General News:
– US Senators Durbin and Grassley are looking into possible abuse of the temporary workers program by Infosys and Wipro, which could lead to trade tensions.
– India may open up its liquor market for distribution.
– Financial Times ran a story reporting that the US Senate will introduce a bill that would allow the Treasury to intervene in the Forex markets to correct any misalignments.
– Wall Street Journal says that the demand for summer hiring is strong.
– Mutual Fund inflow numbers: International funds received $16.6 billion of the $18.3 billion invested in mutual funds. There is severe underinvestment in the US.
Economy:
– A new reading by the Commerce Department on the gross domestic product showed that economic growth in the first quarter was much weaker at 0.6%. Government statisticians slashed their first estimate in half, which of a 1.3 percent growth rate for the quarter.
– The economy’s 0.6% growth rate in the first quarter of 2007 marked a big loss of momentum from the 2.5% pace recorded in the last quarter of 2006.\
– Real final sales to domestic producers rose 2.5%.
– Exports were down 0.6% and imports up 5.7%.
– The deficit was $611.2 billion.
Asia/Europe:
Asia:
– India’s GDP rose 9.1% in the first quarter. This was slightly lower than the forecast of 9.5%. There are signs of slowing in the economy, however. Especially among car sales.
– Bank of Japan will raise rates slowly in line with the economy and prices. BOJ, Mr. Nishimura, says that real estate prices have hit a bottom and prices are surging in the big cities.
– Japan’s top currency bureaucrat, Watanabe, said that the economy was on a recovery track. He thinks that China will have a slowdown because of stock volatility, and could spread to other Asian countries.
– China’s PBOC (People’s Bank of China), Mr. Wu, said that there needs to be more Forex flexibility to correct global imbalances and that the yuan could rise further if reforms go smoothly. However, he is worried that a rapid dollar drop would hurt China’s reserves.
– Australian capital spending surged in the first quarter to 9.1% when only 4.0% was expected.
Europe:
– UK home prices rose 10.3% year over year. 10.4% was expected.
– German unemployment rose 3,000. A drop of 20,000 was expected.
– May French consumer confidence rose 6 points to -14. A -19 was expected.
– European Central Bank’s, Mr. Wellink, says that growth in Europe is rising.
– European Central Bank’s, Mr. Drahgi, says that short term rates are below average.
– European Central Bank’s, Mr. Liebscher, says rates are still moderate and the economic environment is good. However, he does see upside inflation risks and Europe needs to be vigilant on inflation.
Corporate News:
– Wachovia (WB) will buy AG Edwards (AGE). The terms are 0.9844 Wachovia shares and $35.80 in cash for each AGE share. Based on yesterday’s closing price, the deal values AGE at $89.50 per share, which constitutes a 16% premium.
– Costco Wholesale (COST) reported sales up 7%. Total revenues were slightly ahead of estimate.
– Northwest Airlines (NWA) emerged from bankruptcy and has begun trading on the NYSE.
– There are rumors of takeover in JAS
– Motorola (MOT) announced further restructuring last night. They will be cutting an additional 4,000 jobs.
– Chico’s FAS Inc. (CHS) guided its EPS higher. $0.28 versus expectations of $0.26.
– Tiffany & Co. (TIF) is trading up after releasing earnings.
– Ceridian Corp. (CEN) is going to be bought by a private equity group, Thomas H. Lee Partners and Fidelity National Financial in a $5.3 billion deal.
– Payless Shoesource (PSS) was higher after reporting earnings of $0.59 in the first quarter. Total sales were 4.9% higher.
– Yahoo (YHOO) announced that its CTO, Farzad Nazem, was resigning on June 8th.
– Heinz (HNZ) is trading higher after its profit report.
– Boeing Airlines (BA) placed a $1.9 billion order from Ryanair. They will buy 27 737s.
Favorable Comments:
– Yahoo (YHOO) upgraded and Goldman Sachs (GS), Morgan Stanley (MS), Lehman Brothers (LEH) had their EPS raised over at JP Morgan.
– Ebay Inc. (EBAY) was talked about at Stifel on potential for a buyback program.
Negative Comments:
– Applebee’s International Inc. (APPB) says sales fell 2.9%.
– Sears Holdings (SHLD) says sales dropped 3.9% in the first quarter.
– Ethanol received a bad report at Bank of America. They say margins will drop 70%.