Daily finance & investment thread (4-1-13 edition)

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NYSE Morning Update:

Ahead of the Bell: Dow futures are trading up 13 points and S&P futures are trading up 2 points. Improving economic data from China and hopes for more monetary policy from global central banks is encouraging the risk on trade. With most major financial markets in Europe and Asia including Hong Kong and Australia closed for the Easter Holidays, investors will turn their focus to US equity markets. A survey showed strong appetite for Chinese factory activity boosted domestic demand; a sign the underlying recovery could weather the patchy economic data. Investors are optimistic that major central banks, such as the Bank of Japan, which is scheduled to meet later this week will provide more monetary stimulus to aid the global economic recovery.

• On the economic calendar today, ISM manufacturing index for March will be out following the opening bell, a reading of 54 is forecasted versus 54.2 for the month prior. Construction spending for January will also be out after the market opens, it is anticipated to be 1.1%, a negative 2.1% was reported in February.

• The dollar is up against the major currencies. Gold is trading at $1,596. Crude oil is currently trading at $97 a barrel.

• Last week, the equity markets flirted with record highs and the running of the bulls continued on mixed economic data, despite concerns over Cyprus teetering with bankruptcy and elimination from the European Union. Cyprus decided with the ECB to wipe out some senior bank bond holders and impose losses on larger depositors. However, stocks finished one of the best quarters, despite investors being skeptical about the rally. The Dow finished the month of March up 3.7% and up 11% for the quarter. The S&P 500 is up 3.4% last month and 10% for the first quarter of the year. The best performing sectors for the year thus far are consumer staples and healthcare. The economic data for the week was mixed; durable goods orders were a pleasant surprise as demand for transportation equipment rose. However, consumer confidence fell as a result of effects from the payroll tax and higher gas prices. New home sales and existing home sales took a pause as fewer Americans signed contracts. Business activity expanded in March at a slower pace than forecast, a sign the rebound in manufacturing will cool. More Americans than projected filed applications for unemployment benefits last week, bringing a halt to the recent progress in the labor market.

• The week ahead; investors have a few market moving events to think about, including the economic data and meetings by the ECB, the Bank of Japan, and the Bank of England, as the stock market comes off its all-time high. There are a number of notable economic reports on the docket this week, such as auto sales, manufacturing data, factory orders, weekly jobless claims, and international trade data. However, the highlight of the week will be the employment report on Friday. The jobs report will be particularly important for the Federal Reserve to gauge the effect its easy monetary policy is having on the labor market. The agency is currently buying $85 billion in treasury securities per month. According to economists surveyed by Thompson Reuters, the private sector is expected to have created 197K jobs in the month of March compared with 236K for the prior month, while the unemployment rate is forecasted to remain at 7.7%. There are several central bank meetings this week, including the bank of England and the Bank of Japan. The Japanese central bank is meeting for the first time with its new president. The most important central bank meeting this week will be the ECB’s discussion with Cyprus’s government over its 10 billion euro rescue plan for the country. The central bank has imposed strict controls over banks and depositors, including closing some banks and limiting withdrawals in order to slow the flight of capital from the nation’s banking system.

• On CNBC today, John Ryding, Chief Economist and founding partner of RDQ Economics and Jeffrey Solomon, CEO of Cowen and Company, talked about the direction of the equity markets from here after the best 1st quarter since 1998. Ryding said this quarter puts us on track for a 3% growth for the remaining 3 quarters of the year. He added, jobs are a key factor and the economic data is getting better. Solomon said the lack of bipartisan in the past really took a toll on how companies hire and make investments, but this past quarter is an indication people are trying to work together. The markets are forecasting US domestic polices will work itself out. This is the first quarter we have had funds inflow into equities in a while; the past few quarters, funds were pulled out. He is getting tired of talking about Europe. There is no trading between Germany and Cyprus, and according to Solomon the effects from the region will only be a blip on the radar.

Thursday’s Close

DJIA up 52.38 pts/+0.36%/ 14,578.54
S&P up 6.34 pts/+0.41%/ 1,569.19
Nasdaq up 11.00 pts/+0.34%/ 3,267.52

Monday’s Futures

Dow Futures up 13.27 pts/+0.27%
S&P Futures up 2.50 pts/+0.42%
Nasdaq Fut up 4.25 pts/+0.55%

Overseas Markets

FTSE +0.38%
CAC 40 +0.53%
NIKKEI 225 -2.12%
HANG SENG -0.74%

Overseas: World stock markets are mixed today. Most of the major markets in Europe and Asian are closed for the Easter Holidays. Markets in China and Japan are down as investors pull back from recent gains.

Economic Reports: Motor Vehicle Sales expected to be 12.1M, PMI Manufacturing Index expected to be, ISM Mfg Index expected to be 54.0, Construction Spending expected to be 1.1% at 10:00 a.m., later in the week, ICSC-Goldman Store Sales, Factory Orders, MBA Purchase Applications, ADP Employment Report, ISM Non-Mfg Index, challenger Job-Cut Report, Jobless Claims, Fed Balance Sheet, Employment Situation, International Trade, and Consumer Credit.

Top Headlines:

• Reports indicate Exxon Mobil (XOM) continued its cleanup of a pipeline spill that sent thousands of barrels of heavy Canadian crude in Arkansas, opponents of oil sands development used the incident to attack plans to build the Keystone XL pipeline.

• Toys R Us Inc. withdrew its proposed IPO late last week, following disappointing quarterly results for the final quarter of 2012. KKR and Bain Capital took the retailer private in a $6.6 billion deal in 2005.

• Proxy advisory firm Glass Lewis is joining ISS in encouraging shareholders to vote against the proposed merger between MetroPCS Communications Inc. (PCS) and Deutche Telekom AG.

Commodities/Currency:

Gold: up $1.60 to $1,596.80
Oil: up 0.56 to $97.08

EUR/USD 1.2812 -0.0007
USD/JPY 94.2150 -0.0200
GBP/USD 1.5193 -0.0012

Volatility Index (VIX): As of the close of business Thursday, March 28, the VIX is down 0.45 at 12.70
Companies Reporting Quarterly Earnings:

Oxford Resource Partners reports Q4 EPS (29c), vs. Est (13c) and Q4 revenue $86.5M, vs. Est $88.9M.

Derma Sciences reports Q4 EPS (27c), vs. Est (31c) and Q4 revenue $20.1M, vs. Est $19.73M.
Today’s Opening and Closing Bells:

General Hospital Celebrates its 50th Anniversary, Executive Producer Frank Valentini, Ron Carlivati, and Actors Tony Geary, Genie Francis, Kin Shriner, Jason Thompson, Kelly Monaco, and Finola Hughes will ring the opening bell.

NJ Sharing Network – Donate Life Month will ring the closing bell.

NASDAQ’s mid-day update

TODAY’S MARKETS

Equities

U.S. stocks headed lower as investors bide their time ahead of major economic and monetary policy news due later this week.

Forex

The Japanese yen rose against the dollar, with the greenback extending losses against its major rivals after data showed an unexpected decline in a U.S. manufacturing gauge.

Bonds

Treasury bonds strengthened, shaking off earlier price losses, as a disappointing report on manufacturing activity deflated optimism over the economic outlook.

Commodities

U.S. crude-oil futures were lower with profit-takers in control after a five-session rally into a long holiday weekend.

ON TAP
1:00 p.m.

Mar Dow Jones Economic Sentiment Indicator DJ Economic Sentiment Indicator (previous 49)

TODAY’S TOP STORIES

A WIDELY FOLLOWED SURVEY of U.S. manufacturers shows the sector slowed more than expected last month, but employment picked up, according to data released by the Institute for Supply Management.

NEW HOME BUILDING drove gains in U.S. construction spending in February, which more than offset lower investments in federal projects.

U.S. authorities are investigating whether a unit of Japanese electronics giant PANASONIC CORP. (PC, 6752.TO) paid bribes abroad to land business, according to company documents reviewed by The Wall Street Journal.

HESS CORP. (HES) has agreed to sell its Russian subsidiary Samara-Nafta for $2.05 billion to OAO LUKOIL as the exploration-and-production company continues to whittle its assets to fund drilling and exploration and cut costs amid shareholder pressure to restructure.

WAL-MART STORES INC. (WMT) plans to invest 500 million yuan ($79.8 million) to upgrade Chinese stores and said it is on target with store openings there, following local media reports that said recent store closures are derailing store growth plans in one of the retailers’ key markets.

A weaker yen is speeding TOYOTA MOTOR CORP.’s (7203.TO) earnings recovery and appears likely to lift fiscal 2012 group operating profit to between Y1.2 trillion and Y1.3 trillion, the Nikkei reported in its Saturday morning edition.

AMERICAN GREETINGS CORP. (AM)—a company with family links running back to its founding more than 100 years ago—has agreed to be taken private by the Weiss family, in a deal that values the greeting-cards company at least $575 million, above the sweetened offer made earlier this year.

TESLA MOTORS INC.’s (TSLA) shares rose as much as 22% on Monday after the luxury electric-car maker said it would report a quarterly profit for its first quarter.

APPLE INC. (AAPL) issued an apology letter signed by Chief Executive Tim Cook that vowed to revamp aspects of its customer-service policies in China after more than two weeks of pointed attacks by government-run media.

UNIVERSAL HEALTH SERVICES INC. (UHS) Chief Executive Alan Miller believes state lawmakers who oppose the U.S. health-care overhaul law’s Medicaid expansion will eventually yield to political pressure, which would help his company and other hospital operators.

CHESAPEAKE ENERGY CORP.’s (CHK) acting chief executive declined Monday to say when the company expects to have a permanent CEO in place to replace departing chief CEO Aubrey McClendon.

THE SUPREME COURT on Monday refused to consider an airline industry challenge to a government rule that restricts how airlines advertise fares.

SOUTH KOREA said it would speed up plans to develop missile-defense systems, as President Park Geun-hye called for “strong retaliation” against any provocations by the North.
The pickup-truck war is on with GENERAL MOTORS CO. (GM) claiming Monday its new Chevrolet Silverado and GM Sierra pickup trucks will beat out FORD MOTOR CO. (F) when it comes to fuel economy.

ORBITZ WORLDWIDE INC. (OWW) and AMR CORP.’s (AAMRQ) American Airlines agreed to resolve all litigation between them, marking the end of the airline’s antitrust battle with distribution-system operators.

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