Tuesday, March 09, 2010

All Links

Posted by Gary .....at 11:37 AM


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Trading Links

Posted by Gary .....at 10:09 AM
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Tuesday Watch

Posted by Gary .....at 12:42 AM

Evening Headlines
Bloomberg:
  • Fannie Mae Mortgage-Bond Spreads Fall to Record: Credit Markets. Yields on Fannie Mae and Freddie Mac mortgage securities that guide U.S. home-loan rates are trading at the lowest relative to Treasuries on record, even as the scheduled end of Federal Reserve purchases approaches. The difference between yields on Washington-based Fannie Mae’s current-coupon 30-year fixed-rate mortgage bonds and 10- year Treasuries narrowed 0.02 percentage point today to about 0.63 percentage point to match the smallest spread since at least 1984, according to data compiled by Bloomberg.
  • Northrop(NOC) Not Bidding for $35 Billion Tanker Program. Northrop Grumman Corp. won’t bid for the U.S. Air Force’s $35 billion tanker program, making good on its threat to withdraw from the contest unless the government altered some of its requirements. The decision by Northrop and its partner, European Aeronautic Defence & Space Co., leaves competitor Boeing Co.(BA) as the only bidder for the program unless another firm enters the contest.
  • McChrystal, Afghans Set Sights on Kandahar for Next Offensive. U.S. Army General Stanley McChrystal and his civilian and Afghan counterparts are laying the groundwork for an offensive in the Taliban heartland city of Kandahar designed to step up pressure on the rebels. The 30-day campaign to wrest control of the southern town of Marjah in neighboring Helmand Province has served as a rehearsal for the planned mission in Kandahar, from which the Taliban ruled Afghanistan and harbored al-Qaeda before the U.S. invasion in 2001. “We have essentially got control” of Marjah now, McChrystal, the top commander in Afghanistan, told reporters yesterday traveling with U.S. Defense Secretary Robert Gates in the Afghan capital, Kabul. “We are absolutely going to secure Kandahar.”
  • Paterson-Backed Sugary Beverage Tax Is 'Unfair,' Opponents Say. New York Governor David Paterson and New York City Mayor Michael Bloomberg said they favor a penny- per-ounce tax on sugary beverages that a group representing about a dozen state lawmakers and companies including Coca-Cola Co. called “unfair.” Bloomberg, in a weekly radio address yesterday, said the plan is a “simple step” to raise funds for Medicaid and education. Paterson said the proposed tax, which state budget officials estimate would raise $465 million in the year starting April 1, will help cut costs related to obesity. New Yorkers Against Unfair Taxes, a group including manufacturers, bottlers, grocers and some state legislators, said the tax is “wrong” and unfairly targets an industry they say employs 160,000 in the state. The tax will jeopardize beverage-industry jobs, the group said in a statement today. “It seems arbitrary to point the finger at a pretty good industry here in New York that supplies a lot of jobs and try to claim that this is the source of our health ailments,” Neil Giacobbi, a spokesman for the group, said in a phone interview. The debate over the sugar tax comes as New York state faces a budget deficit over the next 13 months that Lieutenant Governor Richard Ravitch estimates at $9 billion to $9.5 billion.
  • 'Hurt Locker' Oscars May Double Box-Office Sales, Analysts Say. “The Hurt Locker” DVD sales spiked after the film won best picture at the Academy Awards, and analysts said its six Oscars may help double box-office revenue for distributor Summit Entertainment LLC. “The Hurt Locker,” which won best original screenplay and best director for Kathryn Bigelow at last night’s 82nd Annual Academy Awards ceremony in Los Angeles, rose to third place today from 13th place yesterday on Amazon.com Inc.'s DVD sales chart. The Iraq war drama was the most-rented movie today on Amazon’s video-on-demand service and Apple Inc.'s iTunes.
  • China Says Foreign Exchange Reserves 'Appropriately Diversified.' China’s foreign exchange reserves are “appropriately diversified,” the State Administration of Foreign Exchange said in a statement distributed before a briefing in Beijing today. The reserves included dollars, euro and yen, the regulator said. Investments of China’s foreign exchange reserves were “generally safe” in 2008 and 2009, the administration said. Investment earnings for those two years were close to normal, the regulator said.
  • OSI(OSIP) Bid Likely to Rise as Astellas Seeks Cancer Sales. OSI Pharmaceuticals Inc.’s status as one of the few U.S. biotechnology companies with income from an approved cancer drug likely will drive up the price Tokyo-based Astellas Pharma Inc. must pay to acquire it.
Wall Street Journal:
  • Iraq's Remarkable Election. The strategic benefits of an emerging Middle East democracy. It takes a cynical mind not to share in the achievement of Iraq's national elections. Bombs and missiles, al Qaeda threats and war fatigue failed to deter millions of Iraqis of all sects and regions from exercising a right that is rare in the Arab world. Even the U.N.'s man in Baghdad called the vote "a triumph." On Sunday, 61% of eligible voters came out in Anbar Province, a former extremist stronghold that includes the towns of Fallujah and Ramadi. In the last national elections five years ago, 3,375 people—or 2%—voted in Anbar. The other Sunni-dominated provinces that boycotted in 2005 saw similar numbers: over 70% turnout in Diyala and Salaheddin and 67% in Nineveh, all higher than the national average of 62%. American Presidential elections rarely have such turnout.
  • Swap Fears Are Growing, Draghi Says. Governments are growing uneasy about the speculative trading of credit default swaps, Financial Stability Board Chairman Mario Draghi said Monday, signaling that policy makers are working on new regulation for the instruments. At a press conference on the sidelines of meetings at the Bank for International Settlements in Basel, Mr. Draghi said it is too early to talk about the nature of the regulation but that the FSB would be involved in devising it. European policy makers over the past week have highlighted the role of market speculation in exacerbating problems faced by Greece, questioning whether investors should be able to benefit from its troubles. German Prime Minister Angela Merkel on Friday urged cooperation through the Group of 20 industrial and developing nations to create new controls over CDS. Mr. Draghi noted that many CDS contracts are purely speculative rather than used for hedging purposes. "The sense I have is that governments are increasingly uneasy with this because it has systemic implications very much in the same way as very large banks," Mr. Draghi said. "Whenever something has systemic implications, you can bet it's going to get systemic regulation," he said, adding it was very unlikely that these markets would be left in the same state that they were before the crisis. He also underlined the desirability of centralizing the trading of CDS contracts and other derivatives as much as possible, and of standardizing contracts. another important issue will be the considerable amount of private debt that is set to come due over the next few years, and which will need to be renewed, Mr. Draghi said. One area the FSB is working on is how to incentivize the banking system to provide longer-dated funding. Restarting securitization channels, which dried up in the aftermath of financial turmoil, is a part of that effort, he said. "This is certainly proving to be a serious drag on the restart of credit flows to the economy," Mr. Draghi said, adding that there are several ideas on how to boost securitization.
  • Google(GOOG) Tests TV Search Service. Google Inc. is testing a new television-programming search service with Dish Network Corp., according to people familiar with the matter, the latest development in a fast-moving race to combine Internet content with conventional TV. The service, which runs on TV set-top boxes containing Google software, allows users to find shows on the satellite-TV service as well as video from Web sites like Google's YouTube, according to these people. It also lets users to personalize a lineup of shows, these people said.
  • Verizon(VZ) Will Carry NFL's RedZone Channel. The National Football League and Verizon Wireless struck a deal to distribute live games and the league's wildly popular RedZone Channel beginning next season. The four-year deal between the country's most powerful sports league and the largest U.S. wireless operator by subscribers is valued at $720 million, which covers a rights fee and advertising spending, according to people familiar with the details. It will free fans from their couches on Sunday afternoons by giving them access to live footage of every game, something previously only available through a satellite television package.
Marketwatch.com:
CNBC:
IBD:
NY Times:
  • Google(GOOG) Improves Its Translation Tool.
  • Public Pension Funds Are Adding Risk to Raise Returns. States and companies have started investing very differently when it comes to the billions of dollars they are safeguarding for workers’ retirement. Companies are quietly and gradually moving their pension funds out of stocks. They want to reduce their investment risk and are buying more long-term bonds. But states and other bodies of government are seeking higher returns for their pension funds, to make up for ground lost in the last couple of years and to pay all the benefits promised to present and future retirees. Higher returns come with more risk. “In effect, they’re going to Las Vegas,” said Frederick E. Rowe, a Dallas investor and the former chairman of the Texas Pension Review Board, which oversees public plans in that state. “Double up to catch up.” Though they generally say that their strategies are aimed at diversification and are not riskier, public pension funds are trying a wide range of investments: commodity futures, junk bonds, foreign stocks, deeply discounted mortgage-backed securities and margin investing. And some states that previously shunned hedge funds are trying them now.
CNNMoney:
Business Insider:
Forbes:
  • Cisco's(CSCO) Big Announcement.
  • Electronic Textbooks? You Bet. A $9.9 billion industry is about to get a serious makeover. Will Apple's(AAPL) iPad kill the textbook? Many educators are pointing to Apple Computer's recently announced iPad as the prototype for an e-reader that will be able to hold all the textbooks a student needs. Its color touch-screen, interactive-video capability and virtual keyboard, they say, give it greater potential for textbook users than monochrome readers like Amazon's(AMZN) Kindle.
The Daily Beast:
Crain's New York:
Politico:
  • Eric Massa: Democrats Ousted Me Over Health Care. Rep. Eric Massa (D-N.Y.) says the House ethics committee is investigating him for inappropriate comments he made to a male staffer on New Year's Eve — and that he's the victim of a power play by Democratic leaders who want him out of Congress because he's a "no" vote on health care reform. "Mine is now the deciding vote on the health care bill," Massa, who on Friday announced his intention to resign, said during a long monologue on radio station WKPQ. "And this administration and this House leadership have said, quote-unquote, they will stop at nothing to pass this health care bill. And now they've gotten rid of me, and it will pass. You connect the dots."
AP:
USA Today:
  • Gas Price Headed Back to $3 a Gallon This Spring. The national average price for a gallon of gasoline is up 9 cents in a month and will likely crack $3 in coming weeks, given a typical spring rally before the summer driving season, oil and gas analysts say.
  • Target(TGT) Puts Mobile Coupons on Customers' Cellphones. Using your cellphone during checkout at Target could soon earn you discounts. Starting Wednesday, the giant retailer will allow customers to take advantage of special mobile-coupon offers on their handsets. The coupon is redeemed when the bar code on the phone is scanned at checkout. Offers are good only once and expire on the dates listed. "We believe it's a competitive advantage for us," says Target.com President Steve Eastman.
Reuters:
  • Fairholme, Pershing to up General Growth Investment. Fairholme Capital Management and Pershing Square, two key investors in General Growth Properties Inc (GGP), are teaming up to invest another $3.93 billion in the mall operator to help it emerge from bankruptcy, according to a person familiar with the matter.
  • Sony Corp said on Tuesday it aims to sell at least 25 million LCD TVs in the financial year ending in March 2011, with 3D models accounting for 10 percent of that.
  • U.S. Treasuries are Key Market for China - Official. Yi Gang, head of the State Administration of Foreign Exchange, said that China buys and sells U.S. government debt every day and that he hoped China's holdings of Treasuries did not become politicised. A decline in China's holdings of Treasuries has fuelled some speculation that Beijing was deliberately cutting its holdings of U.S. debt because of political tensions, but many economists said the drop just reflected the maturing of a large volume of short-term debt acquired by China at the height of the global financial crisis.
  • Goldman Sachs(GS) Sued by Big Pension Fund Over Pay.
  • New U.S. Poll Spells Potential Trouble for Democrats. A new poll on Monday found signs of trouble ahead for U.S. President Barack Obama and his Democrats on national security issues such as the handling of terrorism suspects. The poll was conducted jointly by Democratic Corps, a Democratic organization, and Third Way, a progressive non-profit organization. It was done mainly to gauge voters' views on Democrats' handling of national security. The poll also found weaknesses for the Democrats on other issues ahead of November elections, in which they hope to defend their strong majorities in the U.S. Congress. The poll found 60 percent of Americans believe the United States is on the wrong track. It also found that people rated Democrats at about the same level as Republicans, in what amounted to an erosion of the advantage Democrats have held. "We would not want the election to be held today, with this poll," said Democracy Corps' chief pollster Stan Greenberg. "If the election were held today, this would be a 'change' election." "Historical doubts about the Democratic Party on national security show signs of reviving and many voters worry the president and his administration are not dealing forcefully enough with terrorist suspects." The poll found that the Democrats' gap on national security has widened in the areas of "keeping America safe," "ensuring a strong military" and "making America safer from nuclear threats." Singled out by the pollsters was the Obama administration's response to the attempted bombing of a Detroit-bound plane on Christmas Day. The Obama administration has drawn fire from Republicans for treating the bombing suspect, Umar Farouk Abdulmutallab, as a typical criminal suspect instead of as an enemy combatant. The poll found a 51 to 44 percent majority of likely voters disapproved of Obama's efforts "on the prosecution and interrogation of terrorism suspects."
  • Senators Wrangle Over OTC Derivatives Exemptions.
Financial Times:
  • Bair Seeks Upfront Levy on Big Banks. Sheila Bair, chairman of the Federal Deposit Insurance Corporation, on Monday called for an upfront levy on large financial institutions to pay for the costs of their failure – but she signalled willingness to compromise. As regulatory reform talks grind towards a conclusion in the Senate, Ms Bair told the Financial Times that she was still pushing for a pre-funded “resolution authority” to wind down the next Lehman Brothers-style failure even though the biggest banks faced an additional $90bn tax announced by President Barack Obama.
  • EU Climate Chief Delivers Treaty Blow. The world will almost certainly fail to draw up a new treaty on climate change this year, the minister in charge of last year’s Copenhagen summit has admitted, delivering a heavy blow to the barely flickering hopes for a swift global ­settlement. Connie Hedegaard, the Danish minister who masterminded the summit of world leaders on global warming last year and is now the European commissioner for climate change, told the Financial Times negotiations were not progressing fast enough for a treaty to be signed soon. She also gave warning that pushing too hard for a treaty this year could be counterproductive. The admission also comes against the backdrop of a resurgence of climate change skepticism, fueled by a series of mistakes made by scientists that have encouraged many politicians to oppose emissions regulation. Governments had been hoping to forge a final treaty at a global conference this December in Mexico, after failing to do so in Copenhagen. However, Ms Hedegaard said this was more likely to happen at a follow-up meeting next year in South Africa.
  • Tax Move by Brazil Risks US Trade War. Brazil moved on Monday to raise tariffs on a wide range of American goods, potentially igniting a trade war with the US over cotton subsidies after eight years of litigation at the World Trade Organisation. The decision takes effect next month, starting a 30-day period during which US and Brazilian officials will attempt to negotiate a solution to the dispute.
Telegraph:
Evening Recommendations.
  • None of Note
Night Trading
  • Asian indices are -.25% to +.50% on average.
  • Asia Ex-Japan Investment Grade CDS Index 97.0 -1.0 basis points.
  • S&P 500 futures -.14%
  • NASDAQ 100 futures -.07%
Morning Preview
Earnings of Note
Company/Estimate
  • (DKS)/.55
  • (SSI)/.69
  • (SLXP)/-.14
  • (AVAV)/.32
  • (SAM)/.58
  • (JCG)/.46
  • (KFY)/.11
  • (KR)/.34
Economic Releases
7:30 am EST
  • The NFIB Small Business Optimism Index for February is estimated to rise to 90.0 versus a reading of 89.3 in January.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Evans speaking, weekly retail sales reports, Treasury's 3-Year Note Auction, API energy inventory report, JPMorgan Aviation/Transportation/Defense Conference, IBD/TIPP Economic Optimism Index, UBS Industrial Conference, Raymond James Institutional Investors Conference, Jefferies Tech Conference,CSFB Media/Communications Conference, (CVX) analyst meeting, (FL) analyst meeting, Cowen Healthcare Conference, (ADI) shareholder meeting and the ABC consumer confidence reading could also impact trading today.
BOTTOM LINE: Asian indices are slightly higher, boosted by technology and consumer stocks in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.
0 comments

Monday, March 08, 2010

Stocks Finish Slightly Lower, Weighed Down by Airline, Gold and Coal Shares

Posted by Gary .....at 4:14 PM
Evening Review
1 comments

Stocks Slightly Higher into Final Hour on Falling Sovereign Debt Fear, Less Financial Sector Pessimism, Short-Covering, Technical Buying

Posted by Gary .....at 3:36 PM

Broad Market Tone:
  • Advance/Decline Line: Slightly Higher
  • Sector Performance: Mixed
  • Volume: Around Average
  • Market Leading Stocks: Mixed
Equity Investor Angst:
  • VIX 17.67 +1.44%
  • ISE Sentiment Index 120.0 -5.51%
  • Total Put/Call .95 +13.10%
  • NYSE Arms 1.04 +154.81%
Credit Investor Angst:
  • North American Investment Grade CDS Index 83.02 bps -3.74%
  • European Financial Sector CDS Index 72.65 bps -7.56%
  • Western Europe Sovereign Debt CDS Index 68.56 bps -7.01%
  • Emerging Market CDS Index 234.65 bps -2.92%
  • 2-Year Swap Spread 23.0 bps unch.
  • TED Spread 11.0 bps unch.
Economic Gauges:
  • 3-Month T-Bill Yield .14% unch.
  • Yield Curve 281.0 bps +3 bps
  • Copper Days Demand 15.25 days -.31%
  • Citi US Economic Surprise Index +23.40 unch.
  • 10-Year TIPS Spread 2.23% +1 basis point
Overseas Futures:
  • Nikkei Futures: Indicating +40 open in Japan
  • DAX Futures: Indicating +9 open in Germany
Portfolio:
  • Slightly Higher: On strength in Retail, Financial and Tech long positions
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as stocks consolidate recent gains. On the positive side, (IYR) has traded well throughout the day. Tech shares are also outperforming. The ongoing decline in credit default swaps remains a huge positive. The Libor-OIS spread is falling to 6.0 basis points today to the lowest since August 2006. On the negative side, Airline, Gold and Coal stocks are notably weak on the day. The 10-year yield is continuing its recent creep higher. Shanghai copper inventories have surged 23.5% over the last 5 days to the highest levels since Dec. 19th, 2009. As well, copper days demand remains near the highest level since January 2004, which is also a negative. I expect US stocks to trade mixed-to-higher into the close from current levels on less economic fear, short-covering, lower sovereign debt angst, technical buying and diminishing financial sector pessimism.

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