Friday, April 08, 2011

Today's Headlines


Bloomberg:
  • Oil Climbs Above $112 on Libyan Armed Revolt, Dollar Weakness. Crude rose above $112 in New York for the first time in 30 months and Brent topped $125 on skepticism that Libyan output will rebound when fighting ends and as a weaker dollar increased demand for commodities. Futures rose as much as 1.6 percent in New York as Barclays Capital said strikes on Libyan oilfields by forces loyal to Muammar Qaddafi ended hopes for a prompt resumption of exports, and will help send prices toward $130 a barrel. Raw materials surged as the dollar dropped to the lowest level against the euro in more than a year. Crude oil for May delivery rose $1.59, or 1.4 percent, to $111.89 a barrel at 12:27 p.m. on the New York Mercantile Exchange. The contract reached $112.10, the highest intraday price since Sept. 22, 2008. Futures are up 3.7 percent this week and are 31 percent higher than a year ago. Brent oil for May settlement climbed $3.15, or 2.6 percent, to $125.82 a barrel on the London-based ICE Futures Europe exchange. The contract touched $125.79, the highest price since Aug. 1, 2008. The rebels’ six-week drive to topple Qaddafi’s 42-year rule has reached a military impasse as regime forces outgun the opposition and hide their military hardware from NATO jets. Oil output from Libya would still be less than a third of its pre- conflict level even if the rebels took control of the country’s fields, Nomura Holdings Inc. said in a report. Voters in Nigeria, Africa’s biggest oil producer, go to the polls tomorrow to choose members of parliament in the first of a three-stage general election. “We could easily come in Monday and see further disruptions because of the Nigerian election,” said Phil Flynn, vice president of research at PFGBest in Chicago. “This is critical because Nigeria produces high-quality crude that’s similar to the missing barrels from Libya.” The dollar slipped as much as 1 percent to $1.4444, the lowest level since Jan. 10, 2010. “If you want to know why commodities are up, take a look at the dollar,” said Phil Flynn, vice president of research at PFGBest in Chicago. “The dollar is dropping because the Fed is out of whack with the rest of the globe when it comes to rate expectations.”
  • Fisher Says Fed at 'Tipping Point' of Overstimulating U.S. Economic Growth. Federal Reserve Bank of Dallas President Richard Fisher said the central bank faces a “significant” risk of providing record stimulus for too long and should weigh curtailing its $600 billion bond-purchase plan. “We at the Fed are near a tipping point,” the 62-year-old regional bank chief said in a speech today in Dallas. “Just as we pressed on in doing our duty through extraordinary, exigent measures, we must now discipline ourselves to just as persistently normalize our operations in a timely way.” “Having done our job, I see many risks to the Fed overstaying its welcome,” Fisher said during the Society of American Business Editors and Writers 2011 Annual Conference. “Inflationary impulses are gaining ground in the rest of the world,” Fisher said today. With businesses grappling with higher commodity prices, “my gut tells me that this will result in some unpleasant general price inflation numbers in the next few reporting periods,” and “there is the risk that we might breach our duty to hold inflation at bay.” “Continued accommodation presents significant risks,” Fisher said. “In my view, no amount of further accommodation by the Fed would be wise,” whether it is adding more purchases or “tapering” the plan to purchase Treasuries beyond June. “Indeed, it may well be that we should consider curtailing what remains” of the bond-purchase program, he said. “We’re there” in terms of the need to end accommodation now, Fisher said, when asked whether he would prefer to wait until June. He added that inflation is “not out of hand yet.”
  • Gold Climbs to Record on Demand for Inflation-Hedge; Silver Price Tops $40. Gold rose, setting a record for the fourth time this week, as a weakening dollar boosted demand for the precious metal as an alternative asset and an inflation hedge. Silver climbed above $40 an ounce to a 31-year high. Gold rose to $1,476.20 an ounce in New York, the highest ever, after the dollar slid to the lowest level since December 2009 against a basket of six major currencies. Crude oil touched a 30-month high, and the European Central Bank yesterday raised borrowing costs from a record low to fight accelerating prices. “The Federal Reserve isn’t anywhere near an inflation fight as the ECB,” said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. “Gold’s move is about the weakness in the dollar. Inflation is the buzzword, and it’s the impetus behind the trade.” Gold futures for June delivery rose $13.60, or 0.9 percent, to $1,472.90 at 11:44 a.m. on the Comex in New York. Gold for immediate delivery in London climbed as much as 1.2 percent to a record $1,474.90. Silver futures for May delivery advanced 89.8 cents, or 2.3 percent, to $40.45. Earlier, the price touched $40.48, the highest since January 1980, the year futures reached a record $50.35. The difference between yields on U.S. 10-year notes and Treasury Inflation Protected Securities, a gauge of trader expectations for inflation, widened to as much as 2.62 percentage points, the most in 33 months. “We just don’t hear anything about an inflation fight from the Fed,” Lesh said. “The Fed needs to move back to a neutral policy before they can even think of fighting inflation.” Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter, advised clients to sell sterling and buy gold. Earlier this week, Gartman encouraged investors to sell Japanese equities and buy the precious metal. “With the monetary base skyrocketing, and with the U.S. dollar falling, gold has to move higher,” Gartman said.
  • U.S. Corn Supply Shrinking as Meat, Ethanol Demand Send Crop Price Higher. Corn stockpiles in the U.S., the world’s largest grower, are plunging to a 15-year low and may be smaller than the government forecast last month as rising demand from makers of feed and ethanol drive prices higher. Stockpiles on Sept. 1, before the harvest, will drop 66 percent from a year earlier to 589 million bushels, a Bloomberg survey of 30 analysts showed. That’s 13 percent less than a March 10 estimate by the U.S. Department of Agriculture, which will update its forecast today. Tightening supply led Goldman Sachs Group Inc. to raise its corn-price forecast last week. About 40 percent of the crop is used to make ethanol as the government subsidizes the fuel additive and retail gasoline nears $4 a gallon. Corn futures have more than doubled in the past year to the highest since July 2008, as rising pork and beef prices encouraged demand from livestock producers and as U.S. export-sales expanded at the fastest pace in three years. “Ethanol demand is strong, and rising cattle prices have been offsetting increased costs of feed,” said Shawn McCambridge, the senior grain analyst for Prudential Bache Commodities LLC. “At this point we haven’t seen a lot of evidence that prices are having a negative impact on demand.”
  • EU Stress Tests to Examine 90 Banks, 5% Capital Pass Rate. European regulators will use a tougher measure of capital on 90 lenders in this year’s stress tests following criticism last year’s weren’t stringent enough. Banks will be expected to maintain a Core Tier 1 capital ratio of at least 5 percent under the stress-test scenarios, the European Banking Authority said on its website. Lenders won’t be allowed to use some types of non-voting capital permitted by German bank supervisors, known as silent participations, to calculate the results, the EBA said.
  • Portugal Aid Should Focus on First Tranche Before Final Deal, Nowotny Says. European Union leaders should provide a first lifeline to Portugal “as fast as possible” after the government asked for external aid, European Central Bank Governing Council member Ewald Nowotny said. “The best approach is to agree as fast as possible on a first tranche and then to go for the final program,” Nowotny told Bloomberg News late yesterday in Budapest before a meeting of European finance ministers and central bank governors. “It’s the right thing to do,” he said about the aid request. Portugal is the third euro-region nation in less than a year to seek an EU-led bailout after Greece sparked a sovereign- debt crisis that threatened to splinter the currency union.
  • The supply of capesize ships competing to haul iron-ore cargoes in the Atlantic Ocean had a "humongous" gain over the past, week, according to RS Platou Markets. Charter rates for the vessels have declined 21% to $8,381 a day so far this week, according to the Baltic Exchange in London, on course for a third retreat in four weeks. There's a "dearth of cargoes," Oslo-based Platou analyst Dag Kilen said.
  • Yuan Forwards Have Best Week of 2011 as China May Quicken Gains. Yuan forwards had the biggest weekly gain this year before data due next week that economists estimate will show inflation accelerated to a 32-month high. The currency touched its strongest in 17 years today after State Information Center Chief Economist Zhu Baoliang said the People’s Bank of China should let the yuan appreciate to curb price gains and improve its balance of international payments, in a commentary published yesterday in Shanghai Securities News. “There’s a lot of policy makers urging PBOC to use renminbi strength to help curb imported inflation,” said Ho Woei Chen, an economist at United Overseas Bank Ltd. in Singapore. “There could be another trade deficit for China.”
  • Ivanov Says Russia Wants 'Red-Button' Rights on U.S. Missile-Defense Plan. Russia wants to join in the planned U.S. missile shield in Europe with “red-button” rights to launch strikes at incoming weapons, Deputy Prime Minister Sergei Ivanov said. Russia, which is pursuing talks on the issue with the U.S., will only accept an agreement that allows it to have a joint role in operating the defense system, Ivanov said in an interview yesterday in Miami, two days after meeting U.S. Secretary of State Hillary Clinton in Washington. “We insist on only one thing: that we’re an equal part of it,” said Ivanov, a former KGB colleague of Prime Minister Vladimir Putin and defense minister until 2007. “In practical terms, that means our office will sit, for example, in Brussels and agrees on a red-button push to start an anti-missile, regardless of whether it starts from Poland, Russia or the U.K.”
  • Europe's $2 Trillion of Distressed Debt Set to Outstrip U.S. The distressed debt market in Europe is set to outstrip the U.S. for the first time as the region’s sovereign crisis forces banks to sell $2 trillion of underperforming assets, Strategic Value Partners LLC said.
  • Burqa-Clad Women Face French Fines as Sarkozy Ban Takes Effect. A French law banning facial veils in public places goes into effect April 11, with women clad in burqas with their faces covered risking a 150-euro ($214) fine and mandatory lessons on being French. “No one is allowed to wear a garment that hides the face in public places,” the law, passed in October, proclaims. It will soon be splashed on billboards across France. The government has created a website entitled the “Unmasked Face,” for details on the law, with brochures in English and Arabic to be made available for tourists at French consulates. The burqa ban concludes efforts by the government of President Nicolas Sarkozy to bar what he told parliament two years ago was a sign of “servitude” that isn’t “welcome on French soil.” Sarkozy’s ruling party also began this week a controversial debate on challenges posed by Islam to a 1905 constitutional law on secularism in France, home to Europe’s largest Muslim population.
  • Japan, Russia Won't Take on New Kyoto Targets, UN's Climate Chief Says. Japan and Russia reject new targets under the Kyoto Protocol climate treaty, whose current goals expire in 2012, the top United Nations climate diplomat said. “What they’re saying is they will not participate in a second commitment period” of Kyoto, UN Framework Convention on Climate Change Executive Secretary Christiana Figueres told reporters today in Bangkok as a week of climate talks concluded. “They have not said, ‘none of you can do a second commitment period.’”
  • Israeli Retaliation Kills Four in Gaza, Brings Toll to 11. An Israeli strike on the Gaza Strip left three people dead, bringing to 14 the number of Palestinians killed after Israel was targeted with mortar shells, rockets and a missile that hit near a school bus. As violence escalates with some of the worst clashes since Israel sent troops into Gaza in December 2008, the territory’s Islamic militant rulers Hamas urged an emergency Arab League meeting and said Arab governments must “raise their voices” to get Israel to halt strikes. The Palestinian Authority called for international protection.

Wall Street Journal:
  • Budget Talks Remain at Impasse. Negotiations between the White House and congressional leaders slogged forward Friday, with both sides reporting slow progress toward a deal to keep the government funded beyond midnight.
  • NATO Regrets Libyan Misfire. The head of the North Atlantic Treaty Organization said Friday he regretted the loss of life caused by alliance aircraft strikes on tanks operated by anti-government forces in eastern Libya after another alliance official had refused to apologize for the incident. NATO admitted earlier in the day that its aircraft were responsible for two strikes Thursday on tanks being used by rebels to fight government troops which caused up to four rebel deaths, saying it was the first time the alliance had heard that opposition forces were using tanks.
  • USDA Considers Cutting Crop Reports. The U.S. Department of Agriculture may eliminate a range of crop reports watched by farmers, commodity traders and foreign buyers to gauge supplies coming from the world's largest grain producer.
  • BBVA Chairman Urges Speedy Fix For Troubled Cajas. Spain's government and bank regulator must work swiftly to clean up and recapitalize ailing lenders, and then auction them off to stronger banks, the chairman Banco Bilbao Vizcaya Argentaria SA (BBV) Francisco Gonzalez said Friday.
  • Moody's: Global Default Rate Slides In 1Q To 2.6%. The trailing 12-month global default rate among speculative-grade issuers continued to fall in the first quarter, Moody's Investors Service said Friday, in another sign of improving economic conditions.
CNBC.com:
  • An Aggressive Fed? More of the Street Betting On It. After better economic data and increasingly hawkish comments from some US central bankers, Wall Street is beginning to price in a more aggressive Federal Reserve, according to the latest CNBC Fed Survey. The survey found that about a third of the economists, fund managers and strategists who responded to the survey see the Fed hiking interest rates this year, double the percentage from the March survey. About 27 percent believe the Fed will begin selling assets in the second half of 2011, to reduce the size of its portfolio, up from around 16 percent in the prior survey. "The Fed shows more restive Hawks. Inflation expectations show sign of moving up," wrote economist Robert Brusca in response to the survey. Slightly more than half of the 69 respondents believe Fed policy is now "too accomodative," up from 44 percent in March. The percentage who believe the Fed has policy "just right" declined to 42 percent from 50 percent. "Given the lags in monetary policy, there is a significant risk that the Fed will move too late in its tightening process," wrote Lynn Reaser, economics professor at Point Loma Nazarene University. "A 'catch-up' in terms of more rapid rate hikes is likely to be necessary."
Business Insider:
  • Iraqi Forces Raid Camp of Iranian Dissidents. Iraqi security forces in bulldozers and Humvees barreled into a camp that is home to an Iranian opposition group early Friday, an event coinciding with what is likely to be U.S. Defense Secretary Robert M. Gates’s last official trip to Iraq, and a replay of a similar entry into the camp during a Gates visit two years ago.
MSNBC:
  • Witnesses: 20 Killed as Thousands Protest in Syria. Syrian security forces opened fire on tens of thousands of protesters across several cities Friday, killing at least 20 people, wounding hundreds and forcing residents to turn mosques into makeshift hospitals, witnesses and a human rights group said. Ammar Qurabi, who heads Syria's National Organization for Human Rights, said most of the deaths happened in Daraa, a restive southern city that has become a flashpoint for anti-government protests. Sixteen people were killed in Daraa, three in the Damascus suburb of Harasta, and one in the central city of Homs, he said.
YouTube:
  • Google's(GOOG) YouTube is Going Live. Today we're announcing the initial roll out of YouTube Live, which will integrate live streaming capabilities and discovery tools directly into the YouTube platform for the first time.
The Detroit News:
  • Auto Group Opposes Ethanol Bill. A group representing major automakers opposes a federal legislative proposal to require nearly all vehicles to run on a high blend of ethanol by 2016. The measure, sponsored by Sen. Tom Harkin, D-Iowa, and now before a Senate panel, would require 90 percent of all vehicles to run on E85 — a blend of 85 percent ethanol — by the 2016 model year. Currently, about 90 percent of all fuel sold at the pump is E10 — or 10 percent ethanol — and all vehicles can run on the blend.
Seeking Alpha:
LA Times:
Traders Magazine:
  • Where Has All The Volume Gone? Equities trading volume in the first quarter disappointed many industry pros. However, they see several bright spots that could juice volumes the rest of the year.
Rasmussen Reports:
  • Inflation Fears Up, 87% Paying More For Groceries. A new Rasmussen Reports national telephone survey finds that 56% of Adults are Very Concerned about the threat of inflation. That’s up from 52% a month ago and 48% at the first of the year. In addition to those who are Very Concerned, another 28% are Somewhat Concerned about the threat of inflation. Just 14% are not very or not at all concerned. (To see survey question wording, click here.) Eighty-seven percent (87%) of Americans say they are paying more for groceries now than they were a year ago. That’s up 12 points from last April. Looking forward, 77% think they will be paying more for groceries a year from now. That’s well above the range over the past two years. From July 2009 through January of this year, the number that expected to pay more for groceries ranged from 62% to 71%. Just three percent (3%) now expect grocery prices to be a lower in a year’s time, while 16% say they will stay about the same.
AFP:
  • US Says China Rights on 'Negative Trend'. China's human rights record is on a "negative trend" with growing restrictions on freedom of speech and "severe repression" in the Tibet and Xinjiang regions, a US report said Friday. The State Department's annual survey said that China clamped down at key points in 2010, particularly after dissident Liu Xiaobo won the Nobel Peace Prize, but that human rights problems were widespread and persistent. "A negative trend in key areas of the country's human rights record continued," the report said. "The government took additional steps to rein in civil society, particularly organizations and individuals involved in rights advocacy and public interest issues, and increased attempts to limit freedom of speech and to control the press, the Internet and Internet access," it said. The report said that Chinese authorities stepped up efforts "to silence political activists and public interest lawyers" last year, including by placing family members under house arrest. The State Department said that China imposed tight restrictions on citizens' rights to assemble, travel and practice their religions. "The government continued its severe cultural and religious repression of ethnic minorities in Xinjiang Uighur Autonomous Region and Tibetan areas," it said. The report quoted a Human Rights Watch report saying that hundreds of men from Xinjiang's indigenous Uighur community went missing following 2009 clashes with China's majority Han ethnicity. The study said that China also denied passports or restricted travel to many ethnic Tibetans, part of a clampdown since mass protests in the predominantly Buddhist region in 2009. The State Department said that many Chinese -- possibly tens of thousands -- were involuntarily committed to psychiatric hospitals including members of the Falungong, the spiritual movement banned by Beijing in 1999
Milliyet:
  • The Turkish Group that helped organize the aid convoy for Gaza last year on which nine Turkish activists were killed plans a new flotilla in June.

Bear Radar


Style Underperformer:

  • Small-Cap Value (-.73%)
Sector Underperformers:
  • 1) Airlines -2.75% 2) Road & Rail -1.30% 3) Alt Energy -1.15%
Stocks Falling on Unusual Volume:
  • HNR, EZPW, RCL, CUK, NTSP, VRNT, AMSG, BRKR, MMSI, REGN, JBHT, RAIL, BBBY, KAMN, LRCX, LFUS, ARII, WRLD, PLCM, SSYS, SCSC, AZZ, GNI, CSH, HNR, PTY, SCO, SPR, GBX, NTSP and UAL
Stocks With Unusual Put Option Activity:
  • 1) EXPE 2) SCHW 3) JWN 4) SKS 5) STX
Stocks With Most Negative News Mentions:
  • 1) LII 2) BKE 3) PLXS 4) COF 5) MAT
Charts:

Bull Radar


Style Outperformer:

  • Large-Cap Value (+.08%)
Sector Outperformers:
  • 1) Disk Drives +2.50% 2) Gold & Silver +1.88% 3) Coal +1.40%
Stocks Rising on Unusual Volume:
  • PAAS, EXK, MMR, LPSN, CHSI, CAAS, EXPE, STX, NXPI, INCY, PMTC, TPX, BTH, BAS, WDC, SCSS, IDT, AMSC, PMTC, SIL, HGR and KEYN
Stocks With Unusual Call Option Activity:
  • 1) COCO 2) PIR 3) PUDA 4) ACE 5) ESI
Stocks With Most Positive News Mentions:
  • 1) IMGN 2) INCY 3) GD 4) PIR 5) SKT
Charts:

Friday Watch


Evening Headlines

Bloomberg:
  • Japan Hit by 7.1 Quake; Workers Evacuated From Fukushima. Japan suffered the biggest aftershock since the day of the March 11 earthquake, prompting the operator of the stricken Fukushima nuclear plant to evacuate workers while they were cooling radioactive fuel. The magnitude-7.1 temblor struck at 11:32 p.m. local time yesterday near the site of last month’s record quake in Japan, the U.S. Geological Survey reported on its website. No unusual conditions were observed at the Fukushima plant, according to statements from Tokyo Electric Power Co. and Japan’s Nuclear and Industrial Safety Agency. “Indications of new leakage or a change in radiation levels will be the only way they’ll tell if there’s further damage,” Murray Jennix, a nuclear engineer who specialized in radioactive containment leaks and teaches at San Diego State University, said in a telephone interview. “You’ve got cracks that could have been made bigger.” Two people died and 93 were injured from yesterday’s quake, the Fire and Disaster Management Agency said, as more than 3.6 million households lost power.
  • Besieged Libyan City Gets Aid as U.S. General Sees Stalemate. An aid ship reached besieged Misrata, a city under fire for weeks from Muammar Qaddafi’s forces, as a U.S. general said the overall conflict is settling into a stalemate between regime forces and rebel fighters. Former Libyan Energy Minister Omar Fathi bin Shatwan, who fled to Malta on a fishing boat April 1, described the situation in Misrata as dire. The aid ship arrived amid fighting near the port, according to Al Arabiya television. “I came from Misrata, a city that has been under siege for 48 days,” Shatwan, who also had served as Qaddafi’s industry minister, said in an interview yesterday. “People are being killed every day, they have been surrounded” by the loyalist troops who are “attacking all the time.” “They have destroyed the city, cut off all water and electricity supplies,” he said. “There is no food or medicines, there is nothing but fear and dead bodies all over the place.”
  • Oil Heads for Third Weekly Gain in New York on Libya, Middle East Conflict. Oil headed for a third week of gains in New York after climbing above $110 a barrel as a fire burned at Libya’s Sarir field, heightening concern that the conflict in North Africa and the Middle East may spread. Futures advanced to a 30-month high yesterday after NATO said forces loyal to Muammar Qaddafi caused a fire at Sarir, Al Arabiya television reported. The conflict in Libya is in a stalemate, said Army General Carter Ham, the U.S. commander for Africa. Crude for May delivery rose as much as 63 cents, or 0.6 percent, to $110.93 a barrel, in electronic trading on the New York Mercantile Exchange, and was at $110.91 at 10:36 a.m. Singapore time.
  • Zynga, Facebook Spark 51% Jump in Value of Top Web Startups. Zynga Inc. and Facebook Inc. led a 51 percent surge in the private market valuations of top Web companies in the first quarter, according to Nyppex LLC. Zynga, maker of the “CityVille” and “FarmVille” online games, rose 81 percent in value from the fourth quarter to about $8 billion, Nyppex said today in an e-mail. Facebook, the world’s largest social network, climbed 57 percent to about $65 billion. The valuations are based on transactions among institutional investors.
  • Clean-Energy Investment Is Placed at Risk as UN Climate Negotiations Stall. Clean energy investment that totaled $243 billion last year is at risk of slowing as talks on curbing greenhouse gas emissions bog down, said the United Nations official in charge of promoting industrial development. Kandeh Yumkella, director general of the UN Industrial Development Organization, said $40 billion a year is needed through 2030 to bring basic energy to 3 billion people, and part of those funds are linked to the outcome of 192-nation negotiations on global warming that hit a roadblock in Bangkok this week.
  • Dimon's 51% Raise to $23 Million Includes First Bonus Since 2007. JPMorgan Chase & Co. (JPM) gave Chief Executive Officer Jamie Dimon a 51 percent raise in 2010 as the bank resumed paying cash bonuses following two years of pressure from regulators and lawmakers to curb compensation. Dimon’s $23 million compensation package included a $5 million cash bonus, his first since 2007, the New York-based company said today in a regulatory filing. His base salary remained at $1 million and his restricted stock payout increased 20 percent to $17 million. That helped boost total compensation by more than half from $15.2 million in 2009, according to the bank’s calculations.
  • Sotheby's(BID) $337 Million Marathon Falters as Buyers Hold Back in Hong Kong. Sotheby’s total for its Hong Kong marathon crept up to $337 million last night in an auction marked by the absence of mainland Chinese buyers for the most expensive items, dealers said.
  • European Stress Tests to Examine Banks' Readiness for Basel III. European regulators were criticized by German banks for a plan to incorporate into this year’s stress tests global capital standards that aren’t scheduled to be implemented for eight years. The European Banking Authority will review the amount of “higher quality and most loss-absorbing” capital on banks’ balance sheets, Andrea Enria, the group’s chairman, said in Vienna this week. The move was criticized by regional German banks including Norddeutsche Landesbank and Landesbank Hessen- Thueringen because the tests may exclude a form of non-voting capital, known as silent participation, which that country’s regulators allow to be counted toward a bank’s reserves.
  • Disney's(DIS) ESPN Starts Offering Live TV to Subscribers on Apple(AAPL) iPad, iPhone. Walt Disney Co. (DIS)’s ESPN is allowing owners of Apple Inc. (AAPL)’s iPad and iPhone who subscribe to pay- television service to watch its channels live on their devices. “WatchESPN,” available today at Apple’s App Store, will stream ESPN, ESPN2, ESPNU and ESPN3 to Time Warner Cable, Bright House Networks and Verizon FiOS TV subscribers, the Bristol, Connecticut-based sports network said in an e-mailed statement.
  • Australia's Swan Says 'No Brainer' to Reject Singapore ASX Bid. Australian Treasurer Wayne Swan rejected Singapore Exchange Ltd. (SGX)’s bid for ASX Ltd. (ASX), saying the deal was not in his nation’s interest and would have left the local bourse operator as a junior partner. “It was a no brainer that this deal was not in Australia’s national interest,” Swan told reporters today in Canberra, three days after the nation’s Foreign Investment Review Board advised the government to reject it. “At the end of the day this takeover was more about growing Singapore’s financial sector than Australia’s. I am open to the right deal for Australia if it comes along.”
Wall Street Journal:
  • Dickering on Budget Goes Down to the Wire. The federal government moved within a day of shutting down for the first time in 15 years Thursday, though House and Senate leaders said after a nighttime meeting with President Barack Obama that they had moved closer to a deal ahead of a deadline of Friday at midnight.
  • Friendly Fire Raises Tensions in Libya. Fighter jets bombed a rebel tank column readying for an attack on Libyan leader Moammar Gadhafi's forces near the oil town of Brega on Thursday morning, in what appeared to be the second friendly fire strike by NATO aircraft in less than a week.
  • U.S. Halted Record Aid Deal as Yemen Rose Up. The U.S. was on the verge of launching a record assistance package to Yemen when an outbreak of protests against its president led Washington to freeze the deal, officials say, marking a sharper turn in U.S. policy there than the administration has previously acknowledged. The first installment of the aid package, worth a potential $1 billion or more over several years, was set to be rolled out in February, marking the White House's largest bid at securing President Ali Abdullah Saleh's allegiance in its battle against al Qaeda in the Arabian Peninsula.
  • NYSE(NYX) Board Cool to Nasdaq Split Proposal. NYSE Euronext's board of directors is unlikely to embrace a plan to break up the Big Board parent because it runs counter to the company's established strategy, according to people involved in the discussions. The unsolicited joint buyout offer from Nasdaq OMX Group Inc. and IntercontinentalExchange Inc. values NYSE at more than $1 billion more than that of its agreed combination with Deutsche Börse AG, and would divide up the company's equities-related and futures businesses.
  • Lenovo: Quake-Related Supply Chain Concerns Have Eased For Now. China's Lenovo Group Ltd. (LNVGY, 0992.HK) said initial concerns about disruptions to its supply chain caused by the earthquake in Japan last month have been eased for now. The world's fourth-biggest computer maker by unit shipments has closed holes in its supply chain that it was projecting to occur in mid-May through June, said Rory Read, Lenovo's president and chief operating officer in an interview.
  • Muni-Tax Break Under Siege. The tax break for municipal bond investors, a cornerstone of the $2.9 trillion market for bonds sold by cities and states, is under fire in Washington. The latest assault came Tuesday in the Senate when Ron Wyden (D., Ore) and Dan Coats (R., Ind.) proposed a bill preventing municipal borrowers from issuing tax-exempt bonds. Municipal-bond buyers would instead receive a tax credit that analysts say likely would be less attractive to investors.
  • Roy Niederhoffer Hedge Fund Lost 10% In March. Roy Niederhoffer's largest hedge lost 10% last month because of market volatility after the March 11 earthquake in Japan. The $368 million Diversified Program run by his firm, R.G. Niederhoffer Capital Management, was down 9.8% in March, following a 1.4% loss in February, according to an April 5 letter to investors that was obtained by MarketWatch on Thursday.
  • Nation's Capital Bets Online Poker Is Lawful. Washington, D.C.'s Budget Lets Lottery Operate Gambling Website in Challenge to the Federal Government's Effective Ban.
  • U.S. Eyes New Stock Rules. Federal securities regulators are moving toward easing decades-old constraints on share issues by private companies, in a sweeping review that could remake the way American start-ups raise capital.
  • Europe's Rate Rise Signals End of Cheap-Money Era. The European Central Bank on Thursday became the first monetary authority in a major developed economy to raise interest rates since the global financial crisis struck—a sign that the long period of extraordinarily easy credit is beginning to come to a close.
MarketWatch:
CNBC:
Business Insider:
Zero Hedge:
CME Group:
BET.com:
Rasmussen Reports:
USA Today:
Reuters:
  • U.N. Counting on Strong U.S. Funding, Ban Says. The United Nations is counting on continued strong financial support from the United States, Secretary-General Ban Ki-moon said on Thursday, even as President Barack Obama and Congress negotiate federal budget cuts to try to avoid a government shutdown. Ban came from U.N. headquarters in New York to tell U.S. lawmakers in Washington that while he was fully aware of the new age of austerity around the globe, "We need to have robust financial support from the United States." The U.S. envoy to the United Nations, Susan Rice, took on U.N. critics in Congress who charge that the organization's budget is opaque, its bureaucracy is bloated and that it uses Israel as a "punching bag". "The U.N., we all agree, is far from perfect. But it delivers real results for every American by advancing U.S. security through burden-sharing," Rice told the House of Representatives Foreign Affairs Committee. Some Republicans, who have the majority in the House, said they are tired of giving billions of dollars every year under an arrangement that makes the United States responsible more than a fifth of the U.N. budget. "The fact that right now we are in such an economic crisis and we are expected to pay 22 percent of the budget of the United Nations with no strings attached is an incredible demand on the people of the United States," Representative Dana Rohrbacher, a Republican, said during the hearing with Rice. Obama has requested $3.5 billion for U.N. support and peacekeeping missions in fiscal 2012. Washington pays 22 percent of the core U.N. budget and 25 percent of its peacekeeping costs. "We're talking about a lot of money for an organization that uses Israel as a punching bag," Rohrbacher said, referring to frequent criticism of the key U.S. ally at U.N. bodies such as the Human Rights Council.
  • US Equity Funds Net $7.7 Billion in Latest Week - Lipper.
  • Brazil Hikes Personal Credit Tax to Slow Inflation. Brazil will raise a tax on personal credit in a bid to brake inflation that has edged dangerously close to a government ceiling, the finance minister said on Thursday. The government will double the so-called IOF tax on personal credit to 3 percent as of Friday to stem a steep increase in demand, Finance Minister Guido Mantega said. Already 12-month inflation sped to 6.3 percent through March, according to data released on Thursday by the government's statistics agency IBGE.
Telegraph:
  • Spain's Tough Stance Makes It Different From The Rest. Once Portugal admitted the inevitable, the spotlight was always going to turn to Spain. Since Ireland sought aid in November, the Mediterranean neighbours have been talked of in the same breath as the euro economies next at risk of collapse.
Times Online:
  • U.K. Chancellor of the Exchequer George Osborne will today rule out offering a bilateral loan to Portugal as part of the rescue deal for the country. The U.K. will still face liabilities of up to $7.34 billion becuase of its participation in a EU emergency facility and as a shareholder in the IMF.
Financial Times Deutschland:
  • BHP Billiton Ltd.(BHP) wants customers to accept monthly, instead of quarterly, contracts for coking coal delivery, citing Salzgitter AG CEO Heinz Joerg Fuhrmann. The change will likely mean higher costs for steelmakers, Fuhrmann said.
  • Short selling of Commerzbank AG shares topped $1.43 Billion in recent weeks, citing financial data service Dataexplorers Ltd. About 17% of all issued Commerzbank shares have been sold short recently, four times more than in early February, at a value of about 1.2 billion euros, Dataexplorers said.
Kyodo News:
  • The Japanese government proposed an energy-saving plan requiring corporations to reduce power use. The proposal also urges households to make efforts to cut electricity use by as much as 20%.
The Standard:
  • China Railway Braces for Sales Fall. China Railway Group (0390) expects contract sales to fall in the first quarter, as projects are postponed amid central government attempts to tame inflation. "The estimated decline is also due to delays on railway projects that are not up to standard," chairman and executive director Li Changjin said yesterday.
Economic Information Daily:
  • China's monetary policy may focus more on price tools such as interest rates in the future, Zhang Monan, a researcher with the State Information Center, wrote in a commentary today. The country's monetary policy may gradually take fluctuations in asset prices into account, Zhang wrote.
Shanghai Securities News:
  • A unified central bank for the world should be established in the long term as part of efforts to reform the international monetary system, Wang Yong, a professor at the People's Bank of China's training school in the city of Zhengzhou, wrote in a commentary. This proposed bank would oversee global monetary and financial regulation and also be responsible for issuing a sing international currency, Wang wrote.
China Wine News:
  • China urged breweries including China Resources Enterprise Ltd., Tsingtao Brewery Company Ltd., Kingway Brewery Holdings Ltd. and Yanjing Beer Co. Ltd. not to raise prices beyond a "reasonable level," citing Liu Yuan, vp of the China National Assoc. for Liquor and Spirits Circulation.
China Securities Journal:
  • China will tighten the approval process for wind-power projects to slow the rapid growth of the industry.
CCTV:
  • China is studying measures to stabilize rice prices, citing Peng Sen, a vice chairman of the National Development and Reform Commission.
South China Morning Post:
  • Beijing Pursues Probe into Railway Mess. The central government has discovered irregularities in some railway tenders and is investigating further, Li Changjin, chairman of China Railway Group, one of the country's two dominant state-owned rail construction firms, said.
National Business Daily:
  • Baoshan Iron & Steel Co. will cut prices for hot-rolled and cold-rolled products for May delivery, citing the company. The company will reduce prices for hot-rolled products by 200 yuan a ton and cut prices for cold-rolled products by 300 yuan a ton.
China National Radio:
  • China will introduce tax measures to ensure the production and supply of gasoline and diesel if the international price of oil exceeds $130 a barrel, citing an official with the National Development and Reform Commission. The nation won't allow imported inflation to spur increases in domestic consumer prices, citing Peng Sen, a vice chairman of the commission.
Evening Recommendations
Citigroup:
  • Reiterated Buy on (EXPE), target $29.
Raymond James:
  • Raised (MDSO) to Strong Buy, target $35.
Night Trading
  • Asian equity indices are -.50% to +.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 104.5 +.5 basis point.
  • Asia Pacific Sovereign CDS Index 109.50 -.5 basis point.
  • S&P 500 futures +.16%.
  • NASDAQ 100 futures +.16%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (BTH)/2.06
Economic Releases
10:00 am EST
  • Wholesale Inventories for February are estimated to rise +1.0% versus a +1.1% gain in January.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Lockhart speaking, the (AER) investor meeting and the (PAAS) analyst day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by automaker and commodity shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.

Thursday, April 07, 2011

Stocks Slightly Lower into Final Hour on Rising Energy Prices, New Japan Concerns, Profit-Taking, Eurozone Debt Angst


Broad Market Tone:

  • Advance/Decline Line: Lower
  • Sector Performance: Most Sectors Declining
  • Volume: Slightly Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • VIX 17.36 +2.66%
  • ISE Sentiment Index 94.0 -36.49%
  • Total Put/Call .90 +30.43%
  • NYSE Arms .97 +20.62%
Credit Investor Angst:
  • North American Investment Grade CDS Index 93.80 +1.18%
  • European Financial Sector CDS Index 90.48 +13.06%
  • Western Europe Sovereign Debt CDS Index 161.83 bps -.53%
  • Emerging Market CDS Index 198.33 -.34%
  • 2-Year Swap Spread 18.0 +1 bp
  • TED Spread 25.0 +1 bp
Economic Gauges:
  • 3-Month T-Bill Yield .04% -1 bp
  • Yield Curve 276.0 +6 bps
  • China Import Iron Ore Spot $179.50/Metric Tonne +1.93%
  • Citi US Economic Surprise Index +34.50 -.1 point
  • 10-Year TIPS Spread 2.59% +1 bp
Overseas Futures:
  • Nikkei Futures: Indicating -85 open in Japan
  • DAX Futures: Indicating +42 open in Germany
Portfolio:
  • Slightly Higher: On gains in my Medical and Retail sector longs
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is mildly bearish as the S&P 500 trades just slightly lower despite Mideast unrest, rising energy prices, government shutdown concerns, new Japan worries, eurozone debt angst and recent equity gains. On the positive side, Retail, Homebuilding, Medical, Education, Software, Steel and Oil Tanker shares are higher on the day. Tech shares are outperforming. Copper is rising another +1.0%. The Japan sovereign cds is falling -2.3% to 87.11 bps. On the negative side, Airline, Gaming, Restaurant, REIT, Semi and Paper shares are under pressure, falling more than -1.0%. Cyclicals are underperforming again. Oil is up +1.5% and Lumber is falling another -3.34%. Lumber is down about -15% in 10 days. Violence between Israel and Hamas is heating up, which is likely contributing to oil's surge today despite euro weakness and new Japan concerns. The upcoming Nigerian elections are also a factor. Oil continues to trade well, which is a major negative for the broad market. The US price for a gallon of gas is up +.02 today to $3.73/gallon. It is up .61/gallon in 51 days. The Spain sovereign cds is up +1.3% to 203.88 bps, the Greece sovereign cds is up +4.3% to 1,040.36 bps, the Russia sovereign cds is rising +1.6% to 124.17 bps, the UK sovereign cds is gaining +3.4% to 49.12 bps and the US sovereign cds is jumping +13.1% to 40.93 bps. The Greece sovereign cds is now only 34 bps from its record high. The AAII % Bulls rose to 43.59, while the % Bears fell to 28.85, which is also a negative. US stocks remain extraordinarily resilient given mounting headwinds. However, market leadership is still lacking and trading remains choppy with lackluster breadth/volume during this latest move higher. One of my longs, (ISRG), is moving +1.7% higher today. The stock is extended short-term, however the shares will likely take out their all time high at $394 over the coming months. As well, I still see substantial upside in the stock from current levels over the longer-term. I expect US stocks to trade mixed-to-lower into the close from current levels on rising energy prices, Mideast unrest, profit-taking, eurozone debt angst and new Japan concerns.

Bear Radar


Style Underperformer:

  • Mid-Cap Growth (-.47%)
Sector Underperformers:
  • 1) Semis -2.10% 2) Airlines -1.46% 3) Restaurants -1.35%
Stocks Falling on Unusual Volume:
  • TV, AWC, SI, TZOO, BID, RVBD, SMRT, WDFC, SWKS, DMND, MDRX, TRGT, LRCX, JDAS, REGN, TISI, AIRM, LAYN, FTNT, VRUS, SFSF, ROST, CYMI, AMRS, WPRT, FAST, RT, GNI and SCCO
Stocks With Unusual Put Option Activity:
  • 1) BBBY 2) PWER 3) UAL 4) MT 5) XLP
Stocks With Most Negative News Mentions:
  • 1) CLI 2) GPS 3) CSCO 4) BA 5) C
Charts: