$GS’s Cohen Says You Have Not Missed the Rally

“The rally in the stock market is real and supported by the fundamentals, Goldman Sachs‘s Abby Joseph Cohen told CNBC on Friday.

In a “Squawk Box” interview, Cohen said short-term concerns about the automatic spending cuts notwithstanding, her models peg fair value for the S&P 500 index at 1,575 — a 4 percent premium to Thursday’s close. “There are other models, including the Fed model, that show fair value as high as 1,700 or 1,750.”

During Thursday’s session, the Dow Jones Industrial Average came within 15 points of its all-time closing high of 14,164 before finishing lower.

“[The rally] is supported by improving fundamentals in the U.S. economy and, very importantly, valuation,” the senior U.S. investment strategist said. “[With] equities at a (price-to-earnings) ratio at 14 times earnings, they’re just not expensive.” …”

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“Paulson & Co., the largest shareholder ofMetroPCS Communications, said it will vote against the wireless service provider’s proposed merger with T-Mobile USA, a unit of Deutsche Telekom, unless the companies sweeten the deal.

Paulson, owner of 36.3 million shares or 9.9 percent of MetroPCS stock, is following in the footsteps of another shareholder, P. Schoenfeld Asset Management (PSAM). PSAM, whose holdings represented 1.66 percent of MetroPCS shares at year end, is leading a proxy battle against the merger.

Paulson said on Thursday that, while the deal has strategic merits, the merged company would have “too much debt at too high an interest rate to be competitive” and it complained about the exchange ratio for MetroPCS shareholders….”

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“The pace of growth in the U.S. manufacturing sector picked up to its fastest rate in over a year and a half in February as new orders continued to accelerate, while a separate report showed U.S. construction spending unexpectedly fell.

The Institute for Supply Management (ISM) said its index of national factory activity rose to 54.2 from 53.1 in January, topping economists’ forecasts for a pullback to 52.5. It was the highest level since June 2011….”

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An alternate point of view

“NEW YORK (Reuters) – U.S. companies are expected to contribute $70 billion to their pensions in 2013 with about 40 percent of the money going into bonds, a UBS analyst said in a research note released on Friday.

The amount is below the estimated $80 billion in pension contribution made last year.

Although stocks and other risky investments have fared well since mid-2012, many corporate pensions remain underfunded and cannot depend on strong future returns on equities and higher-yielding vehicles to meet their obligations, according to UBS analyst Boris Rjavinski.

A U.S. corporate pension on average is underfunded by 15 to 25 percent….”

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“(Reuters) – Insurer American International Group Inc eliminated the U.S. government’s last financial interest in the company on Friday, buying back warrants from the U.S. Treasury for about $25 million.

The government rescued AIG at the depths of the financial crisis as the insurer teetered on the brink of bankruptcy. The bailout ultimately totaled $182 billion, and when all was said and done theTreasury owned more than 90 percent of the company.

The Treasury sold the last of that stock last year but still held some warrants. AIG said Friday it had repurchased all of them. They had originally been issued in 2008 and 2009.

“The U.S. Treasury does not have any residual interest in AIG after AIG’s repurchase of these warrants,” the company said in a statement.

AIG shares fell 0.5 percent to $37.81 in afternoon trading.”

“(Reuters) – The U.S. Securities and Exchange Commission has escalated its investigation intoChesapeake Energy Corp and Chief Executive Aubrey McClendon for a controversial perk that granted him a share in each of the natural gas producer’s wells.

The investigation, disclosed on Friday by Chesapeake in an SEC filing, comes nine days after it said an internal probe of the well program and McClendon’s finances revealed no “intentional” wrongdoing by the executive.

Regulators in the SEC’s Fort Worth, Texas, office have been looking into the Founder Well Participation Program (FWPP) that grants McClendon up to a 2.5 percent interest in every well that Chesapeake drills. He must also pay his share of well costs.

A Reuters investigation last April found that McClendon had arranged to personally borrow more than $1 billion from a big investor in Chesapeake, EIG Global Energy Partners, secured by his interest in the wells.

The board has since said the FWPP program would end in June 2014.

“I’m now confused because the board just said everything was fine,” said Fadel Gheit, an oil analyst at Oppenheimer. “I really thought the board had an iron-clad, air-tight grip on the situation. Unfortunately the saga continues.”

Chesapeake was advised by the SEC in December that an informal inquiry, launched in May, was continuing as an investigation and subpoenas for information and testimony have been issued. Both the company and McClendon are providing information….”

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“SAN FRANCISCO (Reuters) – Hedge fund manager David Einhorn’sGreenlight Capital has dropped its lawsuit against Apple Inc after winning a battle to stop the iPhone maker from a shareholder voteon a proposal to abolish its ability to issue preferred shares at its discretion.

The lawsuit’s withdrawal, disclosed in a court ruling, closed the chapter on what was the strongest challenge by an Apple investor in years….”

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In Play ,

On the Wires

“Gap reported quarterly earnings and revenue Thursday that exceeded analyst expectations.

The mall clothing chain that owns the Gap, Old Navy and Banana Republic brands also increased its dividend by 20 percent.

Shares popped more than 3 percent after the closing bell, following the news. What is Gap’s stock doing now?(Click here for the latest after-hours quote.)

Net income for the quarter jumped 61 percent to $351 million, or 73 cents a share, from $218 million, or 44 cents a share in the year-earlier period.

Revenue improved more than 10 percent to $4.73 billion from $4.28 billion a year ago.

Analysts had expected Gap to report earnings of 71 cents a share on $4.63 billion in revenue, according to a consensus estimate from Thomson Reuters.

Sales rose 5 percent at stores open at least a year, considered a key indicator of a retailer’s health.

Gap’s outlook came in on the low end of expectations: It expects to earn between $2.52 and $2.60 per share in 2013; analysts currently expect $2.59 a share. The company cited the weakening yen as a factor….”

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“Bank of America said in a securities filing on Thursday that the New York State Attorney General was investigating the bank over its purchase, securitization and underwriting of home loans.

The bank, the second-largest in the U.S., is the third known to be targeted by the New York attorney general’s office over how banks bundled mortgage loans into securities during the housing boom.

Bank of America said in the filing with the U.S. Securities and Exchange Commission that it was cooperating with the investigation. A bank spokesman declined to comment….”

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Let me just say that this is a crock of shit.

All of you in the media, business, and government should be ashamed of this position.

Granted entitlement spending is a big problem, but it is not the seniors fault they are living longer. It is not the seniors fault that government spending is reckless.

It is not the seniors fault that our country has diminished into a banana republic.

Perhaps our government, should get is fiscal house in order, collect taxes from multi nationals, get rid of corporate welfare, and cut down on their own entitlements.

I mean really, does Nanci Pelosi and tons of other millionaires really need pensions of $800k+? Do millionaires really need to collect entitlement spending? Do we really need to have 500 plus military bases around the world where the costs of air conditioning outspends feeding the homeless or education?

If one pays into a system then one should get back….and remember adjusted for inflation the get back is not as great as you think compared to the put in.

Take your Atlas Shrugged attitude and fuck off.

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“DETROIT (AP) — Chrysler says its sales last month rose 4 percent from a year ago for the company’s best February since 2008.

The automaker says it sold just over 139,000 cars and trucks last month.

The increase is a sign that U.S. auto sales remain strong even in an uneven economy. Industry analysts expect an overall increase of 7 percent when automakers report results on Friday….”

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Personal spending increases 0.2%…

“NEW YORK (MarketWatch) — Electronics retailer Best Buy Co. BBY +6.34% said Friday its fourth-quarter loss narrowed to $409 million, or $1.21 a share, from $1.82 billion, or $5.17 a share, a year earlier. Revenue inched up to $16.71 billion from $16.67 billion a year earlier. Excluding items, adjusted profit was $1.64 a share, the company said. Analysts, on average estimated Best Buy would earn $1.54 a share on sales of $16.3 billion, FactSet data showed. The company didn’t give forecasts for this year, but said the first quarter will be “under significant pressure.” …”

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Talks have ended with Schulze

“Banca Monte dei Paschi di Siena SpA, which yesterday received a 4.1 billion-euro ($5.3 billion) government bailout, sued Deutsche Bank AG (DBK) and Nomura (8604) Holdings Inc. over two derivatives that soured.

Monti Paschi filed separate suits in Florence seeking damages over two contracts from 2008 and 2009 dubbed Santorini and Alexandria, the Siena, Italy-based lender said in a statement today. The bank also sued former executives Antonio Vigni and Giuseppe Mussari over their involvement in the transactions. The lender didn’t specify how much it’s seeking….”

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“German retail sales rose the most in more than six years in January as falling unemployment bolstered consumer confidence.

Sales, adjusted for inflation and seasonal swings, jumped 3.1 percent from December, when they dropped 2.1 percent, the Federal Statistics Office in Wiesbaden said today. That’s the biggest increase since December 2006, the office said. Economists forecast a 0.9 percent gain, according to the median of 20 estimates in a Bloomberg News survey. From a year earlier, sales rose 2.4 percent.

The German economy, Europe’s largest, is recovering from its fourth-quarter slump. Factory orders, industrial production and exports rose in December and sentiment has improved among entrepreneurs, investors and consumers. With unemployment near a two-decade low and a shortage of skilled labor, German workers won wage deals of as much as 6.5 percent last year….”

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“The pound fell to the lowest level since July 2010 against the dollar after an industry report showed U.K. manufacturing unexpectedly shrank in February.

Sterling dropped for the third time in four days versus the euro as the Bank of England said mortgage approvals declined in January, signaling the housing market is struggling to recover. The pound has dropped the most of any major currency this year as speculation the central bank will need to add more monetary support to the faltering economy damped demand for the currency. U.K. government bonds rose, with 10-year yields set for their biggest weekly drop since June.

“The data was supposed to be good and it came out negative so that has taken the rug out from under sterling’s feet,” said Jane Foley, a senior foreign-exchange strategist at Rabobank International in London. “There is an array of negative fundamentals for the U.K., so it’s very difficult to see silver linings. I think sterling will be weak all year.”

The pound dropped 0.8 percent to $1.5035 at 12:19 p.m.London time after sliding to $1.5013. The U.K. currency declined 0.4 percent to 86.48 pence per euro. It fell to 88.15 pence on Feb. 25, the weakest since Oct. 28, 2011.

The pound has depreciated 5.5 percent this year, the worst performer of 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 3.1 percent and the euro rose 1.4 percent….”

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“Poland’s economy slowed less than economists forecast in the fourth quarter as exports helped offset weakening consumer spending, taming arguments for more interest-rate cuts.

Gross domestic product climbed 1.1 percent from a year earlier, which was the slowest pace since the second quarter of 2009 and compared with a 1.4 percent increase in the previous three months, the Warsaw-based Central Statistics Office said today. Economists expected a 0.9 percent increase, according to the median of 32 estimates in a Bloomberg survey. GDP grew a seasonally adjusted 0.2 percent from the previous quarter, defying expectations for the first contraction in four years.

The European Union’s largest eastern economy has been battling the worst slowdown in three years as the euro area, its biggest trading partner, fell into recession. The central bank has responded by cutting interest rates by 1 percentage points since November and Governor Marek Belka said last month the fourth quarter “didn’t bring a further drastic deterioration” in economic conditions….”

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