Friday, February 26, 2010

Bull Radar

Posted by Gary .....at 11:20 AM
Style Outperformer:
Large-Cap Value (+.51%)

Sector Outperformers:
Airlines (+1.50%), Hospitals (+1.15%) and HMOs (+1.10%)

Stocks Rising on Unusual Volume:
SNP, JPM, AZN, PBR, AAPL, OSIS, AGO, SID, GGB, EVVV, MGLN, INSU, SMCI, DECK, CHBT, NUVA, VLCM, DWSN, CETV, SVNT, CAGC, JACK, VTAL, GPRE, IPCM, SOHU, IPHS, DTSI, CKR, ARM, INT, CCC, KNM and MHK

Stocks With Unusual Call Option Activity:
1) TOL 2) DECK 3) FLR 4) AKAM 5) GPS

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Trading LInks

Posted by Gary .....at 9:26 AM
0 comments

Friday Watch

Posted by Gary .....at 12:24 AM
Evening Headlines
Bloomberg:
  • Obama May Prohibit Home-Loan Foreclosures Without HAMP Review. The Obama administration may expand efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the government’s Home Affordable Modification Program. The proposal, reviewed by lenders last week on a White House conference call, “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed,” according to a Treasury Department document outlining the plan.
  • Treasuries to Rally, Outperform Bunds, Goldman Sachs(GS) Says. Investors should buy Treasuries and sell German bunds, betting on a deceleration in inflation and U.S. economic growth, Goldman Sachs Group Inc. said. “Treasury yields have formed a top and have the scope to fall over the coming months, both outright and against German bunds, on the back of a further decline in core inflation and a weakening of activity data,” Francesco Garzarelli, chief interest-rate strategist in London at Goldman, wrote in a research report. “Investors have not fully taken on board the ongoing decline in core inflation.”
  • Wheat Prices May Slump on Harvests, Stockpile Release. Global wheat prices may plunge 14 percent in the next few months as new harvests enter the market, or sooner if Russia releases its stockpiles, the nation’s second-largest exporter said. The average world export price may decline to $150 a metric ton from $175 a ton now, Chris Vanhonacker, commercial director at Rosinteragroservis, known as Rias, said in an interview in Singapore today. “It will be the biggest catastrophe” for the wheat market if Russia releases 3 million tons from its stockpiles, he said. Wheat has slumped 62 percent from a record $13.4950 a bushel two years ago as farmers increased plantings, boosting competition between the U.S., Canada, Russia and Australia. Russia plans to export as much as 3 million tons of grain from its inventories, Emmanuel Jayet the head of agricultural research at Societe Generale SA, said this week. Russia, the third-largest wheat exporter, plans to increase its share of global trade as exports may advance by as much as 32 percent in the next five years, Russian Grain Union Chairman Arkady Zlochevsky said in an interview in Singapore today.
  • New York Faces Cash Squeeze in March, Budget Chief Megna Says. New York faces a cash squeeze in March and expects to delay $1.4 billion of payments, almost twice as much as it temporarily withheld two months ago, state budget director Robert Megna said. New York, the third most populous U.S. state, held back $750 million of payments to schools and local governments when its general fund ended December with a record deficit of $577 million. The state paid bills that month by borrowing from other accounts. Delays in March will be needed “to continue orderly operation of government,” Megna said today at a hearing in Albany. Postponements may affect income tax refunds as well as payments to schools and not-for-profit organizations, he said.
  • NYC May Get 16 Inches as Snowstorm Gains Strength, Hangs On. A winter storm warning for New York City is in effect until 6 p.m. tomorrow as a system carrying heavy, wet flakes and gusty winds threatens to smother the region with as much as 16 inches, forecasters said. Airlines canceled hundreds of flights as the snow moved in around 8 a.m. today. Speculation that the snows would reduce demand for motor fuel contributed to a drop in gasoline futures. Gasoline for March delivery declined 6.17 cents, or 2.9 percent, to settle at $2.037 a gallon on the New York Mercantile Exchange. “Demand numbers are going to be annihilated by the bad weather,” said Ray Carbone, president of Paramount Options Inc. in New York, a trader at the Nymex. More than 900 flights were halted across the Northeast today, most of them in New York, Boston and Philadelphia. That represents about 2 percent of the 50,000 flights scheduled in the U.S. this time of year, according to FlightStats.com, a Web site that tracks aircraft movements.
  • Schumer Says China's Weak Yuan Should Prompt U.S. Trade Duties.
  • Clinton Calls U.S. Deficit, Debt a National Security Concern. The record U.S. budget deficit and debt are a growing national security concern, U.S. Secretary of State Hillary Clinton told a panel of lawmakers reviewing the foreign affairs budget for fiscal year 2011. “We have to address this deficit and the debt of the U.S. as a matter of national security, not only as a matter of economics,” Clinton told the House Appropriations Subcommittee on State, Foreign Operations and related programs. “I do not like to be in a position where the United States is a debtor nation to the extent that we are, with the projections” of deficits “going far into the future,” Clinton said. The White House is projecting a record $1.6 trillion budget deficit for the 2010 fiscal year, following a $1.4 trillion shortfall in 2009. The nonpartisan Congressional Budget Office projects that deficits over the next 10 years will total $6 trillion.
  • Japan Deflation Persists as Consumer Prices Fall 1.3%. Japan’s consumer prices fell for an 11th month in January, putting renewed pressure on policy makers to eradicate deflation that hampers the recovery.
Wall Street Journal:
  • U.S. Misses Deadline For Offshore Drilling Study. The Obama administration failed to meet a deadline for submitting a court-ordered analysis of the environmental effects of offering new leases to drill in Alaskan coastal waters, the oil industry said Thursday. A federal appeals court last year had invalidated the Interior Department's current five-year plan for offering oil and gas leases, saying that the government hadn't conducted an adequate review of the environmental impact in the Beaufort, Bering and Chukchi seas off the Alaskan coast. The Interior Department's Minerals Management Service has been conducting such a review and is supposed to respond to the court. "We are disappointed MMS has again missed a deadline to provide the court with the analysis it ordered last April," Jack Gerard, the chief executive of the American Petroleum Institute, said in a statement. "This will delay investment decisions, delay the production of much-needed oil and natural gas and delay the creation of much-needed jobs."
  • Push to Oversimplify at Climate Panel. In the next few days, the world's leading authority on global warming plans to roll out a strategy to tackle a tough problem: restoring its own bruised reputation. A months-long crisis at the Intergovernmental Panel on Climate Change has upended the world's perception of global warming, after hacked emails and other disclosures revealed deep divisions among scientists working with the United Nation-sponsored group. That has raised questions about the panel's objectivity in assessing one of today's most hotly debated scientific fields. The problem stems from the IPCC's thorny mission: To take sophisticated and sometimes inconclusive science, and boil it down to usable advice for lawmakers. To meet that goal, scientists working with the IPCC say they sometimes faced institutional bias toward oversimplification, a Wall Street Journal examination shows. The tension within the IPCC stretches back a decade or more, according to interviews with scientists and a review of hundreds of IPCC documents and emails. It has complicated the panel's work on matters ranging from the study of tree rings to the proper use of massively complex climate computer models. The IPCC shared a Nobel Peace Prize with former Vice President Al Gore in 2007. The group won for a report that declared climate change is "unequivocal" and is "very likely" caused by emissions of carbon dioxide and other greenhouse gases due to human activity. As climate change gained public attention in recent decades, some IPCC-affiliated scientists privately expressed concerns that conclusions were at risk of getting oversimplified. Keith Briffa, a climate scientist at East Anglia, expressed this worry in emails to colleagues in 1999, as work intensified on the IPCC's third major report, published in 2001. Mr. Briffa's particular concern: tree rings. The problem: Using Mr. Briffa's tree-ring techniques, researchers in the 1990s built charts suggesting that temperatures in the late 20th century were at the highest levels in a millennium. The charts were dubbed "hockey sticks" because they showed temperatures relatively flat for centuries, then angling much higher recently. But Mr. Briffa fretted about a potential problem. Thermometers show that temperatures have risen since the 1960s, but tree-ring data don't move in tandem, and sometimes show the opposite. In the same 1999 email, Mr. Briffa said tree-ring data overall did show "unusually warm" conditions in recent decades. But, he added, "I believe that the recent warmth was probably matched about 1,000 years ago." In other words, maybe the chart shouldn't resemble a hockey stick.
  • Hedge Funds Try 'Career Trade' Against Euro. The euro, which traded at $1.51 in December, now trades around $1.35. With traders using leverage—often borrowing 20 times the size of their bet, accentuating gains and losses—a euro move to $1 could represent a career trade. If investors put up $5 million to make a $100 million trade, a 5% price move in the right direction doubles their initial investment. "This is an opportunity...to make a lot of money," says Hans Hufschmid, a former senior Salomon Brothers executive who now runs GlobeOp Financial Services SA, a hedge-fund administrator in London and New York. It is impossible to calculate the precise effect of the elite traders' bearish bets, but they have added to the selling pressure on the currency—and thus to the pressure on the European Union to stem the Greek debt crisis. There is nothing improper about hedge funds jumping on the same trade unless it is deemed by regulators to be collusion. Regulators haven't suggested that any trading has been improper. Through small gatherings, hedge funds can discuss similar trades that can feed on each other, in moves similar to those criticized by some investors and bankers in 2008. Then, big hedge-fund managers, such as Greenlight Capital Inc. President David Einhorn, who also was at this month's euro-dominated dinner, determined that the fortunes of Lehman Brothers Holdings and other firms were dim and bet heavily against their securities, accelerating their decline. An SAC manager, Aaron Cowen, who pitched the group on the bearish bet, said he viewed all possible outcomes relating to the Greek debt crisis as negative for the euro, people familiar with the matter say. SAC's trading position on the euro is unclear. George Soros, head of the $27-billion asset fund manager, warned publicly last weekend that if the European Union doesn't fix its finances, "the euro may fall apart." Through a spokesman for Soros Fund Management, he declined to comment for this article. Again, derivatives, known as credit default swaps, are playing a part in the current trading. Some of the largest hedge funds, including Paulson & Co., which manages $32 billion, have bought such swaps, traders say, which act as insurance against a default by Greece on its sovereign debt. Traders view higher swaps prices as warning signs of potential default. Since December, the prices of such swaps have more than doubled, reflecting investors concerns about a default by Greece. Paulson had built a large bearish position on Europe, people familiar with the matter say, including swaps that will pay out if Greece defaults on its debt within five years. Paulson since has closed out that position and has taken the other side of the bet, leaving the firm with a bullish stance now, a person familiar with the matter says. In a statement, Paulson declined to comment "on individual positions," saying it "does not manipulate or seek to destabilize securities in any markets." Late last year, hedge funds bought swaps insuring the debt of Portugal, Italy, Greece and Spain, and began making bearish euro bets. More recently, the hedge funds have sold these swaps to banks looking to "hedge," or protect, their holdings of European government bonds, traders say. In the past year, the overall value of swaps insuring against a Greek debt default has doubled, to $84.8 billion, according to Depository Trust & Clearing Corp. But the net amount that sellers would actually pay in a default rose just modestly over the same period, up only 4% to $8.9 billion, the DTCC says. This suggests that banks and others have bought and sold roughly equal amounts of swaps to hedge their positions, traders say. Between Dec. 9 and 11, some big European and U.S. banks made bearish calls on the euro by buying one-year euro "puts." Puts give the holder the right to sell an investment at a specified price by a set date. The pressure on the euro soon began building. The currency fell another 1.3% on Dec. 16 when Standard & Poor's downgraded Greek sovereign debt. At that point, some large investors including asset manager BlackRock Inc. had bearish bets on the euro, believing that it couldn't sustain the levels at which it was then trading and that Europe's financial recovery would lag that of the U.S., according to people familiar with their position. On Jan. 28 and 29, analysts from Goldman Sachs Group Inc. took a group of investors on a field trip to meet with banks in Greece. The group included representatives from about a dozen different money managers, say attendees, including Chicago hedge-fund giant Citadel Investment Group, the New York hedge fund Eton Park Capital Management, and Paulson, which sent two employees, say people who were there. Eton Park declined to comment. During meetings with the Greek deputy finance minister and executives from the National Bank of Greece, among other banks, some investors raised tough questions about the state of the country's economy, according to these people. Donald Morgan, head of hedge-fund Brigade Capital, told the group he believed Greek debt is an early domino to fall in a contagion that eventually will hit U.S. companies, municipalities and Treasury securities. In a separate move last week, traders from Goldman, Bank of America Corp.'s Merrill Lynch unit, and Barclays Bank Plc were helping investors place a particularly bearish bet on the euro, traders say. The trade involved an inexpensive put option that will provide its holder a big payoff if the euro falls to the level of a single U.S. dollar within a year. Known as a "tail-risk" trade because its probability is low, the euro-dollar parity put is a cheap way of ensuring that if the euro sinks dramatically within a year, an investor will generate big returns.
  • Greece Delays Bond Sale Amid New Turmoil. Planned Auction, Watched as Test of Country's Financial Outlook, Is Pushed to Next Week After Strike, S&P Warning. Greece delayed plans to issue a 10-year bond until next week, after the government announces a new austerity package that will reduce spending between €2 billion and €2.5 billion ($2.7 billion to $3.4 billion), people familiar with the situation said. The government hopes to raise €3 billion to €5 billion from the bond offering. The delayed offering, along with the S&P warning and widening bond spreads, rattled investors across Europe Thursday and reignited expectations that Athens will require more than rhetorical support from European Union leaders to solve its fiscal crisis. The new bond deal is widely seen as a test of the Greek government's ability to raise money in the capital markets to finance its operations and retire old debt. A successful bond sale will demonstrate that the market believes either that Greece can fix its fiscal problems or that Europe will come up with an effective bailout to solve short-term worries. An unsuccessful auction would exacerbate the sovereign-debt fears gripping financial markets and could force other European nations to move more quickly to support Greece. The Greek stock market slid nearly 3% Thursday, and the euro slipped 0.5% against the dollar.
  • Rangel Blamed for Ethics Offense. The House ethics committee has found Ways and Means Chairman Charles Rangel, a New York Democrat, violated House rules by failing to properly disclose financial details of trips to the Caribbean, senior congressional officials said Thursday. After several months of investigation, the ethics panel determined Mr. Rangel didn't inform the ethics committee of the corporate source of funds for trips that took place in 2007 and 2008. The panel determined his staff knew the trips were paid for by corporations, and found that Mr. Rangel—who says he didn't know—should still be held accountable, officials said.
  • Oil Industry Booms - in North Dakota. State Is Riding High as Firms Develop Better Ways to Tap Huge Bakken Shale Deposit, Raising Hopes for U.S. Production. A massive oil reserve buried two miles underground has put North Dakota at the center of a revolution in the U.S. oil industry, a shift that has radically altered the fortunes of this remote area. The Bakken Shale deposit has been known and even tapped on occasion for decades. But technological improvements in the past two years have taken what was once a small, marginally profitable field and turned it into one of the fastest-growing oil-producing areas in the U.S. The Bakken Shale had helped North Dakota oil production double in the past three years, surging to 80 million barrels in 2009—tiny relative to the more than seven billion barrels consumed by the U.S. every year, but enough to vault the state past Oklahoma and Louisiana to become the country's fourth-biggest oil producer, after Texas, Alaska and California. If current projections hold, North Dakota's oil production could pass Alaska's by the end of the decade.
  • Fed's Posture Improves in the Senate. The Federal Reserve is gaining support in the Senate and could emerge from the overhaul of financial-market rules as the primary regulator of the country's largest financial firms, according to people involved in the negotiations.
  • Defining ObamaCare Down. We're all free-market moderates now.
BusinessWeek:
  • China's 71% Small-Cap Stock Premium Signals Peak. The rally in China’s small-cap stocks that lifted valuations to a record premium above the largest companies’ shares is a signal to sell, according to three of the country’s biggest money managers. China’s CSI 500 Index of companies with a median market value of $841 million trades at valuations 71 percent above the CSI 300 Index, up from 31 percent a year ago and near the all- time high of 77 percent in December, based on estimated price- to-earnings ratios compiled by Bloomberg.
CNBC:
  • JPMorgan(JPM) CEO: No Dividend Raise; Watching Economy. JPMorgan Chase's chief executive said he is in no hurry to raise the bank's dividend due to an economy that he warned could still be threatened by a "double dip" scenario. "We don't mind holding extra capital right now because we don't know what's going to happen," Jamie Dimon said on Thursday during an investor day presentation. "There are huge potential negatives out there." He added that he wanted to see consistent rise in employment numbers over a period of months before increasing the bank's dividend. Dimon, who has emerged as one of the industry's most prominent voices after his bank, the nation's second largest, weathered the credit crisis better than most, also said he was opposed to the Obama administration's proposed consumer protection agency. "We're getting into the capricious and arbitrary punitive behavior" on the regulatory side, he said, although he insisted he wanted better consumer regulation and supported a systemic regulator.
IBD:
NY Times:
  • Plan to Seek Use of U.S. Contracts as a Wage Lever. The Obama administration is planning to use the government’s enormous buying power to prod private companies to improve wages and benefits for millions of workers, according to White House officials and several interest groups briefed on the plan. By altering how it awards $500 billion in contracts each year, the government would disqualify more companies with labor, environmental or other violations and give an edge to companies that offer better levels of pay, health coverage, pensions and other benefits, the officials said. Because nearly one in four workers is employed by companies that have contracts with the federal government, administration officials see the plan as a way to shape social policy.
Forbes:
  • Apple(AAPL) Angles For China. Apple is planning an aggressive expansion into the world's most populous country, aiming to launch 25 new stores in China over the next two years.
San Francisco Chronicle:
Politico:
  • Exclusive: What Happens Next in Health Care. After a brief period of consultation following the White House health care reform summit, congressional Democrats plan to begin making the case next week for a massive, Democrats-only health care plan, party strategists told POLITICO. A Democratic official said the six-hour summit was expected to “give a face to gridlock, in the form of House and Senate Republicans.” Democrats plan to begin rhetorical, and perhaps legislative, steps toward the Democrats-only, or reconciliation, process early next week, the strategists said. Democrats plan to take up the president's comprehensive, $950 billion plan— referred to on the Hill as “the big bill.” The alternative would be a smaller — or “skinny” — bill that would provide less coverage and cost less. But that would amount to starting the complex process over. “It’s probably the big bill or nothing,” said a top Democratic aide.
  • Torture Add Forces House Democrats to Pull Bill. House Democratic leaders were forced to pull a major intelligence funding bill off the House floor after one of their own colleagues attached an amendment that would have jailed CIA agents who engaged in “cruel, inhuman and degrading treatment” during interrogations. If the amendment had become law, any CIA agent who then was involved in waterboarding a suspect would have faced up to 15 years in jail. If the detainee later died, the agent could have been sentenced to life behind bars. The amendment defined "cruel, inhuman and degrading treatment" to include many of the "enhanced" interrogation techniques that the Bush Justice Department declared legal. Forcing a detainee to stand in a stressful position, placing insects near the detainee, and waterboarding were all approved and eventually used during CIA interrogations. One of President Obama's first acts as commander-in-chief limited CIA interrogators to techniques allowed under the Army Field Manual. Those no-longer permitted techniques would be punishable with jail time under the amendment.
USA Today:
  • Construction Unemployment Still on the Rise. As the jobless rate hovers around 10%, unemployment in construction jumped to 24.7%, highest on record since 1976. Construction has accounted for nearly a quarter of all job losses the past year, though the industry employs 4.3% of non-farm employees. Relief is not imminent. The industry will likely slash 50,000 jobs a month the first half of 2010 before a housing rebound offsets a continuing free fall in the commercial sector by late this year, says Ken Simonson, chief economist for Associated General Contractors of America. He predicts another 5% of construction workers will lose their jobs in 2010. While the stimulus should have a bigger impact in 2010, it's affecting only 5% of construction jobs each year, his trade group says.
Reuters:
  • SEC Examines Destabilizing Effects of CDS. Securities regulators said on Thursday they are examining the potential abuses and destabilizing effects of credit default swaps, a financial instrument that can be used to speculate on an issuer's credit worthiness. The Securities and Exchange Commission comments come after Federal Reserve Chairman Ben Bernanke said regulators were looking at how Goldman Sachs (GS) and other Wall Street companies helped Greece arrange derivative deals. The SEC has said it has more than 50 probes involving credit default swaps, collateralized debt obligations and other derivatives-based instruments. The SEC has already expanded some of its insider trading investigations to examine derivatives and credit default swaps.
  • Flour(FLR) Adds to Weaker Engineering Project Outlook. Fluor Corp (FLR), the largest publicly traded U.S. engineering company, and two rivals gave investors on Thursday few reasons to hope for a dramatic bounce in project investment this year. Fluor reported a lower quarterly profit and cut its 2010 profit outlook as it anticipated only a gradual recovery in capital spending for its clients, with prospects for contracts looking somewhat healthier in the second half. Its shares fell 6 percent.
  • Deckers(DECK) Q4 Beats, Confirms Int'l Distribution Overhaul. Deckers Outdoor Corp's (DECK) fourth-quarter results handily beat market expectations, boosted by sales of its core UGG brand, and the shoe maker forecast a strong 2010, sending shares up as much as 9 percent in trading after the bell.
Financial Times:
  • Financial Crisis Panel to Call Back Bank Chiefs. The commission set up by the US Congress to probe the causes of the 2008 financial market meltdown will interview foreign regulators and put bank executives back on the witness stand. In an interview before the second public hearing of the FCIC that begins on Friday, Mr Angelides, a former California state treasurer, said he was most struck so far in his inquiry by the way in which Goldman Sachs(GS) had been “creating and selling securities and then fully betting against them”. In a reference to the Greek Crisis and the alleged role of securities sold by the bank, Mr Angelides said: “It appears that this action was not confined to creating and selling mortgage securities. It also extended to the creation and selling of foreign debt instruments. I find the practice troubling and it raises questions about fair dealing and trust and transparency in the marketplace.”
Financial Times Deutschland:
  • German Banks Avoid Investing in Greek Debt. German banks will avoid new investment in Greek bonds. After Eurohypo AG and Hypo Real Estate AG announced they would eschew Greek debt in their next financing rounds, Deutsche Postbank AG also said it won't invest new funds in Greece. While Deutsche Bank AG will continue to assist Greece in bond sales, it won't invest in the country's bonds. Officials close to state banks Bayerische Landesbank and Landesbank Baden-Wuerttemberg said investing new money in Greek bonds was "hardly imaginable."
21st Century Business Herald:
  • China is carrying out stress testing in labor-intensive industries such as textiles and toymaking to simulate the impact of yuan appreciation on profits. A rough estimate shows that the profitability of the industries falls 1% following each 1% of appreciation, citing senior industry officials.
Evening Recommendations
Citigroup:
  • Reiterated Buy on (LTD), target $28.
Night Trading
  • Asian indices are unch. to +.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 116.50 +4.0 basis points.
  • S&P 500 futures +.30%
  • NASDAQ 100 futures +.21%
Morning Preview
Earnings of Note
Company/Estimate
  • (IPG)/.25
  • (FCN)/.73
  • (TIE)/.01
  • (FRO)/.11
  • (MIR)/.52
Economic Releases
8:30 am EST
  • 4Q GDP is estimated to rise +5.7% versus a prior estimate of a +5.7% gain.
  • 4Q Personal Consumption is estimated to rise 2.0% versus a prior estimate of a +2.0% gain.
  • 4Q GDP Price Index is estimated to rise +.6% versus a prior estimate of a +.6% gain.
  • 4Q Core PCE is estimated to rise +1.4% versus a prior estimate of a +1.4% gain.
9:45 am EST
  • Chicago Purchasing Manager for February is estimated to fall to 59.7 versus a reading of 61.5 in January.
9:55 am EST
  • Final Univ. of Mich. Consumer Confidence for February is estimated to rise to 73.9 versus a prior estimate of 73.7.
10:00 am EST
  • Existing Home Sales for January are estimated to rise to 5.5M versus 5.45M in December.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Dudley speaking, Fed's Kocherlakota speaking, Fed's Tarullo speaking, Fed's Evans speaking, NAPM-Milwaukee, Bloomberg FCI Monthly, (SNDK) investor day, (ETN) analyst meeting, (PEG) analyst day and the Morgan Stanley Basic Materials Conference could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by financial and commodity stocks in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.
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Thursday, February 25, 2010

Stocks Finish Slightly Lower, Weighed Down by Bank, Restaurant, Hospital and Computer Shares

Posted by Gary .....at 4:30 PM
Evening Review
3 comments

Stocks Cutting Losses into Final Hour on Short-Covering, Euro Reversal, Bargain-Hunting

Posted by Gary .....at 3:46 PM
BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Technology longs and Financial longs. I added to my (IWM)/(QQQQ) hedges this morning and them covered them, thus leaving the Portfolio 75% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are declining and volume is slightly above average. Investor angst is very high. Today's overall market action is mildly bearish. The VIX is rising +1.08% and is above average at 20.60. The ISE Sentiment Index is below average at 109.0 and the total put/call is slightly above average at 1.08. Finally, the NYSE Arms has been running high most of the day, hitting 2.33 at it intraday peak, and is currently 1.26. The Euro Financial Sector Credit Default Swap Index is rising +2.03% to 94.91 basis points. The North American Investment Grade CDS Index is rising +1.79% to 95.41 basis points. The TED Spread is unch. at 14.0 basis points. The 2-Year Swap Spread is rising +5.54% to 23.81 basis points. The Libor-OIS Spread is unch. at 9.0 basis points. The 10-Year TIPS Spread is down -4 basis points to 2.16%. The 3-Month T-Bill is yielding .11%, which is unch. today. Hospital, Bank and Computer shares are especially weak today, falling -1.5%+. The Western Europe Sovereign CDS Index is rising another +1.76%. The Greece sovereign cds is rising around +4.0%, which is a large negative. The AAII Bulls fell to 34.9%, while the % Bears fell to 29.53, which is also a negative. On the positive side, Coal, Gold, Steel, Road & Rail, Education, Retail and REIT shares are all higher on the day. (IYR) has traded relatively well throughout the day. Given the negative economic data again today out of Europe/US and another rise in Greece debt angst, I am very impressed with the market's resilience again today. A lot of bad news is currently being absorbed without much technical damage right here. There has also been some bad news on (AAPL) today, yet the stock has reversed 6 points from this morning's lows on heavy volume from just a split rumor and China plans, which should give the bears pause. Investors are closely watching the action in the euro as a gauge on the Greece debt situation, however today's reversal higher in the currency looks like a bought of short-covering that could prove fleeting. A more meaningful surge higher in the euro could spark a tradable rally in stocks. Longer-term, I still believe US dollar strength is a major positive for US equities. Nikkei futures indicate a -56 open in Japan and DAX futures indicate an up +39 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on short-covering, technical buying and bargain-hunting.
0 comments

Today's Headlines

Posted by Gary .....at 3:07 PM
Bloomberg:
  • Jobless Claims in U.S. Increased 22,000 Last Week to 496,000. The number of Americans filing first-time claims for unemployment insurance unexpectedly increased last week, a sign that the economic recovery will be uneven as the labor market struggles to rebound. Economists forecast weekly claims would fall to 460,000, from a previously estimated 473,000 for the week ended Feb. 13, according to the median of 43 projections in a Bloomberg News survey.
  • Mortgage Rates on 30-Year U.S. Loans Rise to 5.05%. U.S. mortgage rates climbed for the first time in three weeks, increasing borrowing costs as new home sales slumped to the lowest level on record. The rate for 30-year fixed U.S. home loans rose to 5.05 percent for the week ended today from 4.93 percent, mortgage finance company Freddie Mac said in a statement.
  • Oil Falls Most in Three Weeks on Jobs, Manufacturing Reports. Oil decreased as much as 3.7 percent to the lowest level in a week as the number of Americans filing first-time claims for unemployment insurance unexpectedly increased last week, and durable goods excluding transportation declined in January.“It’s going to take better jobs, better consumer confidence, better business confidence and getting everything going into a better direction before you can support crude oil in a $75 to $80 level,” said Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington.
  • TiVo(TIV) May Offer Set-Top Box That Combines Web Fare, Tv Listings. Tivo Inc., pioneer of digital video recorders, may introduce a set-top box next week that provides Web search results alongside TV listings, said Tony Wible, an analyst at Janney Montgomery Scott.
  • Europe May Fail to Gather Strength in 2010, EU Says. Europe’s economic recovery may fail to gather strength for most of 2010 as governments phase out stimulus measures and domestic demand remains “subdued,” the European Commission said. European domestic demand remains weak and it’s not yet clear to what extent the euro region will benefit from a global recovery, the commission said. Economic confidence unexpectedly declined this month as governments try to stem investor concern about budget deficits in Greece and other nations, which has pushed the euro lower against the dollar. The German economy, Europe’s largest, may fail to grow in the three months through March before expanding 0.3 percent in the following two quarters, the commission forecast.
  • Brazil May Raise Rates in March on Stimulus Removal. Brazil’s central bank probably will raise interest rates next month for the first time since September 2008 after accelerating economic growth allowed it to withdraw stimulus measures, Goldman Sachs Group Inc. and Itau Unibanco Holding SA said. “The change in the reserve requirement was very big and means the central bank is very worried about the heat in the economy,” said Figueiredo, who forecasts an increase in the benchmark Selic interest rate in March.
  • Buy Visa(V) Calls on Revenue Growth, Morgan Stanley Says. Investors should buy bullish Visa Inc. options because the world’s biggest payments network may rise to a record as it handles more transactions and boosts revenue from emerging markets, Morgan Stanley said. Equity derivatives strategists Christopher Metli and Sivan Mahadevan recommended buying March $90 calls and said June $90 calls also are “attractive.”
Wall Street Journal:
  • Greece to Issue Bond Next Week. Greece now plans to issue a 10-year bond next week, after the government announces a new austerity package of between €2 billion and €2.5 billion (between $2.71 billion and $3.38 billion), people familiar with the situation said. S&P said it could cut Greece's ratings by one or two notches within the next month, which could put the country's long-term rating on the brink of junk territory. The government hopes to raise between €3 billion and €5 billion from the bond. The downgrade threat hit Greek government bonds Thursday, with the yield spread of the 10-year Greek bonds spreads over German bunds surging as high as 3.6 percentage points before moving back down to 3.55 percentage points. That was compared with Wednesday's close at 3.39 percentage points. Similarly, the pressure on Greek credit-default swaps intensified. The yield spread, whose move shows how investors' risk perception changes about Greece, peaked at 4.05 percentage points late January. In market terms, Greek 10-year yields traded around 6.66%, compared with 10-year German yields at 3.11%.Given the anxiety surrounding Greece's rating, the focus now turns to Moody's Investors Service and the direction it will take on the troubled nation's rating. Moody's, which currently rates Greece at A2, said earlier this month that if the country only partially implements the planned budget cuts, then it may downgrade its rating to Baa1. This could be fateful for Greece as the European Central Bank's collateral criteria is due to return to the A3/A- threshold by the end of the year, from the current BBB- level. As government-bond prices tumbled, Greek five-year sovereign credit-default swaps were also under pressure Thursday with spreads quoted around 0.08 percentage point wider at 3.93 points, according to CMA DataVision.
  • Steelmakers Eye Big Increase in Raw-Material Costs. Steel consumers should brace themselves for the onset of much higher steel prices in coming months as steelmakers conclude annual negotiations with miners that may result in steelmaking raw material prices rising by 70% or more in 2010, a large steelmaker said. "In the final negotiations...the increase that we are faced with is bringing the benchmark price close to the [current] spot price," for both coking coal and iron ore, the person at a large steelmaker said. He said steelmakers will likely have to accept iron ore prices that are 70% to 80% higher than last year's benchmark prices.
  • Illegal Workers Slip by System. Homeland Security Program Seen Failing to Catch Half of Unauthorized Hires.
BuinessWeek:
  • Bernanke Says Fed Reviewing Goldman Sachs(GS) Swaps With Greece. Federal Reserve Chairman Ben S. Bernanke said the use of credit default swaps to destabilize a country is “counterproductive,” and added the central bank is reviewing the arrangements of Goldman Sachs Group Inc. and other companies with Greece. “We are looking into a number of questions related to Goldman Sachs and other companies and their derivatives arrangements with Greece,” Bernanke said today in testimony before the Senate Banking Committee in Washington. Federal Reserve officials are using new supervisory powers over firms such as Goldman Sachs and Morgan Stanley to gather information on financial system risks. Bernanke was responding to a question from Senator Christopher Dodd, a Connecticut Democrat, who asked if there should be limits on the use of credit default swaps to prevent “runs against governments.” “Obviously, using these instruments in a way that intentionally destabilizes a company or a country is -- is counterproductive, and I’m sure the SEC will be looking into that,” Bernanke said. “We’ll certainly be evaluating what we can learn from the activities of the holding companies.”
  • Senators Urge U.S. Action on Chinese Currency Manipulation. A bipartisan group of senators urged the Obama administration to act urgently to investigate allegations the Chinese government is keeping its currency artificially low, saying a failure to do so is manifestly harming U.S. manufactures. In a letter sent to Commerce Secretary Gary Locke Thursday, the group of 15 senators, including six Republicans, said there are serious concerns about the department's failure to conclude that China's currency manipulation is in fact a "countervailable subsidy" to its domestic exporters.
MarketWatch:
The Business Insider:
LA Times:
  • Groups Say CalPERS, CalSTRS Flout Iran Divestment Law. Past a state deadline for selling the investments, CalPERS hasn't sold any of its $900 million in holdings in foreign firms working in Iran's defense or energy industries. On Wednesday, legislators heard criticism from Jewish groups and an Iranian torture victim contending that the California Public Employees' Retirement System and to a lesser extent the State Teachers' Retirement System are flouting a 2007 law designed to bring pressure on the Islamic Republic. The United States government has identified Iran as a state sponsor of terrorism and is rallying international support to tighten economic sanctions against the Middle Eastern country, which is believed to be developing a nuclear weapon. "We have been both frustrated by the inaction and dismayed by the persistent excuses offered for why the largest state employees pension fund in the nation and the largest teachers pension fund in the national feel it is acceptable to ignore a law," said Marc Carrel, chairman of the Jewish Public Affairs Committee of California. Carrel testified at a joint hearing of the Assembly and Senate committees that deal with retirement and pension issues. The CalPERS board in February 2009 "decided after careful consideration . . . to not divest shares at that stage, having regard to its overriding fiduciary duty," CalPERS said in a Dec. 31 report to the Legislature. The law's author, Assemblyman Joel Anderson (R-San Diego), said he wasn't satisfied with the board's decision. "You have completely thumbed your nose at the Legislature," he told CalPERS officials at the hearing. He said he was working with other lawmakers to take new legislative or legal actions to force the pension fund to follow the law. CalPERS' current stance on Iran divestment differs from its involvement in carrying out California's highly successful 1986 divestment law that helped break the back of the racist apartheid regime in South Africa and bring in free elections and majority black rule. What's more, CalPERS in particular has carefully cultivated a reputation for socially and environmentally responsible investing that doesn't fit in with a policy of buttressing the government of a country that is developing nuclear weapons and threatening to use them against Israel, lawmakers contend.
Rasmussen:
  • Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 25% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty percent (40%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -15 (see trends).
Politico:
  • Poll: 52% Oppose Reconciliation. More than half of Americans are against Democrats using reconciliation to pass a health care bill through the Senate, according to a new Gallup survey out Thursday. Fifty-two percent of the 1,0009 adults polled nationwide oppose using the procedural maneuver to pass the health care bill in the Senate on 51 votes rather than the 60 votes required to end any filibuster. Forty-two percent would support the move, and not surprisingly there is a strong partisan split. Democrats support passing the bill by reconciliation by a margin of 68 percent to 24 percent. Only 9 percent of Republicans want the bill passed using the maneuver, while 86 percent oppose it. Independents mostly oppose the move by 53 percent to 38 percent. Additionally, if Democratic and Republican leaders meeting Thursday at the health care summit are not able to come to any agreement, 49 percent oppose the passage of health care legislation. Forty-two percent would be in favor of the bill moving forward and 9 percent didn't know.
  • President Obama: Unsure 'Gaps Can Be Bridged' President Barack Obama spent the morning fending off GOP charges that his health care bill was a deal-ridden monstrosity that needs to be scrapped, even tangling testily with his 2008 presidential rival John McCain. “We’re not campaigning anymore, John,” Obama said at one point during the White House health summit, after McCain listed a litany of deals included in the bill. “The election is over now.” McCain joked, “I’m reminded of that every day.” Obama replied, “We can spend the remainder of the time with our respective talking points, but we’re supposed to be talking about insurance.” The exchange also captured Obama’s strategy on display at the summit — to accuse the Republicans of being only interested in scoring political points, while lacking any serious plan to provide health insurance for all Americans. By the lunch break, it was growing clearer that the pre-summit pessimism on both sides – that there was little to no hope of grand bipartisan compromise – was on target. In fact, both sides spent the bulk of the first three hours of the session trying to score tactical points, rarely veering from their scripts to extend a hand to the other side.
  • Bipartisan Health Care Reform Must Include Tort Reform by Darrell Issa.
Reuters:
  • Libya's Gaddafi Urges "Jihad" Against Switzerland. Libyan leader Muammar Gaddafi called on Thursday for a "jihad" or armed struggle against Switzerland using all means, saying it was an infidel state that was destroying mosques. "Any Muslim in any part of the world who works with Switzerland is an apostate, is against (the Prophet) Mohammad, God and the Koran," Gaddafi said during a meeting in the eastern Libyan city of Benghazi to mark the Prophet's birthday. "Let us fight against Switzerland, Zionism and foreign aggression," said Gaddafi, adding that "this is not terrorism," in contrast with the work of al Qaeda which he called a "kind of crime and a psychological disease." "There is a big difference between terrorism and jihad which is a right to armed struggle," he said. Gaddafi accused Switzerland of being an "infidel, obscene state which is destroying mosques," in reference to a Swiss referendum verdict barring construction of minarets. He called for a "jihad against it with all means."
Interfax:
  • ArcelorMittal plans to boost steel output at its Kazakhstan unit by 20% this year, citing General Director Frank Pannier.
Xinhua:
  • China Has 'No Intention' of Capping Emissions. China has no intention of capping its greenhouse gas emissions even as it's committed to reducing carbon intensity through new policies and measures, citing the country's top climate change negotiators. The negotiators also said that rich and developing countries have little hope of overcoming key disagreements over how to fight global warming. China "could not and should not" set an upper limit on greenhouse gas emissions at the current phase, Su Wei, the chief negotiator of China for climate change talks in Copenhagen, was cited as saying.

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