Late-Night Headlines
Bloomberg:
- President Barack Obama has determined that a prepackaged bankruptcy is the best way for General Motors Corp.(GM) to restructure and become a competitive automaker, people familiar with the matter said. Obama also is prepared to let Chrysler LLC go bankrupt and be sold off piecemeal if the third-largest U.S. automaker can’t form an alliance with Fiat SpA, said members of Congress who have been briefed on the subject and two other people familiar with the administration’s deliberations. While Obama two days ago gave GM 60 days to come up with deeper cost and debt reductions than the biggest U.S. automaker proposed in a viability plan submitted last month, the “quick and surgical” bankruptcy his administration described as an option appears to be inevitable, the people said.
- Hewlett-Packard Co.(HPQ), the world’s largest maker of personal computers, is “studying” Google Inc.’s(GOOG) Android operating system software for use on scaled-down notebook PCs known as netbooks. “We are interested in understanding all the various operating-system choices in the marketplace that could be used by our competitors,” said Marlene Somsak, spokeswoman for Palo Alto, California-based Hewlett-Packard. “With respect to Google Android, we’re studying the OS in general and looking at its computing and communications capabilities.” A shift of Android use to PCs from smart phones would encroach on a market dominated by Microsoft Corp., whose Windows operating-system software is used on more than 90 percent of the world’s PCs.
- The Standard & Poor’s 500 Index’s best month since 2002 will probably extend into the second quarter, according to a trend measure used by UBS AG analysts who make forecasts using price charts. The Moving Average Convergence/Divergence chart, which is based on calculations from the benchmark’s closing average during the past 9, 12 and 26 days, has generated a “bullish divergence,” UBS analysts Michael Riesner and Marc Müller said. The so-called MACD measure has posted seven “major divergences” since 1932, they said. In five occasions, stocks rallied into a bull market, as happened in 1932, 1935, 1942, 1982 and October 2002. In the other two cases, stocks advanced at least 15 weeks, the analysts wrote. “With the current bullish divergence in the weekly MACD, we have a high-probability pattern for expecting a stronger and longer-lasting countertrend rally, if not even the start of a new bull market,” Riesner and Müller said in a note today.
- Gains in the Treasury market today shifted “technicals” slightly to the bullish side, according to RBS Greenwich Capital.
- Google Inc.(GOOG) had its first-quarter revenue estimate cut at Goldman Sachs(GS) because of declines in the euro and pound. Google will report a 3% decline in revenue versus the fourth quarter, Goldman analyst James Mitchell wrote today. He said this doesn’t change his “broadly positive view of Google’s stock.” Mitchell said the advertising business has improved since January.
- Ten credit-default swaps dealers and five non-dealers were named to a committee that will make binding decisions for the $28 trillion market, including when borrowers have triggered a payout on the derivatives. Pacific Investment Management Co., Elliott Management Corp. and Primus Asset Management Inc. are among asset managers that will serve on the committee starting April 8, the ISDA said today. Legal & General Investment Management Ltd. and Rabobank Intl. also were named as voting members fo the committee. The dealers with votes on the committee will be: Bank of America, Barclays, Citigroup, Credit Suisse Group, Deutsche Bank, Goldman Sachs, JPMorgan, Morgan Stanley, Royal Bank of Scotland
- Confidence among Japan’s biggest manufacturers fell to a record low, a sign the recession may deepen as companies cut spending and jobs. The Bank of Japan’s Tankan index of sentiment among large makers of cars, electronics and other goods slid to minus 58 in March from minus 24 in December, the lowest since the survey began in 1974. Economists predicted a drop to minus 55. A negative number means pessimists outnumber optimists.
- Iran continues to pose a “significant challenge to Iraq’s long-term stability and political independence,” the Pentagon said. “Iran continues to host, train, fund, arm and guide militant groups that seek to bleed the U.S. in Iraq, and Iran remains opposed to a long-term partnership between the government of Iraq and the United States,” the Pentagon said in its latest quarterly report released today to Congress on conditions in Iraq.
Wall Street Journal:
- While Congress has been flaying companies for giving out bonuses while on the government dole, lawmakers have a longstanding tradition of rewarding their own employees with extra cash -- also courtesy of taxpayers. Capitol Hill bonuses in 2008 were among the highest in years, according to LegiStorm, an organization that tracks payroll data. The average House aide earned 17% more in the fourth quarter of the year, when the bonuses were paid, than in previous quarters, according to the data. That was the highest jump in the eight years LegiStorm has compiled payroll information. Payments ranged from a few hundred dollars to $14,000. Lawmakers, at their own discretion, gave the money to chiefs of staff, assistants, computer technicians, and more than 100 aides who earned salaries of more than $100,000 a year. "Most aides could make more money elsewhere, but choose to work on Capitol Hill because they believe in public service," said Brendan Daly, a spokesman for House Speaker Nancy Pelosi, a California Democrat who along with other top House leaders awarded bonuses.
- The Obama Administration insists it wants to "partner" with private investors for its new toxic-asset purchase plan. But the more details that emerge, the more it seems Treasury wants to work with only a select few companies. This is no way to conduct a bank clean-up. The investment community was already suspicious last week when Secretary Timothy Geithner unveiled his plan, announcing that Treasury would select four or five companies as "fund managers" to purchase toxic securities. Given that the whole idea is to create a liquid market for these assets, we'd have thought Treasury would encourage as many players as possible. But the bigger shock was when Treasury released its application to become a fund manager, a main rule of which is that only firms that already have a minimum of $10 billion in toxic securities under management can apply. Few hedge funds, private equity players or sovereign wealth funds come near this number. The hurdle would bar many who specialize in the very distressed assets that the Obama Administration is trying to offload from banks. While dozens of banks and insurance companies today hold more than $10 billion in toxic securities, the vast majority are trying to get these assets off their books -- not lining up to buy more. As for asset management firms that hold such a big portfolio -- and are also healthy enough to serve as fund managers -- there is only a small pool, such as Black Rock, Pimco, Goldman Sachs or Legg Mason, as well a titan or two of the hedge fund industry, such as Bridgewater. "This is ugly," says Joshua Rosner, the managing director of Graham, Fisher & Co., an independent research firm. "As long as they are experienced, there is no rational reason for creating limitations on who becomes a bidder and manager of assets. It doesn't serve the public good, though it may serve those few large firms that appear to have a privileged relationship with Treasury." We have no idea if Treasury is playing favorites, but it certainly doesn't look good. All the more so given that some of these big players may have consulted informally with the Obama Administration as it was writing the plan. Not to mention that the big asset management companies that are most likely to land plum fund-management jobs are also the ones that have been most vocally praising the Treasury plan.
- The U.S. economy should find its footing around the middle of the year even after another "significant" contraction in the first quarter, Federal Reserve Bank of Minneapolis President Gary Stern said Tuesday. Still he warned in an interview with The Wall Street Journal and Dow Jones Newswires that, when the recovery does come, it will be hard to discern right away. "My forecast is actually for some improvement beginning around the middle of the year," Stern said.
- Facing heavy government pressure, General Motors Corp.'s chief executive spent his second day on the job making a public break from his predecessor, sending a sharply different message of willingness to shake up the ailing auto maker. In an interview with The Wall Street Journal, Frederick "Fritz" Henderson said he is prepared to do whatever it takes to reorganize the company, including taking GM through bankruptcy court.
- In the closing weeks of his presidential campaign, Barack Obama's running mate, Joe Biden, warned that the world would soon test a young, relatively inexperienced president. "Soon" has become "now."
MarketWatch.com: Wells Fargo & Co.(WFC), one of the largest U.S. lenders, told employees this month that it's considering cutting foreign workers, citing political pressure stemming from the government's bailout of the banking industry, according to an internal email obtained by MarketWatch.
- The business environment for Chinese manufacturers continued to deteriorate at a quick pace in March, though the drop was less severe than in preceding months, according to data released Wednesday. The CLSA China Manufacturing PMI was at 44.8 in March, down from 45.1 in February but better than the 42.2 posted in January. The trend indicates conditions are still on the mend from last November's low of 40.9, although the manufacturing sector -- vital to China's export-heavy economy -- remained below 50, indicating contraction. "A worsening of domestic manufacturing orders lies behind the drop in the PMI and accords with what we are seeing on the ground in the steel industry," CLSA economic research chief Eric Fishwick said in a statement. "Expect the production index to show softness in April," Fishwick said.
CNBC.com:
Addision Armstrong of Tradition Energy tells us, "Wednesday's release of the weekly U.S. government inventory data is likely to show that crude supplies -- already 12 percent above the five-year average level -- probably grew by 3.5 million barrels." In other words supplies will increase – a bearish scenario for crude. In fact, supplies are growing so quickly that storage facilities are brimming with more oil than they've had in 16 years. Combined with the strategic petroleum reserve, the nation now has 1.05 billion barrels of oil in storage. To put that in perspective that’s enough oil to fuel roughly 44 million cars for a year. ”I think we’re stuck in a range but the overall direction we’re heading is probably lower,” he says. “When the June contract breaks below $50 I think we could head to $45 pretty quickly.” (video)
NY Times:
- Cerberus Capital Management LP, an investor in auto financing companies Chrysler Financial Corp. and GMAC LLC, is seeking US assistance in combining the two companies.
- During the three most lucrative and widely watched hours of TV, the cable news channel MSNBC outranked CNN for the first time ever in March. Viewers continued to flock to the TV versions of the op-ed page in the evenings, according to Nielsen Media Research ratings released Tuesday, posing trouble for CNN, which placed third for the month in weekday prime time from 8 to 11 p.m. Fox News Channel, the longtime No. 1 cable news operation and a unit of the News Corporation, has extended its lead over CNN and MSNBC in recent months. In March, “The O’Reilly Factor,” Fox’s 8 p.m. program, reached a milestone of 100 consecutive months as the most popular program on cable news.
The Washington
- Key lawmakers are pushing to dramatically escalate U.S. defenses against cyberattacks, crafting proposals that would empower the government to set and enforce security standards for private industry for the first time. The proposals, in Senate legislation that could be introduced as early as today, would broaden the focus of the government's cybersecurity efforts to include not only military networks but also private systems that control essentials such as electricity and water distribution. At the same time, the bill would add regulatory teeth to ensure industry compliance with the rules, congressional officials familiar with the plan said yesterday. Addressing what intelligence officials describe as a gaping vulnerability, the legislation also calls for the appointment of a White House cybersecurity "czar" with unprecedented authority to shut down computer networks, including private ones, if a cyberattack is underway, the officials said.
Lloyd’s List: Tanker derivative contract values slid down for all benchmark crude carrier routes close to rock-bottom levels in reaction to a depressing outlook for oil demand.
Legal Times:
- Lobbyists aren’t the only ones feeling offended by President Barack Obama’s stringent restrictions on communications between K Street and the executive branch about stimulus projects. Today, the American Civil Liberties Union and the Citizens for Responsibility and Ethics in Washington partnered with the American League of Lobbyists to send a letter to White House Counsel Gregory Craig. It requests that Obama rescind a directive issued March 20 to all federal agency heads that bars them from having in-person or telephone conversations with registered lobbyists about particular projects, applications, or applicants for funding under the American Recovery and Reinvestment Act. The rule only allows registered lobbyists to submit written communications on these matters.
Politico:
- Sen. Chris Dodd (D-Conn.) moved to change the location of a $1,000-a-head April 7 fundraiser in New York City Tuesday, after learning that it was to be held at an exclusive club long criticized for having no minority members. Dodd’s fundraiser is being hosted by one of the world’s richest hedge-fund managers, John A. Paulson – after Dodd held hearings as Senate Banking Committee chairman March 26 over whether to impose sweeping new regulations on the hedge-fund industry. But after POLITICO raised questions about the site of the fundraiser, the Harmonie Club, Dodd’s office took steps to find a new location for the event. According to the invitation, the event will be hosted by Paulson, whose hedge fund scored a $15 billion payday when it bet against the subprime housing market in 2007. Paulson’s personal take from that bet was estimated to be between $3 and $4 billion. Paulson has been an active participant in the debate over hedge fund regulation, arguing that his industry needs new government regulation. But in a hearing last fall, Paulson defended the practice of hedge fund managers paying capital gains taxes on their income, instead of much higher income taxes that workers in other industries pay. “I believe our tax situation is fair,” Paulson said at the time. As for the propriety of attending a fundraiser hosted by a hedge fund manager at a time when he’s engaged in the hedge fund regulatory debate, Dodd press secretary Bryan DeAngelis said, “Campaign contributions do not and never have influenced Senator Dodd’s agenda and priorities.
Reuters:
- Kathleen Sebelius, named as U.S. health secretary by President Barack Obama, became his latest nominee to reveal income tax issues, saying on Tuesday she paid nearly $8,000 to settle errors over three years.
- IBM(IBM) will sell a suite of Web-based collaboration software for businesses, including contact management, instant messaging and file sharing programs, the computing giant's biggest effort to date to sell software as a service.
- The California senate on Tuesday approved a bill that would require renewable power to account for 33 percent of electricity delivered by the state's utilities by 2020.
- Ask C.T. Liu about future growth engines for his company, LCD maker AU Optronics, and he whips out his Kindle e-book in lieu of an answer. Strong reception for the Kindle, the brainchild of Web retailer Amazon, is attracting a growing number of developers looking to tap interest in devices that let consumers read newspapers, magazines and books in a digital form that updates wirelessly and saves paper. Sony Corp has joined the paperless wave with its own e-readers, partnering with Google to offer public domain books that are no longer protected by copyright.
The Economic Times:
- The India ministry of commerce and industry has recommended a special duty on imported cold-rolled stainless steel, a value-added intermediate for stainless steel products, after domestic producers complained of cheaper cargo entering the country from China, the US and the European Union. The anti-dumping duty — a levy imposed when an exporter ships a product below cost price or the price at which it is sold within the home market — will also be imposed on exports from Japan, South Korea, Taiwan, South Africa and Thailand. The directorate general of anti-dumping (DGAD) — the commerce department arm for undertaking anti-dumping investigations and recommending duties — has proposed a maximum levy of $1,823 per ton of cold-rolled steel on imports from China. The proposed duties are slightly lower on imports from other countries.
Sai Gon Giai Phong:
- Vietnam
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (NILE ), target $36.
Night Trading
Morning Preview
US AM Market Call NASDAQ 100 Pre-Market Indicator/Heat Map Pre-market Commentary Pre-market Stock Quote/Chart Global Commentary WSJ Intl Markets Performance Commodity Futures Top 25 Stories Top 20 Business Stories Today in IBD In Play Bond Ticker Economic Preview/Calendar Earnings Calendar
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Who’s Speaking? Upgrades/Downgrades Rasmussen Business/Economy Polling
Earnings of Note
Company/EPS Estimate
Economic Releases
8:15 am EST
- The ADP Employment Change for March is estimated at -663K versus -697K in February.
10:00 am EST
- The ISM Manufacturing Index for March is estimated to rise to 36.0 versus 35.8 in February.
- The ISM Prices Paid Index for March is estimated to rise to 33.0 versus 29.0 in February.
- Construction Spending for February is estimated to fall 1.9% versus a 3.3% decline in January.
- Pending Home Sales for February are estimated unch. versus a 7.7% decline in January.
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +3,000,000 barrels versus a +3,302,000 barrel increase the prior week. Gasoline supplies are expected to fall by -1,500,000 barrels versus a -1,144,000 barrel decline the prior week. Distillate inventories are estimated to fall by -1,150,000 barrels versus a -1,584,000 decline the prior week. Finally, Refinery Utilization is expected to rise +.25% versus a -.13% decline the prior week.
Afternoon:
- Total Vehicle Sales for March are estimated at 9.2M versus 9.1M in February.
Upcoming Splits
Other Potential Market Movers
Fed’s Pianalto speaking, weekly MBA mortgage applications report, Challenger Job Cuts, Citi Biotech Day and the (NOVL) investor lunch
BOTTOM LINE: Asian indices are mostly higher, boosted by financial and automaker stocks in the region. I expect US
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