New Legislation/Bill Introduced to Fine Big Banks $20k for Each Foreclosure

“………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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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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Dollar also strong this morning….

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Let them try….

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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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“WASHINGTON (Reuters) – The Obama administration is considering a plan to force more businesses to pay the corporate income tax, an industry group said, in an overhaul package that could be unveiled as early as this month.

Under the proposal, entities with more than $50 million in gross receipts would pay the corporate income tax, instead of the individual income tax they now pay. Partnerships like law firms and hedge firms would likely be the most affected.

“Treasury Department staff are working on a tax reform proposal that reportedly would include corporate taxation of any pass-through entity with gross receipts of $50 million or more,” said a letter to members of the National Association of Publicly Traded Partnerships from its executive director Mary Lyman sent on Friday, obtained by Reuters.”

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“LOUISVILLE, Ky. – Humana Inc. said Monday that its first-quarter profit rose 22 percent as the health insurer posted enrollment gains in its Medicare Advantage and stand-alone Medicare prescription drug plans.

In a sign of its growing diversity, the company also doubled pretax income in its health and well-being services segment in the period.”

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“Saudi Electricity Co., the kingdom’s largest utility, selected General Electric Co. to help expand four power plants in contracts valued at more than $500 million.

GE will supply gas-turbine technology and services for the projects, which will meet half of Saudi Electricity’s targeted increase in annual output, the U.S. company said in an e-mailed statement today.

“These fast-tracked plant expansions are designed to meet peak summer demands,” Saudi Electricity’s Chief Executive Officer Ali al-Barrak said in the statement.”

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“European manufacturing growth accelerated more than estimated in April, driven by higher output in Germany and France, suggesting the region’s economy is weathering surging energy costs.

A gauge of manufacturing in the 17-nation euro area rose to 58 from 57.5 in March, London-based Markit Economics said in an e-mailed report today. That’s above an initial estimate of 57.7 on April 19. A reading above 50 indicates growth.

European manufacturers, led by German companies such as Volkswagen AG, are boosting production and hiring more workers to meet increased export orders. With euro-area capacity utilization at the highest since 2008, oil prices up 23 percent this year and companies trying to pass on higher input costs, the risk is growing that inflation may accelerate and slow the recovery.”

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“A Chinese manufacturing index declined in April from March, indicating that growth may moderate in the world’s second-biggest economy after the government raised interest rates and allowed faster gains in the yuan.

The Purchasing Managers’ Index fell to 52.9 from 53.4, China’s logistics federation and the statistics bureau said in an e-mail yesterday. That was below a median forecast of 53.9 in a Bloomberg News survey of 20 economists.

Premier Wen Jiabao’s government aims to counter the fastest inflation since 2008 and cool a real-estate market that has been at risk of price bubbles. Credit Suisse Group AG says the nation’s fifth increase in benchmark rates since the global financial crisis may come as early as today, a Chinese holiday, less than a month after the previous move.

“This slowdown won’t pose a concern as it indicates that Beijing’s tightening measures are taking effect,” said Liu Li-Gang, an economist at Australia & New Zealand Banking Group in Hong Kong who has worked for the World Bank. “The moderation in economic growth could help to ease inflationary pressure, and inflation should gradually slow in the coming few months.”

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The hope is middle east tensions will begin to wain….let’s hope so! The dollar is strong this morning also contributing to oil demise.

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“Asia’s benchmark stock index rose to the highest level in almost four months after U.S. companies reported earnings that topped analysts’ estimates and President Barack Obama said Osama bin Laden has been killed.

Komatsu Ltd., the world’s No. 2 maker of construction equipment, advanced 3 percent after Caterpillar Inc. posted better-than-estimated profit. Seiko Epson Corp., a Japanese printer maker, rose 5.7 percent after forecasting net income will jump 66 percent this fiscal year. Hyundai Development Co. surged 12 percent in Seoul after the government announced measures to aid builders and boost the property market.

The MSCI Asia Pacific Index gained 0.7 percent to 140.42 at 7:38 p.m. in Tokyo, the highest level since Jan. 19. Three stocks rose for each that fell on the gauge. The measure rose 0.5 percent last week after the Federal Reserve renewed its pledge to stimulate growth in the U.S., the world’s biggest economy, with low interest rates.”

Asia

“European stocks advanced for an eighth day, the longest winning streak in 10 months, as President Barack Obama said al-Qaeda leader Osama bin Laden was killed in Pakistan yesterday. U.S. index futures and Asian shares rose.

Danisco A/S climbed to the highest since 1989 as the world’s largest food-ingredients maker received an increased takeover bid from DuPont Co. Demag Cranes AG jumped 22 percent after Terex Industrial Holding AG offered to buy the company.TNT NV lost 1.9 percent after the Dutch mail carrier that’s spinning off its express unit said quarterly profit fell.

The benchmark Stoxx Europe 600 Index gained 0.2 percent to 284.35 at 12:12 p.m. in London, a two-month high. Standard & Poor’s 500 Index futures advanced 0.5 percent and the MSCI Asia Pacific Index rose 0.7 percent. U.K. and Irish equity markets are closed today for a holiday.”

Europe

“Stocks and U.S. equity-index futures gained, the Dollar Index snapped a nine-day slump and oil dropped the most in two weeks after President Barack Obama said Osama bin Laden is dead. Silver sank after CME Group Inc. raised the amount of cash traders need for speculative positions.

Standard & Poor’s 500 Index futures advanced 0.5 percent at 7:16 a.m. in New York. The Stoxx Europe 600 Index rose 0.2 percent, an eighth day of gains. The Dollar Index added 0.1 percent after falling 3.4 percent during its losing streak, South Korea’s won rose against its 16 most-traded peers, and the Swiss franc weakened. Oil lost 1.5 percent in New York. Silver futures plunged as much as 13 percent. The yield on the two-year German note climbed four basis points.”

U.S. Futures

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