Jan 5, 2010

Daily Markets - Financial News & Opinions

Daily Markets - Financial News & Opinions

Trades Of The Unexpected

Posted: 05 Jan 2010 01:01 PM PST

In “Ten Blasphemous Trade Ideas That Spit In The Face Of Conventional Wisdom,” Business Insider highlights a number of developments that would likely surprise many investors if they came to fruition. Although I would take issue with some of them (in addition to the associated “speculative contrarian bets,” even if the underlying calls proved to be correct), they serve as interesting food for thought:
If you feel dumb even mentioning a trade idea, it’s either A) a really dumb idea or B) a … [visit site to read more]


Ford JV’s Stellar Chinese Sales

Posted: 05 Jan 2010 12:49 PM PST

Changan Ford Mazda, a tie-up between Ford Motor Co. (F), Chongqing Changan Auto Co. and Mazda Motor, has posted a staggering 55% rise in sales to 316,139 vehicles in 2009, driven by the Chinese Government's incentives to push auto sales. In December alone, the joint venture sold 27,680 cars, up 61% from the year-ago level.
General Motors' joint venture with Shanghai Automotive Industries Corp. (SAIC) has also shown an impressive rise of 63.3% in sales to 727,620 vehicles. Further, the … [visit site to read more]

S&P Lowers Manulife Ratings

Posted: 05 Jan 2010 07:22 AM PST

Manulife Financial Corporation's (MFC) long-term counterparty credit ratings were lowered by Standard & Poor’s Ratings Services to ‘A+’ from ‘AA-’. The outlook assigned is negative. The company has also been removed from the CreditWatch listing.
The rating action reflects the rating agency's concern that the recent reorganization of its U.S. subsidiary would reduce its cash flow diversification.
Manulife has completed its subsidiary reorganization on Dec. 31, 2009, following which its … [visit site to read more]

Let Asian Growth Propel Your Portfolio Higher

Posted: 05 Jan 2010 12:21 PM PST

I've got good news and bad news…

The good news: Consumer confidence is rising sharply.
The bad news: Those consumers live in Asia.

According to the Nielsen research group, developing countries are seeing renewed interest in purchasing products.
Meanwhile, the Western world isn't looking nearly as enthusiastic, and consumer confidence levels in particularly the United States have dropped below the global average.
While Asian nations such as the Philippines, Indonesia and India have … [visit site to read more]

Another Lost Decade?

Posted: 05 Jan 2010 12:09 PM PST

In today's edition of The Daily Reckoning, we turn our attention to the "Decade of No Returns" – aka, the "Lost Decade." Students of recent financial history may recall that our friends over in Japan have already logged a couple of "lost" decades. Japanese workers still punch time clocks every day, but the national economy barely seems to notice. Meanwhile, the Nikkei Index has surrendered 73% of its value during the last twenty years.
Here in the States, things are a little bit … [visit site to read more]

Hospira Inks Deal With Genzyme

Posted: 05 Jan 2010 12:05 PM PST

Genzyme Corp. (GENZ) has entered into a contract manufacturing agreement with Hospira (HSP) for its key drugs, including Cerezyme and Fabrazyme. We believe this move has been taken to reduce the impact of the company's manufacturing plant-related issues on the supply of its products.
Any financial detail of the deal, which is set to expire in 2015, has not been disclosed. The deal has yet to receive regulatory approval for the manufacturing of these drugs.
Genzyme has been under … [visit site to read more]

An Invaluable Tip From The King Of Oil

Posted: 05 Jan 2010 12:01 PM PST

He’s been called the “King of Oil.”

He made hundreds of millions of dollars by foreseeing the surges in oil prices of the 1970s.

When the oil market was dominated by a handful of large oil companies (the Seven Sisters), he took them on…and won.

He’s an entrepreneur, a billionaire, and at one point in time was one of the most controversial fugitives of the 20th century.

Think what you will about Marc Rich, but no one can deny he has made a fortune by being right at the right time … [visit site to read more]

Sallie Mae Upped To Outperform

Posted: 05 Jan 2010 06:45 AM PST

We are upgrading our recommendation on the shares of SLM Corporation (SLM) to Outperform. Based in Reston, Virginia and commonly known as Sallie Mae, SLM Corporation is the nation's market leader in education finance. The company manages student loans of roughly 10 million customers.
Sallie Mae's third quarter earnings of 26 cents per share were well ahead of Zacks Consensus Estimate, driven by an increase in loan originations and an improvement in credit markets. However, loan loss … [visit site to read more]

Word’s Leaking Out On This Market…

Posted: 05 Jan 2010 11:34 AM PST

Before we close the book on 2009 for good, let me share one more fittingly "expect the unexpected" storyline.
Options Clearing Corp. reported that a record number of options contracts – 3.6 billion – changed hands last year.
Surprising, to say the least, considering that hedge funds – the foremost user of options – massively scaled back their trading activity. Knowing they had, experts were anticipating options trading to be way off for the year…
But remember, we're talking … [visit site to read more]

Forex Trading: USDCAD Rallies And Stops At 1.0406. Back Down Testing Moving Averages

Posted: 05 Jan 2010 11:29 AM PST

The USDCAD spent most of the NY trading day moving higher after reaching new move lows in the first half of the trading day.  The price correction moved  to the 1.0406 level, the bottom end of 1.0405/15 key resistance level (see post from the NY morning by clicking here). 
The price has since moved back down and just tested support against the 100 and 200 bar MAs on the 5 minute chart at the 1.0376 level and bounced. 
So going into the NY close, look for support buying … [visit site to read more]

VIX Volatility Is Back: Here’s How To Profit From A Complacent Market

Posted: 05 Jan 2010 06:28 AM PST

Tuesday, January 5, 2010: Issue #1168
The stock market kicked off 2010 with a bang, as the major indexes used strong manufacturing data to scoot to 15-month highs.
As always, though, the movement of the CBOE Volatility Index (^VIX) dipped under the radar. Based on options activity on the S&P 500, this widely watched – but poorly reported – gauge of fear and complacency among investors quietly slumped by more than 6%, edging toward the 20-point mark.
This means little to many … [visit site to read more]

MarkWest Sells Starfish Stake

Posted: 05 Jan 2010 06:28 AM PST

Natural gas pipeline operator MarkWest Energy Partners LP (MWE) announced the sale of its 50% non-controlling interest in the Starfish Pipeline Company LLC to Enbridge Offshore (Gas Transmission) LLC, a unit of Canadian energy company Enbridge Inc. (ENB). The financial terms of the transaction were not disclosed.
MarkWest bought the stake in 2005 from an affiliate of Enterprise Products Partners LP (EPD) for $42.1 million. Following the announcement of the sale, MarkWest units hit a … [visit site to read more]

The Trend For 2010

Posted: 05 Jan 2010 06:28 AM PST

Sometimes, our work just writes itself. Follow us through the next couple minutes…
First, U.S. public pension plans face unfunded liabilities of over $2 trillion, says Orin Kramer, chairman of New Jersey's pension fund. Kramer is stealing the show in this morning's FT with a new take on an old story. Sneaky accounting and laughably unrealistic expectations of future returns have led many econ-nerds, your editors included, to suggest pension funds are in a deep, dark hole… maybe as bad … [visit site to read more]

Rockwell Acquires AR Group

Posted: 05 Jan 2010 06:15 AM PST

Rockwell Collins Inc. (COL) completed the acquisition of AR Group Inc. and its affiliated companies, including Air Routing International, a premier provider of trip support services for business aircraft flight operations. Rockwell Collins already has a significant foothold in the aircraft electronic systems market. The acquisition will expand its business to include flight planning and trip support for aircraft flight operations. Under the terms of the agreement, Rockwell Collins will … [visit site to read more]

7 Themes That Will Lead To Maximum Profits In 2010

Posted: 05 Jan 2010 11:01 AM PST

If the crippling financial events of 2008 and 2009 proved one thing, it’s that investors need to rethink the entire philosophy of “portfolio management.”

Today, the best-performing managers around the world manage their portfolios based on broad-and-potent market themes. And with good reason.

It’s much easier to follow macro trends based on broad-based themes than it is to cobble together a bunch of different stocks into a portfolio and call it diversified. Theme-based investing is … [visit site to read more]

DNR Completes Barnett Sale

Posted: 05 Jan 2010 10:57 AM PST

Denbury Resources (DNR) has completed the sale of remaining 40% of its Barnett Shale natural gas assets to Talon Oil & Gas LLC (a privately held company) for $210 million. During June last year, Denbury had completed the sale of its first 60% for $270 million to the same buyer.
 
Proceeds from the sale were used to pay off bank debt. The Barnett Shale divestment allows the company greater liquidity and flexibility to focus on its core tertiary oil operations, which are more … [visit site to read more]

Video: Oil Prices Edge Higher As Dollar Weak

Posted: 05 Jan 2010 03:40 PM PST

Front month crude prices edged higher this session as the US dollar continued to slump. … [visit site to read more]

Triumph Upgraded To Neutral

Posted: 05 Jan 2010 05:38 AM PST

Triumph Group Inc. (TGI) continues to remain focused on growing its core businesses as well as growing through strategic acquisitions. Organic growth remained strong in fiscal 2009 through the addition of products and services, the expansion of the operating capacity and marketing of the complete portfolio of capabilities, while benefiting from the continued strength in the aerospace markets generally.
 
Triumph has grown strongly over the past decade as a result of overall growth in … [visit site to read more]

Forex Trading: GBPJPY Moves Sharply Lower Today To Test Support At 146.02

Posted: 05 Jan 2010 10:28 AM PST

The GBPJPY has come under pressure today falling back below the 100 day MA at the 148.07 level.  On the break, the pair moved down and tested the 38.2% retracement of the move up from the January 2009 low to the August 2009 high at the 146.02 level.  That level comes in at the 146.02 level. The low reached 146.11. 

The GBPJPY has been largely consolidating over the last 4 or so months.  Two days ago the price moved above the 100 day MA (blue line in the chart … [visit site to read more]

Video: California Becomes The First State To Ban Trans Fat

Posted: 05 Jan 2010 03:26 PM PST

Following successful attempts to ban the sale of trans fats in numerous US cities, California has one-upped the cities by putting into action the first ever state-wide ban of trans fats. … [visit site to read more]

A Quick Look At Emerging Market Valuations

Posted: 05 Jan 2010 10:21 AM PST

Adding to our bullish case in Emerging Markets, valuations seem to back our thesis showing evidence for sustainable growth in the first half of 2010. On a Forward Price/Earnings basis, Emerging Markets finished 2009 with a Forward P/E of 12.7, roughly 8% below their long term average of 13.78 and nearly 50% below the all time high of 25.5 (in the summer of 1988 just before the Asian Crisis).

A few ETFs that can add Emerging Market exposure to any portfolio include the iShares MSCI … [visit site to read more]

“The Source” Unveils Bell Goods

Posted: 05 Jan 2010 05:20 AM PST

Bell Canada, the wireless arm of Canada's largest telecom service provider BCE Inc (BCE), has announced that its wireless products are now available exclusively at "The Source,” a leading Canadian consumer electronics retail chain with nationwide presence. Moreover, the Canadian retail giant has also commenced selling products from Virgin Mobile Canada, a wholly owned subsidiary of Bell Canada. 
 
Cell phone users across Canada now have direct access to the state-of-the-art … [visit site to read more]

Pending Home Sales Tumble

Posted: 05 Jan 2010 10:02 AM PST

The National Association of Realtors (NAR) reported that Pending Home Sales plunged 16.0% in November from October, but are 15.5% above year-ago levels.
Used home sales are recorded at closing — not when the deal is reached — which often results in a delay of as much as two months. The pending home sales report is based on the number of handshakes, and is thus a good leading indicator of the number of closings over the next month or two.
In recent months, used home sales (which are what the … [visit site to read more]

Video: Market Movers: CAL, COF, RSH, THC, AMR, UAUA, LCC, TGT

Posted: 05 Jan 2010 02:59 PM PST

The latest news and information on U.S. stocks that are moving the market. … [visit site to read more]

Plexus Downgraded To Neutral

Posted: 05 Jan 2010 04:55 AM PST

We have downgraded Plexus Corp. (PLXS) to Neutral from our previous Outperform rating with a six-month price target of $31. Our target price represents a multiple of 19.6X our 2010 EPS estimate, slightly above the S&P 500.
 
The impact of weak economic conditions significantly contributed to reduced revenue, gross margin and return on invested capital (ROIC) in fiscal 2009. During fiscal 2009, the company's ROIC was 13.2%, gross margin was 9.6% and operating margin was 3.3%. This … [visit site to read more]

Video: Risk Aversion Strengthens On Weak Economic Data

Posted: 05 Jan 2010 02:53 PM PST

The release of a surprising decline in US pending home sales paved the way for investors to steer clear of higher-yielding … [visit site to read more]

Forex Trading: USDJPY Approaches The Topside Resistance At The 100 Bar MA

Posted: 05 Jan 2010 09:52 AM PST

The USDJPY has moved up to and looks to test the 100 bar MA on the 5 minute chart. The moving average currently comes in at the 91.70 level.  The market will look for sellers against the level.  A break above the level will switch the intraday bias to the upside with a confirmation of the bullish bias on a break of the 200 bar MA at the 91.82 … [visit site to read more]

SBGI Lifts Q4 Revenue Guidance

Posted: 05 Jan 2010 04:37 AM PST

Sinclair Broadcast Group Inc. (SBGI) on Monday lifted its broadcast revenue guidance for the fourth quarter of 2009. The company stated that it now expects broadcast revenues to reach approximately $153.8 million, compared to the previous forecast of $143.3 million to $146.3 million. However, the revised guidance still represents a decline of 6.5% from $164.4 million recorded in the year-ago quarter.
 
Sinclair is a diversified broadcasting company that owns or provides programming … [visit site to read more]

Forex Trading: EURUSD Falls To Test 100 Hour MA And Week Midpoint At 1.4370

Posted: 05 Jan 2010 04:23 AM PST

The EURUSD has broken below the 1.4385 floor and moved to test the 100 hour moving average at the 1.4370 level.  The level also corresponds to the midpoint of the weeks range.   A break of the level will next target the 200 hour moving average at the 1.4355 level (green line in the chart above). 
There should be some profit taking buyers against the 1.4372 level.  However the narrow trading range  and break of the floor keeps the pressure to the … [visit site to read more]

Panasonic Moves On

Posted: 05 Jan 2010 04:20 AM PST

Panasonic Corp. (PC) has launched its new HD Visual Communications System at the Consumer Electronics Show in Las Vegas. This new device is expected to be useful for enterprises looking to enhance productivity, without incurring substantial incremental costs. The full HD video conferencing system is expected to improve the customer's videoconferencing capability, thereby reducing the need for frequent business travel.
 
Apart from high definition sound and video quality, this new … [visit site to read more]

Australian Dollar: The Bias Remains Bullish

Posted: 05 Jan 2010 09:17 AM PST

Update on supports and resistances. … [visit site to read more]

Canadian Dollar: Rebound In Sight

Posted: 05 Jan 2010 09:17 AM PST

Update on supports and resistances. … [visit site to read more]

Factory Orders Rise

Posted: 05 Jan 2010 09:09 AM PST

The Census Bureau reported today that New Orders for Manufacturers rose by 1.1% in November. This was up from a 0.8% increase in October (which was revised up from 0.6%) and comes on top of a 1.6% increase in September. The increase was much better than the 0.5% expected by the consensus of economists.
Still, even though new orders have been up in five of the last six weeks, including very solid gains in each of the last three, we had dug ourselves a heck of a hole earlier in the year. On a … [visit site to read more]

Goldman Keeps UK Options Open

Posted: 05 Jan 2010 04:03 AM PST

Goldman Sachs Group Inc. (GS) recently announced its serious consideration of various alternatives to prevent the UK's new 50% super-tax on bonus payments of companies in a report published in London’s Daily Telegraph. One such alternative would be “entire departments going overseas,” according to the report.
 
On Dec 9, 2009, the British government declared a 50% tax for banks on the bonuses exceeding £25,000, effective immediately. Income tax levied on higher income … [visit site to read more]

BMC Wins New Customer

Posted: 05 Jan 2010 03:47 AM PST

BMC Software Inc. (BMC) is winning new customers at regular intervals. One of the most recent wins was that of The Bank of East Asia (China) Ltd. (BEA). The bank will be incorporating BMC Software's Business Service Management (BSM) services to deliver a comprehensive IT management platform and to build up a data center in support of its growing banking business.
 
The Business Service Management (BSM) solution from BMC Software will help BEA China to reduce the risks generated by … [visit site to read more]

With Alcon Sold, Will Nestle Try To Outmuscle Kraft In A Bid For Cadbury?

Posted: 05 Jan 2010 08:45 AM PST

Is a bidding war brewing for Cadbury PLC (CBY)?

In a widely anticipated move, Nestle SA said yesterday (Monday) that it would sell its remaining 52% stake of Alcon Inc. (ACN) to Swiss drug maker Novartis AG (NVS) for about $28 billion. That influx of cash could give Nestle the financial firepower to go up against Kraft Foods Inc. (KFT) in a competing bid for Cadbury.

Nestle is always “open to acquisition opportunities if they fit strategically,” Chief Executive Officer Paul … [visit site to read more]

Citigroup To Sell LavaFX To FXall

Posted: 05 Jan 2010 03:30 AM PST

Citigroup to Sell LavaFX to FXall In a bid to restructure its operations, on Monday, Citigroup Inc. (C) decided to discharge its foreign exchange trading platform LavaFX to FXall, another rival electronic trading platform for foreign exchange. Though the terms of the deal remain undisclosed, LavaFX acquisition is expected to increase the institutional clientele base of FXall by about 800 members. These include the world's largest hedge funds, banks, broker-dealers, corporate treasurers and … [visit site to read more]

Currencies Maintain Their Gains

Posted: 05 Jan 2010 08:23 AM PST

The first trading day of 2010, was interesting, as it certainly looked like risk was back on the table, and the Emerging Markets, and any currency that has some yield, were the beneficiaries of this return to risk taking. It certainly didn't take traders long to get back to dissin' the dollar in favor of these risk assets…I will warn you about this first day of the year move… Let's see if it carries through the rest of the week… If so, then the risk taking bus is about to leave the … [visit site to read more]

Vodafone UK Preps For IPhone

Posted: 05 Jan 2010 03:15 AM PST

Vodafone (VOD) is warming up for the upcoming launch of Apple's (AAPL) iPhone in the UK. The international telecom heavyweight will officially unveil the iconic smartphone on Jan 14, 2010. Vodafone currently sells iPhone in 11 countries including Australia, the Czech Republic, Greece, Italy, India, Portugal and South Africa. However, the carrier has not yet tapped the key European markets. 

Vodafone UK, along with its peer France Telecom's (FTE) Orange UK, sealed marketing … [visit site to read more]

Video: Northrop Grumman Moving To DC In 2011

Posted: 05 Jan 2010 01:07 PM PST

Defense contractor Northrop Grumman announced late Monday that it will move its corporate headquarters to Washington DC from Los Angeles in 2011. … [visit site to read more]

WFC Faces Litigation In Tennessee

Posted: 05 Jan 2010 08:00 AM PST

On Monday, Wells Fargo & Co. (WFC) was reportedly charged by the Memphis City Council and Shelby County Commission, under the Fair Housing Act, for unfair, deceptive and discriminatory mortgage-lending practices in that market. The company has been sued for picking up a minority section of people in the area, for exercising its mortgage-lending programs that insignificantly increased the number of foreclosures through discriminating policies.
 
The matter took a bad shape since the … [visit site to read more]

Video: NYSE Opening Bell Market Monitor: KFT, NOC, UAL

Posted: 05 Jan 2010 12:53 PM PST

The latest in news, commentary, and information on what’s moving the US equities markets. Watch this broadcast LIVE at 4:00 pm EST daily @ “http://www.nyx.com/marketmonitor” … [visit site to read more]

Video: Asian Markets Positive On Growing Commodity Prices

Posted: 05 Jan 2010 12:46 PM PST

The major Asian/Pacific markets were all on the upside this session as commodity prices continued to rally. … [visit site to read more]

Apple Downgraded To Neutral

Posted: 05 Jan 2010 02:46 AM PST

We have downgraded Apple Inc. (AAPL) to Neutral from our previous Outperform rating. Our price target remains at $225, which represents a P/E multiple of 26.1x our fiscal 2010 earnings estimate, a premium to the S&P 500 and more accurately reflecting the current outlook.
 
Apple has experienced tremendous growth, driven by the success of its iPhone and increased Mac shipments. AAPL has undergone a total turnaround from a loss of $0.07 per share in 2001 to a profit of $6.29 per share … [visit site to read more]

Apple Downgraded

Posted: 05 Jan 2010 02:46 AM PST

We have downgraded Apple Inc. (AAPL) to Neutral from our previous Outperform rating. Our price target remains at $225, which represents a P/E multiple of 26.1x our fiscal 2010 earnings estimate, a premium to the S&P 500 and more accurately reflecting the current outlook.
 
Apple has experienced tremendous growth, driven by the success of its iPhone and increased Mac shipments. The company has undergone a total turnaround from a loss of $0.07 per share in 2001 to a profit of $6.29 … [visit site to read more]

Forex Trading: GBPUSD Moves Below 200 Hour MA At 1.6015

Posted: 05 Jan 2010 07:43 AM PST

The GBPUSD has also done a reversal after squeezing higher and failing post the 10 AM economic numbers.  The price failed on the break above the 100 hour MA at hte 1.6048 level. The price has now dipped below the 200 hour MA at the 1.6015 level.  The price has moved to test the double bottom for the day at 1.5988, reached a new low fo 1.5985 and bounced. It is another test for the pair and so far, the test has held support. 
Being below the 200 hour MA, the bias has to … [visit site to read more]

Forex Trading: EURUSD Moves Back Lower After Failing On Top Side

Posted: 05 Jan 2010 02:34 AM PST

The EURUSD has moved lower after testing the topside resistance area.  The market range is narrow, the moves are up and down and the failure to break higher or lower is frustrating. However, failure above has the bears back in charge.  Putting things in perspective 1.4454 is the NY high. The low has reached 1.4385.  The midpoint is 1.4419. The close from yesterday is 1.4413.  I would continue to use that area 91.4413-19) as the pivot for bullish or bearish bias.   … [visit site to read more]

Kraft Offers More Cash For Cadbury

Posted: 05 Jan 2010 02:29 AM PST

Kraft Foods (KFT) has agreed to sell its North American pizza business to Nestle for $3.7 billion in cash. The transaction is expected to close in 2010.
 
The sale includes the DiGiorno, Tombstone and Jack’s brands in the U.S., the Delissio brand in Canada and the California Pizza Kitchen trademark license. It also includes two manufacturing facilities in Medford and Little Chute, Wisconsin and the right to take on the leases for the pizza depots and delivery trucks. The pizza business … [visit site to read more]

General Dynamics Tanks For Iraq

Posted: 05 Jan 2010 02:15 AM PST

General Dynamics Corporation's (GD) business unit General Dynamics Land Systems was awarded a $198 million contract to build 140 M1A1 SA (Situational Awareness) tanks for Iraq. Work on the contract will be performed in Lima, Ohio; Scranton, Pennsylvania; Anniston, Alabama and Tallahassee, Florida. The completion date for the contract is May 31, 2011. 

In recent times the Combat Systems segment has been the revenue growth leader. In the recent third quarter segmental top line grew … [visit site to read more]

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