Wall Street Breakfast: Must-Know News 26 comments
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- Insurers get TARP nod. After waiting a half-year, six insurers were cleared to receive up to $22B in TARP funds late Thursday. Hartford Financial (HIG) was approved for $3.4B; Lincoln National (LNC) said it may receive $2.5B; also approved were Allstate (ALL), Prudential Financial (PRU), Principal Financial Group (PFG), and Ameriprise Financial (AMP). One analyst called the decision "a deal with the devil," but said the move may have been unavoidable, because the collapse of any one could ignite another round of panic. It's not clear that all six will avail themselves of TARP money.
- Barclays explores $10B sale of BGI. Barclays (BCS) is reportedly in talks to sell its entire asset-management unit, Barclays Global Investors, for as much as $10B. That's more than double the $4.4B Barclays would get for BGI's iShares ETF business from buyer CVC Capital Partners, which gave Barclays until June 18 to seek better offers. Potential buyers include BlackRock (BLK) and Bank of New York Mellon (BK). Unlike its peers (LYG and RBS), Barclays has shunned government money, but it needs cash to bring its capital ratio in line. A sale would leave Barclays in a solid position, but with a less-diversified business. Murray Coleman explores the ramifications of a sale for the ETF industry.
- Euro area GDP shrinks at record clip. Euro region GDP fell 2.5% in Q1 from last quarter, the fastest contraction on record, Eurostat said Friday morning. From a year ago, the euro-area economy shrank 4.6%, also the biggest drop on record. Inflation held steady at 0.6% in April. On May 7, the ECB lowered its benchmark rate to 1%, a level economists expect will be maintained, or even trimmed further. (see Eurostat's GDP and inflation data (.pdf))
- Feds 'urge' changes at BofA. Regulators are pushing for major changes in Bank of America's (BAC) board of directors, which is intriguing considering many of the bank's woes stem from its shotgun merger with Merrill Lynch after heavy pressure from the feds. A spokesman wouldn't comment on regulators' requests, but said all of the 19 banks that recently underwent government stress tests have been "directed" to review their managements. The meddling is remarkable, considering the government does not own a stake in most of the banks, including BofA.
- Temasek dumps BofA, looks to emerging markets. Temasek Holdings sold its 3.8% stake in Bank of America (BAC) for about $1.3B, at a loss of about $4.6B. The Singapore state-owned fund, which earlier this week boosted its stake in China Construction Bank, and whose investments shrank 31% over the past eight months, said it will continue to reduce its exposure to developed economies. "The belief now is that the world is not so American-centric anymore," a Singapore economist said.
- Rio Tinto says Chinalco deal is still on table. Rio Tinto (RTP) said Friday it remains committed to a $19.5B deal with Chinalco (ACH), and said the plan has now received U.S. regulatory approval, pouring cold water on speculation it might be backing away from the tie-up in favor of a public rights offering. Shares +1.6% premarket.
- Economists foresee protracted U.S. recovery. WSJ's latest economist survey predicts the recession will be over by August. Recovery, on the other hand, will be subdued and protracted. In the words of one economist: The Fed's "big guns" have "effectively averted a depression, or a much more severe recession." Q2 GDP is seen at -1.4%, a huge improvement from Q1's 6.1% drop.
- GM nears deal with UAW. Sources say GM (GM), under the direction of the Treasury, is near a deal with the UAW that would cut hourly labor costs by more than $1B/year, and halve its remaining commitment to cover healthcare costs to $10B. In exchange, the UAW would receive a 39% stake in a reorganized GM. With UAW backing in sight, Treasury insiders are increasingly confident they can push through a GM reorganization, despite the protests of bondholders who say they're getting the short end of the stick. Meanwhile, in Canada GM is seeking massive cuts in workers' pensions in a deal with the CAW.
- Jobless claims jump. Initial claims for the week came in at a higher-than-expected 637,000 (consensus 610K), the Labor Department said Thursday, and were up 32K from last week's 605K (revised). Continuing claims, which measure the total number of unemployed claiming benefits, rose 202K to 6.56M. The sharp rise may indicate new jobless claims haven't peaked as many hoped, but regardless, overall unemployment is nowhere near its top.
- Wholesale prices up slightly. Producer Prices rose 0.3% in April from March, a drop more than the 0.2% gain economists predicted. Prices are down 3.7% vs. a year ago. Core PPI gained 0.1%, and is up 3.4% vs. last year.
- 30-year fixed mortgage rates climbed 0.02 points to 4.86%, Freddie Mac said Thursday in its weekly report. Rates remain near their record low of 4.78%, but rates have yet to make a run at the 4% some anticipated following the government's aggressive support of mortgage markets.
Earnings: Friday Before Open
- Abercrombie & Fitch (ANF): Q1 EPS of -$0.31 misses by $0.17. Revenue of $612M (-23.5%) vs. $616M. (PR)
- AngloGold Ashanti (AU): Q1 EPS of $0.42 misses by $0.12. Q1 production of 1.1M oz., down 13%. (PR)
Earnings: Thursday After Close
- Blockbuster (BBI): Q1 EPS of $0.12 misses by $0.03. Revenue of $1.12B (-19.5%) vs. $1.3B. Shares -22.8% AH. (PR)
- Compuware (CPWR): FQ4 EPS of $0.20 beats by $0.01. Revenue of $253M (-25.2%) vs. $268M. Shares -1.6% AH. (PR)
- Darling International (DAR): Q1 EPS of $0.06 in-line. Revenue of $133M (-34.1%) vs. $147.7M. Shares +1.5% AH. (PR)
- Nordstrom (JWN): Q1 EPS of $0.31 beats by $0.05. Revenue of $1.71B in-line. Raises full-year EPS guidance to $1.25-1.50 vs. $1.27 consensus. Same-store sales fell 13.2%. Shares +1.8% AH. (PR)
Today's Markets
Strong gains in Asia Friday, but Europe is flat and futures have turned negative.
- Asia: Nikkei +1.88% to 9,265. Hang Seng +1.51% to 16,791. Shanghai +0.2% to 2,645. BSE Sensex +2.53% to 12,173.
- Europe at midday: London flat. Paris flat%. Frankfurt -0.2%.
- Futures at 7:00: Dow -0.2% to 8267. S&P -0.4% to 886. Nasdaq -0.4%.
Crude -1.2% to $57.94. Gold -0.4% to $924.80.
30-year Tsy +0.3%. 10-year +0.12%.
Euro -0.6% vs. dollar. Yen +0.9%. Pound -0.35%.
Friday's Economic Calendar
- 8:30 Consumer Price Index
8:30 Empire State Mfg Survey
9:00 Treasury International Capital
9:15 Industrial Production
9:15 Fed's Fisher speaks
9:55 University of Michigan Consumer Sentiment
11:00 Cleveland Fed Median CPI - Notable pre-open earnings: ANF, AU, JCP, TK, TNK
Seeking Alpha editor Rachael Granby contributed to this post.
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This article has 26 comments:
Insurers getting tarp money, EU GDP falling, Govt taking over BoA board, BoA stock dumped (for a loss), Jobless claims up, Prices up, Mortgages rates up, short bond rates are still going down and the economists still have thier heads in the clouds.
Inflation is rising with higher oil prices, more foreclosures both personal and business, higher unemployment due to the closings of 1000's of car dealerships, cut backs in spending by consumers in fear of losing their jobs and more that hasn't occurred yet.
This reminds me of the article I read last night at "The Onion" website in the business section. "Nation Ready To Be Lied To About Economy Again" it goes on to say that citizens are tired of hearing the truth, it's just too depressing.
1930's style. Pharmacy has no pill for that.
On May 15 08:16 AM stockartist wrote:
> Who are the economist that think "the recession" will end in August
> of this year? You have to be kidding me.
>
> Inflation is rising with higher oil prices, more foreclosures both
> personal and business, higher unemployment due to the closings of
> 1000's of car dealerships, cut backs in spending by consumers in
> fear of losing their jobs and more that hasn't occurred yet.
>
> This reminds me of the article I read last night at "The Onion" website
> in the business section. "Nation Ready To Be Lied To About Economy
> Again" it goes on to say that citizens are tired of hearing the truth,
> it's just too depressing.
Regulating derivatives is critical and essential. The ONLY reason AIG had to be rescued and given $Billions of taxpayer money was their mess of stupid CDS's, for which they retained no funds to back them.
As of the beginning of 2008, the world was awash in over 1,000 $Billion - yes, that's a $Trillion - face value of derivatives, most of which had no legal backing requirement. The current financial crisis was caused by the failure of only a small portion of them. We are still at significant risk from the rest.
As for "Cetinist" optimism, the truth is that there's money to be made in EVERY market, all the time. I made money last year (barely) and I'm well ahead this year. That says exactly nothing about the underlying economy which is still swirling in the bowl.
Some people made fortunes in the Great Depression in the markets. That doesn't mean the economy is good. It means they are good traders.
On May 15 08:30 AM doubleguns wrote:
> If this keeps up they had better get used to depression.
> <snip>
I'm already depressed. Are you implying that most aren't? :-)
HardToLove
Much more cost effective. Hic...
On May 15 08:42 AM HardToLove wrote:
>
On May 15 07:44 AM doubleguns wrote:
>"Cetin read the article today before you start your "its a wonderful
> world" script today.
>
> Insurers getting tarp money, EU GDP falling, Govt taking over BoA
> board, BoA stock dumped (for a loss), Jobless claims up, Prices up,
> Mortgages rates up, short bond rates are still going down and the
> economists still have thier heads in the clouds."
.........................
In addition, insurers getting TARP funds is one more sign of problems not yet admitted to. The banks bad assets show more quickly due to the nature of the business, which is precisely why insurers bad assets can be hidden for so long. They could be holding bonds riddled with defaulting debt, mortgage, credit card, car etc ... , but as insurers pay-outs stretch years into the future, it could be a long time before they have to own up to the non-performing assets and the write-offs that go with that.
I also agree with doubleguns later comment: I need a drink!
Form a Socialist Govt. and redistribute the chips!!.
If after reading that anyone still believes The Bam is still trying to do it the old fashioned way--be sure and wash the sand out of your ears when you come up for air.
What amazes me is that the Market is happily churning along up there on the 3rd ring of Saturn like stocks will always be with us and represent ownership and voting rights in a Company?????!!.
Statist capitalism sounds best.
"... it really doesn't matter much whether the rulers call themselves capitalist or socialist, whether they plunder by concessions and taxation through crony firms or straight-out theft from nationalized industries....
Alvaro Vargas Llosa's five "principles of oppression" are
-corporatism
-state mercantilism
-privilege
-wealth transfer
-political law.
"...the ideological professions of the ruling caste are not very relevant to the real problems. The critical factor is basic liberty for the people, not the favorite economic flavor of the rulers' intellectuals."
On May 15 08:44 AM BlueOkie wrote:
> TARP is the right word. It is the gov't blanket that is beginning
> to cover most economic activity. Banks, Autos, Mortgages, Insurers,
> Credit Cards (coming), unions., schools, health care. Sounds like
> socialism to me. Don't forget Cap and Trade to cover all use of energy.
> Our gov't is like kids in the cookie jar with parents not at home.
Corprotocracy - Where Big Biz Owns/Influences The Government And Voting Is Just For Show.
On May 15 12:21 PM Sober Realist wrote:
> I think a new name or phrase needs to be coined to better describe
> the insidious corruption of our present system. "Socialism" suggests
> some sort of "equality for all individuals, with an egalitarian method
> of compensation." That doesn't really describe the wholesale transfer
> of wealth from America to the financial elite that is happening now.
> "Crony capitalsim" is more apt but still doesn't fully describe the
> massive expansion of government that is swallowing up the private
> sector economy. Fascism is too general of a term.
> Statist capitalism sounds best.
>
> "... it really doesn't matter much whether the rulers call themselves
> capitalist or socialist, whether they plunder by concessions and
> taxation through crony firms or straight-out theft from nationalized
> industries....
> Alvaro Vargas Llosa's five "principles of oppression" are
> -corporatism
> -state mercantilism
> -privilege
> -wealth transfer
> -political law.
> "...the ideological professions of the ruling caste are not very
> relevant to the real problems. The critical factor is basic liberty
> for the people, not the favorite economic flavor of the rulers' intellectuals."
>
seekingalpha.com/artic...
Absolute power corrupts absolutely.
On May 15 01:50 PM WAKEUP wrote:
> Demanding actual NAMES OF INDIVIDUALS is one of the best ways to
> eliminate the B.S. that comes from official entities. Few "experts"
> like having their NAME put on some faceless doctrine, or opinion.
> It's too embarrassing, when these positions turn out to be WRONG.
>
the system has had a new name for quite a few years, already..
" TRICKLE DOWN ECONOMICS "
On May 15 12:21 PM Sober Realist wrote:
> I think a new name or phrase needs to be coined to better describe
> the insidious corruption of our present system. "Socialism" suggests
> some sort of "equality for all individuals, with an egalitarian method
> of compensation." That doesn't really describe the wholesale transfer
> of wealth from America to the financial elite that is happening now.
> "Crony capitalsim" is more apt but still doesn't fully describe the
> massive expansion of government that is swallowing up the private
> sector economy. Fascism is too general of a term.
> Statist capitalism sounds best.
>
> "... it really doesn't matter much whether the rulers call themselves
> capitalist or socialist, whether they plunder by concessions and
> taxation through crony firms or straight-out theft from nationalized
> industries....
> Alvaro Vargas Llosa's five "principles of oppression" are
> -corporatism
> -state mercantilism
> -privilege
> -wealth transfer
> -political law.
> "...the ideological professions of the ruling caste are not very
> relevant to the real problems. The critical factor is basic liberty
> for the people, not the favorite economic flavor of the rulers' intellectuals."
>
On May 15 07:44 AM doubleguns wrote:
> Cetin read the article today before you start your "its a wonderful
> world" script today.
>
> Insurers getting tarp money, EU GDP falling, Govt taking over BoA
> board, BoA stock dumped (for a loss), Jobless claims up, Prices up,
> Mortgages rates up, short bond rates are still going down and the
> economists still have thier heads in the clouds.
"trickle down economics".-- another uselss euphemism created by those at the top that actually translates into "crumbs and scraps for the teeming masses."
www.marshall.org/exper...
emails
-----Original Message-----
From: Cargill Hall [mailto:overflight@att...
Sent: Friday, May 15, 2009 10:49 AM
To: Collins, Bob; Alsip, John & Catherine; Payne, Bill; Greenlee, Gene; Lyons, Doug; Rosenberg, Tom
Cc: Hallion, Richard; Julie Charlip; Fair, Fred
Subject: 50th Anniversaries
Gentlemen:
Our 50th college reunion this month prompted me to reflect on others just past and impending. One of them, the launching of Sputnik I and with it the "Space Age," occurred while we were at Whitman. John Corr and I had just returned from a semester at the Escola Brasileira de Administracao Publica in Rio de Janeiro. I vividly recall standing outside the Green Lantern (affectionately known as the "Green Latrine") one evening just after the launch, watching in amazement the Soviet carrier rocket periodically twinkle in the sunset rays as it tumbled in space, end over end. Perhaps it had an affect on my choice of vocations--who knows? In 2007 Quest magazine asked me to write a 50th summary of the event; it is enclosed for your amusement.
The next noteworthy 50th: the shootdown of the CIA U-2 spy airplane on 1 May 1960, deep inside the USSR. The current shenanigans in Washington DC provoked me to consider the political parallels.
President Dwight Eisenhower authorized peacetime aerial overflights of "denied territory" on or shortly after 15 March 1954, when he approved NSC Directive 5412 "on covert operations." The directive defined them as "all activites conducted pursuant to this directive which are so planned and executed that any U.S. Government responsibility for them is not evident to unauthorized persons and that if uncovered the U.S. Government can plausibly disclaim any responsibility for them." It also established a committee to vet these operations, composed of representatives of the secretaries of state and defense, and the Director of Central Intelligence (DCI). As events transpired, the 5412 Committee would consist of the DCI, the undersecretary of state, deputy secretary of defense, and be chaired by the president's Special Assistant for National Security Affairs-an arrangement made formal in 1955 with the issuance of NSC 5412/1 and 5412/2. To those with knowledge of the committee's existence, it became known as the 5412 Special Group, or simply, "the Special Group." The president approved or denied its recommendations.
The first overflight of the USSR followed on 21 March 1955 and they continued, using modified military airplanes, until Eisenhower terminated that program in December 1956. By then, the U-2 had come on line. Because the aerial intrusions violated international treaties to which the U.S. was a contracting party, these covert programs were closely held. Only a few in Congress and the Executive Branch were "witting" of them. Little is known of the SENSINT military overflight program because it never lost an airplane and the records were mostly destroyed. The CIA's U-2 program, however, which carried the cryptonym TALENT, ended rather more spectaculary in May 1960. Eisenhower at first offered a "plausible denial" (a weather research airplane over Turkey had strayed off course), a cover story that collapsed after the Soviets produced the pilot and charged him with espionage. The resulting international furor mightily embarrassed the administration, and it ended a Summit Conference almost before it began, with Soviet leaders demanding a personal apology from Eisenhower, one that would not be forthcoming. Shortly thereafter, the president announced publicly that the United States would not in future conduct clandestine aerial overflights of the Soviet Union, a pledge that he and his successors would keep.
Political parallels: If the U-2 incident closed a chapter on aerial overflights, it also prompted many in the media to ask why the president would "lie" to the American public in the interest of national security. And it reverberated in the presidential election in November when the Democrat challenger, John F. Kennedy, narrowly won the contest. On assuming office in January 1961, however, Kennedy did not release classified records involving these projects, and he did not authorize his Attorney General to determine whether his Republican predecessor and other administration officials responsible for the U.S.-sponsored aerial overflight policy should be officially sanctioned or possibly even prosecuted for clearly violating the terms of international conventions. Nor did leaders in a Democrat Congress clamor for Senate and House investigations of his policy, or for a "truth commission" in which former officials could be commanded to reveal just how and when that national policy had been forged. It was, after all, 1960-61-a different world, a different international threat, and, most assuredly, a different caliber of American political leaders.
We graduated together in significant times.
Carg
You don't graduate.
You are graduated by an institution.
PS Hall and I are totally different people. We have successfully avoided each other for more than 50 years. Until next week.
We are concerned that bombing of Iran nuclear electricity could possibly trigger WWIII AND may drive up the price of oil.
Both would be bad for us senior citizens.
So we continue to advocate peacefull settlement of these unforunate matters.
www.marshall.org/exper...
cryptome.org/
posted links to
Study on a Possible Israeli Strike on Iran’s Nuclear Development
Facilities
Abdullah Toukan, Senior Associate
Anthony H. Cordesman
Arleigh A. Burke Chair in Strategy
March 14, 2009
www.csis.org/media/csi...
with Harretz msm comments
www.haaretz.com/hasen/...
Iran, like the rest of us, needs additional electricity.
Bombing Iran may do bad things to our investments and drive up the price of gas and diesel? And maybe even start WWIII?
Here is the REAL PROBLEM.
Thu Oct 02 01:00:00 CDT 2008 A new study released this week highlights what experts have been saying for years: the U.S. faces significant risk of power brownouts and blackouts as early as next summer that may cost tens of billions of dollars and threaten lives.
The study, "Lights Out In 2009?" warns that the U.S. "faces potentially crippling electricity brownouts and blackouts beginning in the summer of 2009, which may cost tens of billions of dollars and threaten lives." ...
www.utilityproducts.co...
----- Original Message -----
From: bpayne37@comcast.net
To: bridges@whitman.edu
Cc: "John/Catherine Alsip" <jkalsip@gmail.com&... "William Batie" <William.Batie@morg... "Bob Collins" <bcuw@wbhsi.net>, "Melvin Davidson" <melnbarbara@comcas... "brian dohe" <dohe@whitman.edu>, "Fred Fair" <fredfair@taosnet.c... "Brad M Gravelle" <brad.m.gravelle@sm... "Cargill Hall" <overflight@att.net... "art morales" , "Ron Short (RBC Wealth Mgmt)" <Ron.Short@rbc.com&... "John Sobolewski" <nwminerals@hotmail... "Robert & Susan Wayland" <sbwayland@comcast.... "David Woodward" <dawood01@earthlink...
Sent: Saturday, May 16, 2009 4:07:38 PM GMT -08:00 Tijuana / Baja California
Subject: haaretz comment
seekingalpha.com/artic...
I look forward to hear next week about liberal arts solution to future electricity supply problems.
Fun read.
home.comcast.net/~bpayne37/whitman59/w...
:-)