Wednesday, March 10, 2010

Stocks Finish Higher, Boosted by Technology, Bank, Airline, Hospital and Oil Tanker Shares

Posted by Gary .....at 4:08 PM
Evening Review
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Stocks Rising into Final Hour on Tech Sector Optimism, Less Financial Sector Pessimism, Short-Covering, Technical Buying

Posted by Gary .....at 3:42 PM

Broad Market Tone:
  • Advance/Decline Line: Higher
  • Sector Performance: Almost Every Sector Higher
  • Volume: Above Average
  • Market Leading Stocks: Outperforming
Equity Investor Angst:
  • VIX 18.07 +.84%
  • ISE Sentiment Index 142.0 -6.58%
  • Total Put/Call .72 +5.88%
  • NYSE Arms .63 -18.36%
Credit Investor Angst:
  • North American Investment Grade CDS Index 81.99 bps -1.41%
  • European Financial Sector CDS Index 65.90 bps -13.14%
  • Western Europe Sovereign Debt CDS Index 67.08 bps -3.94%
  • Emerging Market CDS Index 226.88 bps -1.69%
  • 2-Year Swap Spread 21.0 bps -1 basis point
  • TED Spread 11.0 bps unch.
Economic Gauges:
  • 3-Month T-Bill Yield .14% unch.
  • Yield Curve 281.0 bps -1 basis point
  • Copper Days Demand 15.18 days -.09%
  • Citi US Economic Surprise Index +14.80 -2.2 points
  • 10-Year TIPS Spread 2.25% +2.0 bps
Overseas Futures:
  • Nikkei Futures: Indicating +67 open in Japan
  • DAX Futures: Indicating -13 open in Germany
Portfolio:
  • Higher: On strength in my Biotech, Financial and Tech long positions
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is bullish as the major averages build on recent gains with the bears failing to capitalize on yesterday's afternoon weakness. On the positive side, (XLF) has traded pretty well throughout the day, gaining +.9%. Technology shares are also outpeforming, rising +1.0%. Hospital, Airline, Bank, Semi and Oil Tankers stocks are estpecially strong, rising 2.0%+. The implosion in the euro financial sector cds index is a major positive. As well, sovereign cds remain under meaningful pressure again today. The decline in gold is noteworthy considering today's euro strength, equity gains and uptick in inflation expectations. On the negative side, Telecom, Homebuilding and Retail stocks are slightly lower on the day. Shanghai copper inventories are up another +5.4% today and are back near their Dec. 2009 highs. On of my longs, (GOOG), is surging up through its 50-day moving average on volume today. As I said a couple of weeks ago, I believe the shares are attractive for both short and longer-term investors around current levels. We are seeing some more modest late day profit-taking in the broad market, but so far weakness isn't meaningful. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, technical buying, stable long-term rates, tech sector optimism and diminishing financial sector pessimism.

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Today's Headlines

Posted by Gary .....at 3:08 PM

Bloomberg:
  • Smartphone Market Will Ecplipse PCs by 2012. Demand for Apple Inc.’s(AAPL) iPhone and Google Inc.’s Nexus One will help propel smartphone sales past those of personal computers in two years, Gartner Inc. forecasts. The CHART OF THE DAY shows that smartphone sales will more than triple to 491.9 million units by 2012 from 139.3 million in 2008, according to the Stamford, Connecticut-based research firm. The PC market will expand to 443.1 million units from 290.8 million in the same period, Gartner predicted on March 4. “Smartphones are headed towards that billion-unit category that handsets are in today,” said Jim McGregor, an analyst at research firm In-Stat in Scottsdale, Arizona. “The smartphone is the billion-unit pot of gold that everyone wants.”
  • Global Confidence Dips as Greece's Deficit Undermines Recovery. Confidence in the world economy dropped for a second month in March amid concern the fallout from Greece’s budget crisis will undermine the global recovery, according to a Bloomberg survey of users on six continents. The Bloomberg Professional Global Confidence Index fell to 53.8 from 54.9 in February. The index exceeded 50 for an eighth month, which means there were more optimists than pessimists.
  • FSA's Turner Says No Rush to Bank Naked Credit-Default Swaps. Regulators and governments around the world shouldn’t rush to ban speculation on sovereign debt in the wake of the Greek financial crisis, the chairman of Britain’s financial regulator said today.
  • China May Start Raising Interest Rates as Prices Gain. China’s inflation accelerated in February, according to a survey of economists, and exports climbed in the month, increasing the likelihood of the central bank raising interest rates from a five-year low. Consumer prices rose 2.5 percent from a year before, the most in 16 months, according to the median of 29 estimates in a Bloomberg News survey before tomorrow’s report. While the gain was likely exaggerated by seasonal factors, economists project the momentum to continue, sending the rate to as high as 4.4 percent during the year, a separate survey showed last week.
  • WellPoint(WLP) CFO Says California Previews Obama Premiums. WellPoint Inc.’s plan to raise rates for some California customers by 39 percent, a rallying point for Democrats seeking a health overhaul, is a preview of the prices Americans will face if the proposal succeeds, the insurer’s chief financial officer said. The health-care bill pushed by President Barack Obama will force healthy people out of the market while doing nothing to control medical costs, just the conditions that led Indianapolis-based WellPoint to raise rates in California, CFO Wayne DeVeydt said today at an investor conference. California “is a preview of what health-care reform is going to look like,” DeVeydt said at the Cowen & Co. conference in Boston. “These are the kinds of increases you’re going to see.” DeVeydt, at the Cowen conference, said the last provision will let people drop out of the insurance pool until they are ill and force WellPoint to raise rates on the remaining customers. While Obama’s plan requires all Americans to obtain insurance, the penalties for those who don’t are weak, he said. “You cannot convince me or any other average American that you’re going to insure 47 million more people, you’re going to expand the coverage they’re going to get, you’re going to put a multibillion-dollar new tax on the industry and costs are not going to go up,” he said. “The math doesn’t work.”
  • U.S. Posts Record Budget Deficit of $221 Billion in February. A deficit that will probably exceed $1 trillion for a second year underscores the challenges facing the Obama administration and Congress as they seek to preserve the recovery, spur job growth and pass health care reform. The loss of 8.4 million jobs the last two years has been limiting tax revenue, while stimulus efforts such as the first-time homebuyers credit have added to expenses. Spending by the Social Security Administration rose to $308.6 billion from $290.1 billion for the fiscal year to date. Spending by the Department of Health and Human Services, which administers the Medicare and Medicaid health programs, rose to $342 billion from $319.6 billion. Defense Department spending rose to $273.9 billion from $267.4 billion, while spending on the Troubled Asset Relief Program fell to $8.7 billion from $113.3 billion. The government’s $787 billion economic rescue plan contributed to the record deficit in fiscal year 2009. The shortfall will probably exceed $1 trillion this year, according to the White House and congressional budget officials. Mounting monthly deficits prompted President Barack Obama to sign a bill on Feb. 12 that raised the federal debt limit by $1.9 trillion to $14.3 trillion. The increase was required to keep the U.S. from defaulting on its bills. It is more than twice the size of any of the four previous debt increases lawmakers approved in the past two years. The CBO said March 5 that the Obama’s 2011 budget proposal would create bigger annual deficits than projected. The CBO said the budget shortfall will remain above 4 percent of gross domestic product for the foreseeable future while the publicly held debt will reach $20.3 trillion, or 90 percent of GDP, by 2020. Economists generally consider deficits exceeding 3 percent of GDP to be unsustainable because that means government debt is growing faster than the ability to pay back the money. Obama’s budget request projected the government would run $8.5 trillion in deficits over the next 10 years.
Wall Street Journal:
  • Regional Bank Shares Rise As Barclays(BCS) Speculation Heats Up. Regional bank stocks climbed higher Wednesday and were among the broader market's top gainers as speculation spread about a potential move by U.K. banking giant Barclays PLC, which has been reported to be in the search of more U.S. assets. The Wall Street Journal reported Tuesday that Barclays is shopping for a retail bank in the U.S. that would give it more deposits and extend its presence in the country, after a successful purchase of Lehman Brothers Holdings Inc.'s North American operations in 2008. Oriel Securities analysts said in a note that a U.S. retail bank "would make sense" for Barclays and listed as among the possibilities U.S. Bancorp (USB), PNC Financial Services Group Inc. (PNC) and SunTrust Banks Inc. (STI). Shore Capital, a brokerage, also said a deal could be done at the right price and listed the same three banks as likely targets. The biggest gainers on the day for regional banks were Zions Bancorp (ZION), adding 8.4% to $20.86; Regions Financial Corp. (RF), up 8% to $7.46; and Huntington Bancshares Inc. (HBAN), up 5.8% to $5.32. Marshall & Ilsley Corp. (MI), KeyCorp (KEY) and Fifth Third Bancorp (FITB) were all up as well, as M&I rose 4.7% to $7.80, KeyCorp rose 3.9% from $7.55 and Fifth Third gained 3.4% to $13.05. The Wall Street Journal story included speculation that Fifth Third(FITB), as well as SunTrust(STI) and Comerica Inc. (CMA), which was up 1.9%, were takeover candidates.
  • Psychiatric Solutions(PSYS) in Talks with Bain Capital. Psychiatric Solutions has a market capitalization around $1.35 billion. Psychiatric Solutions Inc., a for-profit operator of mental-health hospitals and clinics, is in talks to be acquired by private-equity firm Bain Capital, according to several people familiar with the matter. An exact takeover price couldn't be determined Wednesday, but the firm was seeking around a 25% premium to its current market price, said people familiar with the matter. Any deal would include the assumption of Psychiatric Solutions's outstanding $1.2 billion of debt.
  • Google(GOOG) CEO Sees Conclusion to China Talks Soon.
  • California's College Dreams. When will students figure out the politicians have sold them out?
  • House Democrat Calls for $100 Billion in Increased Aid to States.
BuinessWeek:
  • ECB's Noyer Says Low Rates Fueling Hedge Fund CDS Speculation. European Central Bank council member Christian Noyer called for greater regulation of credit- default swaps, saying hedge funds are exploiting low interest rates to increase speculation with the securities, according to an interview in L’Agefi newspaper.“Is it normal that hedge funds can take such large positions using significant leverage financed by central banks with particularly low interest rates? Obviously not,” Noyer was quoted as saying in the interview confirmed by his office. “We the central banks aren’t keeping rates low to permit hedge funds to take speculative positions in sovereign CDSs.” The European Union is considering banning some swaps in the wake of the Greek debt crisis, European Commission President Jose Barroso said yesterday. Swaps shouldn’t be banned altogether, Noyer said in the interview to appear in the March 11 edition of L’Agefi. “The opacity of the CDS market isn’t acceptable,” he was quoted as saying. “This market needs to be placed under central-bank responsibility.”
CNBC:
 The Business Insider:
Engadget:
Washington Post:
  • Senate Financial Bill Appears Likely to Keep Fed as Regulator of Big Banks. Key members of the Senate banking committee are coalescing around legislation that would strip the Federal Reserve of much of its regulatory authority but would leave the central bank with oversight of the nation's largest banks, according to aides familiar with the ongoing negotiations. Under the plan, the Fed would continue to supervise only 23 bank-holding companies with assets exceeding $100 billion. Supervision of the nearly 5,000 banks below that threshold would fall largely to a proposed new regulator to be created by merging the Office of Thrift Supervision and the Office of the Comptroller of the Currency, aides said. In addition, the Federal Deposit Insurance Corp. would take over regulation of more than 800 state-chartered banks that currently are part of the Federal Reserve System, according to the aides, who spoke on condition of anonymity because the talks are still ongoing and the provisions still could change. Banking committee Chairman Sen. Christopher J. Dodd (D-Conn.) and freshman Republican Sen. Bob Corker (R-Tenn.) have been negotiating for weeks the particulars of a sweeping overhaul of the nation's financial regulatory system and hope to have a draft within the next week.
Univ. of Mich.:
  • Mortgage Default Risks Still High, But Falling. Although 20 percent of U.S. mortgages are currently underwater, Americans' risk for defaulting on their home loans is going down, says a professor at the University of Michigan's Ross School of Business. Dennis Capozza, professor of finance and real estate and the Dykema Professor of Business Administration, says that while the risk is still high, it's at its lowest point since 2005. "Although house prices will continue to decline, the rate of decline has decelerated. The hardest-hit areas have begun to return to sustainable levels," said Capozza, founding principal of University Financial Associates (UFA), a risk-management firm that forecasts mortgage and consumer loan performance. "Slower house price depreciation will mitigate risk levels for mortgage lenders.
Rasmussen:
  • Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Wednesday shows that 22% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty-three percent (43%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -21. That matches the lowest Approval Index rating yet recorded for this President (See trends).
Politico:
  • Democrats: No Thanks to New 'Gang of 14'. Sen. Lindsey Graham (R-S.C.) wants to revive the bipartisan Gang of 14 — this time for health care reform, not judicial nominees. But most of his moderate Democratic colleagues aren’t rushing to R.S.V.P. Graham said Tuesday that a coalition of Republican and Democratic senators could rescue the Senate from an institutional disaster brought on by the use of the parliamentary maneuver known as reconciliation to finish the health care bill.
  • GOP Plan: Play on Blue Dogs' Nerves. When Mitch McConnell speaks these days, he expects House Blue Dogs to be listening.It’s not that the Senate minority leader imagines himself to be E.F. Hutton, but he’s very much part of a newly launched Republican shadow war to block health care reform by playing on the nerves of wavering Democrats across the Capitol. Speaking on health care Monday, McConnell suddenly switched gears, for example, and threw in a line about the high cost of the Senate’s $100 billion-plus jobless benefits bill, heading soon to the House. “Every dime” of 10-year savings from health reform would be wiped out “with one stroke of the president’s pen,” he said. And by implication, debt-conscious Blue Dogs can’t assume the country is moving in “a more fiscally responsible direction. ... And this undercuts the entire point of reform,” said the Kentucky Republican.
USA Today:
  • Internal Report Issues Black Eye for U.S. Embassy in Kabul. The State Department is failing to properly oversee nearly $2 billion in contracts to battle the drug trade, build infrastructure and train police in Afghanistan, according to a bluntly worded internal assessment. The report by the department's inspector general questions whether the U.S. will be able to stabilize the country in time to meet President Obama's goal of withdrawing some troops by June 2011.
Reuters:
  • Greek CDS Overtures Fall on Deaf Ears in Washington. Greek leaders' overtures for far tougher curbs on credit default swaps fell largely on deaf ears in Washington, but they'll go back to Athens with some sage advice from local policy wonks: look in the mirror and don't blame market messengers for your debt woes. The Obama administration effectively said it would prefer to stay on its own course for reforming derivatives markets by making them more transparent and increasing capital requirements. An administration official also said regulators will get enhanced tools to crack down on market manipulation and abuse through position limits and tougher prudential requirements.
  • One in Two Sovereign Funds Invest in Alternatives - Report. Around one in two sovereign wealth funds invest in private equity, real estate and infrastructure assets to seek a diversified source of returns, a report showed on Wednesday. The report from Preqin, alternative assets research firm, also showed that assets managed by the world's sovereign wealth funds rose 9 percent to $3.51 trillion and more than a quarter of total SWF assets are held by funds in Abu Dhabi, Norway and China. Preqin said 55 percent of the funds are known to invest in private equity, 51 percent in real estate and 47 percent in infrastructure. More than a third of them invest in hedge funds.
  • UK Ready to Compromise on Hedge Funds. Britain is preparing concessions to Germany and France that will pave the way for European finance ministers to agree draft rules on hedge funds as soon as next week, sources with knowledge of the matter said. European Union ambassadors -- in talks about new rules to curb hedge-fund pay and borrowing -- are now edging close to winning the backing of Britain for new regulations, diplomats told Reuters ahead of a key meeting on Thursday. "In the spirit of getting an agreement, they would be prepared to look at issues such as remuneration and leverage," one said. A deal would not include a ban or other limits on credit default swaps.
Al-Rai:
  • Oil is unlikely to stay above $80 a barrel because member states of OPEC are overproducing and stockpiles are high, Kuwaiti OPEC delegate Mohammed al-Shatti wrote. "Concerns continue over plentiful unused surplus and over-production by OPEC as well as increasing stockpiles, which reduce the possibility of oil prices remaining above $80," al-Shatti said.
Iranian Labour News Agency:
  • Iranian economist Saeed Laylaz, a supporter of the opposition movement that disputes the re-election of President Mahmoud Ahmadinejad, was sentenced by an appeals court to six years in prison. Laylaz, who has been in custody since June 16, was charged with propaganda against the state, insulting Supreme Leader Ayatollah Ali Khamenei and encouraging unrest with the intent of overthrowing the government, his lawyer said. Laylaz, editor of the now-banned daily business newspaper Sarmayeh, previously worked as an economist at the Ministry of Industries and Mines. Laylaz was among more than 100 opposition figures, activists and journalists paraded in a televised judicial proceeding in August on accusations of backing a plot aimed at "a soft coup" against Iran's Islamic establishment.

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Bear Radar

Posted by Gary .....at 2:08 PM

Style Underperformer:
Large-Cap Growth (+.41%)

Sector Underperformers:
Gold (-1.72%), Papers (-.48%) and Homebuilders (-.26%)

Stocks Falling on Unusual Volume:
SWSI, CBEY, PFWD, HEAT, SAM, TRK, JCG and PSS

Stocks With Unusual Put Option Activity:
1) AMD 2) UNP 3) TXT 4) SFD 5) WMB


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Bull Radar

Posted by Gary .....at 11:26 AM

Style Outperformer:
Small-Cap Growth (+1.16%)

Sector Outperformers:
Banks (+2.90%), Airlines (+2.80%) and Oil Tankers (+2.54%)

Stocks Rising on Unusual Volume:
AIG, ZION, RDN, STEC, VECO, BAC, NWL, NUS, FACT, ITMN, VNDA, BONT, EXLS, AIXG, HRBN, ALOG, IFSIA, VICR, RRGB, FSIN, ROVI, RBCN, CPHD, CPHD, ZION, VRTX, IDCC, DGII, OLP, ZNH, EVR and PHG

Stocks With Unusual Call Option Activity:
1) FFIV 2) XRX 3) KCI 4) MTG 5) ZION

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Trading Links

Posted by Gary .....at 9:30 AM
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