Pensions and Health Care Programs Underfunded by $1.2 Trillion

“Just as America is finally showing signs of digging out of the financial meltdown and the Great Recession of 2008, there are already warning bells being sounded for the next possible scare: government pension programs.

Earlier this week, the Pew Center on the States issued the results of its “fiscal stress test” of the 50 state pension programs, and the results are troubling to say the least.

All told, the Pew center estimates that government pension funds and health care programs are underfunded by more than $1.2 trillion today, a clear sign that something must be done now to avoid a great deal of misery down the road.

Though the Pew study looked at pension funds during 2008 and 2009, the depth of the Great Recession, the results should serve as a wake-up call to political leaders across the nation, including here in theCommonwealth of Virginia.”

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DETROIT (AP) — Chrysler has turned its first profit since leaving bankruptcy two years ago.

The company reported first-quarter net income of $116 million and revenue of $13.1 billion on Monday. The profit is a milestone in Chrysler’s long road back to health after its 2009 bankruptcy. It last reported a profit in 2007.

Several trends put Chrysler Group LLC back in the black. Its sales rose 18 percent worldwide in the first three months of the year as the economy improved and buyers responded to a fresh lineup of new cars and trucks.

“Chrysler Group’s improved sales and financial performance in the first quarter show that our rejuvenated product lineup is gaining momentum in the marketplace and resonating with customers,” Chrysler CEO Sergio Marchionne said in a statement.

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Another version w/ more info

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Prices paid 85.5 vs consensus of 82.5 (ISM)

Construction Spending: Prior -1.4%, Mkt Expects 0.0%, Actual +1.4%

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“………A bill sponsored by Assemblyman Bob Blumenfield (Democrat, Los Angeles) — the Foreclosure Mitigation Fee (AB 935), which is currently going through legislative hearings – would require banks to pay their share of foreclosure costs. Backed by a broad coalition of consumer, community and labor groups, the bill would impose a $20,000 fine on banks for each foreclosure.

The $12 billion revenue over next two years would go entirely to local communities in order offset the multiple costs borne by our neighborhoods because of foreclosures and shared between public safety, public education, local governments, redevelopment activities and small businesses…..”

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“Central banks that were net sellers of gold a decade ago are buying the precious metal to reduce their reliance on the dollar as a reserve currency, signaling demand that may extend a record rally in prices.

As developing countries accelerate purchases, gold may reach $2,000 an ounce this year, compared with a record of $1,569.80 today in New York, said Robert McEwen, the chief executive officer of producer U.S. Gold Corp. Euro Pacific Capital’s Michael Pento, who correctly predicted gold’s highs for the past two years, forecasts a 2011 high of $1,600.

Prices reached a record 15 times this month on demand from investors seeking an alternative to the dollar after the currency slumped to the lowest since 2009, U.S. debt widened, and the Federal Reserve signaled April 27 that borrowing costs will remain near zero percent for an extended period. The economy in China, the biggest foreign holder of U.S. Treasuries, grew 9.7 percent in the first quarter.”

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“In our last episode (here) we noted how China’s steps to tighten liquidity had begun to weigh on its equities markets – and most notably the energy and materials sectors.

The question is whether the recent stalling in the copper price is reflective of this same effect:”

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“Robert Shiller of Yale and Jeremy Seigel of Wharton were recently interviewed by the WSJ regarding the current value in the markets. Shiller has been quite vocal about the market being historically expensive. His 10 year CAPE is widely followed and current levels have tended to be consistent with a market at risk of decline. Seigel, on the other hand, rejects Shiller’s backward looking indicator and instead prefers to look at forward earnings. By this metric, Seigel believes the market remains inexpensive.”

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Results: Funds from operations (FFO) rose to $22.3 million or 27 cents per share from $20.6 million or 28 cents per share a year earlier.

Revenue: Rose to $94.4 million YoY.

Actual vs. Wall St. Expectations: Estimates ranged from 26 cents per share to 30 cents per share with a mean of 28 cents/share for CLP .

Quoting Management: “Strong new and renewal leasing, combined with solid occupancy and lower operating expenses, led to a 5.7 percent increase in same-property net operating income in the first quarter,” stated Thomas H. Lowder, Chairman and Chief Executive Officer. “In addition to the improved core multifamily operating results, the renewal phase of our business is gaining momentum as we acquired three apartment communities for a total of $93 million in the quarter, began construction on another new apartment community and completed our latest $100 million at-the-market equity offering program.”

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Prayers to the families hurt by 911…

Justice has been served….

Our job is not done…we must double our efforts to fight terrorists around the world….

Increase pressure on Al-Qaeda and the Taliban

Bin Ladens death comes at a time of peaceful movements…

We will strengthen our prospects of supporting peaceful demonstrations…

America rises to the challenge and gets the job done….

American spirit is powerful and will continue to prevail….

This is a day where Americans and people all over the world move forward with continued vigilance….

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$0.22 payable June 1, 2011 to holders of AWK stock as of March 18.

Full disclosure here.

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Dollar also strong this morning….

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Let them try….

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Palestinian Prime Minister Ismail Haniyeh of Hamas said killing Osama Bin Laden was “the continuation of the American oppression and shedding of blood of Muslims Arabs.”

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Arch coal is paying $14.60, all cash, for ICO.

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Upgrades

PCLN – Priceline.com target raised to $660 at The Benchmark Company

SODA – SodaStream: Raising estimates to reflect fundamentals and a softer dollar – Stifel Nicolaus

SANM – Sanmina-SCI upgraded to Buy at Argus

AA – Alcoa upgraded to Buy from Neutral at Goldman

CLF – Cliffs Natural Resources: Growth stock at value – FBR Capital Markets

NWL – Newell Rubbermaid target raised to $24 from $22 at RBC Capital Mkts

NFLX – Netflix upgraded to Buy from Hold at Citigroup

OMN – Omnova Solutions upgraded to Buy from Hold at Jefferies

EXEL – Exelixis initiated with a Neutral at Goldman

BHI – Baker Hughes target raised to $95 from $81 at Dahlman Rose

FLIR – FLIR Systems target raised to $42 at Needham

LPNT – Lifepoint Hospitals upgraded to Strong Buy from Market Perform at Raymond James

OXY – Occidental Petro target raised to $125 from $105 at Oppenheimer

TZOO – Travelzoo: April Local Deals -11%; despite decline, high valuation, volatile stock, and insider share sale, remain positive longer term – Wedbush

JDSU – JDS Uniphase and Finisar (FNSR) initiated with Outperforms at Pacific Crest

FNSR – JDS Uniphase and Finisar (FNSR) initiated with Outperforms at Pacific Crest

BP – Stock remains undervalued despite weak 1Q results

Downgrades

WFMI – Whole Foods downgraded to Hold from Buy at Jefferies

AKAM – Akamai Tech target lowered to $45 at Collins Stewart

LZ – Lubrizol downgraded to Hold from Buy at Jefferies

AMAT – Applied Materials downgraded to Neutral from Overweight at JP Morgan

JASO – JA Solar downgraded to Hold at Needham

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Gapping Up

TIVO +25.4%, NFLX +2.7%, CAT + 2.2%, VLCM +23%, AA+ 1.8%, SNE +1.1%, SPPI +22.2%, DMED +5.2%, CEPH +3.9%, DMED + 8.7%,  JBLU +6%, JRCC +3.3%, PCX +4%, DAL +3.6%, LYB +5.6%, CPO +2.7%, JKS +0.9%, AMR +3.1%, LUV +2.1%, THC +3.2%, RCL +2.7%, SPPI + 16.1%, VALE +2.5%, CAT +2.2%, VFC+1.6%, GE +1.4%

Gapping Down

EXK -5.8%, SLW -5.7%, YRCW -14.9%,  SSRI -6.4%, SLV -5.1%, PAAS -3.1%.

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In Play

On the Wires

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“Current market conditions mimic those seen in four of the biggest post-war market declines in U.S. history, according to John Hussman.

Hussman considers this “overvalued, overbought, overbullish, rising-yields syndrome” market similar to those of 6 others in recent history, and more “extreme” than any of those moments.

In previous instances where markets fit Hussman’s criteria, this is what occurred, according to Hussman:….”

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