Bulk of MF Global London fuel oil team quit -industry sources

July 23, 2010 By Leave a Comment

July 22 (Reuters) – Futures broker MF Global Holdings (MF.N) has lost eight brokers from their nine-man London fuel oil swaps broking desk, two industry sources said on Thursday.

The eight brokers resigned earlier this month, and are currently serving out their “garden leave”, an industry source told Reuters.

The remaining member of the team will be leaving soon, the sources added. A spokeswoman for the company in London declined comment on the departures.

“We can only confirm that the London fuel oil desk is still operating,” she said when asked if MF Global will close its fuel oil desk in London. (Editing by Ramthan Hussain)

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Instant view: Intel profit and sales beat estimates

July 15, 2010 By Leave a Comment

(Reuters) – Intel Corp (INTC.O), the world’s biggest microchip maker, handily beat second-quarter sales and profit estimates and forecast third-quarter sales well ahead of Wall Street’s consensus.

The upbeat numbers from the first major U.S. technology company to report this quarter suggest that global demand for PCs and servers is continuing to recover after last year’s belt-tightening.

Shares of the company rose 6.5 percent in after-hours trading.

Following are initial reactions of analysts and investors:

PHANI SARIPELLA, SENIOR ANALYST, PRIMARY GLOBAL RESEARCH

“The numbers just blew me away, I cannot see any mention of any problems whatsoever.”

“It’s as if Europe just never happened as far as Intel is concerned. No mention of Europe, their numbers are at the high end of demand, their margins, it’s like they’re printing dollar bills there.”

“The one thing about Intel shares is in spite of their numbers driving it up, it tends to sort of work itself up to $24-ish or so and then just fall right back as the economy affects it.”

“I expect the same to happen. I would be surprised if it reached significantly north of $25. Because they still have to overcome a huge share count.”

NICK KALIVAS, VICE PRESIDENT OF FINANCIAL RESEARCH & SENIOR

EQUITY INDEX ANALYST, MF GLOBAL

“It’s pretty much a blow out. I think it’s reminding the market that basically stocks are too cheap; the market was trading Intel at a pretty compressed multiple.”

“The fact that they are raising capital spending is confirming this idea that capacity is tight and there’s some pretty good momentum and I think it’s squeezing more buyers into the market. It’s going to be a data point that causes people to flip from probably extreme pessimism to extreme optimism.”

JOHN MASSEY, PORTFOLIO MANAGER AT SUNAMERICA ASSET

MANAGEMENT

“Demand was stronger than many people anticipated, the Street was concerned corporate spending would be restrained with what’s happened in Europe and that wasn’t the case.”

“The real thing that got the Street going was the gross margin guidance, which they raised. It shows a lot of confidence that the company has for the back half of the year. If the company was at all concerned about demand, you wouldn’t have expected them to raise that number.”

“Tech spending was a little more healthy than expected, on the server side and consumer side. We’ve seen companies start to loosen up refresh cycle budgets and expand, and that’s a sign things are continuing to expand despite concerns in Europe.”

EDWARD SNYDER, ANALYST, CHARTER EQUITY RESEARCH

“In a quarter where people expected relatively strong performance, they beat that pretty handily and set a good forecast. They seem unaffected by the negativity that’s impacting equities.”

“This going to be really good for a lot of other tech companies, particularly enterprise.”

“It might be the case that this earnings period is so strong that it allays some of the fears about the broader economy.”

CRAIG ELLIS, ANALYST, CARIS & CO

“Once again gross margins were incredibly strong, showing the benefit of the operational improvements that the company has made over the last few years, plus a good product mix and a strong manufacturing performance.”

“It’s another indication that some of the very positive server data points that you’ve been hearing year to date, and some of the constructive enterprise spending data points, are seeing good validation from Intel.”

TRIP CHOWDHRY, ANALYST, GLOBAL EQUITIES RESEARCH

“They beat on the top line, they beat on the bottom line, the gross margin is through the roof. It couldn’t be better. I think Intel is very under priced. And the key reason everybody missed on it is — as they’ve been talking about for eight months — cloud infrastructure is just started.”

“When we speak to our contacts who are IT purchasers and IT suppliers, we are not seeing any slowdown. Because Europe and Asia are investing in technology.”

PATRICK WANG, ANALYST, WEDBUSH SECURITIES

“Either the investor community has massively under-calculated what worldwide demand is or Intel is too optimistic here.”

“I think it’s too early to call second-half demand so far because obviously Intel is the first one to report, but obviously earnings are off to a very bullish start.”

HENDI SUSANTO, ANALYST, GABELLI & CO

“There’s still consumer demand in growing markets. There could be potential upsides coming from corporate IT renewals.”

DOUG FREEDMAN, GLEACHER & CO

“Very strong mix in product revenues and very strong revenues. People were very focused on the PC client group while the data center group — driven by new product introduction — was what helped lift revenues.”

“Corporate spending for large server farms was much stronger than people had expected.”

(Reporting by Alex Dobuzinskis, Carolina Madrid, Gabriel Madway, Edward Krudy and Matthew Lynley)

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BUY OR SELL-BP partner Mitsui; sick or slick?

June 12, 2010 By Leave a Comment

TOKYO, June 11 (Reuters) – A slump in shares of BP (BP.L) and Anadarko Petroleum (APC.N) over the Gulf of Mexico oil spill [ID:nN10265259] has knocked 30 percent off the market value of Japan’s Mitsui & Co (8031.T), an indirect investor in the project, taking it below the company’s break-up value.

Spooked by uncertainties over the ultimate liability costs for Mitsui, which effectively owns 7 percent of the seabed oil well through a subsidiary, pension and long-term funds are unloading the stock.

But some say market estimates of the potential clean-up and compensation costs are overblown, and recent volatility provides an attractive entry point for bargain hunters.

ALREADY DISCOUNTED?

“The impact of the liability cost has been more than compensated for in the current share price,” said Takashi Aoki, vice president at Mizuho Asset Management.

“There may be short-term volatility, but the stock is now seen as a long-term buy.”

Mitsui shares trade at just under 0.9 times estimated book value, or 10 percent below the break-up value. At a recent 2007 peak, it traded above 2 times book.

The share price fall is a sign the market has factored in a loss of up to 500 billion yen ($5.5 billion) in terms of Mitsui’s liability in the Gulf of Mexico disaster, said Yasuhiro Narita, an analyst at Nomura Securities. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For Graphic on Mitsui, BP shares: here

For Starmine comparative data: r.reuters.com/xez29k

For coverage of oil spill: link.reuters.com/hed87k

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

That assumes total costs for all project participants from the spill will be around 7 trillion yen ($77 billion), more than double the $37 billion forecast by Credit Suisse. [ID:nLDE6511P3]

Others note that Mitsui’s underlying business — it’s a big investor in iron ore mines — is solid.

The company sees net profit doubling to 320 billion yen ($3.5 billion) in the year to next March, and analysts expect it to top that as iron ore prices are more than a third above Mitsui’s assumed price of $106 a tonne.

LIABILITY WORRIES

Ben Wedmore, director of equity research at MF Global FXA Securities, said investors may continue to react negatively to media reports about the oil spill, even if the actual cost to Mitsui might not be as large as some fear.

He pointed to a Mongolian bribery scandal that weighed on Mitsui’s stock in 2002.

“That wasn’t a very serious story and was a very unserious amount of money. But the stock drifted all summer on the back of it, so even if one thinks that fundamentally the stories are not very material, you have to take the sentiment seriously,” he said.

“I’m not banging the table to make people buy the stock, but I’m certainly doing my best to educate them on what the legal situation is.”

BP and Mitsui Oil Exploration Co, 70 percent-owned by Mitsui & Co, have refused to give any details on the indemnification of its partners under their Joint Operating Agreement.

BP, which owns 65 percent of the leaking well, its partners Anadarko, with a 25 percent stake, and Mitsui are legally liable for the clean-up on the basis of their shareholdings. BP has said it would undertake to cover all damages. [ID:nLDE6511P3]

“There’s talk about huge amounts of money and worries about what impact this might have on earnings,” Fujio Ando, senior managing director at Chibagin Asset Management. (Additional reporting by Elaine Lies; Editing by Valerie Lee)

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Strong stocks face earnings test

April 12, 2010 By Leave a Comment

(Reuters) – U.S. stock investors will watch the earnings numbers flow in this week to see how much momentum the rally can get from early profit reports.

The first-quarter figures come as the three major U.S. stock indexes finished a sixth straight week of gains, the best string since the rebound from 12 1/2-year lows in March 2009, and the Dow briefly popped above 11,000 late on Friday.

Those gains could make it tough for stocks to rally further, even with expectations, according to Thomson Reuters, for Standard & Poor’s 500 .SPX companies’ first-quarter earnings to rise 36.8 percent from a year ago.

Other events likely to spark attention this week: Federal Reserve Chairman Ben Bernanke testifies on the economic outlook before the Joint Economic Committee, while a plan to resolve Greece’s debt crisis should boost indexes.

Euro zone finance ministers approved a 30 billion-euro ($40 billion) emergency aid mechanism for Greece on Sunday that could lift a big uncertainty hanging over global markets.

“It was one of the clouds that prevented the U.S. from breaking through to new highs, so lifting this barrier will be a big positive. We have a lot of money on the sidelines globally and this could be a big catalyst to bring some of that money in,” said Alan Lancz, president of investment advisory firm Alan B. Lancz & Associates Inc. in Toledo, Ohio.

The earnings period kicks off with results from Dow component Alcoa Inc (AA.N) after the bell on Monday.

Besides Alcoa, results are expected this week from top tech companies Intel (INTC.O) and Google (GOOG.O), as well as from General Electric (GE.N) and JPMorgan Chase & Co (JPM.N).

“The reaction to some of these earnings is going to be really important. If you don’t get the setback, and it trades higher, I think you’re going to squeeze another wave of buyers into the market,” said Nick Kalivas, vice president of financial research and senior equity index analyst, at MF Global in Chicago.

While earnings are expected to be the focus, the week also brings the Consumer Price Index, March retail sales, industrial production, housing starts and consumer sentiment reports, which will help investors gauge the speed of the economic recovery.

RALLY MAY RUN INTO RESISTANCE

For the past week, the Dow Jones industrial average .DJI rose 0.6 percent, the S&P 500 gained 1.4 percent and the Nasdaq .IXIC increased 2.1 percent.

“The stock market has had a very significant rise off the (February) lows,” said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

“I wouldn’t be surprised to see some near-term pullback within the context of a rising stock market,” he said.

Much stronger-than-expected earnings have helped propel the S&P 500 more than 75 percent from the March 9, 2009, closing lows. But in the last earnings season, stocks actually lost about 3 percent as investors sold equities despite strong results.

Some 72 percent of companies beat earnings estimates in the fourth quarter, down from a record 79 percent in the previous quarter, but still well above the 61 percent in a typical quarter, Thomson Reuters data showed.

Technical indicators pointed to overbought conditions heading into this week’s earnings, which could mean a pullback is in store, some analysts say.

“Short-term momentum for the Dow has been deteriorating since March 23 after reaching an overbought condition,” said Chris Burba, short-term market technician at Standard & Poor’s.

The Dow briefly rose just above 11,000 moments before Friday’s closing bell, but ended at 10,997.35, while the S&P 500 neared the 1,200 mark. Both levels represent technical resistance, Burba said.

FED CHAIRMAN, CPI AND RETAIL SALES

Bernanke is scheduled to speak on Wednesday to a congressional panel called the Joint Economic Committee. Although data continues to show economic improvement, the Fed has reiterated its commitment to keep benchmark interest rates near zero.

Also on Wednesday’s agenda: the U.S. Consumer Price Index and the government’s data on retail sales, both for March.

The overall CPI is pegged to rise 0.1 percent in March from a flat reading in February, while core CPI, excluding volatile food and energy prices, is also seen up 0.1 percent, matching the previous month’s gain, according to economists polled by Reuters.

Retail sales are forecast to rise 1.2 percent in March from the previous month, and minus autos, sales are expected to gain 0.5 percent from February, according to economists polled by Reuters.

Thursday’s industrial output is forecast to show a gain of 0.7 percent in March from the previous month.

March housing starts, due on Friday, are expected to rise to a seasonally adjusted annual pace of 610,000 from 575,000 in the previous month. Friday’s Thomson Reuters/University of Michigan Surveys of Consumers report is expected to show the preliminary index on consumer sentiment at 75 for April. The index ended March at 73.6.

(Reporting by Caroline Valetkevitch; Additional reporting by Leah Schnurr and Chris Sanders; Editing by Jan Paschal and Gunna Dickson)

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RPT-Wall St Week Ahead: Stocks face earnings after strong week

April 12, 2010 By Leave a Comment

NEW YORK, April 11 (Reuters) – U.S. stock investors will watch the earnings numbers flow in this week to see how much momentum the rally can get from early profit reports.

The first-quarter figures come as the three major U.S. stock indexes finished a sixth straight week of gains, the best string since the rebound from 12 1/2-year lows in March 2009, and the Dow briefly popped above 11,000 late on Friday.

Those gains could make it tough for stocks to rally further, even with expectations, according to Thomson Reuters, for Standard & Poor’s 500 .SPX companies’ first-quarter earnings to rise 36.8 percent from a year ago.

The earnings period kicks off with results from Dow component Alcoa Inc (AA.N) after the bell on Monday.

Besides Alcoa, results are expected this week from top tech companies Intel (INTC.O) and Google (GOOG.O), as well as from General Electric (GE.N) and JPMorgan Chase & Co (JPM.N).

“The reaction to some of these earnings is going to be really important. If you don’t get the setback, and it trades higher, I think you’re going to squeeze another wave of buyers into the market,” said Nick Kalivas, vice president of financial research and senior equity index analyst, at MF Global in Chicago.

While earnings are expected to be the focus, the week also brings the Consumer Price Index, March retail sales, industrial production, housing starts and consumer sentiment reports, which will help investors gauge the speed of the economic recovery.

Other events likely to spark attention this week: Federal Reserve Chairman Ben Bernanke testifies on the economic outlook before the Joint Economic Committee, while investors will watch for signs of change in Greece’s debt crisis.

On Friday, the Fitch credit rating agency downgraded Greek sovereign debt two notches to “BBB-”, leaving Greece’s debt just one grade above junk status.

RALLY MAY RUN INTO RESISTANCE

For the past week, the Dow Jones industrial average .DJI rose 0.6 percent, the S&P 500 gained 1.4 percent and the Nasdaq .IXIC increased 2.1 percent.

“The stock market has had a very significant rise off the (February) lows,” said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

“I wouldn’t be surprised to see some near-term pullback within the context of a rising stock market,” he said.

Much stronger-than-expected earnings have helped propel the S&P 500 more than 75 percent from the March 9, 2009, closing lows. But in the last earnings season, stocks actually lost about 3 percent as investors sold equities despite strong results.

Some 72 percent of companies beat earnings estimates in the fourth quarter, down from a record 79 percent in the previous quarter, but still well above the 61 percent in a typical quarter, Thomson Reuters data showed.

Technical indicators pointed to overbought conditions heading into this week’s earnings, which could mean a pullback is in store, some analysts say.

“Short-term momentum for the Dow has been deteriorating since March 23 after reaching an overbought condition,” said Chris Burba, short-term market technician at Standard & Poor’s.

The Dow briefly rose just above 11,000 moments before Friday’s closing bell, but ended at 10,997.35, while the S&P 500 neared the 1,200 mark. Both levels represent technical resistance, Burba said.

FED CHAIRMAN, CPI AND RETAIL SALES

Bernanke is scheduled to speak on Wednesday to a congressional panel called the Joint Economic Committee. Although data continues to show economic improvement, the Fed has reiterated its commitment to keep benchmark interest rates near zero.

Also on Wednesday’s agenda: the U.S. Consumer Price Index and the government’s data on retail sales, both for March.

The overall CPI is pegged to rise 0.1 percent in March from a flat reading in February, while core CPI, excluding volatile food and energy prices, is also seen up 0.1 percent, matching the previous month’s gain, according to economists polled by Reuters.

Retail sales are forecast to rise 1.2 percent in March from the previous month, and minus autos, sales are expected to gain 0.5 percent from February, according to economists polled by Reuters.

Thursday’s industrial output is forecast to show a gain of 0.7 percent in March from the previous month.

March housing starts, due on Friday, are expected to rise to a seasonally adjusted annual pace of 610,000 from 575,000 in the previous month. Friday’s Thomson Reuters/University of Michigan Surveys of Consumers report is expected to show the preliminary index on consumer sentiment at 75 for April. The index ended March at 73.6. (Wall St Week Ahead runs every Sunday. Questions or comments on this one can be e-mailed to: caroline.valetkevitch(at)thomsonreuters.com)

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Oil dips toward $52, U.S. jobs report weighs

April 5, 2009 By Leave a Comment

Oil dipped near $52 on Friday, having surged nearly 9 percent the previous day as a result of the G20 summit, as U.S. data showing the highest unemployment rate since 1983 dampened thoughts of a quick economic upturn.

The U.S. jobs data showed employers slashed 663,000 jobs in March. The figure lifted the unemployment rate to 8.5 percent but had a limited effect on oil prices as it was mostly in line with analysts’ forecasts.

“The jobs report was apparently priced in and was pretty much in line with expectations,” said Mike Fitzpatrick, vice president at MF Global in New York.

U.S. light crude for May delivery fell 52 cents to $52.12 a barrel by 1645 GMT, down from Thursday’s $4.25 gain that lifted the contract to $52.64.

London Brent crude was 2 cents up at $52.77.

WHERE NOW?

Oil made its largest one-day percentage gain in three weeks on Thursday as markets rallied after world leaders at the summit announced a trillion-dollar deal to act on the economic crisis.

Some market watchers said recent price rises in the crude market, in spite of low demand and heavy supply, were likely to be a sign investors were turning to investments seen as involving more risk, which can include oil.

“The last two weeks has been fairly encouraging,” said David Dugdale, a London-based energy analyst at MFC Global Investment Management.

“(U.S. Treasury Secretary Timothy) Geithner’s procedures for quantitative easing and yesterday’s G20 seem to have provided enough for the bulls to now move into risk assets.”

The dollar reversed earlier losses and rose against the euro on Friday as the U.S. jobs data dulled market optimism and enhanced the dollar’s safe haven status.

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Oil dips to around $52 as U.S. jobs report weigh

April 5, 2009 By Leave a Comment

Oil prices hovered above $52 a barrel on Friday, slightly lower on the day after a report that U.S. unemployment in March soared to a 25-year high.

But optimism that the economy will soon turn around curtailed losses. Crude had jumped nearly 9 percent on Thursday on hopes that G20 actions would spur an economic recovery.

U.S. light crude for May delivery settled at $52.51 a barrel, down 13 cents, but retained most of Thursday’s gain of $4.25 that lifted the contract to $52.64.

London Brent crude gained 48 cents to stand at $53.23 a barrel by 2:56 p.m. EST (1856 GMT).

“The oil market is struggling between hope and reality, much like what you also see in other markets,” said Andy Lebow, a broker at MF Global in New York. “The reality is that there is a dismal demand picture and so it is hard for oil to sustain gains.”

Oil moved down by around 1.44 percent after data came out showing U.S. employers slashed 663,000 jobs in March, lifting the unemployment rate to 8.5 percent, the highest since 1983.

“The jobs report was apparently priced in and was pretty much in line with expectations,” said Mike Fitzpatrick, vice president at MF Global in New York.

A stronger dollar also weighed on oil prices. The greenback firmed as rising U.S. jobs data dulled market optimism and enhanced the dollar’s safe haven status.

CHANGE FOR THE BETTER?

Despite Friday’s losses, some market optimism remained.

Oil made its largest one-day percentage gain in three weeks on Thursday as markets rallied after world leaders at the G20 summit announced a trillion-dollar deal to act on the economic crisis.

“The equities market is turning around here and the oil market is tracking it. The long side of the (oil) market has seen investments increase in February and March as a lot of participants think that things are changing for the better here,” said Gene McGillian, an analyst with Tradition Energy in Stamford, Connecticut.

“Yesterday’s rally was spurred by the financial side of the market. But there has been no substantial change in oil fundamentals and unless we see supplies come down and demand improve, it remains to be seen whether the upward trend we’ve seen lately could be sustained,” he said.

The Obama administration expects the economy to begin turning the corner by the end of the year with job growth coming some months after that, said Christina Romer, head of the White House Council of Economic Advisers.

U.S. factory orders rose in February for the first time in seven months, and a rebound in China’s official purchasing managers’ index (PMI) in March showed the Chinese economy may have bottomed, China’s chief statistics official said on Friday.

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Oil hovers around $52, U.S. jobs report weighs

April 5, 2009 By Leave a Comment

Oil prices slipped on Friday, hovering above $52 a barrel as a report that unemployment in March soared to a 25-year high weighed on prices.

However, optimism that the economy will soon turn around curtailed losses. Crude had jumped nearly 9 percent on Thursday on hopes that G20 actions would spur an economic recovery.

U.S. light crude for May delivery fell 44 cents to $52.00 a barrel by 1:23 p.m. EST (1723 GMT), down from Thursday’s $4.25 gain that lifted the contract to $52.64.

London Brent crude gained 8 cents to $52.83.

“The oil market is struggling between hope and reality, much like what you also see in other markets,” said Andy Lebow, a broker at MF Global in New York. “The reality is that there is a dismal demand picture and so it is hard for oil to sustain gains.”

Oil moved down by around 1.44 percent after data came out showing U.S. employers slashed 663,000 jobs in March, lifting the unemployment rate to 8.5 percent, the highest since 1983.

“The jobs report was apparently priced in and was pretty much in line with expectations,” said Mike Fitzpatrick, vice president at MF Global in New York.

A stronger dollar also weighed on oil prices. The greenback firmed as rising U.S. jobs data dulled market optimism and enhanced the dollar’s safe haven status.

CHANGE FOR THE BETTER?

Despite Friday’s losses, some market optimism remained.

Oil made its largest one-day percentage gain in three weeks on Thursday as markets rallied after world leaders at the G20 summit announced a trillion-dollar deal to act on the economic crisis.

“The equities market is turning around here and the oil market is tracking it. The long side of the (oil) market has seen investments increase in February and March as a lot of

participants think that things are changing for the better here,” said Gene McGillian, an analyst with Tradition Energy in Stamford, Connecticut.

“Yesterday’s rally was spurred by the financial side of the market. But there has been no substantial change in oil fundamentals and unless we see supplies come down and demand improve, it remains to be seen whether the upward trend we’ve seen lately could be sustained,” he said.

The Obama Administration expects the economy to begin turning the corner by the end of the year with job growth coming some months after that, said Christina Romer, head of the White House Council of Economic Advisers.

U.S. factory orders rose in February for the first time in seven months, and a rebound in China’s official purchasing managers’ index (PMI) in March showed the Chinese economy may have bottomed, China’s chief statistics official said on Friday.

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