Style Outperformer:
- Small-Cap Value (-.02%)
- 1) HMOs +1.54% 2) Airlines +1.15% 3) Oil Tankers +.75%
- AGP, RCL, ARUN, AAWW, NVDA, NFLX, UAUA, SOHU, ATHR and EW
- 1) INFN 2) BSX 3) SFSF 4) ROVI 5) VVUS
- 1) AAPL 2) AZO 3) T 4) ORCL 5) GOOG
Tuesday, September 21, 2010
Bull Radar
Style Outperformer:
Tuesday Watch
Evening Headlines
Bloomberg:
- Greek Sovereign Default Would Be a 'Tragedy,' Papandreou Says. Greece’s Prime Minister George Papandreou renewed the country’s pledge to return to international capital markets as soon as possible and ruled out any plans to restructure debt. “We are not going to default,” Papandreou said yesterday during an interview with Betty Liu at the New York Stock Exchange. “Default would be a tragedy.”
- Recovery Deniers Just Got Mugged by Reality: Caroline Baum. This just in: The recession that started in December 2007 ended in June 2009, according to the official arbiter of the U.S. business cycle. That will come as a surprise to the 14.9 million unemployed, especially the 6.2 million who have been jobless for 27 weeks or more. It won’t offer encouragement to the 1.1 million discouraged workers who stopped looking for jobs because they don’t think there are any. Nor will it resonate with the 8.9 million who are working part-time for economic reasons -- the primary reason being, the economy stinks. For the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER), designating the trough month for the recession means just one thing: “Any future downturn of the economy would be a new recession,” not a continuation of the old one, according to yesterday’s press release.
- Fed Under Pressure to Avoid Creating Confusion Over Potential for Easing. Federal Reserve officials debating whether to boost stimulus are under pressure to avoid creating confusion among investors about any new effort to spur the U.S. recovery. The Federal Open Market Committee, which meets today, triggered a stock selloff with its last statement on Aug. 10 as investors took it as a signal the economy will falter. The Standard & Poor’s 500 Index tumbled 7.1 percent during the two weeks following the statement after reaching a three-month high on Aug. 9.
- Most Hedge Funds Should Escape New Swaps Regulation in U.S., ISDA Says. Most hedge funds and money managers shouldn’t fall under new derivatives rules being written by U.S. regulators, according to the International Swaps and Derivatives Association, a trade and lobbying group. The Commodity Futures Trading Commission and the Securities and Exchange Commission are responsible for writing the new rules governing $615 trillion in over-the-counter derivatives. They should find hedge funds and money managers don’t meet the criteria of a firm that “maintains a substantial position in swaps,” using leverage that creates “substantial counterparty exposure,” ISDA said today. That’s how the new law defines the so-called major swap participant. “Very few, if any, investment funds should qualify,” ISDA said today in a letter to the CFTC and SEC.
- TransCanada Oil-Sands Pipeline to Gulf May Add 12,000 Jobs, Chief Says. TransCanada Corp.’s 2,000-mile pipeline linking Alberta’s oil sands with Gulf Coast refiners may add at least 12,000 jobs and provide a stable fuel source for the U.S., Chief Executive Officer Russell Girling said. Efforts to stop the $7 billion Keystone XL project because lawmakers say developing tar sands may release more greenhouse gases than other types of oil production will result in the crude being redirected from the U.S., Girling said. “Permitting our pipeline will not impact the development of oil sands,” Girling said today in a telephone interview. “The oil sands will be developed in any event.” TransCanada’s proposal has been faulted by U.S. lawmakers such as Henry Waxman, chairman of the House Energy Committee, and questioned by the U.S. Environmental Protection Agency. Without Alberta’s oil, the U.S. will need more crude from countries less friendly to its interests than Canada, Girling said. Canada is now the biggest U.S. source of imported oil.
- HP(HPQ) and Oracle(ORCL) Resolve Litigation on Hurd Employment. Hewlett-Packard Co. and Oracle Corp. said they resolved litigation over the appointment of Mark Hurd as a president of Oracle and reaffirmed the long-term partnership between the two companies.
- Oil Supplies Hit Five-Week Low in Survey on Enbridge Halt: Energy Markets. U.S. crude-oil supplies probably fell to a five-week low after an Enbridge Energy Partners LP pipeline, the largest linking Canada and the U.S. Midwest, shut for eight days following a leak, a Bloomberg News survey showed. Inventories slipped 1.6 million barrels, or 0.4 percent, in the seven days ended Sept. 17 from 357.4 million a week earlier, according to the median of 14 analyst estimates before an Energy Department report tomorrow.
- Goldman(GS) Shareholder a Loser to CD Rates When Blankfein Earned $125 Million. Goldman Sachs Group Inc.’s stock is one of the best-performing financial shares in the past decade and beat the S&P 500 Stock Index, helping to explain Lloyd C. Blankfein’s $125 million in cash bonuses during the period. Some investments did even better. One-year certificates of deposit earned an average rate of 3.17 percent in the last 10 years, beating the 2.78 percent annual total return on Goldman Sachs stock. Buying a 10-year Treasury note in mid-September 2000 would have yielded 5.8 percent annually.
- Net Neutrality Activists Target Google(GOOG) as Talks Heat Up. Net neutrality activists and left-leaning interest groups are launching an online advertising campaign targeting Google co-founders Larry Page and Sergey Brin for the company’s recently announced agreement about web traffic delivery with Verizon Communications.
- NYC Mayor to Impose Job Freeze. New York City Mayor Michael Bloomberg will impose a citywide hiring freeze as his administration begins to take more aggressive steps to deal with a multibillion budget deficit in the upcoming fiscal year, people familiar with the mayor's decision confirmed Monday night.
- Turkey Questions Sanctions on Iran. Turkey's president questioned the effectiveness of sanctions as a tool to curb Tehran's nuclear ambitions and indicated his country's relations with Israel won't improve until the Jewish state apologizes for its deadly May raid on a flotilla trying to reach Gaza.
- Obama Hints at High-Level Changes. President Barack Obama raised the prospect of changes to his economic team Monday, saying his over-worked staffers were "going to have a whole range of decisions about family that'll factor into" their career decisions.
- A Tale of Two Recoveries. The state of the economy after a year of 'rebound.'
- New Hedge Funds Lack Fuel for Big Launches. A lot of traders are prepping new funds, but start-up capital is scarce.
- Ad Prices May Spike Under Yahoo(YHOO), Microsoft(MSFT) Deal, Report Says.
- Morgan Stanley's(MS) McVey Looking to Cut Equity Exposure.
- The PIIGS Are Being Crucified On A Eurotrash Gold Standard. (charts)
- The "Deleveraging" Deception. There is wide agreement among economists and the financial media that our lackluster economic performance stems from continued "deleveraging" among consumers and businesses. Although it is certainly true that after decades of overly speculative borrowing, individuals and corporations are paying down debt, rebuilding their savings, and generally repairing their respective balance sheets. But these activities cannot be faulted for our economic malaise. In fact, as a country, we haven't deleveraged at ALL. All the moves made by the private sector have been vastly outpaced by the federal government's efforts to add leverage to the economy. The net result is that we are much more indebted now than we were before the recession began; as a result, we are digging ourselves even faster into debt.
- Munger Tells 25 Million Americans to "Suck It In", And to "Thank God for Bank Bailouts" as Berkshire(BRK/A) Benefits From $95 Billion of TARP Funding.
- Bank of America(BAC) Cutting 5% of Capital Markets' Personnel, Firing 400 Employees Globally, Many More to Come...Er...Go.
Rasmussen Reports:
Reuters:
- Senators Warn Insurers On Premium Increases. Two Democratic senators are demanding more transparency about premium increases from health insurers and warning them against blaming higher rates on a newly passed reform law. Senate Finance Committee Chairman Max Baucus of Montana and Commerce Committee Chairman John Rockefeller of West Virginia said they sent a letter to the five largest health insurers by enrollment registering their concerns over increases for next year. The letters were sent to WellPoint Inc, UnitedHealth Group Inc, Aetna Inc, Health Care Services Corp and Cigna Corp.
- China Guizhou Orders Aluminum Smelters to Cut Output. Power-hungry smelters in Guizhou, one of China's major primary aluminium producing provinces, have been ordered to cut production, in efforts to help meet Beijing's target to reduce energy intensity, smelter officials said on Monday. The move may temporarily shut 30 percent of around 850,000 tonnes of operating annual capacity in the southwestern province, cutting some 80,000 tonnes of metal production between September and December.
- Gulf States in $123 Billion US Arms Spree. The Arab states of the Gulf have embarked on one of the largest re-armament exercises in peacetime history, ordering US weapons worth some $123bn as they seek to counter Iran’s military power. A package of US arms worth more than $67bn for Saudi Arabia accounts for the largest single component of this military build-up, providing a huge boost to the American defence industry.
- China's real-estate developers should price homes "reasonably" or face tougher tightening measures, citing Zhu Zhongyi, vice chairman of the China Real Estate Association.
- Shanghai is cracking down on real estate developers and property agents collaborating to manipulate home prices.
- China plans to increase its minimum wage by at least 20% annually in the next five years, more than doubling it by 2015, citing Huang Mengfu, a government adviser.
- China may announce property tax measures before or after the National Day holidays in October which takes place from Oct. 1 to Oct. 7.
RBC Capital:
- Rated (OC) Outperfrom, target $31.
- Rated (DNDN) Outperform, target $50.
- Asian equity indices are -.25% to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 121.0 -4.0 basis points.
- Asia Pacific Sovereign CDS Index 112.50 +2.0 basis points.
- S&P 500 futures -.18%.
- NASDAQ 100 futures -.06%.
Earnings of Note
Company/Estimate
- (AZO)/5.45
- (FDS)/.80
- (CAG)/.39
- (PRGS)/.18
- (CTAS)/.37
- (ADBE)/.49
- (DRI)/.77
- (CCL)/1.47
8:30 am EST
- Housing Starts for August are estimated to rise to 550K versus 546K in July.
- Building Permits for August are estimated to fall to 560K versus 565K in July.
- The FOMC is expected to leave the benchmark fed funds rate at .25%.
- None of note
- The weekly retail sales report, ABC consumer confidence reading, UBS Life Sciences Conference, (SWKS) analyst meeting and the Goldman Sachs Communacopia Conference could also impact trading today.
Monday, September 20, 2010
Today's Headlines
Bloomberg:
- Homebuilder Confidence Holds at Lowest Level in a Year as Tax Credit Ends. Confidence among U.S. homebuilders in September unexpectedly held at the lowest level in more than a year, showing the housing market remains depressed following the expiration of a government tax credit. The National Association of Home Builders/Wells Fargo confidence index was unchanged at 13, matching the August reading as the lowest since March 2009, data from the Washington-based group showed today. The gauge was projected to rise to 14, according to the median forecast of 50 economists surveyed by Bloomberg News. “It’s hard to see where the impetus for growth for housing is going to come from,” said David Semmens, an economist at Standard Chartered Bank in New York who forecast the index would be unchanged. “The employment situation keeps people very much on the back foot and remaining in their existing homes.”
- Harvard's Feldstein Favors Extending All Bush-Era Tax Cuts for Two Years. Harvard University economics professor Martin Feldstein said raising taxes on the wealthiest Americans could push the nation back into a recession and urged that all Bush-era tax cuts be extended for two years. Feldstein, a member of the committee that dates the beginning and end of recessions, said President Barack Obama’s proposal to allow tax cuts for the wealthy to lapse “is going to slow the economy down and could push the economy into recession again next year.” “We should extend all of the Bush tax cuts for two years and we will have a clean slate and see where the economy is,” Feldstein said today in a radio interview on “Bloomberg Surveillance” with Tom Keene. “We should commit now to two years -- and nothing beyond the two years.”
- Mr. President, Here's My Resume, Where's My Job?: Caroline Baum. Asked whether President Barack Obama has a clear plan for creating jobs, 53 percent of the respondents to a recent New York Times/CBS poll said no.
- IBM's(IBM) $1.7 Billion Netezza(NZ) Deal May Spur Bids for Data-Warehousing Company. International Business Machines Corp.’s $27-a-share deal to acquire Netezza Corp. pushed the stock above that level, suggesting investors may expect a competing bid for the analytics-technology provider. IBM, the world’s largest computer-services provider, struck a cash deal worth about $1.7 billion, IBM said in a statement today. The per-share price is 9.8 percent more than Marlborough, Massachusetts-based Netezza’s Sept. 17 closing price.
- Warren, Geithner Look Past Tensions to Shaping Consumer-Protection Agency. Elizabeth Warren, appointed last week to help set up a new U.S. consumer financial-protection agency, spent much of the past two years critiquing Treasury Secretary Timothy F. Geithner. Now, he will oversee her. The Consumer Financial Protection Bureau, a watchdog for products from credit cards to mortgages, may be shaped as much by Warren’s ability to work with Geithner as by the financial firms and industry critics trying to steer its agenda.
- Obama Says China Hasn't Taken Steps It Agreed Upon to Let Yuan Strengthen. President Barack Obama said China hasn’t done “everything they said would be done” to allow its currency to rise in value. The yuan is “valued lower than market conditions say it should be” and that gives China “an advantage in trade,” the president said ahead of scheduled talks with Premier Wen Jiabao at this week’s United Nations General Assembly in New York.
- Individual Investors May Be Returning to U.S. Stock Market, Bespoke Says. Individual investors may be moving back into stocks, as gains in the Standard & Poor’s 500 Index this month occur at the start of the trading day, the time when they enter most transactions, Bespoke Investment Group LLC said. The S&P 500’s average hourly change between the prior close and 10 a.m. is 0.45 percent, higher than the 0.18 percent that occurs in the next 60 minutes until 11 a.m., according to a Sept. 17 report sent to clients by Bespoke. The difference during the remaining one-hour segments of a session is less than 0.1 percent.
- PBOC Researcher Says China Needs Higher Mortgage, Fixed-Term Deposit Rates. China should raise mortgage rates and allow fixed-term deposit rates to float higher to curb inflation expectations, said Ji Min, an official at the central bank’s research bureau. Mortgage rates are too low, fueling asset bubbles and increasing lending risks, Ji wrote in the latest edition of China Finance magazine in an article co-authored by Chang Li from Tsinghua University. Negative real interest rates prompted households to divert savings to wealth management products and other investments this year, leading to rapid price gains for property, gold and agricultural products, Ji and Chang said.
Wall Street Journal:
- New Smog Proposals From EPA Draw Fire. A proposed crackdown on smog by the Environmental Protection Agency is fueling resistance from businesses groups concerned about costs, Republicans who say it'll be a drag on the economy—and some heartland Democrats engaged in tough election battles this fall. EPA Administrator Lisa Jackson has dramatically stepped up the pace and scope of regulatory activity since 2009. She has pushed sweeping rules to regulate greenhouse-gas emissions linked to climate change, challenged coal companies over their mining practices, and questioned the methods energy companies are using to drill for natural gas. Now Ms. Jackson is proposing to redefine what constitutes unsafe levels of ground-level ozone, a primary ingredient in smog.
- China's SAIC Motor Considers Stake in GM. China's biggest auto maker is considering buying a stake in General Motors Co. when the U.S. company reverts to a publicly traded concern this fall, people familiar with the matter said.
- Islam's Encounters With America. A survey by Elaph, the most respected electronic daily in the Arab world, saw 58% object to the building of the WTC mosque.
- Poll: Extend Bush Tax Cuts, Say Americans Worried About Economy. Ninety percent of Americans are concerned about the economy, according to a new CNBC poll, and two-thirds of those surveryed think neither Democrats nor Republicans have a clear vision for improving it. The poll by Public Opinion Strategies/Hart Research was conducted between September 9 and 12. A majority of the respondents believe the Bush tax cuts should be extended, even for people making more than $250,000 a year. Fifty-five percent think increasing taxes on any Americans will slow the economy and kill jobs.
- Recession Over? Who Cares? Commentary: Economy is still in a world of hurt.
- Gold futures traded at a new record high Monday, climbing above $1,280 an ounce as investment demand for the precious metal strengthened.
- China Says It Won't Repeat Japan's Mistake. China pledged not to repeat Japan’s mistake and allow its currency to rise in response to foreign pressure, countering criticism from U.S. lawmakers that the yuan is undervalued amid a growing cross-Pacific row over Beijing’s currency regime.
- 5 Stocks Insiders Are Buying Like Crazy Right Now.
- The 7-Million Housing Shadow Inventory Could Trigger A Price Avalanche.
LA Times:
- Investors Seeing Farmland as Safer Bet Than Stocks. Wary of fluctuations on Wall Street, more wealthy Americans, private funds and foreigners are putting money into parcels of cornfields, fruit orchards and other U.S. agricultural products.
- Boston Area School Segregation Called Rife. Public schools in the Boston and Springfield metropolitan areas are among the most segregated in the country, often isolating black and Latino students in low-performing schools, according to a report released today by Northeastern University.
Gallup:
Rasmussen Reports:
- Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Monday shows that 26% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-five percent (45%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -19 (see trends).
- 56% in Illinois Favor Repeal of Health Care Law.
- Is America Now Afraid of Ambition?
- White House: New York Times Report '100% Wrong'. The White House is pushing back hard against a New York Times report that the president's political team is considering a national ad campaign that would cast the GOP as taken over by tea party extremists.
- EU, IMF Assure Investors On Greek Aid: Source. Greece's international lenders assured investors this week that they would not abandon Athens at the end of a 3-year bailout plan if it fulfilled tough reforms but failed to regain market trust, a source told Reuters on Sunday.
- U.S. Commercial Property Prices Down 3.1% - Index. U.S. commercial property prices fell 3.1 percent in July as a weak economy and fears of deflation drove the index measuring prices down to more than 43 percent below its peak, according to the Moody's/REAL All Property Type Aggregate Index released on Monday.
- Long-Term Increase in US Unemployment 'Possible', Warns OECD. Millions of Americans risk falling out of the job market forever, the Organisation for Economic Co-operation and Development (OECD) has warned, as it cautioned a full recovery from recession will take years. The recession has left the US with a long-term unemployment rate – a measure of those without work for more than six months – of 4.5pc, almost double that of the 1980s and 1990s downturns. "Previous US recessions have exhibited no long-term damage to the economy or long-term increase in unemployment, but it is possible this recession will trigger these effects," the OECD said in its first survey of the world's biggest economy since late 2008.
- Austerity Plan Helps UK Retain Top AAA Rating. Moody's retained its top AAA rating on the Britain saying the country can withstand economic challenges, giving the Coalition's austerity plans a boost and lifting shares.
Bear Radar
Style Underperformer:
- Large-Cap Growth (+.91%)
- 1) Papers -1.43% 2) Semis +.04% 3) Road & Rail +.33%
- COGT, IMO, IP, RKT, PKG, JOBS, LOGM, RIMM, ENOC, RINO, ENSG, BRCM, RBCN, CREE, PKG and TIN
- 1) PWER 2) HOG 3) MRVL 4) IP 5) SUN
- 1) WYNN 2) LEN 3) AA 4) BX 5) WWE
Bull Radar
Style Outperformer:
- Small-Cap Growth (+1.98%)
- 1) Homebuilders +2.59% 2) Education +2.46% 3) Hospitals +2.02%
- TZOO, PCLN, TXT, MBT, AIXG, TOT, MMR, ID, INET, NZ, VCLK, MMR and TDC
- 1) TLAB 2) MJN 3) ID 4) CHTP 5) RAX
- 1) VZ 2) GOOG 3) AAPL 4) IBM 5) BA
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