Tuesday, March 22, 2011

Today's Headlines

Posted by Gary .....at 3:08 PM

Bloomberg:
  • Irish, Portuguese Bonds Sink on Debt Concern; Euro Falls. Irish notes slid, leading bonds of Europe’s most indebted nations lower, and the euro fell on concern Europe is struggling to fix its government-finance crisis. Irish 2-year note yields surged 63 basis points to 9.87 percent and rose as high as 10.18 percent, the most since 2003. Yields on similar-maturity Portuguese and Greek debt climbed at least 18 basis points. The slump in Irish notes came after EU finance chiefs settled yesterday on how to enable a permanent rescue fund to lend 500 billion euros ($712 billion) as of 2013, while remaining divided over how to get the current stopgap fund to its full capacity. The Portuguese government forecast that the economy will contract this year as investment declines and it cuts spending to narrow the budget deficit. “The problems in the periphery have not lessened,” Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York, said in a note to clients. “ The real immediate focus is on Portugal. The government’s new austerity measures will be debated tomorrow.” Ten-year Portuguese yields jumped 13 basis points to 7.50 percent, after retreating for two straight days, and the spread above benchmark German bund yields widened 10 basis points to 4.23 percentage points. Portugal’s government may collapse tomorrow as the country’s parliament votes on a plan for fiscal austerity measures, JPMorgan Chase & Co. economist Nicola Mai said in a note e-mailed to investors. Credit-default swaps protecting Irish government debt rose 40.1 basis points to 628.8 basis points, according to data provider CMA, and the yield on the 10-year note surged 24 basis points to 9.84 percent. Europe’s efforts to tackle its sovereign debt crisis aren’t persuading money managers to buy bonds from the region’s most indebted nations. Work toward a solution to the region’s credit woes is scheduled to culminate at a March 24-25 summit of European leaders.
  • U.S. Says Libyan Campaign to Ease as No-Fly Zone Secured. U.S. Defense Secretary Robert Gates said the intensity of the military campaign in Libya will ease soon after allied forces imposed a no-fly zone on Muammar Qaddafi’s regime, enabling rebels to push out of their eastern Benghazi stronghold. The fighting “should recede in the next few days,” Gates said at a press conference in Moscow today. Opposition fighters advanced on the central gateway city of Ajdabiya, which is held by loyalist troops, according to the Associated Press. Qaddafi’s army units continued to shell the western, rebel-held city of Misrata for a second day, residents said.
  • Crude Oil Futures Increase as Japan Reconstruction May Bolster Fuel Demand. Crude rose on speculation Japanese rebuilding efforts will bolster fuel consumption and as unrest spread in the Middle East and North Africa. Crude oil for April delivery increased $1.55, or 1.5 percent, to $103.88 a barrel at 12:38 p.m. on the New York Mercantile Exchange. April futures expire today. The more-active May oil contract advanced $1.33, or 1.3 percent, to $104.42. Brent oil for May settlement rose 83 cents, or 0.7 percent, to $115.79 a barrel on the London-based ICE Futures Europe exchange.
  • U.S. Facing Loss of Key Ally Against Al-Qaeda Group in Yemen. President Barack Obama is on the verge of losing a key ally in the fight against al-Qaeda, as Yemeni President Ali Abdullah Saleh attempted today to set conditions for quitting in the face of a popular uprising and defections among his ruling elite. “It’s clear at this point that Saleh will have to step down,” Barbara Bodine, a former U.S. ambassador to Yemen, said in an interview yesterday. With the “mounting numbers of senior people in his administration resigning, we know it’s over. The terms of his departure, I think, are still being negotiated.” The March 18 killing of at least 46 protesters allegedly by police and pro-regime gunmen -- which drew condemnation from Obama and Secretary of State Hillary Clinton and prompted the defection of key military, tribal and government officials -- may well be the tipping point.
  • Bad Weather Hampers Japan Aid Efforts For Thousands in Temporary Shelters. Freezing rain and snow is slowing Japan’s relief efforts in areas hardest hit by the record earthquake and tsunami 11 days ago as the government struggles to restore communications to cut-off towns and villages.
  • Sony(SNE) Shuts More Plants in Japan, Toyota(TM) Extends Halts as Recession Looms. Sony Corp. (6758) shut five more plants and Toyota Motor Corp. (7203) extended production halts, 11 days after an earthquake and tsunami that’s bringing scores of Japanese factories to a standstill and threatening to spark a recession. Sony, Japan’s biggest exporter of consumer electronics, today suspended some work at five plants in the central and southern regions until March 31 because of trouble getting supplies after power outages, the Tokyo-based company said in a statement. Toyota, the world’s biggest carmaker, said all domestic car-assembly will be stopped until March 26, while Honda Motor Co. also extended closures. The moves come as Morgan Stanley estimated that damage to the earthquake-stricken northeast, including disruptions to power and distribution systems, may cause the world’s third- largest economy to shrink in the second quarter at an annualized rate of 6 percent to 12 percent. A recession is “almost certain,” according to Mizuho Securities Co. “Companies’ production and people’s consumption will be stuck in an abnormal state at least for the next six months,” said Naoki Iizuka, a senior economist at Mizuho Financial Group Inc. (8411) in Tokyo. “The electricity shortage will continue to hamper economic activity.”
  • Hynix Semiconductor, the world's second-largest maker of computer-memory chips, said it is increasing orders for silicon wafers to preempt any possible shortage of the material following Japan's March 11 earthquake. Hynix has asked its suppliers to increase shipments of the components, Park Hyun, a spokesman for the Ichon, South-Korea-based company said. The semiconductor industry faces possible shortages of silicon after the March 11 earthquake and tsunami in Japan caused suspension of 25% of the global production of the material key to making chips, IHS iSuppli said.
  • Walgreen(WAG) Declines as Profit Margin Falls Short of Expectations. Walgreen Co. (WAG), the largest U.S. drugstore chain, dropped the most since October 2008 in New York trading after profit margins failed to improve as some analysts anticipated. The shares fell $3.38, or 8.1 percent, to $38.59 at 9:52 a.m. in New York Stock Exchange composite trading, after earlier dropping as much as 8.4 percent.
  • State and Local Tax to Rise to Keep Services, GAO's Offutt Says. States and localities will likely raise taxes to maintain health-care services, said the chief economist at the U.S. Government Accountability Office. The difference between what states and localities spend and what they take in will grow to about 2 percent of gross domestic product over the next 40 to 50 years without changes in spending and revenue policies, said Susan Offutt, whose department evaluates government activities for Congress. The growth will be driven by an increase in spending on health care, including Medicaid and payments to retirees, she said. “The nature of the fiscal problem is so daunting that to think about achieving reasonable debt-to-GDP ratios without tax increases of some kind is difficult,” she said today at the State and Municipal Finance Briefing hosted by Bloomberg Link in New York. Some 44 states face a collective budget gap of $112 billion for fiscal 2012, according to the Washington-based Center on Budget and Policy Priorities. Without spending and tax changes, the cumulative gap is likely to grow and states may have problems making payments, Offutt said.
  • The U.S. spent at least $168 million hitting Libya's air defense systems with Raytheon Co. Tomahawk cruise missiles and North African nation, according to data compiled by Bloomberg.
  • Rise in Officer Fatalities Called 'Unacceptable' by Holder. U.S. attorneys will meet with law enforcement officials around the country to devise ways to reduce an increasing and “unacceptable” number of fatal attacks on officers, Attorney General Eric Holder said. Holder made the comments at a meeting today with police officials at the Justice Department in Washington. Holder described the gathering as a “listening session” on officer safety. Following a two-year decline, law enforcement fatalities in 2010 increased to 162, from 117 the year before, according to preliminary data from the National Law Enforcement Officers Memorial Fund in Washington. There have been 49 deaths this year, up from 41 during the same period last year.

Wall Street Journal:
  • Portugal Prime Minister May Step Down After Austerity Vote. The future of Portuguese Prime Minister Jose Socrates is in doubt, as rising political tensions over a fresh austerity drive may spark his resignation on Wednesday. Such a move could make it even more likely that the government would become the third in the euro zone to seek financial help from the European Union and the International Monetary Fund. Legislators will vote Wednesday on a series of new austerity measures that the government unveiled earlier this month. The main opposition parties plan to vote against those measures.
CNBC.com:
Business Insider:
Detroit Free Press:
  • General Motors(GM) Halts Some Production at N.Y. Plant. General Motors Co. is halting some production at its Buffalo, N.Y., engine plant because of a slowdown in parts from Japan. GM is also temporarily laying off 59 of the 623 workers at the Tonawanda Engine Plant. The workers make engines for a GM pickup factory in Shreveport, La., that is closed this week because of a shortage of parts from Japan. GM has also laid off 800 workers in Shreveport.
New York Fed:
Rasmussen Reports:
Reuters:
  • Verizon Wireless CEO Says No Interest in Sprint Deal. The chief executive of Verizon Wireless said he has no interest in buying Sprint Nextel Corp (S.N) even as the company stands to lose its top position in the U.S. wireless market because of a merger between AT&T Inc (T.N) and T-Mobile USA. Verizon Wireless CEO Daniel Mead also said he would not oppose AT&T's plans to buy Deutsche Telekom's (DTEGn.DE) T-Mobile USA for $39 billion. The CEO said the company did not want to be distracted from its goal of being the most profitable U.S. wireless operator.
  • Fed Officials See U.S. Recovery Taking Hold. The U.S. recovery is gaining traction, two top Federal Reserve officials said on Tuesday, though they differed on the risks of inflation in the U.S. economy. Cleveland Fed President Sandra Pianalto said she expects the U.S. recovery to continue at a moderate pace, with rising commodity and energy prices only temporarily putting pressure on broader consumer prices.
Kyodo News:
  • Radioactive iodine was found in the tap water of five areas in Japan's Fukushima prefecture, citing the nation's health ministry. The ministry said infants should not drink the water.
  • Japan's health ministry detected radioactive material beyond legal limits in raw milk from Ibaraki prefecture, and broccoli and mustard spinach from Fukushima prefecture.
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Bear Radar

Posted by Gary .....at 2:17 PM

Style Underperformer:
  • Small-Cap Growth (-.67%)
Sector Underperformers:
  • 1) Networking -1.65% 2) Airlines -1.24% 3) Disk Drives -1.16%
Stocks Falling on Unusual Volume:
  • ARCC, NSANY, CMC, AGNC, ICFI, GPOR, KITD, FFIV, CHRW, EXPD, SSYS, CIEN, SHFL, ACOM, TWGP, RLOC, HAYN, HSFT, RCL, IVR, CCL, SSYS, WAG and GDOT
Stocks With Unusual Put Option Activity:
  • 1) GGB 2) XLI 3) JBL 4) UTX 5) FTR
Stocks With Most Negative News Mentions:
  • 1) NTCT 2) EXPD 3) LULU 4) HSP 5) MED
Charts:
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Bull Radar

Posted by Gary .....at 11:29 AM

Style Outperformer:
  • Large-Cap Value (-.11%)
Sector Outperformers:
  • 1) Oil Tankers +1.06% 2) Tobacco +.96% 3) Education +.41%
Stocks Rising on Unusual Volume:
  • KGC, GLNG, MCP, SSI, TZOO, HNR, STJ, EXPR, AHT and BJ
Stocks With Unusual Call Option Activity:
  • 1) WAG 2) SRX 3) STJ 4) TLM 5) SO
Stocks With Most Positive News Mentions:
  • 1) MRX 2) CEPH 3) HITK 4) BODY 5) CVG
Charts:
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Tuesday Watch

Posted by Gary .....at 12:54 AM

Evening Headlines
Bloomberg:
  • Allies' Control of Libyan Airspace Puts Qaddafi's Forces at Risk. Allied forces are expanding their air campaign over Libya in an effort to thwart Muammar Qaddafi’s fighters and enable rebels to control cities, such as opposition capital of Benghazi, that had been under attack by troops loyal to the regime.
  • Yen Near Two-Week Low Versus Euro as Nuclear Crisis Eases, Stocks Advance. The yen was within 0.4 percent of a two-week low against the euro as Asian stocks rose and progress by Japan in restoring a crippled nuclear plant’s cooling systems reduced demand for the currency as a refuge. The euro was 0.1 percent from the strongest in four months against the dollar on speculation European Central Bank officials will reiterate this week their willingness to raise interest rates next month. The yen erased earlier losses against the greenback on concern Japanese investors are repatriating overseas assets. South Korea’s won rose on bets policy makers will allow the currency to strengthen to temper inflation. “The markets appear to be taking the view that the situation at the nuclear plant is stabilizing,” said Akira Hoshino, Tokyo-based chief manager of foreign-exchange trading at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s largest lender by market value. “Risk aversion may ease, which would likely be negative for the yen.” The yen traded at 115.14 per euro as of 12:08 p.m. in Tokyo from 115.26 in New York yesterday, after falling to 115.57 on March 18, the weakest since March 4. Japan’s currency was at 80.96 per dollar from 81.03, after earlier dropping 0.3 percent. The euro bought $1.4223 from $1.4226, after climbing to $1.4240 yesterday, the strongest since Nov. 5. The MSCI Asia Pacific Index of shares rose 1.6 percent and the Nikkei 225 (NKY) Stock Average surged 2.9 percent, as Japanese trading resumed after a holiday yesterday.
  • Nuclear Plant's Fuel Rods Damaged, Leaking Into Sea. Tokyo Electric Power Co. said fuel rods at its Fukushima Dai-Ichi power plant have been damaged, releasing five kinds of radioactive material and contaminating seawater nearby. The acknowledgements from the utility indicate poisons emanating from the plant may be spreading through the air and sea, raising concern over the safety of seafood from the coast of northeastern Japan and agriculture in the region. The decay of radioactive fuel rods, composed of uranium and plutonium, was suspected by company officials five days after the March 11 magnitude-9 earthquake and tsunami off the main island of Honshu.
  • Japan Economy V-Shaped Rebound Hangs on End to Blackouts. Japan is likely to see a rebound in the second half of this year after a blow that will be determined by the magnitude of electricity disruptions caused by the earthquake and tsunami, a survey of economists showed. Banks are split on whether the nation will slip into a recession, with Mizuho Securities Co. saying that’s “almost certain,” and Barclays Capital not seeing a single quarter of contraction. Annualized growth will trough at 0.4 percent in the second quarter, the median forecasts of nine economists surveyed by Bloomberg News show. “The hits to the electricity supply and extent of the hits to the supply chain are making it harder to analyze,” said Michael Buchanan, chief Asia-Pacific economist at Goldman Sachs Group Inc. in Hong Kong, who previously worked at the International Monetary Fund. The longer it takes to restore electricity, the bigger the damage, he said.
  • Bank of America's(BAC) Bad Loans Stalled U.S. Approval of Dividends, KBW Says. Bank of America Corp. (BAC), the biggest U.S. lender by assets, must resubmit plans for a dividend increase to the Federal Reserve because the regulator probably found fault with the firm’s capital, according to KBW Inc.
  • Obesity Lap Bands May Cause More Complications Than Weight Loss. Almost half of patients undergoing gastric banding for obesity needed to have the device removed, often because of erosion, according to a study that found the treatment caused more complications than weight loss.
  • Libyan Rebel Council Sets Up Oil Company to Replace Qaddafi's. Libyan rebels in Benghazi said they have created a new national oil company to replace the corporation controlled by leader Muammar Qaddafi and whose assets were frozen by the United Nations Security Council. The Transitional National Council released a statement announcing the decision taken in a March 19 meeting to establish the “Libyan Oil Company as supervisory authority on oil production and policies in the country, based temporarily in Benghazi, and the appointment of an interim director general” of the company. The Council also said it “designated the Central Bank of Benghazi as a monetary authority competent in monetary policies in Libya and the appointment of a governor to the Central Bank of Libya, with a temporary headquarters in Benghazi.”
  • Wells Fargo(WFC) CEO Stumpf Says U.S. Limit on Debit-Card Fees 'Make No Sense'. Wells Fargo & Co. (WFC) Chief Executive Officer John Stumpf said limits on fees charged to merchants for debit-card transactions “make no sense” and distort free- market economics. “What’s next?” Stumpf, 57, wrote in his annual letter to shareholders of the San Francisco-based bank. “Will the government require car dealers to sell a new vehicle for $5,000 or grocers a gallon of milk for 50 cents?”
  • Bristol-Myers(BMY) skin Cancer Drug Extends Survival in Trial. An experimental skin cancer drug being developed by Bristol-Myers Squibb Co. (BMY) boosted the survival of patients with advanced melanoma when combined with chemotherapy. A final-stage trial required for regulatory approval found that melanoma patients receiving Bristol-Myers’s drug ipilimumab and chemotherapy lived longer than patients who got chemotherapy alone, the New York-based company said in a statement today.
  • KNOC Buys Texas Shale Stake From Anadarko(APC) for $1.55 Billion. Korea National Oil Corp. agreed to buy a stake in a Texas shale-oil block from Anadarko Petroleum Corp. for $1.55 billion, the second-largest purchase of U.S. oil and natural-gas fields this year, as Asian companies increase access to U.S. reserves.
  • China Operations More Profitable as Climate Worsens, Amcham Says. More U.S. businesses in China said they were profitable last year even as they became increasingly pessimistic about the Chinese government’s commitment to improving market access, the American Chamber of Commerce in China said today. 24 percent of respondents said China’s economic reforms had done nothing to improve the environment for U.S. businesses in the country, up from 9 percent who said the same in the previous poll. The disconnect between performance and perception comes as U.S. companies, including Google Inc. (GOOG), say the Chinese government is making it increasingly difficult to do business in the world’s second-biggest economy.
Wall Street Journal:
  • Allies Spar but Renew Airstrikes on Libya. The U.S. and its allies worked to expand the protective shield in the skies over Libya on Monday, while political skirmishing broke out over who would take command of the continuing international operation.
  • Arab Regimes Under Siege. A contingent of Yemen's key military commanders defected to the political opposition Monday, the most significant challenge yet to the ability of the country's president, a U.S. ally against al Qaeda, to hold on to power. The development followed a bloody weekend crackdown on pro-democracy protesters that left dozens dead, as other countries in the region tipped toward instability. In Syria, residents of a town south of the capital demonstrated against the government for a fourth straight day, undeterred by protester deaths and the authoritarian regime's threats of crackdown.
  • U.S. Reacts to Fear of Iran's Rising Clout. White House Eyes Islamist State While Strategizing in Libya, Bahrain, Yemen and Syria; But Its Approach Could Backfire.
  • At Plant, Repair is Painstaking Task. Tokyo Electric Power Co. continued to report progress in restoring order at the Fukushima Daiichi nuclear reactors, but finishing the job is turning out to be a painstaking process plagued by damaged equipment and unexpected incidents. Smoke rose from two of the plant's six reactors Monday, forcing workers to retreat temporarily. The cause of the smoke wasn't immediately clear. Radioactivity returned to previous levels after a brief rise, officials said. "We aren't out of the crisis situation yet, but we are seeing a light at the end," said Prime Minister Naoto Kan.
  • U.S. Banks Oppose Tighter Money Rules. Even as governments freeze assets tied to regimes in Libya, Egypt and Tunisia, U.S. banks are resisting efforts to tighten international rules to prevent the flow of money from corrupt politicians. U.S. banks are pushing back against a proposal by the FATF that would require financial institutions to identify the person who ultimately benefits from an account. The proposal would toughen the existing standards, which call on banks to take reasonable measures to identify the beneficial owner of an account. The strengthened requirements would force banks to "identify and take reasonable measures to verify the identity" of an individual who controls the account. While some countries such as Switzerland, already require that banks know the individual, U.S. banks generally allow accounts to be opened in the name of a trust, without mandated disclosure of the beneficiary. While the group includes banking-industry associations from around the world, people familiar with the matter said most of the opposition comes from U.S. banks, especially those with large trust operations.
  • AT&T(T) Digs In for a D.C. Fight. With Deal to Buy Rival T-Mobile Sealed, Battle Now Moves to Washington.
  • Reagan's Legacy and the Current Malaise by Steve Forbes. Lower taxes and a strong dollar could spur growth once again.
CNBC:
  • China's Shrinking Labor Pool Creating 'Spoilt' Workers. "Mama Mia," the GM of an Italian company lamented to me over lunch in Shanghai, "The corruption I can deal with, but human resource issues are driving me insane. Workers are too short-term focused – 50 percent leave within two months no matter how much money and training we give."
  • Warnings Signs Over Crony Capitalism in India. India and Russia are accustomed to being bracketed together as two of the world’s most promising high growth markets. But is there more to it than just being adjacent initials in the fabled BRICs acronym? Foreign investors are not alone in worrying this might be the case. Even as the country becomes one of the great economic growth stories of the 21st century, significant members of the Indian elite fear it may be following Russia in developing a kind of crony capitalism dominated by powerful insiders. A slew of recent corruption scandals – notably in telecommunications – has nourished anxieties that the combination of fantastic wealth creation and weak governance threatens to undermine India’s long-term success.
Business Insider:
Zero Hedge:
  • As BOJ Injects Fresh ¥2 Trillion, Radiation Measured 20 km Away From Fukushima Is 1,600 Times Normal. While Japanese futures briefly flirted with another advance, they subsequently dropped by 1% to 9,450, even despite the BOJ's latest injection of 2 trillion yen, which if it continues at this rate will surpass 100 trillion yen in injections within two weeks: an unprecedented feat, even by the Federal Reserve's standards. Of particular note weighing on the markets has been the news from Kyodo that, in confirmation of our fears that zones "Under Survey" are nothing but hotbeds of unprecedented radiation, reported radiation levels are 1,600 times higher than normal 20 kilometers from the power plant. Recall that the first evacuation radius was just 10 km. Assuming a power rate of declining fall out strength, means that the radiation within the 20 km diameter circle centered on Fukushina is currently hundreds of thousands to millions of time higher than normal.
IBD:
Forbes:
Pimco:
Politico:
  • Did Obama Lose Congress on Libya? President Barack Obama is facing growing anger from lawmakers who believe he overstepped his authority by launching missile strikes into Libya without first seeking the consent of Congress. The criticism is from all directions: from moderates, like Sens. Jim Webb (D-Va.) and Dick Lugar (R-Ind.); from those on the far left and right, like Reps. Dennis Kucinich (D-Ohio) and Ron Paul (R-Texas), who believe the president acted outside the Constitution; and from the establishment on both sides, including House Democratic Caucus Chairman John Larson of Connecticut and Republican Rep. Candice Miller of Michigan, a self-described “hawk.”
Reuters:
  • Sony(SNE) Says Supply-Chain Woes to Affect 5 More Plants. Sony said on Tuesday shortages of parts and materials would force it to reduce or suspend production at five additional plants in Japan following the catastrophic earthquake this month. The plants, mostly in central and southern Japan, make products from digital cameras and video cameras to televisions and microphones, the company said in a statement. A sixth plant in Chiba, north of Tokyo, was set to resume production on Tuesday, but it could be interrupted by the rolling blackouts that are affecting some areas supplied by Tokyo Electric Power (TEPCO).
  • California Cap-And-Trade Plan Faces Setback. California did not adequately consider alternatives to its plan to create a cap-and-trade market for carbon emissions, a judge ruled on Monday, throwing a wrench into the most aggressive U.S. effort to combat climate change. The state's regulator on climate change matters, the Air Resources Board (ARB), will need to consider other possibilities to meet state environmental law, San Francisco Superior Court Judge Ernest Goldsmith wrote in an opinion. In particular he said that the state had not made a thorough examination of putting a tax on carbon.
  • The Chinese government will include local government debt in its national budget, Finance Minister Xie Xuren said. The Asian nation will establish a risk warning system for local government debt, Xie said.
Financial Times:
  • Rift Over Command of Libya Campaign. French attempts to sidestep Nato at the outset of military operations against Libya have divided the international coalition enforcing a no-fly zone over the country, western diplomats said. The French moves, which western diplomats said included launching the first attack on Libya without fully informing its allies, angered US and UK officials and are hampering efforts to transfer command of the operation to Nato, officials said. Relations grew so tense on Monday that French and German ambassadors to Nato walked out of a meeting of the North Atlantic Council, the alliance’s decision-making body, after Anders Fogh Rasmussen, secretary-general, criticised Paris for impeding Nato involvement and Germany for not actively participating.
Sky News:
  • Arab Bankers Association Chief Executive Officer George Kanaan said in an interview the turmoil in the Middle East and North Africa has created an environment of "great uncertainty" in which banks can no longer "function properly." The political unrest in Bahrain will end the country's aspirations of becoming a regional financial center, and its hopes "are no difficult to achieve," Kanaan said.
Jornal de Negocios:
  • The Portuguese government forecasts the country's gross domestic product will contract .9% this year, citing the stability and growth program handed in to parliament today.
Commercial Times:
  • Apple Inc.(AAPL) sent procurement staff to Taiwan after the earthquake in Japan to secure component supply for for the second quarter.
NHK:
Kyodo News:
  • Tokyo Electric Power Co. can't say when it can resume spraying water and restoring power at its crippled Fukushima Dai-Ichi nuclear plant because of steam and smoke coming from the reactors, citing the utility.
  • The crisis at the Fukushima nuclear plant is not necessarily improving, citing Japan's Trade Minister Banri Kaieda.
  • Seafood caught near Japan's crippled Fukushima Dai-Ichi nuclear plant hasn't entered the food supply, citing the Fukushima prefectural government.
People's Daily:
  • Sustainable economic growth in China is being hurt by weakening "momentum" from investment and exports and "slow progress" in raising personal incomes, Zhang Monan, an economic researcher at the State Information Center, wrote today.
China Business News:
  • Procter & Gamble Co. and Unilever raised prices for detergents in China by as much as 10%, citing dealers.
Evening Recommendations
Citigroup:
  • Reiterated Buy on (DV), raised target to $64.
Night Trading
  • Asian equity indices are -.25% to +.75% on average.
  • Asia Ex-Japan Investment Grade CDS Index 115.0 -1.0 basis point.
  • Asia Pacific Sovereign CDS Index 117.0 -.5 basis point.
  • S&P 500 futures -.27%.
  • NASDAQ 100 futures -.20%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (CMC)/-.07
  • (DG)/.58
  • (WAG)/.79
  • (JEF)/.37
  • (CCL)/.19
  • (JBL)/.51
  • (ADBE)/.57
  • (CTAS)/.36
  • (DFS)/.57
Economic Releases
10:00 am EST
  • The January House Price Index is estimated to fall -.2% versus a -.3% decline in December.
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Fisher speaking, Fed's Pianalto speaking, Richmond Fed Manufacturing Index for March, weekly retail sales reports, Sidoti Emerging Growth Forum, CTIA Wireless, JPMorgan Aviation/Transportation/Defense Conference, (FLO) analyst day, (UNFI) investor day, (GT) investor meeting and the (PCL) analyst meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and automaker shares 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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Monday, March 21, 2011

Stocks Surging into Final Hour on Less Nuclear Fear, Buyout Speculation, Bargain-Hunting, Short-Covering

Posted by Gary .....at 3:54 PM

Broad Market Tone:
  • Advance/Decline Line: Substantially Higher
  • Sector Performance: Almost Every Sector Rising
  • Volume: Below Average
  • Market Leading Stocks: Outperforming
Equity Investor Angst:
  • VIX 20.75 -15.10%
  • ISE Sentiment Index 140.0 +59.09%
  • Total Put/Call .75 -23.47%
  • NYSE Arms 1.77+64.97%
Credit Investor Angst:
  • North American Investment Grade CDS Index 95.77 +10.50%
  • European Financial Sector CDS Index 99.75 -2.84%
  • Western Europe Sovereign Debt CDS Index 164.58 bps -1.05%
  • Emerging Market CDS Index 214.26 -.83%
  • 2-Year Swap Spread 20.0 -1 bp
  • TED Spread 24.0 -1 bp
Economic Gauges:
  • 3-Month T-Bill Yield .07% +1 bp
  • Yield Curve 269.0 +1 bp
  • China Import Iron Ore Spot $163.80/Metric Tonne -.55%
  • Citi US Economic Surprise Index +61.60 -1.7 points
  • 10-Year TIPS Spread 2.45% +1 bp
Overseas Futures:
  • Nikkei Futures: Indicating +350 open in Japan
  • DAX Futures: Indicating +15 open in Germany
Portfolio:
  • Higher: On gains in my Biotech, Tech, Retail and Medical longs
  • Disclosed Trades: Covered all of my (IWM)/(QQQQ) hedges and then added them back
  • Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades meaningfully higher, despite rising energy prices, growing Mideast unrest, Japan concerns and weak US housing data. On the positive side, Road & Rail, Education, Gaming, Construction, Disk Drive, Semi, Oil Service and Energy shares are especially strong, rising more than 2.0%. Tech shares, which have lagged badly of late, are outperforming. Cyclicals and small-caps are outperforming again. The Japan sovereign cds is falling -2.19% to 106.44 bps. On the negative side, Bank shares are down on the day. (XLF) has underperformed badly throughout the day. Copper is falling -1.19%, gold is jumping +.69% and oil is rising +.35%. China Iron Ore Spot has declined -14.1% in a little more than 1 month. The avg. US price for a gallon of gas is +.01/gallon today to $3.55/gallon. It is up .43/gallon in 34 days. The Portugal sovereign cds is climbing +3.49% to 517.11 bps. The Citi Eurozone Economic Surprise Index is falling to -11.40 today and is now at the lowest since March 23rd of last year. As well, the Asia Pacific Sovereign CDS Index is climbing +2.68% to 120.82 bps. India's Sensex finished -.22% lower overnight. As well, Brazil's Bovespa, which is at a key technical juncture, gave back an +800 point morning gain to finish at session lows, down -.23%. I still suspect that global growth is slowing more than economists perceive right now and that this is not factored into most stocks. However, the market's resilience in the face of numerous mounting headwinds is very impressive. The S&P 500 is right at its 50-day moving average after a low-volume rally. If the benchmark can break convincingly above this level I will add back market exposure. I expect US stocks to trade mixed-to-lower into the close from current levels on growing Mideast unrest, rising energy prices, US housing worries, Japan concerns, more shorting, profit-taking and technical selling.


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Today's Headlines

Posted by Gary .....at 3:09 PM

Bloomberg:
  • Allies Extend No-Fly Zone as Strikes Halt Libya Attacks. Allied forces are expanding their air campaign over Libya after strikes forced fighters loyal to leader Muammar Qaddafi to halt their attacks against the rebel stronghold of Benghazi. “Our actions today are focused on extending the no-fly zone southward, then westward from Benghazi,” General Carter Ham, the top U.S. general for the attacks on Libya, said speaking from Stuttgart, Germany. U.K. Foreign Secretary William Hague today refused to rule out the possibility that special forces will be deployed as the allied mission grows, saying only that there would be no occupation of the country.
  • Oil Climbs on Allied Military Strikes in Libya, Mideast Unrest. Oil rose as allied air strikes in Libya threatened to prolong a supply disruption in Africa’s third-biggest producer and on concern that escalating turmoil may curtail Middle East shipments. Futures climbed as much as 2.3 percent after Muammar Qaddafi vowed to repel attacks against military installations. Libya’s crude output has fallen to a quarter of pre-crisis levels and may stop entirely, the chairman of the national oil company said. Some army leaders abandoned Yemeni President Ali Abdullah Saleh’s regime after it cracked down on protesters. “Prices are going to go up when there are explosions in a major oil-producing country,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “Uncertainty in the Middle East is always bad for oil.” Crude oil for April delivery increased $1.45, or 1.4 percent, to $102.52 a barrel at 11:34 a.m. on the New York Mercantile Exchange. Prices rose as much as $2.28 to $103.35. Brent crude oil for May settlement climbed $1.41, or 1.2 percent, to $115.34 a barrel on the London-based ICE Futures Europe exchange.
  • U.S. Existing Home Sales Slump in February. Sales of U.S. previously owned homes dropped more than forecast in February and the median purchase price declined to the lowest since the same month in 2002, indicating the housing market is struggling to recover. Purchases decreased 9.6 percent to a 4.88 million annual rate, less than the 5.13 million median forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed today in Washington. The median price declined 5.2 percent from a year earlier, and 39 percent of the sales were distressed properties. Foreclosures are adding to the glut of distressed properties and pressuring prices, leaving some Americans with bigger mortgages than their homes are worth as joblessness hovers near 9 percent. Of all existing-home purchases, cash transactions accounted for 33 percent, the highest since at least August 2008, when the group began tracking the monthly figure. Sales fell in all regions in February, led by a 12 percent drop in the Midwest and a 10 percent decrease in the South. The median sales price dropped to $156,100 last month from $164,600 in February 2010. The number of previously owned homes on the market rose 3.5 percent to 3.49 million from January. At the current sales pace, it would take 8.6 months to sell those houses compared with 7.5 at the end of the prior month.
  • ECB Officials Signal They're on Track for April Rate Increase. European Central Bank officials indicated the economic uncertainty caused by Japan’s earthquake may not deter them from raising interest rates next month. ECB Executive Board member Gertrude Tumpel-Gugerell and Governing Council member Yves Mersch both said today that “strong vigilance” is necessary to keep a lid on inflation, a phrase the central bank uses to signal a rate increase is imminent. ECB President Jean-Claude Trichet also told the European Parliament he has “nothing to add” to his March 3 remarks, when he said policy makers may raise the benchmark rate from a record low of 1 percent at their next meeting in April. The euro rose above $1.42 for the first time since November and government bonds declined as investors increased bets on higher ECB borrowing costs.
  • Schwab(SCHW) to Acquire Options Brokerage OptionsExpress(OXPS) for $1 Billion. Charles Schwab Corp. (SCHW) agreed to buy OptionsXpress Holdings Inc. (OXPS) for about $1 billion in stock, adding the retail options brokerage founded in 2000 to its equity and mutual fund offerings. Schwab, the largest independent broker by client assets, will exchange 1.02 shares for each share of Chicago-based OptionsXpress, according to a statement today. Based on San Francisco-based Schwab’s closing price on March 18, the transaction values OptionsXpress at $17.91 a share. The stock jumped 15 percent to $17.67 at 11:04 a.m. New York time, while Schwab lost 0.7 percent to $17.44.
  • Citigroup(C) to Reinstate 1-Cent Dividend, Plans Reverse Split. Citigroup Inc. (C), the U.S. bank that received the largest taxpayer bailout, said it would reinstate a dividend at 1 cent per share in the second quarter after a planned 1-for-10 reverse split of its common stock. Citigroup, which hasn’t paid a quarterly dividend since 2009 because of the financial crisis, will exchange 1 new share for every 10 of common stock after the close of trading on May 6, the New York-based bank said today in a statement.
  • Fed Must Release Loan Data as High Court Rejects Appeal. The Federal Reserve will disclose details of emergency loans it made to banks in 2008, after the U.S. Supreme Court rejected an industry appeal that aimed to shield the records from public view. The justices today left intact a court order that gives the Fed five days to release the records, sought by Bloomberg News’s parent company, Bloomberg LP. The Clearing House Association LLC, a group of the nation’s largest commercial banks, had asked the Supreme Court to intervene. “The board will fully comply with the court’s decision and is preparing to make the information available,” said David Skidmore, a spokesman for the Fed.
  • Production halts at Shin-Etsu Chemical Co. and MEMC Electronic Materials Inc.(WFR) because of the Japan earthquake have idled 25% of the global production of silicon wafers used to make chips, according to researcher IHS iSuppli.

Wall Street Journal:
  • Egypt Vote Results Shows Islamists' Rising Sway. Egyptians' embrace of a set of proposed constitutional amendments in this weekend's referendum is the clearest sign yet that leadership of the country's revolution may be passing from youthful activists to Islamist religious leaders, according to analysts. The results from Saturday's referendum signal a shift in Egypt's continuing revolution: The protest leaders, once celebrated as heroes and martyrs, are no longer the leading voice in Egypt's transition to democracy. In their place are popular religious leaders, whose strong backing of the amendments held sway. These leaders see approval of the amendments as an avenue to political power and a means of preserving the country's Islamic identity. With their influence in what appeared to be Egypt's first free and fair election, these political playmakers show how they are positioned to help define Egypt's democratic future. The powerful Muslim Brotherhood, a once-illegal Islamist political group, was joined in supporting the amendments by leaders of the Salafi Islamist movement—which follows the ultra-conservative brand of Islam widely practiced in Saudi Arabia—and residual elements of the former ruling National Democratic Party, or NDP. Opponents of the amendments, which included many in the youth movement, said the Muslim Brotherhood allied with the NDP as part of a cynical power grab: The approval of the amendments has set the stage for parliamentary elections this summer, for which only the Brotherhood and the NDP have the organizational structures to compete. Posters and leaflets distributed throughout the country said that voting "yes" on the 10 amendments—not one of which made any mention of religion—was a spiritual obligation. Prominent Salafi clerics openly championed the amendments, telling satellite television audiences that a "no" result would lead to the drafting of a new constitution that might exclude a controversial article in Egypt's existing constitution that embraces Sharia, or Islamic, law as the root of all legislation in the Egyptian parliament. The nature of the campaign led some Egyptians to describe their "yes" votes as a religious obligation. "This is a nightmare for intellectual Egyptians," said Nabil Abdel Fattah, a political analyst for the Al Ahram Center for Political and Strategic Studies, a government-funded think tank based in Cairo. "All the youth accepted the results of the referendum as a form of democracy. But at the same time, they felt very deceived by the dangerous role the religious groups played against them," Mr. Abdel Fattah said. "They felt that their revolution is being aborted and there is a huge, huge threat to the unity of the country from using religious campaigns." Egypt's Coptic Orthodox Church—whose adherents account for about 10% of the country's 80 million people—came out against the amendments, which they said amounted to an Islamist power-play.
  • New Attacks as Allies Remain Divided on Libya. The U.S. and its allies launched new missile strikes against Col. Moammar Gadhafi Monday and said they would expand the no-fly zone over the country, as coalition officials work to ease divisions about the course of the military intervention in Libya. European Union foreign ministers remained at odds over the strikes in Libya even while the 27-nation bloc said it agreed a significant extension of its economic sanctions on Col. Gadhafi's regime, the second time in just over a week that the EU has broadened its sanctions.
  • Progress at Nuclear Plant is Slow. Tokyo Electric Power Co. continued to report progress in restoring order at the Fukushima Daiichi nuclear reactors, but finishing the job is turning out to be a painstaking process plagued by damaged equipment and unexpected incidents. Smoke rose from two of the plant's six reactors Monday, forcing workers to retreat temporarily. The cause of the smoke wasn't immediately clear. Radioactivity returned to previous levels after a brief rise, officials said. "We aren't out of the crisis situation yet, but we are seeing a light at the end," said Prime Minister Naoto Kan.
  • US Ex-Im Approves $3 Billion Financing For Brazil's Petrobras(PBR), Infrastructure. The U.S. government's export credit agency has authorized $3 billion in financing for Brazil, including $2 billion for the Brazilian government-run oil company, Petroleo Brasileiro SA (PBR, PETR4.BR), or Petrobras.
MarketWatch:
CNBC.com:
  • Bahrain King Says Forces Have Foiled Foreign Plot.
  • Rising Gas Prices Eating Into Shopping Budgets. Shoppers plan to wait until next year and beyond to spend generously again, a survey on Monday showed, in an early sign that rising gasoline prices could make the spring selling season tough for retailers. About three-quarters of Americans surveyed by America's Research Group said they were shopping less due to rising gas prices, with more than 62 percent of the participants planning to spend generously only next year or beyond.
  • Treasury's Mortgage Debt Sale Comes at Tough Time for Housing. The Treasury Department’s move to start unloading its portfolio of mortgage debt likely will add one more point of pressure—albeit a small one—to a housing market hardly in a position for additional stress.
Business Insider:
Zero Hedge:
New York Post:
  • Netflix(NFLX) Takes It to HBO. It's not TV. It's not HBO either. It's Netflix. After refusing to sell Netflix rights to stream its shows, Time Warner's pay-TV juggernaut, HBO, is getting its comeuppance from Netflix, which announced late last week it's jumping into the original content business. Netflix's $100 million, two-season deal for original series "House of Cards" puts it in direct competition with HBO, which was already fielding questions about the threat of online video services after its subscriber rolls declined last year despite higher profits and revenues.
New York Times:
  • How the iPhone Led to the Sale of T-Mobile USA. Until Apple introduced its highly popular touchscreen device in 2007, which went on to become the world’s leading smartphone, Deutsche Telekom had been generating decent sales from its American operation, with growth in some years surpassing that achieved in Germany. But after the iPhone went on sale, sold exclusively at first by AT&T in the United States, T-Mobile USA began to lose its most lucrative customers, those on fixed monthly plans, who defected to its larger American rivals — AT&T and Verizon Wireless, which began selling the iPhone in February.
Boy Genius Report:
Politico:
  • Joe Manchin Keeps Hitting Dems Over Budget. Less than two weeks after he delivered his maiden floor speech denouncing President Barack Obama’s “failure to lead” on cutting deficit spending, freshman Democratic Sen. Joe Manchin is taking his argument home to his West Virginia constituents. Warning that “we cannot ignore the fiscal Titanic of our national debt and deficit,” the Democrat stressed his unwillingness to simply rubber-stamp his party’s positions in a Monday morning speech at the University of Charleston.
Reuters:
  • WHO Warns of "Serious" Food Radiation in Disaster-Hit Japan. The World Health Organization said on Monday that radiation in food after an earthquake damaged a Japanese nuclear plant was more serious than previously thought, eclipsing signs of progress in a battle to avert a catastrophic meltdown in its reactors. News of progress at the nuclear plant was overshadowed by mounting concern that radioactive particles already released into the atmosphere have contaminated food and water supplies. "Quite clearly it's a serious situation," Peter Cordingley, Manila-based spokesman for the World Health Organization's (WHO) regional office for the Western Pacific, told Reuters in a telephone interview. "It's a lot more serious than anybody thought in the early days when we thought that this kind of problem can be limited to 20 to 30 kilometers ... It's safe to suppose that some contaminated produce got out of the contamination zone."
  • Tiffany(TIF) Outlook Keeps Luster Despite Japan Quake. Tiffany & Co (TIF.N) expects significant sales growth this year in markets such as China, Brazil and Australia, illustrating the strength of global demand for luxury products despite the earthquake and tsunami in Japan. The luxury jeweler forecast higher fiscal-year sales than analysts expected, sending its shares up more than 5 percent.
  • Nokia(NOK) Sees Shortages as Some Japan Plants Restart. Nokia faces shortages of some phones due to disruption caused by Japan's devastating earthquake, although the mobile phone maker said the impact on earnings would be limited.
  • Portugal Austerity Vote Likely Wednesday, Could Topple Government. Portugal's main opposition Social Democrats (PSD) again refused on Monday to back new government austerity measures, raising the risk the minority administration could fall after a vote later this week.
Les Echos:
  • French finance minister Christine Lagarde said in an interview that no calendar has been established for any further intervention to limit the appreciation of the yen.
El Universal:
  • A survey showed 79% of Mexicans want controls on the country's southern border to impede illegal immigration. Of the 2,400 people surveyed last year by the Centro de Investigacion y Docencia Economicas, a Mexican university known as CIDE, 66% agreed that undocumented immigrants should be deported from Mexico. 86% said it was important for immigrants who reside in Mexico to speak Spanish and 81% said they should have a good level of education.
Edmonton Journal:
Business Line:
  • Japan to Monitor Seawater Near Nuclear Plant. “There is a possibility that a very small amount of radiation may flow into the sea. But even if it happens, considering the current radiation level in the air, there will not be an impact on human health,” the official said. Abnormal levels of radiation have already been detected in samples of milk and spinach taken from areas near the plant, as well as in tap water in Tokyo and surrounding prefectures including Fukushima.
Kyodo News:
  • Tokyo Electric says radioactivity has been found in sea water. Radio active iodine found in sea water 126.7 times limit. Radioactive cesium found 24.8 times limit. Tokyo electric says can't judge impact on sea products.
NHK:
  • Tokyo Electric Power Co. detected five kinds of radioactive material at the site of the crippled Fukushima Dai-Ichi nuclear plant, confirming fuel rods have been damaged.
Sina.com:
  • Former Chinese central bank deputy governor Wu Xiaoling said the nation has more room to raise the reserve requirement for banks.
Haberturk:
  • Turkey is blocking NATO's military involvement in implementing a no-fly zone over Libya, citing diplomats. Ambassadors of NATO members failed to reach an agreement in meetings yesterday after Turkey objected.
Al Watan:
  • Palestinian extremists were the main agitators behind unrest yesterday in the southern Syrian city of Daraa that left one person dead. About 30 people were also injured in the unrest.
  • Thousands of people have marched in the southern Syrian town of Daraa today after the funeral of a protester killed yesterday by security forces during a demonstration, citing a resident. The demonstrators chanted "Revolution, Revolution" and "God, Syria, freedom and that's all."
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