“The U.S. Senate voted to let states collect taxes on out-of-state Internet and catalog sales, sending the proposal to the House, where the issue is dividing Republicans.
The measure, passed yesterday on a 69-27 bipartisan vote, would end the era of tax-free Internet shopping. It is backed by Wal-Mart Stores Inc. (WMT) and other retailers that say it’s unfair that out-of-state sellers don’t have to collect sales taxes on purchases…”
Comments »“Bonds sold to finance Florida housing developments are being issued at the fastest rate in six years as investors seek extra yield from the municipal debt even as 85 percent of such securities have defaulted since 2008.
Known as dirt bonds, the borrowings are sold by districts set up by builders to finance roads and utility lines on raw land for housing. Jurisdictions in Florida have sold $273 million of the debt this year in 25 issues, on pace for the most since 2007 in terms of dollar amount and number of issues, data compiled by Bloomberg show.
The securities are benefitting from home prices in Florida that rose at the end of 2012 to a 21-month high, data from the Federal Housing Finance Agency show. At the same time, investors are hunting for speculative-grade munis, which have earned 3.1 percent this year, compared with 1.5 percent for the broader local market, Barclays Plc data show.
The jump in issuance shows “that many of those housing markets have stabilized,” said Peter Hayes, head of munis at New York-based BlackRock Inc. He oversees $114 billion of local debt, including land-development obligations.
“That helps dirt bonds, along with the fact that they offer more income and more yield than some other sectors,” he said.
“AMSTERDAM (Reuters) – For European banking union to succeed, all EU member countries need to be in agreement, Christine Lagarde, managing director of the International Monetary Fund, said on Tuesday.
“You need to have all the players at the table,” Lagarde, managing director of the IMF, told students at the University of Amsterdam when asked about Germany’s concerns.
The banking union is one of the key projects to improve the economy of the 17 countries sharing the euro….”
Comments »“BMC Software Inc. (BMC) agreed to be taken private in a $6.9 billion deal by Bain Capital LLC and Golden Gate Capital after struggling to compete with newcomers better equipped to handle the shift toward cloud computing.
The buyout group, which includes Singapore’s GIC Special Investments Pte Ltd. and Insight Venture Partners, is taking control of BMC in the third-largest private-equity deal of 2013. The investors said yesterday that they will pay $46.25 a share in cash, a 13 percent premium to the closing price on March 4, before Bloomberg reported that BMC had drawn renewed takeover interest after failing to find an acquirer last year.
BMC, a Houston-based provider of software that keeps corporate computer networks running smoothly, gets about 40 percent of its sales from the lucrative business of managing powerfulmainframe computers from International Business Machines Corp. Yet it has had a harder time keeping up with rivals in the market for server software, which is expanding as companies rely more on programs delivered over the Web, fueling demand for data centers and the technology that runs them.
“They’ve been outpositioned by some of the growth companies out there,” said Joel Fishbein, an analyst at Lazard Capital Markets. “The world’s changed from a technology perspective very dramatically, and they haven’t been able to keep up.”
The emergence of software delivered as a service via the so-called cloud has helped newer competitors such as ServiceNow Inc. and Splunk Inc. grab market share. BMC is also contending with traditional rivals CA, Hewlett-Packard Co. and IBM. About a quarter of new ServiceNow customers are replacing BMC products, ServiceNow Chief Executive Officer Frank Slootman said in a recent interview….”
Comments »“West Texas Intermediate crude fell for the first time in four days before government data that may show U.S. stockpiles rose from an 82-year high. Saudi Arabia increased production to the most in five months.
Futures slid as much as 0.9 percent in New York after the biggest three-day gain since the first week of August. U.S. crude supplies probably climbed by 2 million barrels last week, according to a Bloomberg News survey before the Energy Information Administration report tomorrow. Saudi Arabia raised output to 9.32 million barrels a day in April, a person with knowledge of the country’s production said. China’s external trade probably slowed last month, a separate survey showed.
“We are probably going to be presented with another weekly inventory rise from the U.S. tomorrow, and that obviously does bring the focus that the market is still well supplied,” Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, said in a telephone interview. “Whether we are ready to see a return toward the $110 level, which is the average for the last few years, it’s probably too early to say.”
WTI for June delivery declined as much as 90 cents to $95.26 a barrel in electronic trading on the New York Mercantile Exchange and was at $95.66 at 10:38 a.m. London time. The volume of contracts traded was little changed from the 100-day average. Futures climbed 55 cents to $96.16 yesterday, the highest close since April 2, capping a three-day gain of 5.6 percent.
“The euro strengthened against the dollar and yen after German factory orders unexpectedly increased in March, suggesting the region’s largest economy is starting to grow again.
The 17-nation currency rose against all except one of its 16 major peers as the German data damped speculation the European Central Bank will ease monetary policy further after President Mario Draghi said last week the ECB had an open mind about a negative deposit rate.Australia’s dollar fell to a two- month low against the greenback after the central bank cut interest rates to a record low. Sweden’s krona strengthened as industrial production (SWIPNSYY) exceeded economists’ forecasts.
“The German data was far better than expected,” said Jane Foley, senior foreign-exchange strategist at Rabobank International in London. “Today’s data suggests that we are another step away from them cutting the discount rate to negative territory.”
The euro gained 0.4 percent to $1.3123 as of 7:29 a.m. New York time after climbing to $1.3243 on May 1, the highest since Feb. 25. The single currency advanced 0.3 percent to 130.21 yen after dropping as much as 0.5 percent. The yen was little changed at 99.22 per dollar.
The euro is likely to trade between $1.30 and $1.32 until “data gives us strong direction one way or another,” Rabobank’s Foley said.
German factory orders, adjusted for seasonal swings and inflation, increased 2.2 percent from February, the Economy Ministry in Berlin said. The median estimate in a Bloomberg News survey of economists was for a 0.5 percent decline.
“HSBC Holdings Plc (HSBA), Europe’s largest bank, posted a bigger-than-estimated increase in first-quarter profit after provisions for bad loans shrank, stirring speculation the lender may step up its cost-reduction targets.
Pretax profit increased to $8.43 billion from $4.32 billion in the year-earlier period, the London-based bank said in a statement today. That beat the $8.04 billion average estimate of nine analysts surveyed by Bloomberg (HSBA). Bad loan charges declined 51 percent to $1.17 billion, HSBC said.
Stuart Gulliver has eliminated $4 billion of costs since becoming chief executive officer in 2011, beating his initial target. He’s announced 46,000 job cuts and sold or closed 52 businesses to revive earnings. That’s prompted speculation among analysts he may set a tougher expense-reduction goal when when he updates investors on the bank’s strategy on May 15.
“The true underlying revenue picture is flat, so it makes sense that they would look to the cost side again,” said Simon Willis, an analyst at Daniel Stewart Securities Plc (DAN) whose hold rating on the bank is under review….”
Comments »“Russian inflation accelerated in April after slowing a month earlier, strengthening arguments to delay easing monetary policy.
Consumer prices rose 7.2 percent from a year earlier after a 7 percent advance in March, the Federal Statistics Service in Moscow said by e-mail today. That matches the median estimate of 24 economists in a Bloomberg survey. Prices increased 0.5 percent in the month, also in line with economist forecasts.
Policy makers led by outgoing central bank Chairman Sergey Ignatiev are waiting to see a sustained slowdown in inflation before cutting their main interest rates. Restraining inflation remains a priority and the government won’t compromise efforts to subdue price growth with economic stimulus, First Deputy Prime Minister Igor Shuvalov said April 18 in Moscow. The economy grew 2.1 percent in the last three months of 2012 from a year earlier, the slowest rate since a 2009 contraction….”
Comments »“Portugal is selling 10-year (GSPT10YR) bonds for the first time in more than two years as it seeks to regain full access to debt markets following its 2011 bailout.
The new securities due in February 2024 may yield 400 basis points more than the mid-swap rate, according to a person familiar with the matter who asked not to be identified because they’re not authorized to speak about it. Investors have so far indicated interest in excess of 4 billion euros ($5.23 billion), though the offer size of 3 billion euros will not be increased, the person said….”
Comments »“European stocks rose, extending a near five-year high, as financial companies from HSBC Holdings Plc (HSBA) to Allianz SE reported results that topped analysts’ estimates. U.S. index futures were little changed, while Asian shares rose.
HSBC, Europe’s biggest lender, Societe Generale SA (GLE), France’s second-largest bank, and Germany’s Commerzbank AG all climbed at least 1.9 percent after posting results. Allianz SE, Europe’s largest insurer, gained 2.5 percent after reporting a jump in profit. Alstom SA (ALO) (ALO) sank 9.1 percent after the power- equipment maker cut its profit forecast.
The Stoxx Europe 600 Index (SXXP) rose 0.3 percent to 301.96 at 1:02 p.m. in London, as trading resumed in the U.K., Ireland and Greece after yesterday’s public holiday. The gauge has climbed 8 percent this year to its highest level since June 2008 as central banks maintained stimulus measures.
“I am overweight financials,” said Kevin Lilley, a fund manager at Old Mutual Asset Managers U.K. in London, which oversees about $6.1 billion. “It’s been a mixed bag on the earnings front, but surprises are coming through on the financials. I see the market continuing to grind higher.”
Futures on the Standard & Poor’s 500 Index gained 0.1 percent today, while the MSCI Asia Pacific Index rallied 1.2 percent as the Reserve Bank of Australia cut its benchmark interest rate to a record low.
The RBA unexpectedly reduced the overnight cash-rate target by a quarter percentage point to 2.75 percent. Eight of 29 economists predicted the seventh cut in the past 19 months, while money markets had seen about a 50-50 chance.
Europe’s Stoxx 600 (SXXP) closed little changed near a five-year high yesterday as services and manufacturing output shrank for a 15th month, while European Central Bank President Mario Draghi said policy makers are ready to cut interest rates if needed….”
Comments »“The yuan strengthened the most this year as Premier Li Keqiang pledged to come up with a plan this year that would allow investment capital to move more freely in and out of China.
The proposal, part of the government efforts to loosen control over the currency and interest rates, will include a mechanism enabling individuals to invest overseas, the nation’s Cabinet said yesterday. People’s Bank of China Deputy Governor Yi Gang said last month the yuan’s trading band will be widened “in the near future.” The central bank raised the daily reference rate0.05 percent to 6.2083 per dollar, shy of the record 6.2082 on May 2. The currency is allowed to diverge a maximum 1 percent from the fixing.
“China is moving forward with exchange-rate reform and making the yuan more globally used,” said Nathan Chow, a Hong Kong-based economist at DBS Group Holdings Ltd. “There have been bets the trading band will be widened, giving more room for appreciation. Yet, it’s unlikely to happen soon as that might fuel speculation and worsen inflation.”
The yuan rose 0.2 percent, this year’s largest one-day gain, to close at 6.1541 per dollar in Shanghai, according to the China Foreign Exchange Trade System. It dropped 0.18 percent yesterday, the most since December, as China intensified scrutiny of cash transfers from abroad. The currency has gained 1.2 percent this year and touched a 19-year high of 6.1521 on May 6.
In Hong Kong, the yuan gained 0.28 percent, the most in four months, to 6.1585 per dollar, according to data compiled by Bloomberg. It dropped 0.35 percent yesterday, the biggest loss since March 2012, after the currency regulator said it would step up efforts to ensure companies and banks are not bringing in cash for speculative purposes….”
Comments »“The Topix Index (TPX) climbed the most in a month, erasing losses from the 2008 collapse of Lehman Brothers Holdings Inc., as Japanese markets reopened from a holiday during which the yen slid and U.S. jobs data beat estimates.
Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, rose 6.4 percent. Toyota Motor Corp. (7203) added 4.9 percent after the Nikkei newspaper reported the carmaker will beat profit estimates when it posts results tomorrow. Japan Steel Works Ltd., which forges reactor containment vessels, surged 16 percent after Japan won its first nuclear plant order since the Fukushima meltdowns.
The Topix rose 3.1 percent to close in Tokyo at 1,188.57, a level not seen since before Lehman filed for bankruptcy protection on Sept. 15, 2008. Japan’s broadest gauge of equities has rallied 65 percent since mid-November, making it the world’s best-performing major stock index, as the yen weakened amid optimism a change in government and central bank leadership will pull Japan out of deflation.
“We saw solid U.S. jobs data even though the market was nervous about downside risks, and that’s boosting stock buying,” said Isao Kubo, a Tokyo-based equity strategist at Nissay Asset Management Corp., which oversees about 5 trillion yen ($50.5 billion.) “As the yen has weakened, corporate forecasts suggest profits are going to improve a lot this year. The market likes that.”
After a record earthquake and tsunami, nuclear meltdowns and a surge in the yen, Japan is the last of the five biggest equity markets to recover to pre-crisis levels. Topix industry groupstracking consumer lenders and real estate companies led the recovery from the March 2009 bottom following Lehman’s collapse, almost quadrupling.
The Nikkei 225 Stock Average (NKY) today climbed 3.6 percent to 14,180.24, closing above 14,000 for the first time since June 2008. The exporter-heavy gauge recouped its losses from the Lehman shock on March 9….”
Comments »“The Reserve Bank of Australia cut its benchmark interest rate to a record low, driving down a currency that has damaged manufacturing and boosted unemployment.
Governor Glenn Stevens reduced the overnight cash-rate target by a quarter percentage point to 2.75 percent, saying in a statement that the Aussie’s record strength “is unusual given the decline in export prices and interest rates.” Eight of 29 economists predicted the seventh cut in the past 19 months, while money markets had seen about a 50-50 chance.
“The board has previously noted that the inflation outlook would afford scope to ease further,” Stevens said. “At today’s meeting the board decided to use some of that scope. It judged that a further decline in the cash rate was appropriate to encourage sustainable growth in the economy.”
He joins global counterparts in embracing record-low rates in an economy where inflation is contained, mining spending is predicted to crest, and credit growth remains subdued. Stevens is aiming to rebalance growth as mining regions in the north and west thrive and manufacturers in the south and east struggle.
“It’s a seminal decision to put a 2 in front of a decimal point for interest rates, and the RBA has decided to maintain its easing bias,” said Joshua Williamson, a senior economist at Citigroup Inc. in Sydney who predicted today’s decision. “The currency has been the thorn in their side and the inflation data was the catalyst to act on the exchange rate concern.”
The Australian dollar fell to $1.0199 at 5:19 p.m. in Sydney, from $1.0238 before the decision. Three-year government bond yields dropped to as low as 2.47 percent, the least since Oct. 16. The benchmark S&P/ASX 200 Index (AS51) pared a loss of as much as 0.7 percent to close 0.2 percent lower….”
Comments »Yields for Italy, Spain, France, and Germany …
Comments »U.S. equities traded in its narrowest range today for the year. Essentially it was a samich day. The DOW transports did hit new highs after Friday’s big gains…so some happiness there full the bulls.
Defensive stocks, drugs, and food companies lagged while bank stocks led the way.
[youtube://http://www.youtube.com/watch?v=X0B41tBTTko 450 300] Comments »
“The Financial Times reports exclusively the Commodities Futures and Exchange Commission is studying whether Bitcoin would fall under their purview.
CFTC head Bart Chilton told the paper Bitcoin “is for sure something we need to explore,” adding, “It’s not monopoly money.”
Another anonymous source said that the regulator is “seriously” examining the issue….”
Comments »“David Rosenberg the veteran Wall Street economist and bearish strategist at Gluskin Sheff, gave an intense presentation on Friday at John Mauldin’s Strategic Investment Conference.
Titled “Bernanke: The Wizard Of Potemkin,” this presentation offers a sobering look at the anemic U.S. economy, the labor market mess, and the Federal Reserve’s controversial efforts to get everything back on track.
Before you can even think about getting bullish, you must consider the eye-opening charts from Rosenberg’s presentation.
Thanks to Gluskin Sheff for giving us permission to feature this presentation…..
Comments »“David Kostin, Goldman Sachs‘ chief U.S. equity strategist, sees almost no upside to the S&P 500 from now through the end of the year.
However, within the market he sees no shortage of stocks and sectors expected to outperform.
In his new U.S. Monthly Chartbook, Kostin provided an updated list of stocks with the most upside potential today.
This time around, the list is dominated by oil and gas firms including drillers or refiners. The rest are ringers across a broad range of industries, from tires to telecom.
According to Goldman’s analysts, the 40 stocks on this list offer 23% to 57% upside relative to their recent prices.
Comments »“Dr. Ron Paul
Last week at its regular policy-setting meeting, the Federal Reserve announced it would double down on the policies that have failed to produce anything but a stagnant economy. It was a disappointing, but not surprising, move.
The Fed affirmed that it is prepared to increase its monthly purchases of Treasuries and mortgage-backed securities if things don’t start looking up. But actually the Fed has already been buying more than the announced $85 billion per month. Between February and March, the Fed’s securities holdings increased $95 billion. From March to April, they increased $100 billion. In all, the Fed has pumped more than a half trillion dollars into the economy since announcing its latest round of “quantitative easing” (QE3) in September 2012.
Although many were up in arms when the Fed said it would buy $600 billion in government debt outright for the previous round, QE2, all seems quiet about the magnitude of QE3 because it doesn’t come with huge up-front total price tag. But by year’s end the Fed’s balance sheet could hit $4 trillion.
With no recovery in sight, where’s all this money going? It is creating bubbles. Bubbles in the housing sector, the stock market, and government debt. The national debt is fast approaching $17 trillion, with the Fed monetizing most of the newly issued debt. The stock market has been hitting record highs for the past two months as investors seek to capitalize on the Fed’s easy money. After all, as long as the Fed keeps the spigot open, nominal profits are there for the taking. But this is a house of cards. Eventually, just like in 2008-2009, the market will discipline the bad actions of the Fed and seek to find the real normal….”
Comments »“What is “obvious” to those embedded in the conventional, MSM/state-manufactured worldview is not the same as what is obvious to those outside the asylum.
Longtime readers know my analytic perspective is based on what psychiatrist/author R.D. Laing called the Politics of Experience.
Survival+ 6: The Politics of Experience (April 2, 2009)
Survival+ 7: Simulacrum and the Politics of Experience (April 3, 2009)
In his prescient 1972 lecture, The Obvious, Laing explained the inherent difficulty of understanding “the obvious” when a systemic madness is taken as “normal”:
To a considerable extent what follows is an essay in stating what I take to be obvious. It is obvious that the social world situation is endangering the future of all life on this planet. To state the obvious is to share with you what (in your view) my misconceptions might be. The obvious can be dangerous. The deluded man frequently finds his delusions so obvious that he can hardly credit the good faith of those who do not share them.
We can summarize one aspect of this analysis by asking: what is “obvious” to those inside a system and what is “obvious” to those outside the system? Our experience of what is “obvious” says a lot about our cultural context and assumptions: the manufacture of our “news” and consensus, the mystification of our experience via propaganda and simulacra, what we perceive as “normal” relationships, work, goals, etc.
What is “obvious” to most participants is that the stock rally is fueled by central bank liquidity and quantitative easing, and since there is no limit in sight to these policies, there is also no limit to the stock market running higher.
It is also “obvious” that betting against this trend is an excellent way to lose money, so the number of people shorting the market dwindles with each push higher.
Equally “obvious” is the incentive to borrow money via margin to invest in the rising market: the higher it goes, the more you can borrow, and the more you borrow and plow into the market, the more you make. It is a wonderful self-reinforcing feedback loop.
Thus record-high margin debt is not a warning sign but evidence that the music is still playing, so by all means, keep on dancing:
Near-Record NYSE Margin Debt Leads to Caution (Bloomberg)
That the disconnect between the real economy and the stock market is widening is obvious, but there doesn’t seem to be any intrinsic reason why it can’t continue widening. As a result, many analysts are calling for a brief retrace and then another leg up to new highs. Others see a serious decline (10%+) this summer and a new high in Q4 2013 or Q1 2014.
In other words, what might be obvious to those outside the system–that all liquidity-driven bubbles end badly, usually when participants are convinced there is nothing to restrain the trend from going higher–is not at all obvious to participants and those cheering them on (the MSN, the Federal government and the Fed).
What I sense is a near-universal resignation of those attempting to call a top in the market, an acceptance that the trend is up for the foreseeable future and that trying to short this market (i.e. profit from a decline) is a fool’s game.
The number of those willing to short the market, i.e. take the other side of the trade, has dwindled. Every sharp rally like last Friday’s eliminates entire divisions of shorts, leaving the trade even more one-sided.
Yes, the market is manipulated and totally dependent on central bank QE, liquidity and outright buying of stocks and bonds. But the market is not as stable as presumed, and one-sided trades tend to capsize when everyone who feels safe being on one side of the boat least expects it.
Every trader wants to short the market after it becomes obvious the trend has reversed. But since there are so few shorts left, the decline (should one ever be allowed to happen) might not be orderly enough for everyone to pile on board. More likely, the train will leave with few on board and the initial drop will leave everyone who was convinced the uptrend was permanent standing shell-shocked on the platform with margin calls in hand…..”
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