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US stock market daily report (May 22, 2012, Tuesday)

Two liberal senators moved to not only have J.P. Morgan Chase & Co. (JPM:NYSE) CEO Jamie Dimon removed from the boards of the dozen Federal Reserve regional banks but, all bankers as the Fed comes under fire. “The American people are pretty clear that they want reform of financial institutions and they want reform of the Fed,” said Sen. Bernie Sanders, an independent from Vermont, who introduced the legislation. The bankers on the Fed boards come from the same institutions that the Fed is in charge of regulating, he said. “If that is not a clear example of the fox guarding the hen house, I don’t know what is,” Sanders said at a press conference. A report last fall from the Government Accountability Office found that having representatives of banks on the Fed boards 'can create the appearance of a conflict'. If enacted, the Sanders measure would represent a dramatic overhaul of the Fed’s structure first established in 1913. The 1913 law setting up the Fed established 12 regional Fed banks that are not federal agencies but, are government chartered corporations run by member banks with nine member boards of directors. The member banks get to choose six of the board members: three Class A directors from the banking industry and three Class B directors from private industry and, three other Class C directors are chosen by the Fed in Washington. The regional Fed boards approved the bank presidents until passage of the Dodd-Frank Act. The three Class A board members do not get to vote. Sen. Barbara Boxer, a Democrat from California, called the Fed structure 'a sweet deal' for bankers. Dimon said that in the wake of Dodd Frank, the New York Fed’s board is 'more of an advisory group' than a board, was his response when pressured to resign earlier this month. Senator Sanders scoffed at Dimon’s claim that he was just an advisor, saying the J.P. Morgan CEO had 'significant influence' on the regional Fed. Dimon’s term on the New York Fed expires at the end of 2012. Remarks last week by Treasury Secretary Timothy Geithner who said in a television interview that it was important for financial regulators to be perceived as above any political influence heartened supporters of Sanders' legislation although the legislation is not on a fast-track in the Senate. The Fed has few friends on Capital Hill. Rep. Barney Frank, a Massachusetts Democrat, wants to strip the votes that the 12 regional Fed bank presidents have in setting monetary policy.

US stock market, economy and companies update (May 22, 2012)

US equity markets are extending the gains seen during yesterday's session. During the European session vague hopes for the informal EU summit scheduled for Wednesday helped propel European equities higher, leading to early follow-through strength in US premarket trading. Banking stocks took off ahead of JPMorgan's Congressional testimony, with JPM up more than 2% in the first 30 minutes of cash trading.

US stock market daily report (May 21, 2012, Monday)

According to a research report published Monday by the San Francisco Fed, a lack of competition in the mortgage market limited the impact from the Federal Reserve’s three rounds of unprecedented bond buying. Research showed that with fewer competitors writing mortgages, originators were not under as much pressure to pass on decreases in rates for mortgage-backed securities to homeowners. “This suggests that the weaker link between MBS yields and primary mortgages may persist for some time,” Michael Bauer, an economist in the San Francisco Fed’s economic research department, wrote in the latest San Francisco Fed Economic Letter. Fed officials remain frustrated that more homeowners can not take advantage of low mortgage rates through home purchases or refinancing. Widespread refinancing into lower mortgage rates would most definitely give the economy a kick start as homeowners would have more disposable income, to move into the economy.

US stock market, economy and companies update (May 21, 2012)

US equity markets look poised to break the recent streak of losses as investor risk sentiment has found some firmer footing. Some reassuring comments from Chinese premier Wen along with a pay raise for Germany's largest industrial union helped overseas commodity and equity markets rebound. US stocks are shrugging off another drubbing in Friday's IPO Facebook, helped in part by a $12B M&A deal in the industrial sector. June WTI is up 0.8% to $92.25 and copper has bounced more than 1% back above $3.50.

US stock market daily report (May 18, 2012, Friday)

Mark Zuckerberg, co-founder and CEO of Facebook (FB:NASDAQ), rang the opening bell for the NASDAQFriday session remotely from his company’s headquarters in Menlo Park, Calif. While Zuckerberg maintained the CEO role he brought in Sheryl Sandberg, a highly-respected tech executive, as chief operating officer. After a delay in the opening of Facebook due to Nasdaq getting bogged down due to immense interest, shares rose in its early minutes of its first trading following the Internet company’s $16 billion initial public offering. Shares slid thereafter. Thursday afternoon the company priced its offering of 421.2 million shares, making for the largest technology IPO ever. Underwriters have been granted over-allotments options worth about 63.2 million shares, which could bring the total value of the debut to about $18.4 billion. Facebook now has nearly half the market cap of Google (GOOG:NASDAQ) and only one-tenth the revenue. In 2011, Facebook had revenues of $3.7 billion and net income of $1 billion. The company says it has nearly 901 million active monthly users, a number expected to cross into the 1 billion range, later this year. "NASDAQ is working to deliver these executions back to customers as soon as possible," officials for the exchange wrote in the notice. NASDAQ officials told exchange members in a notice at noon Friday that its staff was 'investigating an issue in delivering trade execution messages' from trades made in Facebook's IPO.

US stock market, economy and companies update (May 18, 2012)

Trading in US and European markets has been choppy this morning as cross currents from Facebook mania and events in Europe keep traders on their toes. Volume is very elevated in US trade thanks to options expirations. The media frenzy surrounding Facebook has crowded out nearly everything else during the US session this morning; shares of the social media giant opened this morning at $42.05 after some minor snafus. In Europe, Moody's downgraded the Spanish banking sector yesterday evening, although the move was widely telegraphed and came as a surprise to no one. There were reports that Moody's cut is giving the banks ammunition to press Madrid to reinstitute a short-selling ban on financials, which is in turn boosting confidence. In addition, EU Trade Commissioner De Gucht told a Belgian newspaper that contingency plans are being drafted to deal with a potential Greek euro exit, prompting denials from the EU Commission. EUR/USD sank as low as 1.2645 overnight before bouncing back to 1.2740 in the US morning, although peripheral bond spreads remain highly elevated, with the Spanish 10-year was trading as high as 6.33%. President Obama is hosting the G8 in Washington this weekend, and while no major policy developments are expected, there has been plenty of chatter this week that leaders will discuss potential plans to calm markets and cope with potential Greece exit scenarios.

US stock market daily report (May 17, 2012, Thursday)

And the whoopla of Facebook continues... if Facebook (FB:Nasdaq) prices at $41 a share or more, it will raise $19.861 billion and beat the previous record set by Visa (V:NYSE) which raised $19.65 billion when it went public March 18, 2008. The underwriting team of Facebook consists of up to 33 banks consisting of lead underwriter Morgan Stanley, JPMorgan Chase and Goldman Sachs. Facebook is expected to sell shares in the range of $34 to $38 a share, up from previously disclosed pricing from $28 to $35 a share. The company is expected to announce official offering price after the market close on Thursday. Retail investors who find themselves unable to buy Facebook shares at the IPO price should avoid - at all costs - placing market orders for the stock that are meant to be executed immediately after the shares debut. Simply put - limit orders yes - market orders a serious no-no. It is common for a hot IPO to surge on the opening day however, it is just as common for the price to pull back and potentially decline, by the end of the opening day and over the next few days. Investors don't want to be locked in, facing an immediate or potentially significant loss. With high-profile, high demand IPOs, a majority of pre-trading shares are sold to best clients of underwriters which normally consist of institutional investors. When all the hoopla is - wagers on the Street say in reality, Facebook is unlikely to be the largest IPO ever.

US stock market, economy and companies update (May 17, 2012)

Nervous traders drove European equities lower overnight after press reports that Spanish bank Bankia has seen $1B in deposit withdrawals over the last week. This disturbing news came only days after reports that Greek banks were seeing similar large deposit withdrawals. In addition, Spain saw sharply higher rates in a debt sale overnight. There were rumors that the G8 would discuss coordinated measures on a conference call scheduled for later this morning. In addition, there wer reports that Moody's would be cutting Spanish bank ratings as soon as today. In the US, the weekly jobless claims data was flat, and after the open of cash equity trading the May Philly Fed survey spooked traders with a big miss. Analysts noted that the survey has severely underperformed over recent months, contrasting sharply with the Empire State survey. There was a sharp move upwards in spot gold after the Philly survey and brief spike downwards in equities, however US stocks recovered and both the DJIA and S&P500 are only down slightly mid morning. Spot gold remains bid, just shy of $1,580. Front-month crude continues its two-week slide, and is trading the $92 handle this morning.

US stock market daily report (May 16, 2012, Wednesday)

Under a settlement announced Wednesday, Skechers USA Inc. (SKX:NYSE) will pay $50 million to resolve federal and state allegations that the company deceived the public by making unfounded claims that its 'toning shoes' would help consumers tone muscles and lose weight. The Federal Trade Commission challenged that several Skechers ads were deceptive, including one in which the company urged consumers to 'get in shape without setting foot in a gym'. The FTC also objected to an ad Skechers ran during the 2011 Super Bowl featuring Kim Kardashian. A market leader for toning shoes, the FTC said Skechers made unsupported claims that its products would provide more weight loss, muscle toning and strengthening than regular fitness shoes. The amount of the refunds will depend on the number of claims the FTC receives for consumers who bought the shoes who are eligible for refunds either directly from the FTC or through a court-approved class action lawsuit. Skechers, in a statement, vigorously denied the allegations but said it “could not ignore the exorbitant cost and endless distraction of several years spent defending multiple lawsuits in multiple courts across the country.” Skechers said it will pay $40 million under a settlement with the FTC, $5 million under a related deal with state attorneys general and $5 million in class-action attorneys’ fees. Additional terms of the FTC settlement, the shoemaker cannot make claims about the health benefits of its shoes unless they are backed by scientific evidence. The FTC said Skechers ad wrongly claimed the shoes’ benefits were backed by an independent chiropractor study when in fact, the study did not produce the claimed results. The chiropractor who conducted the study is married to a Skechers marketing executive.

US stock market, economy and companies update (May 16, 2012)

European indices traded up into positive territory just before the open of US cash trading. Overnight the Greeks officially named an interim prime minister and both Chancellor Merkel and ECB President Draghi reiterated their support for Greece staying in the euro zone. In addition, Merkel may have vaguely hinted on the possibility of more concessions for Greece in an interview with CNBC, and there was also news that outflows of deposits from Greek banks have slowed (yesterday's slide was blamed to a degree on the circulation of news that more than €1B in deposits had left Greek banks in the last week). However the recirculation of news that the ECB might halt overnight lending and other monetary policy operations to certain Greek banks took US and European indices off their highs midmorning.

US stock market daily report (May 15, 2012, Tuesday)

"Collectively, these uncertainties about the future are likely contributing significantly to the tight lending standards in the mortgage market today," Federal Reserve Governor Elizabeth Duke said in a speech Tuesday. "Regardless of what the final contours of the rules are, I think the mortgage market will benefit from having them decided so that business models can be set and investments calibrated." Comments were made by Duke as lenders are being overly conservative when they decide on what loans to make, a situation that is being driven largely by regulatory uncertainty. Contributing to the tightened lending are the uncertainties around litigation risk, mortgage servicing standards, capital requirements and compensation of loan servicers. Duke cited rules being drafted about what mortgages will be exempt from new rules as contributing to the uncertainty of lending practices. A consumer watchdog bureau is in the process of adopting a rule that would identify the criteria and characteristics for 'qualified mortgages' - those deemed by the Dodd-Frank bank reform law that assures a borrower has a reasonable ability to repay the loan.

US stock market, economy and companies update (May 15, 2012)

US equity markets are reacting relatively calmly to news that Greece will hold a second parliamentary election next month after talks to form a coalition government officially ended in failure this morning. The development is hardly a surprise, and Greece's European partners have repeatedly assured markets that the nation will have the liquidity it needs to keep from defaulting or leaving the euro zone before the next round of voting hopefully produces a viable government. However, analysts expect anti-bailout parties to sweep the polls and likely set up a possible Greek exit scenario. The Germans continue to insist that Greece's future is in the euro. Almost forgotten today has been the inauguration of new French President Hollande, who meets with his German partners tomorrow. The leading European markets are retesting their lows while Spanish and Italian stock markets are down more than 2% a piece. Meanwhile in the US, the May Empire Manufacturing survey was very strong, with the employment sub-index hitting highs last seen in May 2011. The euro is being hammered and EUR/USD has fallen to levels not too far from the YTD lows of 1.2625 seen in mid January. Front-month WTI crude gapped downwards as low as $93.80 during yesterday's session and traded as low as $94.40 this morning.

US stock market daily report (May 14, 2012, Monday)

Ina Drew, the woman who ran JP Morgan Chase & Co.’s chief investment office, which incurred a trading loss of more than $2 billion, has decided to retire, becoming the first high-ranking casualty in a scandal that has dented the bank’s reputation and prompted fresh calls for tighter regulation of large financial institutions. In a statement shortly before the stock market opened on Monday, Morgan Chase said that Drew, who has been at the firm for more than 30 years, will retire as chief investment officer - terms of her retirement were not disclosed in the statement. Her departure was widely anticipated after her office suffered nearly a $2 billion trading loss disclosed last Thursday. It has been reported that she may receive $14.65 million of accelerated equity awards depending on the terms of her departure. As J.P. Morgan holds its annual shareholder meeting on Tuesday, her compensation is likely to be the spotlight. Drew, age 55, is reportedly one of the highest paid women on Wall Street. In 1993, Crain’s New York Business named Drew one of the '40 under 40' executives to watch and at that time, she was working for Chemical Bank, which later bought Chase Manhattan Bank. Matt Zames, co-head of global fixed income in the company’s investment bank and head of capital markets in the mortgage bank, will reportedly replace Drew. Executive Mike Cavanagh will oversee a team task force responsible for responding to the firm’s trading loss, which resulted from a soured hedge on credit derivatives. The final scale of the loss remains unclear, with the bank still in the process of unwinding these trading positions. JP Morgan Chase Chairman and Chief Executive Jamie Dimon issued a statement as he praised Drew for her contributions to the bank, saying: “Despite our recent losses in the [chief investment office], Ina’s vast contributions to our company should not be overshadowed by these events.” Dimon has been a vocal opponent of calls for stricter regulation of the banking industry in the wake of the 2008 credit crisis. Also on Monday Dimon said that his bank is 'very strong and well capitalized'. “We will learn from our mistakes,” he added, with pressure mounting on Dimon, in recent days. Over the weekend, Elizabeth Warren, a candidate for the U.S. Senate from Massachusetts, urged Dimon to resign from the board of directors of the Federal Reserve Bank of New York, a role in which he advises the Fed on oversight and policy for the industry. “We need to stop the cycle of bankers taking on risky activities, getting bailed out by the taxpayers, then using their army of lobbyists to water down regulations,” said Warren, who helped establish the federal government’s Consumer Financial Protection Bureau, in a statement.

US stock market, economy and companies update (May 14, 2012)

Global equity markets are getting crushed by the looming prospect of disaster in Greece and also a healthy dose of concern about the situation in China, where the PBoC cut the RRR rate over the weekend after a slew of weak April data. There had been thin hopes of a last-minute deal to prevent fresh elections in Greece, however the political parties in Athens have only hardened their positions, and there are concerns Greece could run out of funds as soon as next month.

US stock market, economy and companies update (May 11, 2012)

The dual pressures of political chaos in Athens and the big JPMorgan derivatives loss heavily pressured equities in the US premarket this morning. European indices were deep in the red for most of the European session as Greek politicians engaged in a fifth frenzied day of trying to put together a coalition government. Compromise among the parties is looking less and less likely, with a second election in June appearing to be the most probable outcome. In the US, shares of the big US banks are deep in the red after JPMorgan's disclosure that it lost $2B on derivative bets made by the now infamous London Whale. US indices opened down by about 0.5% a piece but turned around promptly after the preliminary reading of the May U of Michigan confidence reading hit its highest level since January of 2008. EUR/USD remains below 1.3000, but up a bit after Spain announced a new bank rescue plan.

US stock market daily report (May 11, 2012, Friday)

By 8:00am ET Friday, J.P. Morgan Chase (JPM:NYSE) shares were sinking, during pre-market trading and were the most active during the session after reporting late Thursday, a $2 billion trading loss that will eat into Q2 results. “Since March 31, 2012, the firm’s Chief Investment Office has had significant mark-to-market losses in its synthetic credit portfolio, and this portfolio has proven to be riskier, more volatile and less effective as an economic hedge than the firm previously believed,” said Chief Executive Jamie Dimon. Dimon said the loss “plays right into the hands of a bunch of pundits out there, but that’s life.” Reportedly, the losses stemmed from trades at the bank’s chief investment office, where a single trader, dubbed the 'London Whale', was reported to have taken large positions for the bank in credit-default swaps. The U.S. Securities and Exchange Commission is investigating whether there were any civil violations around the firms $2 billion trading loss. According to reports, the SEC opened a formal preliminary investigation in recent days into the bank's accounting practices and public disclosures after learning about its trading activities in April.

US stock market daily report (May 10, 2012, Thursday)

Federal Reserve Board Chairman Ben Bernanke on Thursday reported that conditions in the U.S. banking system have improved, but banks have more work to do to restore health and adapt to the new regulatory environment. Bernanke said in a speech via satellite to a banking conference sponsored by the Chicago Federal Reserve Bank, Some key measures of systemic risk developed by the Fed "present a picture of a banking system that has become healthier and more resilient". Fed Chairman said that credit conditions have improved significantly in a number of areas, but in other sectors, like mortgages and commercial real estate, credit remains tight. Overall demand for credit has remained 'sluggish' - in part because of an economic recovery "that has been halting at times," Bernanke said. The Fed is sharply aware of the risk that stricter oversight could restrain lending, he said and a review of Fed bank examiners found that they are talking a balanced approach in their review of bank lending.

US stock market, economy and companies update (May 10, 2012)

US and European equities benefitted from hopeful developments in Athens this morning. PASOK party leader Venizelos was handed the mandate to form a government after the failure of New Democracy and Syriza to weld together a coalition. There were rumors that PASOK and New Democracy might be able to temp all or some of far-left wing party Democratic Left into a coalition, and markets are waiting eagerly to hear more about the ongoing negotiations. However the rally is already beginning to fade and the NASDAQ is already in the red, weighed down by shares of Cisco. Recall that overnight, Former ECB member Weber warned that the risk of an uncontrolled Greek default was not off the table.

US stock market daily report (May 09, 2012, Wednesday)

Reports out on Wednesday indicate that a group of orangutans at a Miami zoo are using Apple (AAPL:NASDAQ) iPads to communicate with their keepers. While not all of the endangered extant great apes show interest in them, some draw and play games on the devices. Linda Jacobs, who runs the program at Jungle Island said, "Our young ones pick up on it. They understand it. Our two older ones, they just are not interested." The software on the iPads was designed for autistic people with the screen showing pictures of different objects and when a trainer names one, the orangutan pushes the corresponding button. The Commerce Department reported Wednesday that U.S. wholesale inventories rose 0.3% in March to $480.4 billion, while wholesale sales rose 0.5% to $411.1 billion. Inventories-to-sales ratio remained unchanged at 1.17 with inventories of durable goods rising 1% in March and inventories of nondurables decreased 0.6%. During February, total inventories grew 0.9%, while sales rose 1.1%.

US stock market daily report (May 08, 2012, Tuesday)

Will the eventual regulation by the FTC be a 'Do Not Track' option or a 'Do Not Collect' option? An issue that could limit information collected about American consumers is under scrutiny by regulators, online privacy advocates and digital advertisers. The move to limit similarities of Google and Facebook of the world from tracking personal information is said to potentially limit access to free products like email, online news, digital music and social networks that are paid for by online advertising. The challenge is a complex one in the hand of the Federal Trade Commission on how online advertisers collect and use personal information. The issue most consumers do not fully understand are the ramifications of an FTC regulation that would require consumers be given the option of clicking a button on a browser window to protect us from having online advertisers collect and sell information about our online interests. A major question under fire in the debate is whether a 'Do Not Track' option would block advertising targeted to our interests, or go further and block most data collection by companies that sell our preferences to online advertisers. Browsers such as Mozilla Firefox, Microsoft Explorer, Google Chrome and Apple Safari say the collection of personal data has provided the financial foundation for the world wide web and feel they have been responsible to date in regulating their own practices. The question remains up to actual consumers; how do you as a consumer, feel about the 'Do Not Collect' or 'Do Not Track' option? Consumers should be given clear and understandable information about the issue and at that time, the government and industry should ask for their collective opinion before moving forward. More transparency by companies who collect personal information will enable consumers to make their own decision. Consumer Reports released in June 2011 showed that nearly 13 million U.S. Facebook users do not use or are not aware of the privacy controls on Facebook, potentially exposing personal information beyond their network of Facebook friends. A projected 4.8 million people post information on their Facebook about where they plan to go on a certain day which is a potential tip for potential burglars.

US stock market daily report (May 07, 2012, Monday)

After an announcement that the U.S. Food and Drug Administration ruled to allow the company to continue testing its antibiotic drug Arikace for the treatment of cystic fibrosis patients with pseudomonas lung infections, shares of Insmed Inc. (INSM - NasdaqCM) sky-rocketed higher today, holding onto a 59% gain into early afternoon trading. During August 2011, FDA temporarily halted testing of the drug, stating it needed more safety information on the product. Insmed was given the green light by the FDA in January for testing of Arikace in the treatment of lung infections caused by non-tuberculous mycobacteria, or NTM. Arikace is an inhaled formulation of the antibiotic amikacin.

US stock market daily report (May 04, 2012, Friday)

With the 2012 Kentucky Derby running on Saturday, Wall Street moguls will have another opportunity to place bets only this time, it could be on the horses. Twenty horses, all of which are running a mile and a quarter for the first time, typically with several horses with the speed of a sprinter setting a demanding and tiring pace. All twenty relatively lightly raced and still developing with so many variables one has to consider all facts, when making a Derby bet. Handicapping a horse race is a mixture of art and science. Just like any sport, there are basic statistics that clue us in on which horses have performed well and which rank below their peers. To help our readers get a jump start, as of this time, here is a list of the horses, set for the Derby tomorrow including their position, name, jockey name and trainer.1 Daddy Long Legs, C. O'Donoghue, A. O'Brien; 2 Optimizer, J. Court, D. W. Lukas; 3 Take Charge Indy, C. Borel, P. Byrne; 4 Union Rags, J. Leparoux, M. Matz; 5 Dullahan, K. Desormeaux, D. Romans; 6 Bodemeister, M. Smith B. Baffert; 7 Rousing Sermon, J. Lezcano, J. Hollendorfer; 8 Creative Cause, J. Rosario, M. Harrington; 9 Trinniberg, W. Martinez, B. Parboo; 10 Daddy Nose Best, G. Gomez, S. Asmussen; 11 Alpha, R. Maragh, K. McLaughlin; 12 Prospective, L. Contreras, M. Casse; 13 Went The Day Well, J. Velazquez, G. Motion; 14 Hansen, R. Dominguez, M. Maker; 15 Gemologist, J. Castellano, T. Pletcher; 16 El Padrino, R. Bejarano, T. Pletcher; 17 Done Talking, S. Russell, H. Smith; 18 Sabercat, C. Nakatani, S. Asmussen; 19 I'll Have Another, M. Gutierrez, D. O'Neill; 20 Liaison, M. Garcia, B. Baffert

US stock market, economy and companies update (May 04, 2012)

European and US equity indices have traded lower following this morning's April US employment reports. Hiring slowed sharply in April, with 115K new jobs versus 154K new jobs in March, marking the third sequential month of slowing job gains. However, analysts pointed out that the March figures were revised higher and generally blamed the weak showing on "payback" from the gains seen in the warmer winter months. The unemployment rate fell slightly, thanks to another decline in the participation rate. PIMCO's Bill Gross responded to the report by again pointing out that unemployment has become a structural problem and that fiscal and monetary policy are not working very well at all. Crude has made big moves to the downside: ahead of the US session the front-month WTI contract was around $102.50, but moves to the downside began well ahead of the jobs number. By mid morning, WTI was around $98.25, below its 200-day moving average and at levels last seen in February. The yield on the 10-year UST fell below 1.90% to levels last seen in February.

US stock market daily report (May 03, 2012, Thursday)

Government-controlled mortgage financier Freddie Mac (OBB:FMCC) posted a profit of $577 million in Q1 and will request additional government aid to help sustain its operations. On Thursday, Freddie reported their profit was down from a profit of $676 million a year earlier - the decline was driven in part by larger derivative losses, which totaled $1.06 billion, up from $427 million a year earlier and $766 million in the previous quarter. The companies provision for credit losses fell to $1.83 billion, down from $1.99 billion a year earlier and $2.58 billion in Q4 thanks to slowdown in loans deemed 'seriously delinquent'. Freddie said it will request an additional $19 million in government aid to offset a net deficit incurred after paying $1.81 billion in dividends to the Treasury Department. Freddie reported they saw improvement in its credit-quality during the quarter and that the rate of single-family loans deemed seriously delinquent was 3.51%, down from 3.58% in Q4, though the rate remains at elevated levels because of weak home prices and extended foreclosure timelines. The mortgage financier saw a jump in requests for lenders and mortgage servicers to buy back soured loans that breached its representation and warranty requirements with such requests at $3.2 billion based on the unpaid principal balance of the loans, up from $2.7 billion at the end of 2011. In a regulatory filing in March, Freddie said it identified two 'material weaknesses' in its financial-reporting controls that it blamed partly on 'increased levels of employee turnover'. During Q4, Freddie experienced a 'significant increase in the number of control breakdowns' related to information technology, which stemmed from 'ineffective management oversight'.

US stock market, economy and companies update (May 03, 2012)

US equity markets opened flat this morning as a more positive weekly claims number helped calm some nerves ahead of the Friday non-farm payrolls report. However the April ISM non-manufacturing report send equity indices into the red after 10:00ET. The key index of services industry growth missed expectations and saw declines in both the key new orders and employment components. Note that this followed a mixed bag of April comp store sales data, with weakness seen at many big retail chains after a strong Q1. In Europe, the ECB decision did not deliver a rate cut, as some had hoped, and ECB President Draghi did not offer any dovish commentary. To add to the picture, key corporate earnings were weak. There was an interesting reversal in energy markets this morning. After 08:00 WTI crude tumbled, falling from above $105 to under the $102 handle as of writing. The rollover came as funds fled into natural gas, with the front-month Henry Hub contract moving sharply higher.

US stock market, economy and companies update (May 02, 2012)

Risk is off this morning after yesterday afternoon's big slide. Final readings in various European manufacturing PMIs were worse than expected, painting an ugly picture of a continent in trouble. The softness in the euro zone drove a spate of rumors that Moody's would imminently follow through on its pending downgrade of the European banking sector. In addition, there were press reports that the ECB was mulling another three-year LTRO due to increasing fears about contagion from Spain. Then at 08:15ET, the April ADP jobs report fell well short of expectations. The series is not considered a great predictor of payrolls, however nerves are on edge ahead of Friday's March payrolls report given recent estimate cuts at leading banks. Note that front-month crude remains not far from one-month highs despite the soft market sentiment, trading around $105.50.

US stock market daily report (May 02, 2012, Wednesday)

The United States Postal Service has said closures and related slower delivery times are necessary to stem the bleeding of the agency that loses $25 million a day. Talk about a bad credit risk! Four U.S. Senators who championed postal reform legislation, are urging the U.S. Postal Service to extend a moratorium on post office and plant closures that is set to expire May 15. Without an extension, the USPS could begin shutting down nearly 3,700 post offices and 223 distribution centers targeted for closure, starting this month however, a reprieve on the closures would give Congress more time to reach compromise on more sweeping reforms. The Senate approved bill last week would make it more difficult for the USPS to close locations, especially in rural areas. In a letter sent this week to Postmaster General Patrick Donahoe, "We believe an attempt to proceed with the planned closures--to 'get in under the wire' while legislation to the contrary is being considered, would be counterproductive and would violate the clear intent of the Senate," Senator Joseph Lieberman (I., Conn.), Senator Susan Collins (R., Maine), Senator Thomas Carper (D., Del.) and Senator Scott Brown (R., Mass.).

US stock market daily report (May 01, 2012, Tuesday)

According to a letter released by a top Democrat Tuesday, Representative. Elijah Cummings on the House Committee on Oversight and Government Reform committee, officials at Fannie Mae concluded that a key housing initiative being rejected by the government-seized housing giant’s regulator would save taxpayer’s money. Cummings provided a summary of internal Fannie Mae documents he obtained asserting that officials at the mortgage firm concluded in an analysis that cutting the amount underwater borrowers owe on mortgages owned by the government-seized housing giant could save taxpayer money. With roughly 11 million homeowners underwater, these borrowers owe more than their homes are worth. The letter comes after chief of the regulator for Fannie Mae and Freddie Mac, Ed DeMarco defended his policy of not cutting the principal owed by borrowers, known as principal forgiveness, for mortgages owned by the two mortgage companies in recent months, included in testimony to Congress in November. Nearly 56% of all U.S. mortgages are owned or guaranteed by Fannie and Freddie. DeMarco recently said he would be willing to consider having Fannie and Freddie participate in a recently expanded Obama administration principal reduction program, though he's pointed out the drawbacks to doing so, including an estimated $2.1 billion cost to taxpayers.

US stock market, economy and companies update (May 01, 2012)

US equity indices are gaining ground on the first day of trading in the month of May, with the S&P500 hitting one-month highs. The April ISM Manufacturing index slightly topped expectations, rising to its highest level since last June, with both the key employment and new orders sub-indices still strong. The March construction data showed spending barely rose as investment in public projects dropped to a five-year low. Fed governors Lockhart and Evans offered dovish commentary on the US economy. Lockhart said he was not sure whether more stimulus in the form of QE would have a major effect, and Evans said he would like to maintain accommodation so long as unemployment remained above the 7% threshold. The better ISM data sent front-month WTI crude much higher, with the contract spiking from $104.80 to above $106 right after the data dropped.

US stock market daily report (April 30, 2012, Monday)

Barnes and Noble (NYSE:BKS) shares surged higher by 62% into early afternoon trading session after the giant bookstore operator inked a technology partnership with Microsoft Corp. Barnes & Noble holds the potential to expand its Nook digital franchises globally and now Microsoft (NASDAQ:MSFT) will invest $300 million in the as yet-to-be-named Barnes & Noble subsidiary. With Barnes & Noble owning 82.4% of the new subsidiary and Microsoft holding a 17.6% equity stake, the combination of digital and college businesses holds a valuation of $1.7 billion. The new venture will produce a Nook eBook reading application for Windows 8, which will offer eBooks, magazines and newspapers to Windows customers in the U.S. and abroad. By contrast, Monday’s investment values Barnes & Noble at $2.8 billion, Barnes & Noble Chief Executive William Lynch said on a conference call that the New York-based company currently does not have any Nook exposure outside of the U.S. The partnership with Microsoft was formed “because of the large global opportunity in the exploding market for digital content” in both the consumer and college segments, and the partnership would not undermine the 'symbiotic relationship' the unit has with the company’s retail operations, he added. Barnes & Noble said Monday that college business is an important component of the new subsidiary, which will push for the distribution and management of digital education materials. “The shift to digital is putting the world’s libraries and newsstands in the palm of every person’s hand, and is the beginning of a journey that will impact how people read, interact with, and enjoy new forms of content,” said Microsoft President Andy Lees, adding that electronic books are expected to represent over a third of books sold over the next few years. “Our complementary assets will accelerate e-reading innovation across a broad range of Windows devices, enabling people to not just read stories, but to be part of them. We’re on the cusp of a revolution in reading,” Lees said. In the future, Barnes & Noble and Newco will have a royalty-bearing license under Microsoft’s patents for its Nook and tablet products.

US stock market, economy and companies update (April 30, 2012)

US equity markets are rolling over this morning following last week's solid gains. Note that the S&P500 was just about 1% away from its recent four-year highs by the end of last week, making for a very sensitive market. In Europe, Spain followed the UK into official recession territory and drumbeat of bailout fears and anti-austerity commentary resurfaced. S&P futures turned negative before the US open, and cash trading sent the index steadily lower over the first hour of trading. Two negative regional manufacturing surveys have not helped matter: the April Dallas Fed index widely missed expectations and the Chicago Purchasing managers' index hit its lowest level since November 2009.

US stock market daily report (April 27, 2012, Friday)

Defying a White House veto threat, on Friday the House of Representatives passed a Republican bill to keep interest rates on federal loans to college students from doubling on July 1. The nearly $6 billion cost of the House bill is paid for by taking money out of a prevention and public health fund included in President Barack Obama's health-care law. The White House issued a veto threat against the bill shortly before the vote. The bill passed on a vote in the House, of 215-195. The Commerce Department reported on Friday that the U.S. economy downshifted during Q1 as business spending fell, raising fears the expansion could lose traction in coming months. In its first estimate Friday the CD said gross domestic product rose at a 2.2% annual rate between January and March, slower than the 3.0% pace in the prior three months. The slower growth came despite a welcome pickup in consumer spending, to its fastest pace in over a year. The biggest negative surprise was a drop in business spending. The economy is not growing at a strong enough pace to significantly bring down the unemployment rate that is stuck above an 8% rate.

US stock market, economy and companies update (April 27, 2012)

The lower rate of US GDP growth in Q1 is having less of an effect this morning than you might expect as investors home in on some of the better components in the data. The headline advance Q1 reading of +2.2% missed expectations and was lower than the +3.0% rate seen in Q4, however the decline was more or less priced in already. Analysts have been focusing on the higher personal consumption expenditure component, higher export growth component and a big sequential increase in residential fixed investment, all of which are taking over from inventory restocking to drive growth. The final reading of the April U of Michigan confidence survey was a bit higher than the preliminary look, also aiding sentiment this morning. In Europe, indices opened down sharply after S&P's two-notch cut of Spain's sovereign ratings, however Euro equities turned around and marched right back into positive territory.

US stock market daily report (April 26, 2012, Thursday)

Under rules set in the Affordable Care Act that Congress passed and President Obama signed in 2010, individuals and employers will begin receiving a total of $1.3 billion in rebates by August 1, according to an analysis by the Kaiser Family Foundation, a nonpartisan research group. A provision in the federal health-reform law stands to return big bucks to customers whose health plans have exceeded the limits of a formula meant to ensure that most premium dollars go to pay for medical care instead of overhead and profit. Consumers and businesses located in Texas and Florida will see the largest rebates, with $186 million and $149 million, respectively. Hawaii is the only state where no insurer is projected to issue a rebate. Rebates will appear for consumers/business either in the form of a check, premium discounts or 'holidays' where consumers can skip a month or two of payments until the debt zeros out, said Cynthia Cox, the study’s co-author and a fellow at the Kaiser Family Foundation in Menlo Park, Calif. “It’s going to be one of the more visible aspects of reform until some of the major provisions go into effect in 2014,” Cox said. “It’s going to be one that gets a lot of attention from consumers.” Some of the biggest beneficiaries will be consumers who buy insurance on their own, who don’t have to worry about sharing the money with an employer who covers a substantial portion of their premium costs. Nearly a third of consumers in the individual market are expected to receive rebates compared with 28% of the small-group market and 19% of the large-group employer markets. Actual rebates will vary by state and by insurer. Consumers slated to get rebates in the individual market are forecast to receive $127 on average. Amounts can range from a few dollars in some states to as much as $305 in Alaska, $294 in Maryland and $243 in Pennsylvania. Rebates to people in the individual market are expected to hit $426 million, while small businesses are on track to receive $377 million. Rebates in the large-group market which has the most enrollees, will total $541 million, but big employer plans have the highest bar to meet. Under rules designed to calibrate what’s known as the medical-loss ratio, large-group health plans need to show that they spend at least 85% of the premium dollars they take in on medical claims and quality improvement as opposed to administrative costs, marketing and profits. The ratio is set lower in the individual and small-group markets, where insurers need to spend just 80% of premiums on actual medical care. Insurers that fall below these thresholds must issue refunds to consumers and businesses. Cox said the details can be complicated for employer plans because of how premiums are split between workers and employers and the different regulatory agencies overseeing the process. People who are in plans that are not required to be issued rebates may already have benefited from the medical-loss ratio provision since some insurers may have lowered their premiums to be in compliance when the rule took effect in 2011, she said. “Insurers have kind of built these requirements into how they structure their premiums,” Cox said. Kaiser Family Foundation researchers based their rebate data on insurers’ estimates in filings to the National Association of Insurance Commissioners. “Right now, utilization of health care services is relatively low because of the economy,” she said. “People aren’t going to the doctor as much because it costs money. Normally when utilization goes down, that’s when insurers make income because they’re taking in the same amount for premiums but paying out less in claims.” With the new medical-loss ratio rule, insurers have to pay the excess back to enrollees, Cox said. “People who aren’t using as much health care are essentially getting that money back rather than the insurers keeping it.” Perhaps the biggest threat to rebates hitting mailboxes as planned is the Supreme Court ruling, expected by the end of June, on whether health reform can require people who don’t have insurance to buy it or face penalties.

US stock market, economy and companies update (April 26, 2012)

US equity indices are in the black this morning despite several notable earnings misses among major companies and some weak US data. The declining trend in weekly jobless claims seems to have flattened out for the moment, with this week's initial claims slightly higher than expected and the March Chicago Fed Activity Index fell a bit. Investors took comfort from the March pending home sales data, which was much better than expected. The NAR commented that rising sales are bringing down inventory and creating much more balanced conditions around the county. In Europe, various opposition parties seem to be close to a deal for the FY13 budget that comes in at or below the 3% deficit-to-GDP ceiling.

US stock market daily report (April 25, 2012, Wednesday)

A step beyond fast food competitors' efforts to push for better treatment of food-producing animals, Burger King Corp. (BKC) pledged Wednesday to begin buying eggs only from farms that do not cage their hens. Burger Kings announcement is the first time a major chain has made a commitment to phase out all egg-buying from caged hens, said Matthew Prescott, a spokesman for the Humane Society of the United States. Burger King additionally announced it will begin buying pork only from producers that do not use controversial gestation stalls to confine sows. It will take five years to complete the transition to buying only 'cage-free' eggs for breakfast sandwiches and burritos served at Burger King's 7,200 restaurants across the U.S. "These changes by Burger King Corp. will improve life for countless farm animals and encourage other companies to abide by animal welfare principles up and down their supply chain," said Wayne Pacelle, Humane Society president and chief executive. Nearly twelve years ago - Burger King, McDonald's and other restaurants demanded egg suppliers increase cage sizes for laying hens and ended up spurring egg companies to increase the industry standard. Gene Gregory, chief executive of the farm group United Egg Producers said that farms can make the switch to cage-free production, but not overnight. Gregory said new production facilities have to be built or existing ones have to be converted and producers generally don't make the change until they are contracted to do so by buyers because of the expense involved. It costs an additional 25 to 40 cents per dozen of eggs, to produce cage-free eggs, Gregory said. According to data maintained by the United Egg producers, farmers produce about 250 billion eggs per year in the U.S., but only a small percentage of those come from uncaged hens. Of the 10.5 million laying hens in 2010, only about 4% were not in cages.

US stock market, economy and companies update (April 25, 2012)

Markets are ignoring plenty of bad news this morning to focus solely on Apple's remarkable earnings results. The Nasdaq was up nearly 2.5% earlier this morning, led higher by Apple, while the S&P500 and DJIA are somewhat less frothy. Meanwhile, the FOMC decision and press conference are looming, and few expect anything but more of the same from the Fed this afternoon, with little hope for more easing. The March durable goods orders data racked up the biggest decline in three years and the total February durables were revised lower, raising concerns about softness in US economic data. In Europe, the peripheral debt front was quiet, but the Q1 advanced UK GDP data officially puts Britain officially back in recession (and puts PM Cameron on the hot seat). The greenback has been soft ahead of the FOMC decision. EUR/USD remained above the 1.32 handle and dealers continuing to look for an excuse to gun for buy-stops building above the 1.3250 area. Front-month cruse is above $103; note that there has been little reaction to comments from the Iran Ambassador to Russia, who said that Iran is considering a halt to its nuclear program in order to avoid European oil embargo.

US stock market daily report (April 24, 2012, Tuesday)

On Tuesday, Senate lawmakers are debating how quickly to end Saturday U.S. mail delivery and whether to close local post offices as Congress races to complete wide-ranging postal-reform legislation before a mid-May deadline. Senators will begin slogging through nearly 40 amendments to a bill designed to shore up the struggling U.S. Postal Service, which loses billions of dollars a year. Congress is facing a deadline of May 15 to act before the Postal Service begins closing post offices and mail-distribution centers. U.S. Postmaster General Patrick Donahoe has called for five-day delivery to help the Postal Service save money, and President Barack Obama’s latest budget proposal supports, dropping Saturday postal service. Cutting Saturday delivery would not be automatic if the Senate bill passes as the move would be delayed by two years and only, if alternate savings can’t be found elsewhere. Amendments scheduled for a vote Tuesday would require preserving six-day service, and force going to five-day service immediately. The Postal Service lost $3 billion in Q1 of fiscal 2012 alone, after losing more than $5 billion in 2011.The Senate bill would return to the agency $11 billion in surplus payments to the Federal Employees Retirement System, to help the Postal Service save money. The refund could be used for early-retirement incentives for nearly 100,000 postal workers. The Senate bill would also allow the Postal Service to ship beer and wine, as its competitors FedEx Corp. (FDX:NYSE) and United Parcel Service Inc.(UPS:NYSE). An amendment from Senator Joe Manchin, a West Virginia Democrat, would extend the moratorium on closing and consolidating post offices. The Senate amendments face a 60-vote threshold. The Senate bill differs from the House’s companion legislation, raising the bar for quick passage of a final bill. The House bill would create a commission empowered to close post offices, and moves more quickly to end Saturday delivery.

US stock market, economy and companies update (April 24, 2012)

A better tone in Europe and investor focus on the better US data out this morning are driving US equity indices higher this morning. In the Netherlands, the three main opposition parties are said to be looking for a way to form a new government, and the Spanish Treasury successfully sold another round of bills this morning (although yields were much higher). Yields on peripheral 10-year bonds backed off a bit and EUR/USD actually tested the 1.32 handle, not too far off three-week highs. The economic data released in the US this morning was mixed. The headline consumer confidence reading was lower for the third consecutive month in April (although the expectations sub-index was higher than in March). The regional Richmond Fed index for April was much better than expected, with strength seen in nearly all sub-indices. The S&P/Case-Shiller composite index actually increased sequentially for the first time since last April, by a razor-thin margin, and analysts pointed out that the April 2011 increase was itself a blip. Economist Robert Shiller warned that the decline in home prices had much further to go, and even suggested it could continue for decades. Plenty of decent corporate earnings reports are also contributing to the risk-on sentiment.

US stock market daily report (April 23, 2012, Monday)

Wal-Mart Stores Inc. (NYSE: WMT) world's largest retailer led the broader markets and the retail sector lower on Monday after reports over the weekend that the company's Mexican subsidiary reportedly used bribery to expand its growth there. Reportedly, top executives at Wal-Mart Chief Executive Mike Duke - knew of the claims while former CEO Lee Scott reprimanded internal investigators at the time for being too aggressive. Wal-Mart Vice Chairman Eduardo Castro-Wright, at one time the head of Mexican unit, was responsible for the company's increased use of bribes in that country.