Today's Business - Raj Gets Spanked and more
Today's Coffee Today's business news flow is being characterized by the high profile jury verdict issued to inside trader and hedge fund billionaire Raj Rajaratnam. Several important corporate news drivers also reached wire, including one reminiscent of the good old Wall Street bailout days. The U.S. Treasury unloaded a good chunk of its massive ownership interest (a.k.a. bailout) in AIG (AIG). Meanwhile, we received oil inventory and international trade data, the monthly treasury budget and mortgage activity data.
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Today's Business
Main St. Takes it Out on Raj
Galleon Hedge Fund gun Raj Rajaratnam was found guilty on all 14 counts of conspiracy and fraud in the most significant insider trading case in a decade, if not ever. Done in by wiretaps that clearly identified him trading on inside information, it was estimated Raj saved or made $60 million by way of cheating. CNBC reported Raj could get 25 years or more. He’ll be let out on bail, which is massive but affordable for a billionaire, and he’ll wear an electronic monitor around his ankle. Raj is from Sri Lanka, and is viewed as a potential flight risk.
Mortgage Activity
The Mortgage Bankers Association (MBA) published its Weekly Mortgage Applications data in the premarket. This week’s data covering the period ending May 6 showed mortgage applications increased 8.2% over the prior week period. Sharply lower mortgage rates drove activity in refinancing and purchase related mortgage signings.
Oil Prices and Inventory
The weekly Petroleum Status Report covering the period ending May 6 showed crude oil inventory increased by 3.8 million barrels, while gasoline stores also rose this week, by 1.3 million barrels. Oil inventory was above the upper limit of the average range for this time of year, but gasoline measured within the lower limit of the average range. This was good news for the American economy, as WTI Crude Futures fell 4.7%, to $99. Gasoline RBOB Futures fell 7.6%.
International Trade Report
International Trade data reported this morning showed the trade gap widened in March to $48.2 billion, more than economists were looking for ($47.4 billion - Bloomberg). The trade deficit was impacted by oil imports.
Fed Speak
Three Fed speakers found audiences Wednesday: Narayana Kocherlakota, Dennis Lockhart, and Sandra Pianalto. A senate panel is examining the AT&T (T), T-Mobile merger.
Monthly Treasury Budget
The latest monthly Treasury Budget release reached wire at 2 PM today. This is actually covered by the press these days, given the political jawboning around the budget deficit and debt ceiling. The April budget showed a lighter deficit than economists had foreseen ($65 billion), with the month’s shortfall amounting to $40.5 billion. The report for March showed an expansive deficit of $188.2 billion.
Corporate Events
Good Old AIG
Gold old AIG (AIG), relic of the old Wall Street bailout, announced today it would make a secondary offering of 300 million shares, including 200 million U.S. Treasury held shares. Of course, the Treasury got those shares by saving AIG’s rear end, which it properly spanked during Congressional hearings. Uncle Sam will retain control of the company though, since it got stuck with 1.66 billion during the crisis. The other 100 million shares will go toward paying a legal settlement, and the rest will go into corporate coffers (maybe to pay bonuses).
FriendFinder Networks
Penthouse Magazine owner, FriendFinder Networks (FFN), traded down 23% today after pricing its IPO at the low end of the range yesterday.
Investor and analyst meetings took place today at Bank of America (BAC), Talisman Energy (TLM), Computer Sciences (CSC), HSBC (HBC) and Lexmark (LXK).
Wednesday’s EPS schedule highlights news from Macy’s (M), Toyota Motors (TM), Symantec (SYMC), Cisco Systems (CSCO), Accretive Health (AH), Aegean Marine Petroleum (ANW), Canadian Solar (CSIQ), 7 Days Group (SVN), 8x8 (EGHT), American Medical Alert (AMAC), Archipelago Learning (ARCL), Asure Software (ASUR), Bidz.com (BIDZ), Biofuel Energy (BIOF), Bionovo (BNVI), China Green Agriculture (CGA), China Pharma (Nasdaq: CPHI), China Yuchai (CYD), Compugen (CGEN), Derma Sciences (DSCI), Discovery Laboratories (DSCO), Ellie Mae (Nasdaq: ELLI), Evolving Systems (EVOL), Federal Agricultural Mortgage (AGM), Flotek (FTK), Fortress International Group (Nasdaq: FIGI), Global Sources (GSOL), InterOil (IOC), IntraLinks (IL), Kid Brands (KID), Lakes Entertainment (LACO), Lightbridge (LTBR), Maidenform Brands (MFB), Nexstar Broadcasting (NXST), Pacific Ethanol (PEIX), Performance Tech (PTIX), Point360 (PTSX), Quepasa (Nasdaq: QPSA), SINA (SINA), Sky Mobi (MOBI), SouFun Holdings (Nasdaq: SFUN), Spar Group (SGRP), TearLab (TEAR), Tsakos Energy Navigation (TNP), Virtusa (VRTU), Zipcar (NYSE: ZIP) and others.
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