Russell 2000 Climbs to Record as U.S. Small Caps Trump S&P 500. The Russell 2000 Index climbed to a record as a technology rally helped smaller stocks erase losses from the 2008 crisis faster than the rest of the U.S. market. The measure, which beat the Standard & Poor’s 500 Index from 2008 to 2010, has climbed 9.5 percent this year, exceeding the 7.8 percent advance by the benchmark gauge for U.S. stocks.
Oil Rises a Second Day After U.S. Fuel Stockpiles Fall More Than Forecast. Oil climbed for a second day in New York on speculation fuel demand will increase after the Federal Reserve renewed its pledge to stimulate growth and U.S. gasoline stockpiles fell to the lowest since August 2009. Futures rose to a 31-month intraday high today after Federal Reserve Chairman Ben S. Bernanke signaled the Fed will maintain its record monetary stimulus. The Fed “said it would complete its latest $600 billion bond-buying program in June as scheduled and it would keep interest rates low for an extended period, which was positive for commodities,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd. in Melbourne, said in an e-mailed note today. Crude oil for June delivery gained as much as 94 cents, or 0.8 percent, to $113.70 a barrel in electronic trading on the New York Mercantile Exchange, the highest since Sept. 22, 2008. The contract was at $113.54 at 9:29 a.m. Singapore time. Brent oil for June settlement increased 66 cents, or 0.5 percent, to $125.79 a barrel on the London-based ICE Futures Europe exchange.
Gold Climbs to Record as Bernanke Maintains Stimulus, Dollar Extends Drop. Gold advanced to a record after the Federal Reserve pledged to keep interest rates near zero to bolster the recovery, weakening the dollar and boosting demand for precious metals as a store of value. Immediate-delivery gold gained as much as 0.2 percent to $1,530.22 an ounce, and traded at $1,528.32 at 10:06 a.m. in Singapore. “What’s behind gold’s rally is investors’ fear over the dollar’s decline,” said Hwang Il Doo, a Seoul-based senior trader at KEB Futures Co. “As long as the U.S. keeps interest rates low, it’s perceived by the market to buy more gold.”
Exelon(EXC) Said to Be Near $7.7 Billion Deal for Constellation(CEG). Exelon Corp. (EXC), the largest operator of U.S. nuclear power plants, is near agreement to buy Constellation Energy Group Inc. (CEG) for about $7.7 billion, adding stakes in five reactors in Maryland and New York, according to a person with knowledge of the matter. In the transaction under discussion, Constellation shareholders would get 0.93 Exelon share for each of their shares, said the person, who declined to be identified because the talks are private. Based on Exelon’s closing stock price of $41.49 today, that would value Constellation at $38.59 a share, a 12.5 percent premium to its closing price.
Palestinian Factions Seek Unit Government, Plan Elections. The rival Palestinian Hamas and Fatah groups have reached a preliminary agreement to end their almost four-year divide and form a unity government. The agreement also calls for legislative and presidential elections in a year, Fatah official Azzam al-Ahmad said in an interview yesterday after a joint press conference with Hamas negotiators. Egypt, which acted as mediator during the secret talks, will host a meeting of Palestinian factions next week for a formal signing ceremony, al-Ahmad said. “Today, we open a new page of unity and agreement, of closing ranks and struggling together,” Hamas official Musa Abu Marzouk said. The formation of a unity government of technocrats will begin next week after the accord is signed, he said. Israel said the deal would kill any chance for peace talks and the U.S. said Hamas can’t play a “constructive role” as long as it is unwilling to accept Israel’s right to exist. Hamas -- considered a terrorist organization by the U.S., the European Union and Israel -- rejects the peace negotiations and refuses to recognize the Jewish state. The Palestinian move follows protests in March in which thousands of Palestinians, inspired by the popular uprisings in Egypt, Tunisia and Libya, rallied in support of reconciliation between Hamas, which controls the Gaza Strip, and the Fatah-led Palestinian Authority, which rules the West Bank.
NYSE(NYX) Board Is Failing Owners by Rebuffing Nasdaq(NDAQ), Legg Mason's Miller Says. Bill Miller of Legg Mason Inc. (LM), the fifth-biggest shareholder of NYSE Euronext, said the failure of the exchange operator’s board to meet with Nasdaq OMX Group Inc. (NDAQ) is inconsistent with its obligations to owners. “We think it is in the shareholder’s interest that the board work to maximize value for owners,” Miller wrote in an e- mail to Bloomberg News today. “We don’t see how being unwilling to meet with Nasdaq furthers that goal.” Twice this month, NYSE Euronext rejected a joint bid from Nasdaq OMX and IntercontinentalExchange Inc. (ICE) that was worth 12 percent more as of 4 p.m. New York time than Deutsche Boerse AG’s Feb. 15 agreement to purchase the company. Legg Mason, based in Baltimore, owned 7.48 million shares of NYSE Euronext as of Dec. 31. That makes it the fifth-biggest owner, according to ISS Proxy Advisory Services, the shareholder advisory unit of New York-based MSCI Inc. Miller is the chairman and chief investment officer of Legg Mason Capital Management Inc. T. Rowe Price held 19.1 million NYSE Euronext shares, making it the biggest owner.
Yields Surge as Local Spending Boosts Inflation: India Credit. Spending by local governments before elections is stoking India's inflation, which has driven yields on the nation's benchmark bonds to their biggest monthly surge in more than a year. Gross state borrowings rose 39% in the year ended March, reversing an 8% drop in the previous 12 months. India's central bank warned last month that lax fiscal discipline threatens efforts to contain inflation. "Policy makers' efforts in fighting inflation are being offset by populist measures," S.C. Kalia, executive director of Union Bank of India in Mumbai, which buys regional government bonds, said in a phone interview on April 26. "States have to exercise fiscal discipline" to avoid a situation where "the panic button on inflation has to be pressed," he said.
Japan Economy Took Bigger Hit in March Than Analysts Estimated. Japan’s economy had a bigger hit from last month’s disaster than anticipated, with factory output falling the most since at least the end of the U.S. occupation, underscoring calls for the central bank to add stimulus. Factory output dropped a record 15.3 percent from February and household spending plunged 8.5 percent from a year earlier, government reports showed today. Retail sales fell the most in 13 years, according to data released yesterday. The economy’s deterioration makes harder Prime Minister Naoto Kan’s task of sustaining confidence in Japan’s government debt after Standard & Poor’s yesterday downgraded its outlook for the nation’s rating. The Bank of Japan will today detail an emergency lending program for banks in devastated northeastern areas as a group of lawmakers and former Cabinet ministers presses for more purchases of government bonds.
China Property Slowdown Poses Growth Risks, World Bank Says. China’s real-estate market is a “particular source of risk” to growth given the importance of property construction to the world’s second-biggest economy, the World Bank said today. “Shocks to the property sector that would slow down construction significantly could have a large impact on the economy and on bank balance sheets,” the Washington-based lender said in its China Quarterly Update released in Beijing. “A property downturn could affect the finances of local governments, which do a lot of the infrastructure investment.” Regulators told China’s banks last week to conduct more stress tests on their real-estate lending as the government steps up efforts to curb surging housing prices. A potential rise in bad debts on property loans and credit to local government financing vehicles risks triggering another state- funded bailout, Fitch Ratings said this month. “With tension between the underlying upward housing price pressure and the policy objective to contain price rises, interaction between the market and policy measures could lead to a more abrupt than planned downturn in the real-estate market,” the World Bank said in its report. High property prices should be controlled through “macroeconomic levers” rather than administrative measures, the bank said.
China's B Shares Tumble to Five-Month Low on Capital Gains Tax Speculation. China’s B shares sank for a fifth day, driving the benchmark index to a five-month low, amid speculation the government will impose a capital gains tax on trading of the equities. The Shanghai SE B Share Index, comprising 53 companies whose shares are traded in U.S. dollars, slumped 4.1 percent to 290.7 at the 11:30 a.m. local-time break, extending a four-day, 7.8 percent plunge that included a 5.3 percent retreat yesterday.
Wall Street Journal:
Deadly Storms Hit South. Dozens Killed Across Four States; In Flooded Midwest, a Battle Over Levee Plan. At least 72 people were killed Wednesday in storms across the South, including 58 in Alabama, where a tornado unleashed some of the heaviest damage on a university town. Meanwhile, in the Midwest, officials approved plans to blow up a levee, flooding farms but saving towns, should waters continue to rise at the confluence of the Mississippi and Ohio rivers. Powerful storms raged through the South, uprooting trees, knocking over houses and ripping down power lines. Swaths of Tuscaloosa, Ala., home to the University of Alabama, were reduced to rubble by a tornado reported to be a mile wide, the Associated Press reported. Fifteen people died there.
Chrysler Financing to Pave Way for New DOE Grant. Chrysler Group LLC is expected to disclose Thursday it has hired a group of banks to refinance its government loans, setting the stage for it to apply for additional funding from the Department of Energy, people familiar with the matter said. Chrysler will secure money from a bank group led by Goldman Sachs Group(GS), to repay the $5.8 billion it borrowed from the U.S. and the $1.7 billion it took from the Canadian government during its 2009 bankruptcy, according to these people. In addition to Goldman, the banking group includes Citigroup Inc., Morgan Stanley, and Bank of America Corp., these people said. The repayment of the government debt, coupled with Fiat SpA's intention to increase its current 30% stake in Chrysler to 46% once the loans are paid off, is expected to ease the DOE's concerns about Chrysler and allow the agency to grant the company as much as $3.5 billion in low-interest loans. The money would be used to re-tool its plants to build more fuel-efficient vehicles. The DOE has been reluctant to provide Chrysler the financing amid concerns about the auto maker's long-term financial health.
High Court Clears Rule on Disclosing Creditor Data. The Supreme Court approved a new federal rule requiring distressed-debt investors and others to disclose details of their trades when banding together to influence bankruptcy proceedings. The new rule, drafted by a panel of bankruptcy judges and other restructuring experts, is poised to take effect in December, unless Congress blocks it, which isn't expected. The rule will require investors to reveal their "economic interest" in a company operating under Chapter 11 bankruptcy protection, including debt, stocks and bearish bets such as credit-default swaps.
Citrix(CTXS) Net Up on Strong Revenue Growth. Citrix Systems Inc.'s first-quarter earnings rose 55% as the virtualization and infrastructure software company reported across-the-board revenue growth, led by product license and technical services, while margins expanded. Shares rose 3%, to $80.14 in after-hours trading, as results topped the company's expectations and Citrix raised its outlook for the year.
EBay(EBAY) Tops Street View, Raises Full-Year Outlook. The internet commerce company reported a first-quarter profit of 47 cents, compared with 42 cents a share during the same period a year ago. Sales for the most recent quarter came in at $2.55 billion, versus $2.196 billion last year.
China Census Shows Population, Older and More Urban. China's population grew to 1.34 billion by 2010, according to census figures released on Thursday, up 5.9 percent from the 1.27 billion counted in the last census in 2000, and lower than the 1.4 billion population some demographers had projected for the latest tally. Between 1990 and 2000, the total population increased by 11.7 percent. The proportion of mainland Chinese people aged 14 or younger was 16.60 percent, down by 6.29 percentage points from the number in the 2000 census. The number aged 60 or older grew to 13.26 percent, up 2.93 percentage points.
New York Dominates Hedge Fund Industry. In a report on the global hedge fund industry, TheCityUK states that 41 percent of hedge fund assets were managed out of New York during 2010, compared with 19 percent in London.
Evergreen Solar(ESLR) Warns It May Need Cash Soon; Shares Swoon. Evergreen Solar is in big, fat trouble. The solar products company this afternoon warned that due to a variety of factors, including slower-than-expected demand and worse-than-expected pricing pressure, it is running into a cash crunch.
21% Say U.S. Heading in Right Direction, A New Low. Twenty-one percent (21%) of Likely U.S. Voters say the country is heading in the right direction, according to a new Rasmussen Reports national telephone survey taken the week ending Sunday, April 24. It's the fourth week in a row that the measurement has gone down, with confidence in the nation's course now reaching the lowest point of the Obama presidency. Seventy-one percent (71%) of voters now say the country is heading down the wrong track.
USA Today:
Thefts Rise as Price of Gas Goes Up. As gas prices approach record highs, gas-related thievery is on the rise. Regular gasoline averages $3.88 a gallon, up $1.02 from a year ago and likely to climb higher. Increasingly, consumers are pumping gas and driving off without paying, stealing from other motorists and ripping off large quantities from municipalities and businesses.
Unemployment Rates Down in 317 Cities, Most Since '09. The rate rose in 44 cities and was unchanged in 11. Nationwide, the unemployment rate dipped to a two-year low of 8.8% in March and has dropped a full percentage point since November. Businesses added a net total of more than 200,000 jobs in March and February, the fastest two-month hiring spree in five years.
Reuters:
Norfolk Southern(NSC) Profit Jumps, Shares Rise. U.S. railroad Norfolk Southern Corp reported a quarterly profit that beat Wall Street estimates as shipments of goods from coal to autos picked up, even as higher fuel prices raised costs. Fuel costs and truck capacity shortages have driven more traffic to railroads and intermodal businesses, where transportation costs have risen less. "Looking ahead, we feel confident that the economic recovery is well under way and, barring some extraneous event, it will continue well on into 2012," Chief Executive Wick Moorman told analysts on a conference call. The company said there is a "pervasive interest" and "ongoing building momentum" in shifting from highway transport to more fuel-efficient intermodal for supply chain support.
Equinix(EQIX) Sees Strong Q2, to Open More Data Centers. Equinix Inc forecast second-quarter sales above Wall Street estimates on higher demand for its data-center services and easing pricing pressures, and said it would build new data centers, sending its shares up 3 percent.
Akamai(AKAM) Outlook Disappoints as Shares Plunge. Online content delivery company Akamai Technologies Inc issued a quarterly profit forecast that disappointed investors, sending its shares down 10 percent as it disclosed that spending will rise.
RTP TV:
Bank of Portugal Governor Carlos Costa said that the levels of public debt at present are a barrier to the country's economic growth. "We fell in the debt trap," Costa said. "The deterioration of public accounts reflects increases in spending that are disproportionate in relation to the capacity to generate revenue through taxation," RTP said.
Xinhua:
China's consumer price index may increase from 5.5% to 5.6% on a year earlier in May and June, citing an unidentified Ministry of Finance official.
National Business Daily:
China may raise fuel prices in the second week of May, citing researcher C1 Energy.
Evening Recommendations Citigroup:
Reiterated Buy on (OC), boosted target to $49.
Reiterated Buy on (PH), boosted target to $112.
Reiterated Buy on (BA), boosted target to $90.
Night Trading
Asian equity indices are unch. to +1.0% on average.
Asia Ex-Japan Investment Grade CDS Index 104.50 unch.
Asia Pacific Sovereign CDS Index 112.0 +.5 basis point.
The Chicago Fed National Activity Index for March is estimated at .5 versus -.04 in February.
Advance 1Q GDP is estimated at 2.0% versus a +3.1% gain in 4Q.
Advance 1Q Personal Consumption is estimated to rise +2.0% versus a +4.0% gain in 4Q.
Advance 1Q GDP Price Index is estimated to rise +2.3% versus a +.4% gain in 4Q.
Advance 1Q Core PCE is estimated to rise +1.4% versus a +.4% gain in 4Q.
Initial Jobless Claims for last week are estimated to fall to 395K versus 403K the prior week.
Continuing Claims are estimated to fall to 3680K versus 3695K prior.
10:00 am EST
Pending Home Sales for March are estimated to rise +1.5% versus a +2.1% gain in February.
Upcoming Splits
None of note
Other Potential Market Movers
The Fed's Lockhart speaking, weekly EIA energy inventory data, weekly Bloomberg Consumer Comfort Index and the (LIZ) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and automaker shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.
North American Investment Grade CDS Index 92.25 -.37%
European Financial Sector CDS Index 88.58 -1.28%
Western Europe Sovereign Debt CDS Index 193.92 +.67%
Emerging Market CDS Index 205.79 +.93%
2-Year Swap Spread 15.0 -3 bps
TED Spread 22.0 unch.
Economic Gauges:
3-Month T-Bill Yield .05% unch.
Yield Curve 270.0 +1 bp
China Import Iron Ore Spot $179.50/Metric Tonne +.34%
Citi US Economic Surprise Index 11.70 -.4 point
10-Year TIPS Spread 2.56% -1 bp
Overseas Futures:
Nikkei Futures: Indicating +54 open in Japan
DAX Futures: Indicating +43 open in Germany
Portfolio:
Higher: On gains in my Medical, Retail, Biotech and Tech sector longs
Disclosed Trades: None
Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is bullish as the S&P 500 surges to a new multi-year high, despite US/European debt fears, emerging markets inflation worries, higher energy prices, more hawkish Fed commentary and Mideast unrest. On the positive side, Road & Rail, Education, Gaming, Retail, HMO, Hospital, Drug, Biotech, Medical, Bank, Wireless, Telecom, Computer Service and Internet shares are especially strong, rising more than +1.0%. Tech and Transport shares are outperforming. The Portugal sovereign cds is falling -2.45% to 664.54 bps and the Italy sovereign cds is declining -2.0% to 151.99 bps. The UBS-Bloomberg Spot Ag Index is falling -.96%. On the negative side, Construction, Disk Drive, Steel and Coal shares are under pressure, falling more than -.75%. Copper is declining -1.6%, oil is rising +.83% and lumber is falling another -2.21%. The US price for a gallon of gas is rising .01/gallon today to $3.88/gallon. It is up .76/gallon in 71 days. The Greece, Ireland and Portugal sovereign cds are still near or at record highs.The US dollar continues to trade very poorly, which remains a huge longer-term negative for the US economy and stocks. The Shanghai Composite, after opening higher, reversed and fell another -.49% last night, finishing near session lows. Brazil shares are also weak today with the Bovespa dropping -1.29%. The broad market continues to trade very well and further short-covering, after a brief pause, is likely. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less tech/financial sector pessimism, earnings optimism, buyout speculation, more economic optimism, investor performance angst, less fed uncertainty and technical buying.
Fed Says Recovery is 'Moderate'; Bond Buying to End in June. Federal Reserve policy makers said the economy is recovering at a “moderate pace” and a pickup in inflation is likely to be temporary, as they agreed to finish $600 billion of bond purchases on schedule in June. “The economic recovery is proceeding at a moderate pace and overall conditions in the labor market are improving gradually,” the Federal Open Market Committee said today in its statement after a two-day meeting in Washington. “Increases in the prices of energy and other commodities have pushed up inflation in recent months,” and the Fed expects “these effects to be transitory,” the statement said. The Fed, discussing its securities portfolio, said it “is prepared to adjust those holdings as needed to best foster maximum employment and price stability.” “The Fed’s view of the world hasn’t changed very much,” Gary Stern, former president of the Minneapolis Fed, said in an interview with Bloomberg Radio. “They continue to emphasize the transitory nature of inflation” and “continue to talk about the economy improving at a moderate pace.” The Fed left its benchmark interest rate in a range of zero to 0.25 percent, where it’s been since December 2008, and retained a pledge in place since March 2009 to keep it “exceptionally low” for an “extended period.” “The unemployment rate remains elevated, and measures of underlying inflation continue to be somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate” for stable prices and maximum employment, the Fed said. The “depressed” housing industry remains a weak spot in the economy, it said. The Fed repeated that it will “pay close attention to the evolution of inflation and inflation expectations.” Food and beverage prices rose in the first quarter by the most since 2008, based on the Labor Department’s Consumer Price Index, while the cost of regular-unleaded gasoline has increased by 26 percent this year to $3.88 a gallon as of yesterday.The increases helped slow U.S. growth to a 2 percent pace in the first quarter, according to the median estimate of analysts surveyed by Bloomberg News, from 3.1 percent in the prior period. Since the Fed announced the second round of asset purchases on Nov. 3, yields on 10-year Treasuries increased to 3.31 percent as of yesterday from 2.57 percent. The dollar weakened by 3.5 percent to the lowest since August 2008 against an index of six currencies. Bernanke is still seeing objections from politicians within the U.S. and abroad almost six months after the Fed began the unprecedented second round of asset purchases. Senator Mark Kirk, a first-term Republican from Illinois, sent Bernanke a letter on April 25 expressing concern about inflation. He called for an early end to asset purchases should Bernanke “also find the trends that I have now heard widely about.” Russian Prime Minister Vladimir Putin said last week that compared with the U.S., his country doesn’t have the “same opportunity to make trouble.” The U.S. is “financing the government by using a printing press,” he said.
U.S. Durable-Goods Orders Rise for Third Month as Equipment Is Replenished. Demand for U.S. durable goods rose in March for a third consecutive month, indicating business investment will pick up. Bookings for equipment meant to last at least three years climbed 2.5 percent after a 0.7 percent gain the prior month that reversed a previously reported drop, the Commerce Department said today in Washington. The increase reflected growing demand for machinery, computers and automobiles. Orders excluding transportation equipment rose 1.3 percent, the best performance so far this year. Orders for non-defense capital goods excluding aircraft, items like computers and communications gear, increased 3.7 percent after increasing 0.5 percent the prior month. Shipments of such goods, used in calculating gross domestic product, increased 2.2 percent after increasing 0.4 percent.Demand for machinery rose 4.2 percent, increased 10 percent for computers and related products and rose 3.7 percent for autos. Economists may mark up forecasts for first-quarter gross domestic product after the report showed inventories jumped. Stockpiles grew by 1.3 percent in March, the same as in the prior month.
Gold Futures Surge to Record on Outlook for Sagging Dollar, Low U.S. Rates. Gold futures rose to a record $1,524.20 an ounce on speculation that the Federal Reservewill be slow to raise U.S. borrowing costs, weakening the dollar and boosting the appeal of the precious metal as an alternative asset. The dollar fell to the lowest since December 2009 against the euro after the Fed kept borrowing costs at a record low and said it would continue $600 billion in bond purchases through June. Gold futures for June delivery rose $13.60, or 0.9 percent, to settle at $1,517.10 at 1:48 p.m. on the Comex in New York. After the close, the metal reached the all-time high. The price has gained 31 percent in the past year.
Crude Oil Futures Increase After Report Shows U.S. Fuel Stockpile Decline. Crude oil increased after a U.S. Energy Department report showed that gasoline stockpiles tumbled to the lowest level since August 2009. Futures climbed as much as 0.8 percent after the department said gasoline inventories fell 2.51 million barrels to 205.6 million last week. “Gasoline supplies are definitely on the light side,” said Kyle Cooper, director of research for IAF Advisors in Houston. “With gasoline supplies falling and prices climbing, refiners can pay more for oil. They are going pay more to take delivery of extra barrels of crude because they know they will make money processing it into gasoline.” Crude oil for June delivery rose 41 cents, or 0.4 percent, to $112.62 a barrel at 1:31 a.m. on the New York Mercantile Exchange. Prices are up 37 percent from a year ago. Regular gasoline at the pump, averaged nationwide, increased 1 cent to $3.879 a gallon yesterday, the highest level since Aug. 3, 2008, AAA said on its website. Gasoline demand rose 0.8 percent to 9.06 million barrels a day over the past four weeks, 1.6 percent lower than a year earlier, according to the report. Refineries operated at 82.7 percent of capacity, up 0.2 percentage point from the prior week. That’s down from 89 percent of capacity a year earlier.
Radiation Readings at Stricken Japanese Plant Rise to Highest in Crisis. Radiation readings at Japan’s Fukushima Dai-Ichi station rose to the highest since an earthquake and tsunami knocked out cooling systems, impeding efforts to contain the worst nuclear crisis since Chernobyl. Two robots sent into the reactor No. 1 building at the plant yesterday took readings as high as 1,120 millisierverts of radiation per hour, Junichi Matsumoto, a general manager at Tokyo Electric Power Co., said today. That’s more than four times the annual dose permitted to nuclear workers at the stricken plant. “Tepco must figure out the source of high radiation,” said Hironobu Unesaki, a nuclear engineering professor at Kyoto University. “If it’s from contaminated water leaking from inside the reactor, Tepco’s so-called water tomb may be jeopardized because flooding the containment vessel will result in more radiation in the building.”
Greek, Portuguese Yields, CDS Reach Records as El-Erian Sees 'Lost Decade'. Greek, Irish and Portuguese bonds slumped and costs to insure the securities against default climbed to all-time highs as concern deepened that the nations will need to restructure their debts. Greek two-year yields rose above 25 percent for the first time, while 10-year yields advanced to euro-era highs for the ninth consecutive day. Portuguese two- and 10-year and Irish 10- year yields also reached records. German two-year notes slid as a report showed inflation in Europe’s largest economy accelerated in April and the nation sold 10-year bonds. “The talk about restructuring or rescheduling of Greek debt is not going away,” said Marc Ostwald, a fixed-income strategist at Monument Securities Ltd. in London. “As long as no one can offer the market reassurance that there isn’t going to be a rescheduling or a restructuring, then the market will keep on pricing in more and more.” Greek two-year yields surged as much as 171 basis points to 25.95 percent and were at 25.53 percent as of 4:17 p.m. in London. Ten-year yields soared as much as 101 basis points to 16.34 percent. Portuguese 10-year yields rose as much as 10 basis points to 9.71 percent, while two-year yields climbed 19 basis points to 11.87 percent, also records. The cost of insuring debt sold by Greece, Ireland and Portugal rose to records today, according to traders of credit- default swaps. Contracts on Greece jumped 21 basis points to 1,376 basis points, according to CMA. Contracts on Irish debt added 11 basis points to 685, while Portuguese swaps climbed seven basis points to 688. Greece faces the risk of a Latin American-style lost decade as a result of its debt crisis, Mohamed El-Erian, chief executive officer at Pacific Investment Management Co., the world’s biggest manager of bond funds, told Germany’s Handelsblatt. The extra yield, or spread, investors demand to hold Greek 10-year bonds instead of similar-maturity German bunds widened 81 basis points to 1,289 basis points, after reaching 1,305, the most since at least March 1998, when Bloomberg started collecting the data.
CFTC Proposes Protecting Swaps User Margin From Peer Default. The Commodity Futures Trading Commission approved a proposal to allow swaps users who post collateral to a clearinghouse to have their margin protected against another investor’s bankruptcy, a move that may increase trading costs.
PetroChina Profit Misses Estimates on State Fuel-Price Curbs. PetroChina Co., Asia’s biggest company by market value, posted a 14 percent gain in first- quarter profit, missing estimates, after increases in state- controlled fuel prices lagged behind gains in crude oil costs.China’s government raised fuel prices by less than 11 percent so far this year to contain inflation even as New York crude averaged 20 percent higher in the quarter from a year earlier. The higher price of oil increased PetroChina’s operating costs by 46 percent, according to the statement.
Apple(AAPL) Denies Tracking iPhone Locations. Apple Inc. (AAPL), facing scrutiny from consumers and lawmakers over data collection on its iPhone, said it isn’t tracking customers’ location and plans to retain less information on the device. “Apple is not tracking the location of your iPhone,” the Cupertino, California-based company said in a statement today. “Apple has never done so and has no plans to ever do so.”
Wall Street Journal:
White House Releases Obama Birth Certificate. The White House on Wednesday released President Barack Obama's original "Certificate of Live Birth" from Hawaii amid persistent questions about his citizenship from some of his political opponents. Mr. Obama said he has watched the debate over his birthplace with "bemusement." Lawmakers from both parties, investigative reporters and others have probed his birthplace and confirmed "that yes, in fact, I was born in Hawaii on Aug. 4, 1961, in Kapiolani hospital."
MarketWatch:
Amazon's Bezos Defends Spending; Stock Tops High. Shares of Amazon.com Inc. shares jumped to a record high Wednesday following strong first-quarter sales growth, as well as a letter from Chief Executive Jeff Bezos that defended the company’s massive investments in technology and infrastructure. By early afternoon, Amazon(AMZN) stock was up more than 6% to $193.43. The shares have risen more than 20% in the last six weeks
CNBC.com:
A Major Bear Goes Bullish. David Rosenberg, the curmudgeonly senior strategist and economist at Gluskin Sheff in Toronto, told clients Wednesday in his daily newsletter that he’s finally given up his long-held position that the market is heading for a thud, if not an all-out crash.
Lobbyist Fires Warning Shot Over Donation Disclosure Plan. After a brief truce of sorts between the White House and business leaders, the top lobbyist at the U.S. Chamber of Commerce took aim at President Obama on Tuesday over an as-yet unannounced plan to force government contractors to disclose their political giving. The lobbyist, R. Bruce Josten, said in an interview that the powerful business bloc “is not going to tolerate” what it saw as a “backdoor attempt” by the White House to silence private-sector opponents by disclosing their political spending. Mr. Josten said the chamber was concerned about a variety of Obama administration policies that it considered potentially damaging to businesses in a time of economic uncertainty. Those concerns include the efforts to carry out last year’s health care plan, a vast expansion of business regulations under the Dodd-Frank measure passed by Congress and the slow pace of new trade agreements with foreign nations. American businesses “are losing market share” globally to countries like Canada that have enacted new trade pacts, Mr. Josten said. “The rest of the world — while we’re sitting around doing nothing — is racing ahead.”
Washington Post:
Trump's Donation History Shows Democratic Favoritism. Billionaire Donald J. Trump, an early presidential favorite among tea party activists, has a highly unusual history of political contributions for a prospective Republican candidate: He has given most of his money to the other side. Recipients include Senate Majority Leader Harry M. Reid(Nev.), former Pennsylvania governor Edward G. Rendell, and Rahm Emanuel, a former aide to President Obama who received $50,000 from Trump during his recent run to become Chicago’s mayor, records show.
Circumcision Ban a Step Closer to the Ballot. The ban would outlaw circumcision in the city on any male under 18 years old - even for religious reasons. Breaking the law would count as a misdemeanor punishable by a fine of up to $1,000 and jail time for up to a year. Opponents say the ballot measure would never stand up in court because it violates the freedom of religion clause of the U.S. Constitution.
Boston Herald:
Jack Welch: Fed's Free Money Policies Court Disaster. Former General Electric CEO Jack Welch is warning that the Federal Reserve’s easy-money policies will eventually cause a major economic “blowout.” Speaking at the Massachusetts Institute of Technology yesterday, Welch slammed the Fed’s decision to keep the interest that banks pay for money at essentially zero percent since Wall Street crashed in 2008. “We’re at this point now where money is (interest) free,” Welch said in a speech at the Sloan School of Management. “With free money ... something’s going to blow here — and blow big. Because you can’t have free money and (Wall Street) risk-taking all in the same culture and not expect a blowout.”
Reuters:
Apple(AAPL) to Sell iPad 2 in India From April 29. Apple's iPad 2 will be available in Indian stores from Friday, just over a month after the company started selling the updated version of its popular tablet device in the United States.
China to Keep Family Planning Policy. China will stick to its current family planning policy and maintain a low birth rate, citing Chinese president Hu Jintao.
Dawn.com:
Pakistan Government Expects $981 Million From US by June. ISLAMABAD: Expecting a disbursement of $981 million by the US by June this year under the coalition support fund and Kerry-Lugar-Berman Act, Finance Minister Dr Abdul Hafeez Shaikh on Tuesday identified five major challenges of the next year’s budget.
