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Monthly Archives: May 2011

Utah Legalizes Gold and Silver Coins as Currency

“SALT LAKE CITY — Utah legislators want to see the dollar regain its former glory, back to the days when one could literally bank on it being “as good as gold.”

To make that point, they’ve turned it around, and made gold as good as cash. Utah became the first state in the country this month to legalize gold and silver coins as currency. The law also will exempt the sale of the coins from state capital gains taxes.

Craig Franco hopes to cash in on it with his Utah Gold and Silver Depository, and he thinks others will soon follow.

The idea is simple: Store your gold and silver coins in a vault, and Franco issues a debit-like card to make purchases backed by your holdings.

He plans to open for business June 1, likely the first of its kind in the country.

“Because we’re dealing with something so forward thinking, I expect a wait-and-see attitude,” Franco said. “Once the depository is executed and transactions can occur, then I think people will move into the marketplace.”

The idea was spawned by Republican state Rep. Brad Galvez, who sponsored the bill largely to serve as a protest against Federal Reserve monetary policy. Galvez says Americans are losing faith in the dollar. If you’re mad about government debt, ditch the cash. Spend your gold and silver, he says.”

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Another Chinese Scam: LFT

The CFO and auditor resigned after Citron Research alleged the company of fraud. To make matters worse, the SEC has begun an accounting audit.

Note: Goldman was a big advocate of the shares.

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Discrepancy in the Numbers; Another Look at Taxes

“The average American pays about 12% of his or her income to federal income tax. Thanks to statistics compiled by US Uncut Chicago, a group that advocates boycotting U.S. corporations that avoid paying taxes in the United States, we now know the effective tax rate paid by 100 top companies for the years 2008-2010.

Of the top 100, 39 paid a lower tax rate than the average American. Of these, 11 actually ended up with refunds or credits. The lucky companies were Tesoro, Sears, Prudential, Sunoco, Dow Chemical, General Electric, Verizon, Wells Fargo, DuPont, Boeing and Honeywell.”

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Chicago National Fed Survey Hits -45: Economy Enters Below Average Growth

“Another diffusion contraction confirms the stagflation thesis is playing out just as expected. “Led by declines in production-related indicators, the Chicago Fed National Activity Index fell to –0.45 in April from +0.32 in March. April marked the lowest reading of the index since August 2010. Three of the four broad categories of indicators that make up the index deteriorated from March, but two of those three categories made positive contributions to the index in April.” And more truthiness courtesy of a tumbling Japanese economy and European contraction: “The index’s three-month moving average, CFNAI-MA3, declined to –0.12 in April from +0.08 in March, turning negative for the first time since December 2010. April’s CFNAI-MA3 suggests that growth in national economic activity was somewhat below its historical trend.”

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Consumers Get a Break as Prices Fall to $3.91 per Gallon Nationwide

“The average price at the tank for a gallon of gasoline in the United States fell in the past two weeks, and should drop more as floods in the southeast curb demand and refiners and gas stations feel pressure to pass lower costs on to drivers, an industry analyst said on Sunday.

The national average price for self-serve, regular unleaded gas fell 9.24 cents on May 20 to $3.9074 per gallon, compared to $3.9998 on May 6, according to a nationwide survey of some 2,500 gas stations in larger metropolitan areas in the continental United States.

“We may well see a drop of another dime if crude oil prices allow,” Trilby Lundberg, the survey’s editor, told Reuters.”

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States Have Started Cutting Unemployment Benefits to Help Out Business

“Some of the states that have drained their unemployment insurance funds are cutting the number of weeks that a laid-off worker can count on those benefits. Legislators are trying to limit tax increases for businesses to replenish the pool and are hoping the federal government keeps stepping in when the economy slumps.

Michigan, Missouri and Arkansas recently reduced the maximum number of weeks that the jobless can get state unemployment benefits. Florida is on the verge of doing so. Unemployment in those states ranges from 7.8 percent in Arkansas to 11.1 percent in Florida.

The benefit cuts come as legislatures deal with the damage that the recession inflicted on state unemployment insurance programs. The sharp increase in the number of people who lost their jobs drained the reservoir of money dedicated to paying out benefits.”

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Campbell Soup EPS Up, But Sales are Slacking in Soup and Sauce Division

“NEW YORK (AP) — Campbell Soup Co. said Monday that its fiscal third quarter earnings rose 11 percent as sales increases in its snack, food service and international businesses offset a decline in its core U.S. soup, sauce and beverage division.

Its U.S. soup sales were hurt as it shifted away from heavy discounting in the first half of its fiscal year.

The earnings still beat Wall Street expectations. But its shares slipped 9 cents to $35.15 in pre-market trading.

The Camden, N.J. company said Monday that its net income rose to $187 million, or 57 cents per share, compared with $168 million, or 49 cents per share, a year earlier.

Revenue edged up to $1.81 billion from $1.80 billion a year ago.

Analysts expected earnings of 52 cents a share on revenue of $1.81 billion.

Sales in the company’s baking and snacking unit, which includes Pepperidge Farm products, rose 10 percent. Foodservice segment sales were up 5 percent. Sales of soup, sauces and beverages outside the U.S. rose 7 percent.

But sales in its U.S. soup, sauce and beverage unit fell 8 percent. The company blamed lower volume due in part to fewer promotions and higher prices that deterred some customers.”

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Upgrades and Downgrades This Morning

Upgrades

MOS – Mosaic upgraded by Stifel Nicolaus

CF – CF Industries upgraded to Overweight from Neutral at JP Morgan

AKS – AK Steel ticking higher; strength attributed to tier 1 firm upgrade

ATI – Allegheny Tech target raised to $85 from $78 at Stifel Nicolaus

UNH – UnitedHealth upgraded to Buy from Hold at Jefferies

SOLR – GT Solar: Forward estimates likely to rise given backlog; great acquisition target – Wunderlich

COT – Cott upgraded to Overweight from Neutral at JPMorgan

DNDN – Dendreon initiated with Buy at ISI Group

FICO – FICO upgraded to Hold at Auriga following mgmt’s raised guidance

LDK – LDK Solar downgraded to Hold at Auriga on financing uncertainty

LTD – Limited upgraded to Neutral from Sell at Goldman

TTEK – Tetra Tech initiated with a Outperform at Oppenheimer

MXIM – Maxim Integrated upgraded to Neutral from Sell at Goldman

BP – BP upgraded to Buy from Hold at Societe Generale

DIS – Walt Disney upgraded to Buy from Hold at Stifel Nicolaus

GAP – Gap upgraded to Hold from Sell at Deutsche Bank

TZOO – Travelzoo: Local deals re-accelerate in May – Benchmark

NTAP – NetApp: Auriga expects a strong quarter from NetApp Wednesday afternoon, but it appears most others do as well

Downgrades

MRVL – Marvell target lowered to $21 at FBR Capital; firm removes all RIMM revenues from their calendar 2012 and beyond financial forecast

BKE – Buckle downgraded to Sell from Neutral at Goldman

YGE – Yingli Green Energy: Priced for uncertainty

ONNN- ON Semiconductor downgraded to Neutral from Buy at Goldman

PCG -PG&E downgraded to Hold from Buy at Jefferies

ED – Con Edison ticking lower; weakness attributed to tier 1 firm downgrade

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Gapping Up and Down This Morning

Gapping Up

GIVN +1.1%, SPPI +1.6%,  CFSG +16.8%, SNTS +5.3%, AKS +1.9%, SQNS 12.9%

Gapping Down

LMAT -8.4%, BP -1.7%, BHP -3%, BBL -3%, ARMH -3.7%, ING -3.4%, STO -3.1%,NOK -2.8%, TOT -1.5%, CS -1.4%, RDS.A -2.7%, STO -2.7%, CCL -2.6%,  SLV -1%, MT -2.5%, E -2.5%, GTXI -2.3%, RYAAY -7.2%, GOLD -2.3%, RIO -2.2%, HBC -2.1%, DB -2.1%, IRE -4.5%, AIB -4.3%,

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Barton Biggs Buying Up The S&P on Analysts Calls for Higher Earnings

“Analysts are boosting U.S. earnings estimates by the most in a year, a sign to Barton Biggs and Michael Shaoul that stocks will weather the biggest drop in U.S. economic forecasts since 2009.

Standard & Poor’s 500 Index profits may reach $104.73 a share in the next 12 months as consumer demand pushes sales up 13 percent, according to data from about 9,000 analysts compiled by Bloomberg. The income estimate rose 2.8 percent in the four weeks ended May 2. Analysts are turning more optimistic as economists cut projections for 2011 U.S. gross domestic product growth to 2.7 percent from 3.2 percent in March, the data show.

Falling commodity prices and economic data that have trailed forecasts by the widest margin since August sent the S&P 500 down 2.2 percent since its high on April 29. Declines were twice as much in stocks that led last year’s rally, the data show. To Traxis Partners LP’s Biggs, Kevin Rendino of BlackRock Inc. and Marketfield Asset Management’s Shaoul, earnings growth will reverse the losses and extend the index’s two-year advance of 97 percent.”

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Oil Falls 3% on U.S. Growth and Greek Debt Concerns

Oil fell in New York amid concern that Europe’s sovereign debt situation may weaken fuel demand. The dollar rose to a nine-week high against the euro.

Futures slid as much as 3 percent after Spain’s governing Socialist party suffered its worst electoral defeat in more than 30 years and Standard & Poor’s said on May 20 it may lower Italy’s credit rating. The Dollar Index climbed to its highest in more than nine weeks as declining Asian stocks spurred demand for safer assets.

“External macro factors, especially the strength of the U.S. dollar and the negative start of the week in Asian equities, have weakened commodities,” said Eugen Weinberg, an analyst at Commerzbank AG. “The dollar is higher against the euro because of worries about Europe’s debt.”

Crude for July delivery lost as much as $2.99 to $97.11 a barrel in electronic trading on the New York Mercantile Exchange. It was at $97.24 at 10:42 a.m. London time.

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European Markets Fall Over Greek Debt Concerns

“European stocks dropped to a one- month low after Spain’s ruling party suffered its worst election defeat in 30 years andStandard & Poor’s warned it may downgrade Italy’s debt. U.S. index futures and Asian shares retreated.

Banco Santander SA (SAN), Spain’s largest bank, and Italy’s Mediobanca SpA led a selloff in financial shares, both falling more than 1 percent. Commerzbank AG (CBK) lost 3.7 percent after the German lender announced a 5.3 billion-euro ($7.4 billion) share sale. Airlines tumbled after Ryanair Holdings Plc (RYA) reported earnings and a volcanic eruption in Iceland threatened to disrupt trans-Atlantic flights.

The benchmark Stoxx Europe 600 Index dropped 1.4 percent to 275.79 at 12:46 p.m. in London, erasing its gain for the year. The gauge fell last week after Greek 10-year bond yields climbed to a record and Fitch Ratings cut Greece’s credit rating to B+, four notches below investment grade.”

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Asian Markets Fall on Euro Debt Problem Concerns

“Asian stocks dropped, with the regional benchmark index set for its biggest decline since March 15, as Fitch Ratings cut Greece’s credit rating and Standard & Poor’s said Italy’s rating was at risk, deepening concern over Europe’s sovereign debt crisis.

Esprit Holdings Ltd. (330), the Hong Kong-based clothier that counts Europe as its biggest market, dropped 4 percent. Canon Inc. (7751), the world’s largest manufacturer of cameras, lost 1 percent in Tokyo. Tokyo Electric Power Co., owner of the nuclear reactor crippled by the March earthquake, slumped 9 percent after posting a record loss. BHP Billiton Ltd. (BHP), the world’s largest mining company and Australia’s biggest oil and gas producer, declined 1.7 percent in Sydney.”

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Commerzbank Said To Offer $7.5 Billion in Dilution

Commerzbank AG (CBK) fell to the lowest price in more than two years in Frankfurt trading as Germany’s second-biggest bank said it plans to raise about 5.3 billion euros ($7.5 billion) selling new shares to help repay state aid.

Commerzbank will offer 2.44 billion new shares at 2.18 euros apiece, the Frankfurt-based lender said yesterday. That’s 45 percent below the stock’s closing price on May 20. Shareholders will be allowed to subscribe to 10 new shares for every 11 already held from May 24 to June 6, and the new shares are expected to trade on June 7. Commerzbank slid 5.2 percent to 3.75 euros at 9:15 a.m. local time, the lowest since March 2009.”

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The Socialists Lose in Spain; Austerity Threatened

“Spanish Prime Minister Jose Luis Rodriguez Zapatero’s Socialist party had its worst electoral setback in more than 30 years, prompting a shift in regional governments that risks reviving concern over public finances.

The opposition People’s Party won 38 percent of the vote in municipal voting yesterday, compared with 28 percent for the ruling Socialists, the Interior Ministry said. The Socialists lost control of Barcelona for the first time since 1979, and also ceded Seville. The central region of Castilla-La Mancha, held by the Socialists for three decades, fell to the PP, as did the Balearic Islands.”

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Aussie Dollar Falls on a Slowing European and Chinese PMI

“The Australian dollar fell against all but one of its 16 major counterparts as Asian stocks dropped after concerns increased that Europe’s debt crisis will worsen.

The so-called Aussie declined for a second day versus the greenback after a report signaled that manufacturing expanded at a slower pace this month in ChinaAustralia’s largest trading partner. New Zealand’s dollar retreated from the highest in more than two weeks before reports forecast to show European services and manufacturing growth slowed and U.S. new home sales stalled, signs that the global economy is losing momentum.

“There’s a risk-aversive mood in the market, spurred by uncertainty about the European debt crisis,” said Toshiya Yamauchi, a senior currency analyst in Tokyo at Ueda Harlow Ltd., which provides foreign-exchange margin-trading services. “Concerns over a slowdown in the global economic recovery are also leading selling of the Aussie and kiwi.”

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Sony Misses Earnings on Japan Earthquake

Sony Corp. (6758), Japan’s largest exporter of consumer electronics, forecast earnings below analysts’ estimates after the nation’s record earthquake crippled factories and hackers invaded its online entertainment services.

Operating income in the 12 months ending March 2012 will be similar to the 200 billion yen ($2.5 billion) last fiscal year, the Tokyo-based company said in a preliminary earnings statement today. The forecast missed the 254.7 billion yen average of nine analyst estimates compiled by Bloomberg. Sony forecast net income will turn positive after a 360 billion yen tax charge led to the biggest annual loss in 16 years.

The maker of Bravia televisions is struggling to improve earnings even after restarting plants that were disrupted byJapan’s 9-magnitude temblor and ensuing power shortages. The company is trying to fully resume its PlayStation Network and Qriocity online services after an attack by hackers compromised personal information from more than 100 million user accounts.”

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