INTRADAY calls for 30th Sep 2009
+ve sector, scripts : OIL&Ref, Pharma Dishman, Coreproject,GSPL
BUY KotakBank-757 for 777+ with sl 749
BUY CIPLA-279 for 298+ with sl 270
BUY Petronet-77 for 81+ with sl 75.50
+ve sector, scripts : OIL&Ref, Pharma Dishman, Coreproject,GSPL
BUY KotakBank-757 for 777+ with sl 749
BUY CIPLA-279 for 298+ with sl 270
BUY Petronet-77 for 81+ with sl 75.50
Positional
BUY RIL-2171 for 2235-2290+ with sl 2155
BUY Dewanhouse-147 for 170+ with sl 140
BUY TTML-36 for40+ with sl 34.50
BUY RIL-2171 for 2235-2290+ with sl 2155
BUY Dewanhouse-147 for 170+ with sl 140
BUY TTML-36 for40+ with sl 34.50
Breakout
BUY MRPL-93 for 116+ with sl 90
BUY MRPL-93 for 116+ with sl 90
STOCKS IN NEWS TODAY
Radico Khaitan board approves fund raising up to Rs 375 cr
Punj Lloyd bags new order worth Rs 275.8 cr from Tamil Nadu
Wockhardt gets US FDA nod for prostate drug Tamsulosin
Fortis Healthcare rights issue opens today, ratio of 2 shares for 5 held at Rs 110/sh
Sanghi Ind shareholders seek govt help to probe affairs of co, accuse promoters of sniffing off funds to privately held co – DNA
IDBI Bank To Cut Home Loan Rates By 25 bps From Thursday
Punj Lloyd bags new order worth Rs 275.8 cr from Tamil Nadu
Wockhardt gets US FDA nod for prostate drug Tamsulosin
Fortis Healthcare rights issue opens today, ratio of 2 shares for 5 held at Rs 110/sh
Sanghi Ind shareholders seek govt help to probe affairs of co, accuse promoters of sniffing off funds to privately held co – DNA
IDBI Bank To Cut Home Loan Rates By 25 bps From Thursday
NIFTY FUTURE LEVELS
SUPPORT
4983
4967
4953
4940
4926
RESISTANCE
4011
5014
5027
5041
5155
Buy DAI-ICHI KARKARI;Buy NOIDA MEDICARE
SUPPORT
4983
4967
4953
4940
4926
RESISTANCE
4011
5014
5027
5041
5155
Buy DAI-ICHI KARKARI;Buy NOIDA MEDICARE
Strong & Weak futures
This is list of 10 strong futures:
Orchid Chem, IOB, Dr.Reddy, Chennai Petro, KS Oil, Ranbaxy, Uco Bank, Dena Bank, KFA & IDBI.
And this is list of 10 Weak futures:
Tulip, Finance Tech, TV-18, Suzlon, MTNL, Neyveli Lignite, Aditya Birla, Voltas Ltd, Tata Comm & Triveni.
Nifty is in Up trend
NIFTY FUTURES (F & O):
Below 4983 level, expect profit booking up to 4967-4969 zone and thereafter slide may continue up to 4953-4955 zone by non-stop.
Below 4983 level, expect profit booking up to 4967-4969 zone and thereafter slide may continue up to 4953-4955 zone by non-stop.
Hurdle at 5011 level. Above this level, buying may continue up to 5012-5014 zone by non-stop.
Cross above 5025-5027 zone can take it up to 5039-5041 zone by non-stop. Supply expected at around this zone and have caution.
On Negative Side, rebound expected at around 4940-4942 zone. Stop Loss at 4926-4928 zone.
Short-Term Investors:
Bullish Trend. 3 closes above 4790.00 level, it can zoom up to 5155.00 level by non-stop.
BSE SENSEX:
Lower opening expected. Recovery should happen.
Lower opening expected. Recovery should happen.
Short-Term Investors:
Short-Term trend is Bullish and target at around 17281.17 level on upper side.
Maintain a Stop Loss at 16119.95 level for your long positions too.
POSITIONAL BUY:
Buy DAI-ICHI KARKARI (BSE Cash)
Bulls may lose control today.
1 Month: Bullish, as per current indications.
3 Months: Bullish, as per current indications.
1 Year: Bullish, as per current indications.
Buy NOIDA MEDICARE (BSE Cash)
Bulls may hold on gains today.
1 Month: Surprisingly going up, opposite to bearishness.
3 Months: Sideways, surprisingly going one sided with bullishness.
1 Year: Bullish, as per current indications.
Buy DAI-ICHI KARKARI (BSE Cash)
Bulls may lose control today.
1 Week: Sideways, surprisingly going one sided with bullishness.
1 Month: Bullish, as per current indications.
3 Months: Bullish, as per current indications.
1 Year: Bullish, as per current indications.
Buy NOIDA MEDICARE (BSE Cash)
Bulls may hold on gains today.
1 Week: Bullish, as per current indications.
1 Month: Surprisingly going up, opposite to bearishness.
3 Months: Sideways, surprisingly going one sided with bullishness.
1 Year: Bullish, as per current indications.
Global Cues & Rupee
The Dow Jones Industrial Average closed at 9,742.20. Down by 47.16 points.
The Broader S&P 500 closed at 1,060.61. Down by 2.37 points.
The Dow Jones Industrial Average closed at 9,742.20. Down by 47.16 points.
The Broader S&P 500 closed at 1,060.61. Down by 2.37 points.
The Nasdaq Composite Index closed at 2,124.04. Down by 6.70 points.
The partially convertible rupee INR=IN ended at 48.10/11 per dollar on yesterday, weaker than its Friday's close of 47.97/98.
Interesting findings on web:
Stocks slipped Tuesday after a surprise drop in consumer confidence countered a better-than-expected housing market report. That added to lingering questions about the strength of an economic recovery.
Interesting findings on web:
Stocks slipped Tuesday after a surprise drop in consumer confidence countered a better-than-expected housing market report. That added to lingering questions about the strength of an economic recovery.
The Dow Jones industrial average fell 47.16, or 0.5 percent, to 9,742.20.
The Standard & Poor's 500 index fell 2.38, or 0.2 percent, to 1,060.60.
The Nasdaq composite index fell 6.70, or 0.3 percent, to 2,124.04.
RUSSELL610.45-2.77-0.45%
TRAN3826.6-30.36-0.79%
UTIL380.270.36+0.09%
S&P 100490.25-1.44-0.29%
S&P 400695.042.32+0.33%
NYSE6926.82-12.94-0.19%
NAS 1001717.67-6.92-0.4%
For the week:
The Dow is up 77.01, or 0.8 percent.
The S&P is up 16.22, or 1.6 percent.
The Nasdaq is up 33.12, or 1.6 percent.
For the year:
The Dow is up 965.81, or 11.0 percent.
The S&P is up 157.35, or 17.4 percent.
The Nasdaq is up 547.01, or 34.7 percent.
Stocks churned in the early going, before turning lower after the 10 a.m. ET release of the consumer confidence report. By afternoon, stocks were volatile, bouncing across the unchanged line.
"Many people believe that you still need to see the consumer come back for the recovery to be sustainable," said Ron Kiddoo, chief investment officer at Cozad Asset Management. "If consumers aren't confident, they're not going to spend."
But the advance was short lived, with investors again showing caution after a seven-month rally that has left the leading indexes at nearly one-year highs.
"We continue to wait for the market to slow down," said Scott Armiger, portfolio manager at Christiana Bank & Trust.
Despite pervasive calls for a September selloff, stocks have held on to gains and moved higher this month.
"You don't know if a September selloff has just been pushed into October or if a big selloff can be avoided altogether," he said.
Consumer confidence dropped in September, potentially a bad sign ahead of the critical holiday retail sales period. The Conference Board said its consumer confidence index fell to 53.1 from 54.5 in August. Economists surveyed by Briefing.com were expecting the index to rise to 57.
"The big problem seems to be the job market," said Joel Naroff, president of Naroff Economic Advisors. "There is little faith that jobs will start becoming available as only about 18 percent of the respondents thought employment opportunities would improve in the near future."
"It's hard to get people to open their wallets wide if they are still concerned about being able to keep their jobs or find new ones," he added.
With several key employment reports due out later this week - including the latest non-farm payrolls monthly update on Friday - "the day's troubling consumer sentiment data set the tone for a mostly negative session," said Elizabeth Harrow of Schaeffer's Investment Research.
The disappointing decline in consumer confidence today was a stark reminder that American consumers are not as upbeat, meaning they are likely to keep their spending in check.
"Stock have been moving aggressively up," said Lawrence Creatura, portfolio manager at Federated Clover Investment Advisors. "It's natural for investors to want to lock in some of those gains as we end the quarter."
"Consumers remain quite apprehensive about the short-term outlook and their incomes," Lynn Franco, head of the consumer research group at the private research organization, said in a statement.
"While not as pessimistic as earlier this year, consumers remain quite apprehensive about the short-term outlook and their incomes. With the holiday season quickly approaching, this is not very encouraging news," Joshua Shapiro of MFR Inc. wrote in a note to clients.
The pace of falling home prices continued to slow, according to a report released before the markets opened. The Case-Shiller 20-city home price index rose 1.6% in July from June, more than triple what economists surveyed by Briefing.com were expecting.
Prices dropped 13.3% in July versus a year ago, a decline that was slower than the drop of 14.2% economists were expecting. Prices fell 15.4% year-over-year in June.
Dell unveiled its newest high-end, super-thin personal computer late Monday. Called the Latitude Z, the 4.5-pound PC will retail for $1,999. Dell (DELL, Fortune 500) shares fell 3% Tuesday.
JPMorgan Chase (JPM, Fortune 500) said it is shuffling some of the management responsibilities of its successful investment banking and asset management units. Shares were little changed.
Drugstore chain Walgreen (WAG, Fortune 500) reported weaker quarterly earnings and higher quarterly revenue, both of which topped analysts' estimates. Shares rose 9%.
Sequenom (SQNM)'s board said it has removed most of its management team, including the CEO, following a scandal involving mishandling of research and results on its prenatal Down syndrome test. Shares of the genetic analysis product developer fell 39% in unusually active NYSE trading.
Exxon Mobil Corp. and Chevron Corp. led energy stocks lower as a stronger dollar dragged down oil prices.
Gannett Co. rallied over 17 percent after the largest U.S. newspaper publisher predicted third-quarter earnings that topped analysts' estimates.
Among rising stocks was Boeing, which climbed 2.92 percent to 54.62 dollars after it won two contracts for the US Navy totaling more than 22 million dollars.
Delta Air Lines rose 2.22 percent to 9.20 dollars as it sealed 2.1 billion dollars in financing deals in a bid towards repaying debt.
MBIA (MBA) shares declined after Standard & Poor's downgraded its main bond insurance unit to non-investment grade status. Shares of rival Ambac Financial Group (ABK) also slipped.
3M [MMM 73.94 -1.07 (-1.43%) ] and Cisco [CSCO 23.30 -0.31 (-1.31%) ], some of the biggest gainers in the previous session's rally, were among today's biggest drags: Both stocks fell more than 1 percent.
Banks ended mixed, with Citigroup [C 4.70 0.13 (+2.84%) ] up nearly 3 percent, and Bank of America [BAC 17.16 -0.06 (-0.35%) ] down 0.4 percent.
CIT Group [CIT 2.20 0.53 (+31.74%) ] jumped 32 percent following a report that hedge fund manager John Paulson is considering merging the troubled finance company with failed mortgage lender IndyMac Federal Bank.
Starbucks [SBUX 20.38 -0.24 (-1.16%) ] shed 1.2 percent after the barista announced plans to roll out a line of instant coffee.
Sequenom [SQNM 3.46 -2.23 (-39.19%) ] tumbled nearly 40 percent after the genetic-analysis test maker said it fired its CEO and a swath of its top management team following a scandal over mishandling of research data.
With the third quarter ending on Wednesday, earnings season is just around the corner. There are a few reports trickling out after the bell today, including Nike [NKE 60.09 1.09 (+1.85%) ] and Micron [MU 8.40 -0.04 (-0.47%) ].
Tuesday is the first anniversary of the Dow's biggest one-day point loss of all time, when the average plummeted 777.68 points and the broad market knocked out $1.2 trillion in value.
The plunge followed the House of Representatives's decision to reject the government's then $700 billion bank bailout plan. With banks around the globe teetering on the brink of collapse and credit nearly frozen, the decision sparked a panic that battered stocks in every sector.
The crash followed a brutal two-week roller-coaster, triggered by the near-meltdown of Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) and the collapse of Lehman Brothers.
Health-care stocks perked up slightly in late trading after the Senate Finance Committee rejected the possibility of a so-called public option in the ongoing health-care reform plan.
Toyota is announcing its largest recall in the U.S. ever. The Japanese automaker is recalling 3.8 million vehicles over fears the removable floor mats can interfere with the vehicle's accelerator and cause a crash. Vehicles affected include the Camry, Avalon, Prius, Tacoma, Tundra and Lexus ES350, IS250 and IS350.
Federal regulators say the rash of bank failures that are depleting the deposit insurance fund will likely cost about $100 billion over the next four years. To shore up the funds, the FDIC board has voted to require early payment of bank premiums for 2010-2012.
Sears has agreed to pay a record $6.2 million to settle allegations that it illegally fired disabled employees.
The Equal Employment Opportunity Commission claimed the retailer fired hundreds of employees who took workers' compensation leave after being injured on the job.
With one day left to go in th quarter, the Dow and S&P are on track for their best quarterly percentage gains since the fourth quarter of 1998.
VIX25.190.31+1.
Oil,Gold & Currencies:
U.S. light crude oil for October delivery fell 13 cents to settle at $66.71 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery rose 30 cents to settle at $994.40 an ounce.
The dollar rose versus the yen and euro, pushing higher after repeatedly hitting one-year lows against a basket of currencies over the last few weeks.
The dollar fell against the yen, paring earlier gains, on speculation the Federal Reserve will keep record-low interest rates unchanged for an extended period.
The U.S. currency retreated from near a two-week high against the euro as Asian stocks rose and before a report this week forecast to show employers cut fewer jobs in September, damping demand safe-haven currencies.
"Fed policy makers will probably keep low borrowing costs unchanged until next summer, weighing on the dollar," said Akira Hoshino, chief manager of the foreign-exchange trading department in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan's largest lender.
The dollar dropped to 89.89 yen as of 10:45 a.m. in Tokyo from 90.02 yen in New York yesterday. It fell to as low as 88.24 yen on Sept. 28, the weakest level since Jan. 23. For the quarter, the dollar has declined 6.7 percent against the yen.
The U.S. currency fell to $1.4614 per euro from $1.4587. Yesterday, it touched $1.4527, the strongest level since Sept. 14. The dollar has weakened 4 percent against the euro this quarter.
Japan's currency fetched 131.34 per euro from 131.40 in New York yesterday. The yen has gained 2.9 percent against the euro this quarter. The MSCI Asia Pacific Index of regional shares gained 0.5 percent.
Bonds:
Treasury prices slumped, raising the yield on the benchmark 10-year note to 3.29% from 3.28% late Monday. Treasury prices and yields move in opposite directions.
What to expect:
Earnings and Conference Calls
Actuant, Aehr Test Systems, Diamond Foods, Lawson Software
Economic Data
7:00 a.m. MBA Purchase Applications
8:15 a.m. ADP Employment Report
8:30 a.m. GDP (Q2 Final)
8:30 a.m. Corporate Profits
9:45 a.m. Chicago PMI
10:30 a.m. EIA Petroleum Status Report
Still to come: We'll get reports on GDP, auto sales, ISM manufacturing and the September employment situation later in the week.
WEDNESDAY: Weekly mortgage applications; ADP jobs report; GDP; weekly crude inventories; Fed's Lockhart speaks
THURSDAY: Personal income/spending; jobless claims; ISM manufacturing index; pending-home sales; construction spending; auto sales; Fed's Bernanke, Pianalto, Lockhart speak
FRIDAY: Sept jobs report; factory orders; Calif. IOUs mature
Asia:
Asian stocks rose for a second day, led by automakers and technology companies, after NGK Insulators Ltd. raised its profit forecast and Micron Technology Inc. reported a narrower loss.
NGK Insulators surged 8.1 percent in Tokyo after citing growing demand for products related to cars and electronics for its higher forecast. Hynix Semiconductor Inc. gained 2.6 percent in Seoul as Micron's results boosted optimism a glut in the memory-chip industry is easing. Billabong International Ltd., Australia's biggest surfwear maker, climbed 3.6 percent on a greater-than-estimated retail sales report.
The MSCI Asia Pacific Index added 0.5 percent to 117.33 as of 11:38 a.m. in Tokyo. The gauge is set for its second-straight quarterly advance, having climbed 14 percent in the past three months as economies around the world emerged from recession.
"The recovery is moving from being supported by governments and central banks to being a bit more self-sustained," said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors, which manages about $75 billion. "Across Asia we're seeing strong private demand as well as a strong pick-up in actual measures of economic activity."
The Shanghai Composite Index climbed 1 percent in China, where markets are closed from tomorrow for a week-long holiday. South Korea's Kospi Index gained 0.6 percent, while Taiwan's Taiex Index added 0.7 percent. Japan's Nikkei 225 Stock Average was little changed.
Hai-O Enterprise Bhd., a Malaysian seller of Chinese wines, herbs and medicines, rose 4.9 percent to a record after first- quarter profit climbed 36 percent.
U.S. Home Prices
Futures on the U.S. Standard & Poor's 500 Index were little changed. The gauge fluctuated between gains and losses yesterday before finishing down 0.2 percent. The S&P/Case-Shiller home- price index climbed 1.2 percent in July from the previous month, the most since October 2005, according to an S&P report.
In Tokyo, NGK Insulators surged 8.1 percent to 2,065 yen after boosting its profit forecast for the year ending March 31, 2010, by 14 percent to 12.5 billion yen ($139 million).
Hynix climbed 3.1 percent to 20,150 won, while Samsung Electronics Co., the world's largest maker of computer memory, lost 1.4 percent to 823,000 won. Taiwan Semiconductor Manufacturing Co., the world's largest maker of customized chips, gained 1.9 percent to NT$64.90.
Technology companies accounted for 20 percent of the MSCI Asia Pacific Index's gain today after Micron said its fourth- quarter net loss narrowed to $88 million from $344 million a year earlier. The loss in the period of 10 cents a share beat the 19 cents estimated by analysts in a Bloomberg survey.
Memory Chips
Bankruptcies and factory shutdowns have helped the memory industry pare an oversupply of chips, pushing up prices closer to the cost of production. Micron makes dynamic random access memory, or DRAM, for personal computers, as well as Nand flash chips, which store information.
The MSCI Asia Pacific Index has added 3.4 percent in September, set for a seventh monthly advance, its longest stretch of gains since the 10 months ended July 2007. Japan's Topix index and the Nikkei 225 are the worst performers this month among 88 global equity indexes tracked by Bloomberg, amid uncertainties over policies from the nation's new government.
The MSCI index's gain in the past three months is lower than the second quarter's 28 percent as concerns emerged the stock rally may have overvalued company earnings prospects. The average price of the gauge's shares rose to 1.6 times book value on Sept. 17, up from 1 at the measure's five-year low on March 9.
Australian Retail Sales
The climb in equities in the past seven months has been fueled by better-than-estimated economic and earnings reports. Australian retail sales climbed 0.9 percent in August, the first gain in three months, the country's statistics bureau reported today. The median forecast of economists surveyed by Bloomberg News was for a 0.5 percent gain.
Billabong rose 3.6 percent to A$11.95 in Sydney, while Harvey Norman Holdings Ltd., Australia's largest furniture and electrical retailer, added 1.4 percent to A$4.33.
In Kuala Lumpur, Hai-O Enterprise advanced 4.9 percent to a record 5.97 ringgit after first-quarter profit climbed 36 percent. OSK Research Sdn. upgraded the stock to "buy" from "neutral."
Nikkei 225 10,106.78 +6.58 ( +0.07%). (08.27 AM IST)
Japan's Nikkei average was flat in cautious trade on Wednesday, with investors hesitant to actively take positions ahead of a series of economic data releases, while Toyota Motor Corp (7203.T) fell following a U.S. recall announcement.
The stock market lost steam after the dollar/yen fell below 90 yen, though some exporters such as Honda Motor Co (7267.T) managed to hold on to their gains.
The benchmark Nikkei .N225 inched up 6.58 points to 10,106.78, after rising 0.9 percent the previous day.
The broader Topix was flat at 904.40.
HSI 20981.03 -32.14 -0.15%.(08.30 AM IST)
Hang Seng Index opens 32 points lower on Wed
Hong Kong stocks fell on Wednesday morning, with the benchmark Hang Seng Index opening 32 points lower at 20,981.
The Hang Seng China Enterprise Index, which tracks the overall performance of 43 mainland Chinese state-owned enterprises on the Hong Kong Stock Exchange, opened 69 points lower at 11,918.
PetroChina<601857><0857><PTR> fell 0.45% and opened at HK$8.86. Sinopec<600028><0386><SNP> decreased 1.2% from the previous closing to HK$6.6.
SSE Composite 2754.54 2773.28 2803.86 2772.09 + 0.68.(08.32 AM IST)
China's key stock index opened 0.65 percent higher on Wednesday, led by Industrial and Commercial Bank of China (ICBC) (601398.SS: Quote, Profile, Research) after it announced an acquisition plan, but overall trading was sluggish on the eve of an eight-day national holiday that starts on Thursday.
The Shanghai Composite Index .SSEC opened at 2,772.569 points after losing around 3 percent on Monday and Tuesday, as investor sentiment was depressed by heavy supplies of new shares including initial public offerings on China's planned Nasdaq-style second board, ChiNext.
The benchmark stock index has lost around 7 percent so far this quarter and is heading for its worst quarterly performance this year, mainly reflecting worries about an oversupply of shares.
The official Shanghai Securities News reported on Wednesday that Chinese companies raised 105 billion yuan ($15 billion) via initial public offerings (IPOs) of stock in the third quarter, up a staggering 700 percent against the same quarter of last year.
ICBC, the world's largest bank by market value, was up 0.84 percent at 4.78 yuan after it said it was bidding to buy Thai lender ACL Bank ACL.BK for up to $545 million to tap rapid growth in the Thai economy and bilateral trade.
HSBC's China Purchasing Managers' Index (PMI) for September, compiled by British research firm Markit, will be announced on Wednesday, giving the latest glimpse of the performance of the world's third-largest economy.
Most of the next set of economic data will be posted in mid-October. ($1 = 6.83 yuan)
China Star sees surging turnover in H1.
China Yangtze Power approved to issue 1.59 bln shares to CTGPC.
Shares of Peak Sport plunge 17.07% on HK debut.
Suning to open 50 stores during National Day holiday.
Best Western International opens hotel in Xi'an.
Shunfa Hengye buys land in Hangzhou for RMB 434 mln.
BOE Tech to sell 70% stake in Beijing property subsidiary.
Chinatrust Financial to inject US$200 mln into U.S. unit.
Fujian New Hua Du to buy 4 local retail stores.
MOF to issue RMB 350 bln in 50-year T-bonds in Q4.
Shanghai International Port to issue RMB 4 bln in short-term bills.
Lite-On Technology opens East China headquarters.
Evergrande Real Estate's IPO approved in listing hearing.
Market Insider: Wall Street Waits for Jobs Report
Traders are looking straight past quarter end to the September jobs report at the end of the week.
Stocks are likely to finish the third quarter quietly Wednesday, locking in impressive double digit gains. The Dow is up 15.3 percent; the S&P 500 is up 15.4 percent, and the NASDAQ is up 15.8 percent. Financial stocks did the best of the S&P sectors in the third quarter, gaining 25.8 percent, followed by industrials, up 22.3 percent and materials up 21.6 percent.
"I think the big funds are happy to let this month run out at this level," said one stock trader. The Dow finished Tuesday down 47 at 9742, and the S&P 500 slipped 2 to 1060, after a lower consumer confidence number disappointed investors. Treasures, except for the long bond, saw selling while the dollar inched higher against a basket of currencies. Oil, metals, and grains were mostly weaker.
ADP's private sector jobs report for September will get attention when it is released Wednesday at 8:15 a.m. It is expected to show the loss of 200,000 jobs. Traders follow the report closely, as a kind of preview to the government's jobs report, but it is not always a good indicator. The government data Friday is expected to show the decline of 200,000 non farm payrolls, and an unemployment rate of 9.8 percent.
Other data Wednesday includes the final look at second quarter GDP, at 8:30 a.m., and the 9:45 a.m. Chicago Purchasing Mangers report. Oil inventory data is reported after the close.
More importantly though will be comments from Fed Vice Chairman Donald Kohn. "Any of the talk we're hearing now about exit strategies is very important," said Brian Edmonds, head of interest rate trading at Cantor Fitzgerald.
Kohn speaks at 12:35 p.m. in a panel discussion on Central Bank exit policies at the Cato Institute's Shadow Open Market Committee Meeting. The session includes questions from the audience.
"We had the FOMC (last week) and they sounded like they're a long way off. Then you get (Fed Gov. Kevin) Warsh speak and he makes it look like they're a lot closer than the FOMC would let on," said Edmonds. Traders have been buzzing for several days now about Friday comments from Warsh, which suggested the Fed could move to tighten sooner than markets expect.
Warsh is considered a fairly middle of the road Fed voice so his comments were especially surprising to the market. Dallas Fed President Richard Fisher, viewed as more hawkish, made similar comments Tuesday, saying the winding down of the Fed's accommodative monetary policies needs to start as soon as the economy shows convincing signs of traction.
The dollar was up for a second day Tuesday. "I think that probably it's not the big bottom yet for the dollar. They key problem is that U.S. rates are below most other countries'," said Marc Chandler, head currency strategist at Brown Brothers Harriman. "The only currency that could make a compelling case for a top to be in place is sterling."
Sterling firmed 0.4 percent to $1.5951. "Sterling most likely has peaked against the dollar. We would expect to pick off the weakest first," he said.
The dollar firmed $1.4572 per euro. The yen finished at 90.21 per dollar. Chandler said the euro's move higher could be in anticipation of moves by the European Central Bank Wednesday. The ECB has a second refinancing operation Wednesday in which it is expected to make $100 to $200 billion euros available, Chandler said.
Chandler said he expects the euro to test the $1.48 to $1.50 area before carving out a top. "Tops and bottoms in the euro are often made with double tops and double bottoms," he said.
Stocks to Watch
Saks [SKS 7.17 0.13 (+1.85%) ] stock fell after the bell after it said it was offering up to $100 million in new shares of stock. Nike [NKE 60.09 1.09 (+1.85%) ] moved higher after the bell,after reporting earnings of $513 million, or $1.04 per share, up slightly from $510 million or $1.03 per share the year earlier. The numbers were well above Wall Street's estimate of $0.98 per share. Jabil Circuit [JBL 12.28 -0.10 (-0.81%) ] was also up after hours after forecasting better than expected earnings.
Toyota Plans Huge US Recall for Dangerous Floormats
Toyota [TM 79.32 -1.31 (-1.62%) ] said on Tuesday it will recall some 3.8 million vehicles because of the risk that a loose floormat could force down the accelerator, a problem suspected of causing crashes that killed five people.
"This is an urgent matter," said U.S. Transportation Secretary Ray LaHood.
The U.S. government said it has received reports of 100 related incidents that include 17 crashes and 5 fatalities involving Toyota vehicles.
Toyota and U.S. safety regulators warned owners to remove all driver-side floor mats from eight Toyota and Lexus models manufactured in the last six years and sold in the United States, including its Prius hybrid, as an immediate safety precaution.
The U.S. safety recall would be the largest ever such step for Toyota, the top global automaker.
A cost estimate for the company's still-developing recall was not immediately available.
In August, an off-duty California state trooper and three members of his family were killed in the San Diego area in a crash of a 2009 Lexus ES350.
Before the crash, a passenger in the car had called 911 and told dispatchers that the accelerator was stuck and the car had reached 120 miles per hour (193 km per hour).
The recall will cover recent versions of the Camry and Avalon sedans, the Prius hybrid, the Tacoma and Tundra pickup trucks and luxury Lexus models, the IS250 and the IS350 as well as the ES350.
California Investigation Continues
The San Diego Sheriff's Department has not completed its investigation into the off-duty trooper's crash, a spokeswoman said. The National Highway Traffic Safety Administration has also sent investigators to look into the accident.
Toyota said it was waiting for a final report on the accident but wanted to act because of indications that a floormat may have been involved.
"Obviously the tragic accident in San Diego was certainly an eye opener for all of us and we've paid very very diligent attention to moving forward to try to make sure none of us will be reliving that kind of a very tragic situation," Toyota spokesman Irv Miller.
Toyota said it would issue specific recall notices as soon as it had a plan to address each of the models affected.
NHTSA closed an investigation into all-weather floor mats in Toyota vehicles in 2007 that resulted in a recall of more than 50,000 vehicles.
Toyota's largest previous largest recall was in 2005 for a problem with steering rods. That recall covered about 900,000 vehicles, the automaker said.
Japan Warns of Possible Tsunami After Samoa Quake
Japan's Meteorological Agency on Wednesday issued a tsunami warning for the country's eastern coast, following a magnitude 8.0 earthquake off American Samoa.
The warning was for a possible tsunami of 50 cm, the agency said on its website.
Key Senator Still Determined to End 'Regulator Shopping'
A senior U.S. Democratic senator said Tuesday he is moving forward with his effort to consolidate bank supervision into a single federal regulator, despite criticism from current bank regulators who do not want to lose power.
"It's clear that we need to end charter shopping, where institutions look around for the regulator that will go easiest on them," Senator Christopher Dodd, chairman of the Senate Banking Committee, said during a hearing on bank supervision.
Dodd's plan would consolidate the Office of the Comptroller of the Currency and the U.S. Office of Thrift Supervision into one regulator. It would also strip direct bank supervision powers from the Federal Deposit Insurance Corp and the Federal Reserve, transferring those powers to the new regulator.
Dodd has not yet introduced legislation to consolidate the bank regulators. His plan would go further than what the Obama administration has put forward.
The move to streamline the current system of four bank regulators is part of a larger effort in Congress to overhaul financial regulation to prevent crises such as the recent meltdown of financial markets.
Other pieces of the overhaul include creating a consumer agency to police financial products, and empowering the FDIC or another agency to dismantle troubled financial firms whose failure could threaten market stability.
The idea of a single bank regulator would attack a key problem in the financial crisis of 2008-2009 — "regulator shopping" by firms such as Countrywide Financial and American International Group [AIG 45.22 -0.92 (-1.99%) ], both poster children for unfettered risk-taking. Those institutions chose the OTS, an agency that had gained a reputation for relaxed standards, as their primary regulator.
A single bank regulator would also ease the onerous compliance issues that many institutions face, said Eugene Ludwig, chief of the Promontory Financial Group and former U.S. comptroller of the currency.
"There are so many needless burdens caused by this cacophony of regulators, rules, examinations and enforcement activities that many financial services companies shift their business outside the United States whenever possible," he said.
Preserving Their Turf
Existing federal regulators have resisted a catch-all regulator for banks.
FDIC Chairman Sheila Bair, a Republican widely praised by Democratic lawmakers for her focus on capital requirements and predictions of the mortgage crisis, strongly opposes the idea.
Bair has said a single regulator would likely focus on the needs of larger banks to the detriment of smaller ones. She has argued against "putting all your regulatory and supervisory eggs in one basket" and has said regulatory tension tends to result in better rules.
Comptroller of the Currency John Dugan and Fed Governor Dan Tarullo have been more restrained, saying there are advantages and disadvantages to each approach.
Republican Senator Bob Corker on Tuesday echoed some of Bair's concerns, saying multiple regulators can serve as checks and balances on each other. "Each of the regulators — sometimes gleefully, sometimes not — points out the deficiencies of the other regulators," he said.
Full Steam Ahead
Dodd said he will move forward with the consolidation plan.
"The most common argument is not that it's a bad idea — it's that consolidation is too politically difficult," Dodd said. "That argument doesn't work for me."
The consolidation plan would retain the dual U.S. banking system, with one federal bank regulator working with 50 state bank regulators.
Dodd said he is getting closer to a consensus with other senators on regulatory reform ideas. But he said the Senate Banking Committee will not rush the single piece of legislation that will try to capture all the reform ideas. "I think it's important to do it carefully and right," he said.
Lawmakers in both the Senate and the House of Representatives are attempting to meet the Obama administration's request to finalize regulatory reform overhaul by the end of this year.
Nike Profit Rises, Tops Expectations, Sparking Shares
Nike reported a profit that topped analysts expectations and edged higher than last year's levels as it used cost-cuts to counter revenue declines in most of its key geographic regions, sending the company's stock higher in late trading Tuesday.
The sports apparel company said it earned $1.04 a share in its fiscal first quarter on sales of $4.8 billion, compared with $1.03 a share on sales of $5.43 billion in the same period last year.
On average, analysts who follow Nike expected the company to turn in a profit of 97 cents a share on sales of $4.90 billion, according to a consensus from Thomson Reuters. Analysts' estiamtes ranged broadly, from 82 cents a share to $1.16 a share.
Nike shares [NKE 60.09 1.09 (+1.85%) ] rose more than 3 percent in extended trading Tuesday. Get after-hour quotes for Nike here.
The stock closed at $60.09, an increase at 1.85 percent.
Beaverton, Ore.-based Nike, the world's largest footwear and apparel company, has managed to meet or beat expectations during the recession because it has reorganized its structure and tightly controlled inventory and costs.
But Nike's largest market is in the U.S., where shoppers are still keeping a lid on discretionary spending and specialty athletic retailers that emphasize the Nike brand are struggling.
Nike said that revenue fell in the most recent quarter in all regions except Japan. But after accounting for currency fluctuations, sales were flat in Japan and rose in the emerging markets unit, which includes Brazil.
Orders for goods to be delivered from now until January—a key gauge known as futures orders —fell 6 percent, Nike said. That was in line with most analysts' expectations for a decline in the mid-single digits. Orders were down on a year-over-year basis in every region except its emerging markets unit.
Nike has countered declines in consumer spending by cutting costs, streamlining operations and reducing marketing. It has also slashed 5 percent of its global workforce, or some 1,750 jobs.
During the quarter, Nike cut its selling and administrative expenses by 17 percent, helped by lower marketing and personnel costs.
Five Things That Could Spook Stock Investors This October
If September was a month that defied expectations, October might be the month that lives up to them.
All of which means another nerve-wracking ride for investors.
The first month of autumn is reliably known as the stock market's worst, but this year passed with not much more than an occasional jolt as the Standard & Poor's 500 has gained about 4 percent.
Its follow-up act in October is both "the jinx month" for its history of market crashes and a "bear killer" for its reversal of 11 bear markets since World War II, according to the Stock Trader's Almanac.
Market pros, then, have their sights set on a number of factors to watch as the fourth quarter begins and Wall Street looks to put some fundamental legs beneath the technical sprint it's been on for the past seven months.
"What we need to see now is the one step forward, two steps back now goes to one step forward," says Quincy Krosby, general market strategist at Prudential Financial. "The market needs something bigger and better to get it excited."
Among the multitude of factors likely to influence investors, here are five keys:
1. Earnings
Second-quarter earnings pleased investors, with about a 3-to-1 upside surprise in performance over expectations. Yet projections for the third quarter are that S&P 500 companies will report an overall 15.4 percent drop in profit from a year ago.
While companies still may beat expectations, the bar is rising and the trend of cost-cutting offsetting weak revenue will have to change.
"Top-line revenue growth—that's really what investors are waiting to hear," Krosby says. "If they don't hear it enough times the market will react accordingly."
Investors may tolerate one more quarter of less-bad earnings, but the outlook and trend will be key.
"You get this sense that we could fall into a double-dip recession—a fear that's out there—but it's most likely going to keep analyst estimates low during this season's forecast," says Doug Lockwood, CIO of Cornerstone Wealth Management in Auburn, Ind. "That simply sets up the ability to have further positive earnings surprises."
2. Jobs—And Consumer Health
Unemployment remains probably the market's most critical metric, and Wall Street won't have to wait to gauge how strong consumers will be. The Labor Department is set to release its monthly jobs report on Friday, and investors will be watching closely.
"Losing jobs makes everybody nervous. If you have a job and your neighbor doesn't it still makes you nervous," says Kathy Boyle, president of Chapin Hill Advisors in New York. "The consumer's saving and they're still behind the eight ball. They don't have enough money for college, they don't have enough money for retirement."
A market bear, Boyle thinks more signs of weakness—such as Tuesday's drop in consumer sentiment—will weigh on the market in October and possibly drive a strong move lower.
By the same token, though, Wall Street cheered Monday over the spate in mergers and acquisitions activity, and a continuation in that trend could signal a turnaround for the jobs market.
"Anytime you have acceleration of mergers and acquisitions activity generally portrays that businesses are starting to hire more," Lockwood says. "You've shaken out the weak ones. They don't start doing that unless they're able to find financing or that the deals are too good to pass up."
Lockwood, who thinks October could be "flat to low-positive," says the health of luxury hotels will serve as a good barometer for where the consumer is positioned.
3. Technical Levels
Many analysts say the market's momentum has been based strongly on technical benchmarks that have been eclipsed after the market reached a strongly oversold position in March.
Similarly, some are now starting to wonder if the market hasn't reached a resistance level from which it will correct following the rally.
"Trading has picked up. That's also something that makes people nervous," Krosby says. "Once the day traders get in there, they typically come in at the end of a momentum-driven rally."
"If we have a consolidation, which is the most minor form of a pullback, that's one thing. If it's something larger than a consolidation, those riskier assets are going to sell off and sell off dramatically."
Questions about the technical aspect of the rally have heightened as the S&P has shown resistance at the 1065 level, pulling back once it passed that area.
That's not necessarily a long-term bearish sign for the market, but could signal an impending correction.
"Support remains 1014-1000 with key support at the August low of 978.50," BofA Merrill Lynch Global Research analyst MaryAnn Bartels wrote in a note to clients. "We maintain that the risk of a 15-20% correction is rising within the context of a base-building process and that the major area of resistance at 1200-1325 can be tested in 2010."
4. Financials
After 18 months at the center of the market firestorm, beaten-down financials have been a major player in the stocks rally.
Now, with many of the industry's biggest names seemingly back on their feet, their performance will be watched closely for clues about the broader market.
"We're watching the financial stocks very closely," Krosby says. "We don't want to see the best of breed sell off."
Analysts have been watching the yield curve—specifically, the gap between yields on the 10-year and 2-year Treasury notes—and drawing caution about what it might portend for the sector. A wide spread generally means good things for the group, but a narrowing spread, as has been happening lately, could be a sign of trouble.
5. Everything Else
Geopolitics, commodity prices, dollar moves—they're all in the mix as well as the world endures a tumultuous time of saber rattling in the Mideast, declining faith in the US currency and a health care battle at home.
"The news is still really bad, so I'm looking for a reaction in October," Boyle says. "However, there's enough money on the sidelines and these big hedge-funds are throwing these programmed buy trades in. We see a lot of business controlled by programmed trades."
Of course, that can cut both ways, as the market has found out the hard way in the 18 months preceding the March rally.
Fear is still a strong ingredient in this market environment.
"I'm in the skeptic crowd," Art Cashin, director of floor operations at UBS, told CNBC. "I think it's going to be tough for the economy to live up to the hope and hype that we've seen in some of these stocks."
Former Moody's Exec Warned SEC About Bond Ratings
The former head of compliance for Moody's voiced concerns to regulators about the credit rating agency's lack of surveillance of municipal securities, according to a document obtained by Reuters Tuesday.
Scott McCleskey, who is scheduled to testify on Wednesday at a U.S. House Oversight and Government Reform Committee hearing, said some high profile issuers such as New York City received periodic reviews, but the vast majority of municipal bond issuers were hardly reviewed.
"I feel that in the current economic environment this failure could have far-reaching systemic consequences,'' McCleskey said in a March 2009 letter to the U.S. Securities and Exchange Commission. A copy of the letter was obtained by Reuters.
McCleskey said he was Moody's [MCO 20.81 2.04 (+10.87%) ] head of compliance until last September. While in that role, McCleskey said he became aware that virtually no surveillance was being performed on debt issued by states, counties and municipalities.
In some cases, McCleskey said, bonds had not been reviewed for two decades since their original rating, "I raised concerns about this, stating that at a minimum we needed to characterize such ratings as 'point in time' ratings so that investors did not assume that the stale ratings were still current,'' the letter said. "My guidance was, to put it politely, ignored.''
In the letter, McCleskey urged the SEC to rigorously review Moody's and other credit rating agencies' surveillance of municipal bond ratings.
Another former Moody's executive, Eric Kolchinsky, is also scheduled to testify at the congressional hearing. Kolchinsky, a recently suspended managing director at Moody's, told Congress in testimony to be released on Wednesday that the firm's senior managers favor revenue over rating quality.
A representative from Moody's is also expected to testify at the hearing.
Commentary: Spending Stimulus to Track Stimulus
Where is the stimulus money going?
Well, almost $10 million of it went toward revamping the Web site that monitors the spending. That's right. The government spending money on how it monitors how it spends money. I know — a headache.
But in the era of "transparency", the Obama administration looks at it as a vital upgrade. Is it an actual upgrade?
Check out Recovery.gov and decide for yourself. It will still make your head spin with the massive scope of data available, but at least there's a "feeling" that it's all there.
Some things to consider in case you want a quick primer before your procrastination-to-work ratio goes through the roof:
— Be sure your computer is up to the task. The mapping elements are interesting, dynamic and informative, but if you don't have the download speed, it'll be frustrating.
— You should absolutely take a look at the map that allows you to view stimulus information in your area. You can actually put in a zip code, and it takes you right there. In fact, it has a Google Maps-type function where you can literally zoom in to the specific location.
—There is a "Download Center", where you can get some help parsing through all the data. It allows you to isolate certain departments to see all the reports done as of today.
— Go back in two weeks and again in four. As recipients of funding report back to the government, the site should be updating with that information. It will be a definite test, both for the Recovery Act itself and for the system of reporting it.
Keep in mind that if you really want to learn what's going on, you have to have time and patience. The Web site, despite improvements, can easily make your eyes gloss over. There are just too many zeroes in 787,000,000.00.
Also, be prepared for several references to "transparency". The government is going to great lengths to try and account for everything. The quotation marks more than imply a little cynicism here, but in defense of recovery.gov, it's a difficult job, tracking thousands of contracts and projects.
If you want more of a third-party perspective — if you view journalists as better government watchdogs than the government itself — here are a few stories from across the country that we at CNBC.com found notable, some with tongue firmly planted in cheek.
Texas, of course, is a huge state. However, there have been a lot of reports that it isn't receiving much funding. According to this report, if you adjust for population, 48 states have received more grant money from the Recovery Act.
We at CNBC are keeping a close eye on money spent to clean up contamination. There is a billion-dollar project in South Carolina that we are working to do a story on, but here is one from Minnesota. A good portion of it involves converting contaminated property into industrial or commercial real estate.
San Antonio International Airport is getting 14-million to improve its system for checking bags.
In Maine, some fisherman will get stimulus money to replace their old diesel engines.
In terms of accountability, October is a huge month. The government will be gathering and releasing data on recipient contracts, and with the new fiscal year, a new round of spending is set to begin.
Panasonic wins conditional EU approval to buy Sanyo
Japanese electronics giant Panasonic won approval on Tuesday from the European Union (EU) to buy its rival Sanyo Electric on condition that it sells certain battery production facilities in Europe.
The European Commission, the EU's competition guardian, said after Panasonic pledged to divest certain battery production facilities in markets where competition concerns were identified, it concluded that the operation would not significantly impede effective competition.
"In view of the remedies offered, I am satisfied that competition will remain vigorous after the merger and that purchasers of batteries will continue to benefit from choice and competitive prices," said Competition Commissioner Neelie Kroes.
Both Sanyo and Panasonic are diversified industrial groups.
Panasonic is primarily active worldwide in the development, manufacture, and sale of a wide range of audiovisual and communication products, home appliances, electronic components and devices including batteries and industrial products.
Sanyo is primarily active worldwide in the development, manufacture, and sale of consumer products, commercial equipment, electronic components including batteries and industrial logistics and maintenance equipment.
The commission's investigation identified competition concerns in a number of battery markets where the merged entity would have a significant market share.
Panasonic and Sanyo agreed to the merger deal in December 2008, which is worth 9 billion U.S. dollars and would create one of the world's biggest electronics makers.
U.S. Federal Reserve launches new credit card rules
The U.S. Federal Reserve (Fed) Board on Tuesday proposed new rules to protect consumers who use credit cards from a number of potentially costly practices.
"This proposal is another step forward in the Federal Reserve's efforts to ensure that consumers who rely on credit cards are treated fairly," said Federal Reserve Governor Elizabeth A. Duke. "The rule bans several harmful practices and requires greater transparency in the disclosure of the terms and conditions of credit card accounts."
The proposal, issued for public comment, represents part of the Fed's implementation of the Credit Card Act, which was signed into law by President Barack Obama in May.
Among other things, the proposed rule would protect consumers from unexpected increases in credit card interest rates by generally prohibiting increases in a rate during the first year after an account is opened and increases in a rate that applies to an existing credit card balance.
It will prohibit creditors from issuing a credit card to a consumer who is under the age of 21 unless the consumer has the ability to make the required payments or obtains the signature of a parent or other cosigner with the ability to do so.
The proposal will require creditors to obtain a consumer's consent before charging fees for transactions that exceed the credit limit. It limits the high fees associated with subprime credit cards.
The new rules will also ban creditors from using the "two-cycle" billing method to impose interest charges and prohibit creditors from allocating payments in ways that maximize interest charges.
In December 2008, the Federal Reserve adopted final regulations prohibiting unfair credit card practices and improving the disclosures consumers receive in connection with credit card accounts. This proposal would amend aspects of those regulations to incorporate provisions of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit Card Act), which was enacted in May 2009.
The proposed rule represents the second stage of the Federal Reserve's implementation of the Credit Card Act.
On July 15, 2009, the Board issued an interim final rule implementing the provisions of the Credit Card Act that went into effect on Aug. 20, 2009. The proposed rule would implement the provisions that go into effect on Feb. 22, 2010. The remaining provisions of the Credit Card Act go into effect on Aug. 22, 2010, and will be implemented by the Federal Reserve at a later date.
French leading bank to repay governmental aid early
BNP Parisbas, France's leading bank announced Tuesday that it will reimburse bailout funds to the government months earlier than scheduled.
The banking group will launch a 4.3 billion euros (about 6.28 billion U.S. dollars) right issue from October to pay back a governmental aid of 5.1 billion euros underwritten on March 31 and will reward the state 226 million euros as interests calculated over seven months, the company said.
Improved marketing performance ameliorates the prospect and profits, Paribas said.
The previously estimated repay action will not be seen as early as 2010, according to local media.
Welcoming the reimbursement news, Paribas shares lead a rise of financials in Paris' CAC40 index, showing a gain of 2.35 percent to 57.9 euros at the closing. ( 1 U.S. dollar = 0.6847 euros)
Japan's industrial output climbs for a sixth month
Japan's industrial production index rose for a sixth month in a row by a seasonally-adjusted 1.8% in August, government data showed Wednesday, and companies surveyed by the Ministry of Economy, Trade and Industry said they expect further increases in the months ahead.
The result came in below the 2.0% on-month gain expected by economists polled in a Dow Jones Newswires and Nikkei survey. The output index stood at a seasonally-adjusted 84.1 in August, down 18.7% from the previous year, data showed.
Strength in the steel and iron, transport equipment and electronic parts and devices industries contributed to the increase, the government data showed. Cellular telephones, semiconductor products machinery and small passenger cars were also among the commodities that played a part in the rise.
"Fortunately for this data, there remains significant interest in Japanese brand autos in the U.S. -- something that will persist even without the Cash for Clunkers system," said Richard Hastings, a consumer strategist at Global Hunter Securities.
"We would be a bit more concerned about the contribution from cell phones since this is a lower-priced item despite its high markups," said Hastings. "What is needed here is not just more shipments and external demand, but more demand for higher-priced products."
Hastings said he's also concerned about Japan's exports to China and "how these could be converted into other products for export from China, since China's trade activity with Japan, in August, was certainly healthier than was Japan's with the U.S."
The data showed that industrial shipments were up 1.0% in August from July, while inventories were unchanged.
Looking further ahead, companies surveyed by the government expect to see industrial production increase of 1.1% in September and 2.2% in October.
Plosser Says Fed Will Need to Avert 'Great Inflation'
Federal Reserve Bank of Philadelphia President Charles Plosser said the central bank should tighten credit "promptly" when necessary to avert a recurrence of the high U.S. inflation during the 1970s.
"Our credibility depends on it," Plosser said today in a speech at Lafayette College in Easton, Pennsylvania. "We recognize the costs that significantly higher inflation and the ensuing loss of credibility will impose on the economy if we fail to act promptly, and perhaps aggressively, when the time comes to do so."
Determining how quickly to move is "high on my list of priorities," Plosser said. Policy makers unanimously decided on Sept. 23 to keep the benchmark interest rate near zero and repeated that rates will stay low for an "extended period." The Fed also committed to complete its $1.25 trillion in purchases of mortgage securities and extended the end-date of the program to March from December.
The Fed must "take the necessary steps to prevent a second Great Inflation" and may need to act "well before unemployment rates and other measures of resource utilization have returned to acceptable levels," Plosser said at an economic forum hosted by Lafayette. He doesn't vote on Federal Open Market Committee decisions this year.
'Eerily Similar'
The attributes of the economy "pose an eerily similar set of conditions to those in the mid-1970s," said Plosser, who's known for one of the toughest stances against inflation at the central bank. In his first major speech as a policy maker in 2006, he said interest rates at the time may need to be increased in the "best interests" of the U.S. economy over the long run. The Fed has since lowered its main rate almost to zero from 5.25 percent.
Answering reporters' questions after the speech, Plosser said officials "need to be prepared" for the possibility they will have to raise interest rates in steps of 0.50 or 0.75 percentage point, as policy makers did when they cut rates. "That's going to depend on the circumstances," he said.
Paul Volcker became Fed chairman in 1979 and pushed the federal funds rate to as high as 20 percent to throttle inflation in 1980. The inflation rate, as measured by the consumer price index, rose to 14.8 percent in 1980 from 4.9 percent in 1976.
The central bank paid a "steep" price in the form of the 1981-82 recession to defeat inflation and regain credibility, Plosser said.
Raising Rates
Plosser joins other Fed officials who are arguing for raising interest rates potentially as fast as the Fed lowered them in 2007 and 2008.
Dallas Fed President Richard Fisher said today in a speech that "when it comes time to tighten monetary policy, my colleagues and I will move with an alacrity that, if needed, will be equal in speed and intensity to that with which we pursued monetary accommodation."
Fed Governor Kevin Warsh said last week the central bank may need to raise interest rates with "greater force" than it has in the past to keep inflation in check.
Responding to audience questions after the speech, Plosser said the U.S. dollar is currently "weak," while "not as weak as it's sometimes portrayed." The dollar is unlikely to lose its status soon as the world's main reserve currency, he said.
Plosser, 61, a former professor and business-school dean at the University of Rochester in New York, voiced support for the Fed's 12-district-bank structure and for keeping its policy decisions isolated from politics.
Right Number
Some lawmakers have discussed the idea of subjecting the appointment of district-bank presidents such as Plosser to Senate confirmation. The Senate passed a resolution in April calling for a review of the "appropriate number" of Fed banks.
"Research and history have shown that central banks that do not have independence from short-term political influences in the conduct of monetary policy tend to produce higher inflation rates and lower economic performance," Plosser said.
Plosser said there are signs the U.S. economy "is turning a corner and prospects for a return to growth are increasing," echoing assessments by other Fed officials that the worst contraction since the Great Depression ended in recent months.
Chairman Ben S. Bernanke said earlier this month that "even though from a technical perspective the recession is very likely over at this point, it's still going to feel like a very weak economy for some time."
'Settle Down'
Plosser said his forecast for second-half economic growth is "similar" to the 2.3 percent from the Philadelphia Fed's Survey of Professional Forecasters. He predicted growth will increase to about 3 percent in 2010 and "settle down to a long- term trend rate of about 2.7 percent in 2011."
Fed officials in June predicted that gross domestic product will expand 2.1 percent to 3.3 percent next year after shrinking 1.5 percent to 1 percent this year, according to the central tendency of their forecasts.
The U.S. jobless rate will "continue to creep up for a little while longer" from its August level of 9.7 percent, and will fall "only well after the economy begins to recover" because it's a lagging indicator, Plosser said.
Plosser said the inflation outlook "remains subdued" and that he sees "little risk of inflation in the near term." At the same time, he foresees "greater risk of higher inflation in the intermediate to long term" because of the Fed's "extremely accommodative," or economy-stimulating, monetary policy.
May Pick Up
Inflation may pick up in the second half of 2010, Plosser told reporters. "That's when I'll be watching," he said. "It's not the near term I'm really worried about."
Also, Plosser said he puts less stock than "many other economists do" in the notion that economic slack can reliably predict inflation. That compares with the Fed's statement last week, which said the weakness in the economy is "likely to continue to dampen cost pressures" and keep inflation "subdued for some time." Public expectations for price trends are "stable," the FOMC said.
One "key element of the improving outlook" is the housing market, with sales and construction starts increasing over the past six months, Plosser said.
INVESTMENT VIEW
INVESTMENT VIEW
Noida Medicare Limited-Adding A Smile To Your Life
BSE 523670, CMP Rs 17.78
As if by stealth two medicare hubs are coming up in satellite cities of New Delhi-Noida and Gurgaon. While the emerging chains of Max and Fortis have emerged as powerful forces in the field of private medicare, there are select isolated but equally important players around.
One I referred to last week was the Apollo Tyres owned 500 bed Artemis which is based in Gurgaon. Another with 128 beds in operation is the Noida Medicare Centre, based in Sector 30 Noida.
Now in it's 20th year of operations, NMC has had a steady climb up amongst institutions with credible healthcare. Till the time Escorts Heart Institute got acquired by Fortis, NMC was a referral centre for EHIRC, with both management and administrative support coming through.
What sets Noida Medicare apart from most of the newer groups is the apparent under-valuation. With an Equity of Rs 9.4 crore and a CMP of Rs 17.78, the hospital sells for roughly Rs 17 crore. This when the corporate generates Revenues of Rs 25 crore per annum and after tax profits of Rs 2.2 crore.
As a thumb rule new private super-speciality hospitals incur close to Rs 7 mn per bed to be set up. Replacement cost for NMC should work out to Rs 84 crore by that logic. The other benchmark is to value private hospitals at 10 times latest EBITDA, which again would place NMC's value substantially higher than the current market cap of Rs 17 crore.
In a country virtually devoid of credible healthcare, and just one hospital bed amongst 10,000 people, there is no way the GOI or even the entire private sector can put together this gap in the decades to come. What investors can hope and wish is that they find quality doctors who can provide the required medicare at affordable levels.
Here NMC promoters seem to be doing their bit. Last October they took up 50 lakh warrants at Rs 13.50 per share to increase Equity of NMC. In addition, they have expanded into the setting up of NMC Hospitals, NMC Heart centre, NMC Imaging & Diagnostics centre as also the Rancan Gamma Knife Centre-the latter being the only facility of it's kind in the country.
Looking at what NMC is doing and rather thin access to medicare, the future for such hospitals is endless. A back ground note is attached below for investors to make up their mind about the corporate.
Noida Medicare Centre (NMC) Ltd. was born on 27 April 1990 with the setting up of a 68 bedded first multi-specialty Corporate Hospital in U. P., having the only whole body CT Scan in NOIDA at that time. It has grown to be a 120 bedded centrally air-conditioned multi-superspeciality Hospital comparable to the international standards.
NMC Hospital with 20 years of unparalleled experience in the medical field, is backed by specialist doctors, physicians and consultants; and ultramodern investigational support. It has exclusive facilities for all major medical disciplines, including:-
Renal Transplant, Urology, Nephrology & Dialysis
Interventional Cardiology & Cardiothoracic Surgery
Advanced Orthopaedics including Joint Replacement
Medical, Surgical & Interventional Oncology
Neurosciences & Trauma Centre
Burns, Cosmetic & Reconstructive Surgery
Minimally Invasive Laparoscopic Surgery
Highly specialised Gastroenterology & Hepatology Unit
Advanced Obst. & Gynaecology Unit with LDR facility
Advanced Paediatrics & Neonatal Unit
Ultramodern Surgery-Cum-Trauma Centre
ENT, Eye, Dental Surgery
Advanced ICU, OT and Emergency Care
State-of-the-art imaging & diagnostic services
NMC is the first hospital in the State of U.P. to have the distinction of being granted official recognition in 1998, by Government of Uttar Pradesh to carry out kidney transplantation. The Hospital has successfully performed more than 300 renal transplants and over 15000 dialysis.
The pursuit for excellence comprises uncompromised commitment to provide prompt, correct, effective and responsive healthcare to all.
(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)
FUNDS DATA
| FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| FII | 29-Sep-2009 | 3360.48 | 2645.98 | 714.5 |
| DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| DII | 29-Sep-2009 | 1151.69 | 1059.92 | 91.77 |
SPOT LEVELS TODAY
 | 5006.85 | ( 0.97 %) | 47.90 |  |
| 1 | 2 | 3 | ||
| Resistance | 5031.70 | 5056.55 | 5092.85 | |
| Support | 4970.55 | 4934.25 | 4909.40 | |
 | 16852.91 | ( 0.96 %) | 159.91 | | |
| 1 | 2 | 3 | |||
| Resistance | 16906.23 | 16959.56 | 17011.27 | ||
| Support | 16801.19 | 16749.48 | 16696.15 | ||
--
Arvind Parekh
+ 91 98432 32381
