chance to Show Moral Courage: Alice Schroeder. What were they thinking? How could Warren Buffett excuse David Sokol’s trading in stock while Sokol was pitching the company to Lubrizol Corp. (LZ)Berkshire Hathaway Inc. (BRK/A) as an acquisition candidate? Buffett and Sokol both say that nothing “unlawful” was going on (Sokol even went so far as to tell CNBC he did nothing inappropriate). Their explanation is that, because a deal with Lubrizol hadn’t actually been struck and wasn’t likely when Sokol bought his shares, it was all right for Sokol to profit from his knowledge of a possible deal. On Wall Street, we call this kind of trading front-running, and everybody knows that it is wrong.

Wall Street Journal:
  • Saudi's New Super Light Crude Blend to Hit Market in April - Source. The newly produced blend of super light crude by Saudi Arabia won't become available until early April, despite speculation that the oil has already been purchased in the Mediterranean, someone familiar with the matter told Dow Jones Newswires on Thursday.
  • Handicapping the Economic Recovery by Alan S. Blinder. Japan, Europe, oil and the deficit all pose problems. But chances are growth will continue.
  • Record Volume of Junk Bonds Sold This Quarter, At $113.8B - Dealogic. Companies sold almost $115 billion of speculative-grade debt globally this quarter, making it the busiest three-month stretch for corporate issuers since 1995, according to data provider Dealogic.
  • Few Banks Seek Funds for Small Businesses. The Obama administration announced with much fanfare last fall that it would set aside $30 billion for a program to revive small-business lending. But only 7% of banks have participated in it. About 526 community banks have requested $7.6 billion in funds from the program, which is available to the nation's nearly 7,700 lenders that have less than $10 billion in assets. That is far short of the amount allocated by the Treasury Department. The program, the centerpiece of September's Small Business Jobs Act, included enticements such as low interest rates to encourage banks to get money into the hands of small-business owners. But relatively few community banks, which had until March 31 to apply for the program, signed up. Earlier this week, the Treasury Department extended Thursday's deadline to May 16. The extra time mightn't be enough to win the banks over. Many say they have plenty of capital but little demand from small businesses. Banks have also long complained that increased scrutiny from regulators has made it difficult to underwrite risky small-business loans. A government program, especially one with strings attached, isn't the solution, they say.
  • Irish Banks Need $33.9 Billion. Four of Ireland's most important banks could need up to a total of €24 billion ($33.9 billion) in new capital to stay viable, the Irish Central Bank said Thursday.
Business Insider:
  • Apple(AAPL) and Partners to Meet iPad 2 Demand Amid Earthquake Effects. A series of new reports indicate that Apple and its suppliers are working hard to ensure a steady flow of iPad 2 units to the market amid strong demand and continuing effects from the Japanese earthquake earlier this month. According to DigiTimes, Apple has agreed to absorb additional part costs brought about by the earthquake in exchange for assurances that suppliers will continue providing "smooth shipments" of the needed components.
Kansas City Star:
  • Kansas City Fed Regional Manufacturing Activity Increases, Employment Inches Higher, Survey Says. Manufacturing activity in the Federal Reserve's Tenth District "accelerated rapidly" in March, hitting a record high for the second straight month, according to a survey released this morning. The survey, which covers a seven-state area including Kansas and western Missouri, also noted that the manufacturing employment index edged higher this month from February to a new record. The report from the Federal Reserve Bank of Kansas City saw growth in most year-over-year factory indexes, such as order backlog and shipments.
The Daily Beast:
  • Al Qaeda's Libya Pilgrimage. As debate rages in Washington over whether to arm anti-Gaddafi rebels, an exclusive report by The Daily Beast indicates al Qaeda forces are gearing up to join the rebels and seize power in Libya.
Rasmussen Reports:
USA Today:
Sky News:
Kyodo News:
  • Japanese Prime Minister Naoto Kan said Tokyo Electric Power Co.'s Fukushima Dai-Ichi nuclear plant must be decommissioned, citing Kazuo Shii, head of the nation's Communist Party.

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