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June 15 (Bloomberg) -- International demand for U.S. financial assets weakened in April as China, Japan and Russia trimmed holdings of Treasuries, a shift that may reinforce concern demand for American debt will wane amid record deficits.
Total net purchases of long-term equities, notes and bonds rose a net $11.2 billion, compared with buying of $55.4 billion in March, the Treasury said today in Washington. International holdings of Treasuries rose a net $41.9 billion, down from the $55.3 billion gain in March. Including bills, the holdings fell a net $2.6 billion.
Capital One Unadjusted Charge Off Rate Hits Record 9.91%
Monday, June 15, 2009
A number you won't hear much about on CNBC: Capital One's official annualized U.S. credit card net charge-off rate hit 9.41% for May, however as footnote (1) advises, the real charge-off rate was actually 9.91%, a record for the company. Companies will fudge anything and everything for even 30 days worth of green shoots - in the meantime Ken Lewis will upgrade the stock and issue 3 equity follow-ons while State Street orchestrates a short squeeze. From the footnote:
A change in bankruptcy processing resulted in an improvement in the U.S. Card charge-off rate that is reflected in the May results. The impact was approximately 50 basis points. While our internal guidelines require bankrupt accounts to be charged off within 30 days, our practice had been to charge off customer accounts within 2 to 3 days of receiving notification of bankruptcy. Due in part to an increase in the volume of bankruptcies, we have extended our processing window to improve the efficiency and accuracy of bankruptcy-related charge-off recognition. The new process remains within Capital One’s internal guidelines, as well as FFIEC guidelines that bankrupt accounts must be charged-off within 60 days of notification.
Just a reminder that a mere 3 months ago the charge off rate was just over 8% - a 20% deterioration in 12 weeks and accelerating.
Retail stocked fell Monday after finance ministers around the world hinted at ending stimulus measures as the global economy is beginning to show some signs of recovery. Wal-Mart Stores Inc. shares fell 2.3% after the world's largest retailer was cut to neutral from buy by Goldman Sachs.
While Wal-Mart (WMT) has and should continue to gain share across a still-challenging consumer spending environment, on-going expense pressures, and tougher sales comparisons will likely translate to little near-term positive catalysts to drive shares higher, Goldman analyst Adrianne Shapira said. "Wal-Mart's earnings and share price have been driven by a macro environment that has played to its strengths (value, price leadership), combined with impressive internal execution," the analyst said in a report. "While both factors remain in place, we see limited opportunity for the company to generate the same rates of improvement seen in prior quarters going forward.
We expect more discretionary retailers to display significantly greater relative (per-share profit) momentum versus Wal-Mart into 4Q2009 as the former lap easy year ago margin comparisons." Wal-Mart rival Target Corp. (TGT) shares fell 1.5%. Shapira reinstated her rating on Target at buy. The S&P Retail Index (RLX) declined 2% to 33.12.
Besides the governments' possible end of stimulus measures to spur consumer spending, the industry also is under pressure amid a recent pick-up in gasoline prices and mortgage rates that may dent disposable income and hurt consumers' desire to purchase homes, analysts said. Colder weather in the Northeast and lack of last year's stimulus rebate checks also may further hurt demand in June, they said.
Shares of home improvement and home goods retailers led by Home Depot Inc. (HD) also were down. Limited Brands Inc. (LTD) shares fell 3% after the owner of Victoria's Secret and Bath & Body Works said it's seeking to raise approximately $500 million of gross proceeds through an institutional private placement of senior notes due 2019. The notes will be guaranteed by certain of the company's subsidiaries. Limited said it plans to use the proceeds to repurchase or repay existing debt and for general corporate purposes.
Best Buy Co. (BBY) fell 1% ahead of its quarterly profit report Tuesday. The onslaught of the recession and rising job losses that curbed consumers' appetite for most things they don't need is expected to again hurt the electronics retailer when it reports its first-quarter results on Tuesday. The largest U.S. electronics chain is expected to report profit declined to 34 cents a share from 43 cents a year earlier, according to the average estimate of analysts surveyed by FactSet.
-Andria Cheng; 415-439-6400; AskNewswires@dowjones.com