文章 RSS
评论 RSS


字体 -

Macro News:Labor Items:

• ADP showed a job loss of 532,000 workers. This compares to expectations of -525,000. I had thought the number would have been more in the -450,000 area.

• Challenger said that layoffs totaled 111,182 in May down from 132,590 in April and up from 103,522 a year ago. The layoff numbers peaked at 186,350 in February. The levels remain very elevated. Hiring intentions were 8,124 compared to 27,062 in April. They were 7,118 a year ago. Pretty weak.

General News Items:

There is a new Bin Laden tape, threatening America. Note that there are reports that the Air France plane which crash had received a bomb threat.

Few Treasury notes:

• There is reportedly a Goldman report out saying the Fed will step up treasury purchases at the June FOMC meeting. There seems to be some talk that the Fed should surprise the market with purchases and not announce the schedule. Personally, I think the idea of surprising the market has a lot of merit.

• Talk that the 10 year treasury has -300 bps in the repo market - market seems short.

• Fed will be buying 5/16 to 5/19 today and 5/11 to 4/12 issuance tomorrow.

• Reuters reports that Asian central banks will keep buying treasuries to help maintain market stability. Not sure if it is the same story, but there is another comment from the ASEAN summit that has Asians official saying there was no alternative to the dollar as a reserve currency. Cut it sovereign rating would have little impact on reserve management.

• There is another comment that Chinese officials are saying it sees Treasury holdings as a partnership with the U.S.. I think this was around yesterday.

• Swap spreads are mostly lower with pretty even declines across the curve

• 3 month LIBOR is down .9 bps to 63.688%.

• Itraxx 5 yr crossover is up about 1 bp to 669 bid.

ABC Consumer Comfort fell 2 to -49. The recent low was -43 on the first week of May.

President Obama said to be open to taxing healthcare benefits. If you remember, he ran against this and John McCain found grief from this positions.


• China said it would not buy more oil for stockpiling until additional storage tanks are built. Oil tanks, in use, are fully full. Australia’s Bureau of Weather said that the risk of El Nino has increased. The story talks about the potential for dry weather in parts of Asia and Australia. Odds are greater than 50% and 2x the normal risk.

• Talk that Pakistan canceled plans to buy 50,000 tons of sugar


· Fed said to be raising capital requirements for banks wanting to pay back TARP. The story notes that MS, JPM, and AXP were told to raise capital after being told they were ok a few weeks back.

· NY Post says that the plan to rid toxic assets from bank balance sheets has been put on hold. This is is partly a function of banks successfully raising capital. The PPIP had been set to start in June.

· China Investment Corporation said that it will buy $1.2 bln of the $2.2 bln shares that MS is offering to raise money.

· COF says it does not need TARP going forward.

Housing items:

· MBA purchase index rose 4.3% last week. Refinance fell 24.1%. The purchase index is up despite a jump in rates. The 30 year rate rose to 5.25% from 4.81%. It may have pushed people off the fence. Refinance fell 24.1% after declining 18.9% last week.

· Toll Brothers said that its deliveries this year would be 2,200 to 2,800 homes. TOL said that although cancellations appear to be leveling off, we believe that job security and the economy continue to inhibit traffic and conversion of deposits to contracts. Has experienced positive same week year over year refunding deposits per community comparisons in 9 of past 11 weeks. There are some local markets where foreclosures are limited and available supply is less abundant. Will not provide guidance on earnings. We have begun to see more offerings in the land market as sellers - individuals, companies and financial institutions appear to be motivated. Will look to take advantage of opportunities.

· HOV, said that net monthly contracts per community had increased each of the past two quarters and six of the past seven months. HOV said it lowered the sale price further, but had seen more stability in home prices over the last six weeks. The company noted federal and state of California tax credits. HOV was still cautious in the results, but has to be seen as a favorable data point



· EZ PMI Composite was 44.0 up 0.1. 43.9 was expected. PMI Services was 44.8 up 0.1. 44.7 expected

· EZ April PPI fell 4.6% y/y. -4.5% expected.

· UK PMI services rose 3.0 to 51.7. 49.5 expected

· UK BRC price index rose 1.3% y/y. There is a trend toward deceleration, although food prices remain high. Food rose 6.4% and non-food fell 1.3%. The sequential change was stronger up 0.5%. Food rose 0.2% and non-food rose 0.7%.

· Germany’s print sector employees agreed to a wage hike for 170,000 workers. 24 month contract has a one off payment of E280 for period ending April this year to March of next. Pay raise of 2.0% for the next year. This does not seem very inflationary.

· VDMA says that German May car exports fell 24% y/y. Production was off 9% y/y

· ArcelorMIttal is shutting down a Spanish operation and laying off 12,000 workers. They get 90% of pay.

· German new car registrations rose 1.3% m/m and 39.7% y/y

· EU Commission is releasing E19 bln for job funding. Released earlier than expected.

· ECB Nowotny said that staff projects would be downbeat

o Europe to have a few months of negative inflation

o Massive negative GDP this year and around zero next year

o Concerns about hyperinflation are far fetched.


· Q1 Australian GDP rose 0.4% q/q. -0.2% expected.

· China’s job situation is grim. New jobs shrinking compared with a year ago and registered unemployment rate rising. Government will announce policies to help labor-intensive industries. State Council reports.

o Economy faces many uncertainties

o Economic recovery is not solid

· There is a report that mainland Chinese property prices will rise in H2. Hong Kong Standard reported quoting Shimao Property Holdings CEO. Prices could rise 10%.

· India is sticking to its borrowing plans for the fiscal year.

· India’s export growth is expected to continue to slow until August or September. Trade Minister.

· BOJ says it is too early to discuss exit strategy from Monetary ease - BOJ Kamezaki

o Labor market likey to see a weak recovery

o Production needs long time to return to normal

o May pay attention to inflation expectations

o Watch impact of excessive liquidity

· Some talk of a new bill in Washington, which tightens rules for outsourcing workers form India. Could hurt models for Wipro, Infosys and Tata. It has to do with visa limits.


DRAMeXChange composite rose - out of time today

Major Corporate News:


· JBLU is offering 20 mln shares and a convertible

· LUV said that may traffic fell 3.6% y/y. Available seat miles fell 3.2%

· AAI upgraded by a Broker



· INTC talks about solid consumer laptop demand. Says that commercial biz is challenging

· ARW has weak numbers

· BRCD off a buy list

· AAPL upgraded by a broker

· AMSC downgraded by a broker

· Antitrust inquiry into hiring at US tech companies. GOOG, YHOO, and AAPL

· LSI favorable analyst comments

· TXN target raised



· COF says that the credit card business must be reinvested. Early to know impact of new law

· HBAN announced a common equity offering

· DB upgraded by a broker

· BCS upgraded by a broker

· CMA upgraded by a broker

· BEN upgraded by a US bank

· TROW upgraded by a broker



· VLO warns of weak profits and offers shares

· STLD is offering shares

· MT upgraded by a European bank

· NFX discovery announce in Gulf of Mexico

· FE reported solid profit guidance

· HESS defended by a broker

· NEM upgraded by a broker

· SGY upgraded by a broker


· AET warned of weak profits

· MDT target is priced

· THC see an upgrade



· HOV and TOL release. The news is mixed and should not derail current trends

· TAP price hike and added to a buy list

· BOBE had solid revenue guidance

· JOSB reported robust profits

· PBG target up at a broker

· AMZN target up at a broker

· WSM has strong EPS to consensus. Still lost money. Forward revenue guidance healthy to consensus.

· ANF upgraded by a broker

Equity Fair Value


-0.68 0.25 -10.87 Outlook:

Stocks are on the defense. The profit warning from AET and VLO sour the tone of the market. Moreover, there is heavy supply. The market will face a challenge taking down paper if risk aversion picks up. News flow is mixed. The consumer sector is seeing neutral to friendly numbers, there are a few upgrades in the financial space, and technology news is mostly friendly. There seems to be little recovery in the transport sector given airline data and Chrysler is offering big incentives despite better than expected auto sales in May. The ADP number and geopolitical backdrop could make traders nervous. The reaction to the services PMI will be important. The number should give the market a chance to rally. Lack of follow through could spark profit taking. The market is vulnerable to consolidation before it works higher. SPM: range guess 929 to 950.

Treasuries are finding some support. There are four favorable factors: 1) repo market implies a large short in the 10 year. 2) the Fed will buy treasuries today in a coupon pass 3) There is talk the Fed may increase its treasury purchases or move to a surprise the market model with purchases. 4) Labor data is friendly for prices, as labor demand is weak. Funding remains the largest negative. ISM non-manufacturing on deck. Lack of downside after this number should firm the market into Friday. TYU has support at 115-15 and 115-06. Resistance is at 116-07 and 116-123.

归类于: 未分类 | RSS 2.0 | Trackback |