Gold spot prices could breach $4,600/oz as soon as Q1: BMO
Stocks rallied after three awful weeks, despite ongoing investor anger over the Facebook offering. The Dow Jones rose 0.7% to 12454, while the S&P 500 gained 1.7% and Nasdaq 2.1%. On the tech front the earnings picture was mixed with Dell missing estimates badly and Hewlett-Packard exceeding expectations.
U.S. Treasury Yields
6-mo. 0.13% 2-yr. 0.29% 10-yr. 1.74% 30-yr. 2.84%
The U.S. continues to benefit from the safe haven play, the best little whorehouse in a dirty neighborhood.
The more we learn about the Facebook IPO debacle, the more it’s clear the little guy took it up the butt. For starters, the offering was way overpriced given the company’s fundamentals, but then we’ve learned there was extensive “selective disclosure” of information between the underwriters, in particular Morgan Stanley, which was cutting its revenue estimates, and institutional clients during the “roadshow” leading up to the IPO. It technically isn’t illegal to do so during this pre-offering period, but any other time, selective disclosure is. Wall Street firms must publicly disseminate information that could move the share price; in theory giving the retail investor the same information at the same time as the big institutions.
Morgan Stanley issued a statement saying it “followed the same procedures for the Facebook offering that it follows for all IPOs.” But it’s too late. All manner of state and securities-industry regulators are on the case and investor suits are being filed.
As for Nasdaq, its trading glitches only added to the headaches faced by both brokerages and investors. Executives there knew there could be software issues, especially if huge volume materialized, but went ahead with the offering anyway.
Meanwhile, Facebook had released a regulatory document three days into the roadshow discussing the fact that the more people use mobile phones rather than computers, the less likely they were to click on ads, let alone the fact advertising on mobile is difficult to begin with.
Lastly, founder and CEO Mark Zuckerberg married his longtime college sweetheart, Priscilla Chan, on Saturday. No word on the terms of any pre-nup, if indeed there is one, though it seems anything he earned before the marriage is solely his property afterward. In California, anything either partner earns or acquires after marriage is considered communal property.
There is much talk of China’s slowing economy. HSBC’s flash estimate of May PMI was 48.7, down from 49.3. The April leading economic indicators figure, however, was up a decent 0.8% in April vs. March.
Nonetheless, everyone is lowering their growth forecasts for 2012, though not significantly…yet. The OECD, for example, pegs it at 8.2% for 2012 and 9.3% for 2013. Like whoopty-damn-do if that proves to be accurate. What’s the concern then? The World Bank lowered their forecast from 8.4% to the same 8.2%. Morgan Stanley is projecting 8.5% for the year, down from an earlier forecast of 9.0%.
But Premier Wen Jiabao is urging renewed efforts at growth, calling the current situation “complex.”
Consumer spending is not picking up the slack as many thought it would. One Goldman Sachs analyst in Hong Kong told clients Chinese economic activity is “exceedingly weak.”
Forget what your personal feelings are about the place, and mine are decidedly mixed these days, but given the global structure of the economy today, we need China to do well.
Geopolitics, the issue of stealing secrets, etc. are totally different matters. As negative as you may get at times, remember that America’s farmers, for one, are fans of the place…and for good reason.
Fitch Ratings cut the sovereign debt of Japan to A-plus, surprising the political leadership. Japan’s rating is now below that of rivals China and Korea. Fitch blasted the government for its “leisurely” approach to dealing with its massive deficits, 200% of annual GDP, the highest among industrialized nations; even as investors pour more money into Japanese government bonds because they are perceived as more of a safe haven than Europe, for example.
Now many have said for years not to worry about Japan because over 90% of its government bonds are held domestically, as opposed to the situation in Europe with the southern periphery. But it’s been one weak government after another in Japan and the politicians must take action soon.
Thailand reported a surprise decline in exports for April because of falling demand in the U.S. and Europe, down 3.7% from a year earlier. Analysts had forecast an increase of 3%. Not good.
Earlier, though, Thailand reported GDP rebounded 11% in the first three months compared to the previous three months, though just 0.3% on an annual basis. The worst flooding in decades hit the country late last year making for an easy quarter-to-quarter comp.
Analysts say Macau’s gambling revenue for the month of May could increase only about 11%, year-over-year vs. April’s 22% growth and far headier rates in 2010 and 2011. Should the 11% rate pan out, it would be the lowest number recorded since July 2009. But revenues would still be a record for a single month. Of particular interest is how much Chinese VIP spenders are being crippled by bad debt.
Eventually, growth in Macau could be hit by new casinos going up in the Philippines and Vietnam. There’s already an impact from Singapore’s casinos.
Discount airline king Ryanair reported record annual profits for the first quarter, 503 billion euros, as revenues increased by 19%.
The FDIC said the banking industry earned $35.3 billion in the first quarter, up from $28.7 billion in Q1 of 2011 and the highest level since the second quarter of 2007. About 67% of U.S. banks reported improved earnings.
But bank loans to consumers, like for credit cards and home mortgages, fell.
In the continuing fallout from its trading debacle, JPMorgan Chase suspended its share buyback program out of prudence, as CEO Jamie Dimon put it. Estimates on the ultimate loss from the bad trade in its Chief Investment Office unit now range up to $6 billion.
The global wheat crop has gone through some major ups and downs the past three years. We had a historic drought in Russia and Australia in 2010, and then bumper crops in 2011 as rainfall returned to normal, and now we’re back in drought conditions in Russia and Ukraine, as well as a very dry May in Kansas, so the U.S. Dept. of Agriculture is expected to cut its global crop estimate significantly next month, according to analysts surveyed by Bloomberg. Ergo, the price of wheat has been surging in recent weeks.
But…rain is coming for the key Russia/Ukraine growing regions.
Hewlett-Packard has settled on 27,000 job cuts by end of 2014, about 8% of its workforce, which the company claims will reduce costs by up to $3.5 billion a year.
HP did release earnings and revenues for its first quarter that were better than expected, though profits fell 31% over year ago levels.
CEO Meg Whitman, who joined HP in September after heading up eBay, said the strategy to turnaround the company is on track.
Meanwhile, Dell missed Street forecasts badly for both earnings and revenues for its second quarter. Dell is the world’s third-largest personal computer maker by shipments but is suffering with the shift among both consumers and businesses away from desktops and laptops to mobile alternatives, such as Apple’s iPad and other tablet computers. Dell’s notebook business contracted 10% in the quarter. Overall U.S. sales fell 7%.
Congratulations to Ford Motor for regaining its investment-grade rating from Moody’s. A spokesman for Moody’s said:
“The key factor…was whether or not the company would be able to sustain its strong performance. We concluded that the improvements Ford has made are likely to be lasting.”
As of March, it helps that Ford’s cash and liquid assets were about $32 billion.
Tiffany reported worse-than-expected results for the quarter and reduced its outlook for 2012. The luxury retailer is often a good barometer of the overall economy and the company reported a drop in crowds at its flagship Fifth Avenue store as the number of tourists from Europe and Asia declined.
From Jack Farchy / Financial Times
“U.S. manufacturers have attacked plans by JPMorgan Chase to launch an exchange-traded fund backed by physical copper, arguing that the product would ‘grossly and artificially inflate prices’ and ‘wreak havoc on the U.S. and global economy.’
“Copper’s use in electrical wiring makes it essential to the manufacturing industry.
“In a letter to the Securities and Exchange Commission, lawyers representing the copper consumers say the impact of the ETF on the copper market would be comparable to the Sumitomo trading scandal of 1995-96, which sent prices sharply higher.
“JPMorgan is among several groups trying to capitalize on investors’ interest in industrial metals by launching a fund that allows them to access physical copper directly.”
No way this should be allowed. This is different than some of the existing offerings in precious metals such as gold and silver because of the prevalence of copper in so many products.
The Times-Picayune of New Orleans announced it will scale back the printed edition to just three days a week, making the Big Easy the most prominent U.S. city without a daily newspaper. Since Hurricane Katrina in 2005, the paper’s daily circulation has declined from 261,000 to 132,000. According to the Audit Bureau of Circulations, nationwide, papers with a circulation of 25,000 or more had a 21% drop in circulation between 2007 and 2012.
The Times-Picayune, owned by the Newhouse family, will offer print editions on Wednesday, Friday and Sunday. The move was followed by similar reductions at three other Newhouse papers, all in Alabama.
Inflation Alert: A one-day ticket at Disneyland is rising 9% this summer. A premium annual pass that includes parking is going up 30%. [I’m having an “It’s A Small World” flashback from my only trip there as a kid…not a good memory.]
Dogs occupy the No. 1 slot on your editor’s proprietary All-Species List (Man is No. 203), but dogs shouldn’t get too cocky. According to the Insurance Information Institute, dog bites accounted for more than one-third of homeowners insurance liability claims paid in 2011. State Farm, the largest writer of homeowners insurance in the U.S., paid more than $109 million on nearly 3,800 dog bite claims.
Granted more people own dogs these days, they live closer to one another, and many folks deserve to get bit.
Sports betting could be coming to New Jersey’s racetracks and casinos by the fall. Yippee! Gov. Chris Christie said my state will act on its own to implement it, defying a federal ban on such wagering in all but four states, claiming he’s confident the state will prevail when the Feds try to stop it. About freakin’ time. Take the Jets and the points at New England on Oct. 21.
Kudos to United Airlines for telling families with small children they can wait their turn like every other schlep. And if the kids misbehave, United said it would force them to take a stagecoach instead.
80% of all visitors to the London Olympic Games will pass through Heathrow Airport. Talk about a nightmare. They’ve been running baggage drills and say hundreds of extra border staff will be brought in to ease the lines at passport control but no way will it be an efficient operation.
In the OECD’s annual Better Life Index, which looks into criteria such as jobs, income and health, Australia comes out on top as the happiest industrialized nation in the world, ahead of Norway and the U.S.
Of course if you’re not careful you could get devoured by a crocodile, or killed by a poisonous snake or spider in the land Down Under, but you have superb premium beer at a reasonable price (as opposed to Norway where you have to take out a second mortgage just to buy a case and the U.S. where, unless it’s Yuengling or Shiner Bock, you’re talkin’ domestic).
The city of Los Angeles is adopting a ban on plastic bags at supermarket checkout lines. I’m all for this one. We never should have changed from paper anyway.
[The Trumbore Family treats paper bags from Trader Joe’s like gold because of the handles. It’s the perfect Christmas gift, too.]
U.S. Treasury Yields
6-mo. 0.13% 2-yr. 0.29% 10-yr. 1.74% 30-yr. 2.84%
The U.S. continues to benefit from the safe haven play, the best little whorehouse in a dirty neighborhood.
The more we learn about the Facebook IPO debacle, the more it’s clear the little guy took it up the butt. For starters, the offering was way overpriced given the company’s fundamentals, but then we’ve learned there was extensive “selective disclosure” of information between the underwriters, in particular Morgan Stanley, which was cutting its revenue estimates, and institutional clients during the “roadshow” leading up to the IPO. It technically isn’t illegal to do so during this pre-offering period, but any other time, selective disclosure is. Wall Street firms must publicly disseminate information that could move the share price; in theory giving the retail investor the same information at the same time as the big institutions.
Morgan Stanley issued a statement saying it “followed the same procedures for the Facebook offering that it follows for all IPOs.” But it’s too late. All manner of state and securities-industry regulators are on the case and investor suits are being filed.
As for Nasdaq, its trading glitches only added to the headaches faced by both brokerages and investors. Executives there knew there could be software issues, especially if huge volume materialized, but went ahead with the offering anyway.
Meanwhile, Facebook had released a regulatory document three days into the roadshow discussing the fact that the more people use mobile phones rather than computers, the less likely they were to click on ads, let alone the fact advertising on mobile is difficult to begin with.
Lastly, founder and CEO Mark Zuckerberg married his longtime college sweetheart, Priscilla Chan, on Saturday. No word on the terms of any pre-nup, if indeed there is one, though it seems anything he earned before the marriage is solely his property afterward. In California, anything either partner earns or acquires after marriage is considered communal property.
There is much talk of China’s slowing economy. HSBC’s flash estimate of May PMI was 48.7, down from 49.3. The April leading economic indicators figure, however, was up a decent 0.8% in April vs. March.
Nonetheless, everyone is lowering their growth forecasts for 2012, though not significantly…yet. The OECD, for example, pegs it at 8.2% for 2012 and 9.3% for 2013. Like whoopty-damn-do if that proves to be accurate. What’s the concern then? The World Bank lowered their forecast from 8.4% to the same 8.2%. Morgan Stanley is projecting 8.5% for the year, down from an earlier forecast of 9.0%.
But Premier Wen Jiabao is urging renewed efforts at growth, calling the current situation “complex.”
Consumer spending is not picking up the slack as many thought it would. One Goldman Sachs analyst in Hong Kong told clients Chinese economic activity is “exceedingly weak.”
Forget what your personal feelings are about the place, and mine are decidedly mixed these days, but given the global structure of the economy today, we need China to do well.
Geopolitics, the issue of stealing secrets, etc. are totally different matters. As negative as you may get at times, remember that America’s farmers, for one, are fans of the place…and for good reason.
Fitch Ratings cut the sovereign debt of Japan to A-plus, surprising the political leadership. Japan’s rating is now below that of rivals China and Korea. Fitch blasted the government for its “leisurely” approach to dealing with its massive deficits, 200% of annual GDP, the highest among industrialized nations; even as investors pour more money into Japanese government bonds because they are perceived as more of a safe haven than Europe, for example.
Now many have said for years not to worry about Japan because over 90% of its government bonds are held domestically, as opposed to the situation in Europe with the southern periphery. But it’s been one weak government after another in Japan and the politicians must take action soon.
Thailand reported a surprise decline in exports for April because of falling demand in the U.S. and Europe, down 3.7% from a year earlier. Analysts had forecast an increase of 3%. Not good.
Earlier, though, Thailand reported GDP rebounded 11% in the first three months compared to the previous three months, though just 0.3% on an annual basis. The worst flooding in decades hit the country late last year making for an easy quarter-to-quarter comp.
Analysts say Macau’s gambling revenue for the month of May could increase only about 11%, year-over-year vs. April’s 22% growth and far headier rates in 2010 and 2011. Should the 11% rate pan out, it would be the lowest number recorded since July 2009. But revenues would still be a record for a single month. Of particular interest is how much Chinese VIP spenders are being crippled by bad debt.
Eventually, growth in Macau could be hit by new casinos going up in the Philippines and Vietnam. There’s already an impact from Singapore’s casinos.
Discount airline king Ryanair reported record annual profits for the first quarter, 503 billion euros, as revenues increased by 19%.
The FDIC said the banking industry earned $35.3 billion in the first quarter, up from $28.7 billion in Q1 of 2011 and the highest level since the second quarter of 2007. About 67% of U.S. banks reported improved earnings.
But bank loans to consumers, like for credit cards and home mortgages, fell.
In the continuing fallout from its trading debacle, JPMorgan Chase suspended its share buyback program out of prudence, as CEO Jamie Dimon put it. Estimates on the ultimate loss from the bad trade in its Chief Investment Office unit now range up to $6 billion.
The global wheat crop has gone through some major ups and downs the past three years. We had a historic drought in Russia and Australia in 2010, and then bumper crops in 2011 as rainfall returned to normal, and now we’re back in drought conditions in Russia and Ukraine, as well as a very dry May in Kansas, so the U.S. Dept. of Agriculture is expected to cut its global crop estimate significantly next month, according to analysts surveyed by Bloomberg. Ergo, the price of wheat has been surging in recent weeks.
But…rain is coming for the key Russia/Ukraine growing regions.
Hewlett-Packard has settled on 27,000 job cuts by end of 2014, about 8% of its workforce, which the company claims will reduce costs by up to $3.5 billion a year.
HP did release earnings and revenues for its first quarter that were better than expected, though profits fell 31% over year ago levels.
CEO Meg Whitman, who joined HP in September after heading up eBay, said the strategy to turnaround the company is on track.
Meanwhile, Dell missed Street forecasts badly for both earnings and revenues for its second quarter. Dell is the world’s third-largest personal computer maker by shipments but is suffering with the shift among both consumers and businesses away from desktops and laptops to mobile alternatives, such as Apple’s iPad and other tablet computers. Dell’s notebook business contracted 10% in the quarter. Overall U.S. sales fell 7%.
Congratulations to Ford Motor for regaining its investment-grade rating from Moody’s. A spokesman for Moody’s said:
“The key factor…was whether or not the company would be able to sustain its strong performance. We concluded that the improvements Ford has made are likely to be lasting.”
As of March, it helps that Ford’s cash and liquid assets were about $32 billion.
Tiffany reported worse-than-expected results for the quarter and reduced its outlook for 2012. The luxury retailer is often a good barometer of the overall economy and the company reported a drop in crowds at its flagship Fifth Avenue store as the number of tourists from Europe and Asia declined.
From Jack Farchy / Financial Times
“U.S. manufacturers have attacked plans by JPMorgan Chase to launch an exchange-traded fund backed by physical copper, arguing that the product would ‘grossly and artificially inflate prices’ and ‘wreak havoc on the U.S. and global economy.’
“Copper’s use in electrical wiring makes it essential to the manufacturing industry.
“In a letter to the Securities and Exchange Commission, lawyers representing the copper consumers say the impact of the ETF on the copper market would be comparable to the Sumitomo trading scandal of 1995-96, which sent prices sharply higher.
“JPMorgan is among several groups trying to capitalize on investors’ interest in industrial metals by launching a fund that allows them to access physical copper directly.”
No way this should be allowed. This is different than some of the existing offerings in precious metals such as gold and silver because of the prevalence of copper in so many products.
The Times-Picayune of New Orleans announced it will scale back the printed edition to just three days a week, making the Big Easy the most prominent U.S. city without a daily newspaper. Since Hurricane Katrina in 2005, the paper’s daily circulation has declined from 261,000 to 132,000. According to the Audit Bureau of Circulations, nationwide, papers with a circulation of 25,000 or more had a 21% drop in circulation between 2007 and 2012.
The Times-Picayune, owned by the Newhouse family, will offer print editions on Wednesday, Friday and Sunday. The move was followed by similar reductions at three other Newhouse papers, all in Alabama.
Inflation Alert: A one-day ticket at Disneyland is rising 9% this summer. A premium annual pass that includes parking is going up 30%. [I’m having an “It’s A Small World” flashback from my only trip there as a kid…not a good memory.]
Dogs occupy the No. 1 slot on your editor’s proprietary All-Species List (Man is No. 203), but dogs shouldn’t get too cocky. According to the Insurance Information Institute, dog bites accounted for more than one-third of homeowners insurance liability claims paid in 2011. State Farm, the largest writer of homeowners insurance in the U.S., paid more than $109 million on nearly 3,800 dog bite claims.
Granted more people own dogs these days, they live closer to one another, and many folks deserve to get bit.
Sports betting could be coming to New Jersey’s racetracks and casinos by the fall. Yippee! Gov. Chris Christie said my state will act on its own to implement it, defying a federal ban on such wagering in all but four states, claiming he’s confident the state will prevail when the Feds try to stop it. About freakin’ time. Take the Jets and the points at New England on Oct. 21.
Kudos to United Airlines for telling families with small children they can wait their turn like every other schlep. And if the kids misbehave, United said it would force them to take a stagecoach instead.
80% of all visitors to the London Olympic Games will pass through Heathrow Airport. Talk about a nightmare. They’ve been running baggage drills and say hundreds of extra border staff will be brought in to ease the lines at passport control but no way will it be an efficient operation.
In the OECD’s annual Better Life Index, which looks into criteria such as jobs, income and health, Australia comes out on top as the happiest industrialized nation in the world, ahead of Norway and the U.S.
Of course if you’re not careful you could get devoured by a crocodile, or killed by a poisonous snake or spider in the land Down Under, but you have superb premium beer at a reasonable price (as opposed to Norway where you have to take out a second mortgage just to buy a case and the U.S. where, unless it’s Yuengling or Shiner Bock, you’re talkin’ domestic).
The city of Los Angeles is adopting a ban on plastic bags at supermarket checkout lines. I’m all for this one. We never should have changed from paper anyway.
[The Trumbore Family treats paper bags from Trader Joe’s like gold because of the handles. It’s the perfect Christmas gift, too.]