An in depth view of the Spanish spring of discontent…..
Comments »Monthly Archives: May 2011
This Week’s Biggest Winners/Losers
No. Ticker 1-week Return
1 FTWR 92.50
2 SQNS 69.19
3 AATI 60.37
4 ZLC 39.04
5 KKD 37.34
6 PCRX 34.00
7 KBX 33.59
8 RPTP 33.08
9 REVU 32.22
10 TRGL 31.26
11 MSO 30.53
12 ACHN 30.52
13 CBMX 28.77
14 LMLP 28.14
15 CXZ 27.40
16 GLUU 27.11
17 RXII 25.51
18 FPIC 25.25
19 HRZ 24.72
20 HMPR 23.37
21 COIN 23.33
22 INHX 22.35
23 URRE 21.52
24 FURX 21.46
25 NOA 21.41
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No. Ticker 1-week Return
1 JGBO -51.86
2 CWS -36.70
3 MCOX -31.53
4 LTBR -28.60
5 CGA -27.38
6 SIGM -27.13
7 CHBT -26.32
8 FFHL -24.73
9 CNIT -23.85
10 KUTV -23.54
11 CEU -22.96
12 SPU -22.79
13 ROIAK -22.67
14 BORN -21.21
15 VELT -21.21
16 CBLI -20.62
17 WHRT -20.51
18 RODM -20.50
19 EDE -18.86
20 CVVT -18.67
21 CSUN -18.62
22 DEER -18.62
23 GMAN -18.53
24 XUE -18.11
25 INVE -17.76
Goldman Sachs Sells Its ‘Conviction Buys’
BOSTON (TheStreet) — A so-called Chinese Wall is supposed to exist between investment banks’ research and asset-management divisions, but recent calls, especially coming from subprime-securites proponent Goldman Sachs(GS_), warrant further scrutiny.
Goldman helped to catalyze the recent commodity sell-off as its researchers expected little upside when the economy hit a soft patch. Crude oil tumbled beneath $100 on that report. Then, two days ago, with few fundamental changes in the demand outlook, Goldman reversed its stance, advising clients to buy.
This flip-flopping from Wall Street’s most closely followed researcher is being perceived by some as client-fleecing since the bank is able to trade in proprietary accounts before it releases research and the markets react, as they often do to Goldman’s calls.
Similarly, many sell-side researchers award stocks “buy” or “overweight” ratings even as their internal asset-management units unload shares, presenting a conflict of interest and ethical dilemma. Goldman’s most famous front-runs to date were the Abacus transactions, through which the bank allegedly postured for high ratings for its mortgage-backed CDOs, sold them to clients and then shorted them.
News broke yesterday, or rather, a blogger pulled data yesterday to show that Goldman dumped 1,260,802 shares of Apple(AAPL_) during the first quarter, even as its research division rated the stock “buy” and maintained its lofty $470 target. Little due diligence is done in the journalism community on the interplay between asset-management and research units.
Comments »FLASH: Pending Home Sales Down 26.5% YOY or 11% in April
FLASH:Michigan Sentiment- Prior 72.4, Market Expects 72.4, Actual 74.3
Stephen Moore: Democrats Want 62 Percent Tax Rate
“If the Democrats get their way on taxes, the top combined tax rate would soar to 62 percent, warns economist Stephen Moore of The Wall Street Journal.
A combination of higher income tax rates, phasing out of deductions, payroll taxes, state taxes, new healthcare taxes, and a 3 percent “millionaire’s tax” would add up fast, Moore says.
Essentially, the Democrat’s plan is more Jimmy Carter than Bill Clinton, he writes in an Op Ed for the newspaper….”
Comments »Bill Gross: Deficit Solution Unlikely Soon, Putting Dollar at Risk
“Real action on the US deficit problem is unlikely until the 2012 presidential election, a stalemate that is helping to make the stock market a better bet for investors than Treasurys, Pimco’s Bill Gross told CNBC.
Inaction on fiscal policy combined with real negative interest rates on most government-issued debt has chased Pimco from the Treasurys market, with the firm underweight on US debt and holding only shorter-term notes.
Yet Gross called market chatter that Pimco, whose Total Return offering is the largest bond fund in the world, is lagging because it missed out on a Treasurys rally a “misconception” and insisted that the firm, which manages more than $1.2 trillion in assets, is outperforming its peers.”
Comments »Should Greece Leave the Euro ?
“So I’ve been forced to reach a different conclusion; perhaps it never will. Instead, the eurozone has entered a seeming state of permanent crisis. In desperation, European policymakers have adopted a very British characteristic – the hope that they can somehow just muddle through.
But though no one can know the exact timing of the endgame – that’s ultimately for the politicians to decide, so no time soon might be a reasonable bet – it’s now fairly clear what that endgame must be.
What’s presently being played out among the GIPS (Greece, Ireland, Portugal and Spain) is final proof that you cannot have a monetary union of such size among sovereign nations without compensating fiscal union. That simple underlying truth leaves the euro facing a choice between two equally unappetising outcomes.
Either the richer countries carry on bailing out the poorer ones more or less indefinitely, rather in the manner that Germany subsidises its formerly communist East, or membership of the euro has to be reconstituted on a smaller and more sustainable basis. There’s really nothing in between. The longer European policymakers remain in denial about this choice, the worse the situation will become.”
Comments »House Passes NDAA; No Congressional Permission Needed For War
“The House just passed the National Defense Authorization Act (NDAA), including a provision to authorize worldwide war, which has no expiration date and will allow this president — and any future president — to go to war anywhere in the world, at any time, without further congressional authorization. The new authorization wouldn’t even require the president to show any threat to the national security of the United States. The American military could become the world’s cop, and could be sent into harm’s way almost anywhere and everywhere around the globe.”
Comments »Steering Committee on BP Oil Spill: “defendants cavalierly failed to take even the minimum of safety measures to ensure the health and welfare of workers “
“NEW ORLEANS (CN) – A Thursday hearing focused on motions to dismiss claims in the Gulf of Mexico oil spill, including claims from cleanup workers who say they are sick from exposure to toxic chemicals.
Thousands of plaintiffs have filed hundreds of claims for personal injuries, property damages and other causes stemming from the April 20, 2010 explosion of BP’s Deepwater Horizon drill rig that killed 11 people and dumped millions of barrels of oil into the Gulf of Mexico.
Almost all of the claims have been consolidated in New Orleans Federal Court under U.S. District Judge Carl Barbier.
Because the issues vary widely, the lawsuits have been divided into pleading bundles. The Thursday hearing concerned bundles B1, B3 and D1.
BP, Transocean, Halliburton, Cameron International, Nalco – the manufacturer of the dispersant Corexit – and numerous other defendants filed motions over the past months challenging claims in the three pleading bundles.
Bundle B1 concerns economic damages, B3 health issues related to oil exposure and oil spill cleanup, and D1 is from plaintiffs challenging regulatory actions under the Clean Water Act, the Endangered Species Act, the Emergency Planning and Community Right to Know Act, the Comprehensive Environmental Restoration, Cleanup and Liability Act, and maritime and state laws.
A motion filed by the plaintiff steering committee states that B3 bundle plaintiffs “are individuals who worked in the Vessels of Opportunity (‘VoO’) program, other vessel captains and crew not involved in the VoO program who were nonetheless assisting in clean-up efforts and were exposed to the oil’s and/or chemical dispersants’ harmful effects, and beach clean-up workers and residents who live in close proximity to the shore. …
“The chemicals to which they were exposed – hydrocarbons from oil and in situ burning and chemical dispersant, including Corexit – can cause a wide array of health problems, such as respiratory ailments, disruption of the nervous system, impairment of liver and kidney function, and interference with the reproductive system.”
Upgrades and Downgrades This Morning
Upgrades
HNZ – HJ Heinz target raised to $58 at Stifel Nicolaus following earnings
NDAQ – NASDAQ reinstated with a Buy at Goldman
NBL – Noble Energy upgraded to Buy from Neutral at Sterne Agee
APC – Anadarko Petro upgraded to Buy from Neutral at Sterne Agee
BRCM – Broadcom added to Top Picks list at FBR Capital
DD – DuPont reinstated with Neutral at Goldman
JNJ – Johnson & Johnson: Hearing positive mention at Goldman
BWC – Babcock & Wilcox upgraded to Buy at KeyBanc Capital Mkts
CXO – Concho Resources upgraded to Buy at Wunderlich
LONG – eLong initiated with Hold at Mizuho
NSU – Nevsun Resources initiated with an Outperform at RBC Capital
SWKS – Skyworks: Oppenheimer is positive on acquisition of power mgm’t co AnalogicTech
BEN – Franklin Resources continues to benefit from bonds – Ticonderoga
Downgrades
CPWM – Cost Plus initiated with a Hold at BB&T
GPI – Group 1 Auto initiated with a Hold at ThinkEquity
STIR – STAG Industrial initiated with Neutral at UBS
AEO – American Eagle downgraded to Sell at Wall Street Strategies
WY – Weyerhaeuser downgraded to Sell from Hold at Deutsche Bank
CBST – Cubist Pharma initiated with a Neutral at Global Hunter Securities
ICE – IntercontinentalExchange reinstated with a Neutral at Goldman
Comments »Gapping Up and Down This Morning
Gapping Up
AATI +53.8%, AZN +0.8%,E +1.8%, RIG +1.6%, SD +1.5%, LDK + 2.4%, IBN +1.8%, RBS +1.8%, HMY +2.3%, AU +1.8%, GOLD +1.6%, AG +1.6%, CVS +3.8%, CDE +1.5%, SNY +1.7%, NVS +1.1%, SEAC +19.3%, RUE +15.4%, MRVL +8.9%, DRC +3.8%, LDK +2.4%, RBS +1.8%, HBHC +1.3%, BCS +1.3%, RIO+1.3%, GOLD +1.2%, HBC +1%, SLV +1%, VHC +2.2%, LXRX +4.9%, NBG +2.3%, STO +2.0%, PTR +1.8%,
Gapping Down
BCSI -14.6%, PRGN -4.3%, GMAN -25.9%, GLUU -2.5%, TTM -1.8%, SDRL -1.7%, OVTI -4.2%, BWP -3.7%,
Comments »In Play and On The Wires
PPI: Prior 0.1%, Market Expects 0.2%, Actual 0.4%
Personal Spending: Prior +0.6%, Market Expects +0.5%, Actual +0.4%…Personal Income +0.4%
JPM’s Thomas Lee: Economy About to Give a Upside Surprise
“An interesting point from JPmorgan’s Thomas Lee, who argues that the economic data has been so consistently disappointing, that a rebound in the Citi Economic Surprise Index (which measures the data against expectations) is practically guaranteed.
Again, it’s not that the economy will rebound, but the economy will rebound vs. expectations, which is actually what matters to markets.
We have found economic surprise indices (CESI, the Citi Economic Surprise Index in this case, CESIUSD index) to be a historically reliable signal for both Cyclical (vs. Defensive) relative performance as well as for S&P 500 absolute return. Economic momentum has been slowing for the past few months, reflecting the dual effects of both higher oil prices as well as disruptions stemming from Japan. Economic momentum, as defined by the Citigroup Economic Surprise Index (CESIUSD Index <<GO>>), is at an extreme low level of –57.9. This index is mean reverting, however, suggesting we are likely to see a rebound in economic surprise soon….”
Comments »China To Export Inflation To The Global Economy
“China is about the export inflation to the rest of the world in a process that will resemble the fall of three dominos, one of which is already fallen, according to Societe Generale.
In a massive report titled “The China Domino has Fallen!” Soc Gen analysts outline the three dominos of the Chinese inflation export scheme, and their current progress.
- Domestic inflation: China switch to a consumer driven economy means more domestic demand. Supply remains constant, so prices rise. This is already happening.
- China exports inflation: “This dynamic seems as inevitable as gravity itself.” Chinese demand for oil and steel has pushed prices up in those markets. Now it is effecting commodities like cotton and food products. That’s being passed on to developed markets like the U.S., and it will really hit home in 2012. This is in the process of happening.
- China demand shock: The country’s long-term economic rebalancing results in an permanent increase in global demand. Supply is sticky, and it will take time for it to catch up, thus limiting the world’s ability to cope with this rise in demand. This is starting to happen.
If this didn’t sound alarming, their conclusion on how this resembles the reverse of China’s entry into the WTO should.
From Societe Generale:….”
Comments »Ebay and Paypal Sue Google
“NEW YORK (Reuters) – EBay and its online payment unit, PayPal Inc, on Thursday sued Google Inc and two executives for stealing trade secrets related to mobile payment systems.
The two executives, Osama Bedier and Stephanie Tilenius, were formerly with PayPal and led the launch on Thursday of Google’s own mobile payment system in partnership with MasterCard, Citigroup and phone company Sprint.
The suit highlights the growing battle by a wide range of companies from traditional finance to Silicon Valley trying to take a major stake in what has been described as a $1 trillion opportunity in mobile payments. The mobile phone is seen as the digital personal wallet of the future.
The eBay suit said Bedier worked for nine years at PayPal, most recently serving as vice president of platform, mobile and new ventures. He joined Google on January 24 this year.
Tilenius was at eBay from 2001 to October 2009 and served as a consultant to the company until March 2010. The suit says Tilenius joined Google in February 2010 as vice president of e-commerce.
Bedier is accused in the suit of having “misappropriated PayPal trade secrets by disclosing them within Google and to major retailers.”
The suit accused Tilenius of recruiting Bedier, thereby breaking a contractual agreement with eBay. It also claims Bedier attempted to recruit former colleagues still at PayPal.
Ebay said PayPal and Google worked closely together for three years until this year on developing a commercial deal where PayPal would serve as a payment option for mobile application purchases on Google’s Android phones.”
Comments »Caroline Baum: Bond Yields Say No Recession for U.S.
“Green shoots are proliferating in gardens across America, but for some forecasters it already looks like the end of summer. A few are even hinting at recession by year-end. That’s highly unlikely.
While black swans have gained a new cachet following the prices-can’t-fall-nationwide housing bust and the financial meltdown it triggered, the most important leading indicator, the yield curve, is saying there will be no recession anytime soon.
With the Federal Reserve’s benchmark rate at zero to 0.25 percent and the 10-year Treasury note yielding 3.06 percent, the spread between the two interest rates is among the widest in history. It’s the reverse configuration, an inverted yield curve with short rates above long rates, that augurs recession.
The spread — or the “term structure of interest rates,” as it’s known in academic circles — isn’t some mystical talisman with omniscient powers. It derives its prognosticating ability from the simple fact that one rate is artificially pegged by the central bank while the other is determined by the market. Their relationship encapsulates the stance of monetary policy.
When the yield curve is steep, as it is now, it’s an inducement for banks to expand their balance sheets — borrow short, lend long — and increase the money supply. That bank credit isn’t growing now owes more to the hangover from a period of excess leverage and new-found religion on lending standards than any restrictive policy on the part of the Fed.
In a similar situation in the early 1990s, following another real-estate-driven banking crisis, it took years for financial institutions to start lending again.”
Comments »Japan May Have Ended 2 Years of Deflation
“Japan’s policy makers, striving for more than two years to end deflation, refrained from calling a victory after prices rose in April, with an economic recession damping the nation’s outlook.
Consumer prices excluding fresh food rose an annual 0.6 percent, the first gain since 2008, the statistics bureau said. Economy MinisterKaoru Yosano indicated today’s data don’t signal sustained gains. Japan’s challenges were highlighted by Fitch Ratings cutting its sovereign-rating outlook, citing the risk of rising debt on post-earthquake reconstruction.
The Bank of Japan is poised to keep its monetary stimulus, contrasting with counterparts from China to India that are tightening policy to stem inflation. Prices climbed in Japan after global energy and food costs rose and retailers suffered product shortages in the aftermath of a record earthquake and tsunami that caused the economy to shrink in the first quarter.”
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