North American Investment Grade CDS Index 92.59 -.90%
European Financial Sector CDS Index 91.25 +1.76%
Western Europe Sovereign Debt CDS Index 192.62 +1.69%
Emerging Market CDS Index 203.57 -.29%
2-Year Swap Spread 18.0 unch.
TED Spread 22.0 -1 bp
Economic Gauges:
3-Month T-Bill Yield .05% unch.
Yield Curve 269.0 -3 bps
China Import Iron Ore Spot $178.90/Metric Tonne unch.
Citi US Economic Surprise Index 12.10 +1.9 points
10-Year TIPS Spread 2.57% -2 bps
Overseas Futures:
Nikkei Futures: Indicating +102 open in Japan
DAX Futures: Indicating +33 open in Germany
Portfolio:
Higher: On gains in my Medical, Biotech, Retail and Tech sector longs
Disclosed Trades: None
Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is bullish as the S&P 500 surges to a new multi-year high, despite US/European debt fears, emerging markets inflation worries and Mideast unrest. On the positive side, Airline, Road & Rail, HMO, Hospital, Paper, Tobacco and Biotech shares are especially strong, rising more than +1.75%. Small-caps and cyclicals are outperforming. The Transports are also hitting a multi-year high. Copper is rising +.38%. The 10-Year Yield is falling -6 bps to 3.31%. The US Muni CDS Index is falling -2.44% to 137.86 bps. Weekly retail sales jumped +5.0%, which is the largest percentage increase since the week of May 2, 2006. On the negative side, Restaurant, Construction, Computer and Coal shares are lower on the day. Lumber is falling another -2.38%. The US price for a gallon of gas is rising .01/gallon today to $3.87/gallon. It is up .75/gallon in 70 days. The Greece sovereign cds is climbing +5.72% to 1,435.67 bps, the Ireland sovereign cds is rising +3.35% to 662.63 bps and the Portugal sovereign cds is rising +2.41% to 675.50 bps. The Greece, Ireland and Portugal sovereign cds are now all at new record highs.The US dollar continues to trade very poorly. The Shanghai Composite fell another -.88% last night, breaking below its 50-day moving average. The China 7-Day Repo Rate jumped +56 bps to 4.43% last night, which is the highest level since February 23rd. I suspect volatility will increase tomorrow, but stock action will be rather muted in response to the Fed's comments. Bonds may weaken after recent gains. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less tech sector pessimism, earnings optimism, buyout speculation, falling long-term rates and technical buying.
Consumer Confidence in U.S. Rose More Than Forecast in April. Confidence among U.S. consumers increased more than forecast in April, signaling the improving labor market is helping Americans weather rising fuel costs. The Conference Board’s confidence index rose to 65.4 from a revised 63.8 reading in March, figures from the New York-based private research group showed today. The median forecast of economists surveyed by Bloomberg News called projected an advance to 64.5. The group’s measure of present conditions increased to 39.6, the highest since November 2008, from 37.5 a month earlier. The gauge of expectations for the next six months rose to 82.6 from 81.3. The share of consumers who said jobs are currently plentiful rose to 5.2 percent from 4.6 percent. Those who said jobs are hard to get decreased to 41.8 percent, the fewest since January 2009, from 44.4 percent. The percent of respondents expecting more jobs to become available in the next six months decreased to 17.5 from 19.6 the previous month. The share expecting incomes to rise over the next six months improved to 16.7 percent from 15.2 percent. The share of Americans planning to buy a house over the next six months increased to 5.5 percent, matching the record high reached in January 1978. Data go back to 1964. Intentions to purchase automobiles and appliances also improved.
3M Boosts Forecast as Renewable Energy Helps Top Estimates. 3M Co. (MMM) boosted its full-year earnings forecast after first-quarter profit surpassed analysts’ estimates. Profit this year will be $6.27 to $6.47, excluding pension- related expenses, compared with a February forecast of $6.17 to $6.42 a share, the St. Paul, Minnesota-based maker of Scotch tape said today in a statement. Sales increased about 20 percent at the industrial and transportation division, whose products include films for solar panels and windows, and at the electronics and communications unit, which makes films for smartphones. 3M said the earthquake and tsunami in Japan will curb 2011 profit by 10 cents to 13 cents a share, and favorable currency translation will help offset that. “The year has started off better than we would have expected,” Stephen Tusa, a JPMorgan Chase & Co. analyst in New York, wrote today in a note.
IBM Boosts Dividend, Authorizes $8 Billion for Stock Repurchases. International Business Machines Corp. (IBM), the biggest computer-services provider, increased its quarterly dividend 15 percent and set aside more money for share buybacks, sending the stock to a record. The quarterly payout will rise by 10 cents for the second straight year, to 75 cents a share, IBM said today in a statement. IBM added $8 billion to the stock-repurchase plan, bringing the total authorized by the board to $12.7 billion.
UPS's(UPS) Next-Day Delivery Gains Show Improvement in 'Core Economy'.United Parcel Service Inc. (UPS)’s next- day package shipments rose in the first quarter as business customers refilled stockpiles to meet higher demand from the recovering economy, Chief Financial Officer Kurt Kuehn said. Boxes shipped using the UPS’s Next Day Air service climbed in the “mid-single digits” as companies sought to restock goods faster after adapting to leaner inventory during the recession, Kuehn said in a telephone interview. The gains reflect “some of the increased velocity in the core economy with manufacturing and finished goods,” Kuehn said.
Greek Deficit Tops Forecasts as Euro-Area Debt Reaches Record. Greece’s budget deficit exceeded goverment estimates and the euro area’s overall debt reached a record, narrowing Europe’s options for putting an end to the fiscal crisis. Greece’s shortfall was 10.5 percent of gross domestic product in 2010, higher than a 9.4 percent estimate made by the Greek government in February, official European Union figures showed today. Greek bond yields surged, rekindling speculation that a debt write-off or extension of the country’s repayment timelines will be the only way out of the fiscal trap. "I don’t think that Greece will succeed in this consolidation strategy without any restructuring in the future, or perhaps also in the near future,” Lars Feld, a member of the German government’s council of economic advisers, told Bloomberg Television’s Nicole Itano in Frankfurt. “Greece should restructure sooner than later.” Two-year Greek yields rose as much as 64 basis points to 23.65 percent, before slipping back to 23.41 percent as of 11:13 a.m. in London. Ten-year yields reached 15.26 percent. Portugal’s two-year note yields touched 11.62 percent, before easing to 11.53 percent. All of the yields reached records. The cost of insuring debt sold by Greece and Portugal rose to records, according to traders of credit-default swaps. Contracts on Greece jumped 13 basis points from April 21 to 1,345 basis points, signaling a 66 percent chance of default within five years, according to CMA. Portuguese swaps climbed six basis points to 666. Debt rose in all 16 countries using the euro last year to 85.1 percent of GDP from 79.3 percent in 2009, today’s Eurostat report showed. Aggregate euro-area debt moved closer to the 90 percent level that economists Kenneth Rogoff and Carmen Reinhart say can weigh on long-term growth prospects. Greece’s debt ballooned to 142.8 percent of GDP, the highest in the euro’s 12-year history, the EU figures showed. Ireland’s debt surged the most, by 30.6 percentage points to 96.2 percent of GDP.
Food Costs Seen Reaching a Record High This Year as Inflation Accelerates. Global food prices may rise 4.4 percent to a record by the end of the year, driven by demand for meat, oilseeds and grains used to make ethanol, adding to costs that mean inflation is accelerating from the U.S. to China. The United Nations’ Food Price Index may climb to 240 points from 229.84 last month, said William Adams, a fund manager at Zurich-based Resilience AG, which has $22.2 million of assets. Global corn stockpiles are shrinking the most in seven years, inventories of nine edible oils will drop to the lowest since 1974 and U.S. beef stocks will be the smallest since 1999, the U.S. Department of Agriculture estimates. “The stockpiles are being severely depleted,” said Adams, who correctly forecast gains in heating oil and gasoline prices last year. “Eventually it gets to the consumer. The U.S. government isn’t subsidizing pork chops like it is ethanol.”
U.S. Government Efforts to Remove Drug CEO Jolts Firms. A government attempt to oust a longtime drug-company chief executive over his company's marketing violations is raising alarms in that industry and beyond about a potential expansion of federal involvement in the business world. The Department of Health and Human Services this month notified Howard Solomon of Forest Laboratories Inc. that it intends to exclude him from doing business with the federal government. This, in turn, could prevent Forest from selling its drugs to Medicare, Medicaid and the Veterans Administration. If the government implements its ban, Forest would have to dump Mr. Solomon, now 83 years old, in order to protect its corporate revenue.
Lee Warns of Further Inflation for U.S. Former Singapore Prime Minister Lee Kuan Yew said a stronger local currency could help ease inflation in the fast-growing Asian city-state, even as he warned of a continued weak U.S. dollar—and potentially more inflation—in the U.S.
Nations Pursue U.N. Censure of Syria. Syrians resumed protests Tuesday, less than a day after military tanks and troops killed at least 25 people in the southern city of Deraa, as activists appeared to defy the fear that has sustained the Assad regime for decades. World leaders stepped up condemnation of the escalating violence used by the government of President Bashar al-Assad, who is facing the largest threat to his rule as protests across Syria move into their sixth week.
Strong Demand Revs Up Ford(F) Profit. Ford Motor Co., showing little impact from rising U.S gasoline prices or the Japan earthquake, said its first-quarter profit rose 22%, fueled by higher vehicle sales and pricing, especially in North America, its most important region.
Despite Rally, ETFs That Bet Against Stocks Gain Popularity. Exchange-traded funds that bet against further gains, in fact, have been hugely popular with investors, making the group the fastest-growing fund class in the $1.1 trillion ETF industry. The so-called "inverse" ETFs, which can sometimes pay double or triple the opposite move of the benchmarks they track, have seen a 16 percent growth in assets this year, against 4 percent for the industry as a whole.
Apple's(AAPL) Parts Grab. Apple CEO Steve Jobs is cracking his $66 billion piggybank to ensure he has enough parts to meet demand for his popular gadgets. The world's No. 1 tech company has committed $11 billion of its enormous cash pile to protect the supply chains for Macs, iPhones, iPads and other gadgets, according to a regulatory filing yesterday. That represents about a 40 percent increase over the previous quarter allocated to locking up its global supply chain of high-tech components for its devices. The aggressive move puts Apple in a position of even greater strength compared to rivals as they all struggle for limited electronics resources.
Expect Apple(AAPL) to Charge for Music Cloud. Music industry insiders told me that Apple has indicated it could offer the service free of charge initially but that company will eventually require a fee. Google is also expected to charge for a similar service.
New Yorkers Lead Pack in Government Benefits. New Yorkers get more government aid per person from social programs than residents of any other state, a USA TODAY analysis finds. The state's Medicaid program is the most expensive in the nation, driving the average cost of all government benefits in New York to $9,442 per person. New York ranks 28th in Social Security payments per person and 9th in Medicare benefits. But the spending on Medicaid, the health program for the poor, is far above that in any other state. Only Washington, D.C., spends more.
Americans Depend More on Federal Aid Than Ever. Americans depended more on government assistance in 2010 than at any other time in the nation's history, a USA TODAY analysis of federal data finds. The trend shows few signs of easing, even though the economic recovery is nearly 2 years old. A record 18.3% of the nation's total personal income was a payment from the government for Social Security, Medicare, food stamps, unemployment benefits and other programs in 2010. Wages accounted for the lowest share of income — 51.0% — since the government began keeping track in 1929. The wage decline has continued this year. Wages slipped to another historic low of 50.5% of personal income in February. From 1980 to 2000, government aid was roughly constant at 12.5%. The sharp increase since then — especially since the start of 2008 — reflects several changes: the expansion of health care and federal programs generally, the aging population and lingering economic problems. Americans got an average of $7,427 in benefits each in 2010, up from an inflation-adjusted $4,763 in 2000 and $3,686 in 1990. The federal government pays about 90% of the benefits. "What's frightening is the Baby Boomers haven't really started to retire," says University of Michigan economist Donald Grimes of the 77 million people born from 1946 through 1964 whose oldest wave turns 65 this year. "That's when the cost of Medicare will start to explode."
GOP's Gamble on the Budget Pays Off, So Far. A new USA TODAY/Gallup Poll finds that House Republicans, who took a political risk in passing a controversial budget blueprint last week, have survived so far with some key advantages intact as Congress moves toward the debate on raising the debt ceiling, passing the 2012 budget and enacting a long-term deficit plan. Americans are evenly divided between the deficit plan proposed by President Obama and the one drafted by House Budget Chairman Paul Ryan, and those surveyed put more trust in Republicans than Democrats to handle the federal budget and the economy. Pessimistic about the economy and the nation’s course, they overwhelmingly blame too much spending for soaring federal deficits and want to rely more on spending cuts than tax hikes to get it under control.
IMF Managing Director Dominique Strauss-Kahn, ECB President Jean-Claude Trichet and European Commission for Economic and Monetary Affairs Olli Rehn may visit Greece next month.
Mehr News Agency:
Bahrain's charges of spying against an Iranian diplomat are "baseless" and Iran's government may retaliate, said Ramin Mehmanparast, a Foreign Ministry spokesman.
China Said to Raise Capital Adequacy Ratios for 5 Biggest Banks. China’s banking regulator set capital targets for the nation’s five biggest lenders above the minimum 11.5 percent ratio amid concern that credit risks may rise, three people with knowledge of the matter said. Industrial & Commercial Bank of China (1398) Ltd., the world’s largest lender, and three rivals were told last month to maintain capital adequacy ratios of at least 11.8 percent in 2011, one of the people said, declining to be identified as the plan isn’t public. Agricultural Bank of China Ltd. (1288), the nation’s fourth-biggest, should target 11.7 percent, two of them said. The move may help China’s policy makers curb loan growth after inflation accelerated and real estate prices rose following a $2.7 trillion two-year credit boom. “The regulator doesn’t seem comfortable any longer with Chinese banks’ capital levels after their overseas rivals raised money,” said May Yan, a Hong Kong-based analyst at Barclays Capital. “If the target stays at the current level, the banks probably won’t need to worry too much in the next two years as credit growth is already slowing down. But the market will be concerned if the target is pushed higher and higher.” There’s a “high likelihood of a significant deterioration” in banks’ asset quality after the two-year credit boom, Fitch Ratings said April 12. Fitch lowered its outlook on China’s long-term, local-currency rating to negative because of the risk that the government would have to bail out its banks. A downgrade would be the first on China’s debt since July 1999.
Asia Faces 'Serious Setback' on Rising Food Costs, ADB Says. Asia faces a “serious setback” from surging oil and food prices that are fueling inflation and threatening to push millions into extreme poverty, the Asian Development Bank said. The region’s growth may be reduced by as much as 1.5 percentage points should the pace of gains in oil and food prices seen so far this year persist for the rest of 2011, the Manila-based lender said in a statement today. Domestic food inflation in many Asian economies has averaged 10 percent this year, an increase in prices that may push an additional 64 million people into extreme poverty, defined as living on less than $1.25 a day, it said. Policy makers from China to India and Singapore are stepping up the fight against inflation through interest rate increases or currency appreciation as political unrest in the Middle East boosts crude oil prices. The pattern of “higher and more volatile” food prices is also likely to continue in the short term amid declining grain stocks, the ADB said. “To avert this looming crisis it is important for countries to refrain from imposing export bans on food items, while strengthening social safety nets,” ADB chief economist Rhee Chang Yong said in the statement accompanying a report on global food inflation today. “Efforts to stabilize food production should take center stage, with greater investments in agricultural infrastructure to increase crop production and expand storage facilities, to better ensure grain produce is not wasted.”
Wall Street Journal:
Syria Steps Up Violence. Syria's government escalated its crackdown on protestors Monday, sending tanks and armored vehicles into the southern city of Deraa, and raiding homes and deploying snipers in suburbs surrounding the capital and other hot spots, according to witness and activist accounts posted online. The latest military assault killed at least 35 people, many of them in Deraa where the uprising has been most intense, and in the northwestern town of Jableh. The government also deployed members of an elite unit headed by President Bashar al-Assad's brother Maher—the army's fourth division—and parts of the country were cut off from electricity and telephone service. The Assad government's decision to crack down harder after a weekend that saw more than 80 protesters killed puts more pressure on the international community to respond strongly, despite concerns many countries have about pushing the regime to the breaking point. "Things now are taking a very dangerous turn," said an Arab diplomat who is following the situation closely.
Taliban Jailbreak Rattles Afghan South. Escape of Hundreds via Prison Tunnel Refills Ranks of Insurgent Commanders. The Taliban crowed Monday over the jailbreak of hundreds of militants from a high-security prison in Kandahar, an escape the government called a "disaster" and analysts described as a serious blow to attempts to stabilize southern Afghanistan.
Financiers Switch to GOP. Hedge-fund managers made a big bet on Barack Obama and other Democrats in 2008. Now, with the 2012 contest gearing up, some prominent fund managers have turned their backs on the party and are actively supporting Republicans.
Fight for Lehman's Remains Heats Up. A three-way battle over the remnants of Lehman Brothers Holdings Inc. is coming to a head, as the defunct investment bank's estate fights with big-name hedge funds and Lehman's former archrival Goldman Sachs Group Inc.(GS) over how to divvy up $61 billion in assets.
Loan Middlemen Become a Big Draw. With tens of billions of dollars in underwater commercial real-estate loans coming due by the end of next year, some savvy investors are trying to get to the head of the line in the race to snap up distressed properties. Taking the lead among those trying to profit from the pain is real-estate investor Andrew Farkas, who tops a roster of high-profile investors—including Fortress Investment Group, Cerberus Capital Management and Vornado Realty Trust—that have bought companies that act as middlemen on troubled commercial mortgages.
China Won't Speed Yuan Appreciation, Schumer Says. Sen. Charles Schumer, a leading U.S. critic of China's currency policies, came away from a meeting with the head of the People's Bank of China dissatisfied about Beijing's unwillingness to allow the yuan to appreciate more quickly. Mr. Schumer, a Democrat from New York who was traveling with nine other lawmakers, had a one-on-one breakfast with Zhou Xiaochuan, governor of the People's Bank of China. Mr. Schumer said in a telephone interview on his way back from China that the PBOC told him China wouldn't accelerate the appreciation of its currency from its current pace, a refusal likely to spark an outcry on Capitol Hill. "I got the distinct impression from Gov. Zhou that they feel they have gone as far as they are willing to," Mr. Schumer said.
Malls Test Apps to Aid Shoppers. Shopping malls, threatened by the rapid growth of online retailing, are experimenting with mobile applications to help consumers navigate their stores and parking lots and, in some cases, find sales and special discounts.
Commodity Bets Draw Debate. The Commodity Futures Trading Commission is moving to increase oversight of the growing number of mutual funds that make speculative bets on gold, oil and other commodities and currencies through offshore subsidiaries. Officials at the federal agency are concerned that a proliferation of non-U.S. subsidiaries set up by mutual funds beyond the reach of current regulations could expose investors to volatile swings in commodities prices and potentially huge losses. A proposed rule by the CFTC would essentially preclude mutual funds from using subsidiaries to invest in commodities, but the mutual-fund industry is fighting the move.
Football's Future If The Players Win by Roger Goodell. There would be no draft. Incoming players would sell their services to the richest teams. Late Monday afternoon, U.S. District Court Judge Susan Richard Nelson issued a ruling that may significantly alter professional football as we know it.
Bloomberg Businessweek:
Peregrine I Offshore Drilling Venture Files for Bankruptcy. Peregrine I LLC, an offshore drilling company backed by a unit of General Electric Co.(GE), filed for Chapter 11 bankruptcy protection, saying $190 million of a $259 million loan is unpaid.
MarketWatch:
China April CPI Likely Up Around 5.5%: Report. China's consumer price index will likely rise 5.5% in April from a year earlier, the state-run China Securities Journal said in a commentary piece Tuesday.racl
How Japan Dealt a Double Blow to Hedge Funds. To the banker-poet T.S. Eliot, April was the cruelest month. But for many hedge fund traders who take bets on economic trends around the world, March was the cruelest they can remember. “We just got whacked. Japan was a double hit—killing our longs and our shorts,” a young hedge funder said at a beer garden in Manhattan’s meatpacking district.
Netflix(NFLX) Earnings Leap, But Shares Slide on Weak Outlook. Netflix reported better-than-expected profit and revenue, but issued an outlook for the second quarter that disappointed investors, sending shares down in extended trading. Netflix posted first-quarter earnings of $60.2 million, or $1.11 a share—up from $32.3 million, or 59 cents per share, in the period a year ago. Revenue rose 46 percent to $719 million, it said on Monday. Analysts had expected revenue of $703.6 million, according to Thomson Reuters.
Business Insider:
SoCal City Edges Closer To Bankruptcy. Facing a massive budget shortfall and potential insolvency, city officials in Montebello, California, have met with lawyers to explore the possibility of filing for Chapter 9 municipal bankruptcy, according to a memo obtained by the Los Angeles Times.
Finally: YouTube Launching Streaming Movies. YouTube will imminently launch a movie-on-demand service charging users to stream movies off the world’s largest video sharing site, TheWrap has learned.
A Regulator Moves Postcrisis to Expand Power Over Wall St. Richard G. Ketchum is plotting Finra 2.0. The chairman and chief executive of the Financial Industry Regulatory Authority has ambitious plans to expand the influence of Wall Street’s self-regulatory agency. At Mr. Ketchum’s urging, Finra is vying to replace the Securities and Exchange Commission as the top enforcer overseeing tens of thousands of investment advisers.
Forbes:
More Regulation of World Finance Needed, Soros Says. Hedge fund manager and conspiracy theorist fave, George Soros, told The Economic Times of India that more regulation of global finances is required, but just how much regulation is subject of serious debate between the world’s leading economies. The role of the regulators should be to exercise mainly thorough a free market. So you want to have markets as free as possible because while markets are unstable, regulators are even more imperfect than markets because they are subject to political influences they can be corrupt and they can be mistaken. So their role should be kept to a minimum but what that minimum is, is a matter for debate.” Soros also levied harsh criticism on US politicians and their inability to regulate the bulge brackets in the US. Without naming brand names, Soros told the Economic Times that the banking system has become too oligarchical. Instead of the financial powers being regulated more by the state following the near catastrophic 2008 derivatives crash that cost the equivalent of Japan’s entire GDP, the state has instead opted to blame itself for the problems and regulate less, he said. The regulators failed to regulate the economy that is why you had a crisis and when you had crisis then they had to keep the financial institutions alive in order to prevent the total big round and this creates what is called a moral hazard which allows the financial institutions to indulge in excessive lending and excessive profits and excessive stimulation. Because, if things collapse, then the regulators have to pick up the pieces,” Soros said. The billionaire investor seems to believe that financial markets, the Central Bank governors, state regulators and politicians worldwide are at loggerheads over what to do to avoid another 2008-style credit crash. In light of any changes going forward, more crashes are likely, though Soros did not come out and say that.
Washington Times:
Consequences of Debt Crisis Aren't Too Dire for Our Leaders. Just how dire is the crisis over the $14,294,000,000,000 debt ceiling, which America will hit on about May 16? So dire that President Obama spent much of last week traipsing across the West collecting campaign cash (and hit the golf course for Round No. 65 on Saturday). So dire that Congress headed off on a two-week vacation (and Sen. Harry Reid jetted off to China on a 10-day junket with nine colleagues, costing taxpayers millions). So dire that lawmakers have scheduled their first major meeting on the issue for May 5 - 11 days before America goes into global default. And, last, so dire that the “smartest president ever” has put his top man on it - Vice President Joe Biden. The message from the unmiffed politicos inside the Beltway is clear: When you’re $14 trillion in debt, what’s another trillion or two? Let’s just get another credit card - even if we have to pay 29.9 percent - and charge it up.
LA Times:
SEC Shuts Down Beverly Hills Hedge Fund and Wealth Management Business. In an unusual move, the Securities and Exchange Commission has temporarily shut down a Beverly Hills hedge fund and wealth management business -- which allegedly sought to defraud investors -- before anyone actually invested. Elijah Bang and Daniel Lee, who operated IU Group Inc., allegedly targeted retirees, professors and Christians by misrepresenting the business and its financial performance, soliciting clients using a variety of company names and claiming that the fund managed over $800 million, according to an SEC statement on Monday.
Reuters:
Euro Slips After Trichet, But Dollar Still Seen Wobbly. The euro slipped on Tuesday after European Central Bank Governor Jean-Claude Trichet said he shares the view that a strong dollar is in the interest of United States, a comment taken by some market players as showing frustration over the dollar's relentless fall and also an attempt to talk up the currency. Trichet also told two Finnish newspapers he does not see any significant second-round inflation, prompting traders to dump euro long positions against the dollar, although many traders think the dollar will remain under pressure from a perception that the U.S. central bank is far more reluctant to tighten its policy.
iShares Silver Trust Holdings Jump 2.2% to Record High. Holdings in the iShares Silver Trust, the world's largest silver-backed exchange-traded fund, had risen by 2.2 percent from April 21 to a lifetime high of 11,390.06 tonnes by April 25, as silver prices surged towards their 1980 peaks.
North Carolina Might Sue Banks Over Forex Trading. The North Carolina Treasurer's office may pursue claims against custodian banks over foreign exchange trading, making it the latest state to review the controversial business.
Express Scripts(ESRX) Profit Shy of Estimates, Shares Fall. Pharmacy benefit manager Express Scripts Inc reported a lower-than-expected quarterly profit and revenue on Monday, despite having cautioned Wall Street that the results would not measure up to the prior quarter. Express shares fell more than 6 percent in extended trading after reporting its first-quarter results.
Nasdaq(NDAQ), ICE(ICE) Doubt NYSE-D. Bourse Cost Savings. Nasdaq OMX Group and IntercontinentalExchange warned NYSE Euronext investors to be "highly skeptical" of the additional cost savings that the NYSE says will result from its friendly merger with Deutsche Bourse.
Frankfurter Allgemeine Zeitung:
European Central Bank Governing Council member Erkki Liikanen said that the ECB will prevent second-round inflation effects, citing an interview. "Inflation expectations are strongly anchored and we will oppose any trace of second-round effects," Liikanen, who also heads Finland's central bank, said. "Emerging markets are growing so quickly that costs are also increasing there," Liikanen said. "This inflation pressure will affect the euro area and make monetary policy more difficult."
People's Daily:
China's Communist Party needs "blood" ties with the country's public, the People's Daily said in a front-page commentary. The Party should insist on struggling for the people's interests. The Party is facing many new challenges and some "unaccustomed situations" in its work related to the masses. This may affect the connection between the Party and the Chinese people, the commentary said.
Economic Information Daily:
China may raise interest rates and banks' reserve requirement ratios in the second quarter to control liquidity, Ba Shusong, a researcher at the State Council's Development Research Center, wrote in a commentary.
Evening Recommendations Citigroup:
Reiterated Buy on (K), target $61.
Oppenheimer:
Rated (ATHN) Underperform, target $30.
Rated (MDAS) Outperform, target $21.
Night Trading
Asian equity indices are -1.0% to -.25% on average.
Asia Ex-Japan Investment Grade CDS Index 104.50 unch.
The S&P/CS 20 City MoM% SA for February is estimated to fall -.4% versus a -.22% decline in January.
10:00 am EST
Consumer Confidence for April is estimated to rise to 64.5 versus 63.4 in March.
Upcoming Splits
None of note
Other Potential Market Movers
The 2-Year Treasury Notes Auction, weekly retail sales reports, Richmond Fed Manufacturing Index for April and the Barclays Retail/Restaurants Conference could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by commodity and real estate shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.
North American Investment Grade CDS Index 93.43 +.41%
European Financial Sector CDS Index 89.67 -.04%
Western Europe Sovereign Debt CDS Index 189.41 unch.
Emerging Market CDS Index 205.40 +1.18%
2-Year Swap Spread 18.0 unch.
TED Spread 23.0 +1 bp
Economic Gauges:
3-Month T-Bill Yield .05% unch.
Yield Curve 272.0 -1 bp
China Import Iron Ore Spot $178.90/Metric Tonne unch.
Citi US Economic Surprise Index 10.20 -1.4 points
10-Year TIPS Spread 2.59% -1 bp
Overseas Futures:
Nikkei Futures: Indicating -11 open in Japan
DAX Futures: Indicating +18 open in Germany
Portfolio:
Higher: On gains in my Medical, Retail and Tech sector longs
Disclosed Trades: None
Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 maintains recent gains, despite US/European debt fears, emerging markets inflation worries, rising food prices and Mideast unrest. On the positive side, Airline, Road & Rail, Gaming, REIT, Drug, Networking, Disk Drive and Internet shares are especially strong, rising more than .5%. The MS Tech Index continues to trade relatively well. Lumber is rising +.32%. The 10-Year Yield is falling -3 bps to 3.36%. The Japan sovereign cds is falling -2.87% to 77.08 bps. On the negative side, Coal and Oil Service shares are under pressure, falling more than .75%. The UBS-Bloomberg Ag Spot Index is rising +.87% and copper is falling -2.21%. The US price for a gallon of gas is rising .02/gallong today to $3.86/gallon. It is up .74/gallon in 69 days. The Greece, Ireland and Portugal sovereign cds are hovering near record highs.The US dollar continues to trade very poorly. The Shanghai Composite feel -1.51% last night, right to its 50-day moving average. Emerging markets inflation remains my number one concern. Trading still has a holiday feel to it. Today's activity appears to be another healthy consolidation of recent gains. The tech sector continues to trade much better with improving leadership and breadth. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less tech sector pessimism, earnings optimism, buyout speculation and technical buying.
