Factory orders: Prior 3%, Market Expects -2.5%, Actual -4%
ISM: Prior 54.4, Market expects 54, Actual 53.1
Monthly Archives: May 2013
A Whole New Meaning to Float Your Boat
“When Oklahoma energy billionaire George Kaiser opened the Northeast Gateway liquid natural gas terminal in 2008, the floating depot’s first delivery was shipped on the Excellence, a 909-foot supertanker that holds 138,000 cubic meters of LNG — enough gas to meet more than 4 percent of daily U.S. demand.
The Excellence is owned by the George Kaiser Family Foundation, a charitable organization that also owned a 36 percent stake in Solyndra LLC, the Fremont, California-based solar system maker that went bankrupt in 2011 after receiving a $535 million U.S. Energy Department loan.
The nonprofit organization paid $110 million for the tanker in 2003. It later gave control of the vessel to Woodlands, Texas-based Excelerate Energy LP, a for-profit gas delivery company Kaiser owns with publicly traded German electric utility RWE AG, according to RWE’s 2012 annual report.
“It is an excellent investment,” Frederic Dorwart, a trustee of the foundation and longtime attorney for Kaiser’s various banking and energy companies, said in a telephone interview. “It pays out this year and we’ll still own the vessel.”
The Excellence is also an example of how federal laws and U.S. Internal Revenue Service regulations forbid forms of self- dealing in one kind of tax-exempt organization while creating loophopes that allow them in another.
‘Anything Goes’….”
Comments »Rail Traffic Continues to Slump
“April rail trends finished with a whimper as intermodal rail traffic came in at 1.6% on a year over year basis. This continues a series of weakening data points as the Q2 period begins. After a very healthy 3 month average reading of 5.3% in Q1, the second quarter is off to a very sluggish start with a 0.38% average reading. The most recent reading brings the 12 week trailing average to 3.54% which is the weakest reading since January.
Here’s more from AAR…”
Comments »Upgrades and Downgrades This Morning
Upgrades – ALL, AUXL, BEAM, BZH, BDBD, CHEF, CARB, CEO, SCOR, CBST, MMP, WNR,
Downgrades – AU, NLY, BBBY, HFC, LULU, MBI, MELI, PETM, SYY, VLO, VRSK
Comments »Gapping Up and Down This Morning
In Play and On the Wires
Death of a Salesman
“Entrepreneurs start businesses that create lots of jobs and inject innovation into the US economy. Start-up America is our difference maker. Our edge.
But something seems to be going wrong. In another great note, “Where have all of the entrepreneurs gone?,” JPMorgan economist Mike Feroli highlights some disturbing trends with our entrepreneurial culture.
1. Net job growth is driven by new businesses. Existing establishments tend to shed jobs. But according to the Labor Department’s new Business Employment Dynamics report, “the trend has clearly shifted. In 12Q3 opening establishments added 1.27 million jobs. In the last cycle this figure averaged closer to 1.5 million jobs per quarter, and in the 1990s the figure averaged 1.75 million per quarter.” Down, down, down.
2. Feroli notes that employment “births” — a subset of openings not including reopenings of seasonal businesses — are also weak. Employment births in 12Q3 as a percent of all employment held at 0.7% in 12Q3 for the fourteenth consecutive quarter. In contrast, this figure stood between 1.1% and 1.3% during the 1990s.
And some charts highlight the problem…”
Comments »$LNKD Posts Outstanding Numbers, Stock Crushed for Poor Guidance
“SAN FRANCISCO (AP) — LinkedIn’s rapidly rising stock got demoted late Thursday after the online professional networking service released a forecast calling for its earnings growth to slow later this year as the company hires more workers, invests in data centers and tweaks the way that it shows online ads.
The predicted deceleration overshadowed another stellar performance during the first three months of the year. As has been the case in every reporting period since LinkedIn Corp. went public two years ago, both the company’s first-quarter earnings and revenue topped the analyst estimates that steer Wall Street expectations.
But management’s projections for both the current quarter ending in June and the full year came in below analyst projections, rattling investors who have become accustomed to LinkedIn delivering nothing but pleasant surprises.
The letdown dampened the feverish interest in LinkedIn’s stock, which surpassed $200 for the first time Thursday. After closing at $201.67, LinkedIn’s shares tumbled $20.45, or more than 10 percent, to $181.22 in extended trading.
Even if the sell-off carries through into Friday’s regular trading session, LinkedIn’s stock still will have more than quadrupled from its initial public offering price of $45. As of Thursday’s close, the shares had surged by 76 percent so far this year compared to a 12 percent gain for the Standard & Poor’s 500 index.
LinkedIn has thrived by establishing itself as the go-to place for employers to find talented workers and for people to get job tips and other advice to manage their careers. It doesn’t cost anything for people to set up a professional profile on the site. The Mountain View, Calif., company makes most of its money by charging employers and headhunters for analytical tools and additional access to LinkedIn profiles and the site, such as the ability to send messages to users.
The service now has 225 million members, up from 202 million members at the end of last year.
LinkedIn is now adding more content, giving its audience more reasons to return to its website more frequently and to stay for longer periods. The company hopes that will lead to more advertising to supplement its revenue. As part of that process, LinkedIn plans to place more ads within the stream of the personal updates appearing in the middle of its members’ individual pages rather displaying them on the sides….”
Comments »A New Rule Change Puts Light on the Death of Retirement Plans
“A little known rule change that allows companies to contribute fewer dollars to pension funds is signaling just how meaningless the retirement vehicle has become.
“This proves that pensions are pretty much dead,” said Greg McBride, chief economist at Bankrate.com. “The change is just another charade to mask the underfunding of pensions and increases the odds of having less money for retirement.”
“It’s not necessarily the immediate end of pensions but it’s not good for them and it’s certainly a bad sign,” McBride added.
The pension change was part of a transportation bill—called Moving Ahead for Progress in the 21st Century or MAP-21—passed by Congress last June. The change became mandatory this year.
In essence, MAP-21 lets employers put less money in their pension plans by allowing them to value their liabilities— what they have to pay out to pensioners—using a 25-year average of interest rates instead of current rates.
When interest rates are low, like now, pension plan liabilities are estimated to be higher and companies have to put in more money. When rates are higher, the liabilities are figured to be smaller and employers’ contributions are less. The 25-year average is expected to be at least 2-3 percentage points higher than rates today.
The reduced amount that companies will be putting in has to be figured out by each firm based on the higher rates. But Madison Pension Services, a consulting firm, has reported that some minimum pension contributions in 2012 were reduced by 33 percent.
Employers are not required to offer pension plans, but the government encourages them to do so by offering tax breaks….”
Old Man Buffet Opines on the Fed, IBM, and His First Tweet
“Billionaire investor Warren Buffett told CNBC that if the Federal Reserve were to increase its massive bond-buying program that would be “pretty extraordinary.”
In an interview that aired on “Squawk Box” Friday, the Berkshire Hathawaychairman and CEO said, “Basically [the Fed] is buying the debt we’re creating and to go beyond that is an awfully big number.”
After their latest meeting, Fed policymakers said Wednesday that interest rates will remain at historically low levels, while the central bank will not alter its $85 billion a month asset-purchasing program known as quantitative easing.
There was one notable change in the language used in the statement from the Fed—a declaration that it would increase or decrease the pace of its asset purchases depending on economic conditions.
Buffett said he thought that Fed Chairman Ben Bernanke “feels he needs a little help from elsewhere.” In the past, Bernanke has urged Washington to reach a deal to reduce the nation’s debt burden.
“But the economy is improving,” Buffett stressed, “not [at] a very rapid clip, but this country has done well since 2008, certainly compared to much of the world.”…”
Comments »$JPM Found to Use “Manipulative Schemes” To Produce Profits at Money Losing Power Plants
$VZ Says They Will Not Pay Up for $VOD
“LONDON (Reuters) – Verizon Communications would like to buy out Vodafone from their Wirelessjoint venture but will not do so at any cost, its chief executive has told JP Morgan analysts,
In a note to clients, analyst Philip Cusick said Verizon boss Lowell McAdam had said he did not believe a premium would be required to buy Vodafone’s 45 percent stake in the highly successfulVerizon Wireless business, because Verizon already had control through its 55 percent holding.
Shares in both groups are up over 20 percent this year on speculation Britain’s Vodafone could finally exit the leading wireless business in the United States, a partnership the two firms’ formed in 2000.
Verizon management have stepped up the rhetoric in recent months, saying they want to do a deal and two people familiar with the situation have told Reuters that Verizon is working on a possible $100 billion bid to take full control of the asset.
In response, Vodafone has said it has an “open mind” on whether to stay in the business, which makes up around 75 percent of its market value….”
Comments »Weak Power Demand Has $DUK Posting Lower Than Expected Profits
“(Reuters) – Duke Energy Corp , the largest power provider in the United States, reported a lower-than-expected quarterly profit on Friday, citing weak electricity demand and higher costs at two key units.
The company, which uses coal, natural gas and nuclear plants to generate electricity, has had weak power sales since the 2008 recession as the housing market struggles to recover and consumers remain reluctant to increase their spending.
Demand from commercial customers was especially weak in the first quarter, Duke said, but it still expects to earn $4.20 to $4.45 per share this year. The midpoint of that forecast roughly matches analysts’ average estimate of $4.33.
Low rainfall in Brazil boosted generation costs at a key hydroelectric power station, the company said. Duke operates an international power supply business, primarily in South America, but the United States is its largest market…”
Comments »Non Farm Payroll Data Melts Up Futures and European Markets
The Dollar Halts it Largest Advance Against the Euro
“The dollar snapped its biggest advance against the euro in two weeks before the U.S. releases April jobs data after the previous report disappointed with employers adding the fewest positions in nine months.
The euro yesterday dropped versus 15 of its 16 major peers after European Central Bank President Mario Draghi said policy makers may take the unprecedented step of charging banks to hold excess reserves. Australia’s dollar was set for its longest weekly losing streak versus the New Zealand currency in 12 years as traders raised bets the bigger nation’s Reserve Bankwill cut borrowing costs next week.
“The data has softened recently and that could show up in non-farm payrolls,” said Richard Grace, the Sydney-based chief currency strategist and head of international economics atCommonwealth Bank of Australia. “If the number is weak, theU.S. dollar will go down a little as will long bond yields.”
The dollar traded little changed at $1.3067 per euro as of 7:11 a.m. in London after rising 0.9 percent yesterday, paring this week’s decline to 0.3 percent.
The U.S. currency fetched 98.10 yen from 97.94 yesterday and 98.05 on April 26. The 17-nation euro was at 128.16 yen from 127.95, heading for a 0.3 percent climb on the week.
Japanese markets are closed today and on May 6 for holidays.
Payrolls increased by 140,000 workers after an 88,000 gain in March, according to the median forecast of economists surveyed by Bloomberg News before a Labor Department report. Theunemployment rate may have stayed at 7.6 percent, matching March’s reading as the lowest since December 2008.
Fed, ECB…”
Comments »India Cuts Interest Rates to Spur Growth
“India cut interest rates for a third straight meeting to revive growth, extending the only reduction in borrowing costs among major emerging nations this year.
Governor Duvvuri Subbarao lowered the repurchase rate to 7.25 percent from 7.50 percent, theReserve Bank of India said in Mumbai today, as 33 of 40 analysts in a Bloomberg News survey predicted. One forecast 7 percent and the rest no change after quarter-point reductions in both January and March….”
Comments »Non Farm Payrolls: Prior 88k, Market Expects 155k, Actual 165k
Unemployment rate drops to 7.5%
Comments »The EU Lowers Growth Estimates
“The euro-area economy will shrink more than previously estimated in 2013 as part of a two-year slump that has pushed up unemployment to a record, according to the European Commission.
Gross domestic product in the 17-nation currency bloc will fall 0.4 percent this year, compared with a February prediction of 0.3 percent, the commission said in a report issued in Brussels today. This follows a 0.6 percent contraction in 2012 and shows the region headed for its first ever back-to-back years of falling output….”
Comments »Copper Leads Metals Higher
“Copper led metals higher before a U.S. report that may show employment climbed in the world’s largest economy, while the yield on Spain’s 10-year bonds fell below 4 percent for the first time since 2010. European stocks and U.S. index futures were little changed.
Copper jumped 4.2 percent and zinc increased 2.1 percent at 7:56 a.m. in New York. The Spanish 10-year yield dropped eight basis points to 3.97 percent, and the Italian 10-year yield fell to the lowest since February 2006. The euro strengthened against the dollar and the yen. The Stoxx Europe 600 Index advanced 0.1 percent, while futures on the Standard & Poor’s 500 Index retreated 0.1 percent….”
Comments »Aisia Trades Mixed at Best, Europe is Flat Like a Pancake, and U.S. Future Wait on Non Farm Payrolls
Yields for Italy, Spain, France, and Germany …
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