- Banks back to same old tricks. An analysis of data released by the New York Fed shows large banks are hiding their risk levels by temporarily lowering their debt just before reporting periods. A group of 18 banks - including MS, GS, JPM, BAC and C - lowered the debt used to fund trading ventures by an average of 42% at the end of each of the past five quarters, refilling their tanks in subsequent months. While not illegal, the practice gives investors a false impression of banks' leverage - one of the factors that led to the massive panic in 2008.
- Greece bankruptcy looms. Rates on 10-year Greek bonds spiked as high as 7.5% on Thursday, up from 6.5% just three days ago, delivering a clear message: Artfully worded communiqués aren't enough; to avoid bankruptcy, Greece needs an EU bailout, fast. At a press conference Thursday, ECB chief Trichet insisted the joint EU/IMF aid proposal is a "very, very serious commitment," but his assurances did little to calm nerves as investors continue to withdraw funds from Greek banks.
- Retail sales rocket higher. Sales at top retail chains rose a robust 9.1% in March, the largest monthly jump in at least 10 years, and far stronger than the +6.3% Street consensus. More than 90% of all retailers beat expectations, although executives cautioned that the March rise could foretell a weaker than usual April. Economists were upbeat, saying the data indicated consumer spending was accelerating. Department stores were the strongest performers, but discounters and teen apparel chains also exceeded projections. Strong performers included TGT, TJX, M, KSS, LTS and GPS. Abercrombie & Fitch (ANF) posted weaker-than-expected comps.
- iPad sales approach 500K. Apple (AAPL) has sold 450K iPads since its debut on Saturday, CEO Steve Jobs said Thursday, including more than 300K on launch day. Analysts expect sales of 1-2M units in Q2, and estimate 2010 sales of anywhere from 3M to 7M. Jobs said users have downloaded 600K digital books and 3.5M iPad apps so far. Apple also stepped up its rivalry with Google (GOOG) by revealing iAd, an in-house advertising platform that will power its gadgets. Jobs also unveiled a new version of the iPhone/iPod OS that will finally bring multitasking to the devices.
- Initial jobless claims jump. The number of U.S. workers filing for unemployment benefits shot higher, up 18K from a week ago to 460K, well above economist estimates of 435K - although the Dept. of Labor warned the data may contain statistical biases due to the Easter holiday. But the number of people still receiving benefits after an initial week of aid fell to the lowest level since Dec. 2008, and the insured unemployment rate dropped to 3.5%, the lowest since Jan. 2009.
- Panel pounds Prince, Rubin. Appearing before the Financial Crisis Inquiry Commission Thursday, former Citigroup (C) CEO Charles Prince apologized repeatedly for the billions of dollars investors lost as a result of soured investments. But former Chairman Robert Rubin downplayed his role in the crisis, and was met with anger and disbelief. "You were either pulling the levers or asleep at the switch," committee chair Philip Angelides told him. Bill Thomas, a former chairman of the House Ways and Means Committee, summed up the feelings of the millions who lost their savings and their homes: "To make the argument that somehow a simple apology still allows you to maintain a profile of income based upon what devastated everybody else doesn't fit the scale test," he said, "no matter how often you feel really, really sad about what happened."
- Goldman denies it would profit from Greece collapse. Goldman Sachs (GS) admitted the firm "has bought some credit protection" to hedge its exposure to the Greek debt crisis, but suggested that - contrary to reports - it would lose money if Greece's credit situation worsens. On Wednesday, Rochdale's Dick Bove hinted that Goldman could profit handsomely if bad turns to worse in Greece, sending shares up 2%.
- Yuan rise could come by June-Oct. China might increase interest rates as early as this month, but will probably not allow the yuan to rise until the June-Oct. period, senior government economist Zhu Baoliang said this morning. He added that another one-off revaluation was unlikely, but said the yuan peg could be shifted to a basket of currencies.
- Coal-maker bidding war heats up. Macarthur Coal spurned a $3.5B bid from Australian rival New Hope, saying it would continue to move forward with a plan to take over Gloucester Coal in alliance with Noble Group (OTC:NOBGF). Macarthur had already rejected an earlier $3.45B bid from New Hope, and a $3.3B bid from Peabody (BTU). Meanwhile, sources say Xstrata (OTC:XSRAF) has approached ArcelorMittal (MT) and POSCO about a possible joint bid; ArcelorMittal and POSCO control a combined 25% of Macarthur. Shareholders were scheduled to vote on the Gloucester deal on Monday, but Macarthur today pushed off the vote for a week to give investors more time to consider their options. Suitors are attracted by Macarthur's specialist pulverized or PCI coal, a cleaner input for steelmakers' blast furnaces.
- Tribune inks bankruptcy exit. Tribune Co. said Thursday it has agreed with creditors on a plan that would help it exit bankruptcy protection later this year. "Under the plan, the company would emerge from bankruptcy, significantly deleveraged, with its business units intact and with adequate liquidity for operating and capital needs," Tribune said. The agreement releases Sam Zell from all liability for the company's collapse following his $8.2B leveraged buyout in 2007, much to the consternation of junior bondholders who oppose the deal.
- MasterCard ventures into predictive shopping. MasterCard (MA) will Monday unveil a web shopping mall that it says can pinpoint with uncanny accuracy what its cardholders are likely to purchase.
Overseas markets were broadly higher Friday. U.S. futures indicate modest gains for stocks and Treasurys.
- Asia: Nikkei +0.3% to 11204. Hang Seng +1.6% to 22209. Shanghai +0.8% to 3145. BSE +1.2% to 17933.
- Europe at midday: London +0.8% to 5756. CAC +1.2% to 4025. Frankfurt +0.9% to 6225.
- Futures at 7:00: Dow +0.25% to 10911. S&P +0.25% to 1186.75. Nasdaq +0.23%.
Crude +0.9% to $86.12. Gold +0.5% to $1158.
30-year Tsy +0.24% to 115-22. 10-year +0.09%.
Euro +0.36% vs. dollar. Yen +0.2%. Pound +0.65%.
Friday's Economic Calendar
- 10:00 Wholesale Trade
Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.