May 2, 2011
The biggest news on the global stage is that American Special Forces attacked a compound inside Pakistan and in a 40 minute fire fight killed al-Qaeda leader Osama Bin Laden.
Equity futures are up this morning, the dollar is stronger after declining for nine days, and oil fell the most in the past two weeks, although it still sits at $113 for the WTI. Brent crude hit a 7-week low. Silver also fell after the CME raised the amount of cash required for speculative positions. Airline stocks are getting a bump this morning due to a perception their operating environment will now be safer.
The ISM Manufacturing index for April declined from March to 60.4 from 61.2, but was ahead of the 59.5 consensus. Since this is a diffusion index, anything over 50 indicates expansion. The ISM prices paid rose to 85.5 vs. expectations of 83.9, indicating higher input costs. Construction spending rose 1.4$ vs. expectations of a 0.4% increase.
M&A activity continues as biopharmaceutical leader Cephalon is up 6% after receiving a takeover offer from Teva Pharmaceuticals for $6.8 billion. International Coal Group is up 30% after receiving a $3.4 billion offer from Arch Coal.
Manufacturing activity in China has begun to slow. The Federation of Logistics and Purchasing said its PMI fell to 52.9 in April from 53.4 in March. The yuan rose for the 7th consecutive week, hitting an 18 year high last week while the dollar hit a three year low vs. a basket of currencies.
A Gallup poll shows that despite the official data, an overwhelming majority of Americans believe the country is still in trouble. A surprising 29% said the US is in a depression, 27% said recession, and 16% said it is slowing down.
According to the NY Times, the Japanese Ministry of Finance surveyed 70 damaged factories and learned that nearly 2/3 are recovered enough to be back in operation by this summer. This is much faster than many experts have anticipated.
The Economist was critical of both Republican and Democratic posturing regarding gas prices. “Your taxis and town cars and commutes are not going to be made any cheaper, at least in the near term, by ending oil company subsidies or drilling in the Arctic National Wildlife Refuge. The real goal of these types of policies is to reassure voters that your party is trying to do something about gas prices and the other party is responsible for the problem.”
Speaking of gasoline, last week I included a picture of the price board at a Shell station in Palo Alto (thanks Al). The picture below is of the same price board, showing a $.04 increase over the week, 0.8%, or roughly 40% per annum. Good thing rising prices are just transitory.
In what is already shaping up to be an almost comical Presidential election for 2012, Donald Trump has announced that “in his mind” he is planning to run for President. I’m not sure if that means he will be running in his mind, or if he is just thinking about running. My first thought is he’s completely unqualified, but given his four bankruptcy filings it is possible he could have the ideal skill set needed to run a country careening through a debt laden morass.
Trading in EMEA and APAC markets was light as the UK, China, Hong Kong, Malaysia, Taiwan, Vietnam, and Singapore markets were all closed for a holiday. The Nikkei rose 1.6%, ASX flat, and Kospi up 1.7%.
Have a great day