Tuesday, September 15, 2009

Today's Headlines


- U.S. stocks are in a bull market after rallying as much as 55 percent from a 12-year low on March 9 and have “a lot of room to run,” investor Laszlo Birinyi said. The advance in U.S. equities shows that the longest recession since the 1930s is over, and investors who wait to buy stocks until the National Bureau of Economic Research declares the contraction finished will miss out on gains, Birinyi said. Birinyi recommended buying financial stocks that are “strongly outperforming,” citing Wells Fargo & Co., JPMorgan Chase & Co., and American Express Co., which topped analysts’ estimates for adjusted second-quarter profit. Financial stocks in the S&P 500 have climbed 135 percent since March 9, the best performance among 10 industries and 60 percentage points more than industrial shares, the next best-performing industry. Birinyi said on May 20 that the S&P 500 would climb to a record 1,700 in the next two or three years, an 88 percent gain from its close that day.

- Sales at U.S. retailers surged in August by the most in three years, showing unexpected strength in consumer demand that extended beyond auto purchases spurred by the government’s “cash-for-clunkers” program. The 2.7 percent increase exceeded economists’ forecasts and followed a 0.2 percent drop in July, Commerce Department figures showed today in Washington. Purchases excluding automobiles climbed 1.1 percent, topping the highest forecast.

- Ford Motor Co.(F), the U.S. automaker that lost $30 billion in the past three years, is on target with its plans to slow cash losses in this year’s second half, Chief Financial Officer Lewis Booth said. “I’m comfortable with our guidance that we will do better in the second half,” Booth said today in an interview at the Frankfurt Motor Show.

- The first vaccines for swine flu have been approved by the U.S. Food and Drug Administration, a top health official said. The FDA today cleared sales of four vaccines to combat the spread of H1N1 influenza, Health and Human Services Secretary Kathleen Sebelius told the House Energy and Commerce Committee in Washington. The vaccines are made by Australian drugmaker CSL Ltd., Novartis AG, based in Basil, Switzerland, Paris-based Sanofi Aventis SA and London-based AstraZeneca Plc, Peper Long, an FDA spokeswoman, said in an e-mail. A small number of vaccines are expected to be available at the start of October with mid-October being the “target” release date for most doses, Sebelius told lawmakers on the panel.

- The U.S. should begin preparing crippling sanctions on Iran and publicly make clear that a military strike is possible should the Iranian government press ahead with its nuclear effort, a bipartisan policy group said. “If biting sanctions do not persuade the Islamic Republic to demonstrate sincerity in negotiations and give up its enrichment activities, the White House will have to begin serious consideration of the option of a U.S.-led military strike against Iranian nuclear facilities,” said the study from the Bipartisan Policy Center in Washington. The report was written by Charles Robb, a former Democratic senator from Virginia; Daniel Coats, a former Republican senator from Indiana who also served as ambassador to Germany, and retired General Charles Wald, the former deputy commander of U.S. European command.

- Chipmakers such as Intel Corp.(INTC) and Samsung Electronics will boost production this year as demand for electronics rebounds, according to research firm Gartner Inc. Capital expenditures by semi makers will bottom out at $22.9 billion in 2009, a drop of 48% from last year. The market will then grow until 2012, according to Gartner’s forecasts.

- The Libor-OIS spread fell to the average level in the five years before the credit crisis began after central banks and governments acted to limit the damage sparked by the failure of Lehman Brothers Holdings Inc. The spread, a gauge of bank reluctance to lend, narrowed 1 basis point to 11 basis points today, the average in the period leading to August 2007, when credit markets began to seize up. “The money markets are healing rather rapidly,” said David Keeble, head of fixed-income strategy in London at Calyon, the investment-banking unit of Credit Agricole SA. “All the money that has been thrown at us from the central banks is having a profound effect. There is just a wall of money out there willing to be lent out.”

- Simon Property Group Inc.(SPG), the largest mall owner in the U.S., may use some of its cash for acquisitions and is monitoring the availability of properties owned by bankrupt rival General Growth Properties Inc.(GGP), Simon Property chairman and chief executive officer said.

- The U.S. Treasury Department adopted rules letting lenders revise commercial real estate loans without triggering tax penalties in an effort to stem a rise in defaults. The guidance would ease requirements for collateral and other guarantees in many cases. Borrowers in investor pools known as Real Estate Mortgage Investment Conduits would be allowed to refinance some loans without paying tax penalties. The rules were urged by trade associations such as the Real Estate Roundtable and opposed by the Commercial Mortgage Securities Association.

- The Afghan war likely will require more U.S. troops to push back the Taliban and reduce the climate of fear in the country, Joint Chiefs of Staff Chairman Admiral Michael Mullen told lawmakers today. “A properly resourced counter-insurgency probably means more forces,” Mullen told the Senate Armed Services Committee in Washington today.

- Lehman Brothers Holdings Inc. said Barclay’s Plc received at least a $5 billion windfall when it bought the collapsed bank’s North American brokerage business and some real estate within days of its bankruptcy filing a year ago and is asking the deal be amended. “Material components of the transaction were not disclosed to the court before and at the sale hearing,” lawyers for Lehman said in a filing today in the U.S. Bankruptcy Court in Manhattan. “The fact is that the deal was actually structured to give Barclays an immediate and enormous windfall profit. Certain Lehman executives agreed to give Barclays an undisclosed $5 billion discount off the book value of securities.” Lehman said Barclays’ windfall may have been more than $8.2 billion when margin deposits and liabilities Barclays assumed are taken into consideration. The collapsed bank is asking U.S. Bankruptcy Judge James Peck to revise the deal and force Barclays to return assets to Lehman’s estate.

- Corn prices soared by a record and soybeans jumped on concern that freezing temperatures next week may hurt plants in the U.S, the biggest producer and exporter of the crops. Damaging cold weather is possible in the northern Great Plains and Midwest beginning Sept. 23, with the lowest temperatures expected Sept. 25 to Sept. 27, according to the National Weather Service. Freezes may affect fields from South Dakota to Michigan, and frost may occur in parts of Nebraska, Iowa, Illinois and Indiana, World Weather Inc. said.

- Crude oil rose more than $1 a barrel in New York as sales at U.S. retailers surged in August and Federal Reserve Chairman Ben S. Bernanke said the worst U.S. recession since the 1930s has probably ended. Oil climbed as much as 2.4 percent and equities advanced for the seventh time in eight days after Commerce Department figures showed that sales climbed by the most in three years.

Wall Street Journal:

- Muslims groups here are pressing city officials to close public schools on two of the faith's holiest days, just as schools do for major Jewish and Christian holidays. But the groups have yet to persuade the man in charge of New York City schools, Mayor Michael Bloomberg.

- Federal Reserve Board Chairman Ben Bernanke said Tuesday that the recession has ended -- at least based on the numbers. "From a technical perspective, the recession is very likely over at this point," Bernanke told a conference at the Brookings Institution. But "it's still going to feel like a very weak economy for some time," he added. Bernanke said there is a risk that labor markets will remain weak through 2010 because growth will be too anemic to create jobs. Bernanke noted that many economists now expect the labor market to recover slowly.

- S&P 500 edges above major rsistance.

- Shares of Regions Financial Corp.(RF 5.99, +0.47, +8.51%) were up 9% in afternoon trade Tuesday after the bank's chief executive said the company doesn't need to raise additional capital. "The answer is absolutely not; we think we have more than adequate capital," said Dowd Ritter at the Barclays Capital Global Financial Services Conference. The Regions CEO said the company expects its nonperforming loans to begin to see some decline late this year or early next year.


- Here's the latest video from my friend Dan Mitchell over at the Center for Freedom and Prosperity Foundation. It presents real-world data and research showing that the burden of government spending is far too high not only in the United States (where the Bush-Obama policies have increased the federal budget by more than 100 percent), but also in other nations where government budgets sometimes consume more than one-half of an economy's output.

Washington Post:

- Interior Secretary Ken Salazar launched the Obama administration's first coordinated response to the impacts of climate change Monday, which he said would both monitor how global warming is altering the nation's landscape and help the country cope with those changes. Salazar will lead a new "climate change response council" that will coordinate action among the department's eight bureaus and offices. A secretarial order will create eight "regional climate change response centers" in areas ranging from Alaska to the Northeast and build landscape conservation cooperatives that will create strategies for the eight regions with the help of state and local groups, and other federal agencies. Interior manages one-fifth of the nation's land mass and nearly 1.7 billion acres on the Outer Continental Shelf. Salazar noted that while the U.S. Geological Survey had received $10 million to address climate change through its centers, "There is additional money that will be needed."

Miami Herald:

- President Barack Obama has signed a one-year extension of the law used to impose the trade embargo on Cuba, disappointing those who favored allowing the law to expire as a friendly nod to Havana while reassuring others who oppose easing the sanctions.


- In what is currently a difficult political climate for Democrats, Senate Majority Leader Harry Reid trails two potential Republican challengers seeking to unseat him as he faces reelection next year in Nevada. The first Rasmussen Reports statewide telephone survey of the 2010 race shows Sue Lowden beating Reid by 10 percentage points, 50% to 40%. Lowden is chairwoman of the Nevada Republican Party and the preferred candidate of the Republican party establishment. GOP hopeful Danny Tarkanian beats Reid by seven points, 50% to 43%.


- It’s one of the most persistent — and potent — Republican arguments against health reform: that President Barack Obama and fellow Democrats want a U.S. government takeover of health care. And what evidence do they have to back it up? Obama said so. Just check out YouTube. “I happen to be a proponent of a single-payer, universal health care plan,” then-U.S. Senate candidate Obama said at an AFL-CIO event in 2003, using the terms that commonly refer to a government-run health insurance system.

Apple Insider:

- The iTunes LP album and iTunes Extras movie-enriching bonus material bundles Apple introduced as a new feature of iTunes 9 are built using a new TuneKit JavaScript framework and appear aimed to deliver new big screen content to Apple TV.


- Open Letter to Congress. I am writing to you today as a concerned citizen with a truly global perspective who also happens to be a co-founder and managing director of a small (~$30M) venture capital fund that invests in promising seed and early-stage technology and life science companies in Southern California. I want to relay to you my deep concern regarding S.1276 (a.k.a. the “Private Fund Transparency Act”) and any other such legislative proposals that will, unnecessarily, impose new regulatory burdens on the venture capital industry whole-scale. I truly believe these proposals will negatively impact the venture capital industry’s ability to fund and nurture the innovative start-up companies that have been and continue to be critical to U.S. economic growth as well as our country’s ability to effectively compete in the global market. To put the importance of venture capital in perspective, the venture capital industry has created over tens of millions of jobs for the U.S. economy just during my lifetime and venture capital backed companies now make up a significant percentage of our GDP. I have spent a good portion of the past decade in the emerging markets of China, India, Russia, and Brazil/Argentina and have been amazed at the lengths to which these countries have been actively changing their regulatory, financial, and entrepreneurial ecosystems to encourage venture capital all while we, as a nation, seem bent on hindering it.

USA Today:

- The chief of the Environmental Protection Agency said Monday that the Obama administration is studying how to curb global-warming gases from big industrial polluters such as power plants and factories. In an appearance before the USA TODAY editorial board, Lisa Jackson also said the agency will soon propose rules to cut greenhouse emissions from cars. "We will continue to move stepwise down the path toward regulation of greenhouse gases," Jackson said, assuming that the EPA adopts a preliminary finding that greenhouse gases are a danger to public health. Though she is willing to use current law to cut greenhouse gases, Jackson said it would be better if Congress passed climate legislation. A new law would forestall lawsuits, she said. A law is also preferable because it could fund clean-energy efforts and other programs that would help fight climate change, said Lou Leonard of the World Wildlife Fund, an environmental group. However, he said, "if the Congress can't move fast enough, then the EPA should act." Industry groups don't want the EPA to tackle climate in the absence of new legislation, said William Kovacs of the U.S. Chamber of Commerce. The existing law that would be used as the basis of regulations, he said, would require companies to apply for onerous permits if they want to open new facilities. Regulating industrial sources with current law would be "a job killer and a project killer right at the outset," Kovacs said.

- Global market regulators published new rules on Monday spelling out how small investors putting money into funds of hedge funds should be protected. The International Organization of Securities Commissions (IOSCO) published its final set of standards on best practice for funds of hedge funds investing.

- Google Inc(GOOG) has rolled out a new version of its Chrome Web browser and a version of the Mac browser for mainstream users will be available within months, as the company moves to double Chrome's market share. Almost exactly one year into Google's high-profile entry into the browser market dominated by Microsoft Corp, the Internet search giant is a distant No. 4, with a market share of roughly 2.8 percent.

- Some of the largest U.S. banks will remain caught in the government's financial bailout program for months, as officials do not expect to grant the next wave of exit approvals until near the end of the year, according to a source familiar with the matter. Banks such as Citigroup and Bank of America Corp have been chafing under the government's reins and want to exit the Troubled Asset Relief Program (TARP), which delivered capital infusions to banks along with limits on pay, share repurchases and dividends. Citigroup has been in preliminary talks with U.S. officials on how to repay part of government funds but the process could take at least a couple quarters, according to sources familiar with the situation. Regulators want to see that firms have fully taken advantage of the more open credit markets to raise significant capital buffers before they remove the government leash from more of the largest banks.

- Athenahealth Inc (ATHN), which provides business services to doctors' offices, will offer a guarantee to lure small U.S. physician practices as they convert to electronic medical records. If users of the Athenahealth system cannot collect their Medicare bonus incentive for going paperless, then the company will not charge for its services for six months. The government's economic stimulus package included $19 billion in incentive payments for hospitals and physicians to convert to electronic medical records.

- Duke Energy Corp (DUK) has chosen Convergys Corp (CVG) to help its electric and natural gas customers in five states to manage their usage better and lower their costs as part of the utility's smart grid initiative. Duke's smart grid plan, which will cost $1 billion to roll out over five years, includes equipment, sensors and advanced meters that provide two-way communication with customers and allows Duke to bill for power usage depending on the time of day and overall demand.

- The Republican governor of Minnesota has written to the state's U.S. senators asking them to stop a proposed tax on medical device makers as Democratic lawmakers push for health care reform. A draft of a proposal from U.S. Senator Max Baucus, chairman of the Senate Finance Committee and a Democrat, that would assess $4 billion in annual fees on medical device makers as part of a broader effort to pay for health care reform was circulated among lobbyists last week. In the letter, Governor Tim Pawlenty urged Senators Amy Klobuchar and Al Franken, Democrats, to work to remove the tax from the proposal. "The proposed market-share based tax would be a severe burden on this industry, costing jobs and draining away funds needed for innovative research and development," Pawlenty wrote. The tax would apply to medical products ranging from pacemakers to wheelchairs and diagnostic tests, and, he wrote, would increase healthcare costs rather than lower them. A coalition of device industry, biotechnology and medical groups has also opposed the tax.


- As Apple Inc. will launch its newest tablet PCs next February, a couple of Taiwanese suppliers of PC parts and components have managed to join the supply chain and will start delivery to Apple in December, according to industry sources. The tablet PC features a 9.6-inch screen, finger-touch function and built-in HSPDA (high speed download packet access) module, and adopts a P.A. SEMI processor chip and long lasting battery pack, selling for between US$799 and US$999.

No comments: