Monday, December 29, 2008

Tuesday Watch

Late-Night Headlines

- The U.S. Treasury said it will purchase a $5 billion stake in GMAC LLC, the financing arm of General Motors Corp. Treasury will also lend an additional $1 billion to GM so the automaker can participate in a rights offering at GMAC to support the lender’s reorganization as a bank holding company, the Treasury announced today. The loan is in addition to $13.4 billion the Treasury agreed earlier this month to lend to GM and Chrysler LLC. Separately, GMAC said it has accepted all bonds tendered in a debt swap designed to reduce its debt load.

- Sony Corp.(SNE), the world’s second- largest consumer electronics maker, rose to the highest in more than two weeks in Tokyo trading after a research report said Sony reduced the cost of making its PlayStation3 video-game console by 35 percent.

- The euro rose the most in almost two weeks against the dollar as the conflict between Israel and Hamas in the Gaza Strip drove up oil prices on concern about possible supply disruptions, reducing the greenback’s appeal.

- The biggest-ever decline in commodities turned Pierre Andurand and Chris Levett into this year’s heroes for investors. Andurand’s $1.1 billion BlueGold Capital Management LLP hedge fund in London almost tripled between its February debut and November by betting on higher oil prices in the first half of 2008 and then reversing the strategy, the 31-year-old manager said. Levett’s $3 billion London-based Clive Capital LLP returned 44 percent in the first 11 months of the year. The first bear market in commodities since 2001, as measured by the UBS Bloomberg CMCI Index, cut investments in raw materials to $144 billion from a peak of $270 billion in the second quarter, Barclays Capital estimates. While the CMCI rose almost fivefold from 2001 to 2008, beating stocks and bonds, commodities measured by the Reuters/Jefferies CRB Index fell 53 percent since June and are heading for the worst year in five decades. “Being short commodities was a highly profitable strategy during the second half of this year,” said Stuart Flerlage, who helps manage $500 million at New York-based NuWave Investment Corp. His fund, with investments including raw materials, rose 51 percent in the year to Dec. 19.

- Israel hinted it was ready to broaden its assault on the Hamas-controlled Gaza Strip with a ground operation after three days of air raids failed to bring an end to cross-border rocket attacks.

Wall Street Journal:

- Top Republican lawmakers are positioning themselves for battle over President-elect Barack Obama's economic recovery plan, signaling Monday that they will cast themselves as guardians against excessive spending rather than outright opponents of the Democrats' stimulus package. Senate Minority Leader Mitch McConnell (R., Ky.) in a statement Monday supported the idea of using federal spending to boost the economy. But he warned that the price tag, which could approach $800 billion over two years, shouldn't become an excuse for funding undeserving projects.

NY Times:

- While newspapers, magazines, radio and local television are all losing advertisers in the recessionary economy, the broadcast networks continue to be an anomaly, with advertisers putting their marketing dollars into national television at levels reminiscent of prosperous economic times.

- A year ago, Gazprom, the Russian natural gas monopoly, aspired to be the largest corporation in the world. Buoyed by high oil prices and political backing from the Kremlin, it had already achieved third place judging by market capitalization, behind Exxon Mobil and General Electric. Today, Gazprom is deep in debt and negotiating a government bailout. Its market cap, the total value of all the company’s shares, has fallen 76 percent since the beginning of the year. Instead of becoming the world’s largest company, it has tumbled to 35th place. And while bailouts are increasingly common, none of Gazprom’s big private sector competitors in the West is looking for one.
- The 10 Biggest Cleantech Victories of 2008.


- Google (GOOG) is catching up in the comparison shopping game. In the last year, traffic to Google Product Search has soared closer to rivals such as Yahoo (YHOO). This comes after Google made several improvements to the service, which helps people compare products online. Google Product Search had 11.8 million unique visitors in November. That's up a whopping 786% from the year-ago period — the biggest one-year increase by far of any online comparison shopping service, says market tracker comScore.


- A Run On Hedge Funds: Redemption Strategies and Responses.


- The average retail price for gasoline dropped four cents in the last week to $1.61 a gallon, the Energy Information Administration said Monday. The national price for regular unleaded gasoline is down $1.44 from a year ago, the EIA said in its weekly survey of service stations.

- The iPhone’s Golden Touch. Tapping into the Apple(AAPL) phone craze, accidental entrepreneurs rake in millions by creating popular applications. Apple won't say how much money the App Store is taking in, nor will it say how many of the 300 million downloads were free apps and how many cost money (most apps are free; the others cost anywhere from a buck to $10). Apple gets a 30 percent cut of revenue generated by apps. But for Apple right now the money isn't the point. The big thing is the race to become the dominant mobile-computing platform, the way IBM-standard PCs running Microsoft operating software -- first DOS and then Windows -- came to dominate personal computing in the 1980s and early 1990s. "It's kind of a gold rush," says Brian Greenstone, who runs a tiny outfit (it's just him and a few freelancers) called Pangea Software in Austin, that has created several hit games for the iPhone, including Cro-Mag Rally and Enigmo. Greenstone, 41, has been writing games for Apple computers for 21 years. But he says he's never seen anything like the iPhone app phenomenon, which this year will deliver $5 million in revenue for him. "It's crazy. It's like lottery money. In the last four and a half months we've made as much money off the retail sales of iPhone apps as we've made with retail sales of all of the apps that we've made in the past 21 years -- combined."


- Lehman Brothers Holdings Inc's emergency bankruptcy filing wiped out as much as $75 billion of potential value for creditors, The Wall Street Journal reported on Monday, citing an analysis by the bank's restructuring advisers. A more planned and orderly filing would have allowed Lehman to sell some assets outside of bankruptcy court protection and would have given it time to unwind derivatives positions, according to the analysis by Alvarez & Marsal.

- U.S. securities regulators adopted rules giving investors a more complete picture of the oil and natural gas reserves that a company holds, the Securities and Exchange Commission said on Monday. Under the new SEC rules that are supported by the energy industry, oil and gas companies will be allowed to disclose their probable and possible reserves to investors. Current rules require disclosure of only proved reserves, but many companies provide all three.

Financial Times:
- Hedge funds are bracing themselves for a raft of more stringent requirements by investors and increasing regulatory scrutiny, following the revelations this month that up to $50bn has been lost through alleged fraud by Bernard Madoff. Paul Kanjorski, a top Democratic Congressman, on Monday said a hearing would be held next Monday to examine the alleged fraud and how it went undetected for so long. The affair is likely to lead to a crackdown on due diligence by fund of funds – which hold more than 40 per cent of hedge fund money – according to hedge fund marketers and advisers. One hedge fund adviser, who looked into investing with Madoff and declined, said: “This is just the start. Third party administrators, greater transparency in investments, more regulatory oversight – we can expect them all.”

China Securities Journal:

- China’s producer prices may decline in the first half of next year, citing Fan Jianping, chief economist at the State Information Center. The government should adopt a looser monetary policy if commercial banks refrain from lending and money supply stays at a low level. There’s not enough evidence to show the economy will recover in the short term, Fan said.

Late Buy/Sell Recommendations
- None of note

Night Trading
Asian Indices are +.25% to +1.75% on average.
S&P 500 futures +.72%.
NASDAQ 100 futures +.87%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Pre-market Stock Quote/Chart
Before the Bell CNBC Video(bottom right)
Global Commentary
WSJ Intl Markets Performance
Commodity Movers
Top 25 Stories
Top 20 Business Stories
Today in IBD
In Play
Bond Ticker
Economic Preview/Calendar
Daily Stock Events
Rasmussen Business/Economy Polling

Earnings of Note
Company/EPS Estimate
- None of note

Economic Releases

9:45 am EST

- Chicago Purchasing Manager for December is expected to fall to 33.0 versus 33.8 in November.

10:00 am EST

- Consumer Confidence for December is estimated to rise to 45.5 versus 44.9 in November.

Upcoming Splits
- None of note

Other Potential Market Movers
- The weekly retail sales reports and S&P/CS Home Price Index could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by commodity and technology stocks in the region. I expect US equities to open mixed and to rally into the afternoon, finishing higher. The Portfolio is 100% net long heading into the day.

No comments: