Earnings Disappointments and Commodities Slide Weigh Heavy on U.S. Futures

“NEW YORK (Reuters) – Stock index futures fell on Wednesday, indicating the S&P 500 will retreat from its second-best daily performance of the year as commodities fell and after earnings reports from Yahoo and Intel.

Brent crude slid towards $99 per barrel and copper dropped 1.8 percent to $7,167 a ton as softer-than-expected data in the U.S. and China has heightened worry over demand. U.S. listed shares of BHP Billiton lost 2.7 percent to $64.84 in premarket.

Yahoo Inc shed 1.2 percent to $23.50 in premarket trade after the Internet company’s first quarter revenue fell shy of expectations as declining traffic to its Web properties and falling display advertising sales continue to weigh on the company.

Intel Corp slipped 0.5 percent to $21.81 before the opening bell after the chipmaker said its current-quarter revenue would decline as much as 8 percent and trimmed its 2013 capital spending plans.

Bank of America Corp declined 3.3 percent to $11.87 after reporting first-quarter results.

S&P 500 futures fell 11.9 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures lost 96 points, and Nasdaq 100 futures dropped 23.5 points.

According to Thomson Reuters data through Tuesday morning, of the 42 companies in the S&P 500 that have reported earnings to date for the first quarter of 2013, 66.7 percent have reported earnings above analyst expectations. Over the past four quarters, 67 percent of companies beat estimates while the average since 1994 is a 63 percent beat rate….”

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“ASML Holding NV (ASML), Europe’s largest semiconductor-equipment supplier, named finance director Peter Wennink chief executive officer as it announced a 1 billion-euro buyback and first-quarter profit that beat estimates.

Eric Meurice, 56, whose contract as CEO was set to end next year, will give up that job July 1 and become chairman, the Veldhoven, Netherlands-based company said today….”

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“Germany allotted 3.35 billion euros of 10-year bunds at an average yield of 1.28 percent, thelowest on record, data from the Bundesbank showed.

Investors bid for 5.23 billion euros of the securities, compared with a maximum sales target of 4 billion euros, according to the data.”

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“European stocks declined for a fourth day, the longest losing streak in three months, with a gauge of commodity producers sinking to an 18-month low. U.S. index futures dropped, while Asian shares climbed.

BHP Billiton Ltd. (BHP) retreated to a seven-month low after the world’s largest mining company said third-quarter iron ore production rose less than expected. Tesco Plc (TSCO) sank 3.3 percent after reporting the first annual profit drop in almost 20 years and saying it will exit the U.S. ASML Holding NV rose the most since July after posting first-quarter sales that topped analysts’ estimates and announcing a share buyback program.

The Stoxx Europe 600 Index (SXXP) fell 0.9 percent to 285.63 at 11:26 a.m. in London. The gauge earlier slid as much as 1.4 percent amid speculation Germany’s credit rating could be downgraded, before recovering some of the losses within 15 minutes. Some 14,000 DAX Index futures contracts expiring in June changed hands in a five-minute period about 9:50 a.m. inFrankfurt today, more than 15 times the 20-day average volume for that time of day, according to data compiled by Bloomberg.

“Investors are worried that Germany’s economy isn’t holding up so strongly anymore, and German downgrade rumors are spreading more fear in the markets today,” said John Plassard, who helps oversee $28 billion as vice president at Mirabaud Securities LLP in Geneva. “Coupled with the disappointing Chinese GDP numbers from earlier this week and the plunging gold prices, we’re in the middle of a phase of uncertainty and possibly a correction — the last thing market participants want to hear in such a period are downgrade rumors.”

The Stoxx 600 has still gained 2.1 percent this year as U.S. lawmakers agreed on a compromise budget and central banks maintained stimulus measures. Futures contracts on the Standard & Poor’s 500 Index lost 0.5 percent today, while the MSCI Asia Pacific Index rose 0.7 percent.

China, Commodities

“In the shorter term, we have seen a bit of nervousness linked to the poor figures out of China and the selloff in commodities — and we’re seeing mining stocks also weighing today,” said Jean-Paul Jeckelmann, chief investment officer at Banque Bonhote & Cie. in Neuchatel, Switzerland, who helps manage $1.4 billion in equities…..”

 

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“Emerging-market stocks erased earlier gains as lower commodity prices dragged down Russian and Polish equities.

KGHM (KGH) Polska Miedz SA tumbled 6 percent in Warsaw after copper retreated, helping send Poland’s WIG20 Index (WIG20) to a seven- month low. OAO Gazprom, Russia’s biggest natural-gas producer and the parent of crude producer OAO Gazprom Neft, slid to the lowest level since March 2009 in Moscow, dragging the Micex Index (INDEXCF) toward its lowest close since June 25. Chinese banks led a 1.2 percent drop in the Hang Seng China Enterprises Index of mainland companies listed in Hong Kong.

The MSCI Emerging Markets Index (MXEF) fell 0.3 percent to 1,006.41 as of 12:39 p.m. in London. The gauge earlier gained as much as 0.4 percent. Copper led declines in industrial metals after the International Monetary Fund cut its forecast to China’s economic growth yesterday, while oil traded near the lowest level in four months. The rand weakened 0.5 percent versus the dollar and South African bonds gained, as March inflation was slower than predicted by analysts.

“Russia is down on commodity prices, central and eastern Europe on weak Europe,” Martial Godet, head of emerging-markets strategy at BNP Paribas SA in London, said by e-mail. “Only the markets with low commodity exposure and strong domestic stories like India, ASEAN,Turkey, are somewhat immune.”…”

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“Standard & Poor’s, found liable in November for misleading Australian towns with investment ratings, faces more lawsuits from councils and charities seeking to recoup their losses.

The city of Swan and Moree Plains Shire Council today sued S&P and its parent companyMcGraw-Hill Cos. (MHP) in Sydney federal court claiming the AAA, AA+, AA and AA- ratings given to synthetic collateralized debt obligations were misleading. The two municipalites are representative plaintiffs for about 90 councils, religous organizations and funds who aren’t named in the statement of claim.

“This filing in Australia will pave the way for further filings in Europe,” John Walker, executive director of IMF (Australia) Ltd., the litigation funder, said in a statement. “Rating agencies played a pivotal role in the misallocation of billions of dollars worldwide from 2005 to 2008 and it is important they be held accountable.”….”

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“Hundreds of port workers at Li Ka- shing’s Hong Kong terminals surrounded his Cheung Kong Center headquarters in the city’s business district after rejecting pay rise aimed at ending a three-week strike.

Contract workers of Li’s Hongkong International Terminals Ltd. were offered a 7 percent raise in pay by their employers, the company said in an e-mail, compared with the workers’ demand for a 23 percent increase. Hong Kong government’s mediators have helped narrow the differences between employers and workers, Labour Secretary Matthew Cheung told reporters today….”

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“Asian stocks advanced for the first time in three days as new-home construction in the U.S. jumped more than forecast, the International Monetary Fund raised its forecast for Japanese growth and the yen weakened

Toyota Motor Corp., the world’s largest carmaker, advanced 1.8 percent as a weakening yen boosted the earnings outlook for exporters. Advantest Corp. paced increases in Tokyo among makers of semiconductor equipment after Intel Corp. (INTC) forecast second- quarter sales that would exceed some analysts’ estimates. Cathay Pacific Airways Ltd., Asia’s biggest international carrier by passenger revenue, climbed 2.9 percent in Hong Kong after Deutsche Bank AG raised its rating to buy.

The MSCI Asia Pacific Index gained 0.6 percent to 137.21 as of 6:08 p.m. in Tokyo. Three shares advanced for every two that fell, with eight of the 10 industry groups on the gauge climbing. The benchmark rose 5.5 percent this year through yesterday amid signs the U.S. economy is recovering and as Japanese stocks rallied on speculation the Bank of Japan will boost stimulus.

“U.S. housing starts showed a bright spot and confirmed the view that the economy is on the mend,” said Hiroichi Nishi, an equities manager in Tokyo at SMBC Nikko Securities Inc. “The yen will stay in a downtrend given the bold monetary easing by the Bank of Japan, and that leads to optimism exporters’ earnings will outperform.”

Plans for fiscal stimulus and record monetary-policy easing by the Bank of Japan were reflected in the IMF’s increased growth estimates for the world’s third-biggest economy, which were raised to 1.6 percent this year from 1.2 percent and to 1.4 percent in 2014 from 0.7 percent. IMF Chief Economist Olivier Blanchard said the BOJ’s action was “appropriate” and its impact on the yen “a logical consequence.”

Exporters Rise

Japanese exporters rallied. Toyota Motor gained 1.8 percent to 5,550 yen, Nissan Motor Co. advanced 3.3 percent to 1,024 yen and Ricoh Co., an imaging equipment maker that gets more than half of sales outside Japan, added 3.8 percent to 1,197 yen. The yen fell to 98.34 per dollar….”

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World Markets

Currencies

Commodities

USD Libor

Euribor

Yields for Italy, Spain, France,  and Germany …

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“The latest jobs report showed that unemployment ticked lower because of a decline in the labor force participation rate.

But many people leaving the workforce are actually quitting their jobs.

David Rosenberg believes this trend puts pressure on companies to raise pay to keep their workforce. This is bad news for profit margins and ultimately stock prices.

Here’s Rosenberg:

“At a time when firings are at record lows and job openings are rising at a double-digit annual rate, the number of people quitting their current job for greener pastures elsewhere is on a discernible uptrend. All this points to higher wage growth ahead, and frankly, this is a good thing for society.

“But the flip side is that as the labor share of the national income pie mean reverts off its all-time lows, we are likely to see profit margins pinched.

“This is the big risk – margin compression affects the ‘E’, while inflation, insofar as the tight historical relationship with final prices holds, even if to a smaller degree this time around, affects the P/E.”…”

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“NEW YORK (AP) — Intel Corp., the world’s largest maker of chips for PCs, is remaining steadfast amid a drastic slowdown in computer sales.

Intel on Tuesday said it’s keeping its sales and margin forecasts for this year, even as first-quarter PC sales plunged 14 percent from a year ago, as measured by research firm IDC. The company is helped by rising shipments of chips for servers.

The Santa Clara, Calif., chipmaker also met analyst forecasts for the just-ended quarter. It earned $2 billion, or 40 cents per share, in the January to March period. That was down 27 percent from $2.74 billion, or 53 cents per share, a year ago.

Revenue was $12.6 billion, slightly below the midpoint of Intel’s own forecast range. The figure was down 2.3 percent from $12.9 billion a year ago….”

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“SAN FRANCISCO (AP) — Yahoo is making more money under CEO Marissa Mayer, even as the Internet company struggles to sell more of the ads that bring in most of its revenue.

The latest signs of earnings progress came Tuesday with the release of Yahoo’s first-quarter earnings report.

The numbers also show further signs of decay in Yahoo’s sales of display ads. On the plus side, Yahoo’s ad revenue tied to search results rose.

Investors seemed more worried about the downturn in Yahoo’s display advertising than the surge in the company’s earnings. Yahoo’s stock sank more than 3 percent after the results came out.

The negative reaction suggests that some investors may be losing their faith in Mayer, a respected executive who defected from Google Inc. to join Yahoo nine months ago….”

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By posting this i am not making a statement about recent events in Boston.

The study of history has made me sick over the past few years and i hope this is just a random act of a crazy person or persons.

Let us be thankful that the event in Boston was not bigger than it could have been….let us send love and condolences to the families harmed by this tragedy.

[youtube://http://www.youtube.com/watch?v=oOVICOudMVI 450 300]

 

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“Adhering to a western style diet lowers a person’s chances of achieving older age in good health and with higher functionality, according to a news release.

The latest study, published in The American Journal of Medicine, states that a western style diet, which includes fried and sweet food, processed and red meat, high fat dairy products and refined grains leads to a greater risk of premature death.

“The impact of diet on specific age-related diseases has been studied extensively, but few investigations have adopted a more holistic approach to determine the association of diet with overall health at older ages,” says lead investigator Tasnime Akbaraly, PhD, Inserm, Montpellier, France. “We examined whether diet, assessed in midlife, using dietary patterns and adherence to the Alternative Healthy Eating Index (AHEI), is associated with aging phenotypes, identified after a mean 16-year follow-up.”

For the study, researchers examined the findings from the British Whitehall II cohort study. The study states that AHEI increases the odds of reversing metabolic syndrome. This syndrome can trigger heart diseases, and in worst cases, even compromise a person’s mortality.  Hence the researchers looked for dietary factors that lower the risk of premature death and also improve ideal aging….”

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[youtube://http://www.youtube.com/watch?v=JSUIQgEVDM4 450 300]

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“Businesses would rather hire somebody with no relevant experience than hire a person who has been unemployed for a long time, according to new research by Rand Ghayad at Northeastern University.

Ghayad, a Ph.D. candidate in applied economics, sent out thousands of fake resumes in response to hundreds of online job postings and tracked the responses from the employers. The dummy candidates with long gaps in their resumes received fewer callbacks than the candidates with shorter gaps — even if the fictional resume showed no experience relevant to the job.

“Once you are long-term unemployed, even if you come from the same industry, even if you have the right skills, it doesn’t matter to employers anymore,” Ghayad told The Huffington Post. “They prefer to hire someone who’s short-term unemployed.”

Previous research by Ghayad and others has yielded similar results: Companies just don’t want the long-term jobless.

Since late 2009, roughly 40 percent of the unemployed have been out of work six months or longer, which is the duration economists consider “long term.” It’s the highest rate of long-term joblessness the country has seen since at least the 1940s, according to the Labor Department. As of March, that’s 4.6 million people.

Ghayad’s working paper is the latest piece of evidence that long-term joblessness persists not because workers are defective, but because the surplus labor supply allows employers to be picky about the hiring process….”

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“A leaked study examining genetically-modified corn reveals that the lab-made alternative to organic crops contains a startling level of toxic chemicals.

An anti-GMO website has posted the results of an education-based consulting company’s comparison of corn types, and the results reveal that genetically modified foods may be more hazardous than once thought.

The study, the 2012 Corn Comparison Report by Profit Pro, was published recently on the website for Moms Across America March to Label GMOs, a group that says they wish to “raise awareness and support Moms with solutions to eat GMO Free as we demand GMO labeling locally and nationally simultaneously.” They are plotting nationwide protests scheduled for later this year.

The report, writes the website’s Zen Honeycutt, was provided by a representative for De Dell Seed Company, an Ontario-based farm that’s touted as being Canadian only non-GMO corn seed company.

“The claims that ‘There is no difference between GMO corn and NON Gmo corn’ are false,” says Honeycutt, who adds she was “floored” after reading the study.

According to the analysis, GMO corn tested by Profit Pro contains a number of elements absent from traditional cord, including chlorides, formaldehyde and glyphosate. While those elements don’t appear naturally in corn, they were present in GMO samples to the tune of 60 ppm, 200pm and 13 ppm, respectively.

Honecutt says that the United States Environmental Protection Agency (FDA) mandates that the level of glyphosate in American drinking water not exceed 0.7 ppm and adds that organ damage in some animals has been linked to glyphosate exposure exceeding 0.1 ppm.

“Glyphosate is a strong organic phosphate chelator that immobilizes positively charged minerals such as manganese, cobalt, iron, zinc [and] copper,” Dr. Don Huber attested during a separate GMO study recently released, adding that those elements “are essential for normal physiological functions in soils, plants and animals.”….”

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“The recent plunge in gold prices below $1500 an ounce has suddenly awoken, well, just about everyone.  The “gold bugs” are yelling that it is a conspiracy theory by the Fed while the stock market bulls say it is a sign that the Fed has achieved its goal of creating economic growth.  Unfortunately, both arguments, while great for headlines, are wrong.

In August of 2011, during the original debt ceiling debate, gold spiked sharply to just a tad over $1800 an ounce.   In my weekly missive that month I answered the question of “Should I Buy Gold Now?” stating:

“In a one word answer…Are you kidding me – Gold has never been this overbought before and if you ever want to be the poster child of buying at the top – this is it.  Okay, not really a one word answer but here is my point. Gold is currently in what is known as a ‘Parabolic Spike’. These do not end well typically as it represents a ‘panic’ buying spree.  Therefore, if you currently OWN gold I would recommend beginning to take some profits in it.”

At that time i showed four potential levels of retracement.

The advice at that time fell on deaf ears as investors feared that the government was going to default on its debt and the economy was going to plunged back into a deep recession.  Of course, anyone paying attention to the 10-year treasury rate, as it plunged to then record lows, would have understood that a default was not going to be the case.

Of course, the debt ceiling was eventually raised and disaster postponed due to last minute negotiations.  The release of that fear, and subsequent interventions by Central Banks globally, led to a rotation out of the fear trade which began the process of a gold price reversion.

Parabolic spikes in asset prices always lead to price reversions.  Whether it is gold, oil, or the price of Apple stock – excesses to one extreme lead to excesses in the other.  It is often in the final leg of this reversion process that investors “give up” on the previous long held beliefs and throw in the towel.  This action is known as “capitulation” and tends to be a buying opportunity for astute investors at some point.

The chart below shows the long term price of gold relative to the percentage deviation in price from gold’s 34-week moving average…..”

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“Twitter is nearing an agreement with Viacom to host TV clips and sell advertising on the site,reports Bloomberg. It is also reportedly discussing a content partnership with Comcast’s NBCUniversal, and one or more of the deals could be reached by mid-May.

According to sources cited in the article, the partnerships would let Twitter stream videos on its site and split the resulting ad revenue with the networks. Twitter already has agreements in place with ESPN, Weather Channel LLC, and Turner Broadcasting System…..”

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“Factory production in the U.S. unexpectedly dropped in March, adding to recent signs that manufacturing is cooling.

Output at factories fell 0.1 percent after a 0.9 percent increase in February that was larger than previously reported, figures from the Federal Reserve showed today in Washington. The median estimate in a Bloomberg survey of economists called for a 0.1 percent rise. Total industrial production climbed 0.4 percent as colder-than-normal temperatures drove the biggest gain in utility use in six years.

Output is slowing as companies restrain inventory-building and global markets soften at a time the U.S. is poised for a projected easing in second-quarter growth as automatic cuts in planned federal spending take effect. Companies such as rail-car maker Greenbrier Cos. expect a better second half, a sign business investment is unlikely to retrench.

“The prior month was very strong so there is probably a return to more normal growth,” Josh Dennerlein, an economist at Bank of America Corp. in New York, said before the report. “The next couple of months are when we could see some weakness as the hit from the sequestration trickles through the economy.” Even so, “manufacturing is still going to be growing,” he said.

The median estimate for total industrial production of the 82 economists surveyed by Bloomberg called for a 0.2 percent gain. Projections ranged from a drop of 0.5 percent to an increase of 0.7 percent. The prior month was revised up to a 1.1 percent increase from a previously reported 0.8 percent advance.

Manufacturing Production…”

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