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USA stock market daily report by Millenium Traders (May 27, 2009, Wednesday, 10.30 p.m. GMT)

Treasury's Secretary Timothy Geithner commented today that the U.S. economy is showing 'Signs Of Stability'. Crude oil climbed higher again today over $63 a barrel. Ali al-Naimi, Saudi Arabia's oil minister said crude oil may hit $75 a barrel but, it won't hurt the global economy. What rock has this guy been under? Bond holders rejected General Motors (GM) debt-for-equity swap, an offer to convert $27 Billion of unsecured debt into GM common stock,  moving the automobile giant even closer to filing for bankruptcy. GM has only a few days remaining before the U.S. government imposed deadline to obtain bond holders approval. Should General Motors file bankruptcy it would make it the largest industrial bankruptcy filing in U.S. history.

Trading activity was flat during the trading session with major U.S. indices posting triple digit losses at the closing bell. Bond yields shot higher this afternoon with the yield on the 10-year Treasury note rocketing to nearly 3.7% from 3.5% on Tuesday and 2.24% on December 31. The spread between the 2-year notes and the Treasury notes hit a record 2.75 percentage points making it the steepest gap, since August 2003.

U.S. Banks Report 1Q profit, but credit problems persist. U.S. Banks Report $7.6 Billion 1Q Profit but continue to plan for losses.

Number of `Problem` U.S. Banks hit 305 reaching highest number since 1994. FDIC reported that noncurrent loans rise across all major loan categories. U.S. Banks charge off $37.8 Billion during 1Q reaching across loan categories. FDIC Deposit Insurance fund fell to $13 Billion during 1Q. Bank ratio of reserves to noncurrent loans down for the 12th quarter in a row. Total equity capital of U.S. Banks has risen by $82.1 Billion in 1Q.

FDIC-Insured Institutions Earned $7.6 Billion in the First Quarter of 2009  Loan-Loss Provisions Continue to Depress Net Income:

Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported net income of $7.6 billion in the first quarter of 2009, a decline of $11.7 billion (60.8%) from the $19.3 billion that the industry earned in the first quarter of 2008. Higher loan-loss provisions, increased goodwill write-downs, and reduced income from securitization activities all contributed to the year-over-year earnings decline. Three out of five insured institutions reported lower net income in the first quarter and one in five was unprofitable. "The first quarter results are telling us that the banking industry still faces tremendous challenges, and that going forward, asset quality remains a major concern," said FDIC Chairman Sheila C. Bair. "Banks are making good efforts to deal with the challenges they're facing, but today's report says that we're not out of the woods yet." She added, "As I see it, we're now in the cleanup phase for the banking industry. It will take some more time. But in the end, we'll have a stronger banking industry that's better able to meet the demand for credit as the economy recovers." Insured institutions set aside $60.9 billion in provisions for loan losses in the first quarter, an increase of $23.7 billion (63.6%) over the first quarter of 2008. Expenses for goodwill impairment and other intangible asset expenses totaled $7.2 billion, up from $2.8 billion a year earlier. These negative factors outweighed the positive effects of increased noninterest income (up $7.8 billion or 12.8%), higher net interest income (up $4.4 billion or 4.7%), and higher realized gains on securities and other assets (up $1.9 billion). Twenty-one FDIC-insured institutions failed during the first quarter, the largest number since the fourth quarter in 1992. The FDIC's "Problem List" grew during the quarter from 252 to 305 institutions, and total assets of problem institutions increased from $159 billion to $220 billion. The FDIC also noted that asset-quality indicators continue to decline. Insured institutions charged off $37.8 billion in bad loans in the first quarter, almost twice the $19.6 billion of a year earlier. The amount of loans and leases that were noncurrent (90 days or more past due or in nonaccrual status) rose by $59.2 billion during the quarter, and are $154.3 billion higher than a year ago. "Troubled loans continue to accumulate, and the costs associated with impaired assets are weighing heavily on the industry's performance," Chairman Bair noted. "Nevertheless, compared to a year ago, we see some positives. Net interest income is higher, and noninterest revenue is up at larger banks, particularly trading revenues. Realized gains on securities and other assets improved, too. But these positive factors were outweighed by higher expenses for bad loans and for goodwill impairment." Financial results for the first quarter are contained in the FDIC's latest Quarterly Banking Profile, which was released today. Also among the major findings: Tier 1 capital reached a record high. Tier 1 capital rose to almost $70 billion, the largest quarterly increase ever reported by the industry. However, much of the increase occurred at institutions that received capital from the U.S. Treasury Department's Troubled Asset Relief Program (TARP). A number of institutions also reduced their dividends to support capital growth. Dividend payments in the first quarter totaled $7.2 billion, about half the $14.0 billion insured institutions paid in the first quarter of 2008. The FDIC noted that 97% of insured institutions were well-capitalized by regulatory standards. Total assets declined by $302 billion. Downsizing by a few large banks caused total industry assets to fall by $302 billion (2.2%) during the first quarter. Two-thirds of all institutions reported asset growth in the quarter, but reductions at eight large banks caused the industry total to decline. Total loans and leases fell by $159.6 billion (2.1%), while assets in trading accounts declined by $144.5 billion (14.9%). The FDIC's Deposit Insurance Fund (DIF) reserve ratio fell to 0.27%. Growth in insured deposits and a shrinking fund balance caused the Deposit Insurance Fund's reserve ratio to decline from 0.36% of insured deposits to 0.27% in the first quarter. Insured deposits increased by $82.4 billion (1.7%) during the quarter. The DIF balance declined from $17.3 billion at the end of 2008 (amended from the originally reported unaudited balance of $19 billion) to $13.0 billion on March 31, 2009. However, the FDIC Board of Directors approved an amended restoration plan in February that is designed to restore the DIF reserve ratio to 1.15% within seven years. The FDIC has already set aside $28 billion in reserve to cover projected losses for the next 12 months. In addition, the FDIC will collect more than $8 billion in premiums during the second quarter, including $5.6 billion from the special assessment the FDIC Board approved on May 22. "Insured deposits increased 1.7% in the quarter -- some $82 billion -- and they are up by 9% over the last 12 months," Chairman Bair said. "This growth in insured deposits is a vote of confidence from bank customers. They obviously see the value of the FDIC guarantee."

Economic data released today:

Redbook:
U.S. Retail Sales fell 0.5% for week end of May 23 versus a year ago; U.S. Retail Sales for first 3 Weeks in May fell 0.2% versus May a year ago; U.S. Retail Sales first 3 Weeks in May fell 0.4% versus April reading.

ICSC/Goldman Sachs Chain Store Sales:
U.S. ICSC/Goldman Sachs Chain Store Sales rose 0.5% on the year; U.S. ICSC/Goldman Sachs Chain Store Sales rose 0.8% in week of May 23.

MBA Mortgage Applications:
U.S. MBA Refinance Index fell 18.9% at 3890.4 compared to last week reading of 4794.4; U.S. MBA Purchase Index rose 1.0% at 256.6 compared to last week reading of 254; U.S. MBA Market Index fell 14.2% at 786 compared to last week reading of 915.9.

Existing Home Sales:
U.S. April Existing Home Sales rose 2.9% to 4.68M rate; U.S. April Existing Home Sales Consensus came in at 4.67M rate; U.S. Inventory of Unsold U.S. Homes at 10.2 months supply; U.S. April Median Existing Home Price fell 15.4% on the year to $170,200.

At the NYSE closing bell on the New York Stock Exchange, here is how the major world indices and major U.S. stock indices ended the trading session on the world markets as well as the emerging markets including the stock market closing bell price:
DOW (Dow Jones Industrial Average) triple digit loss 173.47 points, EOD 8,300.02
NYSE (New York Stock Exchange) triple digit loss 112.95 points, EOD 5,823.63
National Association of Securities Dealers Automated Quotations (NASDAQ) loss 19.35 points, EOD 1,731.08
S&P 500 (SPX) loss 17.27 points, EOD 893.06
BEL 20 (BEL20) gain 18.93 points, EOD 2,084.52
CAC 40 (CAC40) gain 24.77 points, EOD 3,294.86
FTSE100 (UKX100) gain 4.51 points, EOD 4,416.23
NIKKEI 225 (NIK/O) gain 54.35 points, EOD 9,344.64 Closed

New York Stock Exchange (NYSE) stock market indicators for the trading session today:
Advanced stock prices 946, declined stock prices 2,147, unchanged stock prices 80, stock prices hitting new highs 15 and stock prices hitting new lows 6. NYSE quotes for volatile stocks and market trends, as well as stock quotes, stock prices and stock symbols of Day Trading Stock Picks on the New York Stock Exchange stock market for Day Trading online and active Day Trading for those who are or would like to be Day Trading for a living: SKF gain 2.68 points, HOD $44.43, LOD $42.13, EOD $45.49; DCI shed 0.96 points, HOD $33.74, LOD $31.16, EOD $32.31; RTP shed 6.39 points, HOD $178.43, LOD $170.10, EOD $170.40; PNC shed 1.14 points, HOD $44.50, LOD $40.96, EOD $41.11; ICE gain 0.40 points, HOD $105.97, LOD $101.37, EOD $102.48; CME shed 6.03 points, HOD $309.88, LOD $300, EOD $298.50; POT shed 4.58 points, HOD $117.79, LOD $112.63, EOD $112.87.

National Association of Securities Dealers Automated Quotations (NASDAQ) stock market indicators for the trading session today:
Advanced stock prices 967, declined stock prices 1,792, unchanged stock prices 123, stock prices hitting new highs 38 and stock prices hitting new lows 10. NASDAQ quotes, volatile stocks and market trends, as well as stock quotes, stock prices and stock symbols of Day Trading Stock Picks on the NASDAQ stock market for Day Trading online and active Day Trading for those who are or would like to be Day Trading for a living: BIDU gain 2.84 points, HOD $254.98, LOD $245.64, EOD $250.20; FSLR gain 0.99 points, HOD $186.25, LOD $177.67, EOD $180.50; ISRG shed 2.62 points, HOD $148.24, LOD $141.97, EOD $142.68.

Market trends on the American Stock Exchange (AMEX) and stock market indicators for the trading session today:
Advanced stock prices 243, declined stock prices 292, unchanged stock prices 55, stock prices hitting new highs 12 and stock prices hitting new lows 4.

Chicago Board of Trade Futures Market for the day, at time of this posting:
E-mini S&P 500 (ES) June 09: EOD 891.50; Change -17.25
E-mini NASDAQ-100 (NQ) June 09: EOD 1,400.25; Change -10.50
E-mini DOW $5 (YM) June 09: EOD 8,290; Change -171
E-mini S&P MidCap 400 (MF) June 09: EOD 561.40; Change -8.90
Nikkei 225 (Yen) June 09; EOD 9,335; Change -160

World Currencies for the Forex Market, for Forex Trading by active Forex Traders, at time of this posting:
Euro 0.7201 to U.S. Dollars 1.3886
Japanese Yen 95.20 to U.S. Dollars 0.0105
British Pound 0.6249 to U.S. Dollars 1.6003
Canadian Dollar 1.1194 to U.S. Dollars 0.8933
Swiss Franc 1.0882 to U.S. Dollars 0.9189

COMMODITY MARKETS:

Energy Sector - Nymex:
Light Crude (July 09) gain $1.00, EOD $63.45 per barrel ($US per barrel)
Heating Oil (July 09) gain $0.02, EOD $1.59 a gallon ($US per gallon)
Natural Gas (July 09) shed $0.01, EOD $3.64 per million BTU ($US per mmbtu.)
Unleaded Gas (June 09) gain $0.04, EOD $1.89 a gallon ($US per gallon)

Metals Markets - Comex:
Gold (August 09) gain $0.10, EOD $955.20 ($US per Troy ounce)
Silver (July 09) gain $0.27, EOD $14.87 ($US per Troy ounce)
Platinum (July 09) gain $1.30, EOD $1,141.10 ($US per Troy ounce)
Copper (July 09) shed $0.02, EOD $2.12 ($US per pound)

Livestock and Meat Markets - Chicago Mercantile Exchange (cents per lb.):
Lean Hogs (July 09) shed 0.55, EOD 66.63
Pork Bellies (July 09) gain 0.23 EOD 72.65
Live Cattle (August 09) shed 0.73, EOD 83.10
Feeder Cattle (August 09) shed 0.15, EOD 102.43

Other Commodities - Chicago Board of Trade (cents per bushel):
Corn (July 09) shed 1.50, EOD 426
Soybeans (July 09) gain 1.50, EOD 1,187

BOND MARKET:

2 year EOD 99 26/32, change -3/32, Yield 0.95, Yield change 0.03
5 year EOD 97 19/32, change -13/32, Yield 2.39, Yield change 0.09
10 year EOD 95 5/32, change -1 9/32, Yield 3.71, Yield change 0.16
30 year EOD 94 6/32, change -1 26/32, Yield  4.60, change 0.11