General News:
– Fed Chief Ben Bernanke made the headlines today. He said that there was no major spill over from housing to other parts of the market and economy and tighter lending regulations will restrain housing demand.
– Bernanke continued by saying that housing problems will persist longer than expected, bad loan practices may need additional measures, inflation risk remains to the upside, and he expects growth to be under the trend.
– His comments scared the market to swallow its gains yesterday as many believe he will not lower rates later in the year as expected. The wait for the Fed is in the consumer sector.
– The nation’s service sector expanded at a faster-than-expected pace in May as the Institute for Supply Management (ISM) reported its index of business activity in the non-manufacturing sector was 59.7 in May, which was higher than April’s reading of 56 and Wall Street’s expectation of 56. The higher reading suggests that the service sector could help sustain broader economic growth as the automotive and housing industries slip. ***Please note that a reading above 50 indicates expansion, while one below 50 indicates contraction.
– Fannie Mae (FNM) and Freddie Mac (FRE) are acquiring mortgage market share, by accounting for 46.9% of all mortgage bonds sold from a record low of 37.3% in quarter two of 2006.
– Exotic lending is down in the mortgage industry.
– Wall Street Journal ran a story on Wal-Mart’s (WMT) slowdown in square footage expansion because of a slowdown in the demand for food.
– Ron Burkle, the investor who made billions in grocery stores, is interested in placing a bid for Dow Jones & Co., publisher of The Wall Street Journal.
Asia/Europe:
Asia:
– Chinese stocks were all over the place in a highly volatile session. Shanghai’s benchmark index, the CSI 300, finished up after trading lower.
– Rumors have been circulating in China recently. Some of them suggest that the stamp tax will only apply to one side of the trade and that the proceeds from the tax will go to a market stabilization fund.
– The International Monetary Fund (IMF) said that China’s limited Forex flexibility is hindering other Asian countries from strengthening their currencies and that the reserve buildup is preventing growth.
– People’s Bank of China, Governor Xiaochuan, said that he is watching the pork and grain prices closely as those prices are seeping into the overall inflation numbers.
– Bank of Japan’s, Fukui, said that the economy is expanding gradually but a gap still exists.
– Japan’s Economic Minister, Ota, said that capital expenditures remains strong and that the US economy can see a soft landing.
Europe:
– European Central Bank’s, Mr. Trichet, said that the EU-13 outlook is favorable and that the European financial system is robust.
– The International Monetary Fund (IMF) said that the European Central Bank’s (ECB) rate policy has sustained a neutral range and that inflation is gradually coming into around 2% in 2007 and 2008. However, the IMF did call for more rate hikes, but they are unsure how much at this time.
– Enterprise Zone retail sales in Europe rose 0.2% month over month, when 0.5% was expected.
– United Kingdom’s Purchasing Manager’s Index (PMI) was unchanged while employment was higher (54.1 vs 52.5) and new business was higher (57.6 vs. 57.0)
Corporate News:
– Handset printed circuit board (PCB) manufacturers, Compeq Manufacturing and Unitech Printed Circuit Boards may see their revenues decline in the second quarter on news of weak orders from Motorola. However, Unimicorn Technology could have a 10% growth because of strong demand from Nokia.
– Honda (HMC) will discontinue their hybrid Accord. This could have a positive impact for the Toyota hybrid models.
– Heavy option activity yesterday in Marriot International (MAR) and Rackable Systems Inc. (RACK) as they are rumored to be takeover targets.
– Bank of America is increasing its forecast for sales of handsets. This will impact the share prices for QualComm (QCOM), Nokia (NOK) and Motorola (MOT).
– CIBC noted that (CLS) could be a buyout target.
– Apple (AAPL) could be using Nvidia (NVDA) for its MacBook Pro.
– Ciena (CIEN) offers a convertible bond to the secondary market.
– Bed, Bath & Beyond (BBBY) posted poor profit results.
– Openwave Systems (OPWV) will be cutting its workforce as it reported weaker numbers.
– The Financial Times ran a negative article on Cadbury Schweppes (CSG) relating to its Coca-Cola (KO) Glaceau deal.
– The Irish airline, RyanAir, posted a record full-year profit for 2006. They cited a 33% rise in net income. However, CEO, Michael O’Leary said that the growth of the company may slow for 2007.
Favorable Comments:
– Callaway Golf (ELY) and TRW Automotive Holdings Corporation (TRW) upgraded at Matrix.
– Dow Chemical Co. (DOW) upgraded at Lehman Brothers
– Onyx Pharmaceuticals (ONXX) had its target price increased over at HSBC.
– Royal Caribbean Cruises (RCL) and Carnival (CCL) were both upgraded at Ray James.
– Forest Oil Corp. (FST) received good comments from CitiBank.
Negative Comments:
– Juniper (JNPR) downgraded at UBS.
– General Mills (GIS) downgraded at Bear Stearns.
– Tellabs Inc. (TLAB) and Alcatel-Lucent (ALU) receive negative comments over at Morgan Keegan.
