27 Oct
Media Quotes

Adam Sarhan Reuters Quote: Gold rebounds after U.S. GDP but set for weekly loss

Reuters


By Frank Tang
NEW YORK | Fri Oct 26, 2012 12:18pm EDT

(Reuters) – Gold rebounded on Friday after data showed U.S. economic growth picked up in the third quarter, but the metal was heading for its first three-week losing streak in over a year on uncertainty over the future of the U.S. Federal Reserve’s monetary stimulus.
Bullion prices reversed early losses after the U.S. Commerce Department said gross domestic product expanded at a better-than-expected 2 percent annual rate, driven by a late burst of consumer spending.
Analysts said, however, that uncertainty over global economic recovery and questions on the future of U.S. monetary policy that has been ultra-loose under Fed Chairman Ben Bernanke could dent gold’s appeal as an inflation hedge.
“I don’t believe gold is able to rally off of that (GDP) data for now. Gold is an momentum asset and its momentum is not there right now,” said Jeffrey Sica, chief investment officer at SICA Wealth, which manages more than $1 billion in assets.
Spot gold edged up 0.2 percent at $1,713.84 an ounce by 11:34 a.m. EDT (1534 GMT)
Bullion was set for a weekly drop of 0.4 percent, and that would mark its first three-week consecutive loss in more than a year. Gold posted a four-week decline after a rally to a record price above $1,920 an ounce in September 2011.
U.S. COMEX gold futures for December delivery was up $1.90 at $1,714.90 an ounce, with trading volume on track to finish below its 30-day average, preliminary Reuters data showed.
Traders said gold’s 0.5 percent decline this week was partly due to doubts over a report earlier this week that Bernanke has told close friends that he probably will not stand for a third term at the central bank even if President Barack Obama wins the November 6 election.
“Without Bernanke, monetary stimulus from the Federal Reserve could be greatly reduced, and that will weigh on the price of gold,” Sica said.
Gold’s outlook hinges on uncertainty related to the November 6 U.S. election and the so-called “fiscal cliff,” a series of automatic spending cuts and tax increases in 2012 if Congress fails to reach a deficit reduction deal by the end of the year.
On charts, gold has come under technical pressure after it has several times run near formidable resistance at $1,800, which it has not broken since November 2011, and failed each time, said Adam Sarhan, CEO of Sarhan Capital.
Silver was up 0.4 percent at $32.21 an ounce.
MOMENTUM SLOWS
Bullion rallied to an 11-month peak above $1,795 an ounce in early October after the Fed’s latest program of purchasing mortgage-backed debt stirred inflation worries.
Momentum has since stalled, with weak global economic data helping send prices below $1,700 earlier this week, when U.S. durable goods data showed the first cutbacks in investment in more than a year by cautious businesses.
Year to date, gold is up nearly 10 percent, on track to gain for a 12th consecutive year. Bullion’s gains in the last several years have largely been powered by economic uncertainty related to the Fed’s bond-buying to stimulate growth.
Platinum group metals are on track to fall more than 3 percent this week as economic worries and easing supply fears from top producer South Africa triggered heavy selling.
Platinum eased 0.2 percent to $1,556.99 an ounce and palladium fell 0.7 percent to $597.50 an ounce.
(Editing by James Jukwey, Helen Massy-Beresford and; Peter Galloway)
URL: http://www.reuters.com/article/2012/10/26/us-markets-precious-idUSBRE89P04Z20121026

26 Oct
Daily Market Commentary

Nasdaq Defends 200 DMA Line… For Now

Long-Term Look At The US Stock Market


Friday, October 26, 2012
Stock Market Commentary:
The major averages ended in the red last week but the bulls showed up and defended the Nasdaq’s 200 DMA line- for now. So far, this is nothing more than a normal pullback after a big run evidenced by the fact that the benchmark S&P 500 is just over -4% below its 52-week high and the tech heavy Nasdaq composite is -6.5% below its multi-year high of 3196. If the selling continues then the correction becomes more severe. Normally, one would like to see the bulls show up and defend the 50 DMA lines for the major averages and leading stocks. The fact that all the major averages violated their respective 50 DMA lines in the first half of October coupled with lousy action in several leading stocks caused us to change the status of this rally from “rally under pressure” to “market in a correction.”. Remember, over the next several weeks as we make our way through Q3 earnings season- it is very important to not only focus on the actual numbers but more importantly how stocks (and the major averages) react to the numbers. So far the reaction has been less than stellar.
Monday-Wednesday’s Action- 50 DMA Line Becomes Resistance
Stocks spent most of the session in the red on Monday and fell further below their respective 50 DMA lines. However, a late day rally helped the major averages squeeze out a small gain and close in the black. Apple (AAPL) was one of the standout winners, jumping 4% after Topeka raised its Q4 earnings estimates and Goldman Sachs (GS) reiterated its “buy” rating and $810 price target. By Friday, that price target was cut to the mid 700’s. Earnings news was decent; Caterpillar (CAT), Peabody Energy, and Yahoo (YHOO) were among some of the well-known companies that released stronger than expected numbers on Monday.
Stocks opened sharply lower on Tuesday on the heels of fresh European debt woes and a series of weaker-than-expected earnings data in the U.S. Spain dominated the headlines after Moody’s downgraded five regions and it is largely expected that GDP will contract by -0.4% in Q3. Catalonia, which accounts for a fifth of Spain’s economy, was downgraded and that bodes poorly for Spain’s ability to grow in the future. In the U.S., 3M (MMM) and DuPont (DD) were among the latest high profile companies that missed estimates and reiterated fears that a global slowdown was upon us. Apple released several new products on Tuesday but its stock still ended lower.
Stocks opened higher but closed lower on Wednesday as investors digested a flurry of mixed economic and earnings data from across the globe. Overnight, China said its HSBC Flash manufacturing PMI index rose to 49.1 which topped estimates and was the best reading in three months. Meanwhile,the business climate in Europe remains weak. The Eurozone composite PMI hit its lowest level since 2009. Greece was granted a two year extension to implement their much needed austerity measures which helped alleviate some pressure on the troubled eurozone. Earnings were mixed. Facebook (FB), AT&T (T), Panara Bread (PNRA), Netflix (NFLX), and Boeing (BA) were a few of the high profile companies which reported Q3 earnings. In the U.S., the Commerce Department said new home sales surged 5.7% to their highest level since April 2012. As expected, the FOMC held rates steady and reiterated their recent stance regarding QE Infinity.
Thursday & Friday’s Action- Stocks Slide On Soft Earnings Data
Stocks opened higher on Thursday after England officially exited its double dip recession and GDP grew by 4% on an annualized basis. This bodes well for the global economy. Before Thursday’s open weekly jobless claims fell to 369k which was a smaller decline than expected and durable goods vaulted an impressive +9.9%, topping the Street’s estimate. After the open, pending home sales for September inched higher by +0.3% which missed the 2.8% forecast. After Thursday’s close Apple (AAPL) and Amazon (AMZN) were a few high profile companies which released their Q3 results. Stocks ended flat on Friday after the government said Q3 GDP rose 2%, topping the Street’s estimate for 1.8%.
Market Outlook- Market In A Correction:
From our perspective, the multi-month rally ended on Friday 10/19/12 when all the major averages traded below their respective 50 DMA lines and a slew of leading stocks broke down in heavy volume.  On October 9, 2012 we noted that the market rally was under pressure and if the major averages violated their respective 50 DMA lines the market would enter correction territory. Normally, when this happens we begin to raise cash and adopt a more defensive stance. We will turn more bullish if/when all the major averages jump back above their respective 50 DMA lines. Until then caution is king. As always, keep your losses small and never argue with the tape. 

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19 Oct
Blog

Stock Market In A Correction- Could Monday Be Another Black Monday?



 
 
 
 
 
 
 
 
 
Oct 10: I sent out a note saying “Rally Under Pressure”
Oct: 19: Status Changes to Market In A Correction (Normally, a correction is defined when a market or stock declines >10% below a 52-week high. My definition is a little different. I look at how the major averages & leading stocks are acting)

Current Market Snapshot:
  • S&P 500: 
    • Broke below its 50 DMA on 10/19
    • Forming an ominous series of lower highs & lower lows forming
  • Dow Jones Industrial Average

    • Broke its 50 DMA line on 10/19
    • Negative for month.
  • Nasdaq Composite: 
    • Broke below and 50 day moving average on Oct 9 (had been support since early July)
    • Forming an ominous series of lower highs & lower lows forming
    • Then rallied back and failed to break above its 50 day moving average line which means support has become resistance
    • Took out October’s lows in the process
  • Most Leading Stocks are breaking down (AAPL, GOOG, AMZN, etc)
    • Housing & Financials continue to shine
Defense is king until the major averages trade back above their 50 DMA lines…
1987 Black Monday vs Today:
Looking at the 1987 Black Monday precedent. Stocks suffered heavy losses on the Friday before Black Monday in 1987. So that begs the question, could Monday 10/22/12 turn into another Black Monday? Short answer is yes, anything is possible- but it is not probable. Here’s why, there are a lot of differences between then and now.
  • 1987 the major averages were trading below their respective 50 & 200 DMA lines on the Friday before Black Monday (2012-All the major averages are above their respective 200 DMA lines)
  • 1987 the major averages were close to 20% below their 52-week highs. 2012 the weakest major average is the Nasdaq and it is only 6.1% below its 52-week high as of 3:30pm EST
    Bottom Line: 
  • The markets are in a much better place in 2012 then they were in 1987.
  • The strong rally we have seen is weakening and the technicals (explained above) and fundamentals (sluggish global economy, slower earnings, eurozone debt crisis, etc) are deteriorating.
  • The path of least resistance is lower as long as the major averages continue trading below their respective 50 DMA lines.

Trade accordingly,

Adam Sarhan
19 Oct
Daily Market Commentary

Stock Market In A Correction

Long-Term Look At The US Stock Market

Friday, October 19, 2012
Stock Market Commentary:

The major averages ended mixed last week but ended near their lows (which is not a healthy sign for the bulls) as sellers showed up in the latter half of the week and sold shares. So far, this is nothing more than a normal pullback after a big run. The S&P 500 is less than -3% below its multi year high of 1474 and near its 50 DMA line. Normally, one would like to see the bulls show up and defend the 50 DMA lines for the major averages and leading stocks. The fact that all the major averages violated their respective 50 DMA lines coupled with lousy action in leading stocks will cause us to change the status of this rally from rally under pressure to market in a correction. Remember, over the next several weeks as we make our way through Q3 earnings season- it is very important to not only focus on the actual numbers but more importantly how stocks (and the major averages) react to the numbers.

Monday-Wednesday’s Action- Stocks Bounce off 50 DMA Line

Stocks opened higher on Monday helped by stronger than expected economic/earnings data and healthy comments from Europe. Overnight, China said its trade surplus widened to $27.7B which topped the Street’s estimate of $20B. China said exports rose which bodes well for the global economy. China released its PPI numbers which were not that bad. In Europe, EU Commissioner Olli Rehn said talks with Greece should by resolved by Mid-November and more relief may be provided to the heavily indebted nation. Mr. Rehn also said that Spain is open to a bailout request and is confident in Spain’s ability to reform its troubled economy. In the US, Citigroup (C) topped estimates and rallied even after Mr. Pandit, former CEO, unexpectedly stepped down.
Stocks opened higher on Tuesday after a string of stronger than expected economic and earnings data was released. Before Tuesday’s open, three Dow Components topped estimates and financial giant Goldman Sachs (GS) smashed numbers on both the top and bottom line. Economic data was positive, CPI matched estimates which eased pressure on the Fed to raise rates in the future to curb inflation. Industrial output rose to 0.4% in September which beat the Street’s estimate for a gain of 0.2%. The National Association of Home Builders Housing Market Index rose to 41 vs 40 in the prior month.
Stocks ended slightly higher on Wednesday, helping the DJIA enjoy a 4-day winning streak. The big positive was a very strong report from the housing market. Housing starts vaulted by 15% in September which was the fastest rate since 2008 according to the Commerce Department. This helped send shares of home builders surging to fresh multi-month highs and supports our bullish call that the housing market bottomed in Q4 2011. In other news, Moody’s, one of the popular rating agencies, held its credit rating unchanged for Spain.

Thursday & Friday’s Action- Stocks Slide On Soft Earnings Data

Stocks ended with small losses on Thursday after Google’s prematurely announced a surprisingly weak earnings report. Google earned $9.03 a share compared to $9.72 which is a decline of -7% vs Q3 2011. This was the first deceleration in the tech giant’s earnings since the 2008 crisis. So far, around 20% of S&P 500 firms have posted Q3 results and 65% have beat estimates while 20% have missed. Economic data was mixed, jobless claims rose by 46,000 to a seasonally adjusted 388,000 which is not ideal for the ailing jobs market. On a more positive note, leading indicators jumped in September to post their largest gain in seven months while the Philly Fed index rose in October. Friday marked the 25th Anniversary of the 1987 “Black Monday” Crash. The Dow Jones Industrial Average plunged a stunning -22.6% in one day- marking its largest single day decline in history.  Stocks were smacked on Friday due to a series of weaker than expected earnings reports from a few influential companies.

Market Outlook- Market In A Correction:

From our perspective, the multi-month rally ended on Friday 10/19/12 when all the major averages traded below their respective 50 DMA lines and a slew of leading stocks broke down in heavy volume.  On October 9, 2012 we noted that the market rally was under pressure and if the major averages violated their respective 50 DMA lines the market would enter correction territory. Normally, when this happens we begin to raise cash and adopt a more defensive stance. We will turn more bullish if/when all the major averages jump back above their respective 50 DMA lines. Until then caution is king. As always, keep your losses small and never argue with the tape. 
16 Oct
Media Quotes

Adam Sarhan Reuters Quote: Gold higher as U.S. consumer prices rise, dollar drops

Reuters


By Frank Tang
NEW YORK | Tue Oct 16, 2012 2:56pm EDT

(Reuters) – Gold rose on Tuesday to snap two days of hefty losses lifted by a broad dollar drop and by data showing U.S. consumer prices climbed but not enough to derail the Federal Reserve’s ultra-easy monetary policy.
The metal rebounded from Monday’s one-month low, after U.S. Labor Department said U.S. Consumer Price Index climbed 0.6 percent in September, matching analysts’ expectations and August’s reading. Solid gains in U.S. equities .SPX also underpinned bullion.
Gold has rallied $200 an ounce in the last two months due to hopes that the Fed’s monetary stimulus might trigger inflation. The U.S. central bank said in September it would keep buying mortgage-backed securities until the job market improves dramatically.
“From an inflation standpoint, the fact that the CPI is in line gives the Fed more room to continue easing,” said Adam Sarhan, CEO of Sarhan Capital.
Technical buying also boosted gold as it held well above key support of its 50-day moving average (DMA) despite Monday’s pullback. Late last month, the metal formed a bullish “golden cross,” in which its 50 DMA traded above its 200 DMA.
As long as gold held above its 50 DMA, it stood ready to challenge its next major resistance at $1,800 an ounce, Sarhan said.
Spot gold was up 0.5 percent at $1,744.60 an ounce by 2:05 PM EDT (1805 GMT), well above the previous day’s one-month low at $1,728.75. The metal had dropped almost 2 percent in the last two sessions.
U.S. COMEX gold futures for December delivery settled up $8.70 an ounce at $1,746.30, with trading volume at about 45 percent below its 30-day average, preliminary Reuters data showed.
Some analysts said some gold investors stayed on the sidelines due to political uncertainty ahead of a second U.S. presidential debate.
A U.S. “fiscal cliff” of automatic spending cuts and tax increases scheduled for January also triggered some safe-haven bids, traders said. That scenario could shock the economy and lead to more money printing from the Fed.
ETF HOLDINGS EASE
Investors appeared to lessen their bullish bets on gold after Monday’s decline. Holdings of bullion exchange-traded funds tracked by Reuters fell on Monday, due to an outflow from the largest gold ETF the SPDR Gold Trust.
The largest silver ETF, the iShares Silver Trust also recorded an outflow of about 0.3 million ounces on Monday.
Other precious metals also rebounded after Monday’s sharp pullback. Silver was up 0.6 percent at $32.87 an ounce. On Monday it hit a one-month low at $32.53 an ounce.
Platinum group metals climbed, even though analysts said sentiment remained cautious after Chinese-owned car maker Volvo said it would halt production for a week this month due to continued low demand, especially in Europe.
Spot platinum edged up 0.1 percent at $1,636.74 an ounce, while spot palladium was up 0.9 percent at $635.47 an ounce.
http://www.reuters.com/article/2012/10/16/us-markets-precious-idUSBRE89E03H20121016

16 Oct
Media Quotes

Adam Sarhan CNBC.com Quote: Euro, global shares rally on Spanish hopes, U.S. earnings

CNBC.com


Published: Tuesday, 16 Oct 2012 | 10:54 AM ET
NEW YORK (Reuters) – World shares rose for a second day on Tuesday and the euro rallied against the U.S. dollar after a report said Germany could show greater flexibility toward aid to Spain and as U.S. corporate earnings surprised on the upside.
Returning confidence in Germany suggested the euro zone debt crisis is not impacting the bloc’s largest economy as much as feared, giving stocks and the euro further support.
U.S. stocks opened higher, boosted by earnings reports from sector bellwethers Johnson & Johnson and Goldman Sachs, which posted a profit as revenue more than doubled.
“That a financial is able to have results like that in this kind of low-growth environment bodes well for the economy as a whole,” said Adam Sarhan, chief executive officer at Sarhan Capital in New York.
The Dow Jones industrial average <.DJI> rose 97.45 points, or 0.73 percent, to 13,521.68. The S&P 500 <.SPX> gained 10.24 points, or 0.71 percent, to 1,450.37. The Nasdaq Composite <.IXIC> added 15.22 points, or 0.50 percent, to 3,079.41.
Citigroup <C.N> unexpectedly announced that chief executive Vikram Pandit had resigned effective immediately, along with chief operating officer John Havens. Citi shares rose 0.6 percent.
U.S. stocks bounced back on Monday after posting their worst week in four months on Friday. Major indexes are trading in tight ranges with the S&P 500 now just 1 percent below its 2012 closing high set a month ago.
The closely watched monthly survey from the ZEW institute showed a better than expected improvement in German investor confidence, adding to recent signs that the euro zone’s biggest economy is fighting hard to stave off the bloc’s debt troubles.
The FTSE Eurofirst 300 index <.FTEU3> and an MSCI index of global shares <.WORLD> rose 1.2 percent and 1.1 percent respectively.
European leaders meet in Brussels on Thursday and investors are looking for clues on whether Spain will ask for a bailout in the coming weeks, thereby activating the European Central Bank’s bond buying scheme, and if Greece will be given support to allow it to stay in the euro.
EURO STRENGTHENS
The euro rose to a one-week high against the dollar and four-week high against the yen and sterling, with traders citing a media report that Germany was open to a precautionary line of credit for Spain.
The Bloomberg report, citing two senior German coalition lawmakers, implies an easing of Berlin’s hard-line stance and clears the way for Madrid to ask for financial help, a step seen by many as necessary to stem the country’s debt crisis.
The single currency was recently up 0.86 percent at $1.3059.
Spanish and Italian debt prices rose slightly but the moves were not expected to extend beyond recent ranges, with uncertainty over Spain and Greece still high. <GVD/EUR>
U.S. Treasuries prices fell as the strong U.S. earnings boosted stocks and reduced the appeal of safe haven debt.
The benchmark 10-year U.S. Treasury note was down 12/32, with the yield at 1.7099 percent. The 30-year bond earlier lost a full point in price, its yield up at 2.89 percent.

16 Oct
Media Quotes

Adam Sarhan Reuters Quote: US STOCKS-Wall St set to open higher for second day on profits

Reuters


Tue Oct 16, 2012 9:12am EDT

* Johnson & Johnson, UnitedHealth Group raise profit views
* Goldman reports stronger-than-expected profit
* Citigroup CEO Pandit unexpectedly resigns, shares fall
* Futures up: Dow 58 pts, S&P 6.5 pts, Nasdaq 12.75 pts
By Ryan Vlastelica
NEW YORK, Oct 16 (Reuters) – U.S. stock index futures pointed to a higher open on Tuesday after the latest quarterly earnings and outlooks posted by Goldman Sachs, Coca-Cola and other major companies outweighed investor fears about the sluggish global economy.
Johnson & Johnson and UnitedHealth Group, both Dow components, raised their full-year profit views while Goldman Sachs boosted its dividend. J&J rose 1 percent to $69.26 while UnitedHealth was up 2.1 percent at $58.70 in premarket trading.
Goldman shares oscillated between gains and losses in premarket trading after posting earnings that beat expectations and revenue that more than doubled. Shares were up modestly before the bell.
Coca-Cola Co also reported a rise in earnings and revenue, though profits were pressured by foreign exchange rates. The stock rose 0.3 percent in premarket trading.
“Not only have the Dow components done very well today, but Goldman is extremely positive,” said Adam Sarhan, chief executive officer at Sarhan Capital in New York. “That a financial is able to have results like that in this kind of low-growth environment bodes well for the economy as a whole.”
Citigroup tumbled 3.1 percent after the company said in a surprise announcement that Chief Executive Vikram Pandit had resigned effective immediately, along with Chief Operating Officer John Havens. Michael Corbat, previously chief executive for Europe, Middle East and Africa, was named to succeed Pandit.
Citigroup Inc had rallied after its results on Monday, helping to calm concerns about financial shares.
“Pandit is leaving at the top of the game and leaving the company in great hands, but the timing of the move is shocking,” Sarhan said. “Why they didn’t announce it with the earnings is a question that needs to be answered.”
S&P 500 futures rose 6.5 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures added 58 points and Nasdaq 100 futures rose 12.75 points.
The quarterly earnings season thus far has been mixed, with some early pessimistic results giving the S&P 500 its worst week since June last week. However, Citigroup’s results helped spark a rally on Monday.
Profits of S&P 500 companies are seen dropping 2.3 percent this quarter from a year ago, according to Thomson Reuters data. With about 8 percent of S&P companies having reported, 58 percent have topped profit expectations – less than the average beat rate of 67 percent for the past four quarters.
Intel and IBM report after the market closes and are among the first major earnings reports of the tech sector, which has been marked by a number of profit warnings, including from Intel. Late Monday, Microchip Technology Inc said second-quarter revenue was likely to be below its earlier estimates due to soft demand.
U.S. consumer prices rose 0.6 percent in September as the cost of gasoline surged, posing a threat to consumer spending power. However, futures were little influenced by the CPI data.
While earnings have been the primary driver for equities in recent sessions, overshadowing some strong economic indicators, investors will keep an eye on the meeting of European leaders later this week. European shares rose 0.5 percent on growing hopes the meeting would advance plans to tackle debt problems in Spain and Greece.
U.S. stocks climbed on Monday, rebounding from last week’s losses, after Citigroup’s earnings and U.S. retail sales exceeded expectations.
URL: http://www.reuters.com/article/2012/10/16/markets-usa-stocks-idUSL1E8LG5F120121016

16 Oct
Media Quotes

Adam Sarhan CNBC.com Quote: Wall Street gains on strong earnings from Goldman, J&J

CNBC.com


Published: Tuesday, 16 Oct 2012 | 10:15 AM ET

NEW YORK (Reuters) – Stocks rose on Tuesday as stronger-than-expected quarterly earnings from such bellwethers as Goldman Sachs and Johnson & Johnson alleviated concerns about the slowing global economy.
Dow components Johnson & Johnson <JNJ.N> and UnitedHealth Group <UNH.N>, both raised their full-year profit views while Goldman Sachs <GS.N> boosted its dividend.
J&J, the diversified healthcare company, rose 0.7 percent to $69.11 while UnitedHealth, the largest health insurer, fell 0.4 percent to $57.24 after rallying in premarket trading.
Goldman shares slipped 0.5 percent to $123.63 after posting earnings that beat expectations and revenue that more than doubled.
“Not only have the Dow components done very well today, but Goldman is extremely positive,” said Adam Sarhan, chief executive officer at Sarhan Capital in New York. “That a financial is able to have results like that in this kind of low-growth environment bodes well for the economy as a whole.”
The Dow Jones industrial average <.DJI> was up 59.80 points, or 0.45 percent, at 13,484.03. The Standard & Poor’s 500 Index <.SPX> was up 6.30 points, or 0.44 percent, at 1,446.43. The Nasdaq Composite Index <.IXIC> was up 9.94 points, or 0.32 percent, at 3,074.12.
Coca-Cola Co <KO.N> also reported a rise in earnings, but quarterly revenue came in short of Wall Street expectations, hurt by declines in Europe and Asia. Its shares fell 1 percent to $37.59.
Citigroup <C.N> unexpectedly announced that Chief Executive Vikram Pandit had resigned effective immediately, along with Chief Operating Officer John Havens. Michael Corbat, previously chief executive for Europe, Middle East and Africa, was named to succeed Pandit.
The announcement came one day after a surprisingly strong quarterly earnings report. Citi’s shares rose 1 percent to $37.10.
“Pandit is leaving at the top of the game and leaving the company in great hands, but the timing of the move is shocking,” Sarhan said. “Why they didn’t announce it with the earnings is a question that needs to be answered.”
The quarterly earnings season thus far has been mixed, with some early pessimistic results giving the S&P 500 its worst week since June last week. However, Citigroup’s results helped spark a rally on Monday.
Profits of S&P 500 companies are seen dropping 2.5 percent from the year-ago period, according to Thomson Reuters data. With about 8 percent of S&P companies having reported, 61 percent have topped profit expectations, under the average beat rate of 67 percent for the past four quarters.
Intel <INTC.O> and IBM <IBM.N> report after the market closes and are among the first major earnings reports of the tech sector, which has been marked by a number of profit warnings, including from Intel. IBM shares rose 0.4 percent to $209.91 while Intel rose 3 percent to $22.38.
Consumer prices rose 0.6 percent in September as the cost of gasoline surged, while industrial output was up 0.4 percent in September. Wall Street was little influenced by the data.
While earnings have been the primary driver for equities in recent sessions, overshadowing some strong economic indicators, investors will keep an eye on the meeting of European leaders later this week. European shares <.FTEU3> rose 0.9 percent on growing hopes the meeting would advance plans to tackle debt problems in Spain and Greece.
(Editing by Kenneth Barry)

URL: http://www.cnbc.com/id/49431338

16 Oct
Media Quotes

Adam Sarhan Reuters Quote: Instant View: Citigroup CEO Vikram Pandit resigns

Reuters


Tue Oct 16, 2012 10:12am EDT

(Reuters) – Citigroup Inc Chief Executive Vikram Pandit has resigned, effectively immediately, a shock change at the top of the bank just one day after surprisingly strong quarterly results.
A statement on Tuesday from Chairman Michael O’Neill said Michael Corbat, previously chief executive for Europe, Middle East and Africa, would succeed Pandit as CEO and become a board member.
Chief Operating Officer John Havens, a long-time associate of Pandit, also resigned.
After falling 2.5 percent before the market opened on news of Pandit’s departure, Citigroup shares rose 1.7 percent to $37.30 in early trading on the New York Stock Exchange.
Following are initial reactions of analysts and investors:
MICHAEL JONES, CHAIRMAN AND CHIEF INVESTMENT OFFICER, RIVERFRONT INVESTMENT GROUP, LLC, RICHMOND, VIRGINIA
“It raises tremendous questions. I think you can only attribute it to one of two things: either he has the most incompetent public relations people advising him on how to handle something like this, or something suddenly has been revealed that has caused him to have to step down, and not just step down but also step off the board immediately. All of these things are just red flags everywhere.”
“It will be a headwind for the financial sector specifically if this proves that there’s another major financial hiccup at a money-center bank.”
ANTHONY POLINI, ANALYST, RAYMOND JAMES
“The announcement of Corbat is a big plus for the company: he has great leadership capabilities. I think he will probably be in a better position to get regulatory approval for the return of excess capital.”
“I think Vikram has some regulatory baggage. I don’t think he was very liked by the regulators. I think they, for whatever reason, had some disagreements.”
MARTIN MOSBY, STOCK ANALYST, GUGGENHEIM SECURITIES
“If it was a natural transition of any sort, the timing would not be now. You would announce it in January and you would set up a transition period that would be completed in probably April.”
“What didn’t happen is that the chief financial officer is not resigning, so that says it wasn’t related to the financials.”
“There is probably an underlying difference between Pandit, and Havens, and the board.”
MIKE HOLLAND, CHAIRMAN, HOLLAND & CO, NEW YORK, OVERSEEES MORE THAN $4 BILLION OF ASSETS
“It’s not a shock that he’s no longer there, but the surprise is, this is all happening very quickly. Why is he leaving immediately? Normally you have a transition period. And Havens is gone too. I’m not a Citi shareholder, but if I were, I’d be disappointed that Havens is gone, in some ways more than Pandit.”
ADAM SARHAN, CHIEF EXECUTIVE OF SARHAN CAPITAL, NEW YORK
“The timing of the move is shocking. Why they didn’t announce it with the earnings is a question that needs to be answered. But Pandit is leaving at the top of his game and leaving the company in great hands. As an investor, my only question is with the timing. “
GAUTAM DHINGRA, CHIEF EXECUTIVE AND FOUNDER, HIGH POINTE CAPITAL MANAGEMENT LLC, CHICAGO
“Our outlook on Citigroup is positive. We are positive on banks in general and more so on Citibank because of the higher potential reward.
“As to Pandit’s resignation, we are scratching our heads. Our view has always been that he was not really adding much value. So, in that sense we are not sorry to see him leave.
“However, the abruptness of the resignation does cause a bit of worry. Why did it have to be an abrupt, rather than a graceful exit?”
JEFF HARTE, EQUITY RESEARCH ANALYST, SANDLER O’NEILL, CHICAGO
“I think Vikram had them on the right path strategically so I am disappointed for him.”
“I don’t get the impression there are significant underlying issues driving this. I think this is more the board reacting to the share price and wanting a more hands-on manager in the CEO position.”
MATT MCCORMICK, BANKING ANALYST AND PORTFOLIO MANAGER AT BAHL & GAYNOR, CINCINNATI, OHIO
“Pandit struggled to get an identity for Citigroup and I would say ultimately he was unsuccessful in having people know what Citigroup stands for and what it does.”
“He was not beloved by Wall Street. He was the accidental president. He was thrust into that position- he’s a hedge fund guy.”
“What Pandit and Havens did was increase the uncertainty around Citi. There’s a perpetual cloud of uncertainty surrounding Citigroup. There’s always turmoil. . .that’s had to affect the (stock) price.”
PETER JANKOVSKIS, C0-CHIEF INVESTMENT OFFICER, OAKBROOK INVESTMENTS LLC, LISLE, ILLINOIS
“Interesting, and after the stock reported pretty good numbers yesterday, I’m surprised.
“It does seem strange to me that someone would step away after reporting better-than-expected numbers and certainly do a lot to reconfigure the company for going forward. I would have expected he wanted to stay around and see some of the fruits of his labors there.”
(Reporting By Chuck Mikolajczak, Phil Wahba, Ryan Vlastelica, Herbert Lash, Dan Wilchens, David Henry and Samuel Forgione)
URL: http://www.reuters.com/article/2012/10/16/us-citigroup-pandit-instant-view-idUSBRE89F0QL20121016

16 Oct
Media Quotes

Adam Sarhan Reuters Quote: Instant View: Consumer prices up in September on gasoline


 
 
 

Tue Oct 16, 2012 8:54am EDT

(Reuters) – Consumer prices rose in September as the cost of gasoline surged, posing a threat to consumers’ spending power although faster inflation looked unlikely to derail the Federal Reserve’s ultra-easy policy path.
KEY POINTS: * The Consumer Price Index increased 0.6 percent last month, in line with analysts’ expectations and matching August’s reading, data from the Labor Department showed on Tuesday. * Gasoline prices jumped 7 percent in September after climbing 9 percent the prior month. Higher costs at the pump force many American consumers to cut back on other spending.
COMMENTS:
PETER BOOCKVAR, PORTFOLIO MANAGER, MILLER TABAK & CO, NEW YORK:
“An ever rising level in the cost of living is not price stability but the Fed only seems to focus on the rate of change. While the Fed’s preferred inflation measure is the personal consumption expenditures or PCE now, the CPI reflects a sticky level of inflation in the context of mediocre economic growth. The current velocity of money, or lack thereof, is the only thing keeping it from jumping much higher right now.”
RYAN DETRICK, SENIOR TECHNICAL STRATEGIST, SCHAEFFER’S INVESTMENT RESEARCH, CINCINNATI, OHIO:
“Most of the inflation data seems like it’s been pretty well contained, even though there’s been a lot of continued concerns regarding inflation issues. But when I look at the core, it’s once again showing overall contained inflation. Even though we’ve got the higher oil prices out there, it doesn’t seem like it’s trickling over quite yet.”
CARY LEAHEY, ECONOMIST AND SENIOR ADVISOR, DECISION ECONOMICS, NEW YORK:
“The CPI report was pretty much what the market was looking for with a large headline increase – same as in August – with the same culprit: a large increase in energy prices. What’s particularly interesting is that the rise in gasoline prices has not made a major dent in consumer sentiment which has picked up noticeably in the last six weeks and people are buying lots of stuff ranging from back to school needs for their children as well as the new version of the IPhone.
“The good news from the core rate – up just 0.1 percent for the third month in a row – is that the Fed can confidently focus on propping up the economy because inflation is not a problem. If anything, the Fed is probably more worried about disinflation than inflation at this juncture.”
PETER JANKOVSKIS, CO-CHIEF INVESTMENT OFFICER AT OAKBROOK INVESTMENTS LLC IN LISLE, ILLINOIS:
“Basically, people will be reassured the Fed can continue with QE3 for the foreseeable future, no inflation concerns on the horizon at the moment. I wouldn’t have expected (a move on futures), it was pretty much in-line, nothing too exciting and still pretty low.”
JOSEPH TREVISANI, CHIEF MARKET STRATEGIST, WORLDWIDE MARKETS, WOODCLIFF LAKE, NEW JERSEY:
“Core inflation was low and unthreatening, but in truth neither matters to a Fed monetary policy committed to lowering unemployment.”
ADAM SARHAN, CHIEF EXECUTIVE OF SARHAN CAPITAL IN NEW YORK:
“This confirms that inflation remains in check, which takes pressure off the Fed to raise rates. So far the market reaction is positive.”
URL: http://www.reuters.com/article/2012/10/16/us-usa-economy-instant-idUSBRE89F0Q820121016

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