Thursday, April 18, 2013

IBM reaction to earnings could move market

from usatoday




NEW YORK -- Aluminum giant Alcoa gets a lot of ink for kicking off earnings season each quarter and setting the tone for the stock market. But it is actually IBM's results -- and its stock's reaction -- that determine the short-term direction of the broader stock market.
So even though Internet darling Google and software titan Microsoft report first-quarter earnings after the market closes today, it will be Big Blue's results after the bell that will either reinvigorate the bulls or embolden the bears on Wall Street.
The past 10 years, there has been a clear relationship between how IBM's stock reacts on the first trading day after it reports earnings and how the stock market trades the following five weeks, according to Bespoke Investment Group.
In short, the market reacts bullishly when IBM stock rises after the company reports earnings. And the market slumps when shares of the computer services company and American icon decline after its profit announcement.
Indeed, when IBM rallies after reporting earnings, the broad stock market, measured by the Standard & Poor's 500 index, has been up 81% of the time five weeks later, says Bespoke. The average gain: 1.24%.
But when shares fell, the market was down 70% of the time five weeks later, with an average decline of 3.02%
What explains the correlation between IBM and the S&P 500?
"Part of the explanation," says Bespoke co-founder Paul Hickey, "lies in the fact that IBM generates more than half of its revenues from its services unit, which has a presence in practically every S&P 500 company."
As a result, Hickey says, "any weakness in the performance of corporate America will likely show up in the results of IBM."

Sunday, April 14, 2013

Kerry Says North Korea Talks Are Possible, but Hints at Conditions

from nytimes




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TOKYO — Secretary of State John Kerry said Sunday that the United States was prepared to reach out to Kim Jong-un of North Korea if he made the first move to abandon his nuclear weapons program.
Issei Kato/Reuters
Secretary of State John Kerry arrived with Japan's Foreign Minister Fumio Kishida at a meeting in Tokyo.
Multimedia
“We need the appropriate moment, appropriate circumstance,” Mr. Kerry told reporters in Tokyo.
While he did not say specifically what steps would be needed, according to the long-standing United States position they might include a public commitment to denuclearization and such measures as halting the production of nuclear material, refraining from testing missiles and ceasing threats to attack its neighbors.
Over the past week, there has been considerable attention on the United States’ vows to militarily defend its Asian allies and its warning that North Korea should forgo a test firing a Musudan medium-range missile.
But the United States has also postponed tests of an intercontinental ballistic missile and toned down its statements in recent weeks to try to create an atmosphere in which talks with North Korea might begin, a theme that Mr. Kerry emphasized Sunday.
“What we really ought to be talking about is the possibility of peace,” he said in a joint news conference on Sunday with Fumio Kishida, Japan’s foreign minister. “And I think there are those possibilities.”
Sketching out his approach in his meeting later in the day with reporters, Mr. Kerry said that before talks could begin, North Korea needed to take tangible steps to demonstrate that it was serious about denuclearization.
But it seemed unlikely that that precondition for talks would be met by North Korea, given the country’s announcements that it considers itself to be a nuclear state and its dedication to a “military-first” stance that channels resources to its armed forces.
The Obama administration has been willing to conduct direct talks with Iranian officials and sought early in Mr. Obama’s first term to forge a constructive relationship with President Bashar al-Assad of Syria. But the White House, in a policy that some have called strategic patience, has remained unwilling to meet openly with top North Korean officials unless they first committed to denuclearization.
Mr. Kerry indicated there were some circumstances in which he could imagine sending a representative to talk to North Korean leaders or engaging directly with the North Koreans through a diplomatic back channel.
“It may be that somebody will be asked to sit down,” he said.
“I am open personally to exploring other avenues; I particularly want to hear what the Chinese have to say,” Mr. Kerry said. “I am not going to be so stuck in the mud that an opportunity to actually get something done is flagrantly wasted.”
“But fundamentally the concept is they’re going to have to show some kind of good faith here so that we are not going around and around,” he said. “They have to indicate that seriousness of purpose to go toward the denuclearization, and there are ways that they can do that.”
Tokyo is the final stop on Mr. Kerry’s six-nation tour and his third destination in Asia. As part of its regional diplomacy, the United States has also been urging Japan and South Korea, its two main regional allies but who remain divided by history, to cooperate on North Korea.
In his news conference in Tokyo, Mr. Kerry expanded on his remarks on Saturday that the United States would be willing to withdraw some of the antimissile defenses it recently deployed if China were able to persuade North Korea to abandon its nuclear weapons program. Those remarks, made at a news conference in Beijing, were seen as a lure to elicit China’s cooperation.
“The president of the United States deployed some additional missile defense capacity precisely because of the threat of North Korea,” Mr. Kerry said. “And it is logical that if the threat of North Korea disappears because the peninsula denuclearizes, then obviously that threat no longer mandates that kind of posture.”
“But there have been no agreements, no discussions; there is nothing actually on the table with respect to that,” he added.
So far, Mr. Kerry’s comments and his endorsement of South Korea’s efforts to open a dialogue with the government of Kim Jong-un in the North have produced nothing but scorn from North Korea’s leaders.
On Sunday, North Korea rebuffed a South Korean proposal for dialogue, calling it “empty” and a “cunning trick.”
“If South Korea truly does want to have talks, it should first change its confrontational stance rather than playing on words,” a spokesman of the North’s Committee for the Peaceful Reunification of Korea was quoted as saying on Sunday by the official Korean Central News Agency. “It will depend on the South Korean authorities’ attitude whether there will be dialogue in the future.”
Martin Fackler contributed reporting from Tokyo, and Choe Sang-hun from Seoul, South Korea.


China Growth Slows

from wsj






A grandson's admiration

from Reuters


Defiant North Korea readies mass parade for founder

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Attendees applaud during a central report meeting to celebrate the 101st birth anniversary of North Korean founder Kim Il-Sung, at the April 25 Culture Hall in Pyongyang, in this photo distributed by North Korea's Korean Central News Agency (KCNA) on April 14, 2013.
SEOUL | Sun Apr 14, 2013 7:51pm EDT
(Reuters) - North Korea prepared for the annual celebration of its founder's birth on Monday, having rejected talks with South Korea aimed at reducing tensions and reopening a joint industrial park between the two countries.
The North has threatened for weeks to attack the United States, South Korea and Japan since new U.N. sanctions were imposed in response to its latest nuclear arms test in February.
Speculation has mounted of a new missile launch or nuclear test in a bid to either force Washington to hold talks with Pyongyang or to shore up the leadership of Kim Jong-un, the grandson of the reclusive state's founder.
The third Kim to rule in Pyongyang attended a midnight celebration of his father and grandfather's rule with top officials including his kingmaker uncle Jang Song-thaek and the country's top generals.
In Tokyo on Sunday, U.S. Secretary of State John Kerry again offered talks if North Korea abandoned its nuclear weapons programme, which Pyongyang describes at its "treasured" sword.
Kerry's trip to South Korea, China and Japan was aimed at reassuring its allies and putting pressure on Beijing to act decisively to implement theUnited Nations sanctions.
North Korea has repeatedly stressed that it fears Washington wants to invade it and has manipulated the United Nations to weaken it. At the weekend, Pyongyang rejected an overture by new South Korean President Park Geun-hye as a "cunning" ploy.
"We will expand in quantity our nuclear weapons capability, which is the treasure of a unified Korea ... that we would never barter at any price," Kim Young-nam, North Korea's titular head of state, told a gathering of officials and service personnel applauding the achievements of Kim Il-Sung.
Kim Il-Sung's birthday is usually marked with a mass parade to showcase the North's military might. In 2012, following the death of his father, the 30-year old Kim Jong-un made a public speech, the first in living memory for a North Korean leader.
(Additional reporting by Arshad Mohammed and Kiyoshi Takenaka in TOKYO)

North Korean video shows imagined strikes on U.S.

from  shreveporttimes.com



A screen grab of a North Korean propaganda video that includes animation of four nuclear strikes against the United States. U.S. government officials say North Korean missiles do not have the capability of reaching the United States. / Uriminzokkiri
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video released by Saturday by North Korea shows nuclear launches against the United States reaching four sites, including Washington, D.C., California, Hawaii and what the announcer describes as Colorado Springs, but which looks like Arkansas. U.S. officials were clear they did not believe the belligerent nation has missiles capable of reaching the United States.
The video was released Saturday on Uriminzokkiri, a North Korean government web site. It has also been posted on YouTube.
In it, each of the U.S. targets explodes into a ball of flames as the missiles strike on the map. The Colorado Springs attack is presumably because the North American Aerospace Defense Command (NORAD) is located near there, as well as the U.S. Air Force Academy. However based on the map the North Koreans posted, the attack site is actually in either southern Arkansas or northern Louisiana.
The video, typical of North Korean propaganda, is introduced by a male voiceover while a female news anchor in the traditional Korean hanbok dress reads from news headlines. The images are accompanied by synthesizer music and sounds of thunder. Further in, jarring montages of missile launches and military equipment are accompanied by what sound like 1970s power rock guitar solos. The video had more than 225,000 hits on YouTube by Saturday afternoon.
Tensions on the Korean peninsula have been building all week. U.S. officials say that they expect North Korea to perform a missile test soon but insist that while the unpredictable government might have rudimentary nuclear capabilities, it has not proven it has a weapon that could reach the United States.
The effort is expected to test the North's ballistic missile technologies, not a nuclear weapon, said a senior U.S. defense official who was granted anonymity by the Associated Press to discuss intelligence matters.
The Pentagon does not plan to try to shoot down any missiles North Korea might launch unless they unexpectedly head for a U.S. or allied target, several officials said. As a precaution, the U.S. has arrayed in the Pacific a number of missile defense Navy ships, tracking radars and other elements of its worldwide network for shooting down hostile missiles.
Bruce Bennett, a Rand Corp. specialist on North Korea, said this week there is a "reasonable chance" that North Korea has short-range nuclear missile capability, but it is "very unlikely" that it has one that can reach the U.S.
Contributing: Associated Press


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