Adobe(ADBE) Forecast Misses Analysts' Estimates as Budgets Stay Tight. Adobe Systems Inc., the biggest maker of graphic-design software, forecast sales that missed analysts’ estimates amid a sluggish recovery in corporate technology spending. Fourth-quarter sales will be $950 million to $1 billion, San Jose, California-based Adobe said today in a statement. Analysts surveyed by Bloomberg on average projected sales of $1.03 billion. Adobe slid 8.8 percent in late trading to $30.04 following the report. The shares fell 17 cents to $32.94 at 4 p.m. on the Nasdaq Stock Market.
Obama Loses U.S. Investor in Global Poll With Approval Abroad. More than three-quarters of U.S. investors view Obama as anti-business and are pessimistic about his policies, while a majority outside the U.S. holds a more favorable view, a Bloomberg survey shows. Two-thirds of U.S. respondents say investing would be improved if Republicans won control of Congress in the November elections, according to the quarterly poll of investors and analysts who are Bloomberg subscribers conducted Sept. 16- 17. Separately, 50 percent of U.S. respondents say a Republican takeover would improve the economy, 36 percent say it wouldn’t make much difference and 13 percent say it would be harmful.
Gold Trades Near Record After Fed Statement Triggers Slump in the Dollar. Gold, little changed, may gain after climbing to a record yesterday as the Federal Reserve said it was willing to ease monetary policy further to boost the U.S. economy, sending the dollar to a six-week low. Bullion for immediate delivery advanced as much as 0.2 percent to $1,289.88 an ounce before trading at $1,287.80 at 11:36 a.m. Melbourne time. The metal reached $1,291 yesterday. Gold for December delivery gained as much as 1.3 percent to $1,290.90, nearing yesterday’s all-time high of $1,292.40. “It continues to look bullish,” Peter McGuire, managing director at CWA Global Markets Pty, said by phone from Sydney today. “There are more worries about debasing of currencies, printing of money and quantitative easing.”
IStar Said to Weigh Pre-Packaged Bankruptcy Filing Next Year. IStar Financial Inc., the commercial real estate lender seeking to restructure some of its $8.6 billion of debt, may seek bankruptcy protection after creditors blocked it from amending loans, said people with knowledge of the plan. IStar fell 13 percent.
Hedge Fund Closure Rate May Rise to 20%, Merrill Lynch Says. As much as 20 percent of hedge funds globally may be liquidated by the first quarter because smaller managers are starved for fees and new capital, according to Bank of America Corp.’s Merrill Lynch & Co. unit.
Oil Trades Near $75 After Industry Report Shows Gain in U.S. Stockpiles. Oil traded little changed near $75 a barrel in New York after falling as an industry report showed an increase in U.S. crude stockpiles and analysts estimated the nation’s refineries operated at their lowest rate in five months. Futures declined yesterday after the American Petroleum Institute said inventories increased 2.23 million barrels to 364.1 million. This is the highest level for this time of year in the past five years. “The economy is not moving as fast as it should and as a result of that, we have more supply in the crude market than what we would expect,” Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney, said by telephone today. “There is too much oil.”
Chinese Premier Wen Jiabao won't meet Japanese Prime Minister Naoto Kan during the UN summit in New York this week because of the dispute between the two countries over the detention of a Chinese trawler captain, citing China Foreign Ministry spokeswoman Jiang Yu.
China will take further measures if the detained Chinese skipper isn't released by Japan, Chinese Premier Wen Jiabao said in the U.S.
Buffett's BYD Visit Comes as Sales Slide, Disputes Hurt Profits. When Warren Buffett visits Chinese carmaker BYD Co. next week, he’ll find a company facing sliding sales and legal disputes with the government and Foxconn International Holdings Ltd. Berkshire Hathaway Inc.’s $232 million investment in Shenzhen-based BYD was worth about $2.5 billion last year as the company became the fastest-growing Chinese carmaker. That stake is now valued at about $1.6 billion after BYD’s shares plunged 18 percent this year. Its sales fell 19 percent last month.
SEC's Canellos Says U.S. Swaps Overhaul May Lead to Fraud Investigations. George Canellos, the head of the Securities and Exchange Commission’s Manhattan office, said new U.S. rules for clearing derivatives trades are likely to expose frauds tied to instruments including credit-default swaps.
Obama Tax Credit Looks Endangered. President Barack Obama's signature tax policy, known as the Making Work Pay credit, might not continue past this year, just like the Bush-era tax cuts. Senate Democrats struggled Tuesday to develop a plan to extend the Bush-era breaks for middle-class people, and it is doubtful the Making Work Pay credit would be included, according to several people familiar with the situation. The tax break, an Obama campaign pledge first adopted as part of the 2009 stimulus legislation, has provided as much as $400 a year for working Americans who earn below $75,000, and $800 for couples earning below $150,000.
Bell Tolls for Officials in California Pay Scandal. Authorities arrested the mayor and most city-council members Tuesday in Bell, Calif., charging them and former officials with defrauding constituents of $5.5 million in outsized salaries and perks. The arrests, which landed all but one of the city's elected officials in Los Angeles County jails, came after revelations this summer that some part-time council members were paying themselves $100,000 a year. Former City Manager Robert Rizzo was the highest paid among those charged, taking home $1.1 million a year in salary and benefits. The blue-collar municipality of 37,000 mostly Latino residents is one of a cluster of small cities southeast of Los Angeles that has been wracked by corruption scandals for years.
Obama, Warren and The Imperial Presidency. President Obama's appointment of Elizabeth Warren late last week is another milestone down the path toward an imperial presidency. During America's first 150 years, Ms. Warren's appointment as a special adviser to the White House would have been unthinkable. Today, it's par for the course.
E-Trade May Be Bought for Over $6 Billion: Analyst. E-Trade Financial Corp. may be acquired for more than $6 billion, but rivals probably won’t bid until the online broker’s troubled loan portfolio shrinks more, Richard Repetto, an analyst at Sandler O’Neill, said Tuesday.
Jobs Picture Gets Worse in 27 States. (graph) The national unemployment rate may have only ticked up slightly in August, but on a state-by-state basis, the jobs picture continues to look a lot more grim in places like Nevada, Michigan and California. A total of 27 states reported higher unemployment rates in August, nearly double the 14 that saw increases in July, the Labor Department said in its monthly report on state unemployment Tuesday.
Rasmussen Reports:
Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Tuesday shows that 26% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-five percent (45%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -19 (see trends).
Reuters Summit - U.S. Bailout Watchdog Will Review GM IPO. A government bailout watchdog will review the General Motors Co share offering to see whether decisions made by Obama administration officials resulted in maximized returns for taxpayers.
PMC-Sierra(PMCS) Cuts Q3 Revenues Outlook; Shares Fall. Chipmaker PMC-Sierra Inc cut its third-quarter revenue outlook and said it sees gross margins at the lower end of its expectations, sending its shares down 8 percent in trading after the bell. The supplier of semiconductors to network equipment makers sees third-quarter revenue of $161-$163 million, compared with $169-$177 million it projected earlier. Analysts on average were looking for $173.4 million, according to Thomson Reuters I/B/E/S.
Evening Recommendations Susquehanna:
Rated (AXP) Positive, target $53.
Night Trading
Asian equity indices are -.25% to +.50% on average.
Asia Ex-Japan Investment Grade CDS Index 122.50 +1.5 basis points.
The House Price Index for July is estimated to fall -.2% versus a -.3% decline in June.
10:30 pm EST
Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,750,000 barrels versus a -2,489,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -250,000 barrels versus a -694,000 barrel decline the prior week. Distillate inventories are expected to rise by +100,000 barrels versus a -340,000 barrel decrease the prior week. Finally, Refinery Utilization is estimated to fall by -.8% versus a -.6% decline the prior week.
Upcoming Splits
None of note
Other Potential Market Movers
The weekly MBA Mortgage Applications report, Geithner's testimony on international financial system, (INTU) Investor Day, Morgan Stanley Education Services Conference, Goldman Sachs Communacopia Conference, UBS Life Sciences Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by healthcare and financial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 75% net long heading into the day.
North American Investment Grade CDS Index 107.24 bps -.49%
European Financial Sector CDS Index 121.79 bps +5.90%
Western Europe Sovereign Debt CDS Index 155.91 bps -.05%
Emerging Market CDS Index 237.15 bps +1.29%
2-Year Swap Spread 19.0 -2 bps
TED Spread 14.0 unch.
Economic Gauges:
3-Month T-Bill Yield .15% unch.
Yield Curve 216.0 -9 bps
China Import Iron Ore Spot $139.20/Metric Tonne -.57%.
Citi US Economic Surprise Index -8.90 +4.8 points.
10-Year TIPS Spread 1.84% +5 bps
Overseas Futures:
Nikkei Futures: Indicating -57 open in Japan
DAX Futures: Indicating +28 open in Germany
Portfolio:
Slightly Higher: On gains in my Tech, Retail and Medical long positions
Disclosed Trades: Added (IWM)/(QQQQ) hedges and added to my (EEM) short
Market Exposure: Moved to 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bearish as the S&P 500 trades near session lows on worrisome FOMC comments and (XLF/IYR) weakness. On the positive side, Airline, Road & Rail and HMO shares are especially strong, rising 1.0%+. Select growth stocks continue to trade much better than the broad market. Lumber is rising another +4.50%. Weekly retail sales rose +2.7% this week versus a +2.9% gain the prior week. On the negative side, Education, REIT, Hospital, I-Banking and Software shares are under pressure, falling more than .75%. (XLF) and (IYR) have been a bit heavy throughout the day. The Euro Financial Sector CDS Index is rising significantly for the second day in a row, gaining another +5.9%, which is a large negative. The Portugal sovereign cds is rising +2.39% to 368.47 bps and the Ireland sovereign cds is gaining another +.57% to another record of 431.27 bps. Furthermore, key credit default swap indices continue to trend higher, even as equities rally, which is a major negative. Commodities, in general, continue to trade poorly given the euro's strength and the 10-year yield has dropped -21 bps from Friday's high in yield, which is also a large negative. The Shanghai Composite was unable to hold a rally again overnight after breaking below its 50-day moving average for the first time since April last week, rising +.11%. I did not think the FOMC statements were positive or surprising. Asian equities could come under pressure tonight, as a result. I expect US stocks to trade modestly lower into the close from current levels on rising economic fear, profit-taking, more shorting and increasing financial sector pessimism.
