Late-Night Headlines
Bloomberg:
- Steel prices in the U.S. fell 3.1 percent in June, the 11th straight monthly decline, as a global recession prevents steelmakers from charging more for their products. The average price of hot-rolled steel sheet, the benchmark product used in cars and appliances, dropped to $380 a ton from $392 in May, Purchasing Magazine said today in a monthly update. Cold-rolled sheet slipped 2.1 percent to $467 a ton. Hot-rolled steel prices have plunged 64 percent from a record $1,068 a ton in July as the slowing global economy reduced demand for automobiles, appliances and homes. “The steel market continues to be sluggish, despite protestations by some analysts that recovery has begun,” the magazine said. Prices for hot-rolled steel were the lowest in June since the spot-market price averaged $350 in January 2004, according to data published last month by the trade magazine. “U.S. end-user purchasing is expected to remain weak for remainder of 2009,” the magazine said. “The steel makers admit very little marketplace impact from the government’s fiscal stimulus package is expected this year.”
- Sentiment among Japan’s largest manufacturers rose less than economists estimated in June, signaling the economy may be slow to recover from its deepest postwar recession. An index of confidence among large makers of electronics, cars and other products climbed to minus 48 from a record minus 58 in March, the Bank of Japan’s Tankan survey showed today in Tokyo. Economists surveyed by Bloomberg News predicted minus 43.
- The U.S. Treasury Department is set to name eight to 10 asset managers for the Public-Private Investment Program as soon as this week, a person familiar with the matter said today. Once the asset managers have signed deals with Treasury, they each will be expected to raise at least $500 million of private capital within 12 weeks, according to Treasury program documents. Pacific Investment Management Co. and BlackRock Inc. have been among the leading candidates for the slots. Other companies that have said they applied include Bank of New York Mellon Corp.’s Boston-based Standish bond unit; Atlanta-based Invesco Ltd. and its affiliate, WL Ross & Co.; Baltimore’s Legg Mason Inc.; and TCW Group Inc. in Los Angeles.
Wall Street Journal:
- Some of the states worst hit by the recession are getting far less federal economic-stimulus money per person than states faring better. Nevada, where unemployment stood at about 10% when the plan was passed, is getting $541 for each resident from the stimulus money allocated so far, a Wall Street Journal analysis found. Wyoming, where the 3.9% jobless rate was the lowest in the country in February, is getting $1,074 per person. Florida, North Carolina and Oregon are among the other states with relatively low per-capita payouts, despite battling double-digit unemployment. North Dakota and South Dakota, meanwhile, are also receiving large quantities of stimulus money relative to their small populations -- even while unemployment remains about half the national average.
- The Federal Deposit Insurance Corp. on Thursday is expected to propose tough new guidelines for private-equity investors seeking to buy failed banks, people familiar with the matter said. The issue is a tricky one for the FDIC. It wants to open the door for more types of investors to buy failed banks, reducing the potential cost to the agency of bank collapses. At the same time, it wants to prevent largely unregulated private-equity firms from acting too aggressively. The proposal is expected to deter private equity investors from buying and flipping failed banks and could include a mandatory investment period. The proposal is also expected to require private-equity investors to hold higher capital reserves than traditional banks would be required to hold. The proposal could require private equity investors that own several banks to offer some sort of cross-guarantee, so that one bank owned by the investors might have to serve as a source of strength to the other banks. And there could be another requirement that the private-equity investors remain a behind-the-scenes source of capital, beyond their initial investment. It's unclear how private equity investors will react to the proposal, in part because the full details haven't been released. Some investors said overly stringent regulations could kill private-equity interest.
- Gannett Co.(GCI), the largest U.S. newspaper publisher by daily circulation, will cut more than 1,000 jobs in response to continuing revenue declines, according to a person familiar with the company's thinking. The cuts will come from the U.S. Community Publishing division, which consists of Gannett's more than 80 local dailies, the person said.
- On top of the lumps taken from the credit crisis, stock-market declines and the recession, hedge-fund and private-equity firms now have a real-estate problem. After loading up on lavish office space near the top of the market, some firms are trying to sublease what they don't need for as much as 30% less than their rental rate. New York hedge-fund firm Trafelet & Co. and Duff Capital Advisors, a Greenwich, Conn., hedge-fund firm started last year, have paid their landlords to take back office space. It is a classic buy-high, sell-low squeeze with no end in sight. In midtown Manhattan, a record 8.9 million square feet of high-quality, class "A" office space -- equivalent to more than three Empire State Buildings -- is available for sublet, according to brokerage Jones Lang LaSalle.
- Obama administration officials will announce rules Wednesday for handing out $7.2 billion in broadband stimulus funds, but some companies already are raising concerns about how long it could take to award the money. Officials are expected to detail how they plan to distribute $4.7 billion in broadband money from the Commerce Department in grants and $2.5 billion from the Agriculture Department in grants or loans. Commerce Department officials will still be doling out the first of three rounds of broadband grants in December. Such a delay, business groups and some states say, could push back construction of some projects in northern states to next summer or 2011.
- The odors, respiratory complaints and corrosion blamed on drywall from China used in American homes may have been caused by the failure to remove sulfur and other contaminants from synthetic gypsum, some Chinese experts in building materials say. The U.S. Consumer Product Safety Commission in recent months has received more than 550 reports from people in 19 states and the District of Columbia involving odors, health symptoms and corrosion problems they blame on imported Chinese drywall.
- The U.S. International Trade Commission recommended imposing punitive duties of as much as 55% on low-cost Chinese tire imports because they are disrupting the U.S. market, in a move that could sharply increase costs for consumers.
NY Times:
- The trend of cable news viewers moving away from CNN continued in the second quarter of 2009 with MSNBC beating CNN in weeknights for the first time ever for a full quarter of a year. Neither was anywhere near the Fox News Channel of course, which, as it has all year, posted enormous audience gains in the second quarter. On weeknights in prime time, Fox averaged 2.5 million viewers for the quarter, while MSNBC averaged 954,000 and CNN had 941,000. The real growth among the news networks continues to be posted by Fox, which completed the best 6-month period in its history. For the second quarter Fox News Channel was up 50 per cent from the previous year. Mr. O’Reilly was up 31 per cent. Glenn Beck, though not in prime time, improved his time period by 110 per cent.
- YouTube confirmed on Tuesday that Steve Chen, a co-founder and most recently YouTube’s chief technology officer, was no longer working at the company. Mr. Chen left some time ago to work on unspecified engineering projects at its parent, Google
IBD:
- Taleo Corp. (TLEO) markets software that helps customers recruit and retain employees. But right now it's winning business because it's not slashing its own payroll, CEO Michael Gregoire says.
Politico:
- Republican Norm Coleman has conceded to Democrat Al Franken in the Minnesota Senate race, ending one of the longest Senate races in American history and clearing the way for Democrats to hold a 60-seat supermajority in the Senate.
Rasmussen:
- Americans have mixed feelings about the historic climate change bill that passed the House on Friday, but 42% say it will hurt the U.S. economy. A new Rasmussen Reports national telephone survey shows that just 19% believe the climate change bill passed by the House on Friday will help the economy. Fifteen percent (15%) say it will have no impact, and 24% are not sure. A majority of both Republicans (56%) and adults not affiliated with either major political party (52%) think the bill will hurt the economy. Among Democrats, however, 30% say it will help the economy, 23% that it will hurt and 21% say it will have no impact.
Washington Post:
- U.S. securities regulators are considering changing how companies are required to disclose stock options awarded to executives, people familiar with the Securities and Exchange Commission's thinking told Reuters on Tuesday. At an SEC meeting on Wednesday, the commissioners also will propose giving investors a greater voice in setting executive pay at companies that were given taxpayer funds under the U.S. government's Troubled Asset Relief Program. Among the possible changes is a revision to how companies value equity awards in the "summary compensation table" for top executives that they file with the commission each year. The SEC is considering requiring companies to include the estimated value for stock options granted during the year, the people said.
CommonDreams.Org:
- General Electric(GE), the world's largest industrial company, has quietly become the biggest beneficiary of one of the government's key rescue programs for banks. At the same time, GE has avoided many of the restrictions facing other financial giants getting help from the government. The company did not initially qualify for the program, under which the government sought to unfreeze credit markets by guaranteeing debt sold by banking firms. But regulators soon loosened the eligibility requirements, in part because of behind-the-scenes appeals from GE. As a result, GE has joined major banks collectively saving billions of dollars by raising money for their operations at lower interest rates.
TheDeal.com:
- Registering venture capital firms -- along with hedge funds and private equity firms -- with the Securities and Exchange Commission, as President Obama's administration plans to do, would be "very burdensome" for small VC firms, said Michael Stark, co-founder and general partner at Crosslink Capital. "I think registering with the SEC would kill a three-partner VC firm," said Stark. The National Venture Capital Association is actively lobbying the Obama administration to not tarnish the VC industry with the same brush as leverage-backed asset classes, such as hedge funds, as it embarks on a sweeping overhaul of financial regulations. "There are enough smart people in the Obama administration to figure out the differences between asset classes," Stark concluded confidently.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (GLW), target $20.50.
Night Trading
Asia Ex-Japan Inv Grade CDS Index unch..
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
Conference Calendar
Who’s Speaking? Upgrades/Downgrades Rasmussen Business/Economy Polling
Earnings of Note
Company/EPS Estimate
- (GIS)/.81
- (NS)/.98
Economic Releases
8:15 am EST
- The ADP Employment Change for June is estimated to shrink to -395K versus -532K in May.
10:00 am EST
- ISM Manufacturing for June is estimated to rise to 44.6 versus 42.8 in May.
- ISM Prices Paid for June is estimated to rise to 47.0 versus 43.5 in May.
- Construction Spending for May is estimated to fall .6% versus a .8% gain April.
- Pending Home Sales for May are estimated unch. versus a 6.7% gain in April.
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil inventory decline of -2,000,000 barrels versus a -3,868,000 barrel decrease the prior week. Gasoline supplies are estimated to rise by +2,000,000 barrels versus a +3,871,000 barrel gain the prior week. Distillate inventories are expected to rise by +1,500,000 barrels versus a +2,077,000 barrel increase the prior week. Finally, Refinery Utilization is estimated to rise by +.05% versus a +1.16% gain the prior week.
Afternoon:
- Total Vehicle Sales for June are estimated at 9.8M versus 9.9M in May.
Upcoming Splits
Other Potential Market Movers
Fed’s Evans speaking, weekly MBA mortgage applications report and the Challenger Job Cuts report
BOTTOM LINE: Asian indices are mostly lower, weighed down by insurance and commodity shares in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.
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