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Comments »Yearly Archives: 2013
In Play and On the Wires
Mortgage Applications Rose Last Week
“Applications for U.S. home mortgages rose last week, fueled by demand for refinancings as interest rates dropped, data from an industry group showed on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 1.8 percent in the week ended April 26.
The MBA’s seasonally adjusted index of refinancing applications climbed 2.8 percent. But the gauge of loan requests for home purchases, a leading indicator of home sales, slipped 1.4 percent…..”
Comments »ADP Private Payroll Numbers Miss Huge, Futures Fall Further
“The gloomy news continued for jobs as ADP reported Wednesday that private companies created just 119,000 new positions in April.
That was well below expectations and confirmation that the labor market is slowing heading into late spring and early summer.
Economists surveyed by Reuters expected the ADP report to show the private sector created 150,000 jobs in April, down from 158,000 in March.
“Nearly every industry has seen slower growth since the beginning of the year,” Moody’s economist Mark Zandi said on CNBC. “Smaller businesses are experiencing much weaker growth.”
Moody’s Analytics conducts the survey in conjunction with ADP.
The report comes two days before the government releases its nonfarm payrolls growth count for April. Economists recently have been nudging down their projections, which is pegged around 150,000 after March’s dismal 88,000 reading.
The weakness from the ADP report could cause expectations to dim even further.
Small businesses accounted for 50,000 of the new positions, but Zandi noted that the sector is seeing a slowdown likely attributable to the onset of the Affordable Care Act national healthcare plan.
Companies with more than 50 employees will fall under the umbrella of the plan, also known as Obamacare…..”
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$MRK Hurts DOW Futures as They Miss and Guide Lower
“Merck & Co. (MRK) reported first quarter 2013 earnings of 85 cents per share, well above the Zacks Consensus Estimate of 78 cents. Tax benefits boosted first quarter 2013 earnings by 6 cents. Earnings, however, declined 14.1% from the year-ago period.
Revenues for the quarter fell 9.0% to $10,671 million and missed the Zacks Consensus Estimate of $10,997 million. Revenues were hit by the genericization of Singulair and a few other products and negative currency fluctuation (2%).
Including one-time items, first quarter 2013 earnings declined 7.1% to 52 cents per share.
The Quarter in Details
Merck’s Pharmaceutical segment posted sales of $8.9 billion, down 12%. Negative currency movement impacted Pharmaceutical segment sales by 2%. Products like Remicade, Simponi, Isentress, Zostavax and Gardasil performed well.
However, the strong performance of these products was offset by lower sales of Singulair, Maxalt, and Clarinex.
Singulair sales experienced a severe decline following its US patent expiry in Aug 2012. Sales fell 75% from the year-ago period to $337 million. We note that Singulair lost exclusivity in the EU in Feb 2013 and is experiencing a sharp decline in sales. The drug retains exclusivity in Japan until 2016….”
Comments »$CMCSA Posts Better Than Expected Profits and Revenues
“(Reuters) – Comcast Corp posted higher quarterly profit on Wednesday, driven by strength on the cable side of the business.
The leading U.S. cable television provider, which also owns broadcaster NBC Universal, posted first-quarter profit of $1.4 billion, or 54 cents a share, up from $1.22 billion, or 45 cents a year ago.
Excluding revenue from Comcast’s sale of spectrum, the company posted earnings of 51 per share and beat analyst estimates by a penny.
While the cable unit lost a worse-than-expected 60,000 customers, it added 433,000 high-speed Internet customers, slightly more than the 432,000 that analysts, on average, expected, according to StreetAccount. Analysts looked for Comcast to lose 29,000 video customers, according to Street Account.
Revenue at NBC Universal rose 2.4 percent year over to $5.4 billion. Operating cash flow at the broadcast television unit NBC was negative $14 million, better than a year ago, when it was negative $35 million….”
Comments »$VIA Misses Estimates Both Top and Bottom Line
“(Reuters) – Viacom Inc reported a 6 percent drop in revenue because of a weak slate of movies from its studio Paramount Pictures, but advertising revenue turned positive during the quarter.
The company said for the quarter that ended March 31, revenue was $3.14 billion, slightly lower than analysts’ expectations of $3.19 billion, according to Thomson Reuters I/B/E/S.
But its cable network properties, which include MTV and Nickelodeon, were climbing out of a slump as advertising revenue rose 2 percent in the United States.
Viacom has been struggling with a decline in TV ratings…”
Comments »$TWC Beat Estimates and Reaffirms Guidance
“(Reuters) – Time Warner Inc posted a higher first-quarter profit on Wednesday, as growth in its cable networks offset declines in the film, TV entertainment and publishing units.
The company also stood by its earnings growth outlook for the year, although that forecast does not include the planned spin-off of the publishing business.
Net income for the media company, which owns the CNN cable network, premium TV service HBO and a movie studio, rose to $720 million, or 75 cents per share, from $583 million, or 59 cents a share, a year ago.
Adjusted earnings of 82 cents per share easily beat the consensus Wall Street forecast of 75 cents, according to Thomson Reuters I/B/E/S. Earnings exceeded even the highest of the 28 estimates that made up the consensus.
But revenue came in below even the lowest Wall Street expectations….”
Comments »Brent and WTI Fall as Stockpiles Continue to Build and Consumption Falls
“Brent crude fell for a second day after OPEC’s production increased to a five-month high and an industry group said U.S. stockpiles climbed for the first time in three weeks.
Futures slid as much as 1.8 percent in London after dropping 1.4 percent yesterday. U.S. crude inventories rose by 5.2 million barrels last week, the American Petroleum Institute said. Government figures today are projected to show a gain of 1.1 million barrels, according to a Bloomberg News survey. Daily output by the Organization of Petroleum Exporting Countries increased in April by 194,000 barrels a day, a separate survey indicated. An index of manufacturing in China signaled weaker expansion in April.
“With inventories at the levels they are at, it is a question of how much demand there is, and there is growing evidence of a slowdown in economic activity with even China weaker than expected,” Michael Hewson, a market analyst at CMC Markets Plc in London, said today by telephone. “The direction of travel on oil is down, and I see no reason to change that view unless OPEC cuts production.”
Brent for June settlement slid as much as $1.83 to $100.54 a barrel on the London-based ICE Futures Europe exchange, the lowest intra-day level in a week, and was at $100.58 at 1:21 p.m. local time. Futures fell $1.44 to $102.37 yesterday, capping a 7 percent drop for April. Trading was 2 percent above the 100-day average for the time of day. Prices are down 9.5 percent this year.
Cushing Supplies
West Texas Intermediate for June delivery declined as much as $1.79 to $91.67 a barrel in electronic trading on the New York Mercantile Exchange and was at $91.81 at the same time today. Front-month Brent was at a premium of $8.73 to WTI, the narrowest gap since Dec. 30, 2011…..”
Comments »Copper Slips Over 1% as China Manufacturing Slows
“Copper fell for a second day in London on concern demand will take time to revive after an official manufacturing gauge was weaker than projected in China, the world’s biggest consumer of the metal.
A Purchasing Managers’ Index was at 50.6 in April, China’s statistics bureau and logistics federation said today, below the 50.7 median estimate in a Bloomberg News survey of economists. Markets in the country will reopen tomorrow after a three-day break. Copper rose in London trading last week after five weeks of declines, the longest streak since November.
“Chinese end-users were taking advantage of low prices to restock,” Nic Brown, head of commodities research at Natixis SA in London, said by e-mail today. “With China out for three days, the market is losing some of that positive impetus.”
Copper for delivery in three months lost 1.3 percent to $6,964 a metric ton by 9:22 a.m. on the London Metal Exchange after slumping for a third month in April. Copper for delivery in July dropped 1.1 percent to $3.151 a pound on the Comex in New York, where futures trading volumes were 48 percent lower than the average in the past 100 days for the time of day.
“Despite the poor macro data we’ve been seeing in recent weeks, I’d imagine there might also be some replenishment of inventories as demand for copper products begins to improve,” Brown said of China. Imports of refined copper into the country rose in March from a 19-month low, figures showed last week….”
Comments »On the Matter of European Bailouts: “They are Making Stuff Up as They Go Along”
“As Greece lurched toward its first bailout in early 2010, the largest bank in Cyprus was stocking up on Greek bonds.
That lethal misjudgment helped drive the government in Nicosia toward a rescue of its own, a 10 billion-euro ($13 billion) project involving measures so novel — beyond an unprecedented raid on bank deposits that sparked a global uproar — that policy makers initially kept them under wraps.
Neither a plan for Cyprus to sell gold reserves nor one to repay a loan from the Cypriot central bank with real estate was disclosed in a statement by euro-area finance chiefs in the early morning hours March 16. The measures were cited by Jeroen Dijsselbloem of the Netherlands, the group’s chief, in a confidential recap, which was obtained by Bloomberg News.
“It’s clear they’re making stuff up as they go along: every bailout is different in an unexpectedly horrible new way,” Alexander Apostolides, an economics lecturer at European University Cyprus in Nicosia and a member of the Cypriot government’s economic-advisory council, said in an interview. “They’re not really thinking ahead.”
With another small country, Slovenia, fighting to avoid the euro region’s sixth bailout, the Cypriot misadventure raises the question of how much policy makers have learned in more than three years of straining against the debt crisis.
Hemmed in by an election campaign in Germany, along with demands of the European Central Bank and the International Monetary Fund, policy makers are fighting record unemployment, a second year of recession and austerity and bailout fatigue to keep the 17-nation currency bloc whole.
Building Institutions…”
Comments »The $DXY Falls to an Eight Week Low
“The Dollar Index (DXY) dropped to an eight- week low amid speculation the Federal Reserve will affirm its commitment to maintaining bond purchases when it announces its policy decision today.
The U.S. currency weakened for a fourth day against the euro before an industry report forecast to show America’s private employers added the fewest jobs in six months. The Fed is buying $85 billion of bonds a month as part of its quantitative-easing strategy to put downward pressure on borrowing costs. The pound strengthened after U.K. manufacturing shrank less than economists predicted last month. Australia’s dollar fell after Chinese manufacturing growth slowed.
“Into the Fed meeting I think that we’re going to see further U.S. dollar selling pressure,” said Hans-Guenter Redeker, head of global foreign-exchange strategy at Morgan Stanley in London. “The Fed is going to signal that it’s going to stay accommodative, that it’s going to reconfirm the link between unlimited quantitative easing and the state of the economy.”
The Dollar Index, which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, fell 0.2 percent to 81.58 at 7:01 a.m. in New York after dropping to 81.569, the lowest since Feb. 28.
The dollar declined 0.2 percent to $1.3191 per euro after depreciating to $1.32, the weakest level since April 17. The greenback was little changed at 97.53 yen. The euro strengthened 0.3 percent to 128.66 yen.
The U.S. currency may decline below 94 yen within the next three weeks, Morgan Stanley’s Redeker said.
Fed Purchases…”
Comments »Commodities Fall for a Second Day on Slowing Global Growth Data
“Commodities dropped for a second day, led by metals and oil after data showed weaker manufacturing growth in China. U.K. stocks and U.S. equity futures rose on bets the Federal Reserve will continue its stimulus efforts.
The Standard & Poor’s GSCI gauge of 24 commodities fell 1.2 percent as of 8:03 a.m. inLondon, as aluminum slipped 2.2 percent and oil declined 1.5 percent. The U.K.’s FTSE 100 Index rose 0.6 percent, while S&P’s 500 Index futures added 0.1 percent. Japan’s Topix Index fell 0.6 percent after posting its best month since 1999. The Dollar Index (DXY) slipped for a fifth straight day. Most European markets were closed for a holiday.
Chinese and Australian reports today signaled a slowdown inmanufacturing as a U.K. Purchasing Managers’ Index showed a third month of contraction. U.S. private employers probably added the fewest jobs in six months, after business activity unexpectedly shrank, according to a Bloomberg survey. The Federal Reserve may consider maintaining its bond-buying program at a two-day meeting concluding today, a separate survey shows.
“There is little doubt that risks to global economic growth for 2013 are tilted to the downside,” said Matthew Sherwood, the Sydney-based head of investment market research at Perpetual Ltd., which manages about $25 billion. “Earnings growth after several years of very subdued performance still seems a bit of a stretch.” …”
Comments »The Aussie Dollar Holds Gains on Expectations of Global Easing
“Australia’s dollar held a two-day gain versus the U.S. currency on bets the Federal Reserve will affirm its commitment to so-called quantitative easing at the end of a policy meeting today.
New Zealand’s kiwi dollar maintained its biggest monthly advance against the greenback since September ahead of U.S. data forecast to show manufacturing activity cooled and private employers added the fewest jobs since October. Factory production expanded in China, the biggest trading partner of both South Pacific nations.
“Not everything is all bright and rosy” in the U.S., Janu Chan, a Sydney-based economist at St. George Bank Ltd., said on a conference call with clients. “QE from the Fed and elsewhere can only mean further upside for the Australian dollar.”
The so-called Aussie slid 0.2 percent to $1.0353 as of 5:01 p.m. in Sydney, following a 0.9 percent gain over the previous two days. The New Zealand dollar added 0.1 percent to 85.72 U.S. cents, after rising 2.3 percent in April.
Two-year Australian bond yields touched 2.56 percent, the lowest since Nov. 1. Ten-year rates were little changed at 3.1 percent.
Prospects the Fed will taper its $85 billion of monthly bond purchases have diminished amid a slowing economic recovery. Minutes from the March meeting show several Fed officials discussed slowing the pace of stimulus.
Private employment rose by 150,000 in April after gaining 158,000 the previous month, data from the Roseland, New Jersey- based ADP Research Institute will probably show today, according to the median estimate of economists surveyed by Bloomberg News.
U.S. Manufacturing
The Institute for Supply Management manufacturing index, sank to 50.6 in April from March’s 51.3, a second consecutive decrease, according to a separate Bloomberg poll ahead of today’s release. Readings above 50 signal expansion….”
Comments »Japan Teams Up With Germany in Opposing Fed Liquidity Rule
“Japan joined Germany in opposing a proposed U.S. Federal Reserve rule aimed at compelling large foreign bank holding companies to hold more capital and liquidity in their American subsidiaries.
Bank of Japan Executive Director Hiroki Tanaka asked the Fed Board of Governors in an April 30 letter to “carefully consider major concerns” it has about the proposed rule. Japan’s Financial Services Agency asked that the proposed rule take into account “deference to home country regulation and supervision” in a letter signed by Masamichi Kono, the regulator’s vice commissioner for international affairs.
The letters followed an April 26 note by Bundesbank Vice President Sabine Lautenschlaeger and Bafin President Elke Koenig to the Fed board that “‘go it alone’ national initiatives can tend to weaken the global setup and stability” of systemically important banks “instead of stabilizing them.”
The Fed’s proposal would affect Deutsche Bank AG, Germany’s biggest lender, which last year dropped its bank holding company status so that it could meet U.S. requirements without assigning additional capital and liquidity to its unit in the country. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest publicly traded bank, has operations in the U.S. including its San Francisco-based UnionBanCal Corp. unit.
Global Efforts…”
Comments »What Trades in Asia Falls, Europe is Mixed, and U.S. Future Play Wait and See
Yields for Italy, Spain, France, and Germany …
Comments »A Word From Nigel Farage
[youtube://http://www.youtube.com/watch?v=UZap5n3zGZ8 450 300]
Comments »20 Signs That The Next Great Economic Depression Has Already Started In Europe
“The next Great Depression is already happening – it just hasn’t reached the United States yet. Things in Europe just continue to get worse and worse, and yet most people in the United States still don’t get it. All the time I have people ask me when the “economic collapse” is going to happen. Well, for ages I have been warning that the next major wave of the ongoing economic collapse would begin in Europe, and that is exactly what is happening. In fact, both Greece and Spain already have levels of unemployment that are greater than anything the U.S. experienced during the Great Depression of the 1930s.
Pay close attention to what is happening over there, because it is coming here too. You see, the truth is that Europe is a lot like the United States. We are both drowning in unprecedented levels of debt, and we both have overleveraged banking systems that resemble a house of cards. The reason why the U.S. does not look like Europe yet is because we have thrown all caution to the wind. The Federal Reserve is printing money as if there is no tomorrow and the U.S. government is savagely destroying the future that our children and our grandchildren were supposed to have by stealing more than 100 million dollars from them every single hour of every single day. We have gone “all in” on kicking the can down the road even though it means destroying the future of America. But the alternative scares the living daylights out of our politicians. When nations such as Greece, Spain, Portugal and Italy tried to slow down the rate at which their debts were rising, the results were absolutely devastating. A full-blown economic depression is raging across southern Europe and it is rapidly spreading into northern Europe. Eventually it will spread to the rest of the globe as well.
The following are 20 signs that the next Great Depression has already started in Europe…”
Comments »The Nikkei Manages to Pare Losses
“Asian stocks declined from the highest level since June 2008, led lower by Japanese shares as the yen strengthened and data signaled a slowdown in global business activity. Oil and copper dropped.
The MSCI Asia Pacific Index dipped 0.3 percent as of 11:37 a.m. in Tokyo as Japan’s Topix Index slid 0.5 percent after posting its best month since 1999. Standard & Poor’s 500 Index futures were little changed. The yen climbed 0.1 percent to 97.36 per dollar. Crude oil declined 0.4 percent, and copper lost 0.4 percent after the biggest monthly loss since May.
An Australian manufacturing gauge slumped to a four-year low as currency strength weighed on exporters, while China’sPurchasing Managers’ Index expanded at a slower pace, according to reports today. U.S. private employers added the fewest jobs in six months, economists forecast, after business activity unexpectedly shrank in April for the first time in more than three years.
“There is little doubt that risks to global economic growth for 2013 are tilted to the downside,” said Matthew Sherwood, the Sydney-based head of investment market research at Perpetual Ltd., which manages about $25 billion. “Earnings growth after several years of very subdued performance still seems a bit of a stretch.” …”
Comments »South Korea’s Exports Climb Much Less Than Expected, Bad Implications for the Global Economy
“The first major economic report with complete April data is out and it’s a miss.
South Korean exports climbed by just 0.4% year-over-year. Economists were looking for a gain of 2.0%.
Economists across Wall Street dub South Korean exports as the global economic canary in the coal mine.
Korean trade data usually comes before the first trading session of the month in Asia, which makes it the first of the world’s major economic indicators to be released.
Because Korea’s exports are heavily exposed to China and Japan — the world’s second and third largest economies — it is considered to have strong predictive power….”
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