Evening Headlines
Bloomberg:
- China Says It Will Try to Control Inflation, Boost Imports. China said it faces challenges from rising consumer prices and will maintain a “prudent” monetary policy, according to a statement released today following the annual Strategic and Economic Dialogue with U.S. officials. “China will guide its monetary policy to return to normality from an anti-crisis status,” according to the statement distributed by the Chinese delegation to the talks in Washington. “It will try to meet reasonable demand for capital needed for economic growth, while focusing on removing inflationary monetary elements.”
- China Inflation Over 5% Signals More Tightening. China’s inflation held above 5 percent in April and lending exceeded analysts’ estimates, signaling that further monetary tightening may be needed to cool the fastest-growing major economy. Consumer prices rose 5.3 percent from a year earlier and banks extended 740 billion yuan ($114 billion) of local-currency loans, according to reports from the statistics bureau and central bank. Weaker industrial-output growth, also reported today, may diminish price pressures in coming months. Today’s data showed that inflation has exceeded Premier Wen Jiabao’s 4 percent target each month this year. “Inflation is too high and will keep the policy bias in favor of more action over the next few months -- we expect another two rate hikes and further yuan appreciation against the dollar,” said Brian Jackson, an emerging markets strategist at Royal Bank of Canada. “The data looks bad,” said Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong. “The economy is slowing more sharply than expected but inflation is not.”
- YPF Makes Argentina's Largest Oil Discovery in Two Decades. YPF SA (YPF), Argentina’s largest company by market value, said it’s discovered the equivalent of about 150 million barrels of shale oil at a field in southern Patagonia, the country’s largest discovery in two decades. YPF, in which Madrid-based Repsol YPF SA (REP) is the controlling shareholder, made the find in the Loma La Lata field, YPF Chief Executive Officer Sebastian Eskenazi said today in a televised speech from Neuquen province. YPF found 4.5 trillion cubic feet of unconventional natural gas in the same area in December.
- Microsoft)MSFT)-Skype Deal May Upset AT&T(T), Verizon(VZ). Microsoft Corp. (MSFT) may have a tougher time convincing wireless operators to support mobile phones with Windows software after its $8.5 billion purchase of Skype Technologies SA, analysts said. Skype’s Internet-calling service will be on Windows phones, as well as Microsoft’s Xbox and Kinect game consoles, the Redmond, Washington-based company said today.
- Fukushima Students Wear Masks as Radiation Looms. Students at the Shoyo Junior High School in Fukushima are wearing masks, caps and long-sleeved jerseys to attend classes as their exposure to radiation is on pace to equal annual limits for nuclear industry workers. “Students are told not to go out to the school yard and we keep windows shut,” said Yukihide Sato, the vice principal at Shoyo Junior High in Date city, about 60 kilometers (37 miles) northwest from the crippled Fukushima Dai-Ichi nuclear station. “Things are getting worse, but I don’t know what to do.” Two months after the March 11 earthquake and tsunami created Japan’s worst nuclear crisis since World War II, schools in Fukushima are waiting for stronger measures from the government to protect its youngest citizens. A parents group will send a petition to Governor Yuhei Sato at 3 p.m. today, asking for the evacuation of more than 1,600 kindergartens, elementary and junior high schools affecting about 300,000 children and teachers. More than three-quarters of the schools receive radiation readings of 0.6 microsievert per hour, Nakate said. That’s 10 times more than the readings in Shinjuku, central Tokyo last week. A chest X-ray delivers a radiation dose of about 100 microsieverts, or 0.1 millisievert, according to the U.S. Food and Drug Administration. A millisievert is 1,000 microsieverts. Readings at Shoyo Junior High reached 3.3 microsieverts an hour on May 2, according to Date city’s education board. The school, which has 245 students and 27 teaching staff, bans female students from wearing skirts, citing radiation concerns, said Vice Principal Sato.
- Banks Float $5 Billion Deal to End Foreclosure Probe. The nation's biggest banks are willing to pay as much as $5 billion to settle claims by federal and state officials of improper mortgage-servicing practices, according to people familiar with the situation. Such an offer is considerably less than the amounts sought by state and federal officials, some of whom are asking for more than $20 billion in penalties.
- Facebook Security Flaw Exposed User Accounts. A security vulnerability on Facebook Inc. for years gave advertisers and other third parties a way to access users' accounts and personal information, according to security firm Symantec Corp. But Facebook said Tuesday it had fixed the problem and found no evidence of the issue resulting in private information being leaked.
- AIG(AIG) Offering Near Low End of Range. American International Group Inc. and the Treasury decided to move ahead with a stock offering this month for about $9 billion, far less than what officials had once hoped to fetch, people familiar with the decision said.
- Shrinking Oil Supplies Put Alaskan Pipeline at Risk. When the famed Trans Alaska Pipeline carried two million barrels of oil a day, the naturally warm crude surged 800 miles to the Port of Valdez in three days and arrived at a temperature of about 100 degrees. Now, dwindling oil production along Alaska's northern edge means the pipeline carries less than one-third the volume it once did—and the crude takes five times as long to get to its destination.
- Washington Vs. Energy Security by Harold Ford, Jr. Even former President Clinton calls the Obama administration's deep water drilling policy 'ridiculous.'
- Boeing(BA) Is Pro-Growth, Not Anti-Union by Jim McNerney. Washington's actions have assaulted the capitalist principles that have sustained America's competitiveness since it became the world's largest economy nearly 140 years ago. Deep into the recent recession, Boeing decided to invest more than $1 billion in a new factory in South Carolina. Surging global demand for our innovative, new 787 Dreamliner exceeded what we could build on one production line and we needed to open another. This was good news for Boeing and for the economy. The new jetliner assembly plant would be the first one built in the U.S. in 40 years. It would create new American jobs at a time when most employers are hunkered down. It would expand the domestic footprint of the nation's leading exporter and make it more competitive against emerging plane makers from China, Russia and elsewhere. And it would bring hope to a state burdened by double-digit unemployment—with the construction phase alone estimated to create more than 9,000 total jobs. Eighteen months later, a North Charleston swamp has been transformed into a state-of-the-art, green-energy powered, 1.2 million square-foot airplane assembly plant. One thousand new workers are hired and being trained to start building planes in July. It is an American industrial success story by every measure. With 9% unemployment nationwide, we need more of them—and soon. Yet the National Labor Relations Board (NLRB) believes it was a mistake and that our actions were unlawful.
- Here's What John Paulson Said On Housing, Financials, And Gold at UBS's Financial Services Conference.
- Even Mammoth Hedge Fund Man Group Wasn't Immune From Last Week's Oil Crash. Add Man Group to the list of hedge funds, including Astenbeck, Clive Capital and BlueGold, that had a commodity-heavy portfolio crushed when oil nosedived last week. The hedge fund's AHL strategy lost 5.3% last week, according to Marketwatch.
- Goldman Sachs(GS) On The "Crescendo" Of Higher Food, Fuel, And Apparel Prices Coming Later This Year.
- NYSE Short Interest Jumps to Highest in 2011, Just In Time For the Squeeze. (graph)
- Aaaand... It's Gone: Tiny Tim Plans Shelving of AIG(AIG) Stock Offering After Stock Plunge Continues.
Forbes:
- SEC to Raise Threshold for Hedge Fund and Private Equity Fund Investments. It will soon become just a little harder to get past the velvet rope…Today, the Securities and Exchange Commission (SEC) announced its plan to raise certain dollar thresholds that would need to be met before investment advisers can charge their clients performance fees. Performance fees, also known as “carried interest”, are a feature of almost all private equity funds, venture capital funds, hedge funds and other “alternative investment” vehicles. The SEC is required under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), by July 21, 2011, and every five years thereafter, to adjust for inflation these dollar amount thresholds. Accordingly, the SEC today announced that it intends to issue an order to revise the dollar amount tests to $1 million for assets under management and $2 million for net worth. As a result, a significant number of individual investors who may previously have been eligible to invest in these alternative funds will soon be excluded. So much for getting into the venture capital fund that backs the next Skype!
- Removing Reserve Bank Presidents From FOMC: Another Bad Idea by Robert McTeer. As if the Dodd-Frank monstrosity weren’t bad enough, along comes another bad idea that falls under the category of no good deed goes unpunished. Mr. Frank has now proposed that the Reserve Bank presidents be removed from the FOMC. He apparently wants a more centralized central bank, centralized—guess where?—in Washington, D.C.
- U.S. Postal Service Reports $2.2 Billion Loss. The U.S. Postal Service continues to hemorrhage money, with a loss of $2.2 billion in the most recent quarter. The national mail service said Tuesday that it expects to have a cash shortfall and reach its statutory borrowing limit by the time its fiscal year ends in September. That means the agency could be forced to default on some of its payments to the federal government.
- Federal Retreat on Bigger Loans Rattles Housing. For the last three years, federal agencies have backed new mortgages as large as $729,750 in desirable neighborhoods in high-cost states like California, New York, New Jersey, Connecticut and Massachusetts. Without the government covering the risk of default, many lenders would have refused to make the loans. With the economy in free fall, Congress broadened its traditionally generous support of housing to a substantial degree. But now Democrats and Republicans agree that the taxpayer should no longer be responsible for homes valued well above the national average, and are about to turn a top slice of the housing market into a testing ground for whether the private mortgage market can once again go it alone. The result, analysts say, will be higher-cost loans and fewer potential buyers for more expensive homes.
Patently Apple:
- Apple(AAPL) Wins Patents for the iOS Virtual Keyboard, Cover Flow and a Never Released iPad Design and More. The US Patent and Trademark Office officially published a series of 16 newly granted patents for Apple Inc. today. The notables within this group include patents for iLife's iDVD application, a method for creating Web Clip Widgets for iOS devices, Cover Flow and iOS's virtual keyboard. Yet the one granted patent that really stood out this morning was that of an iPad design that never came to market. You just might find it interesting to see what that missing feature is.
- CIA To Let Some U.S. Senators See Bin Laden Photos. The CIA has informed two Senate committees that their members can view post-mortem photos of al Qaeda leader Osama bin Laden if they wish, a congressional aide said on Tuesday.
- Disney's(DIS) Rare Revenue Miss Hurts Shares. Walt Disney Co(DIS) reported a rare results miss after "Mars Needs Moms" capped a disappointing quarter at the U.S. box office, sending its shares down 3 percent.
- Rovi(ROVI) Ups FY EPS View On Sonic Synergies, Shares Rise. Rovi Corp raised its full-year profit outlook as it begins to gain from the Sonic Solution integration, sending the Digital entertainment technology firm's shares up 12 percent in extended trade.
- Molycorp(MCP) Narrows Loss as Rare Earth Prices Soar. Shares of Molycorp fell more than 5 percent in aftermarket trading on Tuesday, after the company narrowed its quarterly loss on soaring rare earth oxide prices, but missed analyst expectations.
- The European Union's cap on carbon emissions from airlines must take into account differences between developed and emerging countries, citing Li Jiaxiang, head of the Civil Aviation Administration of China.
- China will likely lower export tax rebates for some products made by high-polluting, energy-intensive industries or those with overcapacity in the middle of this year to cut the trade surplus.
- China's exports will likely grow less than 20% this year, citing Huo Jianguo, head of the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce. Export growth will slow in coming months, Huo said.
- China central bank adviser Li Daokui said there's still room for interest rate increases, citing Li who made the remarks in the city of Jinan in Shangdong province. The nation's interest rates still need two to three rounds of adjustments to reach the goal of curbing inflation expectations, citing Li.
Citigroup:
- Reiterated Buy on (CE), target $63.
- Reiterated Buy on (CCOI), target $19.
- Asian equity indices are +.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 105.0 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 114.0 +.5 basis point.
- S&P 500 futures +.06%.
- NASDAQ 100 futures +.10%.
Earnings of Note
Company/Estimate
- (M)/.18
- (CSCO)/.37
- (SYMC)/.36
8:30 am EST
- The Trade Deficit for March is estimated to widen to -$47.0 Billion versus -$45.8 Billion in February.
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,500,000 barrels versus a +3,421,000 barrel increase the prior week. Distillate supplies are estimated unch. versus a -1,398,000 barrel decline the prior week. Gasoline inventories are estimated to fall by -750,000 barrels versus a -1,046,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.32% versus a +.1% gain the prior week.
- The Monthly Budget Deficit for April is estimated to shrink to -$41.0 Billion versus -$82.7 Billion in March.
- (ACGL) 3-for-1
- The weekly MBA mortgage applications rep0rt, JOLTs Job Openings for March, RBC Capital Aerospace/Defense Conference, CSFB Capital Equipment Conference, Barclays Global Services Conference, Deutsche Bank Alt Energy/Utilities/Power Conference, (LXK) analyst meeting, (CSC) investor meeting, (TLM) investor day, (JKHY) analyst day, (XRX) investor conference and the (CE) investor meeting could also impact trading today.