Monday, January 25, 2010

Tuesday Watch

Late-Night Headlines
Bloomberg:

- President Barack Obama vowed to press ahead with his health-care initiative and other programs even if it means jeopardizing his re-election chances in 2012. “I’d rather be a really good one-term president than a mediocre two-term president,” Obama said in the interview, according to an excerpt posted on ABC’s Web site. “There is a tendency in Washington to believe our job description, of elected officials, is to get re-elected. That’s not our job description.” Obama also said Federal Reserve Chairman Ben S. Bernanke, whose nomination for a second term as head of the central bank has hit resistance in the Senate, “has my strongest support.” He said he is confident Bernanke will be confirmed. The president got a 48 percent job approval rating in Gallup’s daily tracking poll, conducted Jan. 22-24, with 47 percent saying they disapproved of the job he’s doing. A year ago, Obama’s approval rating was 69 percent, according to Gallup. Obama said it was a “mistake” to let much of the negotiations on health-care legislation happen behind closed doors, particularly because he campaigned on making the process in Washington more transparent and open to the public. “The health-care debate as it unfolded, legitimately raised concerns, not just among my opponents, but also amongst supporters that we just don’t know what’s going on,” Obama said. “It’s an ugly process and it looks like there are a bunch of backroom deals.”

- Barton Biggs, who recommended buying U.S. stocks in March when benchmark indexes sank to the lowest levels since the 1990s, said he favors equities because of the rebounding economy. “I’m still bullish,” Biggs, who runs New York-based hedge fund Traxis Partners LP, said in an interview with Bloomberg Television today. “The U.S. economy is in a strong recovery.”

- When President Barack Obama delivers his State of the Union address tomorrow, he’ll do it in English. But what he says would sound just fine in Japanese. That’s because the policies the president will outline are closer to those of traditional Japan than those of traditional America. The promulgation of such policies may help the president’s party in the short term, but isn’t optimal for the country’s long-term future.


Wall Street Journal:

- Congress Is Politicizing the Fed by Richard W. Fisher.

- Sen. Charles Grassley has sent a second letter to U.S. pay czar Kenneth Feinberg asking about reports of severance payments to executives leaving American International Group Inc.(AIG) The letter inquires about former General Counsel Anastasia D. Kelly and Suzanne Folsom, who was chief compliance and regulatory officer. Both left the company at the end of 2009. Ms. Kelly received an exit package of at least $3.9 million and Ms. Folsom received more than $1 million in severance, according to people familiar with the matter.

- The National Football League is planning to make its RedZone Channel available to cellphone users next season, a move that has its broadcast partners questioning whether they will still get the same bang for their buck on their multibillion-dollar television deals.

- Chinese state-run media said the industrial chemical melamine was found again in milk products early last year, the latest report to suggest the government's crackdown on potentially dangerous practices in the dairy industry after a major 2008 food-safety scandal didn't fully solve the problem.

IBD:
-
EnerNoc (ENOC) is an energy efficiency company with a very complex business plan.

NY Times:

- With the widely anticipated introduction of a tablet computer at an event here on Wednesday morning, Apple(AAPL) may be giving the media industry a kind of time machine — a chance to undo mistakes of the past.


CNNMoney.com:

- At least 1,250 dealerships that got the axe from Chrysler and General Motors as the Detroit giants went through bankruptcy have filed notice that they will appeal their shutdown, according to the American Arbitration Association. The nearly 3,000 dealerships the auto manufacturers scrapped have until the end of day Monday to file with the AAA for an independent arbitration of their case. Even in the final hours, applications from dealers are piling up fast.

- Stimulus Tracker: $4.7 Trillion on the line.


Business Insider:

- The Treasury Department has been scrambling to figure out what to say about the new proposals unveiled by Barack Obama last week limiting the size and scope of banks. The proposals came out of the White House rather than the Treasury Department. Inside of Treasury there is the feeling that the basis of the plan came from “political people” instead of “economic policy experts,” according to a person familiar with the matter. The Treasury Department has been fielding questions from bankers and journalists about the new regulations—but so far has not been able or willing to provide much information. Calls and emails to a Treasury Department spokesperson went unanswered this week and last week. Privately, Treasury Department policy people express frustration at the process. Some believe that if the White House had not been in a rush to present the new policy following the Massachusetts election, a more fully detailed policy could have been presented. There is a growing feeling of resentment that the process was speeded up for political reasons. “This all came out of the White House. We look like idiots because of this. And we can’t get the White House to provide the clarity banks, shareholders and the American people deserve,” a Treasury Department employee said. Bank executives are becoming increasingly frustrated because they have been unable to get clarification about how their business will be affected by the new rules. Some anticipate very little change, arguing that nearly all of their business—including proprietary trading and running hedge funds—is related to serving customers. Others are wary that this kind of thinking may underestimate the Obama Administration’s populist turn. “If we try to jump through loopholes on this, we might find its actually a noose,” a person at one of the largest banks told us. The banks are hesitant to speak out in any official capacity, although Goldman Sachs did say they thought less than 10% of their business would be affected. This caused one executive at a competitor to scoff. “Goldman thinks it can still be Goldman, huh? Well, if they’re right, nothing changes. But I’m not sure Obama really can get away with leaving Goldman untouched,” the person scoffed.

- Deficit hawks, your voices have been heard loud and clear! You're tired of all the spending and so is Obama, and he'll announce at this Wednesday's State of the Union that he's going to "freeze" spending growth. Well, kind of. As The Wall Street Journal and other outlets are reporting, the freeze will apply to the discretionary, non-military part of the budget. That counts for 17% of the budget. Healthcare, defense, Social Security, etc. - i.e. the 83% of the budget that really matters -- are all left intact to grow like bamboo.

- Iran has planned its budget for next year based on an oil price of $60 per barrel.

- While investors speculate as to whether Greece or the euro is going to crash, it's no surprise that parties in the EU are questioning their ties to both. An internal report obtained by SPIEGEL warns that the differing competitiveness among euro zone countries is "a cause of serious concern for the euro area as a whole." The report said that 'peripheral' countries Greece, Portugal, Spain, Ireland, and Italy would "jeopardize confidence in the euro and threatens the cohesiveness of the euro area."

- On his show, Dylan Ratigan goes off on The White House for not being able to stick with a single number of jobs the stimulus has supposedly saved or kept. Various representatives of the administration seem to be arbitrarily throwing out numbers from 600,000 to 1.5 million.


Business Week:

- The U.S. Treasury’s chief watchdog for the financial rescue program is investigating whether the Federal Reserve Bank of New York improperly limited disclosures tied to the bailout of American International Group Inc. The probe by Neil Barofsky, the special inspector general charged with policing the Troubled Asset Relief Program, will also look into whether the New York Fed withheld documents during an audit completed in November, according to an excerpt of testimony provided to a House oversight panel. “We have initiated an investigation into whether there was any misconduct relating to the disclosure or lack thereof,” Barofsky wrote in remarks for an Oversight and Government Reform Committee hearing scheduled for Jan. 27.


Politico:

- Sen. Joe Lieberman (I-Conn.) is joining Republicans in ripping the FBI for reading Miranda rights to the would-be airline bomber, saying the administration made a mistake and should transfer Umar Farouk Abdul Mutallab to military custody. “We write to urge the administration to immediately transfer Umar Farouk Abdul Mutallab, a foreign terrorist, to the Department of Defense to be held as an unprivileged enemy belligerent (UEB) and questioned and charged accordingly,” said Lieberman, the chairman of the Senate Homeland Security Committee, in a letter to President Barack Obama on Monday. Ranking member Sen. Susan Collins (R-Maine) also signed the letter. Two dozen other Republicans signed a similar letter earlier this month.


CNN:

- Americans are divided on whether Democratic control of Congress is good for the country, according to a new national poll. A CNN/Opinion Research Corporation survey released Monday also indicates that 7 in 10 Americans believe that the Democrats' loss of their 60 seat supermajority in the Senate is a positive move for the country. Forty-five percent of people questioned in the poll said Democratic control of Congress is a good thing, with 48 percent disagreeing. The results are a shift from last June, when 50 percent felt that Democratic control of both chambers of Congress was good and 41 percent felt it was bad for the country.


Time:

- To Obama's Pile of Woes, Add a Failing Iran Policy. As if President Barack Obama didn't have his hands full at home with his party's loss of Ted Kennedy's seat in Massachusetts, the collapse of health care reform and a disorganized war against the banks, he now faces a major foreign policy setback. Since the 2008 presidential campaign, Obama has promised to curtail Iran's nuclear program by simultaneously offering talks and threatening sanctions. After a year of trying, both approaches appear on the verge of failure.


USAToday:

- The Gallup Poll people delivered an interesting report today: President Obama was the most polarizing first-year president in history. The average difference in Obama's approval ratings between Democrats and Republicans turned out to be 65 percent -- the highest first-year gap of any president so measured.


zerohedge:

- Federal Reserve Moral Hazard Smoking Gun: In August 2008 Goldman(GS) Was Willing To Tear Up AIG(AIG) Derivative Contracts, Offered To Take Haircut.


Reuters:

- Apple Inc (AAPL) posted better-than-forecast Mac sales and strong growth in Asia and Europe, but iPhone shipments came in just below Wall Street's somewhat heightened expectations. The stock edged 1 percent higher in after-hours trading, building on a 2.7 percent rise on Nasdaq during the day, and provided Apple a boost heading into Wednesday, when it is expected to launch a highly touted tablet computer.

- Chipmaker Texas Instruments (TXN) forecast revenue above Wall Street expectations in the current quarter, saying strong sales across all its product segments and regions last quarter would continue. But the company's shares fell 1.6 percent after Monday's fourth-quarter earnings report as some investors bet that demand for chips was peaking and others worried about supply constraints at TI, which said it is seeing better demand this quarter than in a typical first quarter.

- Software maker VMware Inc (VMW) forecast 2010 revenue growth to be far above Wall Street expectations, saying customers were becoming more comfortable about investing in new technologies after a budget crunch last year. Shares of VMware, which makes software that boosts the efficiency of business computers, jumped 18 percent after the company also reported fourth-quarter results that were well ahead of analysts' forecasts.

- Finance Minister Naoto Kan said on Tuesday he hopes Japan can find a way out of deflation within two to three years, with the help of the Bank of Japan.

- New York City Mayor Michael Bloomberg issued his most forceful statements to date opposing natural gas drilling in the city's upstate watershed on Monday, in a boost for anti-drilling protesters amid competing rallies in the state capital.


Financial Times:

- Apple(AAPL) on Monday fuelled anticipation about its expected launch of a tablet computer with a 50 per cent leap in quarterly profit and fresh evidence that the consumer technology juggernaut behind the iPhone is riding the popularity of that device into the corporate market. IPhone sales doubled to 8.7m units shipped and company executives said they were being welcomed inside many more offices. Chief Financial Officer Peter Oppenheimer said 70 per cent of the 100 biggest US companies were at least experimenting with supporting iPhone use by employees, double the proportion from before the summer’s introduction of a speedier operating system. Half of the largest companies worldwide now accept iPhones, he said. “We feel great about what’s happening there,” he said. “This is a key focus.” The iPhone’s advance inside companies, aided by frustration with security holes in Microsoft products, could pave the way for a more substantial share of the corporate market for Macintosh computers. Apple Chief Operating Office Tim Cook said it was “too early” to evaluate the strength of such a halo effect, but he noted the rapid adoption of the iPod had helped Mac sales. Apple sold a record 3.63m Macs in the quarter, up a third from a year earlier and about double the growth of the PC market, helping drive overall revenue up 32 per cent to $15.7bn. Some experts think a tablet computer could extend Apple’s reach into the business market further. Alisa Bowen, head of consumer publishing at Thomson Reuters, said the tablet could become a significant business tool for executives, rather than just the entertainment device most commentators expect. Recent Thomson Reuters research into how bankers, lawyers and wealth managers worked showed that most had ditched their laptops and traveled only with smartphones such as the iPhone and BlackBerry, she said. “The tablet represents the next generation of how these senior executives are going to handle mobile working,” Ms Bowen said, predicting that the device’s mooted larger size and more sophisticated touch screen could allow users to edit PowerPoint slides and work on documents with colleagues. Thomson Reuters is developing contextual applications to offer profiles of relevant companies or people when an individual adds a meeting to the tablet’s calendar, or details of a city in which an executive’s flight has just touched down. It expects to launch its first tablet applications by the end of the first quarter, Ms Bowen said.

- Personal friends of employees at Google, Adobe and other companies were targeted by hackers in a string of recently disclosed cyberattacks, raising privacy concerns and pointing to a highly sophisticated operation, security experts said. Cybersecurity experts analysing the attacks said the hackers spied on individuals and used other sophisticated techniques, making them extremely difficult to stop. The disclosures come amid renewed alarm over cybersecurity after Google said it had been the target of a series of cyberattacks from China. The most significant discovery is that the attackers had selected employees at the companies with access to proprietary data, then learnt who their friends were. The hackers compromised the social network accounts of those friends, hoping to enhance the probability that their final targets would click on the links they sent. “We’re seeing a lot more up-front reconnaissance, understanding who the players are at the company and how to reach them,” said George Kurtz, chief technology officer at security firm McAfee.


Chosun Ilbo:

- North Korean leader Kim Jong Il has ordered that people trying to defect the country be either killed or set to labor camps for 10 years as he tightens control of his communist regime. The number of public executions surged to a record in 2008, citing intelligence officials in South Korea and the US.


Evening Recommendations

Citigroup:

- Reiterated Buy on (WLP), target $76.


Night Trading
Asian indices are -2.0% to -.50% on avg.

Asia Ex-Japan Inv Grade CDS Index 105.0 -5.50 basis points.
S&P 500 futures -.84%.
NASDAQ 100 futures -.50%.


Morning Preview
BNO Breaking Global News of Note

Google Top Stories

Bloomberg Breaking News

Yahoo Most Popular Biz Stories

MarketWatch News Viewer

Asian Financial News

European Financial News

Latin American Financial News

MarketWatch Pre-market Commentary

U.S. Equity Preview

TradeTheNews Morning Report

Briefing.com In Play

SeekingAlpha Market Currents

Briefing.com Bond Ticker

US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Stock Quote/Chart
WSJ Intl Markets Performance
Commodity Futures
IBD New America
Economic Preview/Calendar
Earnings Calendar

Conference Calendar

Who’s Speaking?
Upgrades/Downgrades

Politico Headlines
Rasmussen Reports Polling


Earnings of Note
Company/Estimate
- (GLW)/.42

- (MHP)/.40

- (EMC)/.30

- (ABC)/.46

- (JEC)/.58

- (SHW)/.52

- (BHI)/.35

- (DD)/.41

- (VZ)/.54

- (FPL)/.74

- (MCK)/1.18

- (IDTI)/.08

- (SYK)/.82

- (GILD)/.84

- (ALTR)/.29

- (TPX)/.37

- (BXP)/1.06

- (QLGC)/.29

- (DV)/.83

- (WMS)/.43

- (JNJ)/.97

- (NUE)/.07

- (X)/-1.51

- (DAL)/-.22

- (TRV)/1.48

- (MSTR)/1.61

- (ENR)/1.87

- (YHOO)/.17

- (BTU)/.28


Economic Releases

10:00 am EST

- Consumer Confidence for January is estimated to rise to 53.5 versus 52.9 in December.

- The House Price Index for November is estimated to rise +.2% versus a +.6% gain in October.

- The Richmond Fed Manufacturing Index for January is estimated to rise to 0.0 versus a reading of -4.0 in December.


Upcoming Splits

- None of note


Other Potential Market Movers
- The S&P/CaseShiller Home Price Index, weekly retail sales reports, ABC Consumer Confidence reading, 2-Year Treasury Note Auction and the Jeffries Healthcare Services Conference
could also impact trading today.


BOTTOM LINE: Asian indices are lower, weighed down by financial and commodity stocks in the region. I expect US stocks to open modestly lower and to maintain losses into the afternoon. The Portfolio is 50% net long heading into the day.

No comments: