Thursday, April 15, 2010

Morning Note...

Futures -20bps this morning as Initial Jobless Claims for the week of April 10th disappoint, coming in at 484k vs. the 440k expectation and the prior 460k reading.  Continuing Claims are 4.639M vs. the 4.580M expectation and the 4.566k prior revision.  Empire Manufacturing actually surprised to the upside, however, coming in at 31.86 vs an estimate of 24 and a prior reading of 22.86.  Overseas, China’s economic data was very strong and probably puts continued pressure on them to allow the yuan to appreciate in a quasi-tightening move in monetary policy.  Chinese GDP was +11.9 year-over-year vs. the +11.7% estimate and CPI data was lower than expected (less inflationary) at +2.4% vs. the +2.6% expectation.  In Europe, however, Greek bonds are lower on the Bloomberg headline “Greece May Activate EU, IMF Loan in April, Fitch Says.”  Additionally, Reuters is reporting that Greece may cancel its US “roadshow” ahead of its planned USD-denominated bond offering later this month.  In corporate news, APA announces plans to acquire ME in a cash & stock deal that values ME at $26.22/share.  Last night, UPS raised Q1 guidance by roughly 10% to the top end of the range and restaurateur YUM (KFC, Taco Bell, Pizza Hut) beat by 6c, beat on revenues, and reaffirmed full-year guidance.  A few strategic moves from the Street this morning… BofAMLCO raised its year-end S&P target to 1300 (from 1275) and GSCO raised their Q2 2010 growth forecast to +3% (from +2%) and expects unemployment to “drift sideways between 9.5%-10% through the end of 2011.”  Note that Philly Fed data is due at 10am.  Worth noting that a volcanic eruption in Iceland is causing air traffic delays (spewed ash) across northern Europe.

Loved Mike O’Rourke’s historical perspective in last night’s “Bedtime with BTIG” note…September 29th, 2008 feels like yesterday:

It took 562 days or nearly 19 months for the S&P 500 to reclaim the ground lost on September 29, 2008.  That was the fateful day that the members of Congress voted down the first TARP Bill 228-205.  The S&P 500 lost 8.8% that day, which was the second worst trading day of the crisis surpassed only by the 9% meltdown a couple of weeks later on October 15th.  The October selloff came following an 11% bounce two days earlier, so it was a different experience than the waterfall that commenced on September 29th.  The trading action that day was extremely sloppy even though at the time, the market expected the Bill to pass.  The rejection was a lights out moment and the damage incurred by the end of the day prompted Congress to reverse course and pass the legislation by the end of the week.  Now that this technical ground has been recovered, sights will be set upon the 1250 level, which was the approximate close on the Friday before Lehman failed.

Today investors find themselves in a better place.  The momentum of the economic recovery appears to be just starting to pick up.  Monetary policy is being steered by a Fed Chairman who has confronted a central banker’s worst nightmare and has no intention of going back to sleep anytime soon.  At the moment, the 9.7% Unemployment Rate, benign CPI data and sluggish M2 year over year growth afford him all of the latitude he needs. 

JBHT beats by 2c and beats on revs.  KRC announces 5.5M share offering.  MAC lowers guidance and announces 18.5M share offering.  MGM lowers estimates.  MTXX lowers guidance.  CCRT announces Dutch auction.  CXDC beats by 6c.  FCS beats by 1c.  LSTR beats by 2c.  NEP delays 10k filing.  NOG announces 5M share offering.  REVU announces 14M share offering. RTP ups iron ore guidance.  RobbieHump ups ZION.  BofAMLCO ups RSG, ITW; cuts WCN, GWW, GMCR.  CSFB ups PGR.  DBAB ups BGFV, OMC, AMSC.  FBRC ups JBHT.  GSCO ups TEO.  MSCO ups PDE.  WEFA ups GPN.  BMOC cuts ARUN.  GSCO cuts NIHD.  JEFF cuts SY.  WEFA cuts EV, HPY. 

Asia mixed overnight.  Europe mixed.  USD +50bps.  Oil -15bps.  Gold -60bps. 

S&P 500 PreMarket 8:30am (last/% change prior close/volume): 
UNITED PARCEL-B          68.60    +4.81% 95072
APACHE CORP                103.562 -4.16%  379381
TEREX CORP                  26.62    +2.58% 1000
ANHEUSER-SPN ADR       50.23    -2.39%  23300
E*TRADE FINANCIA        1.74      +2.35% 910145
SCHWAB (CHARLES)       18.90    -2.33%  14319
YUM! BRANDS INC          42.64    +2.3 %  40185
ZIONS BANCORP            26.93    +2.16% 9837

Today’s Trivia:  Read something interesting the other day (shout out to Amherst alum Harlan Coben’s Hold Tight) about the “self-important” nature of man…interesting to consider our time & place on earth if we’re truly that significant…so regarding our time on Earth – how much longer have we been around than the dinosaurs were?  Or were they here longer?  And what’s the ratio, or the difference, in raw numbers or percentage terms? 
Yesterday's Answer:  The highest elevation paved road in North American is at Mount Evans, about 30 miles west of Denver, CO
Best Quotes:  “U.S. Foreclosure Filings Rise 16% as Bank Seizures Set Record 2010-04-15 04:00:01.3 GMT By Dan Levy
April 15 (Bloomberg) -- Foreclosure filings in the U.S. rose 16 percent in the first quarter from a year earlier and bank seizures hit a record as lenders stepped up action against delinquent homeowners, according to RealtyTrac Inc. A total of 932,234 homes, or one out of every 138 households, received a default or auction notice, or were repossessed by banks, the Irvine, California-based firm said today. In March, filings rose 8 percent to the most in any month since RealtyTrac began publishing reports in January 2005. “The banks are finally working through it,” Rick Sharga, RealtyTrac’s executive vice president for marketing, said in a telephone interview. “We’re seeing a resolution for properties that were in foreclosure but where seizure was delayed.” Unemployed and “underwater” homeowners, or those who owe more than their property is worth, are driving foreclosures. The U.S. jobless rate was 9.7 percent in March, unchanged for a third month, the Labor Department reported April 2. More than a fifth of mortgaged homes were underwater in the fourth quarter, according to real estate data firm Bank repossessions climbed to 257,944 in the quarter. Scheduled auctions totaled 369,491, also the most since RealtyTrac began releasing data.

2010 Forecast…RealtyTrac is forecasting more than 1 million bank seizures this year and at least 4 million foreclosure filings, both potential records. Foreclosures won’t level off until next year, Sharga said. Foreclosure prevention efforts such as the U.S. Treasury’s Making Home Affordable Program may have “slowed down the normal foreclosure timeline,” James J. Saccacio, RealtyTrac’s chief executive officer, said in today’s report. The number of homes seized by lenders rose 35 percent from a year earlier, RealtyTrac said. Auctions increased 21 percent from the same period in 2009. RealtyTrac reported 304,799 default notices in the quarter, down 1 percent from a year earlier. The number peaked at more than 342,000 in the third quarter of 2009.

Nevada’s Top Rate…Nevada had the highest foreclosure filing rate for the 14th straight quarter. One in every 33 households got a notice, more than four times the national average. A total of 34,557 Nevada homes got filings, down 16 percent from a year earlier, RealtyTrac said. Arizona had the second-highest rate at one in 49 households, three times the national average. Florida ranked third with one in 57 households and California was fourth at one in 62. Utah ranked fifth, with one in 88 households, and had the biggest annual increase -- 75 percent -- among states with 10 the highest rates. The following is a list of the 10 states with the most foreclosure filings in the first quarter.

State              Filings         Rate Per Household
California         216,263         1 in 62
Florida            153,540         1 in 57
Arizona             55,686         1 in 49
Illinois            45,780         1 in 155
Michigan            45,732         1 in 99
Georgia             39,911         1 in 101
Texas               37,354         1 in 257
Nevada              34,557         1 in 33
Ohio                33,221         1 in 153
Colorado            16,023         1 in 134

Source: RealtyTrac”

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