Evening Headlines
Bloomberg:
- EU Ministers See Possible Greek Debt 'Reprofiling' in Follow-Up Aid Plan. European finance ministers for the first time floated the idea of talks with bondholders over extending Greece’s debt-repayment schedule, saying that last year’s 110 billion-euro ($156 billion) rescue has failed to restore the country to financial health. Europe would consider “reprofiling” Greek bond maturities as part of a package including stepped-up sales of state assets and deeper spending cuts, Luxembourg Prime Minister Jean-Claude Juncker said. “If all these conditions are fulfilled, we can discuss the question of reprofiling,” Juncker told reporters late yesterday after chairing a meeting of euro-area finance chiefs in Brussels. “It’s not reprofiling or nothing. It’s measures, measures and measures, and then maybe reprofiling.” Introducing that prospect marks a break in Europe’s crisis- fighting strategy, with governments potentially shifting some costs to bondholders instead of relying on taxpayer-funded bailouts to stamp out the debt crisis.
- China Data Suggests Rising Risk of 'Hard Landing,' JPMorgan(JPM) Says. Chinese economic data suggests that the risk of a “hard landing” in the world’s second-largest economy is rising, JPMorgan Chase & Co.’s Adrian Mowat said. Fixed-asset investment in real estate has increased 35 percent in the first four months of the year even amid “very weak” property sales demand, Mowat, the brokerage’s chief Asia and emerging-markets strategist, said in a Bloomberg Television interview in Hong Kong. This means that residential inventories will increase and lead to a contraction in construction activity this year, he said in the interview. “I’m quite worried about the Chinese data, which suggests to me the probability of hard landing is building in China,” Mowat said. Global markets, including commodities, will continue to be “correcting,” he said.
- Hewlett-Packard(HPQ) CEO Girds for 'Tough Quarter'. Hewlett-Packard Co. (HPQ) Chief Executive Officer Leo Apotheker told top executives that he’s bracing for “another tough quarter” in the July period and urged his deputies to “watch every penny and minimize all hiring.” The company’s existing headcount plans are “unaffordable given the pressures on our business,” Apotheker wrote in the May 4 memo to deputies including Todd Bradley, executive vice president of the personal systems business, and Chief Financial Officer Cathie Lesjak. The memo was obtained by Bloomberg. Hewlett-Packard, based in Palo Alto, California, dropped as much as 5.1 percent to $37.76 in extended trading. Following the release of the memo, Hewlett-Packard said it would move up its second-quarter earnings report to tomorrow morning, rather than the afternoon of May 18.
- Strauss-Kahn to Spend Night on Rikers Island. International Monetary Fund chief Dominique Strauss-Kahn, accused of sexually assaulting and attempting to rape a hotel housekeeper, was sent to New York’s Rikers Island jail complex, a corrections official said. A Manhattan judge today ordered Strauss-Kahn held without bail, two days after he was pulled off an Air France flight as it prepared to leave John F. Kennedy International Airport. Strauss-Kahn faces as long as 25 years in prison if convicted of the most serious charge, said prosecutors, who convinced Criminal Court Judge Melissa Jackson he presented a flight risk. Strauss-Kahn, 62, “restrained a hotel employee inside of the room,” Manhattan Assistant District Attorney Artie McConnell told the judge at a packed bail hearing in lower Manhattan. “He sexually assaulted her and attempted to forcibly rape her. When he was unsuccessful, he forced her to perform oral sex on him.”
- Oil Extends Drop as Concern Eases Over Mississippi Floods; Gasoline Slumps. Oil dropped for a second day in New York after the opening of spillways curbed speculation the Mississippi River will flood refineries and disrupt fuel supplies in the world’s biggest crude-consuming nation. Crude for June delivery slipped as much as 55 cents to $96.82 a barrel in electronic trading on the New York Mercantile Exchange and was at $96.93 at 9:10 a.m. Sydney time.
- Pimco's Gross Says 'Insolvent' Greece Is World's Biggest Default Candidate. Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said Greece is the world’s biggest candidate for default. “We suggest that Greece is insolvent and that at some point the can cannot be kicked down the road any further,” said Gross in an “InBusiness with Margaret Brennan” interview on Bloomberg Television. “Ultimately debt holders will have to bear some of the burden as well.” European finance ministers stepped up pressure today on Greece to sell assets and deepen spending cuts to win an increase of its 110 billion-euro ($156 billion) aid package and more time to repay the loans. Europe’s rich countries tied extra money to pledges by Greece to reap more revenue at home and considered whether to make bondholders share the pain. “Greece is the No. 1 candidate for default,” Gross said. “Greece, even with the stringent fiscal measures, can’t get above the line in terms of real growth. It becomes a question of solvency, as opposed to liquidity.”
- Soros Sold Most of His Gold ETP Holding During First Quarter, Filing Shows. Billionaire investor George Soros sold most of his holdings in the bullion-backed SPDR Gold Trust and iShares Gold Trust (IAU) funds in the first quarter and bought shares of mining companies Goldcorp Inc. and Freeport-McMoRan Copper & Gold Inc. (FCX), a government filing shows. Soros Fund Management LLC held 49,400 shares of SPDR Gold Trust as of March 31, compared with 4.721 million at the end of the fourth quarter, the filing today with the U.S. Securities and Exchange Commission showed. The New York-based fund sold all 5 million shares it held in iShares Gold Trust.
- John Paulson's Fund Took $1 Billion HP(HPQ) Stake, Bought Lubrizol(LZ) Last Quarter. Paulson & Co., the New York-based hedge fund founded by John Paulson, took a new stake in Hewlett- Packard Co. last quarter valued at about $1 billion and bought shares in Lubrizol Corp. (LZ).
- Falcone's Harbinger Holdings Adds Bunge(BG) Shares, Trims Gold Stake. Harbinger Holdings LLC, the hedge fund run by Philip Falcone, bought shares of food company Bunge Ltd. (BG) in the first quarter and sold shares of SPDR Gold Trust, according to a regulatory filing. Harbinger’s holdings of U.S. stocks declined to $1.1 billion from $1.6 billion in stocks at the end of 2010, according to today’s filing with the Securities and Exchange Commission.
- Obama Holding Assets of Up to $11.8 Million. President Barack Obama and first lady Michelle Obama reported holding total assets of between $2.8 million and $11.8 million last year, according to federal financial disclosure forms released today. The president’s assets were concentrated in U.S. Treasury obligations. He reported between $1 million and $5 million in U.S. Treasury bills and between $1 million and $5 million in Treasury notes, according to the forms, which report assets in ranges rather than specific amounts. Treasury bills have maturities of one year or less; Treasury notes have maturities of between one and 10 years. In his checking account, Obama, 49, reported a balance of between $250,001 and $500,000, held at JPMorgan Chase & Co.(JPM) The disclosure forms reveal that Obama’s holdings grew from 2009, when he reported assets of between $2.3 million and $7.7 million.
- Cohen's SAC Buys Newmont(NEM), Dendreon(DNDN) While Cutting Plains Exploration(PXP) Stake. SAC Capital Advisors LP, the hedge fund founded by billionaire Steven A. Cohen, boosted stakes in Newmont Mining Corp. (NEM), CenturyLink Inc. (CTL) and Dendreon Corp. (DNDN) during the first quarter, according to a regulatory filing.
- Australia Central Bank Foresees Need for Higher Rates to Contain Inflation. The Reserve Bank of Australia said a rising currency is helping contain inflation pressures that may need to be slowed “at some point” by higher interest rates, minutes of its May 3 meeting showed. “If economic conditions continued to evolve as expected, higher interest rates were likely to be required at some point if inflation was to remain consistent with the medium-term target,” according to the minutes released today in Sydney. “Members viewed the current mildly restrictive stance of monetary policy as remaining appropriate.”
- Insured Loss Estimate From Southern Tornadoes Hits $6 Billion. A new damage estimate shows the powerful tornadoes that hit the South in late April caused insured losses of up to $6 billion, the highest figure yet to emerge from disaster-modelers. A single tornado that struck Tuscaloosa and Birmingham in Alabama accounts for nearly 40% of the estimate from disaster-modeling company Risk Management Solutions.
- SEC Charges Another Adviser In Ponzi Scheme Tied to Venezuela.
- Appaloosa Trots Away From Bank Stocks, Cisco(CSCO). Reports of the 13-F filings of several hedge funds are starting to hit the wires. One very interesting tidbit grabbed our attention right away: It looks like David Tepper is leading Appaloosa Management away from the banking sector a bit. According to Dow Jones Newswires headlines, Appaloosa cut its stake in Citigroup(C) to 76.6 million shares in the first quarter of 2011 from 117.5 million in the fourth quarter of 2010. Tepper’s not the only one dumping Citi. Lone Pine and Tudor Investment have, too, reports Business Insider. Appaloosa also cut its holdings in Wells Fargo(WFC), Fifth Third(FITB), Capital One(COF), Bank Of America(BAC), J.P. Morgan(JPM) and Suntrust Banks(STI). Tepper & Co. reported no stake in Cisco this time and cut stakes in Micron Technology(MU) and Applied Materials(AMAT). On the flipside, Appaloosa raised its stakes in Goodyear(GT) and Dean Foods(DF) (a winning bet for him so far) and announced new stakes in Apple(AAPL), Beazer Homes(BZH), CVR Energy, DR Horton(DHI), KB Home(KBH) and Pulte Group(PHM).
- New York AG Probes Banks Over Mortgage Securities. New York Attorney Attorney General Eric Schneiderman has opened an investigation into the packaging of mortgage loans into securities, in the latest sign of increased scrutiny of the mortgage industry. Mr. Schneiderman will hold meetings with executives of several major banks, including Bank of America Corp.(BAC), Morgan Stanley(MS) and Goldman Sachs(GS), according to people familiar with the investigation. He intends to discuss securitization of mortgage loans and other mortgage practices and has requested related documents from the firms, these people said.
- U.S. Balks at Pakistani Bills. The U.S. and Pakistan are engaged in a billing dispute of sizable proportions, sparring behind closed doors over billions of dollars Washington pays Islamabad to fight al Qaeda and other militants along the Afghanistan border. Washington, increasingly dubious of what it sees as Islamabad's mixed record against militants, has been quietly rejecting more than 40% of the claims submitted by Pakistan as compensation for military gear, food, water, troop housing and other expenses, according to internal Pentagon documents.
- Israeli Leader Sees Rising Arab Threat. Israeli Prime Minister Benjamin Netanyahu gave a stark assessment of how he sees changes in the Arab world threatening his country, warning of the potential for more clashes like the protests on Israel's borders that left 14 people dead Sunday. Mr. Netanyahu, in a speech to parliament, also signaled Israel won't negotiate with a Palestinian government that includes the militant faction Hamas—his most explicit rejection yet of a recent truce between rival Palestinian factions that was forged under the pressure of Arab popular revolts.
- Muslim Brotherhood Raises Syria Profile. The exiled Muslim Brotherhood of Syria, the only antiretime group to ever seriously challenge the Assad government, said it was trying to take a larger role in organizing the disparate opposition as Syria's street protests appear to wane.
- U.N. Panel: North Korea Is Exporting Missiles. North Korea remains "actively engaged" in exporting ballistic missiles, components and technology to numerous customers in the Middle East and South Asia in violation of United Nations sanctions, a U.N. panel said in a new report. The seven-member panel said in a report to the U.N. Security Council obtained Monday by the Associated Press that North Korea has also completed or is about to complete construction of a second launch site for long-range rockets.
CNBC:
Business Insider:
- Moore Capital Dumps Financials and Ramps Up Energy Holdings.
- France Furious About Dominique Strauss-Kahn Perp Walk.
- STAY GRANTED: The NFL Lockout Isn't Going Anywhere.
- THE NEXT BAILOUT? The Post Office Has Lost Nearly $20 Billion in Four Years.
- Paul Ryan Speaks On The "Catastrophic Trajectory" Of US Debt.
- Weekly Insider Buying and Selling: $2.8 Million in Purchases; $1 Billion in Sales.
NY Times:
gurufocus.com:TechCrunch:
- California Bill to Give Parents Access To Kids' Facebook Pages. California SB 242, proposed by Sen. Ellen Corbett, would force social networks like Facebook to allow parents access to their child’s account(s) and, more importantly, force all privacy settings to their maximum level by default. Parents can request that images or text be removed from any social network page “upon request … within 48 hours upon his or her request.” Here’s the interesting part: any social network failing to perform these duties will get hit with a $10K fine per incident. Obviously this is a state-level law and does not apply nationally (yet) and it does smack of the nanny state.
- Confidential Federal Audits Accuse Five Biggest Mortgage Firms of Defrauding Taxpayers(Exclusive). A set of confidential federal audits accuse the nation’s five largest mortgage companies of defrauding taxpayers in their handling of foreclosures on homes purchased with government-backed loans, four officials briefed on the findings told The Huffington Post.
- Rule Change May Expose More Soured Bank Loans - Fitch. A recent accounting change and stepped up scrutiny from regulators may force U.S. banks to disclose more about restructured property loans, affecting earnings at some companies, Fitch Ratings said. Regional and community banks, with the highest concentration of commercial real estate loans, will likely be most affected by the accounting change when it goes into effect in the third quarter, Fitch said in a report on Monday.
- Urban Outfitters(URBN) Q1 Revenue Rises, Shares Up. Urban Outfitters Inc stores posted a rise in its first-quarter revenue that beat market estimates, helped by higher sales at its direct-to consumer and wholesale segments. Shares of the operator of Urban Outfitters, Anthropologie, Free People and Terrain stores rose 3 percent in after-market trading.
- Ackman's Pershing Capital Exits Target(TGT), General Motors(GM).
- Taiwan Semiconductor Manufacturing Co. will cut its prices by three to five percent in the third quarter, the first time in 18 months, citing people in the industry.
- China must try to curb foreign exchange reserve growth to reduce risk from holding U.S. Treasury assets, citing Zhang Ming, economist of the Chinese Academy of Social Sciences. China can lower risk by widening the trading band of yuan, decreasing the trade surplus and scraping policies beneficial to foreign direct investment, Zhang said.
- China needs to push down housing prices to fight a property bubble, Yi Xianrong, a researcher at the Chinese Academy of Social Sciences, wrote in a commentary. The central government can rely on taxation to achieve this goal, Yi said.
- China has approved cutting the tax-rebate for textile exports to 11% from 16%, citing market speculation. The reduction may be implemented in June or July.
- China may raise on-grid electricity prices for coal-fired power plants in the provinces of Hunan, Guizhou and Jiangxi, citing a person familiar with the situation.
- Limits on power usage in China caused by a shortage of electricity may reduce the nation's second-quarter economic growth by .5 percentage points, citing an analyst.
- Chinese Homebuyers Driven Overseas. Held back by Beijing's measures to slow runaway housing prices, mainland investors are taking their money to markets from Hong Kong to Mexico.
- None of note
- Asian equity indices are -.50% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 108.0 unch.
- Asia Pacific Sovereign CDS Index 115.75 +1.125 basis points.
- S&P 500 futures -.10%.
- NASDAQ 100 futures -.09%.
Earnings of Note
Company/Estimate
- (DKS)/.29
- (HD)/.50
- (WMT)/.95
- (SKS)/.16
- (TJX)/.80
- (ADI)/.68
- (DELL)/.43
8:30 am EST
- Housing Starts for April are estimated to rise to 569K versus 549K in March.
- Building Permits for April are estimated to fall to 590K versus 594K in March.
- Industrial Production for April is estimated to rise +.4% versus a +.8% gain in March.
- Capacity Utilization for April is estimated to rise to 77.6% versus 77.4% in March.
- (HLF) 2-for-1
- (TDSC) 2-for-1
- The weekly retail sales reports, BMO Capital Farm Conference, Needham Cleantech Conference, Goldman Sachs BRICs Conference, Piper Jaffray China Growth Conference, Oppenheimer China Conference, (NE) analyst day, (INTC) investor meeting, (PWER) analyst day, (APA) investor day, (AAWW) investor day, (CSX) investor conference, (SSW) analyst event and the (ARMH) analyst day could also impact trading today.