Tax Receipts Allow Geithner To Extend Debt Limit Decision by 3 Weeks

“Treasury Secretary Timothy Geithner said the U.S. will have three weeks more than previously seen before hitting its borrowing limit, giving the White House and Congress more time for a deal to raise the debt ceiling.

The U.S. can borrow until Aug. 2 after reaching the $14.29 trillion limit because of “stronger-than-expected tax receipts” and by taking “extraordinary measures” such as suspending the sale of bonds to finance state and local infrastructure projects, Geithner said in a letter to congressional leaders yesterday. He previously said the deadline would be July 8. Without such measures, the legal limit will be reached May 16, he said.”

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“Tokyo Electric Power may be asked to shoulder half of an estimated $49 billion in total compensation for damages stemming from its crippled nuclear power plant with other power firms to bear the rest, a Japanese newspaper reported on Tuesday.

Officials from the government, Tokyo Electric, and creditor banks have been scrambling to craft a scheme that would allow the utility to cope with the bill of compensating those displaced by the crisis at its Fukushima Daiichi plant, while continuing to operate as a private firm.”

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“The week before last on Thursday the Financial Times published an OpEd piece I wrote arguing that Washington should take the lead in getting the world to abandon the dollar as the dominant reserve currency. My basic argument is that every twenty to thirty years – whenever, it seems, that American current account deficits surge – we hear dire warnings in the US and abroad about the end of the dollar’s dominance as the world’s reserve currency. Needless to say in the last few years these warnings have intensified to an almost feverish pitch. In fact I discuss one such warning, by Barry Eichengreen, in an entry two months ago.

But these predictions are likely to be as wrong now as they have been in the past. Reserve currency status is a global public good that comes with a cost, and people often forget that cost.”

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“Swiss investor Marc Faber has just released his latest issue of the Gloom, Boom, and Doom Report where he discussed his outlook for the stock market, gold, emerging markets, and other financial topics. Here are a few highlights from the report:”


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“Goldman’s Jim O’Neill is the man who invented BRICs, and he’s been a fervent China bull.

And yet in his latest monthly note, he’s concerned.

Basically, he’s not seeing China shift its growth strategy the way he’d like. Inflation is still torrid, and the central bank is being forced to resort to blunt instruments….”

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Upgrades

SPG – Simon Properties target raised to $130 from $120 at RBC Capital Mkts

APA – Apache target raised to $150 from $130 at Oppenheimer

HUM – Humana target raised to $83 from $62 at Oppenheimer

MCP – Molycorp target raised to $125 at Dahlman Rose

JKS – JinkoSolar Holding target raised to $35 from $32 at Brean Murray

SABA – Saba Software initiated with a Buy at The Benchmark Company; tgt $15

AWI – Armstrong World Industries target raised to $55 from $50 at RBC Capital Mkts

ADP – Automatic Data target raised to $60 from $52 at RBC Capital Mkts

CGNX – Cognex target raised to $42 from $35 at Needham – following earnings

DiSH – DISH Network target raised to $35 from $30 at RBC Capital Mkts

GPRO – Gen-Probe target raised to $90 from $57 at RBC Capital Mkts

FSRV – FirstService initiated with an Outperform at JMP Securities; tgt $45

Downgrades

DNDN – Dendreon target lowered to $60 from $65 at Brean Murray

IMAX – IMAX initiated with a Hold at Stifel Nicolaus

VZ – Verizon downgraded to Reduce from Neutral at Citadel

CHU – China Unicom Hong Kong downgraded to Underperform at Macquarie

KKD – Krispy Kreme initiated with a Neutral at Janney Montgomery Scott

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Gapping Up

LEE +22.5%, HLF +7.1%, VVUS +7.1%, FMC +1.7%, MCP +1.2%, DVA +5.9%, FE +5.8%,CGNX +11.5%, EBS +4.7%, CTIC +4%, SCSS +3.8%, AEIS +11%, CRUS +3.8%, HIG +3.6%, BGC +2.7%,  FRPT +9.8%, SYKE +9.5%

Gapping Down

PRXL -18.3%, TXRH -3.4%, VOD -2.2%, NBS -2.1%, BHP -1.5%, ATSG -3.1%, DMED -3%, ROC -2.2%,  COOL -17.1%, CHK -3.6%, LPSN -3.6%, SWSH -8%, NETL -5.1%, MG -4%

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In Play

On the Wires

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“Asian nations are pooling funds to strengthen regional investment, in a step toward diversifying record foreign-exchange holdings as the U.S. dollar declines.

Ten Southeast Asian nations, along with China, Japan and South Korea, plan to discuss an infrastructure fund to boost investment in roads, ports and utilities at a meeting of finance officials that started today in Hanoi. Policy makers have agreed to look for “new avenues” for reserves, the Philippine central bank chief said last month, urging greater use of China’s yuan.

More than a decade after the 1997-98 Asian crisis depleted reserves and forced countries from Indonesia to South Korea to seek bailouts, the region’s holdings have risen to about $6 trillion, half held by China. With the dollar remaining the dominant reserve asset, the currency’s decline threatens to erode returns on Asia’s stockpile….”

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“European stocks declined, snapping the longest winning streak in 10 months for the Stoxx Europe 600 Index, as carmakers retreated. U.S. index futures and Asian shares dropped.

Volkswagen AG (VOW) led a gauge of auto companies lower as a report stoked speculation that Germany may raise taxes on company cars. BHP Billiton Ltd. (BHP) led mining companies lower as copper declined in London. Hannover Re slid 2.8 percent after the world’s third-biggest reinsurer cut its profit forecast. Man Group Plc (EMG) led advancing shares after starting a fund in Japan.

The Stoxx 600 fell 0.7 percent to 281.98 at 11:24 a.m. in London after eight days of gains pushed the measure to a two- month high. The gauge in April had the biggest monthly increase so far this year as companies reported earnings that topped analyst estimates and the Federal Reservemaintained its pledge to keep interest rates low for an “extended period.”

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“A U.K. manufacturing index fell to a seven-month low in April amid declining consumer confidence and falling construction orders.

The gauge based on a survey by Markit Economics and the Chartered Institute of Purchasing and Supply fell to 54.6 from a revised 56.7 in March, according to a report published in London today. The median forecast of 19 economists in a Bloomberg News survey was for a decline to 57 from a previous March reading of 57.1. A measure above 50 indicates expansion.

The recovery in manufacturing may be losing momentum as the biggest fiscal squeeze since World War II takes hold, countering the benefit to exporters from a weaker pound. Policy makers will probably keep the key interest rate at a record low of 0.5 percent this week to support the recovery, according to 42 of 43 economists in a Bloomberg News survey….”

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“Infosys Technologies Ltd. (INFO), India’s second-largest software exporter, plans to step up hiring in the U.S., China and other overseas markets as it seeks to check rising employee turnover and boost profit.

“Our customers are global, so we want to create a global footprint,” S.D. Shibulal, chief operating officer, said in an interview on May 1. “We really need to get talent in thePhilippines, in China, in the Czech Republic and Brazil,” said the 56-year-old executive, who was last week named to take over as the company’s chief executive officer from Aug. 21.

Infosys plans to hire as many as 1,500 workers in the U.S……”

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“Russian manufacturing growth slowed in April for the largest monthly drop since December 2008 after export orders declined and companies scaled back investment.

The Purchasing Managers’ Index fell to a seasonally adjusted 52.1, the weakest level since November, from 55.6 in March,HSBC Holdings Plc (HSBA) said in a report today, citing datacompiled by Markit Economics, a financial information services company. The survey-based index indicates a contraction when below 50 and growth with a figure above 50.

“A decline in new export orders is worrisome as it usually points to the direction of change in overall manufacturing growth momentum in the coming months,” Alexander Morozov, HSBC’s chief economist for Russia and the Commonwealth of Independent States, said in the report.”

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“China’s stocks climbed, driving the benchmark index to its biggest two-day increase in four weeks, on the prospect slowing manufacturing growth may allow the central bank to delay further increases in interest rates.

A gauge of consumer staples rose the most among 10 industry groups as inflation concerns eased after the Purchasing Managers’ Index fell to 52.9 in April from 53.4 in March. Huaneng Power International Inc. (600011) paced gains for utility stocks for a second day on speculation the government may allow power producers to boost prices. A measure of small-company stocks advanced the most since February, led by technology companies….”

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