Wednesday, March 30, 2011

Today's Headlines

Posted by Gary .....at 3:07 PM

Bloomberg:
  • U.S. Companies Add 201,000 Jobs in Sign Labor Market Recovering, ADP Says. Companies in the U.S. added more workers in March, a sign the labor market may be strengthening, data from a private report based on payrolls showed today. Employment increased by 201,000 workers in March after a revised 208,000 gain in February, according to figures from ADP Employer Services. The median estimate in the Bloomberg News survey called for a 208,000 gain. Businesses added 210,000 jobs in March and the jobless rate held 8.9 percent, economists project a Labor Department report to show in two days. Another report today showed employers announced fewer job cuts in March than the same month last year, even as government payroll cutbacks climbed to the highest level in a year. Planned firings decreased 39 percent to 41,528 this month from March 2010, according to Chicago-based Challenger, Gray & Christmas Inc. Public employees accounted for almost half of all job cuts. Companies employing more than 499 workers expanded their workforces by 17,000 jobs. Medium-sized businesses, with 50 to 499 employees, created 82,000 jobs and small companies increased payrolls by 102,000, ADP said.
  • Unemployment Rate in Washington's Ward 8 Is Highest in U.S. The jobless rate in the poorest part of the District of Columbia is higher than in any U.S. metropolitan area with a labor-force of comparable size, according to figures released by the city government. Unemployment in the Ward 8 section of the capital climbed to 25.2 percent in January, the latest month of available data, from 23.1 percent in December, figures from the Department of Employment Services show. Ward 8 is in the southeast section of The next highest rate, as measured by the U.S. Labor Department, was 25.1 percent, in El Centro, California.Washington, about four miles from the White House and home to the Anacostia neighborhood. The poverty rate is 35 percent, compared with 18 percent for the city as a whole.
  • Hoenig Blames Fed for Higher Commodity Prices, Urges Tightening. The Federal Reserve's “highly accommodative” monetary policy is partly to blame for rapidly increasing global commodity prices, said Kansas City Fed President Thomas Hoenig, who called on colleagues to raise the benchmark interest rate toward 1 percent soon. “Once again there are signs that the world is building new economic imbalances and inflationary impulses,” Hoenig, the central bank's longest-serving policy maker and the lone dissenter at Fed meetings last year, said in the text of a speech today in London. “The longer policy remains as it is, the greater the likelihood these pressures will build and ultimately undermine world growth.” The Federal Open Market Committee “should gradually allow its $3 trillion balance sheet to shrink toward its pre-crisis level of $1 trillion,” Hoenig, 64, said in his remarks at the London School of Economics and Political Science. “It should move the U.S. federal funds rate off of zero and toward 1 percent within a fairly short period of time.” “Policy should acknowledge the improving economic trends and begin to withdraw some degree of accommodation,” he said. “If this is not done, then the risk of introducing new imbalances and long-term inflationary pressures into an already fragile recovery increase significantly.”
  • Obama Won't Rule Out Arming Rebels as Qaddafi Forces Advance. Libyan rebels retreated under fire from Muammar Qaddafi’s troops as President Barack Obama and U.K. Prime Minister David Cameron said they may consider sending arms to the opposition forces. “We will be providing them direct assistance,” Obama said in an NBC “Nightly News” interview yesterday. Asked if this meant sending weapons to the rebels, Obama said: “I’m not ruling it out. But I’m also not ruling it in.” Rebels, after advancing toward Qaddafi’s hometown of Sirte, withdrew in the face of artillery and rocket attacks as pro- Qaddafi forces retook control of the oil port of Ras Lanuf. The BBC and New York Times, citing reporters near the Libyan front line, said rebels are streaming away from Brega and heading northeast toward Ajdabiya. “There’s little indication that Qaddafi’s forces were driven back by the rebels,” Nate Hughes, director of military analysis at the Austin, Texas-based geopolitical advisory firm Stratfor, said in a telephone interview. “The rebels are no match for Qaddafi’s forces.” Qaddafi’s advance shows he retains military capacity after almost two weeks of U.S.-led bombing that has targeted his air defenses, armor and army installations. “In two weeks from now, if the rebels haven’t taken Tripoli and Qaddafi is still in charge, I see a second UN mandate for ground troops,” Florence Gaub, a North Africa expert at the NATO Defense College in Rome, said in a telephone interview.
  • Deal Rush Pushes Takeovers to Most Expensive Since Lehman. Corporate executives in the first quarter paid the most for takeovers since before the collapse of Lehman Brothers Holdings Inc., kicking off what investment bankers say may be the busiest year for deals since 2007. Acquirers paid a median 9.2 times earnings before interest, taxes, depreciation and amortization for companies in the period, the most since the second quarter of 2008, according to data compiled by Bloomberg. Valuations are still lower than during the last M&A boom, when they peaked at 11.4 times Ebitda.
  • Optimism Among U.S. CEOs Tops Pre-Slump High. Optimism among U.S. chief executive officers surpassed the highest level reached before the recession as more business leaders projected increased sales, investment and hiring, a survey showed. The Business Roundtable’s economic outlook index increased to 113 in the first quarter, the highest point since records began in 2002, from 101 in the previous three months, the Washington-based group said today. Readings greater than 50 coincide with an economic expansion. The previous peak was 104 in the first three months of 2005. “Companies have given strong signals about their willingness to expand,” Ivan G. Seidenberg, chairman of the Business Roundtable and chief executive officer of New York- based Verizon Communications Inc. (VZ), said in a press conference. “As we keep a steady flow of capital investment, we’ll certainly see sales forecasts go up, and as we do that we’ll start to see hiring.” None of the 142 CEOs surveyed said they expected a decline in sales in the next six months, and 92 percent projected an increase, paving the way for more hiring and investment in equipment. A gain in capital spending plans points to further strength in manufacturing, the industry that’s propelled the economic expansion.
  • Fukushima Governor Sato Slams Japan's Handling of Nuclear Reactor Disaster. Fukushima Prefecture, epicenter of the world’s worst nuclear disaster since Chernobyl in 1986, accused Japan’s central government of sowing confusion and hampering recovery efforts through poor communication.
  • Bunds to Underperform on Permanent German Support for Neighbors, MEAG Says. German bunds may underperform U.K. and U.S. bonds as Europe’s biggest economy is likely to take on supporting its weakest euro-region partners as a permanent burden, according to MEAG Munich Ergo Asset Management GmbH. “Bunds enjoy a huge risk premium right now, which they may no longer enjoy to the same degree as we are moving to a kind of transfer union,” where weaker nations such as Ireland and Portugal are officially supported by their stronger neighbors, Reiner Back, who oversees more than $150 billion as head of fixed income and foreign exchange at MEAG in Munich, said in a telephone interview. German debt is already lagging behind gilts and Treasuries. Yields have climbed this year as the nation committed to aiding the region’s weakest members beyond an initial three-year period ending in 2013.
  • AT&T(T) CEO Makes Case T-Mobile Deal Will Boost iPhone Service. AT&T Inc. (T) Chief Executive Officer Randall Stephenson, making his case for a proposed takeover of T-Mobile USA, said the deal would boost network capacity and improve service for devices such as Apple Inc. (AAPL)’s iPhone. The acquisition would improve capacity on AT&T’s wireless network by about 30 percent in some of the largest U.S. cities, Stephenson said today at an event at the Council on Foreign Relations in New York. It could also reduce charges for overseas roaming, he said. “This transaction is very instrumental” in improving network service, said Stephenson at the event. “Virtually on the day you close the deal, getting a 30 percent lift in capacity in New York City: that’s a significant improvement in call quality and data throughput.”
  • Visa(V), MasterCard(MA) Jump on Possible Delay of Debit-Card Curbs. Visa Inc. (V) and MasterCard Inc. (MA), the two biggest U.S. payment networks, posted their biggest gains of the year on speculation that U.S. curbs on debit-card fees will be delayed or modified. Visa advanced $2.99, or 4.1 percent, to $75.19 at 10:57 a.m. in New York Stock Exchange composite trading, the most since June for the San Francisco-based firm. MasterCard jumped $6.58, or 2.6 percent, to $258.29 after gaining as much as 4.2 percent.

Wall Street Journal:
  • Gadhafi Push Tests The Coalition Strategy. Forces loyal to Col. Moammar Gadhafi continued to push rebels out of positions along coastal oil towns, further delaying the rebel drive on Tripoli and testing the limits of the coalition airstrikes at a time when the alliance is considering arming the rebels.
  • First Solar(FSLR) Chairman Ahearn Slashes Stake. First Solar Inc. (FSLR) Chairman Michael Ahearn may be taking a dimmer view of the solar power company these days, having cut his stake by nearly half in the past month.
  • Morgan Stanley(MS) Sees Even Higher Corn, Soybean Prices Ahead. Most agricultural commodities are marginally lower today, with the exception of soybeans, but that hasn’t stopped Morgan Stanley from getting bullish on foodstuffs. Dow Jones reports that Morgan Stanley believes corn and soybean prices need to jump even more – they recently hit two-and-a-half-year highs – to entice farmers to plant more. The investment bank said it initiated a long position in November 2011 soybean futures to go along with its long December 2011 corn futures position. The USDA is scheduled to issue it plantings estimate report tomorrow.
  • Google(GOOG) Seeks Answer to Facebook With 'Social Search'. Google Inc., seeing a threat from social-networking companies such as Facebook Inc., plans to allow people to reorder the way websites are ranked on its core Web-search engine based on which sites they and their friends like or find useful, said people familiar with the matter.
MarketWatch:
CNBC.com:
  • JPMorgan's(JPM) Dimon Slams CFTC on Swaps Crackdown. Jamie Dimon, chief executive of Wall Street giant JPMorgan Chase(JPM), lashed out on Wednesday at efforts by U.S. regulators to police the $600 trillion swaps market, in which his bank is a big player. New regulations being implemented by the U.S. Commodity Futures Trading Commission, mandated under 2010's Dodd-Frank Wall Street reforms, "would damage America," Dimon said at a U.S. Chamber of Commerce event on capital markets. He was upbeat about the economy, however. "Corporate America is in very good shape. It's well-financed, it's well-funded," he said. "The consumer is spending ... housing is better than it was."
  • Why the New Mortgage Risk Rules May Fail.
Business Insider:
Quinnipiac University:
  • Obama Gets Lowest Approval, Re-Elect Score Ever, Quinnipiac National Poll Finds; More Voters Oppose US Involvement in Libya. American voters disapprove 48 - 42 percent of the job President Barack Obama is doing and say 50 - 41 percent he does not deserve to be re-elected in 2012, both all-time lows, according to a Quinnipiac University poll released today. This compares to a 46 - 46 percent job approval rating and a 45 - 47 percent split on the President's re-election in a March 3 survey by the independent Quinnipiac (KWIN-uh-pe-ack) University. In a hypothetical 2012 matchup, President Obama gets 36 percent of the vote to 37 percent for an unnamed Republican challenger. Voters oppose 47 - 41 percent America's involvement in Libya. In the survey concluded Monday evening as President Obama was addressing the nation about Libya, voters say 58 - 29 percent that he has not clearly stated U.S. goals for Libya.
Apple Insider:
  • Cheaper iPhone Could Give Apple(AAPL) Control of China's Smartphone Market. A new survey shows that Apple is poised to capitalize on an explosion in sales of 3G smartphones in China, with the iPhone the most popular option, though lower prices could give it the lion's share of sales. The survey results revealed this week by Morgan Stanley and AlphaWise show 3G handsets and smartphones are taking off in China in 2011. Nearly 90 percent of respondents said they have "high interest" in buying a 3G handset or smartphone as their next phone. Of those who plan to buy a smartphone, the most popular option is Apple's iPhone. A total of 30 percent of respondents with 3G handset purchase intensions said they will most likely purchase an iPhone, followed by 25 percent for a Nokia device, 7 percent for HTC, 5 percent for Samsung, and 4 percent for Motorola. The iPhone would be an even more popular option, the survey found, if Apple were to lower the price of its smartphone. With a cheaper option, Apple would command a 53 percent share of 3G phone buyers, leaving Nokia with 20 percent and Research in Motion's BlackBery with 5 percent.
Channel 6 News:
  • Iran Welcomes Egypt's Willingness to Resume Bilateral Ties. Iran's Foreign Minister Ali Akbar Salehi on Wednesday welcomed remarks by his Egyptian counterpart Nabil al-Arabi on promoting bilateral ties, Press TV reported. The Iranian foreign minister commented on the remarks by saying "despite the ups and downs, the historical ties between the two countries have been sustained." He added that good relations between the two countries could help the region's stability, security and development. The new Egypt's foreign minister said on Tuesday that his government is ready to open "a new page with Iran," but added that the establishment of diplomatic ties depends on the Iranian side. Al-Arabi said that the Egyptian government does not see Iran as an enemy state, noting that the two countries have historically had deep relations.
Reuters:
Die Zeit:
  • Germans are becoming increasingly skeptical about the benefits of the single-European currency, with only 55% expressing confidence in the euro's long-term success, citing a survey by the Ipsos research service for the Assoc. of German Banks. Germans are also increasingly doubtful about European Union membership, with 31% of those asked saying the EU has more disadvantages than benefits, the highest level since 1994. Only 24% regard EU membership as offering more advantages.
0 comments

Bear Radar

Posted by Gary .....at 2:07 PM

Style Underperformer:
  • Large-Cap Growth (+.62%)
Sector Underperformers:
  • 1) Homebuilders -.41% 2) Road & Rail -.35% 3) Oil Service -.19%
Stocks Falling on Unusual Volume:
  • GBX, ACXM, ALGN, CCIH, MKC and LEN
Stocks With Unusual Put Option Activity:
  • 1) DVN 2) EWW 3) COCO 4) CLWR 5) RSH
Stocks With Most Negative News Mentions:
  • 1) PKD 2) EOG 3) DRCO 4) TSLA 5) CEPH
Charts:
0 comments

Bull Radar

Posted by Gary .....at 11:35 AM

Style Outperformer:
  • Large-Cap Value (+.94%)
Sector Outperformers:
  • 1) Education +1.93% 2) Telecom +1.82% 3) Biotech +1.64%
Stocks Rising on Unusual Volume:
  • CEPH, VRX, PHI, EQIX, PTR, MLNX, ENB, CLNE, SMT, WPRT, IDCC, SHPGY, PENN, TDSC, ASMI, JOSB, OMCL, NUAN, ENDP, DISCK, OTEX, FSYS, CYMI, IOSP, WERN, NNBR, OXM, XBI, BLK, LNN, PUI, PPG, WTW, IPG, SJT, VHC, RAX, PPG, COG, ALJ, GGC, V, RRC, FRX, OPEN and BRKR
Stocks With Unusual Call Option Activity:
  • 1) CEPH 2) VRX 3) GNW 4) MA 5) AMR
Stocks With Most Positive News Mentions:
  • 1) INSU 2) AMZN 3) CRM 4) NWSA 5) SINA
Charts:
1 comments

Wednesday Watch

Posted by Gary .....at 1:10 AM

Evening Headlines
Bloomberg:
  • Libyan Rebels Forced to Retreat as Nations Seek Qaddafi's Fall. Libyan rebels were forced to retreat in the face of artillery and rocket fire from government troops defending Sirte, cutting short their advance as foreign ministers from alliance nations met in London to coordinate strategy for driving Muammar Qaddafi from power. “We will continue to implement the United Nations resolutions for as long as is necessary to protect the Libyan people from danger.”
  • Tepco's Damaged Reactors May Take 30 Years, $12 Billion to Scrap. Damaged reactors at the crippled Fukushima Dai-Ichi nuclear plant may take three decades to decommission and cost operator Tokyo Electric Power Co. more than 1 trillion yen ($12 billion), engineers and analysts said. Four of the plant’s six reactors became useless when sea water was used to cool them after the March 11 earthquake and tsunami knocked out generators running its cooling systems. The entire station north of Tokyo will likely be decommissioned, Japanese Prime Minister Naoto Kan said yesterday. The damaged reactors need to be demolished after they have cooled and radioactive materials are removed and stored, said Tomoko Murakami, a nuclear researcher at the Institute of Energy Economics, Japan. The process will take longer than the 12 years needed to decommission the Three Mile Island reactor in Pennsylvania following a partial meltdown, said Hironobu Unesaki, a nuclear engineering professor at Kyoto University.
  • Assad Faces a Critical Moment as Syrians Seek Freedoms, Multiparty System. Syrian President Bashar al-Assad accepted the resignation of his cabinet in advance of a speech, in which he may offer to lift the nation’s emergency law in response to the anti-government protests that pose the most serious challenge to his rule since he inherited power from his father in 2000.
  • China, India to Add Nuclear Reactors Amid Quake Disaster, Berstein Says. China and India, the world’s two fastest-growing major economies, may boost their share of global nuclear power sevenfold by 2030 to meet electricity demand and emissions goals, according to Sanford C. Bernstein & Co.
  • Bailouts Damaged Market Confidence in Banks, Salgado Tells FT. Banco Espirito Santo SA (BES) Chief Executive Officer Ricardo Salgado said Europe’s bailouts in Ireland and Greece damaged market confidence in the countries’ banking sectors and had “poor results,” the Financial Times reported, citing an interview. The interests rates “were too high” and the debt had “too short a maturity,” Salgado said, according to the newspaper. Portugal can avoid a European bailout as long as the European Central Bank continues to provide liquidity to its banks, Salgado also said, according to the FT.
  • Beijing aims to lower the average price of new homes in the city this year as compared with 2010, the municipal government said in a statement on its website.
  • Valeant Pharma(VRX) Offers to Acquire Cephalon(CEPH) for $5.7 Billion. Valeant Pharmaceuticals International Inc. (VRX), a Canadian drugmaker focused on neurology and dermatology, made a hostile bid to buy Cephalon Inc. (CEPH) for about $5.7 billion, or $73 a share in cash. The offer is a 24 percent premium to today’s closing price of $58.75 for Frazer, Pennsylvania-based Cephalon. The company’s shares jumped to $72.89 at 5:32 p.m. New York time in trading after the close of the Nasdaq Stock Market.
  • Sushi Purchases From Japan Canceled Amid Concerns About Radiation Leakage. Exports of Japanese seafood have been canceled by foreign buyers on concern that the products may have been contaminated by radiation leaking from the crippled Fukushima nuclear plant, a government official said.
  • Director of China Companies in U.S. Says Nevermind as Resume Proves False. Gene Michael Bennett, a director for at least four Chinese companies trading in the U.S., has come under the scrutiny of a short seller who says he’s not what he claims.
Wall Street Journal:
  • At Plant, a Choice Between Bad, Worse. Workers at Japan's Fukushima Daiichi nuclear complex positioned sandbags and concrete barriers around drains leading from the plant Tuesday, setting a last line of defense against highly radioactive water that has flooded reactor buildings and threatens to spill into the ocean. At the same time, Japanese officials said Tuesday they would keep dousing the plant's stricken reactors with water—a course of action that could raise those water levels further.
  • Why I Won't Vote to Raise the Debt Limit by Senator Marco Rubio. Americans have built the single greatest nation in all of human history. But America's exceptionalism was not preordained. Every generation has had to confront and solve serious challenges and, because they did, each has left the next better off. Until now. Our generation's greatest challenge is an economy that isn't growing, alongside a national debt that is. If we fail to confront this, our children will be the first Americans ever to inherit a country worse off than the one their parents were given. Current federal policies make it harder for job creators to start and grow businesses. Taxes on individuals are complicated and set to rise in less than two years. Corporate taxes will soon be the highest in the industrialized world. Federal agencies torment job creators with an endless string of rules and regulations. On top of all this, we have an unsustainable national debt.
  • Oil Prices May Complicate China's Monetary Policy - World Bank Economist. High oil and food prices may complicate China's carefully-balanced monetary policy, creating new problems for Beijing's management of the country's potential real estate bubble, one of the World Bank's top economists warned Tuesday. Hans Timmer, director of the bank's Development Prospects Group, said needed attention to rising commodity price inflation is creating difficulties for authorities attempting to prevent ballooning asset prices. If popped, those market bubbles could cause a raft of financial and economic problems.
  • Smartphone Sales to Continue Surge. The smartphone market is expected to continue its strong growth this year, with global device shipments pegged to jump at a rate of nearly 50%, technology researchers IDC predicted Tuesday.
MarketWatch:
CNBC:
  • Cramer Explains What's Key to This Market. Cramer on Tuesday marveled at how the market continues to push higher despite a long list of negative economic news. "For the first time in a long time we're witnessing true bull market behavior where buyers don't scare easily and are willing to massively overpay anything with growth," Cramer said. "There's a shortage of, well, fright."
Business Insider:
  • Discord at the Fed Has Bernanke Out On A Limb. The voices of dissent within the Federal Reserve are growing louder, fueled by concerns that current monetary policy could boost inflation by keeping interest rates too low for too long in a growing economy. In recent weeks at least four Fed officials have suggested that policymakers need to review the current round of quantitative easing program, or QE2. Their comments are raising questions in the financial markets about whether the Fed may cut short its plan to purchase $600 billion of Treasury securities by the end of June, as well as more fundamental questions about how and when the Fed will start to lift interest rates.
  • Poll: Mexico's Cartels Are Winning The Drug War. Six out of 10 Mexicans think the country's violent criminal gangs are winning President Felipe Calderon's war against the drug cartels, according to a new poll released Tuesday.
  • How a Chemist (Allegedly) Made $3.6 Million Through Insider Trading.
Zero Hedge:
  • US To Purchase Oil From Libyan Rebels, Thereby Funding "Flickers" Of Al Qaeda. Following recent news that the supremely organized Libyan rebels have established their own central bank and oil company (does anyone recall when rebels merely rebelled instead of immediately setting up an oil export infrastructure and a fiat counterfeiting authority... those were the days), we now learn that this impressively "impromptu" development may have actually been intended all along. From Reuters: "The United States on Monday gave a green light to sales of Libyan crude oil from rebel-held territory, giving a potential boost to forces battling Muammar Gaddafi. And the kicker: according to the US NATO leader among those profiting from this latest move of US desperation is none other than Al Qaeda.
  • Alpha Flash: For All Your Nanosecond, Collocated, Algorithmic Frontrunning Needs. Ever feel like your nanosecond algorithmic frontrunning skills are becoming obsolete? Unable to scalp even a few extra pennies from illiterate orphans, widows and kittens armed with REDIPlus 9.0? The joy in subpennying Fido and Vanguard on their block purchases of Netflix no longer there? Finding yourself quote stuffing and crashing the market just for the existential hell of it? Despair not, for Deutsche Boerse (better known as the firm that any minute now will be outbid by the Amish market in its acquisition of NYSE according to Gasparino's latest rumor) has Alpha Flash just for you.
  • TEPCO Stock Implodes as Radioactive Iodine in Fukushima Seawater Now 3,355 Above Limit.
New York Times:
  • Where the Bailout Went Wrong by Neil M. Barofsky. TWO and a half years ago, Congress passed the legislation that bailed out the country’s banks. The government has declared its mission accomplished, calling the program remarkably effective “by any objective measure.” On my last day as the special inspector general of the bailout program, I regret to say that I strongly disagree. The bank bailout, more formally called the Troubled Asset Relief Program, failed to meet some of its most important goals.From the perspective of the largest financial institutions, the glowing assessment is warranted: billions of dollars in taxpayer money allowed institutions that were on the brink of collapse not only to survive but even to flourish. These banks now enjoy record profits and the seemingly permanent competitive advantage that accompanies being deemed “too big to fail.” Though there is no question that the country benefited by avoiding a meltdown of the financial system, this cannot be the only yardstick by which TARP’s legacy is measured. The legislation that created TARP, the Emergency Economic Stabilization Act, had far broader goals, including protecting home values and preserving homeownership. These Main Street-oriented goals were not, as the Treasury Department is now suggesting, mere window dressing that needed only to be taken “into account.” Rather, they were a central part of the compromise with reluctant members of Congress to cast a vote that in many cases proved to be political suicide. The act’s emphasis on preserving homeownership was particularly vital to passage. Congress was told that TARP would be used to purchase up to $700 billion of mortgages, and, to obtain the necessary votes, Treasury promised that it would modify those mortgages to assist struggling homeowners. Indeed, the act expressly directs the department to do just that. But it has done little to abide by this legislative bargain.
Forbes:
The Daily Beast:
  • Where Will All The Tsunami Orphans Go? Americans clamoring to adopt children of the Japan tsunami's victims will likely be disappointed. Tony Dokoupil on what happens to orphans in a country where adoption is virtually unheard of.
Real Clear Politics:
  • Measuring Force by Thomas Sowell. You don't just walk up to the local bully and slap him across the face. If you are determined to confront him, then you try to knock the living daylights out of him. Otherwise, you are better off to leave him alone.
Reuters:
  • Fed's Fisher Says Opposes Extending Easing - Fox. A top Federal Reserve official said on Tuesday he would vote against any further monetary easing by the central bank after the current program is finished in June. The comments by Dallas Fed President Richard Fisher boosted the dollar across the board in early Asian trade. "I will vote against ... any further extension of that program," Fisher said in an interview on Fox Business. "I cannot foresee a circumstance where I can support any further liquidity in the economy."
  • Oxford(OXM) Q4 Tops; Sees Strong Q1 on Tommy Bahama Gains. Oxford Industries Inc's quarterly results topped market expectations and the apparel maker forecast a strong first-quarter and year ahead, spurred by strong sales at its core Tommy Bahama brand. The company, whose brands also include Lilly Pulitzer, Ben Sherman and Oxford Golf, increased its quarterly dividend 18 percent to 13 cents a share. Shares of the Atlanta-based company jumped 11 percent to $27.80 in extended trade.
Financial Times:
NHK:
  • Japan's Federation of Economic Organizations, the nation's largest business lobby, will request member companies to reduce power consumption by 25% to avoid planned blackouts in the peak usage season.
Financial News:
  • More than 60% of Beijing residents will change their home purchasing plans because of the government's property control measures, citing a survey by the central bank's Beijing operations office.
Economic Information Daily:
  • Investors bought large amounts of rare earth metals from the eastern Chinese province of Jiangxi and the northern city of Baotau in the past two months, citing a rare earth company official in Jiangxi. The investors are from regions such as the city of Wenzhou in Zhejiang province, citing the company official. These buyers mainly want to hoard the rare earths instead of making use of the resources, the company official said.
21st Century Business Herald:
  • China may limit lending by trust companies by ordering them to place funds in an account as reserves with the People's Bank of China, citing a person close to the central bank. Trust companies are not "in principle" able to extend new loans. If they do make new loans, the central bank may order the trust companies to set aside reserves that are equal to 150% of the new lending.
Evening Recommendations
Citigroup:
  • Reiterated Buy on (PVH), raised estimates, target $82.
Wells Fargo:
  • Rated (BRKR) Outperform.
Night Trading
  • Asian equity indices are +.75% to +1.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 109.50 -1.5 basis points.
  • Asia Pacific Sovereign CDS Index 125.50 unch.
  • S&P 500 futures +.35%.
  • NASDAQ 100 futures +.44%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (FDO)/.98
  • (AYI)/.50
  • (MOS)/1.08
Economic Releases
8:15 am EST
  • The ADP Employment Change for March is estimated at 208K versus 217K in February.
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,500,000 barrels versus a +2,131,000 barrel gain the prior week. Distillate inventories are estimated to fall by -1,000,000 barrels versus a +7,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -2,000,000 barrels versus a -5,320,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.3% versus a +.7% gain the prior week.
Upcoming Splits
  • (FTI) 2-for-1
Other Potential Market Movers
  • The Fed's Hoenig speaking, Fed's Lacker speaking, Fed's Bullard speaking, Challenger Job Cuts report for March, $29 Billion 7-year Treasury Notes Auction, weekly MBA mortgage applications report and the (NSP) Investor Day could also impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by technology and financial shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.
0 comments

Tuesday, March 29, 2011

Stocks Rising into Final Hour on Window Dressing, Economic Optimism, Short-Covering, Technical Buying

Posted by Gary .....at 3:52 PM

Broad Market Tone:
  • Advance/Decline Line: Higher
  • Sector Performance: Most Sectors Rising
  • Volume: Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • VIX 18.48 -4.94%
  • ISE Sentiment Index 112.0 -16.42%
  • Total Put/Call .74 -8.64%
  • NYSE Arms 1.01 -9.31%
Credit Investor Angst:
  • North American Investment Grade CDS Index 96.14 +1.46%
  • European Financial Sector CDS Index 94.83 -2.75%
  • Western Europe Sovereign Debt CDS Index 167.75 bps -.49%
  • Emerging Market CDS Index 208.32 -.43%
  • 2-Year Swap Spread 17.0 -3 bps
  • TED Spread 22.0 -1 bp
Economic Gauges:
  • 3-Month T-Bill Yield .09% +1 bp
  • Yield Curve 266.0 -2 bps
  • China Import Iron Ore Spot $168.50/Metric Tonne +.66%
  • Citi US Economic Surprise Index +46.10 -4.2 points
  • 10-Year TIPS Spread 2.46% unch.
Overseas Futures:
  • Nikkei Futures: Indicating +50 open in Japan
  • DAX Futures: Indicating +32 open in Germany
Portfolio:
  • Higher: On gains in my Tech, Retail, Biotech and Medical longs
  • Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges, covered some of my (EEM) short
  • Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is bullish as the S&P 500 bounced sharply off its 50-day moving average this morning, despite rising Mideast unrest, higher energy prices, US housing worries, emerging market inflation fears, more hawkish Fed commentary, eurozone debt angst and Japan concerns. On the positive side, Gaming, Biotech, Wireless, Telecom, Steel, Oil Service and Alt Energy shares are especially strong, rising 1.5%+. Small-caps and cyclicals are outperforming. Gold is down -.2%. The Italy sovereign cds is falling -3.0%, the Belgium sovereign cds is declining -3.47% to 138.13 bps and the UK sovereign cds is falling -3.47% to 55.27 bps. On the negative side, Education, Homebuilding, Airline, I-Banking and Computer Hardware shares are lower on the day. (XLF)/(IYR) have lagged badly throughout the day. Oil is rising +1.01% and Lumber is falling -2.63%. The US price for a gallon of gas is +.01/gallon today to $3.59/gallon. It is up .47/gallon in 42 days. Weekly retail sales rose +2.3% this week versus a +2.2% gain the prior week. This is down from a +3.6% gain the week of 1/4 and below the long-term average of a +2.7% gain. The Spain sovereign cds is climbing +2.73% to 218.48 bps, the Greece sovereign cds is rising +2.38% to 999.94 bps and the Russia sovereign cds is rising +3.23% to 131.96 bps. Some market leading stocks aren't participating today, which is always a concern. As well, overseas markets finished mostly weaker overnight. However, the bears were unable to gain any traction again this morning despite a number of potential catalysts. Quarter-end window dressing and expectations for a strong jobs report on Friday are likely aiding the bulls today. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, more economic optimism, window-dressing, technical buying and buyout speculation.


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Today's Headlines

Posted by Gary .....at 3:08 PM

Bloomberg:
  • Portugal, Greece Downgraded by S&P on Restructuring Concerns. Portugal and Greece were downgraded by Standard & Poor’s, which said the European Union’s new bailout rules may mean that both nations eventually renege on their debt obligations. S&P cut Portugal for the second time in a week to the lowest investment-grade rating of BBB-, three steps below Ireland. Greece’s rating fell two grades to BB-, three levels below investment grade. S&P cited concerns that both countries may be forced to restructure debt after seeking European aid and that governments will be paid back before other creditors. The moves increase pressure on European policy makers trying to stem the sovereign-debt crisis almost a year after Greece became the first euro member to seek a bailout. Even as Portuguese Prime Minister Jose Socrates repeatedly denies his country needs help, investors are increasing bets that it will be forced to follow Greece and Ireland into seeking aid. “The downgrades intensify the pressures facing peripheral economies, Portugal in particular,” said Neil Mackinnon, a London-based economist at VTB Capital Plc and a former U.K. Treasury official. “It increases the likelihood of bailout.”
  • U.S. Consumer Confidence Falls to a Three-Month Low. Confidence among U.S. consumers dropped more than forecast in March as fuel costs surged to the highest level in more than two years. The Conference Board’s confidence index fell to a three- month low of 63.4 from a revised 72 reading in February, figures from the New York-based private research group showed today. Another report showed home prices decreased in January for a seventh consecutive month. Sentiment may remain suppressed as higher prices at service stations and supermarkets take a bigger bite out of Americans’ incomes. The median forecast of 69 economists surveyed by Bloomberg News called for the confidence index to drop to 65 this month. Estimates ranged from 59 to 73.5. The measure averaged 98 during the expansion that ended in December 2007. Another report today showed home prices fell in January by the most in a year, raising the risk that home sales will keep slowing. The S&P/Case-Shiller index of property values in 20 cities dropped 3.1 percent from January 2010, the biggest year- over-year decrease since December 2009. The Conference Board’s gauge of consumer expectations for the next six months dropped as fewer Americans said they plan to purchase cars, homes and appliances in the next six months. The share of respondents expecting more jobs to become available in the next six months declined, as did the percentage of those anticipating an increase in incomes. The group’s measure of present conditions increased to 36.9, the highest since November 2008, from 33.8 a month earlier. The gauge rose as 15.1 percent viewed current business conditions as being “good,” up from 12.4 percent a month earlier. The share of consumers who said jobs are currently plentiful fell to 4.4 percent from 4.9 percent. Those who said jobs are hard to get was little changed at 44.6 percent from the prior month. The households surveyed in March projected an inflation rate of 6.7 percent over the next 12 months, the highest level since October 2008. “Consumers’ inflation expectations rose significantly in March and their income expectations soured, a combination that will likely impact spending decisions,” Lynn Franco, director of the Conference Board’s consumer research center, said in a statement.
  • Fed's Bullard Says $100 Billion Should Be Cut From Buying Plan on Recovery. The Federal Reserve may need to trim about $100 billion from its plan to buy $600 billion in Treasury securities because the U.S. recovery has gained strength, St. Louis Fed President James Bullard said. “We are still feeding the fire at this moment, so I think we have to start thinking about turning this around in the near future,” Bullard said to reporters at a financial conference in Prague today. “If the economy is as strong as I think and hope it will be in 2011, I think it will be time for us to start to reverse our ultra-aggressive and ultra-easy monetary policy.” “We could pull up a little bit shy of our total of $600 billion,” Bullard said. “I think it could be on the order of $100 billion less than what we initially thought.” “One of the things that I am concerned about is that the policy is so easy right now, that we have to get started on the process of going back to normal because it will take a long time to do that,” Bullard said. His call for a review of the policy has been echoed by Charles Plosser of the Philadelphia Fed, who last week laid out a strategy to sell holdings in conjunction with raising interest rates. Fed officials have purchased $1.7 trillion of mortgage debt and Treasuries through March 2010. The Fed’s second round of purchases has come under fire from Republican leaders in Congress who say it risks inflating asset-price bubbles and stoking inflation.
  • Libyan Forces Defend Sirte as U.K. Talks Look Beyond Qaddafi. International leaders met to forge a postwar blueprint for Libya as troops loyal to Muammar Qaddafi dug in to block rebels advancing on his hometown of Sirte.
  • Crude Oil Advances as Equities Increase Amid Signals Economy to Recover. Crude for May delivery gained 41 cents, or 0.4 percent, to $104.39 a barrel at 1:09 p.m. on the New York Mercantile Exchange. Oil has risen 27 percent in the past year. Brent crude for May settlement on the London-based ICE Futures Europe exchange rose 40 cents, or 0.3 percent, to $115.20 a barrel.
  • Quantitative Hedge Funds Hurt by Japan Catastrophe, FT Reports. Several big quantitative hedge funds, which employ mathematical strategies fed into computers, have suffered severe losses as a result of the Japanese earthquake and tsunami, the Financial Times reported. The $4 billion flagship fund of Connecticut-based Graham Capital Management LP lost $300 million, almost 8 percent of its value, in the first two weeks of the month, and its other funds lost about 5 percent each, the newspaper said, citing an unidentified investor. Winton Capital Management Ltd., which manages $17 billion, saw its flagship fall 3.6 percent in the middle of the month, the FT said. Other such funds have suffered smaller losses, depending on the trading models they use; BlueTrend, run by BlueCrest Capital Management Services Ltd., was down only 1.24 percent in the middle of the month, the newspaper said.
  • Dying Banks Kept Alive Show Secrets Fed's Data Will Reveal for First Time. U.S. regulators closed Chicago- based Park National Bank in October 2009 when it owed $345 million to one of the lowest-cost lenders in town: the Federal Reserve’s discount window. Park National had been a constant customer at the window for more than 18 months before it failed, records show. That glimpse into the loan program, gleaned through the Freedom of Information Act, will be expanded this week with an unprecedented view of the secret lifelines the Fed extended to hundreds of banks. Officials plan to release documents that amount to more than 6,000 pages, according to court records. Bloomberg LP, the parent company of Bloomberg News, and News Corp.’s Fox News Network LLC requested the records under FOIA, then sued after the central bank refused to release them.
  • Rising Corn Acreage Failing to Meet U.S. Feed, Ethanol Use. U.S. corn planting will expand to cover the second-largest area since World War II this year and still fail to meet demand for feed and ethanol, driving prices to their highest in at least 34 years.Sowing will expand by 4 percent to about 91.75 million acres, the most since 2007 and the second-highest since 1944, according to a Bloomberg survey of 32 analysts. Corn will rise 5.7 percent to average $7.15 a bushel in the third quarter, the most since at least 1977, Abah Ofon and Koun-Ken Lee, analysts at Standard Chartered Bank in Singapore, wrote in a report.
  • General Electric(GE) Agrees to Buy Converteam for $3.2 Billion. General Electric Co. (GE) agreed to buy most of Converteam from Barclays Private Equity Ltd. and LBO France for $3.2 billion to add equipment that helps electricity flow to the power grid from devices such as wind turbines.
  • Home Depot(HD) Sells $2 Billion of Debt to Build Cash, Buy Stock. Home Depot Inc. (HD), the largest U.S. home-improvement retailer, returned to the corporate bond market for the second time in less than seven months to rebuild its cash stockpile and finance share buybacks. The company sold $2 billion of 10- and 30-year bonds, according to data compiled by Bloomberg. Home Depot will use proceeds to replace $1 billion of 5.2 percent notes issued in 2006 that matured March 1 and to buy its own stock, according to a Securities and Exchange Commission filing.

Wall Street Journal:
  • Lenovo Says Chip Supply Could Hit Tablet Shipments. Tight supply of memory chips after the major earthquake in Japan could affect the supply of Lenovo Group Ltd.'s new tablet computer, a company executive said, highlighting the uncertainty the disaster has created for makers of electronic gadgets.
  • Housing Booms North of the Border. Some Economists See Canada's Market Ripe for a Correction, With Debt Rising to Worrisome Levels. As much of the U.S. housing market limps along, home prices north of the border are on a fresh tear, fired up in part by a borrowing binge that has sent Canadians' debt to record levels—and now higher than their notoriously profligate U.S. neighbors—while income growth pokes along. All that has raised worry at the country's central bank, which repeatedly has warned about rising debt levels, and among some economists, who say the market is ripe for a correction—maybe a steep one.
  • Dealers Shift Gears as Inventories of Made-in-Japan Cars Run Low. Plenty of car shoppers dropped by Earl Stewart Toyota in North Palm Beach, Fla., over the weekend to check out the latest Prius hybrids, but not one drove home with a new model.
  • Iraq, Shell Resolve Last Obstacle to $12 Billion Gas Deal - Official.
  • Syria's Cabinet Resigns as Regime Supporters Rally. Syria abolished its cabinet in response to more than a week of political turmoil, but opponents say that action alone won't satisfy their broad grievances against the government. President Bashar Assad accepted the resignation of his cabinet on Tuesday as mass demonstrations took place in Damascus and in other cities in support of his regime. The pro-government protests, which university students and government employees were obliged to attend, allowed the Syrian regime a way to concede from a position of strength rather than weakness.
MarketWatch:
CNBC.com:
Business Insider:
Zero Hedge:
New York Times:
  • For Sale: Illiquid Assets, Hard to Value. Side pockets might as well be a curse word for hedge fund investors. During the financial crisis, when hedge funds became an A.T.M. for anxious investors, managers used side pockets, or segregated accounts, to stow away such illiquid investments as risky loans that they did not want to unload in a fire sale. To the frustration of investors, a lot of those assets sit there still.
NY Daily News:
  • Cash-Poor MTA May Put Recipients of Unemployment Benefits to Work Again Cleaning Subways. The cash-strapped MTA may soon put welfare recipients to work scrubbing and cleaning the subways. The Metropolitan Transportation Authority wants to revive its participation in the city's Work Experience Program - which makes the unemployed toil for their benefit checks. "This is a program that has a proven track record of doing three things: providing low-cost cleaning help for the subway; providing job training to people who need it, and leading directly to full-time employment for many of the people who participate in the program," MTA spokesman Jeremy Soffin said.
Detroit Free Press:
Rasmussen Reports:
  • Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Tuesday shows that 24% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty percent (40%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -16 (see trends).
Reuters:
Handelsblatt:
  • German Finance Minister Wolfgang Schaeuble expects debt-strapped Portugal to seek an international bailout by June, citing a ministry official. Portugal is reluctant to tap the EU's bailout fund out of concern that the IMF will impose spending cuts on the government as a condition for aid. Germany would insist that the IMF negotiate the austerity program.
Kathimerini:
  • Greece's 2010 budget deficit may have ended at about 10% of GDP rather than an estimated 9.5%. Any revision higher may mean additional government deficit cutting measures.
Cinco Dias:
  • Spanish savings banks that don't meet core capital requirements will need $11 billion in aid from a government rescue fund.
Radio TSF:
  • Former Brazilian President Luiz Inacio Lula da Silva said an IMF intervention would not solve Portugal's problem. "The IMF does not solve Portugal's problem, just as it did not solve Brazil's problem," Lula said. "It created more problems than solutions."
Kyodo News:
  • Damaged reactors and spent nuclear fuel pools at Tokyo Electric Power Co.'s Fukushima Dai-Ichi nuclear plant will require years to cool to a safe level, citing Japan's Nuclear Safety Commission.
Haaretz.com:
  • Israel Threatens Unilateral Steps if UN Recognizes Palestinian State. Foreign Ministry instructs envoys in 30 countries to send 'diplomatic protest' to host nations over plan for September vote in General Assembly. Israel informed the 15 members of the United Nations Security Council last week, as well as several other prominent European Union countries, that if the Palestinian Authority persists in its efforts to gain recognition in September as a state within the 1967 borders, Israel would respond with a series of unilateral steps of its own.
ahramonline:
  • Egypt's Foreign Minister: Iran is Not An Enemy of the State. In his first press conference as Egypt's foreign minister Nabil El-Araby stated that Egypt will witness a new phase in its foreign relations with other countries including Iran. He emphasized that Iran has historically rooted relations as a neighboring country to Egypt and is not an enemy state. El-Araby added that Egypt’s embassies mistreated its citizens abroad and that they have been notified to act otherwise. When asked about Egypt’s stand towards Hizballah, he said that it is considered to be part of Lebanon’s political and social makeup and that communication between Egypt and Hizballah is welcomed.
Fars News Agency:
  • The intervention of Saudi Arabian and other Gulf Arab forces in Bahrain may become "incendiary" for the whole Gulf region, Iranian Defense Minister Ahmad Vahidi said. Vahidi was commenting on the decision of the Gulf Cooperation Council states to send troops to support the Bahraini government against Shiite Muslim protests.
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