- Manufacturing in the U.S. expanded faster than anticipated in October, easing concern the economic recovery will be cut short once government aid wanes. The Institute for Supply Management’s factory index rose to 55.7, a three-year high and exceeding every estimate of the 70 economists surveyed by Bloomberg News, data from the Tempe, Arizona-based group showed today. Other reports indicated housing kept gaining after its worst recession since the 1930s. “The economic outlook is brightening,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Manufacturing is in the driving seat at this stage of the recovery. Housing has turned the corner.”
- The chairwoman of the National Mediation Board has sharply criticized the federal agency's proposal to change a decades-old election rule that would make it easier for airline and railway employees to unionize, exposing a sharp rift at the agency's three-person board. In a letter sent to more than a dozen Republican senators Monday, NMB Chairwoman Elizabeth Dougherty said the process by which the proposal was drafted by her two colleagues is "flawed," and she questioned whether the agency had the authority to make such a rule change. The NMB sent a proposed change to the Federal Register on Thursday that would lower the bar for unionizing at airlines and railroad companies. It is expected to be published in the Federal Register Monday or Tuesday and be subject to a 60-day comment period before it could be implemented. Organized labor has been pushing for the change, but U.S. airlines oppose it -- including Delta Air Lines Inc. and Continental Airlines Inc., which are both preparing for large unionization votes. That sets the stage for a battle that could spill into Congress or the courts.
- A consortium led by Italian energy giant Eni SpA (E) Monday signed an initial 20-year agreement with Iraq to develop the giant Zubair oilfield in southern Iraq, an Iraqi oil ministry official said. Under the terms of the deal, Eni, Italy's biggest energy company by market value, and its partners Occidental Petroleum (OXY) and Korea Gas Corp. (036460.SE) of South Korea will be paid $2 for each extra barrel of oil it extracts on top of current production at the field, but will be liable for a 35% tax on its profits. Eni has said the development of the field would require investments of about $10 billion in the first six years to raise output from the field to 1.125 million barrels a day from 195,000 barrels of oil a day now. However, Iraq's Oil Minister Hussein al-Shahristani, who was present at the signing, said Monday the field, in total and along the duration of the contract, would require an investment of $20 billion.
- Walmart(WMT) has stepped up efforts to mobilize local political support for new store openings in US cities and urban areas that were last month identified as a growth priority for the retailer by Mike Duke, its chief executive. In addition to a renewed drive to open a second Supercenter store in Chicago, the retailer is also raising its political profile in Philadelphia and continuing to cultivate the ground for a potential move into New York City. Walmart has long faced political resistance to its plans in the largest US cities, largely orchestrated by the UFCW grocery workers’ union and its political allies. Eduardo Castro Wright, chief executive of Walmart’s US stores, has estimated that urban markets where the retailer is under-represented could yield billions of dollars of new sales. “We already have in our real estate program a robust plan to go after those,” he told analysts in October. The retailer has only one store inside Chicago’s city limits and none in New York or Boston. The focus on urban markets comes at a time when Walmart’s national reputation has improved, partly as a result of its strong performance during the recession. Leslie Dach, head of corporate communications, said last month that Walmart’s role in serving low-income customers during the recession had won the retailer “new respect from politicians, from economists and from the media”. The retailer’s embrace of environmental sustainability over the past four years has also improved its ethical reputation, moving up Covalence’s ethical rating of 27 global retailers from bottom in 2004 to second currently, behind Marks and Spencer. Saint Consulting, a group specializing in land-use politics, reported in January this year a drop in the number of people saying that they would oppose the opening of a new Walmart store – at 56 per cent, down from 68 per cent two years ago.
- Goldman Sachs Group Inc.(GS) Chief Executive Officer Lloyd Blankfein, Citigroup Inc. CEO Vikram Pandit and television talk-show host Oprah Winfrey were among White House visitors during President Barack Obama’s first six months in office, records released by the administration show. The banking CEOs were joined by Microsoft Corp. executives Bill Gates and Steve Ballmer and Hollywood stars such as George Clooney among the 481 entries covering visitors from Jan. 20 to July 31. The most frequent visitor listed was Andrew Stern, president of the Service Employees International Union, who entered the White House grounds 22 times. The names disclosed yesterday are in response to requests about specific people and don’t include all of the thousands of people who have visited the White House during the period. Any member of the public can make such a request through the White House Web site. Other banking executives at that meeting and included on the logs were John Mack from Morgan Stanley, Kenneth Lewis from Bank of America Corp., Jamie Dimon from JPMorgan Chase & Co. and John Stumpf from Wells Fargo & Co. Maurice “Hank” Greenberg, the former chief executive of American International Group Inc., the insurer that was rescued by a $182.3 billion federal bailout, visited the White House three times. From the world’s largest oil company, Exxon Mobil Corp., CEO Rex Tillerson visited the White House on three occasions to meet with Obama, chief of staff Rahm Emanuel and the administration’s top energy adviser Carol Browner. David O’Reilly, the CEO of Chevron Corp., had four appointments at the White House to meet with Obama, Emanuel, Browner and economic adviser Lawrence Summers, according to the logs. Jeffrey Immelt, the chief executive of General Electric Co., was also listed on the logs, as was Procter & Gamble Co. President and CEO Robert McDonald. Billionaire investor George Soros is shown to have made four visits, as was former Vice President Al Gore. Along with Winfrey and Clooney, other celebrities who visited include actors Denzel Washington and Brad Pitt and tennis star Serena Williams.
- Crude oil fell the most in a month after U.S. consumer spending dropped for the first time since April, increasing skepticism that the economy will strengthen. Oil decreased 3.6 percent and equities declined after the Commerce Department said purchases slipped 0.5 percent in September in the world’s biggest energy-consuming country. In the 12 months to June, the U.S. economy shrank 3.8 percent, the worst performance in seven decades, according to the Commerce Department. Third-quarter growth “was boosted by the various fiscal stimulus policies,” HarvardUniversity professor Martin Feldstein said in an e-mail. “The danger remains of a serious slowdown after this and a possible double dip” of the economy in 2010, he said. “The fundamentals don’t support prices at these levels and will eventually have to reassert themselves,” Hodge said. Oil plunged on Oct. 28 when the Energy Department reported that U.S. gasoline stockpiles climbed 1.62 million barrels to 208.6 million. Inventories of crude oil rose 778,000 barrels to 339.9 million in the week ended Oct. 23.
- The chief executive officers of 28 of the largest U.S. banks have been summoned to meet with supervisors at Federal Reserve banks to discuss new rules on compensation, said a person familiar with the matter. The Fed this month said it will review the largest banks to ensure compensation doesn’t create incentives for the kinds of risky investments that brought the global financial system to the edge of collapse, prompting bailouts of firms including Bank of America Corp. and Citigroup Inc. By summoning bank chiefs, the Fed is sending a message that it wants the pay reviews taken seriously, said Kevin Petrasic, an attorney at Washington law firm Paul Hastings and a former special counsel at the Office of Thrift Supervision.
- Even as Citigroup’s stock has soared from a low of $1.02 to its current $4.09 — and the company has eked out a $101 million profit in the third quarter along the way — it’s still unclear whether it can climb out of the hole that its former leaders dug before and during the mortgage mania. If Citigroup remains stuck, taxpayers will be on the hook for outsize losses. Citigroup remains a sprawling, complex enterprise, with 200 million customer accounts and operations in more than 100 countries. And when people talk about institutions that have grown so large and entwined in the economy that regulators have deemed them too big to be allowed to fail, Citigroup is the premier example.
- Democratic leaders in the U.S. House of Representatives unveiled a bill on Thursday to reform the U.S. healthcare system, President Barack Obama's main domestic objective.
- Swine flu is “spreading rapidly” across China, where nearly 80% of the country’s total flu infections are the A/H1N1 virus, citing the health ministry.
Army Radio:
- Israel may not be offered membership in the Organization for Economic Cooperation and Development, due to political reasons, citing people in Israel’s Ministry of Industry and Trade.
Weekend Recommendations
Barron's: - Made positive comments on (PGR) and (RY).
- Made negative comments on (GOOG).
Citigroup:
- Reiterated Buy on (CLF), raised estimates, boosted target to $43.
- Upgraded (MOT) to Buy, target $10.50.
- Upgraded (LEAP) to Buy, target $20.
Night Trading
Asian indices are -1.75% to -.50% on avg.
Asia Ex-Japan Inv Grade CDS Index 119.50 +12.50 basis points.
S&P 500 futures +.42%.
NASDAQ 100 futures +.17%.
-.ISM Manufacturing for October is estimated to rise to 53.0 versus 52.6 in September.
- ISM Prices Paid for October is estimated to rise to 64.0 versus 63.5 in September.
- Pending Home Sales for September are estimated unch. versus a 6.4% gain in August.
- Construction Spending for September is estimated to fall -.2% versus a +.8% gain in August.
Other Potential Market Movers
- The Fed’s Tarullo speaking, Wedbush Morgan Clean Tech Conference, (NITE) analyst meeting, (ARAY) analyst meeting and the (AVID) investor day could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by technology and industrial stocks in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed.The Portfolio is 75% net long heading into the week.
BOTTOM LINE: I expect US stocks to finish the week mixed as mostly positive earnings reports, lower energy prices and bargain-hunting offset economic worries, financial sector concerns and technical selling.My trading indicators are giving mostly bearish signals and the Portfolio is 75% net long heading into the week.
