Bitcoin price today: subdued below $89k amid risk-off mood; key US data awaited
It was the best week in six for stocks, with the Dow Jones up 1.5% to 13228, while the S&P 500 added 1.8% and Nasdaq picked up 2.3%. Fed Chairman Ben Bernanke said at his press conference following the meeting of the FOMC that, “We remain prepared to do more as needed to make sure that this recovery continues and that inflation stays close to target.” Additional bond-buying is still “very much on the table,” he added. Equity traders lapped up the inference further stimulus was on the way.
It also doesn’t hurt that Apple’s influence on the market is huge, especially when the news is good for the company. It accounts for more than 4 percent of the S&P 500 index and is expected to account for about 5.5 percent of its first-quarter profit. Apple is also 18 percent of the Nasdaq 100 index, and nearly 12 percent of the Nasdaq composite. Following its earnings release, Apple staged its best one-day rally, 8.9%, since Nov. 2008.
--U.S. Treasury Yields
6-mo. 0.14% 2-yr. 0.26% 10-yr. 1.93% 30-yr. 3.12%
The Fed lowered its unemployment forecast for 2012 to 7.8 to 8.0 percent for the last three months of the year, from 8.2 to 8.5 percent as it had projected in January, and 7 of 17 Fed officials expect rates below 1 percent by the end of 2014; 10 say 1 percent or higher.
The Fed also lowered its growth forecast for 2013 slightly to 2.7 to 3.1 percent. Europe remains the wild card.
This coming Friday is the employment report for April and the recent weekly readings on jobless claims, in the 385,000-388,000 range, should not give much comfort we will see a big number, or at least one much above estimates.
--The U.S. Treasury Department said two weeks ago that the Troubled Asset Relief Program (TARP) would turn a profit, but a report to Congress out of the Office of the Special Inspector General for TARP read: “After 3 ½ years, the TARP continues to be an active and significant part of the Government’s response to the financial crisis. It is a widely held misconception that TARP will make a profit. The most recent cost estimate for TARP is a loss of $60 billion. Taxpayers are still owed $118.5 billion.”
Unreal. The administration is feeding us another pack of lies.
You see, it’s all about the smaller banks that were rescued that are still struggling to repay the bailout money.
The report goes on to say that the rescue “is not without profound long-term consequences. A significant legacy of TARP is increased moral hazard and potentially disastrous consequences associated with institutions deemed too big to fail.”
--Trustees for the Medicare and Social Security trust funds said both are on “unsustainable paths” (nothing new here) and will be exhausted by 2024 and 2033, respectively. Treasury Secretary Timothy Geithner, though, said the 2010 healthcare law would lower costs on Medicare and other administration officials said the same; as in Obamacare will save Medicare $200 billion through 2016. For the other side…
Jennifer Rubin / Washington Post
“Douglas Holtz-Eakin and Michael Ramlet from the American Action Forum provide some useful detail (on Medicare). They write: ‘In 2011, Medicare spent $549.1 billion on medical services for America’s seniors but only collected $260.8 billion in payroll taxes and monthly premiums. Trustees have now issued a funding warning for 7 straight years.’ The bottom line: ‘The cash shortfall is responsible for over one-fourth of the federal debt accumulated since 2001.’….
“Obama’s refusal to lead on entitlement reform is one of Mitt Romney’s better arguments for his presidency. Obama won’t lead; Romney has already set out Medicaid, Medicare and Social Security reform. There is no guarantee that he will have the nerve or skill to push those through, but he’s already done more than Obama has in over three years in the White House.”
Steven Rattner / Financial Times
“As for the Medicare health insurance plan for the elderly, while its outlook didn’t deteriorate last year, it remains in an even more dismal state than Social Security. Over the next 75 years, using realistic assumptions, Medicare costs are projected to increase from less than 4 percent gross domestic product to more than 10 percent of GDP.
“Still more depressing than these grisly statistics is the utter lack of progress in addressing so obvious and so cataclysmic a problem. Every day that goes by either brings America’s elderly closer to a huge cut in their benefits or threatens every younger generation with an equally huge bill to pay.”
--Mexico’s attorney general will investigate allegations that federal officials received bribes from Wal-Mart in order to speed up permits of new stores in that country. As first reported by the New York Times in an incredibly detailed piece that may be destined for a Pulitzer, hundreds of suspected illegal payments totaling more than $24 million are alleged to have been made, which would be a major violation of the United States’ Foreign Corrupt Practices Act, which forbids bribing officials to secure business abroad.
But the issue isn’t so much the fine that the U.S. government could levy on Wal-Mart, rather it’s the management changes that could result from the probe as current CEO Mike Duke was reportedly apprised of the Mexico bribes shortly after being named head of Wal-Mart’s international division in 2005, overseeing Mexico operations. Duke took the helm of the company overall in 2009.
The Times reports that Wal-Mart didn’t pass on the allegations at the time to U.S. or Mexican authorities, let alone conduct an internal probe of any substance.
--Moody’s Investors Service said China’s growth will slow to anywhere between 7.5 and 8.5 percent this year, vs. the 8.1 to 8.6 estimate generally out there. In other words, further ammo for the soft-landing camp. HSBC issued its PMI for April, almost always more conservative than the government figure, and for April it was 49.1, which was an improvement over March’s 48.3.
But you can’t dismiss comments such as that out of Otis Elevator, which saw new orders from China slide 21 percent in the first quarter as a result of heavy exposure to high-end residential housing markets.
And Caterpillar said it had overestimated Chinese demand on construction equipment, stating its inventories were so high it was exporting machinery to other countries where demand was tight. CAT said demand would decline in China this year, down from a prior forecast of 5-10 percent growth. But, CAT still reported a very solid quarter because China makes up just 3 percent of its overall sales (10 percent of its business in Asia). It would seem, however, that CAT’s expansion plans in China, where it just opened its 16th manufacturing facility with nine more under construction, are rather suspect. [Hal Weitzman / Financial Times]
--So as alluded to above, Apple kicked butt as sales in China more than doubled and represented 26 percent of its $39.2 billion in sales for the first quarter. Apple has yet to ship its new iPad there. Overall, Apple picked up 64 percent of its sales overseas, its highest-ever share for the company.
And for the quarter it sold 35 million iPhones and 11.8 million iPads as net income rose 94 percent to $11.6 billion, or $12.30 a share when the Street was expecting earnings of about $10.00.
--Amazon.com, the world’s largest Internet retailer, slaughtered analysts’ estimates for the first quarter as earnings came in at 28 cents a share vs. expectations of 7 cents, while revenues handily beat as well. Demand for Kindle devices was a big reason for the surge and it remains the best-selling item on Amazon’s website, the company said.
--Chrysler reported earnings of $473 million in the first quarter, topping its entire net income for 2011. Fiat, the Italian automaker that took control of Chrysler out of bankruptcy in 2009, said Chrysler was responsible for all of Fiat’s profits earned worldwide. CEO Sergio Marchionne added, “It is fair to say that Chrysler is firing on all cylinders.”
Chrysler also credited Clint Eastwood’s “Halftime in America” Super Bowl ad as helping create excitement for its brands. Yours truly told you at the time it was indeed a great ad, while some conservatives stupidly tried to turn it into a political football.
--Meanwhile, Ford reported first-quarter profit fell 45 percent, to 35 cents a share compared with 61 cents in the first three months of 2011, as revenue declined to $32.4 billion from $33.1 billion. Ford lost $149 million in Europe as sales there fell 60,000 vehicles to 372,000. Ford’s CFO said, “We had expected the results to be a little bit worse in Europe. We don’t think the environment is going to get a whole lot better for some time.
--Russia reported growth of 4 percent in the first quarter, year on year.
--The new deputy governor of the Central Bank of Ireland, Swedish economist Stefan Gerlach, said it could take decades for the Irish housing market to recover to its 2007 level.
--Facebook reported that net income fell to $205 million in the first quarter from $233 million in Q1 2011, but revenue rose 45 percent to $1.06 billion as the company gears up for its IPO, still slated for May, though some say it could be pushed into June. Facebook reported 901 million monthly active users as of March 31.
--The Senate adopted a plan to deal with the U.S. Postal Service and it doesn’t include eliminating Saturday delivery, restructuring the health insurance program, or downsizing mail-processing facilities. The Senate actually requires Saturday delivery for at least two more years and puts a one-year moratorium on the closing of rural post offices. Instead, it’s all about creative accounting. As the Washington Post reports, the Congressional Budget Office estimates that the bill would increase deficits by more than $6 billion over the next 10 years. I mean USPS management itself had spelled out a five-year plan to cut $20 billion in costs and restore long-term viability, which may yet be the fallback plan because the House effort appears to have stalled.
--The board of Chesapeake Energy is finally phasing out a contentious compensation plan that had chairman and chief executive Aubrey McClendon investing alongside Chesapeake in every well that was drilled, sharing both in profits and expenses. Chesapeake is the nation’s second-largest producer of natural gas, after Exxon-Mobil, but McClendon has been running the operator in an incredibly reckless manner for years. S&P downgraded Chesapeake’s debt further into “junk” territory as it seeks to manage $10.3 billion in debt amidst falling natural gas prices.
--In the S&P/Case-Shiller housing index for February, Atlanta’s market continued to be the worst in the nation over the last one- and two-year periods, with median prices down 17.3 and 21.1 percent, respectively. For the last three years, Las Vegas is still the worst, down 25.8 percent. Washington, D.C., is the best for three years, up 4.6 percent.
Meanwhile, hard-hit Phoenix and Miami have seen their markets stabilize and are up slightly the last 12 months (thru February).
--In the key Southern California home market, the median home price peaked in 2007 at $505,000 and was $280,000 last month.
--The White House is catching a break (as well as consumers) as gasoline-futures have been dropping as more U.S. crude becomes available for refining and North Sea Brent prices decline as a result. A reversal of a pipeline’s flow from Cushing, Okla., to the Gulf Coast has given refiners there greater access to crude that was bottled up in Cushing, which in turn had helped keep Brent prices high.
--Also on the energy front, El Nino, the warming of the Pacific Ocean, may help keep temperatures cool across the U.S. this summer, which would mean less need to run air conditioners. One weather expert told Bloomberg that May will be warmer than normal, but then we’ll see a reversal. June through August 2011 was the second-warmest summer on record in the contiguous U.S. Texas is expected to be much cooler than last year.
--A cow that had died at one of California’s dairy farms was found to have mad cow disease, the first new case of the disease in the U.S. since 2006, though it was quickly deemed to be a highly isolated case, specifically “atypical” in that it didn’t get the disease from eating infected cattle feed. This won’t impact my own beef-eating decisions (though two South Korean chains banned U.S. beef for now), but should I ever get mad cow, or BSE, please shoot me.
--A fourth name associated with Goldman Sachs has emerged in the Galleon Group insider-trading case (think Raj Rajaratnam). The latest fellow, a senior San Francisco investment banker, is suspected of passing on word of pending health-care deals to Galleon. It was former Goldman director Rajat Gupta who was accused of leaking inside information to Rajaratnam.
--Yuck…dried fruit is the latest food scandal in China after an investigation by state television found that some was processed in filthy factories. From Mandy Zuo of the South China Morning Post:
“Preserved peaches were found packed in bags that had been used to hold animal feed, and hawthorn berries were soaked in a pool of water that contained garbage.”
--A friend, Dan V., doing business in Brazil, reported for me that the infrastructure (roads, airport, hotels) were “unimpressive at best” as the country gears up (or not really) to host the 2014 World Cup and 2016 Olympics. The previous week he was in London and said the Olympic Village there looked good, but they were scrambling to finish everything.
--I saw in the Moscow Times there was a weekend oil spill that leaked 2,200 tons of crude across 5 square kilometers of Arctic territory, but “Greenpeace estimates that 5 million tons of oil leak from Russian pipelines and in accidents every year – the equivalent of seven disasters on the scale of BP’s Deepwater Horizon spill in the Gulf of Mexico.”
How many of you knew that? I didn’t, and I thought I knew a lot about Russia’s dreadful environmental record.
But Krispy Kreme is opening up 40 Moscow outlets!
It also doesn’t hurt that Apple’s influence on the market is huge, especially when the news is good for the company. It accounts for more than 4 percent of the S&P 500 index and is expected to account for about 5.5 percent of its first-quarter profit. Apple is also 18 percent of the Nasdaq 100 index, and nearly 12 percent of the Nasdaq composite. Following its earnings release, Apple staged its best one-day rally, 8.9%, since Nov. 2008.
--U.S. Treasury Yields
6-mo. 0.14% 2-yr. 0.26% 10-yr. 1.93% 30-yr. 3.12%
The Fed lowered its unemployment forecast for 2012 to 7.8 to 8.0 percent for the last three months of the year, from 8.2 to 8.5 percent as it had projected in January, and 7 of 17 Fed officials expect rates below 1 percent by the end of 2014; 10 say 1 percent or higher.
The Fed also lowered its growth forecast for 2013 slightly to 2.7 to 3.1 percent. Europe remains the wild card.
This coming Friday is the employment report for April and the recent weekly readings on jobless claims, in the 385,000-388,000 range, should not give much comfort we will see a big number, or at least one much above estimates.
--The U.S. Treasury Department said two weeks ago that the Troubled Asset Relief Program (TARP) would turn a profit, but a report to Congress out of the Office of the Special Inspector General for TARP read: “After 3 ½ years, the TARP continues to be an active and significant part of the Government’s response to the financial crisis. It is a widely held misconception that TARP will make a profit. The most recent cost estimate for TARP is a loss of $60 billion. Taxpayers are still owed $118.5 billion.”
Unreal. The administration is feeding us another pack of lies.
You see, it’s all about the smaller banks that were rescued that are still struggling to repay the bailout money.
The report goes on to say that the rescue “is not without profound long-term consequences. A significant legacy of TARP is increased moral hazard and potentially disastrous consequences associated with institutions deemed too big to fail.”
--Trustees for the Medicare and Social Security trust funds said both are on “unsustainable paths” (nothing new here) and will be exhausted by 2024 and 2033, respectively. Treasury Secretary Timothy Geithner, though, said the 2010 healthcare law would lower costs on Medicare and other administration officials said the same; as in Obamacare will save Medicare $200 billion through 2016. For the other side…
Jennifer Rubin / Washington Post
“Douglas Holtz-Eakin and Michael Ramlet from the American Action Forum provide some useful detail (on Medicare). They write: ‘In 2011, Medicare spent $549.1 billion on medical services for America’s seniors but only collected $260.8 billion in payroll taxes and monthly premiums. Trustees have now issued a funding warning for 7 straight years.’ The bottom line: ‘The cash shortfall is responsible for over one-fourth of the federal debt accumulated since 2001.’….
“Obama’s refusal to lead on entitlement reform is one of Mitt Romney’s better arguments for his presidency. Obama won’t lead; Romney has already set out Medicaid, Medicare and Social Security reform. There is no guarantee that he will have the nerve or skill to push those through, but he’s already done more than Obama has in over three years in the White House.”
Steven Rattner / Financial Times
“As for the Medicare health insurance plan for the elderly, while its outlook didn’t deteriorate last year, it remains in an even more dismal state than Social Security. Over the next 75 years, using realistic assumptions, Medicare costs are projected to increase from less than 4 percent gross domestic product to more than 10 percent of GDP.
“Still more depressing than these grisly statistics is the utter lack of progress in addressing so obvious and so cataclysmic a problem. Every day that goes by either brings America’s elderly closer to a huge cut in their benefits or threatens every younger generation with an equally huge bill to pay.”
--Mexico’s attorney general will investigate allegations that federal officials received bribes from Wal-Mart in order to speed up permits of new stores in that country. As first reported by the New York Times in an incredibly detailed piece that may be destined for a Pulitzer, hundreds of suspected illegal payments totaling more than $24 million are alleged to have been made, which would be a major violation of the United States’ Foreign Corrupt Practices Act, which forbids bribing officials to secure business abroad.
But the issue isn’t so much the fine that the U.S. government could levy on Wal-Mart, rather it’s the management changes that could result from the probe as current CEO Mike Duke was reportedly apprised of the Mexico bribes shortly after being named head of Wal-Mart’s international division in 2005, overseeing Mexico operations. Duke took the helm of the company overall in 2009.
The Times reports that Wal-Mart didn’t pass on the allegations at the time to U.S. or Mexican authorities, let alone conduct an internal probe of any substance.
--Moody’s Investors Service said China’s growth will slow to anywhere between 7.5 and 8.5 percent this year, vs. the 8.1 to 8.6 estimate generally out there. In other words, further ammo for the soft-landing camp. HSBC issued its PMI for April, almost always more conservative than the government figure, and for April it was 49.1, which was an improvement over March’s 48.3.
But you can’t dismiss comments such as that out of Otis Elevator, which saw new orders from China slide 21 percent in the first quarter as a result of heavy exposure to high-end residential housing markets.
And Caterpillar said it had overestimated Chinese demand on construction equipment, stating its inventories were so high it was exporting machinery to other countries where demand was tight. CAT said demand would decline in China this year, down from a prior forecast of 5-10 percent growth. But, CAT still reported a very solid quarter because China makes up just 3 percent of its overall sales (10 percent of its business in Asia). It would seem, however, that CAT’s expansion plans in China, where it just opened its 16th manufacturing facility with nine more under construction, are rather suspect. [Hal Weitzman / Financial Times]
--So as alluded to above, Apple kicked butt as sales in China more than doubled and represented 26 percent of its $39.2 billion in sales for the first quarter. Apple has yet to ship its new iPad there. Overall, Apple picked up 64 percent of its sales overseas, its highest-ever share for the company.
And for the quarter it sold 35 million iPhones and 11.8 million iPads as net income rose 94 percent to $11.6 billion, or $12.30 a share when the Street was expecting earnings of about $10.00.
--Amazon.com, the world’s largest Internet retailer, slaughtered analysts’ estimates for the first quarter as earnings came in at 28 cents a share vs. expectations of 7 cents, while revenues handily beat as well. Demand for Kindle devices was a big reason for the surge and it remains the best-selling item on Amazon’s website, the company said.
--Chrysler reported earnings of $473 million in the first quarter, topping its entire net income for 2011. Fiat, the Italian automaker that took control of Chrysler out of bankruptcy in 2009, said Chrysler was responsible for all of Fiat’s profits earned worldwide. CEO Sergio Marchionne added, “It is fair to say that Chrysler is firing on all cylinders.”
Chrysler also credited Clint Eastwood’s “Halftime in America” Super Bowl ad as helping create excitement for its brands. Yours truly told you at the time it was indeed a great ad, while some conservatives stupidly tried to turn it into a political football.
--Meanwhile, Ford reported first-quarter profit fell 45 percent, to 35 cents a share compared with 61 cents in the first three months of 2011, as revenue declined to $32.4 billion from $33.1 billion. Ford lost $149 million in Europe as sales there fell 60,000 vehicles to 372,000. Ford’s CFO said, “We had expected the results to be a little bit worse in Europe. We don’t think the environment is going to get a whole lot better for some time.
--Russia reported growth of 4 percent in the first quarter, year on year.
--The new deputy governor of the Central Bank of Ireland, Swedish economist Stefan Gerlach, said it could take decades for the Irish housing market to recover to its 2007 level.
--Facebook reported that net income fell to $205 million in the first quarter from $233 million in Q1 2011, but revenue rose 45 percent to $1.06 billion as the company gears up for its IPO, still slated for May, though some say it could be pushed into June. Facebook reported 901 million monthly active users as of March 31.
--The Senate adopted a plan to deal with the U.S. Postal Service and it doesn’t include eliminating Saturday delivery, restructuring the health insurance program, or downsizing mail-processing facilities. The Senate actually requires Saturday delivery for at least two more years and puts a one-year moratorium on the closing of rural post offices. Instead, it’s all about creative accounting. As the Washington Post reports, the Congressional Budget Office estimates that the bill would increase deficits by more than $6 billion over the next 10 years. I mean USPS management itself had spelled out a five-year plan to cut $20 billion in costs and restore long-term viability, which may yet be the fallback plan because the House effort appears to have stalled.
--The board of Chesapeake Energy is finally phasing out a contentious compensation plan that had chairman and chief executive Aubrey McClendon investing alongside Chesapeake in every well that was drilled, sharing both in profits and expenses. Chesapeake is the nation’s second-largest producer of natural gas, after Exxon-Mobil, but McClendon has been running the operator in an incredibly reckless manner for years. S&P downgraded Chesapeake’s debt further into “junk” territory as it seeks to manage $10.3 billion in debt amidst falling natural gas prices.
--In the S&P/Case-Shiller housing index for February, Atlanta’s market continued to be the worst in the nation over the last one- and two-year periods, with median prices down 17.3 and 21.1 percent, respectively. For the last three years, Las Vegas is still the worst, down 25.8 percent. Washington, D.C., is the best for three years, up 4.6 percent.
Meanwhile, hard-hit Phoenix and Miami have seen their markets stabilize and are up slightly the last 12 months (thru February).
--In the key Southern California home market, the median home price peaked in 2007 at $505,000 and was $280,000 last month.
--The White House is catching a break (as well as consumers) as gasoline-futures have been dropping as more U.S. crude becomes available for refining and North Sea Brent prices decline as a result. A reversal of a pipeline’s flow from Cushing, Okla., to the Gulf Coast has given refiners there greater access to crude that was bottled up in Cushing, which in turn had helped keep Brent prices high.
--Also on the energy front, El Nino, the warming of the Pacific Ocean, may help keep temperatures cool across the U.S. this summer, which would mean less need to run air conditioners. One weather expert told Bloomberg that May will be warmer than normal, but then we’ll see a reversal. June through August 2011 was the second-warmest summer on record in the contiguous U.S. Texas is expected to be much cooler than last year.
--A cow that had died at one of California’s dairy farms was found to have mad cow disease, the first new case of the disease in the U.S. since 2006, though it was quickly deemed to be a highly isolated case, specifically “atypical” in that it didn’t get the disease from eating infected cattle feed. This won’t impact my own beef-eating decisions (though two South Korean chains banned U.S. beef for now), but should I ever get mad cow, or BSE, please shoot me.
--A fourth name associated with Goldman Sachs has emerged in the Galleon Group insider-trading case (think Raj Rajaratnam). The latest fellow, a senior San Francisco investment banker, is suspected of passing on word of pending health-care deals to Galleon. It was former Goldman director Rajat Gupta who was accused of leaking inside information to Rajaratnam.
--Yuck…dried fruit is the latest food scandal in China after an investigation by state television found that some was processed in filthy factories. From Mandy Zuo of the South China Morning Post:
“Preserved peaches were found packed in bags that had been used to hold animal feed, and hawthorn berries were soaked in a pool of water that contained garbage.”
--A friend, Dan V., doing business in Brazil, reported for me that the infrastructure (roads, airport, hotels) were “unimpressive at best” as the country gears up (or not really) to host the 2014 World Cup and 2016 Olympics. The previous week he was in London and said the Olympic Village there looked good, but they were scrambling to finish everything.
--I saw in the Moscow Times there was a weekend oil spill that leaked 2,200 tons of crude across 5 square kilometers of Arctic territory, but “Greenpeace estimates that 5 million tons of oil leak from Russian pipelines and in accidents every year – the equivalent of seven disasters on the scale of BP’s Deepwater Horizon spill in the Gulf of Mexico.”
How many of you knew that? I didn’t, and I thought I knew a lot about Russia’s dreadful environmental record.
But Krispy Kreme is opening up 40 Moscow outlets!