Friday, May 10, 2013

Friday Watch

Evening Headlines 
  • Italy Can Keep Tax Pledges Without Budget Cuts, Saccomanni Says. The Italian government won’t need to make more budget cuts this year to finance a plan to ease taxes, and it remains committed to suspending payment of an unpopular property levy, Finance Minister Fabrizio Saccomanni said. The government held a Cabinet meeting yesterday to suspend the June payment of the tax on primary residences in a bid to make good on Prime Minister Enrico Letta’s inauguration pledge. The decision was put off until the next meeting, which may be held as soon as May 12, when Letta’s new government holds a retreat at a monastery near Siena, Italy, Saccomanni said on the “Otto e Mezzo” program on La 7 television
  • Swiss Watches Unworn as China Tackles Graft: Chart of the Day. (graph) The CHART OF THE DAY shows Chinese imports of Swiss-made watches tumbled 24 percent in the first quarter from a year earlier for a third straight decline, while shipments to Hong Kong sank 9.3 percent, according to trade data from Switzerland.
  • Sony Misses Estimates as Hirai Drives Samsung Challenge. Sony Corp. (6758) forecast annual profit that missed analysts’ estimates as Chief Executive Officer Kazuo Hirai rolls out new Xperia smartphones and Bravia televisions to recapture market share lost to Samsung Electronics Co. 
  • RBA Cuts CPI Outlook as Aussie, Mine-Boom Peak Weigh on GDP. The Reserve Bank of Australia lowered its inflation outlook and reiterated its forecast for “below trend” growth this year, reflecting an elevated currency, a crest in resource investment and fiscal tightening. “The outlook for non-mining business investment remains relatively weak over the next few months,” the RBA said in its quarterly monetary policy statement released in Sydney today. “The approaching peak in resource investment, the high level of the Australian dollar and ongoing fiscal consolidation are all likely to weigh on growth over the next year or so, while at the same time the low level of interest rates is helping to support demand.”
  • Commodity Investors Withdrew a Record $9.3 Billion Last Month. Investors withdrew a record $9.3 billion from commodity exchange-traded products as gold sales pushed the metal into a bear market, BlackRock Inc (BLK) said. The outflow for commodities in April pushed the total for the first four months this year to $17.8 billion, compared with inflows of $6 billion for the same period last year, BlackRock said in a report dated April 30. The previous record for commodity sales was $5.2 billion in February. Gold outflows were an all-time high of $8.7 billion last month as the metal slid to a two-year low in London on April 16, two sessions after falling into a bear market. The Standard & Poor’s GSCI gauge of 24 raw materials fell 4.7 percent last month, the most since May.
  • Natural Rubber Imports by India Seen Falling as Car Sales Shrink. Natural rubber imports by India, the world’s third-biggest user, are poised to drop for the first time in five years from a record as declining car sales crimp demand for the commodity used in tires. Inbound shipments are estimated to drop 17 percent to 180,000 metric tons in the year that started April 1 from an all-time high of 217,364 tons a year earlier, Sheela Thomas, chairman of the Rubber Board of India, said in an e-mailed interview. The biggest slump in car sales since 2001 last year boosted local rubber stockpiles 13 percent to 266,000 tons, and will make up for a domestic shortfall in supplies, she said. Reduced demand from India may accelerate a decline in futures in Tokyo, which have lost about 9 percent this year and entered a bear market in April on signs that weak demand from China, the largest user, will expand a global glut.
  • Copper Pares Third Weekly Advance on China Demand Concern. Copper declined, paring a third weekly advance, on speculation that inflation may accelerate in China, curbing further stimulus. Tin also dropped. Copper for delivery in three months lost as much as 1.1 percent to $7,275.25 a metric ton on the London Metal Exchange before trading at $7,345 as of 9:55 a.m. Shanghai time.
  • Pimco Raises Treasuries Holdings to Highest Level Since 2010. Pacific Investment Management Co.’s Bill Gross raised the holdings of Treasuries in his flagship fund at to the highest level since July 2010 while warning that investors face potential losses from central-bank policies. The proportion of U.S. government securities in the $292.9 billion Total Return Fund increased to 39 percent in April, from 33 percent in March, according to data on Newport Beach, California-based Pimco’s website. Mortgage holdings rose to 34 percent, from 33 percent in March, which was the lowest level since August 2011. The company doesn’t comment directly on monthly changes in its portfolio holdings.
Wall Street Journal: 
  • ESPN Eyes Subsidizing Wireless-Data Plans. Smartphone users who binge on video, games and other content must monitor their usage to ensure they don't run over monthly data caps that wireless carriers have put in place in recent years. Now, some media companies whose mobile content gets a lot of traffic are considering arrangements with wireless carriers that would ensure their users can watch, surf and play as much as they want without being hit with stiff overage charges.
  • Falling Deficit Alters Debate. Improving Federal Finances Lessen Pressure on Democrats, Republicans to Negotiate. Rising government revenue from tax collections and bailout paybacks are shrinking the federal deficit faster than expected, delaying the point when the government will reach the so-called debt ceiling and altering the budget debate in Washington.
  • Hezbollah Says Syria to Supply Strategic Weapons. Hezbollah's leader on Thursday said Syria will provide him with weapons that will change the balance of power in his battle with Israel and threatened to fight the Jewish state from inside Syria, ramping up tensions after last week's Israeli airstrikes there.
Fox News:
  • Republican leaders boycott controversial ObamaCare board. The Republican leaders of the House and Senate announced Thursday that they will boycott the ObamaCare-created committee responsible for holding down Medicare costs, in a challenge to a controversial element of the health care overhaul. The Individual Payment Advisory Board, or IPAB, has been described as a "death panel" by some of its fiercest critics. Though that epithet is not often used anymore to describe the panel, Republicans still say it would hurt seniors by forcing doctors to stop seeing patients
  • ‘Ridiculously Bearish for Miners’: Gartman. (video) The move in the U.S. dollar bodes poorly for gold and worse for mining companies, Dennis Gartman of The Gartman Letter said Thursday on CNBC. "It broke out against every currency out there, even the Aussie, so this is a dollar move, and a dollar move to this sort of strength cannot be construed as being anything other than bearish for the metals and ridiculously bearish for the miners," he said. 
  • Brent-WTI Oil Spread Collapse Spooks Refiners, Railways. The near $20 premium North Sea Brent held for much of 2012 over U.S. benchmark West Texas Intermediate (WTI) has fallen to less than $8 a barrel, the lowest since the crude-by-rail boom began to gather steam in early 2011
Zero Hedge: 
Business Insider: 
New York Times: 
The Blaze:
  • Huge cyber bank theft spans 27 countries. In one of the biggest ever bank heists, a global cyber crime ring stole $45 million from two Middle Eastern banks by hacking into credit card processing firms and withdrawing money from ATMs in 27 countries, U.S. prosecutors said on Thursday. The U.S. Justice Department accused eight men of allegedly forming the New York-based cell of the organization, and said seven of them have been arrested. The eighth, allegedly a leader of the cell, was reported to have been murdered in the Dominican Republic on April 27.
  • Brazil's big government seen as good for politics, bad for economy. President Dilma Rousseff added a new minister to her Cabinet on Thursday, further enlarging a federal government whose rapid growth since her leftist party came to power a decade ago has increased Brazil's heavy tax burden. Rousseff, who is seeking re-election next year, swore in Guilherme Afif Domingos to head the newly created Ministry of Micro and Small Businesses, the country's 39th ministry.
  • JPMorgan(JPM) sued by California over 'illegal' debt collections. California's attorney general sued JPMorgan Chase & Co on Thursday, accusing the company of falsely signing documents to unlawfully collect credit card debt from thousands of customers. The lawsuit accuses JPMorgan of engaging in widespread, illegal "robo-signing" of legal documents to commit debt-collection abuses against approximately 100,000 California credit card borrowers.
  • U.S. automakers urge congressional response to falling yen. U.S. automakers called on Congress to take action in response to the falling value of the Japanese yen, which they said has hurt their exports and was a good reason to keep Japan out of a proposed U.S.-led free trade pact. "It's time for U.S. lawmakers to say they have had enough," American Automotive Policy Council President Matt Blunt said in a statement on Thursday, as the dollar rose to its highest value in over four years, blasting through the 100-yen mark. 
Evening Recommendations 
Janney Montgomery:
  • Rated (DDD) Buy, target $56.
  • Rated (SSYS) Buy, target $101.
  • Rated (PRLB) Buy, target $60. 
Night Trading
  • Asian equity indices are -.25% to +.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 100.5 +1.5 basis points.
  • Asia Pacific Sovereign CDS Index 82.0 +1.5 basis points.
  • FTSE-100 futures +.12%.
  • S&P 500 futures +.22%.
  • NASDAQ 100 futures +.26%.
Morning Preview Links

Earnings of Note

  • (MT)/-.16
  • (WCRX)/.84
  • (TRLG)/.34
Economic Releases
2:00 pm EST
  • The Monthly Budget Statement for April is estimated at $110.0B versus $59.1B in March.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Bernanke speaking, Fed's George speaking, Fed's Evans speaking, China Money Supply/New Loan data, USDA Crop Report, Canada Unemployment report, (SWFT) investor day and the (WY) analyst meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by automaker and financial shares in the region. I expect US stocks to open modestly higher and weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

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