Late-Night Headlines
Bloomberg:
- A UBS AG consultant served as a fund-raising committee director for New Mexico Governor Bill Richardson while the bank says he helped it win state bond work, records show. Phoenix lobbyist Fred DuVal’s activities provide more detail on Richardson’s ties to Wall Street firms as the Department of Justice investigates whether state officials traded bond work for political donations.
- Tumbling oil prices are forcing many of the richest Persian Gulf states to record budget deficits and limit a critical source of foreign investment for poorer Arab countries. Crude is now selling at below the budget break-even point for seven of the Arab world’s 10 top oil producers and Saudi Arabia, the world’s biggest exporter, is forecasting its first deficit in at least seven years. “The Gulf won’t be growing so fast, so there’ll be less of a trickle down,” John Sfakianakis, chief economist at Saudi British Bank said in a telephone interview from Riyadh. “The Gulf private sectors are filled by expatriates from other Arab countries. These will be the first people to go.”
- Hong Kong ’s sales of new private homes fell to the lowest level since 1996 last year, as high prices and the slowing economy deterred potential buyers, according to Centaline Property Agency Ltd. The number of new non-government-built residential units changing hands last year fell 47% to 9,955, and their average value was $996,500.
Wall Street Journal:
- Our Workers Deserve Secret Ballots by Elaine Chao.
- The head of United Airlines said Tuesday that the U.S. industry has the financial strength to weather a recession this year, helped by its reaction to spiking oil prices in 2008.
- Physicist Steven Chu, President-elect Barack Obama's choice to run the Department of Energy, softened previously critical comments about coal and nuclear power, and distanced himself from earlier statements that U.S. gas taxes should be higher.
- Timothy Geithner didn't pay Social Security and Medicare taxes for several years while he worked for the International Monetary Fund, and he employed an immigrant housekeeper who briefly lacked proper work papers. Those issues, and a series of other tax matters, caused the postponement Tuesday of Mr. Geithner's confirmation hearing as Treasury secretary. They were instead the subject of a closed-door meeting between the nominee, currently president of the Federal Reserve Bank of New York, and members of the Senate Finance Committee, in whose hands his confirmation lies. Senate Finance Chairman Max Baucus (D., Mont.) called the issue serious, but not disqualifying.
MarketWatch.com: Hedge fund industry assets slumped by more than $1 trillion in 2008 as managers suffered record losses and many investors asked for their money back, according to HedgeFund.net. Outflows of $512 billion last year were driven by investor redemptions and hedge fund liquidations, while losses suffered by managers accounted for another $535 billion drop in assets. That left industry assets down $1.047 trillion, or 36%, to $1.84 trillion, for the whole year, HedgeFund.net said.
CNBC.com: Citigroup's(C) board may have said it is standing behind CEO Vikram Pandit, but the general consensus on Wall Street is that he is running out of time.
BusinessWeek:
- Focus Stock: Global Payments(GPN) Rings Up Growth
CNNMoney.com: The Treasury Department said Tuesday it recently invested $14.8 billion in another 43 banks, $10 billion of which went to Bank of America(BAC), the nation's largest bank.
- The nation's trade deficit narrowed sharply in November, to the lowest level in 5 years, reflecting the sharp drop in the price of imported oil, according to a government report released Tuesday. The U.S. Department of Commerce reported that imports exceeded exports by $40.4 billion, down substantially from a revised $56.7 billion trade gap in October.
IBD:
- A new Congress and presidential administration may change defense-spending priorities. But the last Congress and the current president have already committed billions to defense spending for years to come. IT services firm ManTech International (MANT) expects to earn some of that.
Boston Herald:
- Three Boston cab associations have signed deals to put self-swipe credit card systems and interactive media screens in the back seats of their 1,266 member cabs. Boston Cab Dispatch, Metro Cab and the Independent Taxi Operators Association signed contracts with New York-based Creative Mobile Technologies as a city-imposed mandate for Boston cabs to start accepting credit card payments by April inspections looms.
FINalternatives:
- The United Nations Joint Staff Pension Fund has gotten the okay from the UN Secretary General to begin investing in funds of hedge funds and private equity funds. The pension, which covers UN staffers and employees of other international intergovernmental organizations, has issued a “request for an expression of interest” on the UN’s procurement Web site. “The fund now seeks experienced consultants for the analysis, selection, placement and monitoring of hedge fund of funds and private equity placements,” it said.
Reuters:
- Chrysler is in talks to sell key assets to Nissan-Renault and auto supplier Magna as it rushes to restructure after taking $4 billion U.S. government loans, according to people with knowledge of the discussions. The string of potential deals would deepen ties between Chrysler LLC and two of its key current partners but could also mark the end of the struggling No. 3 U.S. automaker as an independent venture.
- Yahoo Inc's(YHOO) new CEO is a straight-shooting, tough-talking technology veteran but she is seen lacking two qualifications investors hoped for most: deal-making savvy and Web business know-how.
- Japan's Toshiba Corp. said it in talks to buy Fujitsu Ltd's hard-disk drive business, a deal that would create the world's largest maker of small hard drives and is reportedly worth $340-450 million. Shares in both Toshiba and Fujitsu surged more than 5 percent on the news.
- The U.S. Securities and Exchange Commission has sued a managing director at private equity firm Blackstone Group (BX) for an insider trading scheme involving shares of supermarket chain Albertsons, the Dow Jones news wire said on Tuesday.
Financial Times:
China is pushing its state media to create credible, appealing news for an international audience, in an attempt to spread a more favorable image of the country in the west. The plan, backed by at least Rmb30bn ($4.4bn, €3.3bn, £3bn) in government funds, comes as Beijing looks back on a year of public relations disasters. The first step would be the launch of a second national English-language newspaper by Global Times, an affiliate of the Communist party’s mouthpiece People’s Daily, in April, observers said. Xinhua, the official Chinese news agency, is preparing to enter the television business. A person close to Xinhua in Europe said that Xinhua, along with bureaus in other news centers abroad, was expected to be expanded to accommodate television. A similar global push is under way at China Central Television (CCTV), the main state broadcaster. Beijing is said to be giving Xinhua and People’s Daily cash injections of Rmb15bn each to pursue the projects.
- Citigroup (C) is to break itself up by separating higher risk US consumer finance and securities businesses from its global commercial banking operations in an attempt to ensure its survival. People close to the situation said Citi would place unwanted assets and businesses worth more than $600bn – a third of its balance sheet – into a “non-core” unit to isolate them from healthier parts of the company.
- GoldenTree Asset Management, a credit hedge fund, is offering investors who want to withdraw money securities instead of cash, triggering protests from those who in many cases lack means to dispose of such instruments. Hedge funds such as GoldenTree warn investors in offering documents that they have the right to pay investors back “in kind” not cash. However, such payments in kind have been highly unusual until the current credit crisis, which has led hedge funds to place a variety of restrictions on investors trying to pull out their money. GoldenTree, which specializes in investing in complex debt instruments, had about $10bn under management last year. But losses and redemptions could leave it with half as much if investors made good on withdrawal requests, said a person with direct knowledge of the matter.
TimesOnline: India plans to break off business, transport and tourist links with Pakistan and isolate it from the rest of the world if it fails to help to investigate the Mumbai terrorist attacks, the country's Home Minister told The Times today.
South China Morning Post:
- The financial turmoil could spark political crises in Hong Kong and Macau, the mainland’s central bank chief said in a rare warning.
China Market Intelligence Center :
- Apple(AAPL) Poised to Take 40% of the Smartphone Market. Analysis carried out by Generator Research claims that Apple's embryonic mobile business could knock Nokia from the top spot in the smartphone market, and transform the mobile services market.
Late Buy/Sell Recommendations
Citigroup: We recommend a Buy on JPM, BAC, GS and MS. We recommend a Sell on CIT. Legacy Wachovia and Merrill Lynch bonds also look attractive.
- Reiterated Buy on (FORM), target $24.
Night Trading
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 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 Upgrades/Downgrades Rasmussen Business/Economy Polling
Earnings of Note
Company/EPS Estimate
Economic Releases
8:30 am EST
- The Import Price Index for December is estimated to fall 5.3% versus a 6.7% decline in November.
- Advance Retail Sales for December are estimated to fall 1.2% versus a 1.8% decline in November.
- Retail Sales Less Autos for December are estimated to fall 1.4% versus a 1.6% decline in November.
10:00 am EST
- Business Inventories for November are estimated to fall .5% versus a .6% decline in October.
Upcoming Splits
Other Potential Market Movers
BOTTOM LINE: Asian indices are modestly higher, boosted by technology and commodity stocks in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.
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