Tuesday, May 04, 2010

Today's Headlines

Posted by Gary .....at 3:02 PM

Bloomberg:
  • Greek Government Bonds Tumble, Bunds Climb Amid Debt Concern. Greek government bonds tumbled and German bunds rose amid concern Europe’s most-indebted nations will struggle to contain their deficits and as German Chancellor Angela Merkel’s coalition stepped up calls to allow “orderly” defaults in the euro region. Merkel said in an interview with ARD television late yesterday that it’s time to learn lessons from the Greek bailout and raised the option of “an orderly insolvency” as a way to make sure creditors participate in any future rescue. “Investors are reassessing the situation and realize there are still challenges ahead,” said Peter Chatwell, a fixed-income strategist at Credit Agricole SA in London. “The problem is far from over, and the market can’t rule out further fiscal deterioration and rating downgrades among peripheral countries.” Investors demanded an extra to 627 basis points for holding 10-year Greek debt instead of benchmark German bunds. The spread dropped earlier to 539 basis points, the lowest since April 21. Financial aid for Greece was “never designed” to cover the nation’s entire financing needs over the course of the three-year package, German Economy Minister Rainer Bruederle told reporters today. “I expect Greece to make the effort necessary to be able eventually to sell loans in the market,” he said. Any decline in German debt is “a buying opportunity,” wrote RBS’s Sian. “Deflationary forces in the euro area have never been higher, and the weakness of the periphery warrants low ECB rates for some time,” according to Sian.
  • Greek Rescue Doubts Spur Sovereign Debt Risk on Contagion Bets. The cost of insuring against default on sovereign bonds rose on concern that the $144 billion aid package for Greece may not solve the nation’s deficit crisis or prevent contagion to Europe’s debt-ridden economies. Credit-default swaps on Greece surged 84.5 basis points to 731, according to CMA DataVision prices, implying an almost 45 percent probability of default over five years. Contracts on Portugal, Spain, Italy and Ireland also rose. There’s “a deep mistrust among the investor base on the viability of the Greek story in a medium-term context,” Padhraic Garvey, head of investment-grade debt strategy at ING Groep NV in Amsterdam, wrote in a note to investors. Swaps on Spain increased 51 basis points to 208.5, Portugal rose 83 to 358, Italy climbed 23 to 157 and Ireland increased 46 to 223, CMA prices show. “Austerity measures might push these economies closer to the edge, triggering a private sector default cycle that cannot be easily stopped,” Philip Gisdakis, a Munich-based strategist at UniCredit SpA, wrote in a note to investors. The spending cuts may also weigh on the broader region “as the inevitable budget adjustments and normalization of current account deficits for the weaker economies will reduce aggregate demand in the eurozone,” Gisdakis wrote. The Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings climbed 25 basis points to 451, according to JPMorgan Chase & Co. prices. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose 7.25 basis points to 94.5, JPMorgan prices show. The Markit iTraxx Financial Index of 25 banks and insurers increased 12.5 to 131 and the subordinated index surged 25 to 205.
  • Oil Falls Most in Three Months as Dollar Surges, Equities Drop. Crude oil declined the most in three months as the dollar strengthened against the euro, curbing the appeal of commodities to investors, and a slowdown in Chinese manufacturing sent global equities lower. Oil fell more than $3 a barrel as the dollar climbed to the highest level versus the common currency in a year on concern the Greek debt crisis will spread. A Chinese purchasing managers’ index fell to a six-month low.
  • Copper Falls to Nine-Week Low as Chinese Manufacturing Slows. Copper fell to a nine-week low on concern that demand will falter after manufacturing in China, the world’s largest metals user, expanded at the slowest pace in six months. A purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics slid to 55.4, the lowest level since October. Copper prices dropped 5.6 percent in April, the first monthly decline since January, partly on concern China’s efforts to cool its economy will slow demand for industrial commodities. “China is the driver,” said Donald Selkin, the chief market strategist at National Securities Corp. in New York. “People are worried about what impact their tightening will have, and this manufacturing report shows things are already slowing. Copper will have a tough time.” “This could be the start of a more sustained correction,” Daniel Brebner, an analyst at Deutsche Bank AG in London, said by phone. “China appears to be set on instilling some discipline on growth, draining liquidity to rein in inflation, and control excess speculation in some asset classes, such as real estate.”
  • Goldman(GS) Partners Give Blankfein Standing Ovation, Hintz Says. Goldman Sachs Group Inc.’s employee morale remains good and Chief Executive Officer Lloyd Blankfein received a standing ovation from partners at an April 20 earnings call, analyst Brad Hintz told clients. According to the firm, “employees are pulling together like a team under pressure,” Hintz, an analyst at Sanford C. Bernstein & Co., wrote in a note to clients today after a meeting with five senior executives at Goldman Sachs. “The partnership has closed ranks, too, and at Goldman’s April 20, 2010, managing directors earnings call, Lloyd Blankfein received a standing ovation from his partners.”
  • Obama Plans New Rules as For-Profit Colleges Mobilize. The Obama Administration is gearing up to produce tougher regulations that may reduce the amount of federal financial aid flowing to for-profit colleges, cutting the companies’ annual revenue growth by as much as a third.
  • Pfizer(PFE) Profit Beats Estimates on Added Wyeth Products. Pfizer Inc., the world’s biggest drugmaker, said first-quarter profit rose more than analysts estimated as products added from the acquisition of Wyeth overcame costs from the U.S. health overhaul.
  • Euro Falls to a One-Year Low as Greek Bailout Concern Persists. “The ECB’s credibility has been shot to pieces, and we’ve yet to see the political fallout from the Greek bailout,” said Steven Barrow, head of Group of 10 currency research at Standard Bank Plc in London. “The only restriction on the euro’s downside is that the market is already so short the currency.”
  • Wadhwani Sees Sovereign Crises 'Recurring' After Greek Bailout. The euro region faces the danger of further debt crises because of its delay in bailing out Greece and the failure to prepare a system to rescue other nations, former Bank of England policy maker Sushil Wadhwani said. “We don’t really have a credible mechanism in place to deal with potentially Portugal and Spain,” Wadhwani said in a televised interview at an event hosted by Fathom Financial Consulting in London today. “My strong suspicion is that we have recurring sovereign debt crises. Although I’m not sure how long it’ll take for the next one.”
  • Senators Take Aim at $40 Billion of Card-Industry 'Swipe' Fees. Visa Inc.(V) and MasterCard Inc.(MA) face a renewed threat to one of the credit-card industry’s biggest revenue sources after Senator Patrick Leahy backed legislation to curb fees charged to merchants on each transaction. Leahy, a Vermont Democrat and chairman of the Senate Judiciary Committee, will co-sponsor a measure by Senate majority whip Dick Durbin of Illinois, Durbin spokesman Max Gleischman said today. The so-called interchange or “swipe” fees average about 2 percent of each purchase. The industry has escaped previous attempts to curtail swipe fees, which bring in more than $40 billion a year. Now the nation’s biggest card networks and lenders, including Bank of America Corp. and JPMorgan Chase & Co., find themselves pitted against two of the most powerful senators over the fees, which some lawmakers and retailers have said are excessive and hurt small businesses.

Wall Street Journal:
  • Times Square Suspect Received Bomb Training. Times Square bombing suspect Faisal Shahzad told interrogators that he received training in bomb making during a recent five-month trip to Pakistan, according to a senior U.S. official familiar with the matter. The official said Mr. Shahzad received his training in the tribal region of Waziristan bordering the Afghan border. South Waziristan is currently the site of a continuing Pakistani military offensive against Islamic militants affiliated with al Qaeda. The region of North Waziristan is the locus of the Central Intelligence Agency campaign to kill militants with unmanned drone strikes. Mr. Shahzad, a 30-year-old naturalized U.S. citizen originally from Karachi, returned in February from a five-month visit to Pakistan, authorities said.
  • Debt Jitters Hit European Markets. European stocks slumped Tuesday, and the euro reached a fresh one-year low against the dollar as sovereign-debt concerns continued to mount and the focus shifted to Spain as the next high-profile victim of the euro-zone debt crisis. In equity markets, Spanish banks tumbled on speculation that ratings agencies could downgrade Spain's sovereign-debt rank. Although Fitch Ratings and Moody's Investors Service moved to dispel the market rumors of an imminent downgrade for Spain, Madrid's IBEX declined 5.4% to 9859.10, hitting lows not seen since last July.
  • Goldman(GS) Disciplined on Short Sales. The Securities and Exchange Commission and the regulatory arm of NYSE Euronext disciplined the equities arm of Goldman Sachs & Co. for alleged violations of rules on short-selling stocks.
  • Lawmakers Draft Web-Ad Privacy Safeguards. Advertisers and Internet companies have been scrambling to head off regulation they say will hamper growth of online advertising. The pressure is expected to build Tuesday as lawmakers prepare to announce proposed privacy legislation. More than a year in the making, the draft legislation proposes regulating Internet companies' tactics for collecting information about Web visitors and the use of that data for ad targeting. It also could apply to the practices for collecting consumers' information in the offline world.
  • Apple(AAPL) Draws Scrutiny From Regulators. FTC, Justice Department Discuss Possible Inquiry Amid Complaints From Application Developers, Advertising Firms. U.S. antitrust enforcers are taking a keen interest in recent changes that Apple Inc. made to its licensing agreement with iPhone application developers and are likely to open a preliminary investigation into whether the company's actions stifle competition in mobile devices, according to people familiar with the situation.
  • Citadel Senior Executive Has Left Firm. Patrik Edsparr has left Citadel Investment Group, making him the Chicago hedge-fund firm's latest top executive to depart. Citadel spokeswoman Katie Spring said Mr. Edsparr was "let go" from the firm within the last two weeks.
  • EU Close to Hedge-Fund Deal. European Union lawmakers are nearing an agreement on hedge-fund legislation that would significantly restrict the ability of funds based in some offshore tax havens to raise money from EU investors, the lawmaker in charge of the legislation at the European Parliament said Tuesday. The proposal would require European authorities to create a "black list" of countries, with European investors being prohibited from sending their money to funds based in those countries. To escape the list, countries would have to satisfy a list of four or possibly five criteria, said Jean-Paul Gauzès, the French politician who is leading debate.
CNBC:
Business Insider:
Zero Hedge:
  • CMBS Delinquencies Hit Fresh Record, Now at $51 Billion, 268% Increase From Prior Year. The latest RealPoint monthly CMBS delinquency report update is out and it continues to get worse and worse. In March, the total amount of delinquent CMBS increased by $3.2 billion to $51.5 billion, or 6.4% of the total notional outstanding. "Overall, the delinquent unpaid balance is up almost 268% from one-year ago (when only $13.89 billion of delinquent unpaid balance was reported for March 2009), and is now over 23 times the low point of $2.21 billion in March 2007.
CNNMoney.com:
hedgeweek:
  • Capital Flows to Asian Hedge Funds Stall. Following two consecutive quarters of capital inflows, the Asian hedge fund industry saw net redemptions of approximately USD700m in the first quarter of 2010, reflecting continued concerns about strategic and regulatory risks, according to data from Hedge Fund Research.
OC Register:
Politico:
  • White House in P.R. 'Panic' Over Spill. The ferocious oil leak in the Gulf of Mexico is threatening President Barack Obama’s reputation for competence, just as surely as it endangers the Gulf ecosystem. So White House aides are escalating their efforts to reassure Congress and the public in the face of a slow-motion catastrophe, even though it’s not clear they can bring it under control anytime soon. “There is no good answer to this,” one senior administration official said. “There is no readily apparent solution besides one that could take three months. ... If it doesn’t show the impotence of the government, it shows the limits of the government.”
  • Democrats: New Drilling 'Dead on Arrival'. A group of Democratic senators said Tuesday that the massive oil spill in the Gulf of Mexico has rendered plans for new offshore drilling "dead on arrival." "I will make it short and to the point: the president's proposal for offshore drilling is dead on arrival," Sen. Bill Nelson (D-Fla.) said. "If offshore drilling off of the coast of the continental United States is part of it, this legislation is not going anywhere. "If I have to do a filibuster, which I had to five years ago.. I will do so again."
USA Today:
  • Winds Holding Gulf Oil Spill Offshore. Some good news swept through here Monday: Winds so far are keeping most of the Gulf oil spill away from shore, and chemicals are doing a decent job dispersing the giant swath of slick crude oil looming off the coast.
Reuters:
  • US Bank Bill To Exempt Existing Derivatives - Senator. A sweeping rewrite of U.S. financial regulations will probably be modified to exempt existing derivatives contracts from greater collateral requirements, Democratic Senator Ben Nelson said on Tuesday. "I think it is being resolved right now," Nelson told Reuters. The move could benefit Berkshire Hathaway Inc (BRK/A), the insurance and investment company run by billionaire Warren buffett. Berkshire, based in Nelson's home state of Nebraska, has objected to the current version of the bill because it would be required to post greater collateral on billions of dollars' worth of derivatives contracts.
  • U.S. Weekly Gasoline Demand Unchanged - Mastercard. U.S. retail gasoline demand was unchanged in the week to April 30 from the previous week, according to a MasterCard SpendingPulse report released on Tuesday. Gasoline demand averaged 9.213 million barrels per day last week for the second week running, the survey showed. Year-on-year, U.S. gasoline demand fell 2.3 percent, the SpendingPulse report said.
Financial Times:
  • Regulators around the world must be able to limit the size of banks they supervise and split them up if they have grown too large, Jaime Caruana, head of the Bank for International Settlements, told the Financial Times Deutscheland.
0 comments

Bear Radar

Posted by Gary .....at 2:10 PM

Style Underperformer:
  • Small-Cap Value (-3.12%)
Sector Underperformers:
  • Airlines (-5.41%), Steel (-5.03%) and Semis (-4.70%)
Stocks Falling on Unusual Volume:
  • SYX, NSIT, MTA, STD, TIN, PTNR, REP, UBS, ADSK, TTWO, PBR, CKEC, TTES, EHTH, GLRE, SHLM, PTRY, HOLX, ASIA, SHOO, TECH, COCO, ASMI, MXIM, MCHP, COLB, EBAY, APKT, DNDN, DWSN, PEI, PTE, KMP, TKS, GSH, GHL, EVY, RBC, DSC, NLY and LUX
Stocks With Unusual Put Option Activity:
  • 1) ADSK 2) CAR 3) AFL 4) NLY 5) MA
0 comments

Bull Radar

Posted by Gary .....at 11:10 AM

Style Outperformer:
  • Large-Cap Value (-2.13%)
Sector Outperformers:
  • Drugs (-.84%), Foods (-1.46%) and Utilities (-1.56%)
Stocks Rising on Unusual Volume:
  • OSTK, SM, NTRI, IPXL, EXBD, ZBRA, SWM, ANN and MCK
Stocks With Unusual Call Option Activity:
  • 1) SKX 2) ANN 3) GD 4) NTRI 5) HLF
0 comments

Tuesday Watch

Posted by Gary .....at 12:35 AM

Evening Headlines
Bloomberg:
  • Japan Faces 'Growing' Urgency to Reduce Budget Gap, S&P Says. Standard & Poor’s indicated that a fiscal plan scheduled for next month by Prime Minister Yukio Hatoyama’s government may be key to whether it will cut the nation’s sovereign credit rating. The proposal will be “an important statement of the government’s commitment” to rein in the deficit, William Hess, director of sovereign ratings for Asia, said in an interview yesterday in Tashkent, Uzbekistan. “Something has to appear to change our assessment for where things could end up.” At stake for Japan is keeping the AA grade after S&P lowered its outlook for the rating in January, and shoring up confidence that it will avoid contagion from a Greek crisis threatening to engulf other sovereign borrowers. Finance Minister Naoto Kan said this week that Greece has shown the need for Japan to take a “very firm” stance toward reducing debt, which is approaching twice the size of Japan’s economy. “There is a growing sense of urgency, even though it’s stated very quietly, that the situation isn’t sustainable,” said Hess, who was in the capital of Uzbekistan to attend an annual meeting of the Asian Development Bank.
  • Greek Government Workers to Escalate Protests Over Budget Cuts. Greek Government Workers to Escalate Protests Over Budget Cuts. Greek government workers plan to shut down hospitals and schools today and disrupt flights as protests escalate after 30 billion euros ($39.5 billion) of additional wage cuts and tax increases were unveiled this week. ADEDY, which represents more than 500,000 civil servants having their pensions and pay slashed under the new measures announced by Prime Minister George Papandreou on May 2, will begin its protest with a rally at midday joined by striking teachers. A general strike, the third this year, is planned for tomorrow, with the participation of private-sector workers. “Opting for the easy path of cutting wages and pensions can’t be accepted,” said Spyros Papaspyros, the head of ADEDY, the federation of civil-servant unions. “Protests will increase.”
  • How Investors Can Profit From Break-Up of Euro: Matthew Lynn. When the euro celebrated its 10th anniversary last year, it seemed to be a solid currency. Only a few eccentrics speculated about whether it may break up one day. In the last few weeks, Greece has changed all that. New York-based investment bank Morgan Stanley is among those saying the possibility of a euro collapse has to be considered.
  • U.S. Discoloses Arsenal of 5,113 Nuclear Warheads. The U.S. nuclear arsenal consists of 5,113 active and inactive warheads, a Pentagon official said, revealing the size of the nation’s stockpile for the first time. The current total of warheads is down from 22,217 in late 1989, the official told reporters at the Pentagon. He asked not to be identified. The U.S. has kept classified the specific nuclear warhead total, which would include strategic weapons mounted on missiles and bombers for longer-range as well as shorter-range tactical arms and those that aren’t deployed. President Barack Obama aims to set an example of U.S. transparency and willingness to pare its nuclear arsenal in hopes of compelling other nations to follow suit.
  • Fed Ask Appeals Court to Review Bailout-Data Ruling. The Federal Reserve Board asked an appeals court to reconsider a ruling requiring the agency to disclose documents identifying financial firms that might have collapsed without the largest U.S. government bailout ever. Attorneys for the Fed today asked the full U.S. Court of Appeals in New York to reconsider a unanimous ruling by a three- judge panel. If the court refuses, the Fed can appeal to the U.S. Supreme Court.
  • Nickel Peaking as China Prefers Pig Iron Over 2010's Best Metal. Nickel, this year’s best-performing commodity, is poised to decline as world supplies climb at the fastest pace in a decade and China’s search for lower-cost alternatives slows demand growth. Global output will jump 6.8 percent, the most since 2000, said Bank of America Merrill Lynch. China, the biggest consumer, more than tripled production of the cheaper nickel pig iron in the first quarter, said Wang Chongfeng, a Shanghai Metals Market analyst. Nickel has climbed so much that the 5-cent U.S. coin contains 6 cents worth of metal and prices are 59 percent above mining companies’ breakeven level. The commodity, which beat the other 23 futures in the Standard & Poor’s GSCI Index, will drop 19 percent by the third quarter to $21,250 a ton, according to the median estimate of 17 analysts surveyed by Bloomberg News. “The price is way ahead of itself and will serve as nirvana for world nickel producers,” said Nick Moore, head of commodity strategy at Royal Bank of Scotland Group Plc in London, who has followed metals for more than 25 years. “The higher the price, the more likely a deluge of supply comes to market.” The commodity for three-month delivery advanced 42 percent this year and reached a 23-month high of $27,595 a ton on the London Metal Exchange April 16 after stainless steelmakers boosted output by the most since at least the early 1970s, according to Macquarie Group Ltd. World stainless steel output jumped 55 percent in the first three months to 7.9 million tons from a year earlier, and will increase 20 percent to 31 million tons in 2010, the biggest gain since 1976, Macquarie said.
  • Businesses Ask Geithner for More Leeway on Healthcare. The U.S. Chamber of Commerce and 12 other business groups asked members of President Obama’s cabinet including Treasury Secretary Timothy Geithner for more leeway in implementing the health-care overhaul. The groups said they’re being forced to make contract, employee-benefit and other decisions without guidance on how to comply with provisions that take effect in September. The letter dated April 30 was sent to Geithner, Health and Human Services Secretary Kathleen Sebelius and Labor Secretary Hilda Solis. The groups, which include the Blue Cross and Blue Shield Association, the National Retail Federation and the American Benefits Council, requested at least six months to comply with the regulations once they are implemented, and a “good-faith” standard for measuring compliance. “We’ve got a lot of existing and new costs to manage and face a lot of uncertainty over whether the health-care law will actually lower health-care costs,” said Neil Trautwein, employee-benefits counsel for the National Retail Federation, in an interview. “It’s not really a good idea to swamp the business community when we’re still struggling to get off the mat from the last recession.”
  • Schwarzenegger Drops Support for Offshore Oil Wells. California Governor Arnold Schwarzenegger no longer supports a plan to allow limited drilling for oil off the state’s coast because of the Gulf of Mexico spill, said Aaron McLear, his spokesman.
  • China Stocks Drop to 7-Month Low as Banks Increase Reserves. China’s stocks fell, sending the benchmark index to the lowest in seven months, after the central bank ordered banks to set aside more deposits as reserves for the third time this year. The Shanghai Composite Index dropped 1.2 percent to 2,836.51 at 9:35 a.m. local time. The CSI 300 slid 1.3 percent to 3,027.77. The Shanghai Composite plunged 7.7 percent last month, the biggest decline since January, as the government unwound monetary stimulus and stepped up measures to prevent a housing bubble inflated by record lending last year. It has slumped 12 percent in 2010, the world’s second-worst performer.
  • State Street(STT) 'Underweight' China, Brazil Stocks on Valuations. State Street Global Advisors has an “underweight” position on the largest emerging markets including China and Brazil on concern shares are expensive relative to smaller developing nations as economic growth slows. “We’ve been a little cautious on the larger countries in emerging markets, China amongst them, that seem to have reasonably rich valuations,” Richard Lacaille, London-based global chief investment officer at State Street Global Advisors, which oversees $1.9 trillion, said in a Bloomberg Television interview in Hong Kong.
Wall Street Journal:
  • Bomb Probe Looks Abroad. Investigators Cite Possible Foreign Links to New York Case; Names, Clues Surface. U.S. authorities said they were examining the possibility that there were multiple plotters with foreign links behind Saturday's botched car bombing in New York's Times Square. Officials on Monday said early indications didn't necessarily point to al Qaeda or other terrorist groups, but declined to detail evidence pointing overseas. A person briefed on the case by law enforcement said investigators found forensic evidence belonging to a man of Middle Eastern origin in the bomb-laden SUV left at the crime scene. This person said authorities have identified the man, but weren't releasing that information while they try to locate him. In Washington, White House spokesman Robert Gibbs characterized the attempted bombing as a terrorist act.
  • Congress Members Bet on Fall in Stocks. Some members of Congress made risky bets with their own money that U.S. stocks or bonds would fall during the financial crisis, a Wall Street Journal analysis of congressional disclosures shows. According to The Journal's analysis of congressional disclosures, investment accounts of 13 members of Congress or their spouses show bearish bets made in 2008 via exchange-traded funds—portfolios that trade like stocks and mirror an index. These funds were leveraged; they used derivatives and other techniques to magnify the daily moves of the index they track.
  • Oil Agency Draws Fire. Republican Seeks Scrutiny of Regulator; BP(BP) Tries Well Fix. The Gulf disaster is ratcheting up congressional scrutiny of the Minerals Management Service, the federal agency charged with regulating the nation's offshore oil-and-gas industry. Rep. Darrell Issa (R., Calif.), announced Monday that Republicans on the House Committee on Oversight and Government Reform would investigate whether the MMS has pushed for regulations necessary to ensure the safety of offshore operators in the Gulf of Mexico. Citing a report in The Wall Street Journal, Mr. Issa expressed concern in a letter to Interior Secretary Ken Salazar that the MMS "may have sidelined regulatory efforts that would have brought the U.S. oil industry in line with prevailing industry safety standards."
  • Democrats at Ramming Speed. The White House wants to pass as much legislation as possible before losing its big majorities, no matter how unpopular its proposals are.
Fox News:
  • Goldman Sachs(GS) CEO Knows Job Is on Line in Face of Government Probe by Charlie Gasparino. Friends of Lloyd Blankfein say the embattled chief executive of Goldman Sachs knows his job is on the line and that unless he reverses both the negative publicity and the effect it has been having on Goldman’s share price, he will soon be relinquishing power, FOX Business has learned.
NY Times:
  • The Fight to Be the Next Caymans. With alternative hedge fund managers taking flight from such offshore bases as the Cayman Islands, Luxembourg is looking to be the domicile of choice, The Financial Times reported.
  • Big Paydays for the Chiefs in the Media. The media industry may be going through some rough times, with the landscape changing day to day, but at least one aspect is business as usual: big paydays for the people at the top. Top executives at the country’s largest media companies continued to reel in multimillion-dollar pay packages in 2009, a year of widespread cost-cutting throughout the industry. In several cases, the packages even increased from the year before. At the top of the list is Leslie Moonves, chief executive of the CBS Corporation(CBS), whose pay package in 2009 totaled almost $43 million, more than twice what he made in 2008, according to an analysis by Equilar, an executive compensation research firm. Not far behind was Viacom’s chief executive, Philippe P. Dauman, who was paid nearly $34 million, a 22 percent increase over 2008. Sumner M. Redstone, who controls CBS and Viacom, was paid more than $33 million from the two companies combined. “Anybody who reads the business section knows the margins are being squeezed at media companies, so the fact that there are these huge packages makes no sense,” said James F. Reda, the founder of James F. Reda & Associates, a compensation consulting firm with offices in New York and Atlanta.
Business Insider:
NBC:
  • Suspect Arrested in NYC Bomb Attempt. A U.S. citizen of Pakistani descent, Shahzad Faisal, was arrested Monday night on Long Island, Williams reported. Earlier, an official told The Associated Press that the potential suspect recently traveled to Pakistan.
Washington Post:
  • Pakistan Native Sought in Times Square Bomb Case. An FBI-led Joint Terrorism Task Force on Monday took over the investigation into the failed Times Square car bombing amid growing indications that authorities are focusing on a possible international connection, U.S. officials and law enforcement sources said. Authorities were closing in on a man who they said was a naturalized U.S. citizen from Pakistan, according to a senior Obama administration official. The man is believed to have used cash to purchase the Nissan Pathfinder that was set ablaze but failed to detonate Saturday night on a tourist-crowded block in Midtown Manhattan.
L.A. Times:
  • America's Lead Weight. Unions have benefited the country, but changes in the economy have made mainstream unionism itself an impediment to growth. Do you have to love labor unions to be a good Democrat? That was the question raised last year by the unpopular bailouts of unionized Detroit automakers. It's been raised again this year by California's budget crisis, created at least in part by generous pensions for unionized public employees. I think the answer is no. It's time for Democrats, even liberal Democrats, to start looking at unions and unionism with deep skepticism.
market folly:
cnet news:
  • Microsoft's(MSFT) Browser Share Dips Below 60%. Microsoft's browser market share continued to fall in April, with Internet Explorer now in use for fewer than three in five Web connections. IE's share of the market in April was 59.95, down from 60.65 percent in March, according to Net Applications. Google's Chrome grabbed the lion's share of that, increasing to 6.73 percent from 6.13 percent, while Firefox also gained nearly a tenth of a percentage point, to finish April with 24.59 percent.
Rasmussen Reports:
The Hill:
  • Hedge Funds Donate Big to Democrats. The world’s top-earning hedge fund managers have bankrolled almost exclusively Democratic campaigns. The top 10 highest-paid hedge fund managers in 2009 have dished out campaign contributions almost only to Democrats. Over their lifetimes, those managers have given almost $33 million in campaign contributions to Democrats, according to research by the National Republican Congressional Committee (NRCC) and that is based on data maintained by the nonpartisan CQMoneyline. The same managers gave roughly $600,000 to Republicans, according to the research. The contributions went 98 percent to Democrats and two percent to Republicans. The money went to Democratic campaign committees, individual lawmaker’s election bids and other political action committees.
Reuters:
  • Volcker Says U.S. Should 'Think About' New Taxes. As government spending rises, the United States will need to consider raising money though new taxes, White House economics adviser Paul Volcker said Monday. Government spending is now close to 25 percent of GDP, up from 20 percent, he said. "You would have to be an optimist to believe it will go down to 20 percent again," he said after a talk on financial reform at Washington University in St. Louis. "We have to begin thinking about new taxes." Ideas could include a carbon tax or an energy tax, "and then there's that awful value-added-tax" he said.
  • California May Vote to Freeze Landmark Climate Law. Organizers of a California ballot measure that would suspend the state's landmark climate change law, possibly for years, said on Monday they had enough signatures to qualify it for the November ballot. The initiative would put the state's Global Warming Solutions Act, signed into law in 2006 by Governor Arnold Schwarzenegger, on hold until the state's unemployment rate falls below 5.5 percent for four consecutive quarters. Currently the state's unemployment rate is 12.6 percent and hasn't dropped below 5.5 percent since 2007.
Financial Times:
TimesOnline:
  • Goldman Sachs(GS) Shareholders Pull No Punches. Shareholders hammered the board and top executives of Goldman Sachs for gross mismanagement of the beleaguered bank, accusing them of lying about damaging fraud charges and unjustly enriching themselves at investors’ expense, in a series of legal actions revealed yesterday.
Der Spiegel:
Global Times:
  • Beijing Property Sales Plunge Over Holiday Weekend. Property average recorded sales in Beijing tumbled abruptly over the long May Day holiday, with the daily sales of second-hand property dropping by more than 80 percent compared with the last month, according to an official real estate website. Analysts say the abrupt cooling down of the property market in Beijing is a result of a raft of tough measures issued by the central and local governments recently to curb run-away prices. The moves include the recent limiting of homebuyers to one new apartment, but analysts also warned that the measures could deflate the property bubble in the long run, depending on their implementation. The latest figures from the Beijing Real Estate Management Network show that the daily sales of second-hand property in Beijing dropped to 211 over the weekend, against average daily sales of 1,164 last month - an 82 percent decline. "The significant drop in housing sales is inevitable, as both consumers and developers are taking a look-and-see attitude after a series of regulations since last December aimed at cooling down the red-hot real estate market," said Yin Bocheng, former director of the Real Estate Research Center at Fudan University. "The drop is expected to continue over the next few months. The market performance depends on whether housing prices will stay at a level accept-able to consumers and developers," Yin said.
Xinhua:
  • China needs to rein in credit to keep price increases in control even after the government raised the deposit reserve requirement ratio for financial institutions, the China Daily said today in an editorial.
Evening Recommendations
Citigroup:
  • Reiterated Buy on (MET), added to Top Picks Live list, target $55.
Night Trading
  • Asian indices are -.75% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 100.5 -1.5 basis points.
  • S&P 500 futures -.06%.
  • NASDAQ 100 futures -.09%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (NYX)/.54
  • (CVS)/.58
  • (JOE)/-.01
  • (CKP)/.09
  • (RDC)/.75
  • (MRK)/.75
  • (COCO)/.46
  • (EMR)/.55
  • (BHI)/.38
  • (MRO)/.17
  • (PFE)/.53
  • (MA)/3.15
  • (ADM)/.71
  • (AMT)/.18
  • (DUK)/.32
  • (NWSA)/.23
  • (CHK)/.70
  • (IPI)/.15
Economic Releases
10:00 am EST
  • Factory Orders for March are estimated to fall -.1% versus a +.6% gain in February.
  • Pending Home Sales for March are estimated to rise +5.0% versus a +8.2% gain in February.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The weekly retail sales reports, Geithner's testimony before the Senate Finance Committee on Bank Fee, ABC consumer confidence report, (SONC) analyst day, RBC Capital Markets Financial Institutions Conference, Deutsche Bank Health Care Conference and the FinTech Investor Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and real estate shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.
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Monday, May 03, 2010

Stocks Sharply Higher into Final Hour on Less Economic Fear, Diminishing Financial Sector Pessimism, Short-Covering

Posted by Gary .....at 3:51 PM

Broad Market Tone:
  • Advance/Decline Line: Substantially Higher
  • Sector Performance: Most Rising
  • Volume: About Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • VIX 19.72 -10.52%
  • ISE Sentiment Index 137.0 +44.21%
  • Total Put/Call .75 -25.0%
  • NYSE Arms .97 -55.22%
Credit Investor Angst:
  • North American Investment Grade CDS Index 90.36 bps +.1%
  • European Financial Sector CDS Index 103.96 bps +4.21%
  • Western Europe Sovereign Debt CDS Index 114.66 bps -1.15%
  • Emerging Market CDS Index 211.54 bps -4.56%
  • 2-Year Swap Spread 25.0 +1 bp
  • TED Spread 19.0 unch.
Economic Gauges:
  • 3-Month T-Bill Yield .16% unch.
  • Yield Curve 269.0 -1 b
  • China Import Iron Ore Spot $172.90/Metric Tonne unch.
  • Citi US Economic Surprise Index +20.30 unch.
  • 10-Year TIPS Spread 2.40% unch.
Overseas Futures:
  • Nikkei Futures: Indicating +83 open in Japan
  • DAX Futures: Indicating +25 open in Germany
Portfolio:
  • Higher: On Gains in my Financial, Retail, Biotech and Tech long positions
  • Disclosed Trades: None
  • Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is very bullish as equities trade near session highs despite mounting headwinds. On the positive side, Oil Tanker, REIT, Disk Drive, Road & Rail and Gaming stocks are especially strong, rising 2.5%+. (IYR) has traded very well throughout the day. The euro remains heavy despite the Greece bailout. On the negative side, Coal, Oil Service, Gold and Steel shares are down on the day. Despite the rally in equities, the major CDS indices aren't falling much and the euro financial sector cds is rising meaningfully. As well, most commodities are trading poorly today. The market's resilience to recent negative developments remains very impressive. We have been stuck in a relatively volatile, but tight range over the last few weeks. I want to see the S&P 500 break free from this range before getting more aggressive on the long side. I expect US stocks to trade modestly higher into the close from current levels on short-covering, less financial sector pessimism and declining economic fear.

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