Intel(INTC) Forecast Tops Estimates as PC Recovery Holds Up. Intel Corp., the world’s biggest chipmaker, forecast second-quarter sales that topped analysts’ predictions, citing growing worldwide demand for computers. The shares rose in late trading. Sales will be $10.2 billion, plus or minus $400 million, the Santa Clara, California-based company said today in its quarterly earnings statement. Analysts had estimated $9.72 billion on average, according to a Bloomberg survey. The construction of data centers and the continuing shift to mobile computers will drive growth for the rest of the year, Intel said. That prompted the company to increase its full-year gross margin forecast to about 64 percent from roughly 61 percent. The prediction follows record first-quarter sales, fueled by consumers ordering laptops. “They’re very strong numbers,” said Cody Acree, an analyst at Williams Financial Group in Dallas. He has a “hold” rating on Intel shares. “It’s well above what anyone was expecting.” Intel rose 82 cents, or 3.6 percent, to $23.59 in extended trading following the announcement. Customers aren’t building up excess stockpiles of chips, a sign the industry isn’t at risk for a supply glut, Stacy Smith, Intel’s chief financial officer, said in an interview. “When we look through the supply chain, what we see are healthy and appropriate inventory levels relative to how we see demand,” he said. “It was an incredible first quarter for us.” Cloud computing, which lets businesses get their software and information over the Internet from external data centers, also is fueling demand for server chips, Smith said. Notebook shipments jumped 37 percent in the first quarter from a year earlier and account for 61 percent of the market, according to El Segundo, California-based ISuppli Corp. “Intel is in front of the best product cycle in years,” said Gerra, who has an “outperform” rating on the stock and doesn’t own it. “On top of that, we believe that Intel is gaining market share.”
Senate Considering Higher Tax on Buyout-Firm Managers. The U.S. Senate, seeking revenue to fund jobs bills and other initiatives, is for the first time considering adopting a House proposal that would more than double tax rates on executives at private-equity firms, said Senator Charles Schumer, a New York Democrat.The proposal, projected to raise $24.6 billion over a decade, would affect venture capitalists, managers of real- estate partnerships, and hedge-fund managers who make long-term investments. Passed by the House three times, most recently in December as part of a jobs bill, it hasn’t come to a vote in the Senate, where some Democrats have signaled they would oppose it. Now, “it’s one of the things being considered,” said Schumer, who serves on the Finance Committee. Democrats in Congress need to tap new sources of revenue for any spending after the passage last month of $940 billion health-care bill. Private-equity and investment firms have given $5.7 million for the 2010 congressional elections, 69 percent of that amount to Democrats, according to the Center for Responsive Politics, a Washington-based group that tracks political giving.
WaMu Chief Killinger Didn't Trust Goldman Sachs(GS), E-Mails Show. Washington Mutual Inc.’s former Chief Executive Officer, Kerry Killinger, didn’t trust Goldman Sachs Group Inc.(GS) to give the bank advice in 2007 as it slid toward collapse, according to e-mail released by Congressional investigators. “I don’t trust Goldy on this,” Killinger wrote in an Oct. 12, 2007, e-mail reply to Todd Baker, Washington Mutual’s executive vice president for corporate strategy and development. “They are smart, but this is swimming with the sharks. They were shorting mortgages big time while they were giving CfC advice,” he said, referring to Countrywide Financial Corp., the home lender that ran short of cash the same year. “John himself is very discreet but we always need to worry a little about Goldman because we need them more than they need us and the firm is run by traders,” Baker wrote, according to the documents available on the Permanent Subcommittee of Investigations Web site. Billionaire Warren Buffett’s Berkshire Hathaway Inc. invested $5 billion in Goldman Sachs during the financial crisis, which was partly a bet on the “integrity” of the Wall Street firm, Berkshire director Ronald Olson said in an interview this week with Bloomberg Television.
Baxter(BAX) Drug Alzheimer's Patients Maintain Brain. Baxter International’s treatment for immune system disorders also helped Alzheimer’s patients retain brain size and function after 18 months in a study that suggests the drug may top current regimens, researchers said.
Avoiding Bailout 'Backlash' Key to BlackRock(BLK) on Greek Debt. European Union members planning to participate in a Greece bailout need to show they can withstand a “backlash” from citizens before the world’s largest asset manager will buy new Greek debt, according to Curtis Arledge, chief investment officer of fixed income at BlackRock Inc. “We want to see the EU countries really get behind it and see that they’ve gelled around the idea of providing this support at the government level, at the senior policy maker level,” Arledge said in an interview today with Bloomberg News. “If you see the backlash, they need to get their people on board.”
CSX(CSX) Beats Profit Estimate as Rail Volumes, Sales Rise. CSX Corp. reported a first-quarter profit of 78 cents a share that beat analysts’ estimates as the third-largest U.S. railroad hauled more goods and charged more for each carload. Net income rose 24 percent to $306 million from $246 million, or 62 cents a share, a year earlier, the Jacksonville, Florida-based carrier said in a statement today. Sales climbed 11 percent to $2.49 billion, CSX said. Freight carloads climbed 5 percent, paced by increases for commodities such as chemicals, metals and fertilizers and a gain in shipments of goods that move by a combination of rail, truck and ship, CSX said. Revenue from each carload rose 6 percent. Analysts expected an adjusted profit of 70 cents a share, based on the average of 24 estimates compiled by Bloomberg, and net income of 68 cents, the average of 14 estimates. CSX rose 58 cents, or 1.1 percent, to $53.86 at 5:30 p.m. in New York.
China Raises Diesel, Gasoline Prices 4.6% on Crude. China, the world’s second-largest energy user, will increase gasoline and diesel prices by as much as 4.6 percent from today after global crude costs climbed. The average retail gasoline and diesel price will rise by 320 yuan ($47) a metric ton, the National Development and Reform Commission said on its Web site yesterday. The NDRC said the fuel price gain will add 7 basis points to the April consumer price index month-on-month. The increase will boost costs for manufacturers and farmers and may add to inflationary risk.
Toyota Halts Sales of Lexus SUV Labeled 'Safety Risk'. Toyota Motor Corp. asked U.S. Lexus dealers to halt sales of GX 460 sport-utility vehicles after Consumer Reports labeled the model a “safety risk,” the magazine’s first such designation in nine years. “We are taking the situation with the GX 460 very seriously and are determined to identify and correct the issue Consumer Reports identified,” Mark Templin, U.S. general manager for the luxury brand, said in an e-mail.
Soros Says Greek 'Death Spiral' Risk Remains After Aid Package. Greece still faces the danger of a “death spiral” because the cost of borrowing in the euro region’s rescue package is too expensive, billionaire investor George Soros said. “Concessional rates” of borrowing aid would help Greece “fulfill their target,” Soros said. “If they don’t they have then to tighten even further, then your tax receipts go down and the economy goes further into tanking and then you go into a death spiral. That is the danger that is still remaining.” “The argument for political will to bail out Greece” was that “the consequences of Greece leaving the euro would be the disintegration of the euro,” Soros said. “The disintegration of the euro would take a very long way toward the disintegration of the European Union.
Wall Street Journal:
Washington State Files Suit Over Nuclear-Wast Site.Washington state has filed suit to stop the federal government from permanently abandoning the Yucca Mountain nuclear-waste repository, marking the latest clash in a longstanding dispute over where the nation's radioactive waste should be stored. Waste and spent nuclear fuel from south-central Washington's Tri-Cities, site of the highly contaminated Hanford nuclear reservation and the Northwest's only commercial nuclear plant, had long been intended to go to Yucca Mountain.
Morgan Stanley(MS) Property Fund Faces $5.4 Billion Loss. Morgan Stanley has told investors in its $8.8 billion real-estate fund that it may lose nearly two-thirds of its money from bum property investments, according to fund documents reviewed by The Wall Street Journal. That would likely make it the biggest dollar loss—$5.4 billion—in the history of private-equity real-estate investing. Over the past 20 years, Morgan Stanley's real-estate unit was one of the biggest buyers of property around the world, doing some $174 billion in deals since 1991, mostly with money raised from pension funds, college endowments and foreign investors. The losses come from investments in properties such as the European Central Bank's Frankfurt headquarters, a big development project in Tokyo and InterContinental hotels across Europe, among others.
'Spreading The Wealth' Isn't Fair. If you think spreading money around by force seems like an odd definition of fairness, you're not alone. A 2009 survey conducted by the polling firm Ayers-McHenry asked respondents to choose which of the following statements came closer to their views: "Government policies should promote fairness by narrowing the gap between rich and poor, spreading the wealth, and making sure that economic outcomes are more equal"; or "Government policies should promote opportunity by fostering job growth, encouraging entrepreneurs, and allowing people to keep more of what they earn." Respondents chose the second option over the first, 63% to 31%. Most Americans think tax rates are already unfairly high. A February 2009 Harris poll found that on average, Americans believe the maximum amount anyone should have to pay in total taxes is less than 16% of income. The Tax Policy Center notes that families earning $75,000 and above are paying more than this in federal taxes alone; the highest income earners pay much more. Nor do Americans believe it is fair to expand the pool of people with no income tax liability at all. According to a Tax Foundation poll in April 2009, 66% of Americans agree with the statement that "Everyone should be required to pay some minimum amount of tax to help fund government." People understand that good citizenship means we all contribute in some way to the national project. Simple facts about our tax system do not support the contention that it is "unfair" in favor of the rich. According to the most recent IRS data, the top 5% of earners bring in 37% of the income but pay 60% of the federal individual income taxes. The bottom half of earners bring home 12% of the income but pay 3% of the taxes. Today, according to the Tax Foundation, 60% of Americans consume more in government services than they pay in taxes. In sum: A large majority disagrees with the current administration's redistributionist philosophy; believes the rich already face a tax rate that is too high; and disapproves of the fact that more and more Americans pay nothing in federal income taxes.
IBD:
Are Sensor Maker's Products About To Find Their Way Into iPhone? Wall Street tends to take a shine to smallish companies that land business with the titans of industry. That's been the case at OmniVision Technologies(OVTI). The Santa Clara, Calif.-based company makes image sensor chips for compact cameras. Its gear is used in smart phones, digital cameras, cars, medical devices and other products.
New Jersey Teachers Union Official Wants Governor Dead For Proposing Salary Freeze. Governor Christie is calling for the firing of the Teachers' Union official who sought prayers for Christie's death. Christie was discussing death threats and other items on CNBC. (Video below) New Jersey has a state budget of $29 billion and a deficit of $11 billion. New Jersey has among the highest property taxes in the nation yet the union wants more tax hikes. Christie says the union argument "you are hurting the children" is an old, long worn out song. I agree. Moreover, all Christie is asking the union to do is accept a 1 year salary freeze and contribute 1.5% to their benefits (about $750 dollars a year for a $50,000 teacher). Christie notes that Compulsory Teachers' Union dues are $730 a year. If the union wanted to do something for the kids, and the teachers, it could suspend those.
Arizona House Passes Wide-Ranging Immigration Bill. The Arizona House of Representatives has passed a wide-ranging bill that would put the state at the forefront of state control of immigration policy. Senate Bill 1070, among other things, makes it a crime to be in the country illegally and bars what its proponents call "sanctuary city" policies. It passed on a 35-21 vote, along party lines. All 35 Republicans supported the bill; all the Democrats present voted "no." Four Democrats were absent. The vote caps a hotly debated path through the Legislature and puts Arizona on the verge of having some of the toughest immigration laws in the nation.
Rasmussen Reports:
Generic Congressional Ballot: Republicans 45%, Democrats 36%. For the second straight week, Republican candidates hold a nine-point lead over Democrats in the latest edition of the Generic Congressional Ballot. A new Rasmussen Reports national telephone survey finds that 45% would vote for their district's Republican congressional candidate, while 36% would opt for his or her Democratic opponent.
Politico:
Harry Reid Punts on Immigration. Senate Majority Leader Harry Reid (D-Nev.) backed away from a major push on immigration reform in the coming weeks, amid concerns that the issue may be too volatile for an election year agenda already packed with ambitious legislative plans. The announcement came in the face of earlier indications from third-ranking Democrat Chuck Schumer (D-N.Y.) that immigration could get done soon. Reid told thousands of activists during a rally in Las Vegas over the weekend that the Senate would act on immigration reform “now,” raising expectations among his Latino base that Congress would suddenly take up the politically charged issue. But asked about the bill’s status Tuesday, Reid backed away from the pledge to act on it immediately. “We have a lot of work to do,” Reid said. “We won't get to immigration reform this work period. We won't get to the Supreme Court justice this weekend. We have lots of things to do and I've spent most of the caucus today [discussing with my members] the things we have to do and how we're going to do them.” The current seven-week work period ends right before Memorial Day, but others don’t think there’s a chance the bill will get done in the months leading up to Election Day.
Blanche Lincoln Wall Street Bill Tacks Left. A new proposal by Senate Agriculture Committee Chairwoman Blanche Lincoln would require sweeping changes to the $450 trillion derivatives market, including forcing big banks to spin off “swaps desks” that handle the complex financial instruments — a more aggressive approach than either the White House or other congressional committees have advocated so far, according to the Arkansas Democrat and her aides. Lincoln’s plan is likely to burnish her standing with progressive groups inside the Democratic Party ahead of her May 18 Senate primary, where she is facing a challenger from the left. Lincoln drew fire from liberals in her party for opposing the public health insurance option in the recent health care reform bill.
Institutional Investor:
CFTC Poised to Investigate Naked Credit Default Swaps. Gary Gensler is hinting at a possible overhaul of U.S. bankruptcy rules. The swap agreements enable investors to buy insurance against events such as bankruptcy and default, and can pay off big time if the company or country in question goes under. What’s come under increasing scrutiny of late are the motivations of the so-called naked CDS participants — those with no economic stake in the underlying asset. Are they building positions to benefit from a company’s demise? Gensler seems poised to investigate the impact of CDS holders who are in a position to benefit when a company defaults because they hold CDS that exceed actual credit protection.
USA Today:
More Homeowners Keep Up With Their Mortgage. The share of homeowners behind on their mortgages fell in the first quarter, the first drop in four years and a possible sign that the foreclosure crisis has peaked. The portion of mortgages that were delinquent 30 days or more fell to 6.57% in the first quarter from 6.60% in the last three months of 2009, according to Equifax and Moody's Economy.com. That's a drop of about 16,630 delinquent loans and, while modest, it is the first decline in the delinquency rate since early 2006.
Gannett Joins Deal to Broadcast TV Shows to Mobile Devices. The national effort to bring broadcast TV to wireless phones and devices got a boost on Tuesday: Nine of the largest owners of television stations – including Gannett, parent of USA TODAY — teamed up with NBC, Fox, and ION Television to send news, entertainment, sports, and print content to mobile devices. The stations, which collectively reach 150 million people, will use their broadcast airwaves – as opposed to the Internet – to transmit shows from the national networks as well as locally produced news and programming. They also may carry cable channels such as CNBC and Fox News, Gannett Broadcasting President David Lougee says.
Reuters:
Republican in NY Governor's Race Gets Bomb Threat. The campaign headquarters of a Republican contender in the New York governor's race received a bomb threat on Tuesday from a self-proclaimed black militant group, one day after racially charged e-mails sent by the candidate surfaced in the media.
TSMC Sees Global Chip Sales Up 22% in 2010. Top contract chipmaker Taiwan Semiconductor Manufacturing Co said it expects global sales of semiconductors to rise 22 percent this year and 7 percent next amid a recovery from last year's slump.
Linear Technology(LLTC) Q3 Tops Street, Upbeat on Q4. Linear Technology Corp's third-quarter results beat market estimates, helped by strong bookings, and the chipmaker said it expects strong sales growth in the fourth quarter, sending its shares up 4 percent in extended trade.
Kulicke & Soffa(KLIC) Q2 Revenue Tops Street; Shares Surge. Chip-assembly equipment maker Kulicke & Soffa Industries Inc (KLIC.O) posted a stronger-than-expected second-quarter revenue and forecast third-quarter revenue above market estimates, sending its shares soaring 17 percent in extended trading.
China Says Won't Act Under Pressure on Currency. China will not act under outside pressure to revalue its yuan currency and does not believe the world's economic problems are tied to its exchange rates, Vice Foreign Minister Cui Tiankai said on Tuesday.
Financial Times:
IMF Adds to Big Bank Surcharge Call. The International Monetary Fund yesterday urged US and European regulators to consider imposing higher bespoke capital requirements on "systemically important" banks deemed "too big to fail". The discussion of capital surcharges for big banks will prove controversial on Wall Street and in London, where bankers have argued that large institutions should not be penalised by regulators because of their size.
Telegraph:
Funds Shun Europe as 'No-Go Zone' after Greek Crisis. Global fund managers have changed their views of the euro area dramatically since the Greek crisis erupted last year and exposed the deep structural flaws in monetary union. "Europe has become a no-go zone," said Patrik Schowitz, equity strategist at Bank of America Merrill Lynch. "As recently as five months ago investors regarded Europe as the most attractive play on global economic recovery". The bank's monthly survey of funds found that a net 18pc are underweight stocks in Europe.
Evening Recommendations Citigroup:
Reiterated Buy on (INTC), boosted estimates, raised target to $31, Top Picks Live list.
Thomas Weisel:
Rated (SLXP) Overweight, target $52.
Night Trading
Asian indices are unch. to +.75% on average.
Asia Ex-Japan Investment Grade CDS Index 89.5 +.5 basis point.
The Consumer Price Index for March is estimated to rise +.1% versus unch. in February.
The CPI Ex Food & Energy for March is estimated to rise +.1% versus a +.1% gain in February.
Advance Retail Sales for March are estimated to rise +1.2% versus a +.3% gain in February.
Retail Sales Less Autos for March are estimated to rise +.5% versus a +.8% gain in February.
10:00 am EST
Business Inventories for February are estimated to rise +.4% versus unch. in January.
10:30 am EST
Bloomberg estimates call for a weekly crude oil inventory build of +1,300,000 barrels versus a +1,976,000 barrel gain the prior week. Gasoline supplies are expected to fall by -1,000,000 barrels versus a -2,498,000 barrel decline the prior week. Distillate inventories are expected to rise by +1,000,000 barrels versus a +1,074,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.15% versus a +1.89% gain the prior week.
2:00 pm EST
The Fed's Beige Book.
Upcoming Splits
(AAN) 3-for-2
Other Potential Market Movers
The Fed's Pianalto speaking, Fed Chairman Bernanke speaking, Fed's Lacker speaking, Fed's Fisher speaking, Fed's Sack speaking, Bloomberg Global Confidence Index and the weekly MBA mortgage applications report could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and commodity shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 100% net long heading into the day.
North American Investment Grade CDS Index 83.84 bps -1.34%
European Financial Sector CDS Index 71.04 bps -6.78%
Western Europe Sovereign Debt CDS Index 81.17 bps +2.74%
Emerging Market CDS Index 215.11 bps +.99%
2-Year Swap Spread 14.0 bps unch.
TED Spread 16.0 -1 bp
Economic Gauges:
3-Month T-Bill Yield .15% +2bps
Yield Curve 276.0 bps -4 bps
China Import Iron Ore Spot $172.10/Metric Tonne +2.81%
Citi US Economic Surprise Index +40.10 -3.0 points
10-Year TIPS Spread 2.32% -2 bps
Overseas Futures:
Nikkei Futures: Indicating +49 open in Japan
DAX Futures: Indicating +19 open in Germany
Portfolio:
Higher: On gains in my Retail, Medical and Tech long positions
Disclosed Trades: None
Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as stocks trade near session highs on less real estate sector pessimism, stable energy prices and falling long-term rates. On the positive side, Education, Semi, Networking, Computer Service, Wireless, REIT, Retail, Restaurant and Road/Rail stocks are especially strong, rising .75%+. (IYR) has traded very well throughout the day. The Transports are making another 52-week high. Weekly retail sales rose +3.3% this week, versus a +3.9% gain the prior week, which is still healthy. Investor angst gauges are rising meaningfully today, which is a large positive. The 10-year yield has declined -20 bps in 7 days. The euro financial sector cds is moving back to the lower end of its recent range, which is a large positive. On the negative side, HMO, Bank, Computer and Commodity shares are underperforming, falling 1.0%+. Shanghai copper inventories are hitting another new high, rising +4.2% today. One of my longs, (ISRG), is hitting another new all-time high today. While I still see substantial upside in the shares longer-term, I would wait for a pullback before adding around current levels. (INTC) reports after the close today and I suspect its release will be treated favorably by investors. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, falling long-term rates, investment manager performance anxiety and less economic fear.
Mortgage-Bond Yields That Guide Loan Rates Fall to 3-Week Low. Yields on Fannie Mae and Freddie Mac mortgage securities that guide home-loan rates declined to the lowest in three weeks, signaling falling financing costs after a recent increase. Fannie Mae’s current-coupon 30-year fixed-rate mortgage bonds dropped about 0.02 percentage point to 4.43 percent as of 9:50 a.m. in New York, down from an eight-month high of 4.67 percent on April 5, according to data compiled by Bloomberg. “The Fed ended its MBS purchase program, and the world did not end,” Chris Flanagan and Tim Isgro, analysts in New York at Bank of America Corp., wrote in a weekly report April 9.
Brazil May Offer Iran Credit Line to Boost Exports, Estado Says. Brazil’s government may establish a line of credit with Iran to expand exports to the Islamic Republic by as much as 40 percent, O Estado de S. Paulo reported, without saying where it got the information. Trade Minister Miguel Jorge, on a visit to Tehran with 80 Brazilian businessmen, discussed creating a credit line between the two countries’ central banks with Iranian officials yesterday, the Sao Paulo-based newspaper said. Today he meets with Iranian President Mahmoud Ahmadinejad. President Luiz Inacio Lula da Silva may sign the trade agreement when he travels to Tehran next month, Estado said. Iranian officials estimate that annual Brazilian exports of $1.2 billion could expand by 40 percent if a credit line is established, Estado said.
Greece Aid Fails to Cut Downgrade Risk, Moody's Says. The Mediterranean nation faces “significant execution risk,” in implementing a plan to reduce its budget deficit, Sarah Carlson, the Moody’s lead analyst for Greece, said in a telephone interview yesterday in London.
Buy Dendreon(DNDN) Calls Before FDA Decision, JPMorgan(JPM) Says. Investors should buy bullish Dendreon Corp. options because the U.S. Food and Drug Administration is likely to approve its prostate cancer therapy Provenge next month and boost the stock to a record, JPMorgan Chase & Co. said.
Small-Business Confidence in U.S. Dropped in March. Confidence among U.S. small businesses fell in March to the lowest level since July 2009 as executives grew more concerned about earnings and sales, a private survey found. The National Federation of Independent Business’s optimism index dropped to 86.8 last month from 88 in February, the Washington-based group said today. Seven of the index’s 10 components declined last month and two were unchanged from February.
WaMu Excluded From 'Too Clubby to Fail' Group, Killinger Says. K erry Killinger, the former chief executive officer of Washington Mutual Inc., said his company became the largest bank failure in U.S. history in part because it was excluded from a group of financial institutions favored by U.S. policy makers. Washington Mutual wasn’t protected from short sellers and the U.S. Treasury Department excluded the company from information sessions it held with competitors, Killinger said today in written testimony for the Senate Permanent Subcommittee on Investigations. “For those that were part of the inner circle and were ‘too clubby to fail,’ the benefits were obvious,” Killinger, 60, said. “For those outside the club, the penalty was severe.” Washington Mutual, once the nation’s biggest savings and loan, reported losses totaling $6.3 billion in its final three quarters as a public company. Killinger said in his first public comments since the bank was taken over. “I fear consumers will ultimately pay the price of this vision through less competition, higher fees and lower interest rates on their deposits.” He said Washington Mutual shouldn’t have been seized and sold for a “Federal regulators seized the bank in September 2008 and sold it to JPMorgan Chase & Co. for $1.9 billion. “The actions taken by policy makers reflect a vision of a banking industry dominated by large Wall Street banks,”bargain price,” and said he is “deeply saddened” by what happened. The company was the nation’s largest thrift, with $300 billion in assets, $188 billion in deposits and 43,000 employees.
Ford(F) 'Encouraged' as U.S. April Sales Top 2009 Level. Ford Motor Co. is “encouraged” by April U.S. sales running ahead of a year earlier and experienced a boost in revenue in the first quarter, the automaker’s Americas chief said. “We’re starting to see the economic metrics start to go in the right direction,” Americas President Mark Fields said today at an auto-industry breakfast in Detroit. “I’m cautiously optimistic on consumer confidence.”
Buffett Bet on Goldman Sachs(GS) 'Integrity,' Olson Says. Warren Buffett’s $5 billion investment in Goldman Sachs Group Inc. was partly a bet on the “integrity” of the Wall Street firm, Berkshire Hathaway Inc. Director Ronald Olson said. “When Warren and Berkshire stepped up to make this investment, it was a very strong statement of its belief, his belief, in not just the strength of Goldman but its integrity,” Olson said in an interview this week with Bloomberg Television. Goldman Sachs, the most profitable firm in Wall Street history, has been criticized for benefiting from $10 billion in bailout funds in 2008 and its role in the subprime mortgage- securities market. Buffett’s investment in Goldman Sachs preferred shares, as financial firms were shut off from their usual sources of funding in 2008, earns 10 percent interest. Omaha, Nebraska- based Berkshire also obtained warrants to buy $5 billion of Goldman Sachs common stock for $115 a share. The bank closed at $177.84 on the New York Stock exchange yesterday, and has gained about 37 percent in the past 12 months through yesterday.
HTC 2ND-Quarter Shipments Likely Up Over 30% Vs First Quarter - Source. HTC Corp., a Taiwanese maker of phones based on Microsoft Corp. and Google Inc. operating systems, expects shipments of smart phones in the second quarter to rise by at least 30% from the previous three months helped by strong sales in the U.S. and new product launches, a person familiar with the situation said Tuesday.
EU Lawmakers To Mull Deal On Non-EU Hedge Funds. The lawmaker leading the debate at the European Parliament over a new law for hedge funds and private-equity firms wants to allow hedge funds outside of the EU to market their funds across the 27-nation bloc if they pledge to follow the EU rules.
Demand Is Strong for Greek Debt. Greece saw strong demand for its latest debt auction but was forced to pay a hefty interest rate while yields on longer-term bonds jumped again, a sign that investors remain wary about Athens' solvency. Greece's debt agency sold €780 million ($1.061 billion) apiece of the six- and 12-month Treasury bills at yields of 4.55% and 4.85%, respectively.
China Slap Duties on Steel Imports. China has imposed duties on imports from the U.S. and Russia of a common type of electrical steel used in the power sector, following a final decision on its countervailing and antidumping investigation, the nation's Ministry of Commerce said Tuesday.
CNBC:
Intel's Market Sweet Spot. As Intel(INTC) prepares to release earnings tonight after the close, investors are clearly expecting good news. And for good reason.
Rahm Emanuel and Magnetar Capital: The Definition of Compromised. Magnetar 1) A neutron star with an intense magnetic field, capable of emitting toxic radiation across galaxies 2) A hedge fund, the single market player most responsible for the severity of the 2008 financial crisis, through the toxic instruments it created. Rahm Emanuel 1) White House Chief of Staff 2) Politician selected by Magnetar's CEO to be sole recipient of his political donations, 2006-2008.
Politico:
Hedge Fund Managers Invest on Hill. John Paulson, one of the world’s richest hedge fund managers, has not been shy about spreading his wealth to Senate campaign coffers — or to the chairman of the committee that could directly affect his bottom line. Paulson held a ritzy $1,000-per-head fundraiser for Senate Banking Committee Chairman Chris Dodd last year — and then maxed out his donation with $4,800 more for the Connecticut Democrat’s now-aborted reelection run. Paulson is hardly alone. According to a review of Federal Election Commission records, the nation’s 10 richest hedge fund managers have dumped nearly $1 million into campaign accounts over the past several years — with much of it going to senators who’ve given them a friendly reception on Capitol Hill. And despite all the tough talk about a crackdown on Wall Street, consumer advocates and critics from other financial sectors say hedge funds would get off pretty easily under the regulatory reform bill Dodd’s committee approved last month — a charge Dodd’s aides reject. Many hedge funds enjoyed an enormously profitable year in 2009, in part because of good bets that federal dollars would be used to rescue “too-big-to-fail” financial institutions. And the Top 25 earners made more than $25 billion last year, according to a recently released survey by Absolute Return + Alpha magazine. Those Top 25 feature some familiar names in Capitol Hill’s fundraising quarters, including liberal investor George Soros, who earned $3.3 billion last year and has dropped $42,000 of his cash into Democratic campaigns in the past few years. Paulson has donated $30,300 since 2007, with most of it going to senators, including Democrats Arlen Specter , Frank Lautenberg, Finance Committee Chairman Max Baucus, Majority Whip Dick Durbin and Senate Majority Leader Harry Reid and Republican Scott Brown.
President Obama Warns Against Threat of Nuclear Terrorism. As the 47-country Nuclear Security Summit opens in Washington this morning, President Barack Obama is warning that only a concerted effort by the global community can head off the looming threat of nuclear terrorism. "Two decades after the end of the Cold War, we face a cruel irony of history — the risk of a nuclear confrontation between nations has gone down, but the risk of [a] nuclear attack has gone up," Obama said in a brief speech to the summit’s first formal session. "It is increasingly clear that the danger of nuclear terrorism is one of the greatest threats to global security — to our collective security."
Mitch McConnell: Regulatory Bill Won't Solve Problems. Senate Minority Leader Mitch McConnell (R-Ky.) came out in opposition Tuesday to the Democratic financial regulatory reform bill, saying it “wouldn’t solve the problems that led to the financial crisis.” In a floor speech that detailed the Republican case against the bill, McConnell said the version that passed through the Banking Committee last month on a party-line vote would continue to prop up financial institutions deemed “too big to fail” and provides the government with new authorities that could be abused. McConnell raised the specter of a filibuster on the Senate floor unless the bill is changed.
Energy Ties Grow as China Resists Iran Sanctions - Sources. Chinese state oil firms have maintained the pace of project development in Iran while Beijing resists any new sanctions on the energy sector designed to press Tehran to curb its nuclear programme, industry sources said on Tuesday. China, which has close economic ties with Iran, has much to lose from any sanctions that limit new investment to develop the world's second-largest oil and gas reserves.
