Sunday, April 29, 2012

Vilanova follows Guardiola

Pep Guardiola
GettyImagesPep Guardiola believes assistant Tito Vilanova will prove a success


Pep Guardiola has confirmed that he will leave Barcelona at the end of the season. His assistant, Tito Vilanova, has been appointed as his successor.

Guardiola has enjoyed great success at the Camp Nou since he was promoted in the summer of 2008 from his role in charge of the Barcelona B side. Under his leadership, Barca won the league title in 2009, 2010 and 2011, Champions League in 2009 and 2011 and the Copa del Rey in 2009.

However, he has been loath to make a long-term commitment to Barca, signing only one-year contract extensions amid fears of burnout in the face of the intense pressure the role attracts.

Following a week in which Barca suffered a 2-1 home defeat to Real Madrid - effectively ceding the title to their rivals - and then a 3-2 aggregate loss to Chelsea in the Champions League semi-finals, Guardiola told the board that he was not prepared to extend his contract. The players were informed of his decision during training on Friday morning and a formal announcement followed in a press conference attended by Guardiola and the squad.

President Sandro Rosell introduced the conference by saying: "We have called you today to announce that Pep Guardiola will not continue in charge of the team next season.

"Thank you, Pep, for all the happiness you have brought us and for bringing a model of football that can never be questioned. The thanks from everybody at Barcelona will be eternal for the best manager in the history of the club."

Guardiola, who apologised for the uncertainty over his future in recent months, said his exit was the best thing for all parties.

"I would like you to understand that this is not an easy decision for me, but I would like to explain my reasons for this decision," he said. "I have always wanted short-term contracts. Four years is an eternity as Barca coach.

"In the month of October I announced to the president and to the sporting director that I thought my spell was coming to an end. The main reason I have taken this decision is because four years is many years.

"I have given everything and I have nothing left and need to recharge my batteries. The demands have been great and I have not been able to rest much. I have to recover and the only way I can do that is by distancing myself. Otherwise, we would have ended up damaging each other.

"I know that I'm leaving the best place to work in. I am very satisfied with the result we have achieved. I have had the great privilege of coaching fantastic players. I want to thank them."

Guardiola also dismissed suggestions he could take another job this summer. "Sooner or later I'll take up another coaching job, but not right now," he said.

Following Guardiola's speech, it was announced that Vilanova will take charge of the first-team next season.

Rosell hailed Guardiola's contribution and backed Vilanova to continue Barca's success.

"Pep always takes the best decision for this club," Rosell said. "It was his decision and it's a personal one and an understandable one. We hope to follow the inheritance that Pep leaves us with the best we can. He has made us proud.

"Now we can confirm that Tito Vilanova will be our new coach. This was a decision taken by Andoni Zubizarreta and it has been ratified today by our executive committee.

"Tito and Andoni will now work on next season's planning and I am sure they will do a good job."

Barca have successfully promoted several players from the B team during the Guardiola reign, and sporting director Zubizarreta said the appointment of Vilanova was a continuation of that approach.

"Tito represents the philosophy of the club," Zubizarreta said. "We've always said that if the team needs players, we look at home first. Who do we have here at home? Tito.''

Guardiola believes Vilanova will prove a successful appointment.

"I think the club has taken the best decision possible," Guardiola said. "He is more than capable. The players know him. He will make few changes. He will give the club and these players something that I thought I could no longer give.

"I could have continued but it is not what Barca would have deserved."

Friday, April 27, 2012

raihan







S&P 500 Dividend Payers Climb to Highest in 12 Years

More Standard & Poor’s 500 Index companies are paying dividends than at any time since January 2000 after Apple Inc. (AAPL), Nasdaq OMX Group Inc. (NDAQ) and six other corporations initiated payouts this year.

The number has risen to 401, according to data compiled by Howard Silverblatt, S&P’s senior index analyst. His estimate for total payouts this year, which Silverblatt said is under review, is a record $279 billion.

Nasdaq OMX, the second-biggest U.S. operator of stock exchanges, announced its first dividend yesterday. Apple, the world’s biggest company by market value, unveiled one in March after canceling its program in 1996. Exxon Mobil Corp. (XOM) increased its dividend yesterday for the 30th straight year, making its $10.7 billion annual distribution the largest in the world, according to Silverblatt.

Companies are increasing shareholder returns in the form of dividends and buybacks after the 2008 financial crisis led them to hoard cash to a record $1 trillion by the end of 2011. The rise in payouts coincides with a 13th quarter of better-than- estimated earnings.

“Given underlying fundamentals, low payouts and cash reserves, 2012 should set a record high for cash dividend payments,” Silverblatt wrote in an e-mail today.

S&P 500 companies distributed a record $248 billion in cash to shareholders in 2008, when 372 companies paid dividends, according to his report.

To contact the reporter on this story: Whitney Kisling in New York at wkisling@bloomberg.net

Monday, April 23, 2012

Cable Rallies To Five Month High| April 23, 2012. Read more: http://forums.babypips.com/analyst-arena/44291-cable-rallies-five-month-high-april-23-20

Stocks finished the week positive following solid earning out of the US coupled with encouraging news out of Europe.

The Dow Index rose 65 points to finish at 13,029 flirting with the 13,000 milestone all week while the S&P 500 gained 1.21 point to close at 1,378.53. Earlier in the session the Dax Index rallied 1.18 percent to close at 6750.

The GBPUSD (see above chart) rallied to touch a five-month high Friday session on signs of improving U.K. consumer demand and expectations the country's policymakers will pause from further monetary stimulus.

WTI crude oil traded up from Friday night lows of 102.95 to as high as 104.70 following a report out of Germany that showed that the business sentiment rose unexpectedly for the sixth month in a row.

Gold stayed nearly flat in light trade on Friday, it is still on track to log declines for two of the past three weeks as investors took to the sidelines ahead of a Federal Reserve policy meeting next week.

Looking ahead the Chinese HSBC Flash Manufacturing PMI numbers will be released this afternoon.

INDICES

Last Traded
SPI 200 future 4375
S&P500 Index 1378
Dow Jones 13029
FTSE 100 Index 5722

COMMODITIES
Last Traded
Gold 1640.90
Oil (Nymex) 103.82

CURRENCIES
Last Traded
AUDUSD 10368
EURUSD 1.3199
GBPUSD 1.6128
USDJPY 81.65
Source
Bloomberg, Dow Jones News

Read more: http://forums.babypips.com/analyst-arena/44291-cable-rallies-five-month-high-april-23-2012-a.html#ixzz1srDVXn00

Wednesday, April 18, 2012

Dollar Rallies to End the Week, Risk Trends Will Remain Top Concern

Dollar Rallies to End the Week, Risk Trends Will Remain Top Concern

Referring to a weekly chart of the Dow Jones FXCM Dollar Index, the greenback was worked its way into a loaded period of congestion. We now find the currency holding a 200-pip range just below a 14-month range high that has prevented a larger bull trend reversal. The risk is clear. What is not clear, however, is what will catalyze the inevitable break – whether that will be bullish or bearish. This past week was a good representation of both the bullish and bearish factors for the greenback that continuously circulate yet consistently fall short of that critical sentiment shift. What we need is a fundamental change that categorically changes the dollar’s value in the global market.

Over the past week, the world’s reserve currency seemed to temper its correlation to risk trends. While the S&P 500 equity index (my favored measure of investor sentiment) phased from a tentative reversal to aggressive bounce, the dollar seemed responsive only when carry interest swelled. Should we expect this one-sided risk role to persist over the next week and beyond? The hang up for the usually equanimous safe haven was the drop in Treasury yields alongside sentiment-based assets. Normally, this wouldn’t have been a concern for a currency with such an exceptionally low rate. But the strong 10-year yield jump in previous weeks roused enough speculation of an accelerated stimulus withdrawal that the correlation warped. Yet, now back within the range low of the past six months, that premium should be mostly worked off.

So, now we head into a new trading week with a currency that should have greater freedom of movement if capital markets continue to fall apart. That is an opportune situation as the S&P 500 is on the verge of a genuine bear trend. That said, we are still in need of fuel to feed the fledgling drive. Earnings will be a highlight for capital market participants that have based much of their optimism on investment that has circumvented still-weak consumer spending. The reemergence of the Euro-area crisis is another loaded catalyst for the global market. And, of course, there remains the stimulus debate. The Fed seems to have quashed speculation of QE3, but there are other central banks increasing balance sheets.

Euro Traders Watching Spain, ECB and Bond Auctions as Crisis Fears Balloon

The fundamental outlook for the Euro-region hasn’t changed significantly over the past months. Rather, the market’s appreciation of the risks and what it would mean for exposure in the region have. And, when investors want to exit before the crowd, it naturally touches off a flood. How extensive and violent any deleveraging becomes depends on two factors: the underlying balance of risk trends and the intensity of regional trouble. With benchmarks for sentiment starting to take a turn for the worse, the euro is already in a sensitive position. Fundamental traders should keep a close eye on Spain’s financial health. The country’s 10-year yield is just below 6 percent, credit default swaps trade at record highs and the ECB’s lending to the Bank of Spain surged to a record high €316 billion in March. Spain is looking more and more like Ireland or Portugal. Other highlights to watch include the ECB’s SMP bond purchase report and the Spanish and Greek bond auctions on tap.
Japanese Yen Retreats for a Second Week, Officials Growing Antsy
Bank of Japan officials and politicians were no doubt relieved back in February when the central bank’s announcement of an additional 10 trillion yen boost to the asset purchase program finally felled a multi-year USDJPY bear trend. From the beginning, however, it was clear that wouldn’t be a straight line decline for the funding currency. The policy group’s efforts to devalue the currency are no doubt significant, but they do not carry enough weight to alter the yen’s position as a long-term funding source for yield spread-derived trades. And, that means strong anti-risk / anti-carry winds will naturally force deleveraging that boosts the yen. The question is whether the BoJ will try to fight the natural course again.
Australian Dollar: RBA Minutes Impact will Leverage Rate Expectations
Normally, the RBA minutes would have little to no influence over the Australian dollar. The statements that Governor Stevens usually leaves us off with are sufficiently transparent in their intentions. The last policy decision from the central bank was pretty clear as well, however, the threat of an imminent rate cut generally leverages more intense focus. More specifically, the Governor suggested that another trimming of the benchmark rate depended on the pace of the 1Q CPI figures do out the following week. While we wait for the results of that data, traders who have already driven the currency lower through rate forecasts will pick the statement apart to assess the intensity of their dovish stance.
British Pound Ups the Rate Speculation with CPI, Jobless Claims and BoE Minutes
Interest rates and monetary policy have been and will be primary drivers for the sterling, but it just so happens that monetary policy has been on ice for the Bank of England. The only changes to come through are bond purchase program (QE) increases that are signaled well ahead of time. Further intentions beyond these efforts are simply not offered up. Yet, traders will still set the bar through their own speculation. That sets us up for a unique view further ahead the policy curve with both inflation and employment readings to compliment the BoE’s minutes.
New Zealand Dollar May Follow Aussie Lower if 1Q CPI Cools Further
When talking about fading interest rates amongst the high-end of the yield curve, the conversation has remained almost exclusively on the Australian dollar’s ills these past weeks and months. The exemption for the kiwi may soon come to an end however. A key reason the currency has limited its sensitivity to negative sentiment trends is that we haven’t seen a momentous bear trend arise for risk. Another factor is New Zealand’s own economic balance. We have 1Q CPI due for release next week, and the annual clip is expected to cool even further.

Gold Holds Three Year Bull Trend for Another Week, Stimulus Debate Becoming Serious
A bullish close on the week for gold is a boon for long-term bulls. At current levels the precious metal is dangerously close to the long-term trendline that has stood as the backbone to the bull trend that began at the height of the financial crisis back in 2008. Traders will have noticed that volume has materially dropped and all swells have been tied to selling efforts. Furthermore, futures open interest is at its lowest point since September 2009 and Fed stimulus expectations have eased. Is there enough anti-inflation, alternative-store-of-wealth demand out there?

Tuesday, April 17, 2012

Euro Declines Before Spanish Debt Sale, German Sentiment

Euro Drops Versus Peers Before Spanish Sales, German Confidence

The shared currency slid 0.1 percent to 105.59 yen after dropping 0.2 percent to 105.67 yesterday.



The euro weakened against the dollar and yen as Spain prepares to sell debt in a market where concern the region’s fiscal crisis is spreading drove the nation’s borrowing costs to the highest this year.
The 17-nation currency also fell before data that may show confidence among investors in Germany, Europe’s biggest economy, declined from a 21-month high. Australia’s dollar slid for a third day versus its U.S. counterpart after the South Pacific nation’s Reserve Bank said slower inflation would increase the prospects of an interest-rate cut. China’s yuan rose as improving U.S. economic data boosted the nation’s export outlook.

“My feeling is that it’s still overall a bearish mood with regard to the euro,” said Kara Ordway, a currency strategist at City Index Group Ltd. in Sydney. The debt sale “will give us a first indication as to how currently people view Spain.”
The euro lost 0.3 percent to $1.3108 at 7:05 a.m. in London after reaching $1.2995 yesterday, the lowest level since Feb. 16. The shared currency fell 0.3 percent to 105.37 yen. The U.S. dollar was at 80.39 yen after declining yesterday to 80.30, the weakest since Feb. 29.
Spain will sell 12-month and 18-month bills today, followed by auctions of debt due in 2014 and 2022 on April 19.

Spanish Yields
Yields on the nation’s 10-year notes touched 6.16 percent yesterday, the highest since Dec. 1 and edging toward the 7 percent level that pushed Greece, Ireland and Portugal into international rescues. The cost of insuring against a Spanish default rose to the highest on record, according to CMA.
Spanish Prime Minister Mariano Rajoy said his nation must slash its budget deficit in order to maintain access to financing. Failing to reduce the deficit will mean “we won’t be able to fund our debt, we won’t be able to meet our commitments,” he told a conference in Madrid yesterday.
Spain has the euro area’s fourth-biggest economy and the government forecasts it’ll contract 1.7 percent this year as the deepest budget cuts in more than 30 years are implemented. The plan seeks to shrink the deficit to 5.3 percent of gross domestic product this year from 8.5 percent last year.
The implied volatility of three-month options for Group of Seven currencies rose to as high as 10 percent yesterday, according to the JPMorgan G7 Volatility Index. An increase makes investments in currencies with higher benchmark rates less attractive because it shows the risk is greater that market moves will erase profits on such trades.
Currency Volatility
The euro is approaching its support zone of between 104.25 yen and 104 yen, according to Niall O’Connor, a technical analyst in New York at JPMorgan Chase & Co.
“We are wary of a bounce” from those levels, he wrote in a research note yesterday. Support refers to a level where buy orders may be clustered. The 50 percent retracement on the euro’s Fibonacci chart between a January low and a March high was at 104.24 yen, data compiled by Bloomberg show. The euro slid to 104.63 yen yesterday.
The ZEW Center for European Economic Research in Mannheim will probably report today its index of German investor and analyst expectations, which aims to predict economic developments six months in advance, fell to 19 in April from 22.3 in March, according to the median estimate in a Bloomberg News survey. Last month’s figure was the highest reading since June 2010.
“The euro should continue to be constrained by the prospect of soft ZEW survey results today amid already nervous conditions in peripheral bond markets,” Cameron Umetsu, a currency strategist at UBS AG, wrote in a report.
RBA Minutes
The euro has lost 0.1 percent in the past month, according to Bloomberg Correlation Weighted Indexes. The Australian dollar dropped 2.4 percent in the same period, the worst performance among the 10 developed-nation currencies tracked by the gauge.
Minutes released today of the Reserve Bank of Australia’s April 3 meeting, when officials held the benchmark interest rate unchanged at 4.25 percent, reaffirmed that the next rate reduction hinges on an April 24 report on first-quarter inflation. Governor Glenn Stevens said in a statement after this month’s gathering that the board “judged the pace of output growth to be somewhat lower than earlier estimated.”
The so-called Aussie lost 0.3 percent to $1.0322.
China’s yuan advanced after a report yesterday showed U.S. retail sales gained 0.8 percent in March, beating economist forecasts.
Home starts probably increased to a 705,000 annual rate in March following a 698,000 pace the prior month, while industrial production gained 0.3 percent after being little changed in February, according to estimates in separate Bloomberg polls before the figures are released today.
The yuan gained 0.2 percent to 6.3031 per dollar, according to the China Foreign Exchange Trade System.
To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net

Tuesday, April 10, 2012

unemployment





High unemployment may dog the US for years

By Jonathan Spicer and Lucia Mutikani, Reuters

NEW YORK/WASHINGTON -- Gary Feeman has been searching for a job for 16 months. He's not ready to give up just yet, but the 60-year-old worries he is running out of options.

Feeman is among the more than 5 million Americans who have been out of work for more than six months and who represent the heart of the crisis in the labor market.

Their plight also poses a warning that U.S. unemployment may not drop back to its pre-recession levels and could be stuck higher than many policymakers expect.

Feeman, from Lancaster County, Pennsylvania, has sent out as many as 100 resumes. But the former maintenance director at a small amusement park in the area, has had only one interview in person. That was in January.

"I have tried everything under the sun," he said. "The frustrating thing to me is that when you apply for a job, employers do not respond either way."

One of the biggest challenges facing U.S. Federal Reserve Chairman Ben Bernanke and his colleagues is to understand whether people like Feeman will eventually find work once the economy gathers enough speed.

Bernanke appears to think they will and he has suggested more stimulus by the Fed might be needed to kick-start demand, and job creation, into a higher gear.

But if he's wrong, the central bank risks pumping too much money into the economy in an effort to help people who have become unemployable. Rather than bringing down the jobless rate, the Fed could eventually fuel higher inflation.

"We're living through a juncture in U.S. policy history in which we're making major decisions about what type of society we're likely to be," said Steven Davis, an economist at the University of Chicago. "Those decisions will affect things for a generation."

Some 40 percent of the nation's unemployed have been out of work for more than six months. That's over twice the rate of long-term unemployment just before the 2007-2009 recession.

Bernanke mostly pins long-term joblessness on weak demand from American consumers and companies. In late March, he pointed to data showing that, compared to before the recession, the short-term unemployed also are taking much longer to find work.

This, he argued, justifies the Fed's policy of keeping interest rates low to help the economy. Persistent long-term unemployment is a risk because it might someday make people unemployable, he said.

"If progress in reducing unemployment is too slow, the long-term unemployed will see their skills and labor force attachment atrophy further, possibly converting a cyclical problem into a structural one," Bernanke told a conference of economists.

Long-term unemployment has other costs for the economy. A paper for the Brookings Institution, a Washington think-tank, finds that men who lose their job when the unemployment rate is above 8 percent forfeit twice as much in future earnings than if had they lost their job when the rate was below 6 percent.

Still, a number of private economists argue there are signs the structural unemployment problem is already larger than Bernanke would acknowledge.

Wall Street more gloomy than the Fed
Most Fed policymakers think the jobless rate could fall to somewhere between 5.2 and 6 percent before the economy heats up enough to fuel inflation. That's a higher "natural" unemployment rate than the roughly 5 percent rate estimated by most Fed policymakers three years ago.

Many private sector economists have shifted their estimate of the natural rate even higher. Credit Suisse pegs it at around 6.5 percent, and UBS at near 7 percent.

"If that is the case the Fed will run out of effectiveness much sooner than they realize," said Adolfo Laurenti, deputy chief economist at Mesirow Financial, in Chicago. He estimates the natural rate at between 6.5 and 7 percent.

Some economists see signs of an increase in the natural jobless rate in the widespread mismatch between job openings and the qualifications of those seeking work.

In U.S. manufacturing, for example, more than 600,000 jobs are unfilled because of a lack of skilled applicants, according to a study by Deloitte and the Manufacturing Institute.

Many of the companies that are hiring are turning increasingly to younger workers with more up-to-date skills training, rather than taking a chance on people who have been out of work for a long time.

In Kentucky, a construction firm responded to the recession like most of its rivals: from 2008 to 2010, Gray Construction cut 51 of its total of 245 employees. As signs of growth returned to the economy, it started hiring again, with a focus on college graduates with specialized degrees.

"There has to be a very compelling reason to take somebody who was not in the industry, who has changed over to the industry, versus somebody who graduated with an engineering degree or construction management degree," said president and chief executive Stephen Gray.

Another possible source of a run-up in the natural jobless rate is that firms are relying more and more on automation technology. Workers untrained in using that technology could struggle to get jobs.

Some economists think long-term unemployment is also kept high because many workers can't move to find work because they owe more on their mortgages than their homes are worth.

"I don't think people have fully appreciated how deep the hole is," said Michael Greenstone, an economist at MIT university and former chief economist at the White House's Council of Economic Advisers. "The Great Recession is going to be living in our collective homes for many more years to come."

The Fed has bought $2.3 trillion in securities and kept interest rates near zero for over three years to aid the economy and fight the sharpest jump in unemployment since World War Two.

So far it has helped to bring the jobless rate down from 10 percent in 2009 to 8.2 percent in March, although many of the unemployed have become so demoralized that they have left the formal labor force.

If some economists are right to believe the natural unemployment rate is as high as 7 percent, then the Fed could hit a wall before long and need to tighten monetary policy.

Minneapolis Fed President Narayana Kocherlakota -- one of the policymakers at the Fed who suggests rates will have to rise sooner than later -- thinks last year's rise in inflation was a sign the Fed is approaching that wall.

"There's a point at which it gets to be very costly in terms of how much inflation you'd have to generate in order to get a reduction in unemployment," Kocherlakota said last month.

Such predictions are grim for construction workers like Mfthel, 36, who most days sits on a plastic crate at an intersection in Brooklyn, New York, waiting for casual work -- as he has done most days since the recession hammered his industry.

Mfthel, who declined to give his family name, and some of the other dozen men waiting on the street corner with tools and steel-toe boots said they had permanent jobs before the construction boom ended. Now they can expect $7 to $10 an hour for repairing buildings, moving furniture and paving driveways.

"Now they don't come or they don't pay enough," he said. "You can't do much with 20 bucks."

Friday, April 6, 2012

Obama Risks Voter Backlash by Warning Court on Health Law

President Barack Obama

President Barack Obama said he's confident the 2010 health-care law is constitutional, saying it would amount to "judicial activism" by the Supreme Court to throw out the statute requiring Americans to have medical insurance. Photo: Chris Kleponis/Bloomberg



President Barack Obama has shown a willingness to campaign against the U.S. Supreme Court if the justices strike down his 2010 health-care law. It’s a strategy that’s as risky as it is rare.

With the court months away from a ruling, Obama ratcheted up the political stakes this week by saying a decision to reject the law and its requirement that Americans get insurance would be “judicial activism” by “an unelected group of people.”

Taking on the court would mean fighting an institution that polls show is historically the most admired branch of government. That’s one reason no major party nominee has made the court a central issue since 1968, when Richard Nixon tapped into voters’ unease about rising crime by attacking the expansion of suspects’ rights under Chief Justice Earl Warren.

“The risk any president faces is that criticism of the Supreme Court can backfire,” said William G. Ross, a constitutional law professor at Samford University in Birmingham, Alabama, who has written about the role of judicial issues in presidential campaigns. “People can perceive it as unduly disrespectful of an institution that commands tremendous amounts of public respect.”
Declining Ratings

Still, the court’s approval ratings have declined in recent years, and there are indications the public sees politics infusing the biggest rulings. In a Bloomberg National Poll conducted March 8-11, 75 percent of respondents said they expect politics will influence the health-care decision, while only 17 percent said they believe the case will be decided solely on its legal merits. Eight percent said they weren’t sure.

Democrats are increasingly questioning the motives of the court and its majority of five Republican appointees. A decision striking down the law would almost certainly be along party- based lines, with the five Republican-appointed justices joining to invalidate the measure and the four Democratic appointees dissenting.

“It sure looks like a court of conservative activists,” Democratic Senator Charles Schumer of New York told reporters today.

Obama was training his sights on the court even before the health-care case landed there. The president used part of his 2010 State of the Union address to criticize a court decision letting corporations spend unlimited sums on political advertising, saying it would “open the floodgates” for special interests to “spend without limit in our elections.”
Not Waiting

This time, he isn’t waiting for the court to rule. Last week’s three-day, 6 1/2-hour argument -- the longest in 44 years -- suggested the court might turn down at least the core of the health-care law, the insurance mandate. The session at times took on almost a political air as the justices debated whether Congress would be able to re-enact or repeal parts of the law.

This will mark the first time the court has ruled on a president’s signature legislative accomplishment in the middle of his re-election campaign. The decision will probably come in late June, less than five months before the election.

Obama twice this week said he was confident the court will uphold the law, which would expand health insurance to at least 30 million people and reshape an industry that makes up one- sixth of the U.S. economy.
‘Judicial Activism’

In almost the same breath, he went on the attack, saying a ruling against the law would be the very type of “judicial activism” Republicans have long denounced. The phrase has become a standard Republican line for criticizing Supreme Court decisions backing abortion access, expanding gay rights and limiting the death penalty.

Senator Mitch McConnell of Kentucky, the top Senate Republican, said in an interview that Obama is “trying to intimidate them into making a decision on Obamacare that he favors.” The Kentucky senator added, “And the threat is, if you don’t decide the way I want you to, I will make you an issue in the campaign.”

In remarks prepared for delivery to the Rotary Club of Lexington, Kentucky, today, McConnell said Obama “crossed a dangerous line this week” and needs to “back off.”

Republicans have already begun to use the case for campaign purposes, posting an Internet advertisement last week that altered the audio from the argument to attack the law.
No Intimidation

Jay Carney, a White House spokesman, yesterday called the president’s comments “the reverse of intimidation.”

Obama was saying only that he expects the court to uphold the law on the basis of prior cases backing congressional power, Carney told reporters. “He’s simply making an observation about precedent and the fact that he expects the court to adhere to that precedent,” he said, adding that Obama spoke about the case only after being asked a question by a reporter.

Ben LaBolt, a spokesman for Obama’s re-election campaign, declined to comment on the prospect of the court becoming a campaign issue.

Outside observers questioned the wisdom of Obama’s comments at a time when the justices might not have made up their minds. The president risks alienating Chief Justice John Roberts and Justice Anthony Kennedy, the very ones he needs to support the law, said Grier Stephenson, a government professor at Franklin & Marshall College in Lancaster, Pennsylvania.
‘Might Backfire’

“That he warned the court against doing it would almost be like a challenge to the court, and that might backfire,” said Stephenson, author of “Campaigns and the Court.” “You never know how individual justices might take being warned away from a particular decision.”

Already, at least one Republican-appointed judge is bristling at the president’s comments. A day after Obama spoke, a federal appeals court reviewing a separate part of the health- care measure ordered the Justice Department to submit at least a three-page letter stating whether it believes courts can strike down unconstitutional laws.

Obama’s statement “has troubled a number of people who have read it as somehow a challenge to the federal courts or to their authority,” Judge Jerry Smith told a Justice Department lawyer in court.

Attorney General Eric Holder responded to Smith today with a letter saying “the power of the courts to review the constitutionality of legislation is beyond dispute.” The president’s remarks were “fully consistent” with that principle, the attorney general wrote. Holder’s reply was 2 ½ pages.
Court Remains Popular

More broadly, Obama would run a political risk in attacking an institution that remains popular, though less so than in previous years. The court’s approval rating stood at 46 percent, with 40 percent disapproving, according to a Gallup poll taken in September. As recently as 2009, the court’s approval rating stood at 61 percent.

“Even many Americans who disagree with individual decisions of the Supreme Court or even the general trend of Supreme Court decisions nevertheless retain immense respect for the court as an institution,” Ross said.

Obama’s approval rating was 42 percent during that same period. It has since risen to 48 percent, with 45 percent disapproving, according to the latest Gallup three-day tracking poll. A Gallup poll taken last month showed Congress’s approval rating at 12 percent.

An attack on the court would mark a historic shift for Obama’s party. The last Democratic presidential nominee to make the court a campaign issue was William Jennings Bryan, who lost the 1896 election after criticizing the court’s rulings against labor unions and an income tax.
Roosevelt and Court

In 1936, Franklin Roosevelt refrained from attacking the court during his re-election bid even though it had overturned central aspects of his New Deal economic-recovery plan. Roosevelt waited until after his landslide victory to propose packing the court with as many as six additional justices who would be more sympathetic to his programs.

The idea went nowhere, in part because the public was uneasy about undermining the court’s independence, said Barry Friedman, a New York University law professor and author of a book on public opinion and the Supreme Court.

“Probably Obama’s best strategy would be to run quietly against the court rather than loudly, to allow the court to be an issue but not be seen as the primary attacker,” Friedman said. “History suggests there’s sometimes a danger in attacking the court too aggressively.”

A criticism of the court would underscore the power the winner of the presidential election may have to reshape the nine-member bench. Four justices are 70 or older, including Ruth Bader Ginsburg at 79, Antonin Scalia at 76, Kennedy at 75; and Stephen Breyer at 73.

Ultimately, Obama’s criticisms may have less to do with winning over swing voters than reminding his political base of the court’s importance.

Focusing on the court tells his supporters that, “if he remains in office for the next four years, in all likelihood he will have the opportunity to appoint at least one or two justices to the court,” Ross said. “And that could have a profound impact on the court.”

To contact the reporters on this story: Greg Stohr in Washington at gstohr@bloomberg.net; Seth Stern in Washington at sstern14@bloomberg.net

U.S. Stocks Retreat as Europe Overshadow Jobless Claims

U.S. Stocks Erase Losses as Investors Await Government Jobs Data

A trader works on the floor of the New York Stock Exchange. Photographer: Jin Lee/Bloomberg



U.S. stocks fell, sending the Standard & Poor’s 500 Index toward its biggest weekly drop of the year, as renewed concern about Europe’s debt crisis overshadowed a drop in jobless claims to a four-year low.

Alcoa Inc. (AA) and General Electric Co. (GE) fell more than 1.3 percent for the biggest drops in the Dow Jones Industrial Average. Constellation Brands Inc. (STZ) lost 14 percent, the most in the S&P 500, after the wine company forecast earnings that missed analysts’ projections. Bed Bath & Beyond Inc. (BBBY) rose 9.5 percent, leading consumer discretionary stocks higher, as the retail-chain operator’s profit beat estimates.

The S&P 500 dropped 0.1 percent to 1,397.38 at 2:59 p.m. New York time. The Dow fell 26.53 points, or 0.2 percent, to 13,048.22. About 4.3 billion shares changed hands on U.S. stock exchanges today.

“You have, certainly, improvement in the labor market in the U.S. but every once in a while we got reminded there still remain problems in Europe,” Greg Woodard, a portfolio strategist at Manning & Napier in Fairport, New York, which manages about $40 billion, said in a telephone interview. “The volatility is going to continue. It’s going to be choppy. The trend seems to be improvement in the U.S. and continued difficulties outside the U.S.”

The S&P 500 has retreated 0.8 percent this week after reaching an almost four-year high on April 2 as demand fell at a Spanish bond auction and minutes from the Federal Reserve’s latest policy meeting damped expectations for more monetary stimulus. The gauge has still rallied 11 percent this year as U.S. economic reports surpassed estimates and investors speculated the euro-area’s sovereign debt crisis will be contained.
Jobs Data

Equities trimmed early losses after Labor Department data showed unemployment claims in the U.S. fell 6,000 to 357,000 in the week ended March 31, the fewest since April 2008. The median forecast of 43 economists in a Bloomberg News survey estimated a decrease to 355,000. The number of people on unemployment benefit rolls also dropped, while those getting extended payments increased.

A report tomorrow may show the economy added more than 200,000 jobs in March for a fourth consecutive month, the longest streak of similar increases since late 1999 to early 2000. While U.S. stock exchanges are closed tomorrow for Good Friday, index futures will trade for 45 minutes following the Labor Department’s monthly jobs report.

Stocks fell earlier as Spanish bonds declined for a third day today, pushing the spread between yields on 10-year Spanish and German debt to more than 400 basis points for the first time since Dec. 12.
‘Take Risk Off’

The S&P 500 may fall as much as 7 percent because of economic weakness in Europe, according to hedge fund manager Barton Biggs.

“I may want to take a little risk off,” Biggs, founder of Traxis Partners LP, said on Bloomberg Television’s “In the Loop” with Betty Liu. “I am cutting back a little, and I’m tempted to cut back some more,” he said. Equities are “going higher over the course of the next few months, but in the short run here we’ll have a little pause.”

The Morgan Stanley Cyclical Index lost 0.7 percent. Alcoa declined 1.9 percent to $9.62, while General Electric erased 1.3 percent to $19.49.

Constellation Brands plunged 14 percent to $21.11. The world’s largest wine company said earnings per share for the full year may be $1.93 to $2.03. Analysts projected profit of $2.23, the average of 12 estimates in a Bloomberg survey.

Polycom Inc. (PLCM), a maker of videoconferencing equipment, slumped 20 percent to $14.63 after saying preliminary first- quarter earnings and revenue fell short of analysts’ expectations.

Consumer discretionary stocks had the biggest gain in the S&P 500, led by Bed Bath & Beyond. The retail-chain operator rose 9.5 percent to $72.53 as the company posted a fourth- quarter profit of $1.48 a share, beating the average analyst estimate of $1.32.

To contact the reporters on this story: Lu Wang in New York at lwang8@bloomberg.net; Inyoung Hwang in New York at ihwang7@bloomberg.net