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 (NYSE: AIG). Meanwhile, we received oil inventory and international trade data, the monthly treasury budget and mortgage activity data.
Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.
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.
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.
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.
Good Old AIG Gold old AIG (NYSE: 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 (NYSE: FFN), traded down 23% today after pricing its IPO at the low end of the range yesterday.
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