Big Banks are Expected to Post an 11% Drop in Earnings

“The six largest U.S. lenders, including JPMorgan Chase & Co. (JPM) and Wells Fargo & Co., may post an 11 percent drop in first-quarter profit, threatening a rally that has pushed bank stocks 19 percent higher this year.

The banks will post $15.3 billion in net income when adjusted for one-time items, down from $17.3 billion in last year’s first quarter, according to a Bloomberg survey of analysts. Trading revenue at the biggest lenders is projected to fall 23 percent to $18.3 billion, according to Morgan Stanley analysts, who didn’t include their firm or Wells Fargo…”

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It has been said many times in recent months that we aren’t Greece. Now it will start to be said that we aren’t Spain. Both propositions are certainly true. (For one thing, Spain elected its socialist government in 2004, thus getting a head start on us.) But if we compare America’s debt crisis to Europe’s as a whole, how do we stack up?

The Republicans on the Senate Budget Committee did the math and produced this graphic, which shows that the U.S. is now deeper in debt than the entire Eurozone, plus the United Kingdom. (The Democrats on the committee are too busy dodging their legal obligation to come up with a budget to produce anything.):

Read the rest here.

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$28 price target applied.

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Gapping up

MFRM +16.8%, OI +9%, BCS +7.6%, AA +6.2%, DB +5.3%, MT +5.2%, SMSC +5.2%, ING +4.3%,

UBS +3.6%, RIO +3.1%, BAC +2.5%, CS +2.4%, BBL +2%, HBC +1.7%, BHP +1.4%, C +1.1%,

VALE +0.7%,  MPEL +2.8%,  TEF +2.7% ,  YELP +0.7% , THLD +0.8%, CENX +3.5% ,

RENN +5.5%, TEX +2.3%, CAT +1.6%, DE +1.3%, AGCO +1.3%, CMI +0.9%, MTW +0.6%, JOY +0.6%,

SD +3.1%, WLT +2.9%, RDS.A +2.3%, SDRL +2.2%, BP +1.7%, TOT +1.7%, E +1.4%, STO +1.2%,

IRE +6.1%, BCS +5.8%, DB +5.3%, STD +4.5%, ING +4.3%, UBS +3.6%, GNW +2.6%, BAC +2.5%, KEY +2.5%,

CS +2.4%, C +1.8%, HBC +1.7%,

Gapping down

OPNT -6%, PRXI -5.8%, AMCC -4.2%, CSC -4.2%, TEAR -4.1%, JDAS -3.2%, PKT -2.7%, GOLD -2.2%,

QRE -1.6%, PSEC -1.4%, NOK -12.9%, OPNT -8.1%,  CSC -4.2%, JDAS -3.2%, HOFT-2.8%,

GME -0.8%, NTAP -1%,

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“Alcoa Inc. (AA) rose 5.6 percent to $9.84. The largest U.S. aluminum producer reported an unexpected first-quarter profit after customers from automakers to beverage-can manufacturers ordered more of the metal.

Applied Micro Circuits Corp. (AMCC) : The maker of chips used in networking gear said its fourth-quarter adjusted loss will be at least 10 cents a share, wider than the average analyst estimate for a loss of eight cents.

L&L Energy Inc. (LLEN) rose 2.6 percent to $2.35. The Seattle-based company operating coal businesses in China signed a sales contract with Guodian Yongfu Power Generation Co., adding about $19 million of revenue.

Mattress Firm Holding Co. (MFRM) jumped 20 percent to $44.79. The mattress retailer forecast earnings for the current fiscal year will be at least $1.40 a share, beating the average analyst estimate of $1.37.

Owens-Illinois Inc. (OI) : The world’s biggest maker of glass bottles said first-quarter earnings will exceed profit in the year-ago period by more than 35 percent on good manufacturing performance and greater-than-planned production rates.

Titan Machinery Inc. (TITN) surged 20 percent to $33. The owner of full-service agricultural and equipment stores forecast annual earnings of at least $2.55 a share, beating the average analyst estimate of $2.06.

Travelzoo Inc. (TZOO US) climbed 26 percent to $26.50. The Internet travel marketer plans to sell itself and is in the process of hiring an adviser, Reuters reported, citing three people familiar with the situation.

Standard Microsystems Corp. (SMSC) : The semiconductor manufacturer forecast first-quarter earnings excluding certain items will be at least 29 cents a share, topping the 27 cents projected by analysts on average.”

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“American Superconductor Corporation (NASDAQ: AMSC) Started as Buy at Maxim Group.

Cepheid, Inc. (NASDAQ: CPHD) named Bull of the Day at Zacks.

Eldorado Gold Corporation (NYSE: EGO) Raised to Buy at Canaccord Genuity.

GameStop Corporation (NYSE: GME) Cut to Hold at Needham.

Huntington Bancshares (NASDAQ: HBAN) Started as Neutral at Goldman Sachs.

J. C. Penney Company, Inc. (NYSE: JCP) Started as Neutral at UBS.

Macy’s, Inc. (NYSE: M) Started as Neutral at UBS.

NVIDIA Corporation (NASDAQ: NVDA) Started as Outperform at RBC.

Polycom Inc. (NASDAQ: PLCM) Cut estimates but maintained Buy at Argus.

SAP AG (NYSE: SAP) Cut to Hold at ThinkEquity.

SuperValu Inc. (NYSE: SVU) maintained Neutral but cut target to $6 at Credit Suisse.

United Continental (NYSE: UAL) named as Bear of the Day at Zacks.

Yelp Inc. (NYSE: YELP) Started as Neutral at Goldman Sachs; Started as Neutral at Citigroup; Started as Perform at Oppenheimer; Started as Hold at Jefferies.”

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In play

On the Wires

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Export prices prior: 0.4%,  market expects n/a, Actual 0.8%

Import prices prior: -0.1%, market expects 0.6%, Actual 1.3%

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“Fewer S&P 500 companies are offering earnings guidance, or predictions on what they will take in and earn, which has Wall Street analysts worried.

Stock markets often punish companies that miss guidance, and with fewer firms making forecasts, some are worried a recent spate of strong corporate earnings may be coming to an end or at best cooling off.

In March, only 27 companies making up the Standard & Poor’s 500-stock index provided earnings guidance to investors, the lowest ever for March and just the second-lowest of any month since 2000, Smart Money reports, citing a Bank of America-Merrill Lynch Global Research report.

That has analysts bracing for disappointing numbers to hit the wire.

“The waters could get choppier for equity markets as earnings season gets underway,” says John Lonski, chief economist for Moody’s Analytics, Smart Money adds.

Some aren’t so worried.

“Are we going to see 5-10 percent growth in earnings by almost all of the S&P 500? Probably,” investor and strategist Dennis Gartman, author of The Gartman Letter, tells CNBC.

Current calls of up to 2 percent growth in numbers are “probably a bit on the downside,” Gartman adds.

S&P 500 company earnings rose by 19 percent in the first quarter of 2011, although Gartman says a repeat performance will be difficult this year.

Still, the economy will rebound and even though the country added 120,000 jobs in March, way below expectations, investors should wait and see if April and May indicators disappoint before adjusting strategies.

“We are adding jobs, a smaller number than hoped. When the next numbers come out, hopefully we will see this month’s revised upwards,” Gartman says.”

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“The Obama administration’s struggle to stem the U.S. foreclosure crisis illustrates how high household debt can slow recovery from a deep recession, according to the International Monetary Fund.

The global lending organization cited the failure of the administration’s signature foreclosure-prevention program in a report it released on household debt.

Fewer than 1 million mortgages have been modified under the Home Affordable Modification Program, or HAMP, the IMF noted. That’s far short of the administration’s initial goal of helping 3 million to 4 million struggling homeowners…”

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The company said better, but not by how much….

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“Gold’s London AM fix this morning was USD 1,654.00, EUR 1,261.63, and GBP 1,040.25 per ounce. Yesterday’s AM fix was USD 1,643.75, EUR 1,255.92 and GBP 1,037.72 per ounce.

Silver is trading at $31.66/oz, €24.08/oz and £19.87/oz. Platinum is trading at $1,591.50/oz, palladium at $636.30/oz and rhodium at $1,350/oz.

Cross Currency Table – (Bloomberg)

Gold climbed $17.70 or 1.2% in New York yesterday and closed at $1,659.00/oz. Gold gradually ticked lower in Asian trading prior to tentative gains in Europe and is now trading around $1,655/oz.

Gold’s 1.2% gain yesterday was the largest since March 26 and its four sessions of gains is the longest winning streak in two months.

XAU/CNY (Renminbi or Yuan) Monthly Chart – Bloomberg

A positive sign for gold was that US COMEX futures volume was the strongest in a week and gold rose despite a sharp 1.5% drop in the S&P 500 and other equity indices and a large fall in crude oil and grains.

Gold appears to be catching a breather today and is taking a break after the four sessions of consecutive gains driven by safe haven flows on a cloudy global economic outlook.

Gold’s proven safe haven attributes were clearly seen again yesterday as the sharp bout of risk off in international markets saw gold again have an inverse correlation with riskier equity and commodity markets.

SHANGHAI SE A SHARE INDEX – 2002- Today

Markets continue to digest the very poor US employment number which has led investors to again question the rose tinted view of the US economic ‘recovery’.

The Fed’s beige book will be released at 18.00 GMT.  Investors will also watch the European government debt market, after Italian and Spanish debt was met with decreased demand due to shaky euro zone economies and renewed contagion concerns.

Chinese Gold Imports From Hong Kong Rise Nearly 13 Fold – PBOC Likely Buying Dip Again

Chinese gold demand remains very strong as seen in the importation of 40 metric tonnes or nearly 40,000 kilos of gold bullion from Hong Kong alone in February.

Hong Kong’s gold exports to China in February were nearly 13 times higher than the 3,115 kilograms in the same month last year, the data shows.

Shipments were 72,617 kilograms in the first two months, compared with 10,564 kilograms a year ago or nearly a seven fold increase from the record levels seen last year.

China’s appetite for gold remains strong and Chinese demand alone is likely to put a floor under the gold market.

Reuters Global Gold Forum

Mainland China bought 39,668 kilograms (39.668 metric tons), up from 32,948 kilograms in January, according to export data from the Census and Statistics Department of the Hong Kong government.

Demand has picked up again after the Lunar New Year and demand has climbed in China as rising incomes and concerns about inflation lead to store of value buying.

There is also a concern about the Chinese stock market which has gone sideways since 2001 (see chart) and increasing concerns that various property markets in China look like bubbles ready to burst.

Consumer demand for gold beat India for the first time in almost three years in the fourth quarter and China may replace India as the biggest buyer annually this year.

The massive gold purchases may signal the People’s Bank of China is continuing to secretly accumulate gold reserves.

Reuters report that there are suspicions that the number could include purchases from the public sector, as the market was largely quiet during a post-Lunar New Year holiday slump in February. “On the public level, China’s central bank will continue to accumulate gold, which is easier than liberalising their capital account and currency,” said Friesen of SocGen, adding that building gold reserves would help China’s push to turn the renminbi into a global currency.

Accommodative monetary policy will remain an incentive for private investors to buy into gold, he added.

The nation last made its reserves known more than two years ago, stating them to be 1,054 tons.

The PBOC’s gold reserves remain small compared to those of the Federal Reserve and many European nations.  Their gold reserves remain tiny when compared to their massive foreign exchange reserves of $3.2 Trillion.

It is important to note that in past years, Hong Kong gold imports have accounted for about half of China’s total gold imports. China itself doesn’t publish gold import data and the very high and increasing demand from Hong Kong is only a component of overall Chinese demand.

The per capita consumption of 1.3 billion people continues to increase from a near zero base meaning that this is indeed a paradigm shift and not a blip or ‘flash in the pan’.

It means that gold will likely see record nominal highs – possibly before the end of the year.

Prudent western buyers wishing to protect and grow wealth will again buy gold on the dip as the Chinese are doing.

For breaking news and commentary on financial markets and gold, follow us on Twitter.

OTHER NEWS 
(Bloomberg) — China’s Feb. Gold Imports From Hong Kong 39,668 Kilograms
Hong Kong government announced Feb. gold exports data on its website.

(Bloomberg) — Russia’s FinEx Plus Plans Gold Exchange Traded Product This Year
Asset Management Co. FinEx Plus LLC plans to start a gold exchange traded product in Moscow and expand that to other commodities this year.

FinEx is in negotiations with the Micex-RTS exchange in Moscow to list the gold product, said Evgeny Kovalishin, general director. FinEx is partly owned by Andrei Vavilov, Russia’s former first deputy finance minister, according to Kovalishin.

(Bloomberg) — Raw Materials Group Sees Gold Averaging $1,775 an Ounce in 2012
Gold will average $1,775 an ounce this year, 13 percent more than in 2011, Raw Materials Group said in a statement today.

Silver will drop 6.3 percent to an average of $33 an ounce, platinum 1.1 percent less at $1,700 an ounce and palladium 2.9 percent lower at $710 an ounce, RMG said.”

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“American International Group Inc. AIG -2.40% is planning to jump back into U.S. property investing, reversing yearslong efforts to downsize its real-estate business in the wake of its near-collapse and government bailout in 2008.

AIG until recently had been dismantling what was once a $24 billion real-estate portfolio packed with trophy properties around the world to help pay back U.S. government loans and keep the company afloat. Its investing has been limited primarily to a few European deals with a single partner.

But now AIG is beginning to make plans for fresh investments across the U.S. that will begin later this year.

A real-estate division of the New York-based company has reached out to developers of new apartment buildings in major metropolitan areas, said people familiar with the matter.

“We’ve done multifamily deals with them before, and we’re interested in working with them again,” said Hal Fetner, president and chief executive of New York developer Durst Fetner Residential LLC who has been contacted by AIG about new developments.

AIG hasn’t set specific targets on the size of its future investments in real estate, but people familiar with the insurer say that eventually it will amount to hundreds of millions of dollars annually.

The company once acquired flashy properties like a Vermont ski village, Shanghai office towers and a Tokyo shopping mall. This time, a humbled AIG has set its sights lower: The U.S. apartment market is where it is focusing now, said people familiar with the matter.

AIG was one of the financial groups that expressed interest in a $100 million development project in Montclair, N.J., a one-time Jaguar dealership that developer Pinnacle Cos. plans to convert into an apartment complex with retail, commercial and office space, said people familiar with the matter. It also has held discussions with brokers or developers in California and the Southeast U.S., the people said….”

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“WASHINGTON (AP) — Thousands of U.S. job hunters are losing out because employers use faulty background-check data drawn from shoddy records, consumer advocates say in a new report.

Those advocates want the government to make sure people know what information prospective employers see, so that errors can be corrected and abusive companies can be held responsible.

Use of criminal-background data is exploding as the economy struggles back from the worst job crisis in decades, the National Consumer Law Center says in the report, which is being released Wednesday. To meet surging demand, countless dubious companies have sprouted up, it says.

“It’s the Wild West for background-screening report companies,” says Persis Yu, lead writer of the report. “They’re generating billions in revenue, but they have little or no accountability.”

Nearly three-fourths of companies conduct criminal background checks for some job applicants, according to a 2010 study by the Society for Human Resource Management. They buy criminal-background data from providers of all sizes, including national names like Lexis-Nexis as well as upstarts that could include “anyone with a computer, an Internet connection and access to records,” the report says.

Data providers obtain information from online public records, private vendors, jails and police blotters, it says. Sloppy handling of that data can cause a search on one person to turn up a rap sheet about someone with a similar name, for example.

Other common errors include displaying criminal records that were supposed to be sealed or wiped clean, misclassifying minor offenses as major crimes and listing charges that have been dismissed, the report says.

The information is more widely available in part because local law-enforcement agencies are selling it to raise money, the group says. It says some data providers refuse to correct errors even when people can document inaccuracies.

That’s not an option for many people, Yu said, because employers often ignore laws requiring them to let people correct any false, negative information before making a hiring decision.

“It’s a source of confusion for many employers,” she said, and the law is hard to enforce because it’s impossible to know why a person’s job application was rejected.

Further muddying the picture, data providers aren’t registered with the government, so it’s impossible to get a full picture of the industry, Yu said.

The report is the first in-depth survey of consumer abuse by private companies that sell dodgy dossiers. Many of the issues it explores were first described last year in an investigation by The Associated Press.

The Consumer Financial Protection Bureau has the authority to write rules governing data companies under the Fair Credit Reporting Act, the law governing credit-report companies, the report says. Advocates want the agency to make data providers update their records annually, prohibit matches based only on name and take other steps aimed at making them more accurate.

The CFPB has proposed adding credit-report companies to the list of companies it will supervise closely. It has not discussed regulating consumer-data providers.

NCLC also wants the Federal Trade Commission to investigate data providers and employers to make sure they are complying with FCRA.”

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In fact computer models caused insurance companies to drop long standing on time customers in many areas of the country years ago…

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The action is suspected to begin today….

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Not enough HP is my guess. 

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“Carlyle Group, the second-biggest U.S. private-equity firm, will seek a valuation of $7.5 billion to $8 billion in its initial public offering, according to people with knowledge of its plans.

Carlyle plans to sell a stake of about 10 percent in the IPO and will start marketing the deal to investors as early as next week, said the people, who asked not to be identified because the information is private. The Washington-based firm, which has been gauging public interest since last year, is targeting its share sale in early May, said another person…”

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