Prostitute Party Hosted By Munich Re Was a Smash; Leaving Massive Blackouts
“Recently, a company-paid prostitute party sponsored by Munich Re in 2007 has become public news, so the CEO answered some tough questions about the party.
The whole thing is “incredibly embarrassing for our staff,” said Torsten Oletzky, the CEO of Munich RE, a Germany-based insurance company.”
Comments »Gold Hits Two Week Highs
Today’s trade presents only marginal interest. The dollar is getting most of the safe trade action…
Comments »Prosecutors Snooze on Justice
“In November 2009, Attorney General Eric Holder vowed before television cameras to prosecute those responsible for the market collapse a year earlier, saying the U.S. would be “relentless” in pursuing corporate criminals.
In the 18 months since, no senior Wall Street executive has been criminally charged, and some lawmakers are questioning whether the U.S. Justice Department has been aggressive enough after declining to bring cases against officials atAmerican International Group Inc. (AIG) and Countrywide Financial Corp.
Prosecutions of three categories of crime that could be linked to the causes of the crisis — corporate, securities and bank fraud — declined last fiscal year by 39 percent from 2003, the period after the accounting scandals at Enron Corp. and WorldCom Inc., Justice Departmentrecords show.”
Comments »Boeing and General Dynamics Get Favorable Court Ruling
“WASHINGTON (Dow Jones)–The U.S. Supreme Court on Monday threw out a ruling that could have forced the Boeing Co. (BA) and General Dynamics Corp. (GD) to repay $3 billion to the federal government because of the Pentagon’s long-ago cancellation of a multibillion-dollar contract to build a Navy stealth-fighter jet.
The court, in a unanimous ruling written by Justice Antonin Scalia, said a key issue in the case could not be litigated because it involved state secrets that could not be aired in court.
The case dates to 1991, when then-Secretary of Defense Dick Cheney canceled a $4.8 billion contract with General Dynamics and McDonnell Douglas Corp. to build a Navy stealth fighter, the A-12 Avenger.
The first jet was to be delivered to the Navy in June 1990. The contractors, however, had problems from the start and couldn’t meet the proposed schedule. They also said the cost of finishing the project would substantially exceed the price of the contract.
No planes were ever delivered.
McDonnell Douglas merged with Boeing in 1997.
Monday’s decision tossed out a 2009 lower court ruling that found the government was justified in terminating the contract because the companies had failed to meet important milestones on the project. In light of that ruling, the government had demanded the companies repay roughly $3 billion in contract-progress payments and interest.”
Comments »David Walker: “We’re not growing enough and we’re not going to grow our way out of this problem,”
“The US is spending $4 billion a day more than it is taking in, putting the country on an unsustainable fiscal path perpetuated by both Democrats and Republicans, according to David Walker, head of the Comeback America Initiative.
Solving America’s problems will require a combination weighted toward spending reductions but one that also will require spreading the taxation burden around more evenly, said Walker, the former US comptroller general.
“We’re not growing enough and we’re not going to grow our way out of this problem,” he said in a CNBC interview. “We would have to have double-digit real GDP growth for decades to grow our way out of this hole.”
Walker’s organization promotes fiscal stability and is warning that the US is trailing many other developed nations in terms of getting its fiscal policies in order. Comeback America is a conservative think tank funded mostly through a grant from the Peter G. Peterson Foundation, named for the founder the Blackstone Group private equity firm.”
Comments »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.”
Comments »Environmentalists Seek Documents in Lawsuit From Hillary Clinton and Oil Pipeline Lobbyist
“Environmentalists are suing the State Department to force the release of documents that might reveal communications between Secretary of State Hillary Clinton and an oil company lobbyist over a controversial pipeline project.”
Comments »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.”
Comments »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.”
Comments »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.”
Comments »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.”
Comments »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.”
Comments »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
Comments »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%,
Comments »In Play and On the Wires
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.”
Comments »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.
Comments »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.”
Comments »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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