Weekly Market Notes: Weak Durable Goods Orders

Includes: BAC, CPKI, DB, JPM, MS, UBS
by: Ned Brines, CFA

Equity futures are down this morning on the weakest durable goods order report since QE2 began. Durable goods for April fell by 3.6% vs. an expected decline of 2% and March's 4.4% increase. Aircraft orders were weak as were autos, which was partially impacted by component shortages caused by the earthquake in Japan. Boeing said they received orders for two planes in April vs. 98 in March. Orders fell 1.5% ex-transportation equipment vs. expectations of a 0.5% decline.

California Pizza Kitchen (NASDAQ:CPKI) agreed to be purchased by Golden Gate Capital for $18.50 per share, a 10% increase over yesterday's close. The company had been shopping itself for about a year. Game maker Zynga is reportedly preparing to file an IPO by the end of the quarter. Zynga derives the bulk of its revenue from games designed for FaceBook, including the infamous FarmVille.

Chrysler repaid of $7.6 billion in loans from the U.S. Treasury and Export Development Canada. Fiat may now increase its stake in the automaker.

The administration has issued sanctions against Venezuelan state oil company PDVSA because it has sold gasoline to Iran. I'm not sure what the sanctions entail, but they don't create any limitations on the ability of PDVSA owned CITGO to operate in the US. The hypocrisy from this President never ceases to amaze me.

Amazingly, after all the issues in the banking sector over the past decade, the first fraud investigations in the mortgage securitization process have been announced. The AGs from FL, NY and CA are focusing on Goldman (NYSE:GS), Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS), JP Morgan (NYSE:JPM), UBS (NYSE:UBS) and Deutsche Bank (NYSE:DB). CA is the only state who has added Origination Fraud into their investigation, reportedly exploring the concept of Systematic Origination Fraud.

APAC markets were weak again last night on concerns about the Chinese economy. New data show the country is facing higher than expected inflation and an underlying economic slowdown. The ASX suffered the biggest loss, down 0.7%, while the Kuala Lumpur Composite was an outlier, rising 0.2%.

State and local government 2012 budgets anticipate cutbacks of 450K jobs. Fiscal year 2012 begins July 1.

At least 13 tornados hit the Midwest yesterday, causing billions in damage and at least a dozen deaths. This has been the 9th most deadly tornado season in the US since 1953, but the season is only half over. Nearly 500 people have been killed by storms this year. A spokesman for the National Center for Atmospheric Research said there is evidence supporting a rise in tornado activity in years like 2011, in which a La Nina condition begins to fade.

Congratulations to the USC Trojans and coach Peter Smith for capturing their third consecutive NCAA Men's Tennis title.