North American Investment Grade CDS Index 88.77 +1.37%
European Financial Sector CDS Index 85.67 +.97%
Western Europe Sovereign Debt CDS Index 188.37 +.65%
Emerging Market CDS Index 200.91 +1.38%
2-Year Swap Spread 18.0 +1 bp
TED Spread 25.0 +1 bp
Economic Gauges:
3-Month T-Bill Yield .02% -1 bp
Yield Curve 265.0 -2 bps
China Import Iron Ore Spot $182.60/Metric Tonne +.76%
Citi US Economic Surprise Index -6.70 -2.5 points
10-Year TIPS Spread 2.55% -1 bp
Overseas Futures:
Nikkei Futures: Indicating -104 open in Japan
DAX Futures: Indicating -18 open in Germany
Portfolio:
Slightly Lower: On losses in my Tech and Biotech sector longs
Disclosed Trades: Added (IWM)/(QQQ) hedges, added to my (EEM) short, added a commodity short, then covered some of my (IWM)/(QQQ) hedges
Market Exposure: Moved to 75% Net Long
BOTTOM LINE: Today's overall market action is bearish as the S&P 500 trades lower, despite lower energy prices, mostly positive earnings reports, buyout speculation and lower long-term rates. On the positive side, Telecom, Utility, Bank and Education shares are higher on the day. Copper is rising +1.0% and oil is falling -1.9%. Weekly retail sales rose +5.1% versus a +5.0% gain the prior week. On the negative side, Coal, Alt Energy, Energy, Oil Service, Ag, Paper and Hospital shares are under significant pressure, falling more than -2.0%. Small-caps and cyclicals are underperforming. Commodity-related equities have traded very heavy throughout the day again despite a stable euro. The US price for a gallon of gas is rising .02/gallon today to $3.97/gallon. It is up .85/gallon in 77 days. Lumber is falling -2.81% and has plunged around -25.0% in just over 2 months. Rice futures are rising another +1.28%. The US dollar continues to trade very poorly. The Greece sovereign cds is rising +2.0% to 1,339.53 bps, the Israeli sovereign cds is jumping +9.3% to 140.50 bps and the Saudi sovereign cds is climbing +12.6% to 114.68 bps. The most frothy parts of the market are getting hit the hardest today with Chinese internet stocks and silver seeing precipitous declines. As well, the sectors that are the most sensitive to global growth are getting hit. I continue to believe the global economy is slowing more than economists expect on soaring food/energy prices, US housing, European austerity, central bank tightening in emerging markets and the Japan nuclear crisis. I suspect commodities, emerging markets and industrials will continue their recent underperformance for awhile. I expect US stocks to trade mixed-to-lower into the close from current levels on profit taking, more shorting, technical selling, global growth concerns, Mideast unrest and emerging markets inflation fears.
Death of Bin Laden Prompts Review of Pakistan Relations, Afghanistan Goals. The death of Osama bin Laden prompted immediate calls from U.S. lawmakers to re-evaluate the relationship with Pakistan, where the al-Qaeda leader was found and killed less than 35 miles from the capital of Islamabad. Even as Secretary of State Hillary Clintonsaid the U.S. is “committed to supporting the people and government” of Pakistan, politicians and analysts raised questions about support for the country and the need to maintain troop levels in neighboring Afghanistan. The discovery of bin Laden’s hideaway in the military town Abbottabad is the latest event to heighten U.S.-Pakistan tensions. Pakistan’s foreign ministry issued a statement today saying that the U.S. action that killed bin Laden was mounted without the country’s knowledge and may undermine future cooperation. CIA Director Leon Panetta, in an interview released today by Time magazine, said U.S. officials planning the raid “decided that any effort to work with the Pakistanis could jeopardize the mission” because “they might alert the targets.”Democratic Senator John Kerry of Massachusetts, an architect of a 2009 bill that tripled non-military aid to Pakistan, committing $1.5 billion annually for five years, called a new round of hearings to “assess the strategic relationship” between the two countries and to examine how to arrive at an “acceptable end-state” in Afghanistan. White House counterterrorism adviser John Brennan said yesterday that members of Congress are “understandably” raising questions about whether bin Laden got support from some elements of the Pakistani government. “We are looking right now at how he was able to hold out there for so long, and whether or not there was any type of support system within Pakistan that allowed him to stay there.” Obama’s 2012 budget proposes $1.2 billion in assistance for Pakistan, largely to support counterinsurgency training for troops posted along the border with Afghanistan.
Indian Equities Drop Most Among Major Indexes on Rate Increase. Indian stocks dropped the most among major indexes in the world after rate increases by the nation’s central bank exceeded economists’ estimates.State Bank of India (SBIN) paced losses among lenders after the Reserve Bank of India raised rates by half a percentage point, more than analysts’ forecast, and predicted inflation to remain at about 9 percent until September because of higher oil costs. Mahindra & Mahindra Ltd. (MM), the largest maker of tractors, fell the most in three months. Jaiprakash Associates Ltd. (JPA), a builder of dams, roads and bridges, sank 8.2 percent. “The central bank is reacting to the alarming situation of inflation,” said Manish Sonthalia, who manages $300 million in stocks for wealthy individuals at Motilal Oswal Securities Ltd. in Mumbai. “I was expecting a 75 basis point increase by the end of the year, but there’s been front-loading of rate tightening.” Sonthalia is avoiding companies that require large amounts of capital as borrowing costs are set to rise. The Bombay Stock Exchange Sensitive Index, or Sensex, lost 463.33, or 2.4 percent, to 18,534.69 at the 3:30 p.m. close in Mumbai. The gauge fell for the seventh day, its longest run of losses since November 2008, to close at the lowest level since March 24.
Sell Bullish Options on Indian State Banks on Rates, Morgan Stanley Says. Investors should sell bullish options on India’s state-owned banks because their values may fall as lower lending profits reverse the “strong” revenue growth of the past two years, Morgan Stanley derivatives strategists said.
China April Home Prices Rise as Premier Wen Is 'Determined' to Cool Them. China’s home prices rose for the eighth consecutive month in April, Soufun Holdings Ltd. said today, defying government steps to cool prices. The latest gain underscores the challenge facing Premier Wen Jiabao, who said May 1 that the nation is “determined” to bring down housing prices in some cities to a “reasonable” level. Home prices rose 0.4 percent in April from March and climbed in 77 of 100 cities tracked by the nation’s biggest real-estate website owner. Wen said the government is committed to bringing down some cities’ property prices during a visit to a construction site in Beijing, the official Xinhua News Agency reported yesterday. The comments may help correct a misconception in the stock market that the government only wanted to curb increases, according to Credit Suisse Group AG. “We still expect more tightening measures,” Credit Suisse analysts led by Jinsong Du wrote in an e-mailed note today, noting that Wen’s comment was the first time he has committed to lowering some prices. “We continue to prefer taking profits on China property sector, especially after the 25% sector rally in the past one and a half months.”
China's Central Bank Signals Tightening May Continue Even as Growth Cools. China’s central bank said controlling inflation is its top priority, even after a manufacturing survey indicated that growth may slow in the second-biggest economy. “Stabilizing prices and managing inflation expectations are critical,” the People’s Bank of China said in a first- quarter monetary policy report published on its website today. Bank reserve requirements have no “absolute ceiling,” the report said, restating an April 16 comment from Governor Zhou Xiaochuan. “Given the loose monetary policies of major economies and gradual recovery of the global economy, commodity prices keep climbing and global inflation expectations are rising significantly,” the People’s Bank of China said. “China is seeing increasing pressure from imported inflation.”
Navy SEAL Raid on Bin Laden Reflects Tradition of Grit, Secrecy. The fatal shooting of Osama bin Laden with two bullets, the first to the chest and the second to the head, was the climax in a risky, secret Navy SEAL mission of the kind the U.S. is turning to more frequently for its national security. In a post-Cold War era of “irregular warfare” against antagonists such as insurgents and drug traffickers, the U.S. leans increasingly on covert skills and operations. The U.S. military’s Special Operations Command, which includes the SEALs, has more than tripled its budget and quadrupled the number of operatives deployed overseas since the Sept. 11, 2001, terrorist attacks.
Russian Manufacturing Falls Most Since 2008 as Ruble Strength Hits Exports. Russian manufacturing growth slowed in April for the largest monthly drop since December 2008 after export orders declined and companies scaled back investment. The Purchasing Managers’ Index fell to a seasonally adjusted 52.1, the weakest level since November, from 55.6 in March, HSBC Holdings Plc (HSBA) said in a report today, citing data compiled by Markit Economics, a financial information services company.
Williams-Sonoma(WSM) Chooses Clicks Over Bricks in Web Rollout. Williams-Sonoma Inc. (WSM), the 55-year-old housewares chain known for its meticulously arranged stores and baking demonstrations, is cooking up a new strategy: remaking itself as an Internet company. Web orders are already the fastest-growing source of revenue for the San Francisco-based company, and now it’s preparing to make its e-commerce sites global by the end of June, Chief Marketing Officer Patrick Connolly said last week. Williams-Sonoma, which also owns Pottery Barn and West Elm, will invest tens of millions in the project. “We are absolutely obsessed with the Web right now,” Connolly said. By the end of next month, the company’s e- commerce site will go live in more than 75 countries.
Orders Placed With U.S. Factories Increase More Than Forecast. Orders placed with U.S. factories rose more than forecast in March on increasing demand for machinery and computers that points to further gains in business spending. Bookings for manufacturers’ goods climbed 3 percent, a fifth consecutive increase, after a 0.7 percent February advance, the Commerce Department said today in Washington. The report also revised up estimates for capital equipment bookings issued last week.
Sears Holdings(SHLD) Tumbles After Same-Store Sales Decline. Sears Holdings Corp. (SHLD), the department- store chain majority-owned by Edward Lampert, dropped the most in almost a year in Nasdaq trading after comparable-store sales fell and the company predicted a first-quarter loss. Sales at stores open at least a year declined 3.6 percent in the quarter ended April 30, the Hoffman Estates, Illinois- based company said yesterday in a statement.
Senate Report on Goldman(GS) Under Review by Justice Department. The Justice Department is reviewing a report by a U.S. Senate panel that said Goldman Sachs Group Inc. (GS) misled clients about the firm’s bets on securities tied to the housing market, according to Attorney General Eric Holder. Holder told the House Judiciary Committee at a hearing today that the department is reviewing the April report by the Senate Permanent Subcommittee on Investigations. Holder didn’t elaborate on which aspects of the report are under review. At the time the report was released, Senator Carl Levin said he wanted the Justice Department and the Securities and Exchange Commission to examine whether Goldman Sachs violated the law by misleading clients who bought the complex securities known as collateralized debt obligations without knowing the firm would benefit if they fell in value.
Deutsche Bank(DB) Faces U.S. Fraud Lawsuit Over Mortgage Lending. Deutsche Bank AG (DBK), Germany’s biggest bank, was sued for more than $1 billion by the U.S. government, which claims it “repeatedly lied” so that thousands of risky mortgages qualified for a government insurance program. The Frankfurt-based bank and its MortgageIT unit falsely certified that borrowers didn’t face risk of default, qualifying the loans for insurance by the Housing and Urban Development Department’s Federal Housing Administration, according to a complaint filed today in Manhattan federal court. The bank and MortgageIT masked problem loans through “egregious” violations of HUD rules for analyzing the income and creditworthiness of borrowers, the Justice Department said. MortgageIT endorsed more than 39,000 loans for FHA insurance after 1999, making them “highly marketable for resale,” the U.S. said. Of those, 12,500 defaulted.
Wall Street Journal:
Pakistan Criticizes U.S. Raid on Bin Laden. Pakistan said Tuesday it had "concerns and reservations" about Washington's decision to attack and kill al Qaeda leader Osama bin Laden deep inside Pakistan without seeking their permission or giving forewarning. "This event of unauthorized unilateral action cannot be taken as a rule," Pakistan's foreign ministry said in a statement.
Citi(C) Slashes Price Target on AOL(AOL). Citi cuts its target price and earnings estimates for AOL, as the market scribblers fret about the online company’s spending on new deal toy the Huffington Post and on Patch, AOL’s local-news umbrella organization. Citi expects AOL’s results — first up: first quarter numbers are due in Wednesday — to be “fundamentally weak” amid the $315 million HuffPo acquisition and continued “declines in (AOL’s) various businesses.” Citi expects the first quarter to show the — gasp! — 20th straight quarter of revenue declines for AOL. Citi lowers its price target to $23 from $28 and keeps its investment rating at hold.
Bloomberg Businessweek:
Digital Realty(DLR) Gains on Data-Center Frenzy. Digital Realty Trust, the largest provider of data-center real estate, has almost tripled on the New York Stock Exchange since late 2008, amid a server-farm demand surge that the company says may intensify this year. The proportion of companies that plan to expand data centers rose four percentage points, to 85 percent, this year, San Francisco-based Digital Realty said yesterday in a statement, citing a survey it commissioned from Campos Research & Analysis.
CNBC.com:
Fed Still Lacks 'Exit Strategy,' But Talks Are Heating Up. Federal Reserve officials held intense talks about exit strategies at their last meeting, with policymakers divided over whether to sell billions of dollars of assets first or simply raise interest rates, according to people familiar with the matter.
Why One of the World's Biggest China Bulls Is Getting Worried. Goldman's(GS) Jim O'Neill is the man who invented BRICs, and he's been a fervent China bull. And yet in his latest monthly note, he's concerned. Basically, he's not seeing China shift its growth strategy the way he'd like. Inflation is still torrid, and the central bank is being forced to resort to blunt instruments.
Chinese Real Estate Developers Profits Drop, Debts Approach One Trillion. Chinese real estate developers have finished reporting their first quarter results. According to this report, the profits of 113 real estate companies dropped, while inventories and debts rose to some unprecedented levels.
Sources: Goldman(GS) Chief to Stay 2 Years. Ceo Lloyd Blankfein, approaching his fifth anniversary running the storied investment bank amid some Wall Street speculation that recent regulatory tussles have left him burned out and looking to step down, is likely to stay put at the helm of Goldman Sachs for at least two years, sources tell The Post. Call it a desire to do more of "God's work," as Blankfein once famously described it two years ago. Or call it Bronx-born Blankfein's unwillingness to the leave the gold-plated Manhattan franchise with a reputation more tarnished than when he found it on June 29, 2006, the day he ascended to the top spot following Hank Paulson's confirmation as Treasury Secretary.
Alcoa(AA) Shares Rise on Talk of Bid Interest: Traders. U.S. aluminum producer Alcoa Inc (AA.N) shares rose as much as 3.2 percent in early trade on Tuesday, with three traders in Europe citing market talk of bid interest from miner Rio Tinto (RIO.L)(RIO.AX).
Nissan Wins NYC Taxi Contract. Japan's Nissan Motor Co Ltd (7201.T) won New York City's 10-year contract to build the next generation of taxis for the city, a deal estimated to be worth more than $1 billion, the New York Daily News reported on Tuesday, citing unnamed sources. The other two finalists for the concession were Turkish manufacturer Karsan Otomotiv (KARSN.IS) and U.S. automaker Ford Motor Co (F.N).
Senate Democrat's Budget Would Hike Taxes. Democratic Senator Kent Conrad said his budget proposal does not necessarily conflict with efforts by the bipartisan "Gang of Six" senators, who are trying to come up with a budget deal acceptable to both Republicans and Democrats.
Doctors, Lawyers, Dentists Tops in Fed Jobs That Pay $180,000-Plus. As Congress eyes the federal payroll for budget cuts, do you know who the nation's highest-paid federal workers are? Department of Veterans Affairs doctors, Securities and Exchange Commission lawyers and National Institutes of Health physicians represent the most numerous groups among at least 17,828 federal employees whose annualized salaries totaled $180,000 or more in September 2010.
Financial Times:
Renren Replaces Audit Chief Ahead of IPO.Renren has replaced the head of its audit committee on the eve of its initial public offering on Nasdaq, as the Chinese social network is trying to protect itself from the fall-out of an accounting controversy at another company at which the executive serves. According to an amendment to Renren’s prospectus filed with the US Securities and Exchange Commission on Monday, Derek Palaschuk, chief financial officer of Longtop, a Chinese Nasdaq-listed specialist software company, no longer heads Renren’s audit committee and is also no longer an independent director appointee. The step follows an accounting controversy at Longtop which sent the firm’s shares plummeting last week.
National Business Daily:
China can't control inflation with yuan appreciation, citing Tan Yaling, director of the China Forex Investment Research Institute. The pace of the currency's current appreciation is too fast and goes against the laws of economics, Tan said. The government should intervene in the yuan exchange rate, he said.
Yen, Dollar Rise on Terrorist Concerns After Bin Laden's Death. The yen rose against all its major counterparts as Asian stocks declined amid signs global economic growth is losing momentum, spurring demand for safer assets. The dollar also strengthened versus most of its major peers after the U.S. and Australia boosted security at their embassies around the world on concern this week’s killing of Osama bin Laden will lead to revenge attacks.
Return on Equity at 10-Year High Fails to Drive Valuations. U.S. companies, earning more from investments in plants and labor than any time in the last decade, have yet to reap the benefits in their stock valuations. Return on equity at International Business Machines Corp. (IBM) has risen to 68 percent this year from 24 percent in 2005 after the Armonk, New York-based company sold its personal-computer business and reorganized staff. Net income per employee rose to $34,758 in 2010, the highest since at least 1987, according to data compiled by Bloomberg. The stock, up 108 percent since the end of 2005 through last week, trades 16 percent below its average price-earnings ratio during the past decade. IBM’s example mirrors the Standard & Poor’s 500 Index, where return on equity has risen six quarters to 23 percent and may reach 27 percent next year, the highest annual level since 2000, analyst estimates compiled by Bloomberg show.
Financing China Costs Poised to Rise With Decision on CDB Debt. China Development Bank Corp.’s private-equity unit sports three bronze busts of Communist Party leaders in its Beijing lobby. Chairman Mao Zedong is there, and so is his eventual successor as leader, Deng Xiaoping. Then there’s Chen Yun, once China’s top economic planner. The state-owned policy bank, created in 1994 to support the government’s economic and infrastructure goals, has been led since 1998 by Chen’s son, 66-year-old Chen Yuan. His father, like Deng, is among the Communist Party’s so-called eight immortals, who wielded power in the 1980s and 1990s, Bloomberg Markets magazine reports in its June issue. The younger Chen, who led CDB through the Chinese banking crisis more than a decade ago by offloading 100 billion yuan ($15.3 billion) in bad debt, has made the bank the engine of the national government’s economic development policies. CDB had $687.8 billion in loans on its books at the end of 2010, more than twice as much as the World Bank.
Oil Drops on Economic Growth Concern as Bin Laden Death Boosts Volatility. Oil dropped for a second day in New York on signs U.S. economic growth may slow, while price swings intensified on concern the death of Osama bin Laden will lead to retaliatory attacks. Oil for June delivery slipped as much as 77 cents to $112.75 a barrel in electronic trading on the New York Mercantile Exchange. The contract was at $112.97 at 12:07 p.m. Sydney time. Yesterday, it lost 41 cents, or 0.4 percent, to $113.52, after earlier rising as high as $114.83. Prices are up 31 percent the past year. Brent crude for June settlement traded at $124.41 a barrel, down 71 cents, on London’s ICE Futures Europe Exchange.
Morgan Stanley(MS) Aligned With Commodity Bulls as Goldman Says Sell. Money managers are making near-record bets on higher commodity prices, aligning themselves with Morgan Stanley after Goldman Sachs Group Inc. said investors should reduce most of their holdings. Funds held a net 1.49 million futures and options in 18 commodities by April 26, 57 percent more than a year earlier, according to U.S. Commodity Futures Trading Commission data compiled by Bloomberg. The Standard & Poor’s GSCI Total Return Index of 24 commodities beat bonds, stocks and the dollar every month since December, the longest in at least 14 years. It rose in April for an eighth month, the best stretch since 2004. Investors held a record $412 billion of raw-material assets by the end of March, almost 50 percent more than a year earlier, Barclays Capital estimates. Net-long positions held by managed-money funds are within 4.8 percent of the record 1.56 million contracts reached in October, CFTC data show. Open interest in 17 of 19 commodities tracked by the Thomson Reuters/Jefferies CRB Index reached 8.2 million contracts, data from the CFTC show. That compares with an all-time high of 8.6 million on Feb. 18.
Wall Street Journal:
Pakistan's Bin Laden Connection Is Probed. Obama administration officials said Monday they would probe whether Pakistani authorities helped al Qaeda leader Osama bin Laden stay in hiding for years, one day after he was killed by U.S. special forces at an outsize mansion complex located in the same city as Pakistan's top military academy. Emerging details of the U.S. raid immediately raised questions about how bin Laden, the most wanted man in American history, had eluded a manhunt that dates back more than a decade. The al Qaeda leader was cornered not in a remote border hideout but in a three-story mansion complex in Abbottabad, a city roughly 40 miles north of Islamabad that is thick with active and retired Pakistani military personnel.
Tornadoes Leave Many Missing. In Tuscaloosa, Ala., Police Don't Know Whereabouts of 340 People; Some Haven't Called Relatives Yet. For the friends and relatives of the hundreds who died in the tornadoes that pounded Alabama and other Southern states last week, there are funerals and wakes. For the families of the hundreds more still believed missing, there are only questions and fear. Over the weekend, officials lowered the death toll in Alabama to 236 from 250. State officials said Monday they were verifying death tolls county by county. The number of injured and hospitalized is 2,219.
Hedge Funds Crowd Emerging Markets, Silver. “Hedge funds are fully committed to emerging markets again,” said Mary Ann Bartels, head of U.S. Technical Analysis at Bank of America Merrill Lynch. Bartels issued a research report on Monday suggesting that broad-ranging macro hedge funds have continued to pile into a “crowded long” trade in emerging markets. If the current hedge-fund interest in emerging markets builds to a tipping point, investors could be looking at a correction that leaves many of them on the losing side of this trade.
CNBC:
Cramer: Why It's Not Too Late to Buy Apple(AAPL). Although trading at roughly $345 a share, Cramer said Monday Apple's stock is "way too cheap." After all, the "Mad Money" host thinks the technology stock could soon go to $400.
Bin Laden's Death Likely to Deepen Suspicions of Pakistan. The killing of Osama bin Laden deep inside Pakistan in an American operation, almost in plain sight in a medium-sized city that hosts numerous Pakistani forces, seems certain to further inflame tensions between the United States and Pakistan and raise significant questions about whether elements of the Pakistani spy agency knew the whereabouts of the leader of Al Qaeda.
Costs of Rare Earth Rise With Demand. World prices have doubled in the last four months for rare earths — metallic elements needed for many of the most sophisticated civilian and military technologies, whether smartphones or smart bombs. And this year’s increases come atop price gains of as much as fourfold during 2010. The reason is basic economics: demand continues to outstrip efforts to expand supplies and break China’s chokehold on the market.
Osama Was My Neighbor. Residents from the upscale neighborhood where bin Laden spent his last days talk to Newsweek/Daily Beast about hearing the firefight, living next to bin Laden, and mourning the loss of a leader.
Reuters:
Citadel's Griffin Assails Too-Big-To-Fail. Banks with close ties to Washington would be favored under new liquidation rules meant to avoid "the too big to fail" taxpayer rescues seen in the recent financial crisis, Kenneth Griffin, head of giant hedge fund Citadel LLC, warned on Monday. "Companies connected to Washington that curry political favor will be favored" by the new rules "at the expense of those that do not have their business model built around appeasing politicians," Griffin told the 2011 Milken Institute Global Conference in Beverly Hills, California. "It will deeply entrench crony capitalism in the middle of our financial system," he said of the liquidation authority included in last year's Dodd-Frank financial law. Griffin said the law gives regulators too much authority and discriminates against banks that do not have enough clout in Washington. "It opens the door to crony capitalism unlike what we've ever seen before in this country," he told a panel discussion at the conference. Jim Millstein, the former chief restructuring officer of the U.S. Treasury Department, agreed with Griffin that the legislation was flawed but said there is a need for government to provide liquidity to the financial system in times of strain. "My own estimation is that if we hit close to the edge again, we will see a repeat of the drama played out in September, October 2008," Millstein said. Thomas Wilson, chief executive of insurer Allstate Corp (ALL.N) and deputy chairman of the Federal Reserve Bank of Chicago, said the law gives the FDIC too much power. "When you ask the FDIC to come do an O.L.A. (orderly liquidation authority) with rules that they make up, it will work to the disadvantage of the markets," Wilson told panelists.
Libyan Rebels in Loan Talks to Avert Cash Crunch. Rebels controlling Libya's east are in talks for loans from the United Arab Emirates and Qatar, a spokesman said, as they scramble to avoid running out of funds as the Libyan conflict drags on.
US Group Urges Focus on China State-Owned Companies. The United States should focus less on China's currency practices and more on the threat to U.S companies posed by Beijing's support for state-owned enterprises, a U.S. business group said on Monday.
Chesapeake(CHK), Anadarko(APC) Results Hurt by Hedging. Quarterly results from Anadarko Petroleum Corp and Chesapeake Energy Corp were hurt by quarterly accounting for natural gas prices, but excluding those changes, the companies topped expectations as they produced more oil.
Financial Times:
Glencore Has Bigger Risk Appetite Than Wall Street Banks. The research reveals that Glencore could have lost a daily $42.5m last year on average when measured by the so-called “value-at-risk” measure, much more than the average $25.7m put at risk each day in 2010 in commodities trading by Goldman Sachs, Morgan Stanley, Barclays Capital and JPMorgan. The four banks are the largest commodities dealers by revenues in the financial sector.
Economic Daily News:
Apple Inc.(AAPL) will ship over seven million iPad tablets in the second quarter, up at least 50% from the first quarter, citing people in the industry.
Shanghai Securities News:
First-quarter net income for non-financial companies listed in China decline 10% from the fourth quarter.
China Business News:
Home prices and sales in some Chinese cities rose last month, indicating the government may have failed to curb the property market.
Gulf News:
Compound in Pakistan Was Once a Safe House. The compound in Abbottabad where Osama Bin Laden was killed was once used as a safe house by Pakistan's premier intelligence agency ISI, Gulf News has learnt."This area had been used as ISI's safe house, but it was not under their use any more because they keep on changing their locations," a senior intelligence official confided to Gulf News. However, he did not reveal when and for how long it was used by the ISI operatives. Another official cautiously said "it may not be the same house but the same compound or area used by the ISI". The official also confirmed that the house was rented out by Afghan nationals and is not owned by the government. The house is located just 800 metres away from the Pakistan Military Academy and some former senior military officials live nearby.
Evening Recommendations Citigroup:
Reiterated Buy on (ADP), raised target to $59.
Night Trading
Asian equity indices are -1.25% to unch. on average.
Asia Ex-Japan Investment Grade CDS Index 103.50 -.25 basis point.
Asia Pacific Sovereign CDS Index 109.0 -1.5 basis points.
Factory Orders for March are estimated to rise +2.0% versus a -.1% decline in February.
Afternoon
Total Vehicle Sales for April are estimated to fall to 13.0M versus 13.06M in March.
Upcoming Splits
(MMSI) 5-for-4
Other Potential Market Movers
The 1-Year Treasury Bills Auction, weekly retail sales reports, (DHR) analyst meeting, (SVU) investor day, (AHC) investor day and the (ALB) investor day could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by commodity and financial shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.
