Friday, April 29, 2011

Friday Watch

Evening Headlines

  • Dollar Index Set for Longest Losing Run in 6 Months on Economy. The Dollar Index headed for a fifth weekly decline, its longest losing streak in six months, before U.S. reports that economists said will show consumer spending cooled and businesses expanded at a slower pace.
  • Gold Heads for Best Monthly Gain Since November 2009 on Inflation, Dollar. Gold is poised for its biggest monthly advance since November 2009 as a weakening dollar and accelerating inflation prompted investors to buy precious metals as a store of value. Immediate-delivery gold was little changed at $1,536.72 an ounce at 8:29 a.m. in Singapore after touching a record $1,540.85 an ounce earlier. The metal surged 7.3 percent this month. “The sinking dollar is driving people to the gold market as speculators betting on a further rally are adding more fuel to the fire,” said Lim Han Jo, a Seoul-based trader with Tongyang Futures Co. “I don’t exclude the possibility of gold hitting $1,800 this year.” The dollar fell to the lowest since December 2009 against the euro yesterday after the Federal Reserve kept borrowing costs at a record low. Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by gold, have expanded 1.5 percent this month, heading for the biggest gain since August.
  • GE's(GE) Immelt Quits New York Fed Board of Directors Citing Demands on Time. General Electric Co. (GE) Chief Executive Officer Jeffrey Immelt resigned from the Federal Reserve Bank of New York’s board of directors, citing “increased demands” on his time. Immelt, 55, stepped down effective March 9, the New York Fed said in a statement today. He noted in his resignation letter to New York Fed President William C. Dudley that his other commitments include the President’s Council on Jobs and Competitiveness, which he has led since January. Immelt had served as a regional bank director since January 2006. Immelt’s decision is unrelated to plans by the Fed later this year to begin supervising GE Capital, the Fairfield, Connecticut-based company’s finance unit, GE spokesman Gary Sheffer said. “Clearly now the Fed is going to be regulating a financial services company like GE Capital and I don’t think he should be sitting on the New York Fed board” as a Class B director, said Sohn, who is also vice chairman of retailer Forever 21 Inc. “If GE Capital were to get into any kind of trouble, it would be the New York Fed that would have to deal with it so I don’t think it’s appropriate for him.”
  • RIM(RIMM) Cuts Profit Forecast as BlackBerry Demand Falls Short. Research In Motion Ltd. (RIM), facing intensifying competition from Apple Inc. (AAPL) and Google Inc. (GOOG), plunged in late trading after cutting profit forecasts on slower-than-expected demand for BlackBerry smartphones. Profit this quarter will be $1.30 to $1.37 a share, Waterloo, Ontario-based RIM said today in a statement. The company last month forecast profit of $1.47 to $1.55 a share. Sales in the quarter ending May 28 will be “slightly below” the $5.2 billion to $5.6 billion the company had forecast. RIM fell $6.17, or 11 percent, to $50.43 in late trading, after closing at $56.59 on the Nasdaq Stock Market.
  • Total to Buy Up to 60% of SunPower(SPWR) for $1.38 Billion. Total SA (FP), Europe’s third-biggest oil producer, agreed to buy as much as 60 percent of SunPower Corp. (SPWRA) for $1.38 billion, to profit from the global transition to clean energy. SunPower, the second-largest U.S. solar panel maker, described the deal price, $23.25 a share, as a “friendly tender” in a statement today. SunPower surged 40 percent to $22.53 at 6:20 p.m. after the close of regular Nasdaq Stock Market trading.
  • Groupon Won't Place Ads on 'Apprentice' Site After Complaints About Trump. Groupon Inc. said it won’t let ads appear on the website for “The Apprentice” after customers complained about the political views of Donald Trump, the real estate developer who stars on the NBC television show. While Groupon isn’t a sponsor of the show, its ads occasionally appear on the related site, Julie Mossler, a spokeswoman for Chicago-based Groupon, said in a statement. “Enough consumers contacted us to warrant ensuring that we don’t place ads on ‘The Apprentice’ home page in the future,” the statement said. Political activist website ThinkProgress earlier today had urged Groupon to withdraw its ads appearing in connection with Trump properties.
  • Morocco Cafe Blast Kills 14 in Widely Condemned 'Terrorist' Act. A blast ripped through a restaurant in downtown Marrakech, Morocco, killing at least 14 people, including Europeans, in what U.S. Secretary of State Hillary Clinton called a “terrorist attack.”
Wall Street Journal:
  • Tornadoes Leave a Trail of Devastation. Nearly 300 Die in Six Southern States as City Neighborhoods and Farm Towns Are Leveled; FEMA Mobilizes for Cleanup. Residents of Alabama, Mississippi and four other Southern states picked through their splintered communities Thursday as state and federal authorities mobilized to clean up and rebuild after scores of powerful tornadoes killed nearly 300 people in the most deadly storm cluster to hit the nation in 37 years.
  • Obama's Silence on Boeing(BA) Is Unacceptable by Nikki Haley. The president's appointees have moved to block the company from building planes in my state. He owes us an explanation. In October 2009, Boeing, long one of the best corporations in America, made an announcement that changed the economic outlook of South Carolina forever: The company's second line of 787 Dreamliners would be produced in North Charleston. In choosing to manufacture in my state, Boeing was exercising its right as a free enterprise in a free nation to conduct business wherever it believed would best serve both the bottom line and the employees of its company. This is not a novel or complicated idea. It's called capitalism. Boeing has since poured billions of dollars into a new, state-of-the art facility in South Carolina's picturesque Low Country along the Atlantic coast. It has created thousands of good jobs and joined the long tradition of distinguished and employee-friendly corporations that have found a home, and a partner, in the Palmetto State. This a win-win for South Carolina, for Boeing, and for the global clients who will see Dreamliners rolling off the North Charleston line at the rate of 10 a month, starting with the first one next year. But, as is often the case, a win for people and businesses is a loss for the labor unions, which rely on coercion, bullying and undue political influence to stay afloat. South Carolina is a right-to-work state, and we're proud that within our borders workers cannot be required to join a labor union as a condition of employment. We don't need unions playing middlemen between our companies and our employees. We don't want them forcefully inserted into our promising business climate. And we will not stand for them intimidating South Carolinians. That is apparently too much for President Obama and his union-beholden appointees at the National Labor Relations Board, who have asked the courts to intervene and force Boeing to stop production in South Carolina. The NLRB wants Boeing to produce the planes only in Washington state, where its workers must belong to the International Association of Machinists and Aerospace Workers.
  • Tough New Rules Proposed on Food Advertising for Kids. The Obama administration is asking food makers to sharply limit any advertising to children and teens of foods high in sodium, saturated fat and added sugars, in an effort to curb obesity. The proposed standards released Thursday are voluntary, but they're widely expected to reshape how companies like McDonald's Corp., Coca-Cola Inc., General Mills Inc. and Kraft Foods Inc. pitch their products to millions of Americans. By one estimate, the new standards would affect advertisements on 1,700 television programs. They would ripple across about 20 types of marketing, including radio, print and Internet pitches. Some food advertisers said the guidelines—which wouldn't take effect until 2016—are too onerous and called for changes. "We can see right from the outset that this is going to be highly restrictive," said Dan Jaffe, an executive at the Association of National Advertisers, which represents food makers and other advertisers. Mr. Jaffe said he expected manufacturers would feel heavy pressure to comply because the guidelines come from regulators including the Federal Trade Commission, the Food and Drug Administration, the Centers for Disease Control and Prevention and the U.S. Department of Agriculture. "There's clearly a veiled threat here that if they don't act...someone's going to step further," either through legislation or regulation, Mr. Jaffe said.
  • Harbinger's Falcone Discloses 'Market Manipulation' Probe. Hedge-fund manager Philip Falcone told investors Thursday that regulators are investigating whether his firm, Harbinger Capital Partners, engaged in "market manipulation." The investigation, disclosed in a year-end communication to Harbinger investors, relates to debt trading in a particular issuer in 2006 to 2008. Harbinger called the investigation "informal" and didn't disclose the name of the issuer.
  • China's One-Child Plan Faces New Fire. China's latest census shows the nation's population is aging rapidly and its growth rate has declined sharply, raising new questions about the government's unwillingness to abandon its controversial one-child policy despite warnings of a looming demographic crunch.
  • Egypt's Policy Upends Mideast Order. Egypt's brokering of a tentative power-sharing deal between two rival Palestinian factions underlines a more independent Egyptian foreign policy that could challenge U.S. and Israeli objectives in the Middle East, analysts said.
  • Gadhafi's Troops Chase Rebels Into Tunisia. Libyan government forces drove rebels from a border outpost Thursday, the Tunisian state news agency reported, shutting off one of their vital supply lines, pursuing them across the mountainous frontier into Tunisia and provoking a sharp protest from that country.
  • Officials Unfazed by Dollar Slide. The U.S. dollar fell Thursday to its lowest point since the summer of 2008, but officials aren't showing signs that they are alarmed by the currency's descent or acting to stem it. In recent days, the nation's top two economic policy makers—Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner—have publicly expressed their desire for a strong dollar. But there is little indication of a change in policy from either the Fed or Treasury—or in underlying economic conditions—that would alter the currency's downward course.
  • U.S. Rebukes China, Cites 'Backsliding' on Rights. A senior U.S. State Department official rebuked China for "serious backsliding" on human rights amid the country's most severe crackdown on political dissent in more than a decade, and said it has already begun to hurt relations with the U.S. At the end of two-day talks that were dubbed a "human-rights dialogue," Michael Posner, assistant secretary of state for democracy, human rights and labor, lamented that the Chinese side had rebuffed U.S. efforts to find out about the status of lawyers, political activists, artists, religious leaders and others caught in a police dragnet in recent weeks.
  • The Keynesian Growth Discount. The results of our three-year economic experiment are in. For three long years, the U.S. has been undertaking an experiment in economic policy. Could record levels of government spending, waves of new regulation and political credit allocation, and unprecedented monetary stimulus re-ignite growth? The results have been rolling in, and they represent what increasingly looks like an historic mistake that deserves to be called the Keynesian growth discount.
  • Cerner(CERN) Profit Up on Higher Bookings. Cerner Corp.'s first-quarter profit climbed 28%, topping the company's guidance, as bookings and backlog surged. The health-care information-technology company Thursday raised its current-year earnings per share forecast to $3.55 to $3.62 from $3.50 to $3.60 and its revenue view to $2.07 billion to $2.12 billion from its earlier expectation of $2.05 billion to $2.1 billion.
Business Insider:
  • Meet The Nationalist Leaders Who Want To Tear Europe Apart. The European Union may be facing its toughest test in years, as a once united front is stretched by economic turmoil. A new breed of nationalist, populist politician has tapped into the growing discontent. Looking less and less like the leaders of old, the new generation takes anti-EU sentiment and sometimes combines it with xenophobia and nationalism.
  • Chart of the Day: Microsoft(MSFT) Keeps Burning Hundreds of Millions Online.
  • Lara Logan Breaks Silence About Sexual Assault In Egypt. “For an extended period of time, they raped me with their hands,” Ms. Logan said in an interview with The New York Times. She estimated that the attack lasted for about 40 minutes and involved 200 to 300 men."
  • Pennsylvanians Turn On Obama. A new Quinnipiac Pennsylvania Poll contains some very bad news for the president. His approval rating is at an all-time low (42%) in the Keystone State. More than half of all Pennsylvanians (53%) disapprove of his job performance. More alarming, a majority (52%) of Pennsylvanians now say that President Obama does not deserve re-election. Forty-two percent believe that he does. The "re-elect question" is one that political professionals watch carefully. Anything below 45% is viewed as political purgatory. Anything below 40% is considered political hell.
  • George Soros Considers His Options. For Democrats hoping George Soros will write an eight-figure check to boost their 2012 efforts, conservatives seeking to use Soros as a bogeyman to rally their base and market analysts trying to predict his next play, a top Soros aide has some advice: Read Karl Popper. Political operatives from across the ideological spectrum have become increasingly fixated on the question of whether the Hungarian-born billionaire investor will once again reprise the role he played in the 2004 election, when he contributed more than $20 million to Democratic causes, or whether he will continue to focus his domestic philanthropy elsewhere.
  • AOL News to Cease Creating Content. AOL News will stop producing original content, according to a source with knowledge of the situation. The news was first reported by Mediaite. Mediaite writes that the website will cease production of original editorial content and shift to using Huffington Post’s content, a move that reveals more about the editorial stance between the two companies, which merged earlier this year in a $315 million deal.
  • NY Fed Deploys Senior Supervisors to Wall Street. Wall Street executives will soon get more face time with senior bank regulators as part of an effort to strengthen supervision and plug gaps in communication laid bare by the worst financial crisis since the Great Depression. The Federal Reserve Bank of New York has started to assign more senior officials to lead its on-site teams at big banks, aiming to strengthen its lines of communication with chief executives and directors, sources familiar with the matter said on Thursday. Each of the largest financial firms the Fed supervises will be assigned an on-site senior supervisory officer who will be closer to New York Fed regulatory policy discussions and should bring a better sense of how the firm fits into the broader global regulatory framework, one source said. The move to add more senior staff to on-site teams comes from a review by the New York Fed's new head of bank supervision, Sarah Dahlgren. It aims to address a lesson from the crisis: that supervisors often didn't engage with senior management as much as they arguably should have.
  • Nasdaq(NDAQ)/ICE(ICE) May Go Hostile; Investors Press NYSE(NYX). Nasdaq OMX and IntercontinentalExchange are poised to go hostile in their bid for NYSE Euronext after shareholders ratcheted up pressure on the Big Board parent to get a better deal. Nasdaq OMX Group Inc and IntercontinentalExchange Inc are expected to soon take their $11.1 billion bid directly to NYSE's shareholders through a tender offer, two sources familiar with the situation said.
  • Muslim Brotherhood Backs Syria Protests. The Muslim Brotherhood called on Syrians to take to the streets ahead of Friday prayers and help the besieged city of Deraa, where a rights group said civilian deaths from a tank-backed army attack rose to 50. It was the first time that the Brotherhood, ruthlessly crushed along with secular leftist movements under the rule of late President Hafez al-Assad, had called directly for protests in Syria since pro-democracy demonstrations against Assad's son, President Bashar al-Assad, erupted six weeks ago. A declaration by the Brotherhood, sent to Reuters by its leadership in exile on Thursday, said: "Do not let the regime besiege your compatriots. Chant with one voice for freedom and dignity. Do not allow the tyrant to enslave you. God is great."
  • China's Frothy Internet Sector Seen Due For a Correction. China's red-hot Internet sector is due for a correction, with valuations reaching frothy levels, and some players will be eliminated, industry executives and venture capitalists say.
  • Iron Ore Company Cliffs'(CLF) Q1 Profit Soars. Cliffs Natural Resources Inc reported more than a five-fold increase in first-quarter profit as demand and prices for its iron ore and steel-making coal soared.
  • True Religion(TRLG) Q1 Beats Wall Street, Shares Rise. True Religion Apparel Inc's first-quarter results trounced analysts' estimates as the premium denim company sold more of its merchandise through its high-margin online and retail stores. Shares of the company rose 10 percent after the bell on Thursday.
21st Century Business Herald:
  • Land sales in Beijing, Shanghai and Hangzhou fell from January to present as compared with the same period a year earlier. Beijing's land sales fell 55% during the period to 22.3 billion yuan, citing property agent Homelink. Shanghai's land sales declined 32% to 37.5 billion yuan, citing China Real Estate Information Corp.
Shanghai Securities News:
  • China's export growth this year may be in the single digits, citing Wei Jianguo, a former Vice Commerce Minister and now secretary general of the China Center for International Economic Exchanges. Export growth will slow this year due to uncertainties with the European economy, yuan appreciation and rising commodity prices, Wei said.
Evening Recommendations
  • Reiterated Buy on (TWC), boosted target to $88.
  • Reiterated Buy on (MWW), target $25.
  • Reiterated Buy on (ACOM), raised estimates, boosted target to $52.
  • Reiterated Buy on (IP), boosted target to $36.
  • Rated (DNDN) Buy, target $50.
Night Trading
  • Asian equity indices are -1.0% to +.50% on average.
  • Asia Ex-Japan Investment Grade CDS Index 103.0 -1.5 basis points.
  • Asia Pacific Sovereign CDS Index 111.0 -1.0 basis point.
  • S&P 500 futures -.03%.
  • NASDAQ 100 futures -.10%.
Morning Preview Links

Earnings of Note
  • (AXL)/.38
  • (B)/.29
  • (CAT)/1.31
  • (CVX)/3.00
  • (CVH)/.52
  • (DHI)/-.05
  • (FLIR)/.36
  • (GT)/.12
  • (HMSY)/.36
  • (ITT)/.93
  • (LEA)/1.15
  • (MRK)/.84
  • (NWL)/.28
  • (PBI)/.53
  • (SPG)/1.54
  • (VFC)/1.61
  • (WY)/.15
Economic Releases
8:30 am EST
  • The 1Q Employment Cost Index is estimated to rise +.5% versus a +.4% gain in 4Q.
  • Personal Income for March is estimated to rise +.4% versus a +.3% gain in February.
  • Personal Spending for March is estimated to rise by +.5% versus a +.7% gain in February.
  • The PCE Core for March is estimated to rise by +.1% versus a +.2% gain in February.
9:45 am EST
  • The Chicago Purchasing Manager for April is estimated to fall to 68.2 versus 70.6 in March.
9:55 am EST
  • Final Univ. of Mich Consumer Confidence for April is estimated to rise to 70.0 versus 69.6 in March.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Bernanke speaking, NAPM-Milwaukee for April, (ETR) analyst conference, (AMED) investor day and the (NGSX) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and technology shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.

No comments: