* US: Dow Futures: 12850.00 (0.48%), S&P 500 Futures: 1373.00 (0.59%), NASDAQ Futures: 2707.00 (0.50%)
Seth Klarman: Investors Can No Longer Rely On Mean Reversion
"For most of the last century," Seth Klarman noted in his second-quarter letter to Baupost's investors, "a reasonable approach to assessing a company's future prospects was to expect mean reversion." He went on to explain that fluctuations in business performance were largely cyclical, and investors could profit from this buying low and selling high. Also Read More
* Europe: CAC: 3213.07 (0.75%), DAX: 6618.11 (0.52%), FTSE: 5682.58 (0.54%).
* Asia-Pacific: Australia: 4302.33 (-0.49%), China: 2357.03 (-0.09%), Hong Kong: 20610.64 (-0.44%), India: 5226.20 (0.36%), Japan: 9470.64 (-1.77%).
* Metals: Gold: 1648.20 (-0.72%), Silver: 31.45 (0.19%), Copper: 3.62 (-0.32%)
* Energy: Crude Oil: 102.53 (-0.29%), Natural Gas: 1.98 (0.15%)
* Commodities: Corn: 6.12 (-1.75%), Soya Bean: 13.51 (-0.57%), Wheat: 6.23 (-2.21%)
* Currency: EUR/USD: 1.3048 (0.22%), GBP/USD: 1.5838 (0.12%), USD/JPY: 80.8150 (-0.12%)
* 10 year US Treasury: 1.993% (0.011)
Financial and Economic News Update
U.S. stock-index futures trading higher: U.S. stock index futures are pointing to a higher open on Monday, as retail sales climbed more than forecast in March. The Dow Jones industrial average, S&P 500 and NASDAQ futures were trading around half a percent higher.
U.S. retail sales rise in March: U.S. retail sales increased at a robust pace last month, as a healthier job market spurred consumers to spend more. The Commerce Department said today, retail sales climbed 0.8 percent in March. Economists were expecting retail sales to rise by 0.4 percent.
European markets trading lower: European markets rebounded from four consecutive weeks of losses as a better than expected start to the U.S. earnings season revived investor confidence; but persistent worries about Spanish debt has been successful in
capping the upside for the moment. The German DAX (INDEXDB:DAX), the FTSE 100 (INDEXFTSE:UKX) and the CAC 40 (INDEXEURO:PX1) were all showing gains of more than half a percent.
Spanish bond yields jump to four month high: Spanish 10-year government bond yields jumped to a four-month high, breaking above 6 percent, after Jaime Garcia-Legaz, the Spanish deputy minister in the Economy Ministry called on the European Central Bank to buy its debt and stem the financial-market crisis. Spain will auction two and ten year bonds on Thursday, April 19.
Asian markets end lower: Asian markets closed lower on Monday on renewed concerns about Europe’s sovereign debt crisis following a jump in Spanish borrowing costs. The NIKKEI 225 (INDEXNIKKEI:NI225) gave up 1.7 percent, falling below the key psychological level of 9,500 The Shanghai Composite Index (SHA:000001) slipped from its three week highs, while the HANG SENG INDEX (INDEXHANGSENG:HSI) ended down 0.44 percent.
Inflation in India slows less than forecast in March: India’s headline inflation slowed less than estimated in March as food and fuel prices continued to remain high. The wholesale price index (WPI) advanced 6.89 percent from a year earlier, higher than the 6.70 percent rise estimated by analysts.
Company News Update
- The country’s third biggest bank, Citigroup Inc. (NYSE:C), reported first quarter earnings of $1.11 that was better than analyst expectations of $1 per share, but revenue fell to $19.4 billion from $19.73 billion a year ago.
- Mattel, Inc. (NASDAQ:MAT), the maker of Barbie dolls reported first-quarter sales of $928.4 million, which was lower than the average analyst estimate of $984.7 million.
- The Procter & Gamble Company (NYSE:PG), the world’s largest consumer products company, will raise its quarterly dividend by 7 percent from 52.5 cent to 56.2 cents a share.
- Texas Instruments Incorporated (NASDAQ:TXN) will replace First Solar Inc. (FSLR) in the Nasdaq-100 Index before the start of trading on April 23, Nasdaq OMX Group Inc. said in a statement.
- Nokia Corporation (ADR) (NYSE:NOK) was downgraded to one notch above junk, by credit rating agency Moody’s, which cited poor prospects for future sales.
- Caterpillar Inc. (NYSE:CAT) was upgraded to “buy” from “neutral” at Bank of America Corp., citing attractive valuation and solid fundamentals.
- French energy giant GDF Suez SA (EPA:GSZ) has agreed to buy the 30 percent of British utility International Power plc (LON:IPR) that it does not already own for 6.4 billion pounds ($10 billion), to expand in fast growing emerging markets like Asia and Latin America. .
- Pernod Ricard SA (EPA:RI), France’s biggest distiller, was upgraded to “buy” at Morgan Stanley, citing a recent sell off in the shares.
- Credit Suisse Group AG (ADR) (NYSE:CS), Switzerland’s second-biggest lender, may announce the loss of up to 5,000 jobs in its investment banking division at its forthcoming first-quarter results, Swiss newspaper Der Sonntag reported on Sunday, citing an unidentified high-ranking executive.
- Danish daily Jyllands-Posten today reported two Chinese competitors were considering bidding for Vestas Wind Systems A/S (VWS), the world’s biggest wind turbine maker.
- Swedish retailer, Hennes & Mauritz AB, said March total sales rose 26 percent, the biggest rise in monthly sales for almost five years, with comparable sales increasing 16 percent due to favorable weather conditions.
- Arnold Maersk Mc-Kinney Moeller, the owner of Danish shipping and oil conglomerate, A.P. Moller-Maersk A/S died at the age of 98.
- Japanese electronics manufacturer Sharp Corporation (TYO:6753) has begun producing the world’s first high performance liquid crystal display panels based on indium gallium zinc oxide (IGZO) technology, which analysts say could give it an edge over its competitors.
- Apparel maker TSI Holdings Co Ltd (TYO:3608) plunged 11 percent in Tokyo trading after reporting a 27.2 billion yen loss for the year ended February 2012. The company also forecast a loss of 3.3 billion yen ($41 million) for the year ending February 2013.
- Goldman Sachs Group, Inc. (NYSE:GS) sold $2.5 billion worth of shares in Industrial & Commercial Bank of China (HKG:1398), in line with its plan to reduce its stake in the bank. Goldman Sachs sold the stake at 3.1 percent discount to Friday’s closing price of ICBC shares. Singapore state owned investment company Temasek Holdings bought $2.3 billion worth of those shares, giving it a 5.3 percent stake in ICBC.
- China’s biggest train maker, CSR Corp Ltd (HKG:1766) said it is actively pursuing deals in Europe, North America and Australia, in an effort to add new technology and reduce dependence on domestic sales.
- Shareholders have approved a friendly $5.1 billion takeover of Aston Resources Ltd (ASX:AZT) by Whitehaven Coal Limited (ASX:WHC), which will create Australia’s largest listed independent coal company.
- Brisbane-based coal gasification company Linc Energy Ltd (ASX:LNC) announced a joint venture with Hong Kong’s Golden Concord to produce gas in China.
- Economic Calendar for Monday, April 16, 2012:
- 08:30 A.M. ET: Retail Sales (MoM) (March)
08:30 A.M. ET: Retail Sales ex Autos (MoM) (March)
08:30 A.M. ET: Empire State Mfg Survey (April)
09:00 A.M. ET: Net Long-Term Treasury International Capital Flows (February)
10:00 A.M. ET: Business Inventories (February)
10:00 A.M. ET: NAHB Housing Market Index (April)
11:00 A.M. ET: 4-Week Bill Announcement
11:30 A.M. ET: 3-Month Bill Auction
11:30 A.M. ET: 6-Month Bill Auction
03:30 P.M. ET: St. Louis Federal Reserve Bank President James Bullard speaks.