- The U.S. Commerce Department imposed preliminary duties of as much as 12 percent on $269 million of imports of steel grating and wire strand from China. In two separate decisions announced today, the U.S. said the producers are receiving illegal subsidies from the Chinese government, backing petitions by companies including Insteel Industries Inc., American Spring Wire Corp. and Sumiden Wire Products Corp. Makers of steel grating will face tariffs of 7.4 percent, the Commerce Department said in an e-mailed statement today. Importers of concrete steel wire strand, which is used to reinforce concrete construction applications, will face anti- subsidy duties ranging from 7.5 percent to 12 percent.
- ‘Jobs Created or Saved’ Is White House Fantasy. “Most analysts predict that the fiscal stimulus will have its greatest impact on growth in the second and third quarters of 2009,” Romer said. “By mid-2010, fiscal stimulus will likely be contributing little to growth.” At first it was just fringe elements, such as conservative blogs and the not-really-a-news-organization Fox News, that pounced on Romer’s statement. Then other news outlets started to question her statement, which seemed to fly in the face of White House assertions that only a small portion of the stimulus -- $120 billion, or 15 percent -- has actually been spent. Most of the criticism of the stimulus coming from the president’s own party has been, “too little, too late,” and here’s Romer saying it’s kaput. No wonder capital spending plans were at an all-time low in the third quarter, according to the NFIB monthly survey. Only 30,383 jobs were created or saved by the American Recovery and Reinvestment Act, according to Recovery.gov, the government’s once-transparent Web site that has become a complex blur of numbers, graphs and pie charts. An extrapolation of what would have happened without the fiscal stimulus isn’t much consolation to the 9.8 percent of the workforce that is unemployed. Nor is Romer’s prescription for the economy and labor market very comforting in light of the trillions of future tax dollars that have been spent, lent or promised by the federal government.
- In a stark reminder of how some battered financial firms remain dependent on government lifelines, GMAC Financial Services Inc. and the Treasury Department are in advanced talks to prop up the lender with its third helping of taxpayer money, people familiar with the matter said. The U.S. government is likely to inject $2.8 billion to $5.6 billion of capital into the Detroit company, on top of the $12.5 billion that GMAC has received since December 2008, these people said. The latest infusion would come in the form of preferred stock. The government's 35.4% stake in the company could increase if existing shares eventually are converted into common equity. The willingness by Treasury officials to deepen taxpayer exposure to GMAC reflects the troubled company's importance to the revival of the auto industry.
- Washington is captivated by the Senate melodrama over the so-called public option, salivating at the ring of Harry Reid's political bell (see below). But the most important health-care questions continue to be about the policy substance—particularly those that Democrats don't want asked. Foremost among them is: How will ObamaCare affect insurance premiums in the private health-care markets? Despite indignant Democratic denials, the near-certainty is that their plan will cause costs to rise across the board. The latest data on this score come from a series of state-level studies from the insurance company WellPoint Inc. At the request of Congressional delegations worried about their constituents—call it a public service—WellPoint mined its own actuarial data to model ObamaCare in the 14 states where it runs Blue Cross plans. The study therefore takes into account market and demographic differences that other industry studies have not, such as the one from the trade group America's Health Insurance Plans, which looked at aggregate national trends. In all of the 14 states WellPoint scrutinized, ObamaCare would drive up premiums for the small businesses and individuals who are most of WellPoint's customers. (Other big insurers, like Aetna, focus on the market among large businesses.) Young and healthy consumers will see the largest increases—their premiums would more than triple in some states—though average middle-class buyers will pay more too. Not even two hours after Wellpoint had presented its materials on the Hill, Democrats were already trashing it—which, considering that it runs to some 238 pages and took weeks to prepare, must have required remarkable powers of digestion and analysis.
- Keeping that high-value, must-have-now data on expensive high-speed memory drives is an easy call. Getting that might-need-someday out to a cheaper, slower drive somewhere else has always been the challenge. That's what Compellent Technologies (CML) does.
- A U.S. House panel voted Tuesday to periodically adjust the thresholds investors must meet in order to qualify for hedge funds and other sophisticated investments. The House Financial Services Committee agreed to an amendment that would direct the Securities and Exchange Commission to adjust for inflation the standards for whether an investor can partake in some funds. Current rules dictate that individuals can invest in more sophisticated funds only if they have a net worth of at least $1 million or an annual income of at least $200,000 over the previous two years. The amendment was included as part of a broader measure aimed at increasing oversight of hedge funds and other private pools of capital. The committee, chaired by Rep. Barney Frank, D-Mass., is scheduled to vote on the broader bill either Tuesday afternoon or Wednesday.
- President Hugo Chavez's popularity has slipped and a majority of Venezuelans view the situation in their country negatively, according to a poll published Tuesday. The survey by the Caracas-based polling firm Datanalisis found that 46 percent responded positively when asked how they view Chavez's presidency, down from 53 percent a month earlier. The survey, published by the Venezuelan newspaper El Universal, also found that 59 percent said they saw the situation in the country as negative.
- Wolfgang Leese, chief executive officer of Salzgitter AG, warned against overoptimism, noting that a recovery in steel-sector demand in recent weeks is not likely to be sustained.The market remains unstable and at best will be flat, he said.The company, Germany’s second-largest steelmaker, will post a loss for 2009.
- Package delivery rivals FedEx Corp (FDX) and United Parcel Service (UPS) faced off for the first time over a bill pending in Congress that would change FedEx workers' labor laws, setting out their positions in a debate on Tuesday in Albuquerque, New Mexico. In question is a reauthorization bill for the Federal Aviation Administration passed in May by the U.S. House of Representatives, under which FedEx employees would be covered by the National Labor Relations Act instead of the Railway Labor Act. The bill is awaiting Senate approval. "It is legislation written by UPS, for UPS and only benefits UPS," said FedEx spokesman Maury Lane. "Everyone else suffers."
- Durable Goods Orders for September are estimated to rise +1.0% versus a -2.6% decline in August.
- Durables Ex Transportation for September are estimated to rise +.7% versus a -.3% decline in August.
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- New Home Sales for September are estimated to rise to 440K versus 429K in August.
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- Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,910,000 barrels versus a +1,312,000 barrel gain the prior week.Gasoline supplies are estimated to fall by -1,000,000 barrels versus a -2,214,000 barrel decline the prior week.Distillate supplies are expected to fall by -1,000,000 barrels versus a -784,000 barrel decline the prior week.Finally, Refinery Utilization is estimated to rise by +.28% versus a +.19% gain the prior week.
Upcoming Splits - None of Note
Other Potential Market Movers - The Treasury’s 5-Year Note Auction, weekly MBA mortgage applications report, (YHOO) analyst meeting and the Wells Fargo Consumer Conference could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by technology and commodity shares in the region. I expect US equities to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 75% net long heading into the day.
BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Technology longs and Financial longs. I have not traded today, 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 anxiety is high. Today’s overall market action is mildly bearish. The VIX is rising +1.32% and is high at 24.72. The ISE Sentiment Index is around average at 142.0 and the total put/call is above average at 1.0. Finally, the NYSE Arms has been running above average most of the day, hitting 2.12 at its intraday peak, and is currently 1.06. The Euro Financial Sector Credit Default Swap Index is rising +3.56% today to 63.67 basis points. This index is down from its record March 10th high of 208.75. The North American Investment Grade Credit Default Swap Index is rising +2.33% to 102.03 basis points. This index is also well below its Dec. 5th record high of 285.99. The TED spread is down -1 basis point to 22 basis points. The TED spread is now down 442 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is rising +1.16% to 38.13 basis points. The Libor-OIS spread is unch. at 12 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is unch. at 2.0%, which is down 65 basis points since July 7th. The 3-month T-Bill is yielding .06%, which is up +1 basis point today.Cyclicals are weak again today, falling another -2.1%.As well, many tech stock leaders are substantially underperforming today and the Transports remain under pressure.The US dollar continues to trade well and bonds look higher near-term. On the positive side, Energy, Education, HMO, Drug, Biotech, Medical, Telecom and Computer Service shares are all higher on the day. Given today’s news, the bears had another chance to gain meaningful traction, but have failed thus far.I want to see the market’s reaction to tomorrow’s economic data before further shifting market exposure.Nikkei futures indicate a -22 open in Japan and DAX futures indicate an +1 open in Germany tomorrow. I expect US stocks to trade mixed-to-lower into the close from current levels on economic worries, more shorting, higher energy prices and profit-taking.