Wednesday, March 03, 2010

Bear Radar

Posted by Gary .....at 2:09 PM
Style Underperformer:
Large-Cap Value (+.30%)

Sector Underperformers:
Computer Hardware (-.43%), Restaurants (-.42%) and I-Banks (-.15%)

Stocks Falling on Unusual Volume:
PTNR, STX, BJ, BWS, MDVN, CPNO, SPLS, HUSA, CPRT, JAKK, CMED, SGMS, HELE, APSG, FMCN and RHB

Stocks With Unusual Put Option Activity:
1) STD 2) TRA 3) OSIP 4) COST 5) MRVL
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Bull Radar

Posted by Gary .....at 11:10 AM
Style Outperformer:
Small-Cap Value (+1.03%)

Sector Outperformers:
Steel (+2.26%), (Networking (+1.89%) and Homebuilding (+1.84%)

Stocks Rising on Unusual Volume:
TIE, RTP, BCS, STD, SU, GTIV, DPZ, HWAY, ICON, BONT, SWWC, IBKC, LINC, CISG, HSNI, NKTR, ACIW, JOYG, ITMN, INSU, GIVN, RINO, FFIV, CSIQ, HEAT, QCOM, ATHN, ARST, LCAPA, CRZO, ETH, BCA, MFB, PAC, BIG, PUK, AWR, PAY, NC, TEX, FTI, RSH and NNI

Stocks With Unusual Call Option Activity:
1) TEX 2) RSH 3) AMAG 4) SPLS 5) NTAP
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Trading Links

Posted by Gary .....at 8:25 AM
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Tuesday, March 02, 2010

Wednesday Watch

Posted by Gary .....at 10:54 PM
Evening Headlines
Bloomberg:
  • Greece to Detail $6.5 Bln in Budget Cuts to Avoid 'Catastrophe'. Greek Prime Minister George Papandreou said his government is discovering “new holes” in the budget on a daily basis as it prepares to announce as much as 4.8 billion euros ($6.5 billion) in extra deficit cuts. Bowing to pressure from the European Union and investors to do more to tame the EU’s biggest budget gap, the steps to be unveiled today will include higher tobacco, alcohol and sales taxes and steeper reductions in public workers’ bonus payments, said a person familiar with the matter, who declined to be identified because the details aren’t yet public. Greece is signing up to even greater austerity measures two days before Papandreou meets Germany’s Angela Merkel, and the effort may help the chancellor justify aiding Greece to her taxpayers and political allies who say the country shouldn’t be bailed out after years of excess. Greek bonds advanced for a third day yesterday on the prospect that the deficit measures might ease the way for EU assistance. “We need the support of our partners,” Papandreou told his Pasok party in Athens yesterday. “To provide it they must convince their citizens, from whom they are also asking for sacrifices, that Greece is doing what must be done.”
  • Ten-Year Treasury Swap Spread Smallest Since 1988 on Greek Plan. The U.S. 10-year interest-rate swap spread narrowed to the smallest since 1988 as Greece prepared to unveil measures to cut the European Union’s largest deficit, fanning optimism credit risk will be contained. The difference between the rate to convert fixed payments to floating and similar-maturity Treasuries over 10 years declined to 6.13 basis points yesterday, the lowest since at least 1988, according to data compiled by Bloomberg. Reports today may show U.S. service industries expanded at a faster pace in February and companies cut fewer jobs. “The Greek plan will spur an unwinding of flight to quality, so yields may climb higher,” said Kazuaki Oh'e, a bond salesman in Tokyo at Canadian Imperial Bank of Commerce, the nation’s fifth-largest lender. The narrowing swap spread “means that short-term funding is not a problem and financial market conditions are now back to normal,” he said.
  • MIT Professor Diamond Said to Be Contacted for Fed Governor Job. The White House has contacted Peter Diamond, an economics professor at the Massachusetts Institute of Technology, about joining the Federal Reserve’s board of governors, according to two people familiar with the discussion. Diamond, a specialist in taxation and behavioral economics, has written widely on overhauling entitlement programs. His 2003 book “Saving Social Security” was co-written with Peter Orzag, director of the Office of Management and Budget. A third vacancy on the seven-person board opened up yesterday when Vice Chairman Donald Kohn announced he will leave in June when his term as the No. 2 Fed official expires. Diamond isn’t being considered for vice chairman, said the people, who requested anonymity to discuss a potential selection that is not final.
  • Gates Calls for 'Comprehensive' Review of Military Rule on Gays.
  • Novell(NOVL) Gets $2 Billion Takeover Bid From Elliott. Novell Inc., a seller of network software whose stock has slid 85 percent in the past decade, received an unsolicited takeover bid from shareholder Elliott Associates LP that values the company at about $2 billion. Novell’s shares jumped as much as 35 percent to $6.40 in extended trading, indicating that investors see the $5.75-a- share offer as too low. Elliott, a money management firm that owns about 8.5 percent of Novell’s shares outstanding, made the cash offer public in a letter today to the company’s board.
  • Pfizer(PFE) Said to Bid as Much as $4.08 Billion for Ratiopharm. Pfizer Inc., the world’s biggest drugmaker, is bidding as much as 3 billion euros ($4.08 billion) for German generic-drug maker Ratiopharm GmbH, said two people with knowledge of the talks.
Wall Street Journal:
  • Abuse of Power. A string of electoral defeats and the great unpopularity of ObamaCare can't stop Democrats from their self-appointed rendezvous with liberal destiny—ramming a bill through Congress on a narrow partisan vote. What we are about to witness is an extraordinary abuse of traditional Senate rules to pass a bill merely because they think it's good for the rest of us, and because they fear their chance to build a European welfare state may never come again. The vehicle is "reconciliation," a parliamentary process that fast-tracks budget measures and was created in 1974 as a deficit-reduction tool. Limited to 20 hours of debate, reconciliation bills need a mere 50 votes in the Senate, with the Vice President as tie-breaker, thus circumventing the filibuster. Both Democrats and Republicans have frequently used reconciliation on budget bills, so Democrats are now claiming that using it to pass ObamaCare is no big deal.
  • Dubai World Coughs Up the Knickbocker. The former Knickerbocker Hotel site near the heart of Times Square has become the latest Dubai World investment to go belly up, as well as the target of investors wanting to pick up the property at a discount price. Istithmar World Capital, the private-equity arm of the Dubai government's investment fund, recently handed back the keys to the 300,000-square-foot building at 42nd and Broadway to its lender, Danske Bank A/S, after defaulting on its $300 million mortgage.
  • U.S. Probes Bearish Euro Bets. SAC, Greenlight, Soros, Paulson Told to Retain Records; a Collusion Question. The Justice Department has launched an investigation into whether hedge funds might have banded together to drive down the value of the euro, people familiar with the matter say. One of the questions investigators are likely to examine is whether such information-sharing constitutes collusion, the people say. Charges relating to collusion on Wall Street have been a rarity because of the difficulty of proving that firms intentionally sought to act together and acted nefariously. The Justice Department inquiry comes amid a sharp decline in the value of the euro, which has fallen about 10% in value since December. In recent days, some traders may have reduced the size of their bearish bets.
  • Another Step Forward for Iraq by Fouad Ajami. A democratic country is emerging that answers neither to Sunni Arab states nor to Iranians.
Marketwatch.com:
  • Vanke Expects More Uncertainty. Vanke Co., China's leading property developer, said it anticipates more uncertainty in China's real-estate market due to the government's property market adjustment policies. In its annual financial report issued March 1, Vanke said that the government's introduction of adjustment policies in the property market would impact market sentiment and raise uncertainties in the credit and financing environment for developers.
CNBC:
 NY Times:
Forbes:
TheStreet.com:
  • Goldman(GS) Cut by Bove; Rivals Next? Rochdale Securities analyst Richard Bove cut his 2010 estimates on Goldman Sachs (GS), following through on comments he made to TheStreet.com a week ago.
Politico:
  • House GOP targets EPA Rules. House Republicans are pushing a resolution that would block the EPA's regulation of greenhouse gases, throwing a wrench in the Obama administration's attempts to bypass Congress and regulate carbon emissions. The announcement comes as a growing chorus of lawmakers—mostly Republicans, but some coal state Democrats as well— have criticized the EPA’s decision to move forward on carbon regulations. Last year, the EPA issued a finding that the heat-trapping gases were harmful to the public, paving way for regulation under the Clean Air Act. Republicans say they’re concerned the regulations will hurt the economy. “The last thing we need in this economy is new jobs that amount to a new tax on energy,” said Minority Leader John Boehner (R-Ohio). “This really amounts to an attack on the private sector.”
  • Charlie Rangel on the Brink. Charlie Rangel is on the verge of losing his Ways and Means gavel – by choice or by force, permanently or temporarily – and is taking the night to review his options, according to Democratic insiders. As he emerged Tuesday night from a meeting in Speaker Nancy Pelosi’s ceremonial office – sometimes known on Capitol Hill as “the woodshed” – the New York Democrat insisted that he is still the chairman of the powerful tax-writing committee. But he couldn’t guarantee that would be the case by Wednesday. “I can’t make all those promises at my age,” the 79-year-old Rangel said. Republicans plan to force a House floor vote this week on whether to remove Rangel from the chairmanship following last week’s finding that he violated House gift rules by accepting a corporate-sponsored trip to the Caribbean. Democratic lawmakers and aides said Tuesday that the party’s most vulnerable incumbents are not willing to risk the electoral fallout that would come from standing by the 39-year House veteran. If all House members vote and all 178 Republicans favor removing Rangel, the GOP would need 39 Democrats to turn against the chairman to win the vote.
Real Clear World:
  • The Unthinkable U.S.-Iran Deal by George Friedman.
  • Why Americans Hate Washington. In January, the Senate joined the House in passing "pay-as-you-go" rules to require Congress to pay for new discretionary spending. On Feb. 12, President Obama signed the bill. "Now Congress will have to pay for what it spends, just like everybody else," Obama crowed. Less than a month later, Obama and fellow Democrats are busily demonizing a lone senator for pushing Washington to spend responsibly. It seems this administration is all for fiscal restraint -- as long as you don't mean it. The story began last week when Sen. Jim Bunning, R-Ky., blocked Senate passage of a bill to extend one month unemployment and COBRA health insurance benefits, and other spending, because it did not comply with PAYGO. As the Baseball Hall-of-Famer explained, "When 100 senators are for a bill, and we can't find $10 billion to pay for it, there's something the matter, seriously the matter, with this body." For that, he is Satan.
Financial Times:
  • Pru Shares Plunge Over AIA Deal Fears. Prudential’s shares have fallen almost 20 per cent since it agreed a $35.5bn takeover of the AIG’s Asian life business, raising concerns about the UK insurer’s ability to close the deal. Hedge funds betting against the stock were blamed by some in the market for the drop in the shares, while others said investors were growing increasingly nervous about the stock and currency market risks over the next two months.
  • We Need a Plan B to Curb the Debt Headwinds. Policymakers have responded to successive economic downturns in essentially the same Keynesian way since the 1950s. Fiscal deficits have been allowed to rise and interest rates to fall to stimulate aggregate demand. Though Keynes hardly anticipated such repeated use of macro instruments, these policies have worked. As a result, the policy response to the current crisis has been “more of the same”. Many policymakers remain confident that this will eventually generate a sustained recovery. Yet it is worth reflecting on why it might not work this time, and what other public policies might help foster recovery. In short, what is Plan B? An unsustainable level of private sector debt is the main factor explaining the present severe downturn, as well as many previous downturns in history. Today, the problem principally resides in the household sector in many advanced market economies. In Japan in the 1980s, corporations went on a similar spree of spending which was almost wholly funded by debt. However, the problem with debt is that it constitutes a claim on future earnings, which cannot be met if earnings expectations fail to materialise. Although debt problems traditionally originate in the private sector, the public sector cannot be held blameless. Today’s unsustainable debt levels have much to do with the repeated use of monetary easing to stimulate consumer demand in successive cycles. The repeated use of fiscal measures to support demand made private debt more supportable, but also increased public debt levels. With respect to both monetary and fiscal policy, tightening in the cyclical upturns never matched the vigour of the easing in the downturns. Both monetary and fiscal policies may now have reached the limits of their effectiveness.
Australian Financial Review:
  • Australia's personal tax rate should be capped at 35% to help boost productivity, citing a report from think-tank Centre for Independent Studies. The Medicare levy should also be scrapped.
China Securities Journal:
  • China's government should put a limit on property prices, according to a proposal by Yan Qingmin, a delegate to the Chinese People's Political Consultative Conference. The Chinese government will strictly scrutinize loans to housing developers in 2010 and control lending to companies that build properties as "a side business," citing Yan.
Evening Recommendations
Citigroup:
  • Reiterated Buy on (TECD), target $56.
Night Trading
  • Asian indices are unch. to +.50% on average.
  • Asia Ex-Japan Investment Grade CDS Index 107.0 -2.0 basis points.
  • S&P 500 futures -.09%
  • NASDAQ 100 futures -.11%
Morning Preview
Earnings of Note
Company/Estimate
  • (BIG)/1.29
  • (JOYG)/.64
  • (BWS)/.16
  • (BJ)/.96
  • (PETM)/.56
  • (FL)/.25
  • (COST)/.71
Economic Releases
8:15 am EST
  • The ADP Employment Change for February is estimated at -20K versus -22K in January.
10:00 am EST
  • The ISM Non-Manufacturing Composite for February is estimated to rise to 51.0 versus a reading of 50.5 in January.
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,275,000 barrels versus a +3,034,000 barrel increase the prior week. Gasoline supplies are expected to rise by +300,000 barrels versus a -895,000 barrel drawdown the prior week. Distillate inventories are estimated to fall by -1,050,000 barrels versus a -591,000 barrel decline the prior week. Finally, Refinery Utilization is expected unch. versus a +1.42% gain the prior week.
2:00 pm EST
  • Fed's Beige Book
Upcoming Splits
  • (ARO) 3-for-2
Other Potential Market Movers
  • The Challenger Job Cuts report, Fed's Fisher speaking, Fed's Rosengren speaking, Fed's Lockhart speaking, weekly MBA mortgage applications report, CSFB Aerospace & Defense Conference, Deutsche Bank Hospitality/Gaming Conference, (SWY) investor day, (TAP) investor day, UBS Natural Gas/Electric Power/Coal conference, RBC Healthcare Conference, Morgan Stanley Tech/Media/Telecom Conference, Keybanc Consumer Conference, BMO Metals/Mining Conference, (NYX) investor day and the (MYGN) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and technology 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 day.
3 comments

Stocks Finish Slightly Higher, Boosted by Gold, Coal, Wireless and Hospital Shares

Posted by Gary .....at 4:16 PM
Evening Review
1 comments

Stocks Reversing Lower into Final Hour on Profit-Taking, More Shorting

Posted by Gary .....at 3:49 PM
BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Technology longs, Medical longs and Biotech longs. I added (IWM)/(QQQQ) hedges and added to my (EEM) short today, thus leaving the Portfolio 75% net long. The tone of the market is mildly positive as the advance/decline line is higher, sector performance is mostly positive and volume is above average. Investor angst is high. Today's overall market action is slightly bullish. The VIX is falling -1.66% and is around average at 18.94. The ISE Sentiment Index is below average at 113.0 and the total put/call is slightly below average at .77. Finally, the NYSE Arms has been running above average most of the day, hitting 1.42 at it intraday peak, and is currently 1.27. The Euro Financial Sector Credit Default Swap Index is falling -5.92% to 83.26 basis points. The North American Investment Grade CDS Index is falling -2.10% to 87.80 basis points. The TED Spread is unch. at 14.0 basis points. The 2-Year Swap Spread is falling -3.84% to 23.50 basis points. The Libor-OIS Spread is unch. at 10.0 basis points. The 10-Year TIPS Spread is up +1 basis point to 2.17%. The 3-Month T-Bill is yielding .12%, which is unch. today. Nikkei futures indicate an +29 open in Japan and DAX futures indicate a down -24 open in Germany tomorrow. I expect US stocks to trade mixed-to-lower into the close from current levels on profit-taking, more shorting and technical selling.
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