Style Underperformer:
- Large-Cap Growth (+.62%)
- 1) Oil Tankers -.78% 2) HMOs -.34% 3) Coal -.32%
- HTZ, THOR, ACOR and CTRP
- 1) EWJ 2) BAX 3) NE 4) CTRP 5) ACI
- 1) GTIV 2) PXP 3) ROSE 4) HMA 5) SXT
Wednesday, January 12, 2011
Bear Radar
Style Underperformer:
Bull Radar
Style Outperformer:
- Large-Cap Value (+.91%)
- 1) Steel +2.22% 2) Oil Service +2.04% 3) Educcation +2.0%
- ITT, STD, REP, DB, TIE, TEF, SWC, SEED, PTR, NG, PNK, NAK, LULU, SBAY, DXCM, SPEC, AFOP, TITN, SWIR, BRKR, NVDA, AONE, AIXG, SPSC, MYGN, QNST, ASMI, BBOX, SHOO, SHPGY and VSEA
- 1) LEN 2) TTM 3) FXE 4) LULU 5) MU
- 1) ASEI 2) HS 3) LULU 4) NOC 5) LMT
Wednesday Watch
Evening Headlines
Bloomberg:
- Long Bonds Rejected as Yield Curve Steepens: Credit Markets. U.S. companies are selling the fewest long-maturity bonds in almost two years as a strengthening economy diminishes investors’ appetite for the debt. CenterPoint Energy Inc. and Enterprise Products Partners LP are the only issuers of 30-year bonds this month, raising a combined $1.05 billion amid $64.4 billion of overall sales, according to data compiled by Bloomberg. Last month, $1.5 billion of debt maturing in at least three decades was sold, down 85 percent from a year earlier and the least since April 2009.
- Covered Bond Sales Deluge Drives Bank Funding Costs to Record: Euro Credit. Investors are demanding record yield premiums to buy European covered bonds, driving up funding costs for banks at a time when they are relying more than ever on the top-rated, loan backed securities as a source of capital. The extra interest investors demand to own the debt has doubled since the end of 2009 and reached a record 202 basis points this month, according to Barclays Capital’s Euro- Aggregate Securities - Covered Index. Spreads on bonds sold by banks in so-called peripheral nations, which account for 38 percent of the Barclays gauge, widened the most in the region.
- Spain's Collapse May Signal the End of Euro, Nobel Winner Pissarides Says. The European Union doesn’t have the resources to rescue Spain if it “collapses,” Nobel Prize- winning economist Christopher Pissarides said at a forum in Beijing today. That may lead to the end of the euro, said Pissarides, who teaches at the London School of Economics.
- Short Selling Against S&P 500 Drops to One-Year Low, Exchange Data Show. Bets against the Standard & Poor’s 500 Index fell to a one-year low as short sellers reduced speculation that technology and telephone stocks such as Adobe Inc. and CenturyLink Inc. will decline. Short interest on the S&P 500 dropped to 6.87 billion shares, or 3.9 percent of shares available for trading, as of Dec. 31, down 5.7 percent from two weeks earlier, according to data compiled by U.S. exchanges and Bloomberg. It was the third straight period that S&P 500 short selling fell. For technology companies, it slid 8.1 percent to 1.26 billion shares, and it fell 16 percent to 368.4 million for phone stocks.
- Cliffs(CLF) to Buy Consolidated Thompson for C$4.9 Billion. Cliffs Natural Resources Inc., North America’s largest iron-ore producer, agreed to buy Consolidated Thompson Iron Mines Ltd. for about C$4.9 billion ($4.95 billion) to add Canadian output. Cliffs will pay C$17.25 a share, the Cleveland-based company said today in a statement. The bid is 29 percent higher than today’s Consolidated Thompson closing share price on the Toronto Stock Exchange. The purchase price includes net debt.
- Merck(MRK) Vaccine Reduces Risk of Shingles by 55% in Kaiser Permanente Study.
- Daley Has $7.7 Million in JPMorgan(JPM) Stock on Way to White House. William Daley will have about $7.7 million worth of JPMorgan Chase & Co. shares to divest when he takes over as President Barack Obama’s new chief of staff, according to administration officials and regulatory filings. White House lawyers also are reviewing whether Daley will have to recuse himself from some White House discussions to avoid potential conflicts stemming from his prior job as vice chairman of JPMorgan and memberships on the boards of Abbott Laboratories and Boeing Co., according to an administration official. Daley held 114,414 JPMorgan shares when his selection as chief of staff was announced by Obama on Jan. 6, according to a filing with the Securities and Exchange Commission. On that day, New York-based JPMorgan also said he could retain 101,913 restricted shares and stock appreciation rights that entitled Daley to buy another 100,000 shares at $34.78 each.
- Apollo Group Put Trading Backfires in Biggest Loss of U.S. Options Market. Options traders who piled into bearish bets against Apollo Group Inc. before the largest for- profit college operator’s quarterly report had today’s biggest loss in the U.S. market as the shares soared. Apollo, the Phoenix-based operator of the University of Phoenix, jumped 13 percent to $40.74 as of 4 p.m. in New York after reporting quarterly results that were higher than analysts estimated. Trading of puts to sell the stock jumped to a 12-week high of 42,316 contracts yesterday as investors purchased contracts to hedge against stock losses or bet on a drop. Apollo’s January $36 puts plunged 96.2 percent to 7 cents today for the biggest retreat among all contracts traded on U.S. exchanges, according to Bloomberg data. Yesterday’s most-traded options, the January $34 puts, fell 96.1 percent to 4 cents for the second-biggest loss. Apollo puts accounted for eight of the 10 biggest losses among U.S. options.
- Liberty Mutual Reduces Muni-Debt Holdings in 3 U.S. States, CEO Kelly Says. Holding Co., the policyholder-owned insurer, reduced its holdings of municipal debt in Connecticut, and Illinois.Liberty MutualCalifornia “The market is being held up to some extent by the belief that the federal government will bail out” state and local issuers, Chief Executive Officer Edmund “Ted’’ Kelly said today in an interview on the sidelines of a conference in New York. The insurer still has holdings in each of the states, he said.
- Propane, Ethane Price Gains Deepen Natural Gas Supply Glut: Energy Markets. Rising prices for natural gas byproducts such as propane, which touched an 11-month high this week, are encouraging energy companies to boost gas output even after the market’s biggest annual slide since 2008. Propane, a liquid used in home heating and outdoor grills, has surged 42 percent since reaching last year’s low on July 12. Ethane, used as a feedstock in the production of plastics, has climbed 40 percent from a 2010 low on June 23. Profits from liquids are encouraging U.S. companies to shift to fields where they are more abundant, boosting natural gas production at the same time.
- New York, U.S. Northeast Get Ready as Another Snowstorm Moves In. Cities across the U.S. Northeast deployed thousands of plows and sand-spreaders as the second major snowstorm in a little more than two weeks threatened to cripple air, road and train travel.
- Brisbane's Flood Waters Rise, Shutting Australian City, Isolating Suburbs. Flooding in Brisbane is intensifying, cutting off roads and closing businesses as Australia’s third- largest city faces its worst deluge since 1893. Brisbane River, which flows through the center of the city, will surge to 4.5 meters (15 feet) at 3 p.m. local time, from a current level of 3.1 meters. The river may tomorrow exceed 5.45 meters, the height that devastated the city during flooding in 1974, the Bureau of Meteorology said on its website. More than 75 percent of Queensland state, an area bigger than Texas and California combined, has been declared a disaster zone as torrential rain triggered flash floods on Jan. 10 that left 10 dead and more than 90 people missing.
- Giffords's Outlook Improves. U.S. Rep. Gabrielle Giffords remained in critical condition after brain surgery, but doctors said Tuesday that she would survive Saturday's shooting. "She has a 101% chance of survival," said Peter Rhee, head of the University of Arizona Medical Center's trauma unit, where Ms. Giffords was brought after being shot in the head at point-blank range while meeting constituents near a Tucson supermarket. Ms. Giffords has shown some slight movement on one side of her body, and there are signs she could open her eyes soon, Dr. Rhee said.
- Southern Copper Chairman Unloads Shares. Southern Copper Corp. Chairman German Larrea Mota-Velasco sold 400,000 shares for about $19.5 million in recent weeks in a sign the shares may be overvalued even as the near-term outlook for copper pricing looks promising. Mr. Larrea sold the shares at $48.51 to $49.90 a share.
- Obama Begins Gearing Up Re-Election Bid. Democratic Officials Say Early Start Is Needed in Part to Commence Fund-Raising for Contest Expected to Cost $1 Billion.
- Goldman(GS) Bankers, Ascendant Again. In Rules Revamp, Investment Staff Is Set to Gain Ground on Traders Tied to Firm's Recent Troubles.
- New Names Are Moving Up the CMBS Charts. After Downturn, Some—Like Former No. 1 Morgan Stanley(MS)—Are Late to Rejoin Market; Concern Over Loan Standards. As the market for commercial-mortgage-backed securities begins to thaw from a two-year deep freeze, a new pecking order among underwriters is emerging, with J.P. Morgan Chase & Co.(JPM) as the dominant player and onetime market leader Morgan Stanley not yet on the boards. The landscape for CMBS has changed drastically since its peak in 2007—when banks churned out $230 billion of loans nationally and underwriters raked in hundreds of millions of dollars in fees.
- Lululemon(LULU) Boosts 4Q Guidance On Strong Revenue Performance. Yoga-wear retailer Lululemon Athletica Inc. (LULU) is again exceeding quarterly expectations, significantly boosting its fourth-quarter outlook on stronger-than-expected revenue. The Vancouver-based company said it now projects earnings of 55-57 cents a share for the fiscal quarter that ends Jan. 30. That compares with the Thomson Reuters mean estimate for earnings of 50 cents a share and is well above the company's own projection for fourth-quarter earnings of 46-48 cents. Lululemon said net revenue for the quarter should range from $237 million to $239 million, well above the analyst estimate of $221 million and up from its previous view of $210 million to $215 million. Net revenue in the same quarter a year earlier was $161 million. Lululemon closed Tuesday on Nasdaq at $67.24, down 1.8%. In after-hours trading, it's up 6.7% to $71.80.
- New Move to Make Yuan a Global Currency. China has launched trading in its currency in the U.S. for the first time, an explicit endorsement by Beijing of the fast-growing market in the yuan and a significant step in the country's plan to foster global trading in its currency.
- Time to Dip a Toe in Housing?
- Pros: Commodities Bull May Be About to Stumble?
- US Senate Report to Criticize Goldman(GS). Goldman Sachs will come in for harsh criticism from an influential US Senate report into the financial crisis that will highlight alleged conflicts of interests in the bank’s dealings with clients, according to people familiar with the matter.
- Australia Coal Losses Mount as Floods Persist. Australia's devastating floods could remove 5 percent or more of steelmaking coal from world markets, a major bank estimated on Wednesday, as signs emerged that damage and disruption to coal infrastructure continued to spread with the floodwaters.
Business Insider:
- Illinois Passes A Huge 66% Tax Hike, And Governors Around the Country Are Making Fun Of It. Poor Illinois. It's taken over the mantle as the state that everyone thinks is the most screwed. Faced with a monster budget gap, the state Senate just passed a monster 66% hike in the state income tax. The news has governors or other states gleeful. Indiana Governor Mitch Daniels said today that the tax hike was good for... Indiana. And during his State of the State address, New Jersey governor Chris Christie held up Illinois as a state that was going in the wrong direction. Chicago readers, any plans to move?
- Deep Dive Into The Federal Government's Budget and the History of US National Debt. (graphs)
- PHOTOS: Surging Food Prices Are Sparking Riots All Around The World.
- Goldman(GS) Prop: A Veritable (Physical) Gold Mine... As Suspected.
- Is The Criminal Case Against Goldman(GS) About to Be Reopened, As Robert Khuzami's "Ethical" Reputation Lies in Ruins. After a few days ago we described in detail the facts behind the ACA lawsuit against Goldman, we were left scratching our heads how it could be that the SEC could ever possibly scuttle this criminal case which was obviously a slam dunk through court, and which based on the disclosures presented by ACA, is a blatant violation case of 10(b)-5 securities fraud and underwriter representation. We asked: did the SEC hide a key piece of the case against Goldman to fast track a settlement process?
- 114 Times More Insider Selling Than Buying In First Week of 2011.
- Rising Chinese Inflation to Show Up in U.S. Imports. When garment buyers from New York show up next month at China’s annual trade shows to bargain over next autumn’s fashions, many will face sticker shock.
- Have Gun, Will Talk: Arizona Sheriff Clarence Dupnik Not Speechless Over Tucson Shootings or Much Else. The sheriff, who celebrates his 75th birthday today, is understandably defensive. He had no officers at Rep. Gabrielle Giffords' Saturday open-air get-together in a shopping parking lot. Just the sight of a parked patrol car near a federal officeholder might have discouraged a troublemaker.
- Jared Loughner's Supremacists Tie Debunked. An Arizona law enforcement agency is backing away from a document it produced in the aftermath of Saturday’s shootings in Tucson – and which was leaked to Fox News – that linked the man accused with carrying out the crimes to a white nationalist publication.
Reuters:
- US to Press China on Yuan, Economy Ahead of Hu Visit. The United States wants a "real, demonstrative commitment" from China that it is serious about shifting away from export-led economic growth, a U.S. official told Reuters on Tuesday ahead of next week's state visit by China's Hu Jintao. Treasury Secretary Timothy Geithner will on Wednesday lay out his vision for how the world's two biggest economic powers should interact. But the official's comments indicate some impatience with China's gradual approach to allowing its currency to rise and building up domestic demand. "It's both the pace in which they do it and the conviction with which they demonstrate they're going to do it," said the senior Obama administration official, who spoke on condition of anonymity. "What we still need to see in the first instance is that real, demonstrable commitment to the objective" of rebalancing the economy, the official said.
- JPMorgan(JPM) CEO Eyes Dividend Hike in 2011. JPMorgan Chase could pay an annual dividend of 75 cents to a dollar once the Federal Reserve completes stress tests of the largest U.S. banks and gives its approval, Chief Executive Officer Jamie Dimon said on Tuesday.
- Short Bets in U.S. Stocks Fall in Late December. Bearish bets on major U.S. exchanges declined in the second half of December, suggesting investors abandoned their positions as the market advanced. Short interest on the Nasdaq declined 5.4 percent in the second half of December, the exchange said on Tuesday. Short bets on the New York Stock Exchange fell 5.5 percent.
- Germany's biggest banks may be taxed at a higher rate than expected under the c0untry's levy for financial institutions that is scheduled to come into force this year, citing a draft of plans for the implementation of the new law. The draft plan implies that a cap on the annual charge to banks, to be set at 15% of a bank's profits, may not fully apply.
- Euro-region governments are considering changing the terms for the bailout fund for member countries. The fund may extend the amount it can lend and lower the interest rate Ireland has to pay, citing European Union diplomats. The rate of 5.8% that Ireland is now required to pay is higher than the country's growth and needs to be adjusted to a bearable level, the diplomats said.
CSFB:
- Raised (PFS) Underperform, target $13.
- Raised (NYB) Outperform, target $21.
- Asian equity indices are unch. to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 109.50 -3.5 basis points.
- Asia Pacific Sovereign CDS Index 112.50 -2.5 basis points.
- S&P 500 futures +.03%.
- NASDAQ 100 futures +.12%.
Earnings of Note
Company/Estimate
- (CLC)/.56
8:30 am EST
- The Import Price Index for December is estimated to rise +1.2% versus a +1.3% gain in November.
- Bloomberg consensus estimates calls for a weekly crude oil inventory decline of -1,400,000 barrels versus a -4,161,000 barrel decline the prior week. Distillate inventories are estimated to rise by +1,000,000 barrels versus a +1,148,000 barrel increase the prior week. Gasoline supplies are expected to rise by +2,100,000 barrels versus a +3,289,000 barrel gain the prior week. Finally, Refinery Utilization is estimated unch. versus a +.2% gain the prior week.
- The Fed's Beige Book.
- The Monthly Budget Deficit for December is estimated at -80.0 Billion versus -$91.4 Billion in November.
- None of note
- The Treasury's Geithner speaking on China, the Fed's Fisher speaking, $21 Billion 10-Year Treasury Notes Auction, weekly MBA mortgage applications report, IBD/TIPP Economic Optimism Index, (AUY) analyst day, Piper Jaffray Clean Tech Conference and the Deutsche Bank Real Estate Conference could also impact trading today.
Tuesday, January 11, 2011
Stocks Slightly Higher into Final Hour on European Equity Strength, Commodity Rebound, More Economic Optimism
Broad Market Tone:
- Advance/Decline Line: Higher
- Sector Performance: Most Sectors Rising
- Volume: Slightly Below Average
- Market Leading Stocks: Performing In Line
- VIX 17.19 -2.0%
- ISE Sentiment Index 162.0 +11.72%
- Total Put/Call .83 +7.79%
- NYSE Arms .82 -35.13%
- North American Investment Grade CDS Index 86.28 -4.25%
- European Financial Sector CDS Index 176.42 bps -4.61%
- Western Europe Sovereign Debt CDS Index 215.75 bps -.80%
- Emerging Market CDS Index 204.17 -1.32%
- 2-Year Swap Spread 25.0 -1 bp
- TED Spread 16.0 -1 bp
- 3-Month T-Bill Yield .14% +1 bp
- Yield Curve 276.0 +3 bps
- China Import Iron Ore Spot $174.60/Metric Tonne +.69%
- Citi US Economic Surprise Index +36.70 +.9 point
- 10-Year TIPS Spread 2.40% +5 bps
- Nikkei Futures: Indicating +75 open in Japan
- DAX Futures: Indicating +8 open in Germany
- Slightly Higher: On gains in my Medical, Biotech, Ag and Tech long positions
- Disclosed Trades: None
- Market Exposure: 75% Net Long
Today's Headlines
Bloomberg:
- Greece, Italy Borrowing Costs Rise at Bill Sales. Greek and Italian borrowing costs rose and demand fell at sales of almost 9 billion euros ($11.7 billion) of bills amid concern appetite for bonds from the region’s most indebted nations may flag at auctions this week. Greece sold 1.95 billion euros of six-month bills at a yield of 4.90 percent, data from the debt agency showed today. That compares with 4.82 percent at a previous auction on Nov. 9. The Italian government said it sold 7 billion euros of 12-month securities to yield 2.067 percent, up from 2.014 percent at a Dec. 10 auction. Portugal plans to sell as much as 1.25 billion euros of 2014 and 2020 bonds tomorrow as concern mounts the nation will follow Greece and Ireland in seeking a European Union bailout amid a rise in bond yields for the euro region’s most-indebted nations. The bonds of those countries climbed after traders said the European Central Bank bought Portuguese, Irish and Greek securities before the auctions. “All eyes are on the Portuguese auction,” said Mohit Kumar, a fixed-income strategist at Deutsche Bank AG in London. “While I don’t expect it to fail, if the spreads at which it clears is large, this could potentially become a trigger for Portugal going to the” the European bailout mechanism.
- Verizon Wireless(VZ) to Start iPhone Sales Next Month, Ending AT&T(T) Exclusivity. Verizon Wireless will start selling Apple Inc.’s iPhone early next month, ending rival AT&T Inc.’s exclusive hold on the device in the U.S. and more than doubling the potential customer base for the touch-screen smartphone. The iPhone 4 will be available on Verizon’s network on Feb. 10 with preorders for existing customers starting online Feb. 3, the companies said in a statement today. The phone will start at $199.99 with a two-year wireless-service contract.
- Small-Business Confidence in U.S. Fell in December on Outlook. Confidence among U.S. small businesses dropped in December for the first time in five months, indicating a sustained rebound will take time to develop, a private survey found. The National Federation of Independent Business optimism index decreased to 92.6 from November’s 93.2 reading that was the highest since the recession began in December 2007, the Washington-based group said today. Four of the index’s 10 components fell, led by a dimmer outlook on the economy. “The hope for a pickup in the small business sector did not materialize,” William Dunkelberg, the group’s chief economist, said in a statement. “Owners remain stubbornly cautious and uncertain about the future course of the economy and their business prospects.” The report reflects an economic recovery that hasn’t been strong enough to reduce unemployment, which has exceeded 9 percent for 20 straight months. The gauge of expectations for better business conditions six months from now fell percentage points to a net 9 percent, today’s report showed. An index of whether firms think this is a good time to expand fell 1 point to a net 8 percent. Figures on the employment outlook were more promising. Small businesses with plans to add to payrolls rose 2 points to net 6 percent, a 27-month high. A net 13 percent of firms in the December survey said they were having trouble filling job openings, up 4 points from November. “Overall job creation is likely to continue, but at a tepid pace,” Dunkelberg said in the statement. “Until sales pick up, there is no pressing reason to hire.” December was the 25th consecutive month when more small business owners reported cutting average selling prices than raising them. At the same time, plans to raise prices rose to the highest reading in 26 months.
- European Union Said to Consider Separate Tests on Bank Capital, Liquidity. European Union regulators will discuss plans to conduct separate stress tests on bank capital and liquidity provisions at a meeting tomorrow, a person familiar with the negotiations said. Supervisors at the European Banking Authority in London will decide what sort of information lenders should provide for this year’s EU-wide stress tests on capital, as well as possible exams on liquidity, said the person, who declined to be identified because the meetings are private. Regulators will also choose an interim chairman to manage the EBA until a permanent chief is installed later this year. “A liquidity assessment needs to be included in the future stress tests of the banking sector,” Olli Rehn, the EU’s economy commissioner, told reporters in Brussels in December. The next round should be “even more rigorous and even more comprehensive.”
- Bank of Portugal Says Economy Will Shrink After Government's Spending Cuts. Portugal’s economy will contract this year as consumer demand drops and the government cuts spending, the country’s central bank said. Gross domestic product will shrink 1.3 percent in 2011 and expand 0.6 percent in 2012, following estimated growth of 1.3 percent last year, the Bank of Portugal said in its winter economic bulletin. On Oct. 7, the bank forecast no GDP growth in 2011, a projection that didn’t take into account budget deficit- cutting measures announced by the government on Sept. 29. “The Portuguese economy’s growth outlook will be significantly affected in the short term by the process of budget consolidation,” the Lisbon-based bank said in today’s e- mailed report. “Regarding the international context, it is still difficult to assess the degree of strength of the recovery of the world economy.” Portugal is raising taxes and cutting wages as it tries to convince investors it can narrow its budget gap further after the Greek debt crisis led to a surge in borrowing costs for indebted euro nations last year.
- Alcoa(AA) Sees 'Headwinds' in Growth in China Aluminum Use as Car Demand Slows. Alcoa Inc. said growth in demand for aluminum in China, the world’s largest market for the metal, will decelerate as government measures to curb inflation slow housing and automobile sales. Metal used by truck makers will rise as much as 3 percent this year, compared with a jump of about 60 percent in 2010, Chief Executive Officer Klaus Kleinfeld said on a conference call. “For 2011 we see some headwinds like the phasing out of the stimulus package, uncertain housing market,” the CEO of the world’s third-largest producer of the metal said. “Construction is such a huge part of first-end use of aluminum in China, almost 50 percent,” Peter Richardson, chief metals economist at Morgan Stanley Australia Ltd., said by telephone from Melbourne today. “The measures that have been progressively ratcheted up to control speculation and other excesses within construction and high-end property would have inevitably been expected to be reflected in slower growth.” Shipments of aluminum used in autos may also slow after China raised the sales tax on small vehicles to 10 percent from 7.5 percent on Jan. 1 as it scales back measures to support auto sales.
- Canadian Banks May Buy SunTrust(STI), Zions(ZION) as 'Fire Sale' Continues in U.S. Canadian banks, involved in a record $15.9 billion of acquisitions last year, may target U.S. lenders such as SunTrust Banks Inc., Zions Bancorp and Regions Financial Corp.(RF) to expand abroad, analysts said.
- Singh Calls Meeting With Ministers, Advisers as Indian Onion Prices Surge. Indian Prime Minister Manmohan Singh has convened a meeting with his cabinet colleagues to discuss ways to rein in food prices as opposition parties prepare to launch nationwide protests against inflation.
- Clinton Tells Yemenis Terrorism an Urgent Concern. Secretary of State Hillary Clinton said that Yemen-based terrorists are an “urgent concern” for the U.S. and the development of the Middle Eastern nation. “They have sought, more than once, to attack our country,” Clinton, on the first trip by a U.S. secretary of state to Yemen in 20 years, said at a forum in the capital, Sanaa. “Stopping such threats would be a priority for any nation, and it is a priority for us.”
- Job Openings in U.S. Decrease for Third Time in Four Months. Job openings in the U.S. fell in November from the highest level in two years, signaling a sustained labor market recovery will take time to develop. The number of positions waiting to be filled decreased by 80,000 to 3.25 million, the Labor Department said today in Washington. The number of people hired dropped from the prior month and separations climbed.
- Sears(SHLD) Rises After Quarterly Profit Forecast Tops Estimates. Sears Holdings Corp., the largest U.S. department-store chain, climbed the most in a year after its fiscal fourth-quarter profit forecast surpassed analysts’ projections. The shares advanced as much as 11 percent after Sears said today that profit, excluding store closings, restructuring and impairment charges, will be $3.39 to $4.12 a share in the quarter ending Jan. 29. Analysts surveyed by Bloomberg had estimated $3.05 on average.
- Brevan Howard Says Failure to Address Debt Crisis is Biggest Growth Risk. Brevan Howard, Europe’s biggest hedge-fund firm, said the greatest risk to global economic growth would be the failure of European Union leaders to tackle the sovereign-debt crisis. It wouldn’t be “a policy mistake but a political choice by triple-A rated governments unwilling to finance what is going on in the periphery,” Luigi Buttiglione, head of global strategy at Brevan Howard, said at a conference in Geneva today. “This would have a substantial impact on the economic outlook.
Wall Street Journal:
- EU Weighs Boosting Bailout Fund. European Union governments are discussing proposals to increase the €440 billion ($569.98 billion) bailout fund for indebted euro-zone countries, a recognition that the fund might prove too small if the region’s debt crisis spreads to Spain, according to European officials. No decision has been taken yet, and none is currently expected at next week’s meeting of EU finance ministers, said a senior European official, who pointed out that hardly any of the fund’s firepower has been used yet.
- China Stealth Test Upstages Gates, Hu. China’s first test flight of its stealth fighter Tuesday overshadowed a mission to China by U.S. Defense Secretary Robert Gates to repair frayed military relations, and prompted concern about whether President Hu Jintao and the civilian leadership are fully in control of the increasingly powerful armed forces.
- Baltic Dry Index Falls to 21-Month Low on Flooding in Australia. The Baltic Dry Index, a measure of dry-bulk commodity-shipping costs, fell to a 21-month low as flooding in Australia shut mines and halted railroads, curbing volumes of cargo to be delivered. The index declined 15 points, or 1 percent, to 1,480 today, according to data from the Baltic Exchange in London. The drop was the 20th in a row. Daily rents for capesize ships, the biggest tracked by the gauge and typical haulers of iron ore and coal, lost 5.3 percent to $11,266, a two-year low.
- Crisis is 'Systemic' for Europe: Greek Finance Minister. Greek Finance Minister George Papanconstantinou sought to reassure investors over the country’s debt burden on Tuesday, saying spreads between Greek and German bonds were high because of broader market turbulence rather than a real threat of default.
- Fed's Bond-Buying Could Soon Backfire: Plosser. The U.S. Federal Reserve's aggressive bond-buying plan could soon backfire unless the central bank gradually changes course to head off inflation, a top Fed official known for his hawkish stance said on Tuesday. Philadelphia Federal Reserve Bank President Charles Plosser said the $600-billion quantitative easing plan, known as QE2, would need to be reconsidered if the U.S. economy's current "moderate recovery" picks up steam. "The aggressiveness of our accommodative policy may soon backfire on us if we don't begin to gradually reverse course," he said.
- The Fed's QE2 Traders, Buying Bonds by the Billions. Deep inside the Federal Reserve Bank of New York, the $600 billion man is fast at work.
- Schwab(SCHW) Settles YieldPlus Case for $119 Million. Charles Schwab Corp. said on Tuesday that it has agreed to pay regulators about $119 million to settle claims it wrongly marketed its short-term money-market fund YieldPlus to clients.
- Chart of the Day: Hedge Funds Are Still Crazy About Gold. (graph)
- It's Confirmed: WikiLeaks is Targeting Bank of America(BAC).
- Market Stutters As $6 Billion In ES Goes Through. We are hearing that the recent market downdraft and volume upswing occurred as a major block of just about $6 billion in E-Minis hit the bid. What is odd is that such a big order would go as a block and not be split. Either this was a fat finger or someone is making a statement.
- Is Telestone Technologies(TSTC) a "RINO" in Sheep's Clothing? The backlog of alleged Chinese "scam" stocks is starting to trouble us: not even we suspected when we commenced our little crusade against Sino-fraud, and domestic stock exchange complacency to host said fraud on what are increasingly becoming discredited exchanges, that it would lead to such an explosion in content, confirming time after time, that a material number of Chinese companies, most notably of the reverse merger variety, are nothing short of pure-bred frauds.
- Euro's Architect Warns About Currency's Future. Even some architects of are becoming pessimistic about its future. Otmar Issing, the influential former chief economist of the , warns that the common currency’s existence could be threatened unless member countries find a way to impose tougher spending curbs on one another. “With the failure to make sovereign states’ fiscal policies consistent with the conditions for the single currency area,” Mr. Issing wrote in an article to be published this week, “policy makers not only have weakened the functioning of monetary union, but have also called into question its very survival.” Mr. Issing’s views are particularly noteworthy because he was a key figure in the introduction of the euro. “From a former board member of the E.C.B. this is a very pessimistic statement,” said Jörg Krämer, chief economist at Commerzbank in Frankfurt. “There is a lot of disappointment in this article.” In the article, Mr. Issing wrote that rescue of countries that have pursued bad policies “adds up to an open invitation to states to live beyond their means at the expense of others.” Predictions by euro skeptics have proved true, Mr. Issing wrote in the article, which will be published this week in the bulletin of the Official Monetary and Financial Institutions Forum. “The crisis brought further evidence of a basic design flaw of monetary union, namely that we could not rely for its sound working on member countries to carry out appropriate economic policies,” Mr. Issing wrote. Mr. Issing also warned leaders not to try to create a stronger political union behind the backs of European citizens. “A political union worthy of the name cannot be set up by stealth,” he wrote. If leaders create a de facto political union under which disciplined countries subsidize the undisciplined, Mr. Issing wrote, “it will not be long before opposition to monetary union, and possibly other policies as well, appears on the agenda not just of extremist groupings but also of established political parties, in Germany and elsewhere.” Mr. Issing called for tighter rules on government spending, with automatic sanctions, and for independent organizations to determine when countries are in violation.
- Hedge Funds Pinched by Health Care Reform. A survey by insurance broker SKCG Group found that the hedge fund industry is paying more but getting less. SKCG, which interviewed more than 100 of its hedge fund clients with assets ranging from $250 million to $20 billion, said that premiums for hedge funds increased between 6 percent and 18 percent in 2010. In part, insurance companies, the broker noted, are hiking rates in response to new health care reform. “What’s really troubling is that some insurance companies are asking for rate hikes twice in one year. That’s a huge break with tradition,” said David Parker, president of the employee benefits division at SKCG, in a statement. Meanwhile, SKCG said the coverage is being “watered down.” Case in point: One hedge fund firm experienced a 300 percent jump in deductibles for out-of-network visits.
- New Generation of Unmanned Spy Planes is Being Tested. Three drones being flown in the coming weeks are speedier, stealthier and higher-flying.
- Poll: Most Americans Feel Rhetoric, Tucson Shooting Unrelated. Nearly six in 10 Americans say the country's heated political rhetoric is not to blame for the Tucson shooting rampage that left six dead and critically wounded U.S. Rep. Gabrielle Giffords, according to a CBS News poll. In the wake of the shooting, much focus has been put on the harsh tone of politics in Washington and around the country, particularly after a contentious midterm election. Rhetoric and imagery from both Republicans and Democrats have included gun-related metaphors, but the majority of the country isn't connecting the shooting to politics. The lone suspect in the attack, 22-year-old Jared Lee Loughner, had expressed in recent years a deep-seated distrust of the government and personal animosity toward Giffords, according to evidence collected by authorities, YouTube videos he made and accounts from former acquaintances. Overall, 57 percent of respondents said the harsh political tone had nothing to do with the shooting, compared to 32 percent who felt it did. Republicans were more likely to feel the two were unrelated - 69 percent said rhetoric was not to blame; 19 percent said it played a part. Democrats were more split on the issue - 49 percent saw no connection; 42 percent said there was. Independents more closely reflected the overall breakdown - 56 percent said rhetoric had nothing to do with the attack; 33 percent felt it did.
Politico:
- Gabrielle Giffords 'Generating Her Own Breaths'. Arizona Rep. Gabrielle Giffords is breathing on her own again at the University of Arizona Medical Center, where she is still in critical condition three days after being shot in the head during an outdoor meeting with constituents in Tucson.
- U.S. Chamber of Commerce Backs Health Repeal. U.S Chamber of Commerce president Tom Donohue said Tuesday that the powerful business lobby supports the House Republican legislation to repeal President Obama’s health care reform law. “Last year, while strongly advocating health care reform, the Chamber was a leader in the fight against this particular bill — and thus we support legislation in the House to repeal it,” Donohue said during a speech on the state of American business. “We see the upcoming House vote as an opportunity for everyone to take a fresh look at health care reform, and to replace unworkable approaches with more effective measures that will lower costs, expand access, and improve quality.”
- Jon Stewart: Rhetoric Isn't to Blame. He may have hosted the Rally to Restore Sanity and/or Fear last year, during which he called for a more civilized political discourse, but comedian Jon Stewart doesn't blame what he called "the toxic political environment" as the cause of the Arizona shootings this weekend. "We live in a complex ecosystem of influences and motivations and I wouldn't blame our political rhetoric any more than I would blame heavy metal music for Columbine," Stewart said on "The Daily Show" Monday night. "Boy, would it be nice to draw a straight line from this horror to something tangible, because then we could convince ourselves that if we just stopped this, then the horrors will end." "You cannot outsmart crazy," Stewart said. "You don't know what a troubled mind will get caught on." Stewart said he doesn't know "if there is a way to make sense" of the shootings. Nevertheless, he did stress a need to tone down political "ramblings." "It would be really nice if the ramblings of crazy people didn't resemble how we talk to each other on TV," he said. "Let's at least make troubled individuals easier to spot."
- Barclays(BCS) Boss Bob Diamond Says Banks Should Be Allowed to Fail. Bob Diamond, Barclays' chief executive, has told a committeee of MPs that badly-run banks should not be bailed out by taxpayers.
- Talks on possible European assistance for Portugal are proceeding "very discreetly at a technical level," citing two European diplomats.
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