Late-Night Headlines
Bloomberg:
- House Majority Leader Steny Hoyer said he expects President Barack Obama to push for a broad health-care overhaul in his nationally televised address to the nation tomorrow, and he cast doubt on the idea of passing smaller measures instead. “It is difficult to take small pieces and attain the objectives you want to accomplish,” Hoyer of Maryland, the No. 2 Democrat in the House, said today at the National Press Club in Washington.
- The Hang Seng China Enterprises Index may fall another 12%, doubling its two-week retreat, after the measure slid below its average close of the past 200 days, according to Oscar Gruss & Son Inc. The index may now plunge to as low as 10,000, a 12% drop, according to Michael Shaoul, the chief executive officer at the New York-based brokerage. The market's drop "has now developed into straightforward liquidation that looks set to continue," Shaoul wrote. "Many participants will want to lighten holdings in advance of the multi-day closure of local markets" for the Chinese New Year on Feb. 14, he wrote.
- The U.S. ramped up its presence in Haiti to more than 15,400 soldiers, sailors and airmen as Secretary of State Hillary Clinton assailed criticism of the military’s role in the relief efforts. The U.S. has over 4,700 “boots on the ground,” including 3,000 soldiers from the Army’s 82nd Airborne division, and another 10,700 service people on ships off Haiti, Lt. Gen. P.K. Keen, commander of the U.S. military’s operations in Haiti, said today. The military is helping build a 5,000-bed post-surgical hospital for Haitians recovering from injuries, he said.
- JPMorgan Chase & Co.(JPM) is turning “less bullish” on emerging-market stocks in the first half of 2010 amid concern central banks will tighten monetary policy to combat accelerating inflation. Investors should be “underweight” in shares that benefit from rising asset prices and domestic consumption, JPMorgan analysts led by Adrian Mowat wrote in a report dated yesterday. They advised investors with “unprotected portfolios” to consider buying put options, or bets that prices will fall below a certain level. The MSCI Emerging Market Index has dropped 8 percent since Jan. 12, when the People’s Bank of China raised the proportion of deposits that banks must set aside as reserves. Benchmark stock indexes tracking Chinese and Hong Kong shares are among the 10 worst performers globally this year, according to data compiled by Bloomberg. “China led the recovery and is now leading the tightening cycle,” the analysts wrote. “We are now less bullish on the first-half performance as investors price in policy uncertainty.”
- Toyota Motor Corp., struggling to stem widening quality concerns, will suspend production and U.S. sales of eight models that use a component that triggered a recall of 2.3 million vehicles. Dealers will temporarily stop selling RAV4, Highlander and Sequoia sport-utility vehicles, Corolla, Camry, Avalon and Matrix cars and Tundra pickups, Toyota, the world’s largest carmaker, said in a statement yesterday. Assembly lines at five North American plants will be idled the week starting Feb. 1. Mike Goss, a company spokesman, said he couldn’t immediately say how many units of production would be lost. “Toyota had a bulletproof reputation for quality, and now it’s been tarnished,” said Jim Hossack, an industry analyst at AutoPacific Inc. in Fountain Valley, California. “It’s a dramatic move, and an expensive move.”
Wall Street Journal:
- Chief executives advising President Barack Obama expressed frustration with his economic policies and called on him in his State of the Union speech to offer stronger measures to spur growth, business expansion and trade. Mr. Obama is expected to mention in his speech Wednesday a package of small-business tax breaks and incentives that he has touted since his campaign. But these measures have been neglected or languished in Congress so long that the measures may never come to pass, the business leaders said. Some of Mr. Obama's business allies criticized a list of middle-class aid programs expected in Wednesday's speech as costly half-measures, and said his effort to freeze much government spending was the wrong prescription for the economy now. Others worried that intensifying antibank rhetoric from the White House could dampen relations with the broader business community. "We need programs and policies to create sustainable economic growth, not just spending programs that transition people from A to B," said International Paper Co.(IP) Chief Executive John V. Faraci, who advises the president's Middle Class Task Force. Instead of announcing a modest package of middle-class child-care, retirement and education measures, Mr. Faraci and other executives who have had contact with the White House said the president should focus on helping businesses get access to capital and on expanding trade.
- There's still time to rejuvenate our market economy and avoid a European-style welfare state.
- Transcript: ECB President Trichet. European Central Bank President Jean-Claude Trichet recently spoke to The Wall Street Journal's Brian Blackstone and Matthew Karnitschnig at his Frankfurt office about the economy and the World Economic Forum meeting Davos, which starts Wednesday. Below is an edited transcript.
- Public pension funds needing to boost their returns but frustrated with hedge funds and private-equity investments are turning to one of the oldest investment strategies—using borrowed money to boost performance. The strategy calls for leveraging pension funds' safest asset—government or other high-grade bonds—while reducing exposure to stocks. The State of Wisconsin Investment Board, which manages $78 billion, became among the first to adopt the strategy when it approved the plan Tuesday. The fund will borrow an amount equivalent to 4% of assets this year, and as much as 20% of its assets over the next three years.
- Book publishers were locked in secret 11th-hour negotiations with Apple Inc.(AAPL) that could rewrite the industry's revenue model after the technology giant unveils its highly anticipated tablet device Wednesday. Apple's new multimedia tablet device, with a 10-inch touch screen that is expected to deliver video, text, navigation and social-networking applications, could change the way much of traditional media is delivered.
- This year, the 27-nation European Union was supposed to come of age as an actor on the world stage, bolstered by the Lisbon Treaty, which streamlines the EU's cumbersome institutions. Instead, Europe is starting to look like the loser in a new geopolitical order dominated by the U.S. and emerging powers led by China. When the world's policy and economic elite gather Wednesday in Davos, Switzerland, for the annual World Economic Forum, much of the talk will be about the rise of a "G-2" world where the U.S. and China are the most important players. A growing number of European policymakers and analysts say the EU's international influence may have peaked thanks to a combination of political divisions and poor long-term prospects for its economy.
MarketWatch.com:
- The world's chief executives are less downbeat than a year ago about prospects for growth, but fears of a drawn-out global recession haven't been fully dispelled, according to a survey released as top CEOs, politicians and others gathered in the Swiss Alps for the World Economic Forum's annual meeting. The survey of 1,198 CEOs from 52 countries by PricewaterhouseCoopers in the fourth quarter of last year found 81% of top executives were confident of their prospects in the next 12 months, while 18% said they were pessimistic. Last year, 64% were confident, while 35% were pessimistic.
CNBC:
NY Times:
- Finding the winners on Wall Street is usually as simple as looking at pay. Rarely are bankers who lose money paid as generously as those who make it. But this year is unusual. A handful of big banks that are struggling in the postbailout world are, by some measures, the industry’s most magnanimous employers. Roughly 90 cents out of every dollar that these banks earned in 2009 — and sometimes more — is going toward employee salaries, bonuses and benefits, according to company filings. Amid all the commotion over the large bonuses that many bankers are collecting, what stands out is not only how much the stars are making. It is also how much of the profits lesser lights are taking home.
- Weeks after rescuing the American International Group(AIG) with an $85 billion taxpayer loan in late 2008, Federal Reserve Board officials rejected a proposal that would have forced the insurer’s trading partners to return $30 billion in cash that they had received from A.I.G. in the preceding months. The Fed chose instead to let the banks keep the cash and to receive additional billions from taxpayers. This decision was made, internal documents show, after two Fed governors expressed concern that such a plan might be “a gift” to the company’s trading partners, including Goldman Sachs(GS) and Société Générale, a major French bank. The documents were provided to Congressional investigators by the Federal Reserve and were obtained by The New York Times.
Business Insider:
- CHART OF THE DAY: Here's Why The Discretionary Spending Freeze Is A Joke.
Business Week:
- All the buzz about losers if Google Inc.(GOOG) leaves China ignores a potential winner: India.
- Berkshire Hathaway Inc.(BRK/A), Warren Buffett’s insurance and investment company, will join the Standard & Poor’s 500 Index after a 50-for-1 stock split increased trading volume. Berkshire Hathaway will replace Burlington Northern Santa Fe Corp. after buying the railroad, S&P said in a statement on its Web site.
Politico:
- Fox is the most trusted television news network in the country, according to a new poll out Tuesday. A Public Policy Polling nationwide survey of 1,151 registered voters Jan. 18-19 found that 49 percent of Americans trusted Fox News, 10 percentage points more than any other network. Thirty-seven percent said they didn’t trust Fox, also the lowest level of distrust that any of the networks recorded. CNN was the second-most-trusted network, getting the trust of 39 percent of those polled. Forty-one percent said they didn’t trust CNN. Each of the three major networks was trusted by less than 40 percent of those surveyed, with NBC ranking highest at 35 percent. Forty-four percent said they did not trust NBC, which was combined with its sister cable station MSNBC. Thirty-two percent of respondents said they trusted CBS, while 31 percent trusted ABC. Both CBS and ABC were not trusted by 46 percent of those polled.
- Big Labor’s top legislative priority, a bill creating an easier way to organize workers, is essentially dead – and its own members were instrumental in killing it. The victory of Republican Scott Brown’s in last week’s Massachusetts Senate special election that deprived Democrats of a filibuster-proof majority is not only bad news for health care. It also means that Republicans will be able to block the Employee Free Choice Act from coming to the Senate floor for a vote. Whether their rank-and-file lost patience or simply didn’t realize the stakes, the decision of most union members in Massachusetts to back Brown rather than Coakley helped put the last nail in a legislative effort that was already on life support.
Rasmussen Reports:
Theflyonthewall:
- Barrons.com believes that Apple (AAPL) remains a worthwhile investment, despite all the hype about the company's soon-to-be-unveiled tablet computer. The company reported stellar Q1 results. It has no debt and $40B in cash and securities on the balance sheet makes Apple a solid investment. At 19x expected FY11 EPS, the stock doesn't appear cheap, but analysts expect long-term growth of 18% per year. Moreover, that figure could prove conservative given the 40% annual EPS growth Apple has generated since the iPhone launched three years ago. The stock could see "sell-on-the news" action Wednesday on a tablet unveiling, but any weakness would make the investment that much more compelling, says Barrons.com.
Nola.com:
- Alleging a plot to wiretap Democratic Sen. Mary Landrieu's office in the Hale Boggs Federal Building in downtown New Orleans, the FBI arrested four people Monday, including James O'Keefe, a conservative filmmaker whose undercover videos at ACORN field offices severely damaged the advocacy group's credibility. Also arrested were Joseph Basel, Stan Dai and Robert Flanagan, all 24. Flanagan is the son of William Flanagan, who is the acting U.S. Attorney for the Western District of Louisiana, the office confirmed. All four were charged with entering federal property under false pretenses with the intent of committing a felony.
San Francisco Examiner:
- Last year's $787 billion economic stimulus bill is going to be even more expensive — $75 billion more. That's the finding in Tuesday's Congressional Budget Office estimate of the costs of the economic stimulus bill, which mixed tax cuts and lots of spending in an effort to jump-start the economy. The reason for the higher estimate of the recovery bill's price tag is chiefly that unemployment benefits are costing more. Plus, stimulus-subsidized bonds to pay for infrastructure projects are more popular than expected with state and local governments. Republicans criticize the stimulus for being long on spending and short on creating jobs as promised. Democrats say it has helped keep the economy going and has produced up to 2 million jobs. Almost half of the higher estimate, $34 billion, is because the food stamp program won't be able to take advantage of lower-than-expected inflation rates and will instead have benefits set by the stimulus bill. The nonpartisan CBO said five programs were responsible for most of the $112 billion in stimulus spending between last February and October: Medicaid; a $250 payment to almost 53 million Social Security recipients; Pell Grants; and fiscal relief for state governments. Tax cuts added $88 billion. The stimulus is expected to add about $400 billion to the deficit in this budget year. Democrats are pressing for another stimulus measure and top Senate Democrats have drafted an $82.5 billion jobs plan that would help small businesses, boost spending on road construction and mass transit, and give local governments money to retain teachers. A draft document obtained by The Associated Press proposes $20 billion for a job creation tax credit and $12.5 billion to retrofit homes and businesses to make them more energy efficient. The House passed a so-called jobs bill last month, costing about $174 billion. That plan was heavy with safety net spending such as a six-month extension of unemployment benefits and subsidies to help the jobless buy health insurance. Democrats claim their proposals are partly paid for by repealing $150 billion worth of Treasury Department bailout authority to claim $75 billion in budget savings. But CBO director Douglas Elmendorf said those claims are based on outdated estimates. Since the remaining bailout money won't be used, it can't be claimed as savings, he said. "There really isn't money there to be saved," Elmendorf said.
Forbes:
- The Hole In The EPA's Ozone Claims. To the EPA, "safe" is a constantly moving target--and that's the way it likes it. Always something new to regulate, always a new hobgoblin from which to save us. Take the agency's proposal to yet again lower allowable ozone levels. It's another one of those win-win regulations for which the EPA is famous, supposedly saving both lives and money. But its assertions collapse when you examine the science on which they're allegedly based.
CBS News:
- Thanks to recently filed Congressional expense reports there's new light shed on the Copenhagen Climate Summit in Denmark and how much it cost taxpayers. CBS News Investigative correspondent Sharyl Attkisson reports official filings and our own investigation show at least 106 people from the House and Senate attended - spouses, a doctor, a protocol expert and even a photographer. For 15 Democratic and 6 Republican Congressmen, food and rooms for two nights cost $4,406 tax dollars each. That's $2,200 a day - more than most Americans spend on their monthly mortgage payment. CBS News asked members of Congress and staff about whether they're mindful that it's public tax dollars they're spending. Many said they had never even seen the bills or the expense reports. Rep. Henry Waxman, D-Calif., is a key climate change player. He went to Copenhagen last year. Last week, we asked him about the $2,200-a-day bill for room and food. "I can't believe that," Rep. Waxman said. "I can't believe it, but I don't know." But his name is in black and white in the expense reports. The group expense report was filed by House Speaker Nancy Pelosi, D-Calif. She wouldn't talk about it when our producer tried to ask. Pelosi's office did offer an explanation for the high room charges. Those who stayed just two nights were charged a six-night minimum at the five-star Marriott. One staffer said, they strongly objected to no avail. You may ask how they'll negotiate a climate treaty, if they can't get a better deal on hotel rooms. Total hotel, meeting rooms and "a couple" of $1,000-a-night hospitality suites topped $400,000. Flights weren't cheap, either. Fifty-nine House and Senate staff flew commercial during the Copenhagen rush. They paid government rates -- $5-10,000 each -- totaling $408,064. Add three military jets -- $168,351 just for flight time -- and the bill tops $1.1 million dollars -- not including all the Obama administration officials who attended: well over 60.
In fairness, many attendees told us they did a lot of hard work, and the laid groundwork for a future global treaty. "It was cold… I was there because I thought it was important for me to be there," Rep. Waxman said. "I didn't look at it as a pleasure trip." But considering the size of the deficit, and the fact that that no global deal would be reached -- critics question the super-sized U.S. delegation -- more than 165 -- leaving the impression there's dollars to burn. In this case, more than a million.
zerohedge:
- Comments On SIGTARP's Testimony Ahead Of Tomorrow Congressional Hearing.
Reuters:
- Electronics manufacturing services provider Sanmina-SCI Corp (SANM) posted a quarterly profit that beat Wall Street estimates helped by lower expenses and improved margins, and forecast a stronger-than-expected second quarter. The company's shares, which have more than tripled their value in last six months, were up $1.49 to $13.79 in trading after the bell. They closed at $12.30 Tuesday on Nasdaq.
Financial Times:
- A private equity group co-founded by the son of Wen Jiabao, China’s premier, is close to raising $1bn from foreign investors for a fund that will invest in mainland groups. New Horizon Capital has raised about $750m for the fund from existing investors and expects to raise the total to $1bn in the coming weeks, according to people close to the fund. Wen Yunsong, also known as Winston Wen, is the only son of the Chinese premier and has been an active participant in Chinese investment since earning an MBA at Kellogg management school at Northwestern University in the US.
- Why trade war is very likely to break out his year.
- Volcker's axe is not enough to cut banks to size.
Financial Post:
- It's hard to imagine now, after a year in which 50,000 workers lost their jobs in Alberta's manufacturing and energy sectors. At 6.7 per cent, the province's current unemployment rate -- while down from the 2009 peak of 7.4 per cent -- is still nearly double the pre-recession level. Nonetheless, last week's sudden flurry of oilsands project announcements is already sparking concern about possible labor shortages returning by 2011. Mike Percy, dean of the University of Alberta's School of Business, says he can foresee worker bottlenecks looming within 12 to 18 months, depending on how many oilsands projects ramp up simultaneously.
Evening Recommendations
Citigroup:
- Reiterated Buy on (BAC), target $23.
RBC Capital:
- Rated (HGSI) Outperform, target $38.
- Rated (JAH) Outperform, target $41.
- Rated (TWX) Outperform, target $35.
Night Trading
Asian indices are -1.25% to +.25% on avg.
S&P 500 futures +.18%.
NASDAQ 100 futures +.14%.
Morning Preview
BNO Breaking Global News of Note
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Earnings of Note
Company/Estimate
- (CAH)/.46
- (RCL)/-.05
- (LLL)/1.85
- (BDX)/1.20
- (QSII)/.46
- (LMT)/1.99
- (RTN)/1.24
- (F)/.26
- (EK)/-.18
- (PG)/1.36
- (MOT)/.08
- (ZMH)/1.08
- (MO)/.39
- (T)/.51
- (MMM)/1.21
- (CA)/.42
- (RHI)/.05
- (MXIM)/.15
- (KLAC)/.28
- (MSFT)/.60
- (SNDK)/.69
- (JNPR)/.25
- (CB)/1.46
- (AMZN)/.72
- (CELG)/.62
- (OXY)/1.26
- (BAX)/1.03
- (EL)/1.17
- (OSK)/1.02
- (JBHT)/.32
- (LLY)/.91
- (BMY)/.42
- (CL)/1.18
Economic Releases
10:00 am EST
- New Home Sales for December are estimated to rise to 366K versus 355K in November.
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,580,000 barrels versus a -471,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +950,000 barrels versus a +3,950,000 barrel build the prior week. Distillate inventories are expected to fall by -1,900,000 barrels versus a -3,263,000 barrel decline the prior week. Finally, Refinery Utilization is expected to fall by -.1% versus a -2.92% decline the prior week.
2:15 pm EST
- The FOMC is expected to leave the benchmark fed funds rate at .25%.
Upcoming Splits
- None of note
Other Potential Market Movers
- The Fed's Greenlee speaking, Geithner's Testimony Before House, weekly MBA mortgage applications report, Treasury's 5-Year Note Auction, (KED) analyst day and the Jefferies Healthcare Services Conference could also impact trading today.
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