BETWEEN THE HEDGES

Late-Night Headlines
Bloomberg:

- The cost of protecting Asia-Pacific bonds from default declined, with Asia’s benchmark index outside Japan at the lowest in more than two weeks, amid growing optimism of an economic rebound later this year. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan fell 6 basis points to 199 as of 9:15 am in Hong Kong, according to ICAP Plc prices. The Markit iTraxx Japan index fell 7 basis points to 218 at 10 am in Tokyo, BNP Paribas SA prices show. The Markit iTraxx Australia index was quoted 7 basis points lower at 219 at 10:30 am in Sydney, Citigroup Inc. data show.

- Bank of America Corp.(BAC), the biggest U.S. bank by assets, said it raised about $13.5 billion in a sale of common stock as part of an effort to boost capital and weather an extended recession. The bank issued 1.25 billion shares at an average price of $10.77 each, according to a statement today.

- The Federal Reserve will include legacy assets for the first time in a $1 trillion program to revive credit markets, expanding the effort to commercial real estate securities issued before the start of this year. The central bank also expanded the number of credit-ratings companies permitted to rate assets for the Term Asset-Backed Securities Loan Facility to five after Connecticut Attorney General Richard Blumenthal told the Fed that the three initial eligible companies helped fuel the global credit crisis.

- Hewlett-Packard Co.(HPQ), the world’s largest maker of printers and personal computers, forecast full- year sales at the low end of an earlier projection, a sign that recession-wary customers continue to shun technology purchases. The stock dropped after the company said sales will decline 4 percent to 5 percent in the year through October, compared with 2 percent to 5 percent projected in February.

- Analog Devices Inc.(ADI), the maker of chips for companies such as Cisco Systems Inc., rose 7.6 percent in late trading after its forecast for fiscal third-quarter sales and earnings beat analysts’ estimates. Sales in the quarter will be about $475 million, the Norwood, Massachusetts-based company said today in a statement. That’s more than the average estimate of $438.7 million by 14 analysts surveyed by Bloomberg.

- Electronic Arts Inc.(ERTS) Chief Executive Officer John Riccitiello said the software maker’s new fitness video-game may help Nintendo Co.’s best-selling Wii console rebound from two months of declines. “What we’ve been lacking so far this year is any reason to buy hardware,” Riccitiello said in an interview this week. “‘EA Sports Active’ may be the first software catalyst that can move hardware.” The sports game went on sale yesterday.

- Enthusiasm about an economic recovery in China may be “premature” as private investment lags behind government spending, the World Bank said. “Until we see a recovery in private investment, it’s hard to get too excited about the future,” David Dollar, the lender’s country director for China, said at a forum in Beijing today.

- Japan’s economy shrank at a record 15.2 percent annual pace last quarter as exports collapsed and consumers and businesses cut spending. The contraction followed a revised fourth-quarter drop of 14.4 percent, the Cabinet Office said today in Tokyo. Gross domestic product fell 3.5 percent in the year ended March 31, the most since records began in 1955, confirming that the recession is Japan’s worst in the postwar era.

- Democrats debating climate-change legislation in the House Energy and Commerce Committee rejected Republican attempt to delay a cap on U.S. pollution levels until China and India adopt similar standards. The committee also voted against an “emergency exit” amendment that would have lifted pollution caps if electricity rates rose more than 10 percent. The votes were part of a weeklong effort to craft legislation that would set limits on U.S. greenhouse gas emissions and allow companies to buy and sell pollution permits. Republican Representative Roy Blunt of Missouri offered language to abandon a cap-and-trade system to reduce greenhouse gas emissions if electricity rates increase. Missouri utility regulators have estimated that the proposed legislation would increase electricity rates by as much as 40 percent, Blunt said.

Wall Street Journal:

- The House Democratic leadership's climate bill would double to $50 billion a previously authorized loan program designed to help auto makers comply with strict new fuel-economy standards. That provision was tucked into the latest version of landmark climate legislation unveiled this week by the House Energy and Commerce Committee. The provision would authorize the Energy Department to provide an additional $25 billion in low-cost loans beyond what current law permits under a program designed to help auto makers retool to build more-efficient vehicles. Funding would have to be approved in a separate step. The effort to expand the program reflects fears among some lawmakers about the ability of U.S. auto makers to comply with the Obama administration's proposed new fuel-economy regulations, unveiled Tuesday. "I have grave concerns whether these vehicles can be built in this country and allow the companies to return to profitability," said Rep. Candice Miller (R., Mich.), who backs the additional loans. The Energy Department loans would be on top of billions of dollars in bailout money the government has provided to Chrysler LLC, General Motors Corp., parts suppliers and auto-finance companies, but the loans would be earmarked to revamp plants to build cleaner, more-efficient cars like hybrids.

- Bankrupt companies making 39 mpg autos. Are we nuts?

- Occupancy rates in European hotels dropped 8.9% in the first three months of the year compared to the same period last year, according to STR Global, an industry research group. Hardest hit were those in Eastern Europe, down 19%, and southern Europe, down 16%.

- Activist Financier ‘Terrorizes’ Bankers in Foreclosure Fight.

- In a sign that the U.K. commercial-property market has fallen to attractive levels, real-estate companies are building up cash piles to buy assets at knockdown prices.

- The pace of housing sales has been rising in many markets this year, but it is only partly because families seeking affordable housing are returning to the market. It also is because of investors like former Deutsche Bank managing director Matthew Cooleen, whose firm has spent $30 million buying pools of foreclosed houses from banks. His newly formed Greenwich, Conn.-based firm, HudsonCross Financial, is betting it can make a profit reselling in beaten-down markets in states like Nevada, Arizona and Florida and in Southern California because it is paying so little for the homes.

CNBC.com:
- Business is up about 15% at Toyota Motor Corp. dealerships in the US, a typical May increase after a difficult period, Jim Lenz, president of Toyota USA, said. “Passenger cars are picking up,” he said. “We have the new Prius arriving, and that’s generating a lot of interest into the dealerships.”

NY Times:

- The Securities and Exchange Commission will propose new rules on Wednesday that would make it possible for a company’s shareholders to elect a limited number of independent directors, commission officials said. If adopted, the proposal would open the door to the most significant change in decades to the role played by investors in governing publicly traded companies. The proposal would permit large shareholders — typically institutional investors like pension funds or hedge funds — or alliances of shareholders to nominate as many as one-quarter of the directors. For the 700 largest public companies, the proposal would require approval by 1 percent of the shareholders for a dissident slate to be nominated. For smaller companies, it would be either 3 percent or 5 percent, depending on the size of the business.

Politico:

- Senate Democrats, running from the White House as never before this year, moved Tuesday to deny funding for closing the Guantanamo detention facility and to bar any transfer of prisoners to U.S. soil until a detailed plan is provided to lawmakers. Following a similar retreat by the House last week, President Barack Obama is left with no new money to go forward on a signature issue for him — and less flexibility than when he first made his request this spring.

Washington Post:

- The Obama administration is actively discussing the creation of a regulatory commission that would have broad authority to protect consumers who use financial products as varied as mortgages, credit cards and mutual funds, according to several sources familiar with the matter. The proposed commission would be one of the administration's most significant steps yet to overhaul the financial regulatory system. It would also be one of its first proposals to address causes of the financial crisis such as predatory mortgage lending. Plans for a new body remain fluid, but it could be granted broad powers to make sure the terms and marketing of a wide range of loans and other financial products are in the interests of ordinary consumers, sources said.

The Guardian:

- New research on the performance of the world's hedge fund industry shows clients running for the exit as the credit crunch casts doubt on their once fabled ability to beat the market. Investors asked for nearly $104bn (£68bn) back from hedge funds in the first quarter of the year, or about 7.4% of the industry's assets, according to data from Hedge Fund Research. This leaves the industry with almost half of the $2tn of assets it managed at the peak of the market in 2007. Investors withdrew most money from equity funds, many of which have failed to capitalize on the soaring stock market.

Frankfurter Allgemeine Zeitung:

- European Central Bank council member Juergen Stark warned that further debt-financed stimulus measures could undermine public finances and hurt their ability to aid future growth. Public debt measured against economic growth will rise by an average of 20% to about 80% of annual output by 2010, Stark said. He said the euro-region’s economy may shrink in each quarter this year, although at a “much more moderate” pace than the drop in the first quarter.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (CNQR), target $35.

RBC Capital:

- Raised (STT) to Top Pick.

Night Trading
Asian Indices are -.25% to +1.0% on average.
S&P 500 futures -.33%.
NASDAQ 100 futures -.36%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Pre-market Stock Quote/Chart
Global Commentary
WSJ Intl Markets Performance
Commodity Futures
Top 25 Stories
Top 20 Business Stories
Today in IBD
In Play
Bond Ticker
Economic Preview/Calendar
Earnings Calendar

Conference Calendar

Who’s Speaking?
Upgrades/Downgrades
Rasmussen Business/Economy Polling

Earnings of Note
Company/EPS Estimate
- (TGT)/.60

- (DE)/1.07

- (BJ)/.43

- (ANN)/-.11

- (EV)/.22

- (CSC)/1.49

- (NTAP)/.23

- (PETM)/.30

- (SNPS)/.40

- (AAP)/.92

- (INTU)/1.59

- (GYMB)/.71

Economic Releases

10:30 am EST

- Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,150,000 barrels versus a -4,629,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,350,000 barrels versus a -4,154,000 barrel decrease the prior week. Distillate inventories are estimated to rise by +1,200,000 barrels versus a +922,000 barrel decline the prior week. Finally, Refinery Utilization is expected to rise by +.5% versus a -1.62% decline the prior week.

2:00 pm EST

- Minutes of April 29th FOMC Meeting.

Upcoming Splits
- None of note

Other Potential Market Movers
- The Geithner testimony before the Senate on TARP, weekly MBA mortgage applications report, BIO International Convention, (AFL) analyst meeting, JPMorgan Tech/Media/Telecom Conference, Fox-Pitt Kelton Securities Industry Conference, UBS Oil & Gas Conference, (TMO) analyst meeting and the JMP Securities Conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by automaker and technology stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.

BETWEEN THE HEDGES

Top Menu

Wednesday, May 20, 2009

Stocks Finish Lower, Weighed Down by Bank, Computer and Homebuilding Shares

Bull Radar

Links of Interest

Tuesday, May 19, 2009

Wednesday Watch

Stocks Finish Mixed as Gains in Hospital, Technology and Steel Stocks Offset Losses in REIT and Bank Shares

Bull Radar