Tuesday, October 20, 2009
Stocks Lower into Final Hour on Economic Concerns, Healthcare Reform Worries, Profit-Taking, More Shorting
BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Retail longs, Medical longs and Biotech longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is negative as the advance/decline line is substantially lower, most sectors are declining and volume is around average. Investor anxiety is very high. Today’s overall market action is mildly bearish. The VIX is falling -.74% and is high at 21.33. The ISE Sentiment Index is very low at 75.0 and the total put/call is above average at .92. Finally, the NYSE Arms has been running high most of the day, hitting 1.77 at its intraday peak, and is currently 1.75. The Euro Financial Sector Credit Default Swap Index is falling -1.65% today to 64.0 basis points. This index is down from its record March 10th high of 208.75. The North American Investment Grade Credit Default Swap Index is rising +.10% to 96.42 basis points. This index is also well below its Dec. 5th record high of 285.99. The TED spread is falling 1 basis point to 21 basis points. The TED spread is now down 443 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is falling -2.04% to 35.94 basis points. The Libor-OIS spread is up +1 basis point to 12 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is falling -4 basis points to 2.0%, which is down 65 basis points since July 7th. The 3-month T-Bill is yielding .07%, which is up 1 basis point today. Small-caps are under pressure today, with the Russell 2000 falling 1.49%. I am still seeing signs that some of this small-cap weakness is related to liquidations at hedge fund Galleon Group. Healthcare reform worries are once again plaguing some healthcare-related shares. As well, today’s economic reports are helping to pressure commodity and homebuilding stocks. On the positive side, most credit default swap indices are mixed-to-lower and the bears have been unable, once again, to gain any meaningful traction. Several gauges of investor angst are very high today, given the muted nature of today’s decline, which is also a big positive. The ISE Sentiment Index, a gauge of retail options trader’s sentiment, hit 21.0 this morning, the lowest level since January 17th of 2008. While the major averages are extended, I continue to believe any pullbacks will be relatively mild and short-lived over the coming weeks. Nikkei futures indicate a -51 open in Japan and DAX futures indicate a -3 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, investment manager performance anxiety, lower long-term rates, lower energy prices and earnings optimism.
Today's Headlines
Bloomberg:
- The US dollar advanced from a 14-month low against the euro as a report showing fewer U.S. housing starts last month than economists forecast sent stocks lower and discouraged demand for higher-yielding assets. Canada’s dollar fell against most of its 16 most-traded counterparts tracked by Bloomberg after the nation’s central bank amplified a warning about the currency’s strength, saying it will “more than fully offset” signs of economic growth. The U.S. currency also gained on speculation its earlier decline to within a half-cent of $1.50 per euro was hard to sustain. “Overall, it feels like a bit of exhaustion,” said Brian Dolan, chief currency strategist at FOREX.com, a unit of the online currency trading firm Gain Capital in Bedminster, New Jersey.
- The cost of protecting European high-yield corporate bonds from default fell for a second day as better-than-expected company earnings stoked optimism the global economy is healthy enough for governments to start unwinding fiscal stimulus. Credit-default swaps on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings declined 5 basis points to 500, according to JPMorgan Chase & Co. prices at 10:07 a.m. in London. That’s near the lowest level since a new series of the index started trading Sept. 21, and indicates an improvement in perceptions of credit quality.
- Crude oil fell from a one-year high as U.S. equities dropped and the dollar rebounded, reducing the appeal of commodities as an alternative investment. “The oil price going further up from here is perhaps the biggest risk to the global economic recovery,” said Kaha Kiknavelidze, a managing partner at London-based Rioni Capital Partners LLP, a hedge fund that specializes in emerging markets. “When we see that floating storage eliminated it means demand is coming,” El-Badri said. “We are seeing an $80 oil price that is a little bit high.” “There’s still a lot of oil out there,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “Demand in the developed would is still sluggish while what we see in China is impressive. Overall demand is a bit better than last year but that’s faint praise.”
Wall Street Journal:
- Iran's OPEC governor said Tuesday the weak U.S. dollar is driving oil prices above $80 a barrel and the producer group is unlikely to raise output unless demand picks up. "$80 today is equivalent to $45 in 2001," Mohammad Ali Khatibi told Zawya Dow Jones.
- China's Ministry of Commerce has made a preliminary ruling to impose tariffs of as much as 36% on certain nylon imports from the U.S., saying the imports have damaged the domestic industry. The move is the latest in a series of Sino-U.S. trade disputes after the Obama administration said in September that it would impose duties of between 25% and 35% on imports of tires from China for the next three years. China followed that decision with probes of potential antidumping measures on U.S. auto parts and chicken. The preliminary nylon ruling comes a week before senior leaders of China and the U.S. meet at the Joint Commission of Commerce and Trade in Hangzhou, China.
- President Barack Obama is expected to announce a series of initiatives Wednesday aimed at boosting credit to small businesses, an administration official said, as the White House tries to address a complicated issue many think is dragging on the economy. The White House will move to increase the caps on existing Small Business Administration loans. It will also include measures to make it easier for small banks to access funds from the Troubled Asset Relief Program. The Obama administration has struggled to figure out what to do for small businesses and has spent months trying to get their initial program off of the ground.
CNBC:
- Boston Scientific warned on Tuesday that a proposed tax in the U.S. health care reform bill that cleared the Senate Finance Committee last week could have serious consequences for the company, including job losses. "The bill that came out of the committee last week makes absolutely no sense and would be very damaging to Boston Scientific, and the medical device industry as a whole," Boston Scientific(BSX) Chief Executive Ray Elliott said during a post-earnings conference call. "In a nutshell, it would raise costs and lead to significant job losses.
NY Times:
- The Wall Street giants that received a financial lifeline from Washington may have no compunction about paying big bonuses to their dealmakers and traders. But their willingness to deliver “thank you” gifts to President Obama and the Democrats is another question altogether. Mr. Obama will fly to New York on Tuesday for a lavish Democratic Party fund-raising dinner at the Mandarin Oriental Hotel for about 200 big donors. Each donor is paying the legal maximum of $30,400 and is allowed to take a date. Four of the seven “co-chairs” listed on the invitation work in finance, and Democratic Party organizers say they expect that about a third of the attendees will come from the industry. But from the financial giants like Goldman Sachs, JPMorgan Chase and Citigroup that received federal bailout money — and whose bankers raised millions of dollars for Mr. Obama’s election — only a half-dozen or fewer are expected to attend (estimated total contribution: $91,200). Part of the reason, several Democratic fund-raisers and executives said, is a fear of getting caught in the public rage over the perception that Wall Street titans profiting from their government bailout may use their winnings to give back to Washington in return. And the timing of the event, as the industry lobbies against proposals for tighter regulations to address the underlying causes of last year’s meltdown on Wall Street, has only added to the worry over public appearances. “There are sensitivities there,” said Scott Talbot, a lobbyist for the industry’s Financial Services Roundtable. Mr. Obama remains a potent fund-raising draw. Plunging into the 2010 midterm campaigns last week, he raised more than $3 million in one night in San Francisco, speaking at a similar $30,400-a-couple dinner and a larger rally with tickets at $1,000 and under. In addition to the big-ticket dinner on Tuesday, Mr. Obama will also address a more small-d democratic event at New York’s Hammerstein Ballroom, where roughly 2,500 donors paying $1,000 or less will also make cellphone calls to promote his health care overhaul. Over the next five days he will appear at fund-raisers for Bill Owens, a candidate for a House seat in New York; Gov. Jon Corzine of New Jersey (himself a former Goldman Sachs banker); Gov. Deval Patrick of Massachusetts; and Senator Christopher J. Dodd of Connecticut. Current Democratic fund-raisers say their 2008 take from Wall Street may also have benefited from the personal connections of the party’s chief fund-raiser that year, Philip D. Murphy, a former top executive at Goldman Sachs. (He is now ambassador to Germany). And as in recent years, Democrats are raising far more from Wall Street executives than Republicans, according to campaign finance data sorted by the Center for Responsive Politics. The Democrats, including House and Senate party committees and the party itself, have raised about $5.4 million through the first eight months of the year, while the Republicans took in just $2.7 million. Employees associated with the financial firms that received bailout money from the federal government contributed almost $70,000 to the Democratic Party in the first half . Most of that, $60,800, came from one couple who each contributed the legal limit. At the time of the donation, the husband, John M. Noel, had recently retired as head of a unit of the insurance giant AIG called AIG Travel Guard. Mr. Obama still has the loyalty of other powerful friends on Wall Street. Among the other chairmen of the Tuesday dinner in New York is Robert Wolf, head of the American investment banking division of the Swiss giant UBS Group. Mr. Wolf raised more than $500,000 for Mr. Obama’s campaign and sits on a White House panel of outside economic advisers.
Washington Times
- KINSTON, N.C. | Voters in this small city decided overwhelmingly last year to do away with the party affiliation of candidates in local elections, but the Obama administration recently overruled the electorate and decided that equal rights for black voters cannot be achieved without the Democratic Party. The Justice Department's ruling, which affects races for City Council and mayor, went so far as to say partisan elections are needed so that black voters can elect their "candidates of choice" - identified by the department as those who are Democrats and almost exclusively black. The department ruled that white voters in Kinston will vote for blacks only if they are Democrats and that therefore the city cannot get rid of party affiliations for local elections because that would violate black voters' right to elect the candidates they want.
Business Insider:
- CNBC has released a solid iPhone app that is slightly better than the competition. It could be a whole lot better if it had live video on it. Of course, that would upset cable companies, which CNBC doesn't want to do. So instead we get an easy to use app with real time stock quotes, a good flow of information and access to CNBC video clips an hour after they've aired.
LA Times:
PCMag.com:
- Apple’s(AAPL) Mac Line Receives Massive Makeover. On Tuesday, Apple updated virtually its entire Mac lineup, including its desktop iMacs, a new unibody MacBook, the Mac mini, and a new wireless Mighty Mouse. The iMac line has been totally reworked with 16:9 widescreens that are significantly larger than the previous 20-inch and 24-inch models. The new Mac mini looks the same, but of course has some new internals. The Mac mini is joined by a new server-based sibling: same case, but dual drives and no optical. Last but not least, the new iMacs come with a new, wireless multi-touch Magic Mouse.
Rassmussen:
Politico:
- For voters, the economy outpaces all other issues by a wide margin, according to a new Public Strategies Inc./POLITICO poll. As the nation struggles to climb out of a recession, 45 percent rated the economy as the most important issue in deciding their vote if the congressional election were held today, followed by 21 percent who said government spending, 20 percent who chose health care reform and 9 percent who said the wars in Iraq and Afghanistan. Just 4 percent ranked climate change as the top issue. Economic worries also led a majority of Americans to place jump-starting the economy ahead of concerns about the environment. Even as the Obama administration is pushing for climate protection legislation, 62 percent of those polled agreed that “economic growth should be given priority, even if the environment suffers to some extent.”
- A White House attempt to delegitimize Fox News – which in past times would have drawn howls of censorship from the press corps – has instead been greeted by a collective shrug. That’s true even though the motivations of the White House are clear: Fire up a liberal base disillusioned with Obama by attacking the hated Fox. Try to keep a critical news outlet off-balance. Raise doubts about future Fox stories. But most of all, get other journalists to think twice before following the network’s stories in their own coverage. "We're doing what we think is important to make sure news is covered as fairly as possible," a White House official told POLITICO, noting how the recent ACORN scandal story started because Fox covered it “breathlessly for weeks on end.” “And then you had a couple days of breast-beating from The Washington Post and The New York Times about whether or not they were fast enough on the ACORN story,” the official said.
USAToday:
- Turbulent political and economic times roiling the nation are expected to diminish initial participation by households in next year's Census despite a $326 million marketing blitz that far outspends previous Census campaigns. Mounting mistrust of government, rising identity theft and record numbers of foreclosures could discourage people from mailing back Census forms next year, according to the Census Bureau. A Census analysis shows that about 64% of households are likely to mail in their forms without additional prodding from Census workers — down from 67% in 2000.
Reuters:
Financial Times:
Financial Times Deutschland:
- Kenneth Rogoff, former chief economist at the International Monetary Fund, said there’s risk that some euro-area countries might default as a result of the global crisis, citing an interview. Rogoff said he can imagine state defaults in the 16-member region in about five year’s time. The US and Germany cannot afford to support all endangered states for a prolonged period, the Harvard professor was quoted as saying, adding that the deficit situation in countries like Iceland, Romania and Ukraine, which are being buttressed by the IMF, is extremely strained.
Daily Star:
- The unemployment rate in the Middle East may rise to as high as 11% this year as a result of slowing economic growth, citing an International Labor Organization official.
Bear Radar
Style Underperformer:
Small-Cap Value (-1.49%)
Sector Underperformers:
Steel (-2.85%), Medical Equipment (-2.80%) and Homebuilders (-2.27%)
Stocks Falling on Unusual Volume:
STT, ZION, TSU, MICC, JDAS, CRZO, PBR, OGXI, ASTE, VLTR, PETS, RINO, EDU, ITG, EAT, CSL, EWZ and PKG
Stocks With Unusual Put Option Activity:
1) MI 2) BSX 3) IVN 4) BUCY 5) STJ
Bull Radar
Style Outperformer:
Large-Cap Growth (-.14%)
Sector Outperformers:
HMOs (+2.48%), Computer Hardware (+2.27%) and Semis (+.96%)
Stocks Rising on Unusual Volume:
BK, NUS, UNH, AAPL, HUM, SWKS, TER, HLF, BAC, IRE, CMA, GMXR, TSO, QDEL, BT, ISRG, TSTC, ALGT, ICUI, FCFS, SHOO, WERN, BUCY, PRSC, HUBG, AVAV, ITRI, SINA, FUQI, TSRA, VLCCF, GMCR, LAMR, MPS, LXK, CYD, CAT, CCJ and GCO
Stocks With Unusual Call Option Activity:
1) VMED 2) KG 3) VCLK 4) BSX 5) LXK
Large-Cap Growth (-.14%)
Sector Outperformers:
HMOs (+2.48%), Computer Hardware (+2.27%) and Semis (+.96%)
Stocks Rising on Unusual Volume:
BK, NUS, UNH, AAPL, HUM, SWKS, TER, HLF, BAC, IRE, CMA, GMXR, TSO, QDEL, BT, ISRG, TSTC, ALGT, ICUI, FCFS, SHOO, WERN, BUCY, PRSC, HUBG, AVAV, ITRI, SINA, FUQI, TSRA, VLCCF, GMCR, LAMR, MPS, LXK, CYD, CAT, CCJ and GCO
Stocks With Unusual Call Option Activity:
1) VMED 2) KG 3) VCLK 4) BSX 5) LXK
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Monday, October 19, 2009
Tuesday Watch
Late-Night Headlines
Bloomberg:
- Medicare cuts will halve earnings growth over the next decade for UnitedHealth Group Inc.(UNH), the largest U.S. insurer, and wipe them out completely for Humana Inc.(HUM) if the health-care bill approved by a Senate panel last week becomes law, a Goldman Sachs Group Inc. analysis said. Cigna Inc. will be least affected among the five largest insurers, given its low numbers in Medicare and commercial policies where profit margins are likely to drop, said Matthew Borsch, a Goldman analyst, in a note to clients today. Overall, the three companies, along with WellPoint Inc. and Aetna Inc. will see earnings growth cut in half, to 5 percent, under the plan passed by the Senate Finance Committee Oct. 14, he said. Insurer shares, measured by the Standard & Poor’s index of managed-care companies, have dropped 15 percent since committee Chairman Max Baucus, a Montana Democrat, introduced the bill Sept. 16. The bill doesn’t include a government-run insurer to compete with the private sector, a goal of President Barack Obama and other Democrats. Goldman’s analysis assumes that doesn’t change. The finance bill would halve profit margins on individual and small-business policies to about 3 percent over 10 years, while doubling enrollment in those groups to 20 million, Borsch said. Lawmakers also plan to cut funding for insurer- administered Medicare Advantage plans by more than $100 billion. Those categories will account for 79 percent of earnings this year for Louisville, Kentucky-based Humana a third for Minnetonka, Minnesota-based UnitedHealth and only 2 percent for Cigna, Borsch said. Under Baucus’s bill, Humana will see earnings per share fall 2 percent a year over the next decade, compared with an 11- percent annual increase if Congress does nothing, Borsch said.
- Migrating
- Royal Dutch Shell Plc gained conditional approval from the U.S. Interior Department’s Minerals Management Service of a plan to explore for oil and gas in Alaska’s Beaufort Sea. The plan calls for Shell to drill exploration wells in two areas in the sea north of
- Brazil will impose taxes on purchases by foreign investors of real-denominated, fixed-income securities and on purchases of stocks, Finance Minister Guido Mantega said. The measures are being taken “to avoid an excess speculation in the stock market and in capital markets,” Mantega told reporters in
- Google Inc.’s(GOOG) YouTube, the world’s most popular video-sharing site, will stream a live U2 concert on Oct. 25 from the Rose Bowl in Pasadena, California. The concert will be the first full-length concert shown on YouTube live, Chris Maxcy, director of partner development, said on a conference call with journalists. The concert, which can be accessed at youtube.com/u2, will be available in 16 countries, including the
- European Central Bank President Jean-Claude Trichet said officials in the euro area take seriously the U.S. commitment to prevent the dollar from depreciating too much. “We all note with considerable attention the statements made by American authorities as regards their support in favor of a strong dollar,” Trichet told reporters in Luxembourg late yesterday after a meeting of European finance ministers. He also echoed the Group of Seven statement that “excessive volatility and disorganized developments in the exchange market was bad for economic development.” The euro has gained almost 20 percent against the dollar since February, making the region’s exports more expensive to overseas buyers and threatening the recovery from the worst recession since World War II.
- Invesco Ltd., manager of the Aim and PowerShares funds, agreed to buy Morgan Stanley’s retail investment management business, including the Van Kampen unit, for $1.5 billion in stock and cash. Invesco will gain about $119 billion in client money, bringing its assets under management to about $536 billion, the Atlanta-based firm said today in a statement. The purchase price includes $500 million in cash and $1 billion in stock, which will make Morgan Stanley Invesco’s largest shareholder with a 9.4 percent stake.
- Texas Instruments Inc.(TXN), the second- largest U.S. chipmaker, forecast fourth-quarter profit and sales that beat analysts’ estimates, indicating demand for electronic components is recovering further.
Wall Street Journal:
- Health care data company IMS Health Inc.(RX) is in advanced discussions with private-equity firms to sell itself, said people familiar with the matter, the latest sign that the leveraged-buyout business is waking from a two-year slumber. The Norwalk, Conn., company, which compiles such information as the value of prescriptions filled, received bids late last week and its board of directors must determine if the offers justify taking the 55-year-old firm private, these people said. The offers are expected to give IMS stockholders a 30% premium on their shares, said these people, valuing the company at about $3.5 billion.
- Book critics may be digging R. Crumb’s illustrated tome “The Book of Genesis,” which was released today, but several religious organizations have unsurprisingly taken offense to the comic artist’s titillating take on the Bible. (The cover of Crumb’s literal interpretation of the good book — primarily a mash-up of the Robert Alter and King James versions of the bible — states “adult supervision recommended for minors.”) According to the Telegraph, even the Church of England has weighed in, with a spokesperson noting: “I haven’t seen the book but I think trying to sell something by emphasizing the sexual nature of some of the scenes doesn’t seem to be a good way to pass on the message of the Bible.”
- A new electronic book reader is expected Tuesday from book seller Barnes & Noble Inc.(BKS) that will challenge readers from Amazon.com Inc. and Sony Corp. with a color touch-screen and $259 price, according to a planned ad for the device.
- Hedge-fund giant Galleon Group, facing heavy investor withdrawal requests after Friday's arrest of co-founder Raj Rajaratnam, moved to unload some of its technology stocks and other holdings to raise cash. Investors have sought to withdraw about $1.3 billion of the $3.7 billion in assets Galleon manages, traders say. Moreover, two of the brokerage firms Galleon normally deals with, Bank of America Merrill Lynch and Barclays PLC, have told Galleon they will no longer trade securities positions with the fund firm, according to a person close to the situation. Traders at Galleon said they believed competitors were seeking to profit from its troubles by selling stocks in the companies that Galleon also holds, believing they will decline as the hedge fund firm sells them. A blog posting on Friday listed what it said were Galleon's top holdings. The fund's largest, most easily traded stocks, including Apple Inc. and Google Inc., weren't hurt in Monday's rising stock market.
- Human rights “interfere” with President Obama’s campaign against climate change.
CNBC.com:
- Apple(AAPL) shares leaped to an all-time high in late trading Monday as the company reported a profit and sales that rose from last year and blew past analysts' forecasts. Apple's sales of the iPhone and Mac hit quarterly records. Sales of Apple's Mac computers jumped 17 percent from a year earlier to 3.05 million in the September quarter, above analysts' average forecast of roughly 2.8 million. Apple sold 7.4 million iPhones, up from 6.9 million a year ago, and just shy of expectations of 7.5 million units. Some analysts had thought the company was having a tough time making enough iPhones to meet demand. "These are huge numbers tonight. Apple is probably the best growth story in tech, maybe one of the best growth stocks in the market. I bet this stock can go to $250 in six to nine months," said Jane Snorek, analyst at First American Funds. "Usually Christmas and back-to-school are correlated and Apple usually has a gigantic Christmas quarter. This makes me think Apple will have a great Christmas." "This isn't just a one-quarter phenomenon, there's something bigger going on. There's a paradigm shift from a cell phone, a computer in your pocket. Apple's going to run away with that and ultimately, the numbers are going to be inching up as we go forward into 2010," Gene Munster, senior research analyst at Piper Jaffray, told CNBC. "These are phenomenal results—and use that word. You know, it proves that even in a challenging economy people are willing to pay for what they perceive to be high quality product and a good value product," said Cross Research Analyst Shannon Cross. "It's fantastic earnings for this economy, actually, it's great number for any economy. It just shows the strength of Apple. It reaffirms that Apple is the leading consumer electronics company." "While we knew they were gaining share in those categories—PCs and phones—it's still surprising to see this degree of outperformance,'' said Daniel Ernst, an analyst with Hudson Square Research. "But that's just part of the Apple story: they're gaining share with premium-priced products.''
IBD:
FINalternatives:
- The son of hedge fund manager Douglas Kass has settled charges that he made unauthorized trades while working at Circle T Partners. Ethan Kass agreed to pay $50,000 to make the Securities and Exchange Commission allegations go away. The son of the Seabreeze Partners Management chief did not admit or deny the charges. According to the SEC, Kass, then a processing clerk at the hedge fund run by the late Seth Tobias, made at least 24 unauthorized trades that cost Circle T $8.5 million. The younger Kass hid the trading by leaving it out of the hedge fund’s handwritten trade blotter and deleting or altering the entries from the firm’s portfolio management system. Kass was fired when the trades came to light.
Politico:
- Senator Majority Leader Harry Reid had assembled his leadership team for a quick strategy session at the Capitol last week when somebody noticed that Sen. Chuck Schumer was absent. “Where’s Chuck?” the person asked. “He’s probably out there talking about me,” Reid quipped. Reid’s remark — conveyed to POLITICO by a person who was in the room — was a reference to Schumer’s appearance the night before Rachel Maddow’s MSNBC show, where the New York Democrat pressured Reid to accept a Schumer-crafted health care proposal that would create a public option plan but allow states to opt out. Reid and Schumer quickly patched things up — “Harry wanted Chuck to be contrite, and Chuck was contrite,” a leadership aide told POLITICO — but the incident revealed the tension that’s now gripping the Senate’s Democratic leadership as it struggles for an endgame compromise on health care reform. The pressure is rising, and relationships are being tested, staffers and senators say.
genomeweb:
- Casework Genetics, a Stafford, Va.-based forensics-technology provider, is validating an array-based technique that it hopes will be adopted by law-enforcement labs seeking a more "precise" and "efficient" way to solve crimes, CEO Kevin McElfresh told BioArray News last week. McElfresh said that Casework hopes to commercialize the technique, which uses the Illumina(ILMN) HumanOmni1-Quad BeadChip, by year end in order to upgrade its own offering and to gain an advantage over rival firms that use older technology.
The Business Insider:
- Apple (AAPL) will begin selling iPhones in China at the end of this month, company executives said during today's Q3 earnings call. Confirming earlier reports, Apple will launch with China Unicom. New details:
- The New York Times (NYT) newsroom is reeling from today's announcement that the company plans to cut the staff by 100. We spoke with a Times reporter, who told us it was the timing of the layoffs that is hitting everyone the hardest. The layoffs will come at the start of December, meaning a jobless Christmas for lots of reporters.
- This post will explain why Steven Levitt and Stephen Dubner have been taking a brutal beating in the press for a chapter in their new book, Superfreakonomics, in which they discuss global warming, and possible engineering solutions to it. By engineering, we mean, the use of technology (like chemicals emitted into the air, or big carbom sinks) that could actually reduce the presence of greenhouse gasses in the atmosphere. But to understand it, first you have to realize why global warming is the perfect global malady from the perspective of the left. You see, global warming is a special problem, and it sits right at the sweet spot of all kinds of politically charged issues. By going after global warming, you're also going after the oil industry, cars, western nations, rural areas, industrialization, the meat industry and huge suburban homes. All those things happen to be politically charged, as it is, and the left has long had them (to varying degrees) in their sights.
Financial Times:
- Developed countries are preparing to relent on their demand that developing countries agree to long-term cuts in greenhouse gas emissions in a concession that could form the basis of a global deal on climate change. The demand was one of five key elements rich countries wanted for a deal at the international climate change summit in
- Oil prices face further upward pressure as they near $80 a barrel because of heavy trading in options contracts ahead of the year end, brokers and analysts said. A large number of call options – contracts giving holders the right to buy crude oil at a predetermined price – have been struck above $80. If spot oil prices rose above that level, the sellers of the call options will be forced to buy futures to cover their positions, further lifting oil prices. “The options could accelerate prices and put fundamentals considerations to the side,” said Olivier Jakob, head of Swiss-based oil consultancy Petromatrix. Raymond Carbone, president of Paramount Options on the New York Mercantile Exchange floor, added that traders who sold the options, ranging from bearish speculators to Wall Street banks, would have to cover their positions if prices rose further, opening the door to an options-driven rally.
TimesOnline:
- Bob Diamond, the president of Barclays, has turned down the opportunity to try out for one of America’s biggest banking jobs, after he was approached by the board of Bank of America (BoA) to replace Kenneth Lewis, its retiring chief executive. Mr Diamond, 58, was shortlisted by BoA’s recruitment committee and was invited to attend an interview, a bank source said, but declined to take part.
Kyodo News:
- Nippon Oil Corp. and its partners may invest $8 billion in
Nikkei:
- Orders for Advantest Corp.’s chip-testing devices exceeded the company’s forecast by rising about 21% to 14 billion yen ($154.5 million) in the three months ended in September. Advantest’s sales may have increased about 0% to 12 billion yen, besting its forecast.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (ETN), boosted estimates, raised target to $70.
- Reiterated Buy on (AAPL), estimates under review.
- Reiterated Buy on (BAC), raised target to $23.
- Reiterated Buy on (TXN), target $31.
RBC Capital:
- Rated (ATVI) Outperform, target $18.
- Rated (ERTS) Outperform, target $25.
BMO Capital:
- Rated (CRI) Outperform, target $33.
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Economic Releases
8:30 am EST
- The Producer Price Index for September is estimated unch. versus a +1.7% gain in August.
- The PPI Ex Food & Energy for September is estimated to rise +.1% versus a +.2% gain in August.
- Housing Starts for September are estimated to rise to 610K versus 598K in August.
- Building Permits for September are estimated to rise to 595K versus 579K in August.
Upcoming Splits
- None of note
Other Potential Market Movers
- The Fed’s Warsh speaking, Fed’s Plosser speaking, TAF results, weekly retail sales reports, API energy inventory data, (RIGL) analyst briefing, (NDSN) investor day, (HGSI) analyst meeting, (GE) healthcare analyst meeting and the ABC consumer confidence reading could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by technology and commodity shares in the region. I expect US equities to open modestly higher and to maintain gains into the afternoon. The Portfolio is 100% net long heading into the day.
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