Late-Night Headlines
Bloomberg:
- LG Display Co., the world’s second-largest liquid-crystal-display maker, said it isn’t concerned over potential industry oversupply because of better-than-expected demand and a shortage of panel components.
- Google Inc.(GOOG), owner of the world’s most popular search engine, reported slower second-quarter sales growth after the recession crimped the price of online ads. The shares fell 3.3 percent in late trading.
- International Business Machines Corp.(IBM) topped estimates for second-quarter earnings and raised its full-year forecast as it squeezes costs during the recession as sales fall. The world’s biggest computer-services provider said net income rose 12 percent in the quarter. For the year, earnings will be at least $9.70 a share, a 50-cent increase from its previous forecast, the Armonk, New York-based company said today in a statement. IBM gained 1.5 percent, to $112.35 in after-hours trading after rising $3.42 to $110.64 today on the New York Stock Exchange.
- The Industrial Energy Consumers of America, whose members include Goodyear Tire & Rubber Co. and Tyson Foods Inc., urged federal regulators today to block the expansion of the world’s largest exchange-traded fund in natural gas. Unchecked energy speculation will drive up fuel costs for American businesses and consumers, Paul Cicio, president of the Washington-based lobbying group, said in a telephone interview. The United States Natural Gas Fund has expanded 11-fold since the start of the year, growing to 347.4 million shares outstanding before it ran out of new shares on July 7. The fund has asked the Securities and Exchange Commission for permission to sell up to 1 billion new shares. Every share is matched by an investment in natural gas, as the fund tries to mimic price changes in the fuel. “We urge the SEC to act with caution and on behalf of the public interest given our nation’s experience with excessive speculation that occurred in 2008,” the letter said. The ETF’s growth coincides with increasing unease among politicians and regulators about the role energy speculation plays in prices. The U.S. Commodity Futures Trading Commission plans hearings this month on greater market oversight and will look at rules that let banks and funds extend trading limits and expand holdings. “We must guard the futures market from influences that are not consistent with reflecting the fundamental of supply and demand of the physical product being traded,” Cicio said in a letter today to the SEC.
- The U.S. House approved a plan, opposed by President Barack Obama, aimed at forcing General Motors Co. and Chrysler Group LLC to restore agreements with dealers shed during their bankruptcy proceedings. The provision, part of a spending bill that passed 219 to 208 today, would require the automakers to restore franchise agreements with thousands of dealers as a condition of receiving federal aid. Lawmakers said the companies terminated dealerships with little notice or explanation. “There is so much confusion about how they went about it,” House Appropriations Committee Chairman David Obey, a Wisconsin Democrat, said before the vote. He pointed to a dealer in his district who he said “runs a good business.” “I do not, for the life of me, understand why he would be knocked off,” Obey said. Lawmakers “are trying to send a message they want clearer decision-making in terms of who got weeded out and who didn’t.”
- An estimated 47 percent of tax filers will pay no income tax in 2009, according to an analysis by the Tax Policy Center. That’s perilously close to a majority. When half the population is on the receiving end of government programs and has no skin in the cost, they will encourage their elected representatives to vote “yes” on every new benefit that comes down the pike. Universal health care? Slap a surtax on the rich. Exact a penalty fee from companies that don’t provide health insurance to workers. And if the promised cost savings don’t materialize? Just increase the surtax on income and capital gains.
- We need to get more Americans covered with health insurance. But any proposed “solution” to the problem of the uninsured that has the effect of getting people laid off from their jobs is not the way to do it. As unemployment reaches a 26-year high and our economy continues to shed 500,000 jobs a month, it would not seem to be the best time to enact new mandates on business likely to accelerate the rate of job loss. This is precisely what President Barack Obama and congressional Democrats are proposing with the “pay or play” mandates in health-care legislation making its way through Congress. Just five months ago, the American people were told that it was urgent for Congress to spend an unprecedented $787 billion to keep the economy afloat and prevent the unemployment rate from going above 8 percent. With the rate now at 9.5 percent and rising, we should act with great caution in imposing new employer mandates that could force them to cut more jobs.
- China’s First Half Steel Production Rises to a Record on Nation’s Stimulus
- Crude oil fell in New York, reversing two days of gains, as the U.S. dollar rose against the euro, limiting the appeal of commodities as an investment. The dollar climbed after investors sought safer assets following two explosions at hotels in the Indonesian capital of Jakarta. Fuel demand in the U.S., the world’s largest oil user, fell the in the first six months of the year to an 11-year low as the global recession curbed shipping and air traffic, the American Petroleum Institute said yesterday. Deliveries of petroleum products, a measure of consumption, declined 5.8 percent to an average 18.7 million barrels a day from January through June, the API said yesterday in a report. Demand is down 9.6 percent from a record 20.75 million barrels a day reached in the first half of 2005. Gasoline inventories climbed 1.44 million barrels to 214.6 million, the Energy Department report showed. Supplies were forecast to increase 875,000 barrels. “We saw yet another increase in gasoline stockpiles which is obviously pretty concerning,” said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney. “There’s not too much of a bullish story out there.”
Wall Street Journal:
- Congress's chief budget scorekeeper cast a new cloud over Democratic efforts to overhaul the nation's health-care system, telling lawmakers Thursday that the main proposals being considered would fail to contain costs -- one of the primary goals -- and could actually worsen the problem of rapidly escalating medical spending. "We do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount," Douglas Elmendorf, director of the Congressional Budget Office, told the Senate Budget Committee. "On the contrary, the legislation significantly expands the federal responsibility for health-care costs," he added. Mr. Elmendorf's assessment carries significant weight in the health-care debate, since his nonpartisan organization is used to determine the official costs and impact of legislative proposals. Some Democrats had already grown nervous about the health-care effort in recent days, after House Democrats said they would pay for their plan with a surtax on upper-income families -- a proposal that could cause trouble for some Democrats in Republican-leaning districts. While most Democratic lawmakers embrace in principle Mr. Obama's goal of enacting sweeping changes this year, many have said they would only support a measure that clearly can contain health-care spending. In recent days, many of those lawmakers have threatened to oppose the proposals crafted by congressional leaders, saying the plans won't do enough on that front. Mr. Elmendorf's comments gave them new ammunition to threaten opposition. "We have to take steps to hold health-care costs to the rate of inflation, or we will never balance our federal budget again and health-insurance costs will continue to become less and less affordable for the American people," said Arkansas Democratic Rep. Mike Ross. Mr. Ross is a leading member of the Blue Dogs, a moderate faction of the party's caucus that counts more than 50 members and has a crucial say over whether health-care legislation will pass. Mr. Elmendorf's comments, he said, "only underscore what the Blue Dogs have been saying all along." Rep. Jim Matheson, a moderate Democrat from Utah, suggested Mr. Elmendorf's assessment "is of great concern" and called for renewed focus on restraining spending. "If we don't reform the system to get costs under control, then nothing else matters," he said. "We're just putting more people into a broken system." The testimony undercuts one of Mr. Obama's central arguments: that the initiative will control long-term costs for the government as well as ordinary Americans and businesses. It was clear that Mr. Elmendorf's remarks struck a nerve with House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, who jointly appointed the economist to his post after the previous CBO director, Peter Orszag, was made White House budget director.
- Some CIT Group Inc. (CIT) debt holders are considering rescue financing for the troubled lender, according to participants on a conference call organized late Thursday by law firm White & Case LLP.
- Bombs exploded at the Ritz-Carlton and Marriott hotels in the Indonesian capital on Friday, ripping the facade off the Ritz and killing at least four foreigners, police said. The head of the Health Ministry crisis center, Rustam Pakaya, said at least two people were seriously injured, including one New Zealander. One hospital emergency room said it was already treating 15 people.
- Judge Sonia Sotomayor appeared poised to become the Supreme Court's first Hispanic justice, with Republican lawmakers suggesting on her final day of testimony that the Senate could vote on her nomination in early August.
- Unless there is some major glitch, there might finally be a search and online advertising deal struck between Yahoo(YHOO) and Microsoft(MSFT) at long last.
MarketWatch.com: Shares of Nissan Motor Co. climbed Friday on a newspaper report that the automobile major is aiming to develop its own technology for hybrid vehicles and plans to launch a hybrid minivan in Japan in 2011.
CNBC.com: As I look forward to next week Texas Instruments (TXN) stands out to me, explains Pete Najarian. In June they raised their profit forecast. Now, if they show growth in China with their chips I think it could be huge. And if that happens the (SMH) could explode to the upside.
NY Times:
- A new order is emerging on Wall Street after the worst crisis since the Great Depression — one in which just a couple of victors are starting to tower over the handful of financial titans that used to dominate the industry. On Thursday, JPMorgan Chase became the latest big bank to announce stellar second-quarter earnings. Its $2.7 billion profit, after record gains for Goldman Sachs, underscores how the government’s effort to halt a collapse has also set the stage for a narrowing concentration of financial power. Both banks now stand astride post-bailout Wall Street, having benefited from billions of dollars in taxpayer support and cheap government financing to climb over banks that continue to struggle. They are capitalizing on the turmoil in financial markets and their rivals’ weakness to pull in billions in trading profits.
- Farm aid in Europe, which hands out the biggest subsides in the world, goes to a wide array of industries only loosely related to crop production.
CNNMoney.com:
- These 25 counties have experienced the most job growth over the last eight years.
Forbes:
- Once considered among the world's safest stocks, the shine has come off General Electric(GE) in a hurry over the past two years, and, with second-quarter earnings due Friday, expectations are muted.
Politico:
- Embattled House Ways and Means Committee Chairman Charles Rangel, facing a multi-pronged investigation by the House ethics committee, shelled out nearly $280,000 to four different law firms over the last quarter, according to his newest campaign disclosure report. Overall, Rangel has paid $928,000 to his attorneys during the last year as his personal finances have come under scrutiny on a variety of fronts. But despite his ethics troubles, Rangel remains a prolific fundraiser, raising nearly $405,000 in the period from April 1 to June 30, according to the latest report filed with the Federal Election Commission. More than half that total - nearly $236,000 - came in the form of PAC contributions from corporations, trade associations and labor unions, including AFSCME, Boeing, General Electric, Pepsico, Raytheon, and UPS.
Washington Post:
- The two main regulators of U.S. financial markets should merge, the chief executive of America's largest options exchange says in remarks to be delivered to a congressional panel on Friday. William Brodsky, CEO of the Chicago Board Options Exchange (CBOE), says in a written statement that there is a "compelling need for the merger" of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
The Business Insider:
- Okay, This Time Matt Taibbi Nails Goldman(GS) And The Bailout. To sum up, Goldman Sachs is taken advantage of a new trade that was invented in the midst of the crisis. It’s similar to the old fashioned carry trade where banks borrowed money in low interest rate currencies and lent where they could get higher yield. Only these days, the carry traders don’t have to go abroad to find the low interest rate. We’ve brought it home to them. They borrow cheap thanks to this conglomeration of explicit and implicit guarantees, and lend out at higher rates. If your cost of capital is artificially cheap, all sorts of trades that would never be profitable in a free market suddenly become profitable.
Reuters:
- Samsung Electronics, the world's largest memory chipmaker, is expected to invest at least 1 trillion won ($790 million) in a semiconductor production facility in the second half, a newspaper reported on Friday.
- Drug makers Gilead Sciences Inc (GILD) and Johnson & Johnson (JNJ) on Thursday said they plan to develop the second once-daily pill for treating HIV, the virus that causes AIDs. The deal was widely expected, but is nevertheless a coup for Gilead, said Cowen and Co analyst Phil Nadeau.
- U.S. M-2 money supply fell by $0.1 billion in the July 6 week to $8,348.7 billion, the Federal Reserve said. The Fed said the four-week moving average of M-2 was
$8,367.0 billion vs. $8,372.3 billion in the previous week.
Financial Times:
- How Markit turned from a camera into an engine
- Jamie Dimon, chief executive of JPMorgan Chase (JPM), on Thursday hit out at strict rules on US credit cards, saying they would cost the bank’s lossmaking card unit up to $700m next year. Mr Dimon said that while JPMorgan supported most of the reforms introduced by the US government, some of the “fast and furious” regulatory activity had gone “a little bit too far”. He singled out the credit card provisions, which from February will constrain lenders’ ability to raise rates for risky borrowers, and rules that propose to move most derivatives trading on to exchanges as two contentious areas. The tough stance by JPMorgan reflects Wall Street’s new-found confidence in lobbying regulators and the government. After keeping a low profile during the crisis, many of the banks that repaid the bail-out funds are becoming more aggressive in Washington. “[The card law] will reduce credit and it will at least reduce profitability for the rest of this year and mostly next year,” Mr Dimon told investors.
TimesOnline:
- A new government-sponsored crackdown on City pay was condemned yesterday as too extreme amid warnings that it risked triggering an exodus of star bankers and traders to more benign jurisdictions. The proposal to force City traders and dealmakers to wait five years for a quarter of their long-term bonuses was attacked as manifestly unreasonable and unfair. “We risk seeing some of London’s star traders and deal rainmakers leave the country,” Nicholas Stretch, a partner with CMS Cameron McKenna, the City law firm, said.
Late Buy/Sell Recommendations
Janney Montgomery Scott:
- Rated (ADP) Buy, target $44.
Night Trading
Asia Ex-Japan Inv Grade CDS Index -1.27%.
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
- (BMI)/.54
- (BAC)/.28
- (BBT)/.21
- (BMS)/.41
- (C)/-.31
- (FHN)/-.33
- (GE)/.23
- (MI)/-.69
- (MAT)/.00
Economic Releases
8:30 am EST
- Housing Starts for June are estimated to fall to 530K versus 532K in May.
- Building Permits for June are estimated to rise to 524K versus 518K in May.
Upcoming Splits
Other Potential Market Movers
Economic Council’s Summers speaking and (DELL) shareholders meeting
BOTTOM LINE: Asian indices are mostly higher, boosted by financial and technology shares in the region. I expect US
