Perhaps the most well regarded bond manager in the country, Bill Gross of Pimco, is making a large gamble on mortgage debt. The Pimco Total Return Fund, which invests $130 billion, has tripled its exposure to mortgage debt instruments.

According to the FT, Gross is counting on the US government to partially bail out the housing industry. He told the paper that “his decision to raise exposure to mortgage debt in current months was based on the US government’s implicit guarantee of Freddie Mac and Fannie Mae, the government-sponsored mortgage agencies.”

Of course, counting on the government to do anything is a bit risky, but Gross is probably making a good bet that the US will not let the housing situation slide much more than it has already. The danger to the entire economy is too great.

Gross could be right, and, if he is, Pimco investors stand to make massive returns on the fund.

Douglas A. McIntyre is an editor at 247wallst.com.

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Sales of existing homes in April 2008 fell 1.0%, to a seasonally-adjusted annualized rate of 4.89 million, the National Association of Realtors announced Friday, as inventories of homes swelled to a 23-year high.

Economists surveyed by Bloomberg News had expected April 2008 existing home sales to total a 4.85-million annualized rate. The March 2008 sales rate was revised higher to a 4.94-million annualized rate.

Even more telling, inventories — unsold homes and condominiums — rose to an 11.2-month supply at the current sales rate. A typical, healthy housing market has a three to four month supply of unsold homes on the market.

Further, the inventory of single family homes rose to 10.7-month supply - - its highest level since 1985. Meanwhile, the inventory of condominiums increased to a 14.2-month supply.

Also, the median sales price for houses and condominiums fell to $202,300 in April 2008, an 8% decrease from the $219,900 median recorded a year ago.

Existing home sales varied by region. Sales fell 6.0% in the Midwest, declined 4.4% in Northeast, were unchanged in the South, but rose 6.4% in the West.

Economic Analysis: Another bearish housing report. The report indicates Americans are continuing to delay their home purchases, which is rational, given the likely continued decline in home prices, save for a few isolated (and fortunate) markets/cities. The housing sector remains in a pronounced recession — its worst slump in more than 15 years.

Further, as the housing slump continues, each month it seems to contain another record-breaking stat: this month it was the inventory of single family homes, which reached its highest level — 10.7 months — since 1985. Moreover, given the housing sector’s relationship to U.S. GDP growth, housing’s continued doldrums point to continued overall U.S. economic sluggishness through at least Q2 2008, and most likely through Q3 2008.

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An anonymous reader notes that following our discussion this week about the 15-year-old who was under threat of prosecution for calling Scientology a cult in a recent demonstration, the UK Crown Prosecution Service has decided that there’s no case to answer. They’ve issued new guidance to the City of London police clarifying when they can use their public order powers. Quoting: “A [CPS] spokesman said: ‘In consultation with the City of London Police, we were asked whether the sign was abusive or insulting. Our advice is that it is not abusive or insulting and there’s no offensiveness (as opposed to criticism), neither in the idea expressed nor in the mode of expression.’ A spokeswoman for the City of London Police said: ‘The CPS review of the case includes advice on what action or behavior at a demonstration might be considered to be “threatening, abusive or insulting.” The force’s policing of future demonstrations will reflect this advice.’”

Read more of this story at Slashdot.

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As Apple, Inc. (NASDAQ: AAPL) continues marching into consumers’ lives with iPods, iPhone and iMacs (and iEverything), is the company ready to take over the iLivingRoom too? Even though the company’s Apple Television product has been received not-so-hotly, it’s a great product in the second generation form. But will it, with other products, provide the centerpiece of the digital living room within five years? According to some analysts, yes.

Apple is not perfect and has made several product mistakes, but those are the kinds of things that the media gushes on when iThis and iThat are released to the market and sell well. Still, a claim that Apple can come out of nowhere to “take over” the living room seems a bit dubious. A home server (without being called a server) and a universal remote, using iTunes as a central control and collection point for media — these will transform Apple into the Microsoft of the living room?

I am a massive Apple fan, from a marketing, design and usability perspective, but don’t own a single product. This is mostly because the freedom I like isn’t supported in the ways I like. Are you that way? Maybe, maybe not. But analysts, always the ones to grab headlines with big predictions, have this one dead wrong. Apple may be the centerpiece for some future digital living rooms, but it’ll be the vast minority in five years only.

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Filed under: Earnings reports, Products and services, Industry, Dell (DELL), Hewlett-Packard (HPQ)

Lenovo Group Ltd. (OTC: LNVGY), which bought IBM Corp.’s (NYSE: IBM) computer assets years ago, reported an outstanding financial quarter of this week. The Chinese company saw dramatic shipment increases into emerging markets as well as the Americas (even with weak demand in the U.S.). Shipments grew the fastest in the European region, with a 30% growth rate from the year-ago period.

Lenovo is behind Hewlett-Packard Co (NYSE: HPQ), Dell, Inc. (NASDAQ: DELL) and Taiwan’s Acer in terms of global Personal computer sales, but don’t tell it that. The company’s fourth-quarter profit more than doubled to $140 million from the $60 million year-ago quarterly figure. In the Computer industry, that’s a jump extraordinaire. Even though the Computer industry’s growth rose 15% in the company’s latest quarter, Lenovo topped that with an overall growth figure of 21%.

This is even more startling taking into account that Lenovo exports quite a bit to the U.S., which is in the midst of a consumer and business spending slowdown. This is where it comes in handy to have your sales dispersed in such a way that one region of the world doesn’t make or break your company. This is the fruits Lenovo is enjoying at the moment, as it has a very evenly distributed sales mix in every global region. Meanwhile, 60% of Dell’s 2007 sales came from the Americas only — and we wonder why the company’s sales have faltered.

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Jupiter’s Great Red Spot, the solar system’s largest (and longest-lived) storm, was joined by another in 2006, dubbed Red Spot Junior. Now a third red spot near the first two has been photographed by the Hubble space telescope. This is a storm about half the size of Earth. Here’s a pic of the new storm (it’s the one on the left). From New Scientist: “No one knows for sure what gives the three spots their red color. But one theory is that especially violent storms dredge up material from deeper in Jupiter’s atmosphere, such as phosphorus-containing molecules, which undergo chemical reactions that turn them red when exposed to sunlight.”

Read more of this story at Slashdot.

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esocid writes “US scientists have designed a new spray-on explosive detector sensitive enough to detect just a billionth of a gram of (nitrogen-containing) explosive. After treatment, the explosive glows blue under UV light, making the detector perfect for use in the field. The silafluorene-fluorene copolymer can detect explosives at much lower levels than existing systems because it detects particles instead of explosive vapors, and is able to show the difference between nitrate esters (trinitroglycerin) and nitroaromatic explosives (TNT). The team is currently working on a similar system to detect peroxide-based explosives and say they hope to be able to investigate perchlorates and organic nitrates too.”

Read more of this story at Slashdot.

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SecureThroughObscure writes “Security researcher Robert ‘RSnake’ Hansen discusses numerous concerns with Google’s new Google Health application, which aims to integrate user’s medical records online. We discussed Google Health’s opening to the public earlier this week. RSnake mentions that Google has found a loophole allowing them to provide this service without having to follow HIPAA regulations, which, combined with Google’s track record of having numerous flaws leading to private information disclosure, draws serious concern. Security researcher Nate McFeters of ZDNet’s Zero-Day Security Blog also commented on the article, mentioning several past vulnerabilities: ownership of content issues, Google Docs theft, a cross-domain hole, Google XSS, and a Google Picasa protocol handler issue leading to the theft of user images. He and fellow researcher Billy Rios disclosed these issues to Google, including the capability to steal GMail contact list information. McFeters says it’s likely that similar unpatched bugs would allow an attacker to view medical records if a user was also using Google Health. Both McFeters and Hansen tend to concur that Google’s vulnerability disclosure/notification is non-existent and really needs to be improved. Currently, Google does not report vulnerabilities it has fixed to its user base, for the obvious reason of trying to hide the fact that user data could have been stolen.”

Read more of this story at Slashdot.

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Filed under: Before the bell, Earnings reports, Deals, Microsoft (MSFT), Yahoo! (YHOO), Market matters, Halliburton (HAL), Gap Inc (GPS), Economic data, Oil, Housing

Stock futures were lower Friday morning as one again crude prices resumed their seemingly endless move upward. The market may also be agitated about further data upcoming about the housing market.

On Thursday, U.S. stocks ended higher two days of heavy losses as finally crude-oil futures retreated, giving some relief to the markets. The Dow industrials finished 24 points higher, or 0.19%, the Nasdaq Composite rose 16 points, or 0.67%, and the S&P 500 added 3 points, or 0.26%.

Only one economic report is due out this day. April existing-home sales will be released at 10 a.m. EDT, and economists anticipate it to decline yet again.

Oil prices rose Friday, as supply concerns once again took center stage especially with growing global demand. After tumbling around $4 overnight from a record above $135 a barrel, light, sweet crude for June delivery was up $1.29 to $132.10 a barrel.

With the long weekend just around the corner, trading might be lighter than usual today. U.S. markets will be shut Monday for Memorial Day.

Despite the market softening somewhat lately, deal news have been increasing. Today, we hear that Halliburton (NYSE: HAL) has made a conditional bid of $3.36 billion for Expro International Group PLC (OTC: EXPRF), the British oil services firm. The all-cash proposal is about 6% higher than the previous one.

Meanwhile, Yahoo Inc. (NASDAQ: YHOO) on Thursday postponed its annual meeting from July 3 to late July. No doubt, Yahoo!’s board, afraid of losing control following Carl Icahn’s call to replace the board. Yahoo’s board might use the time to either negotiate a deal with Microsoft Corp. (NASDAQ: MSFT), a partnership with another company, or prepare its defense. This the second time Yahoo has postponed its annual meeting.

Gap Inc. (NYSE: GPS) reported results after the close Thursday, saying that while revenue dropped 5%, it managed to still boost its first-quarter profit by 40% by managing inventory and cutting costs. Gap stated that it earned $249 million, or 34 cents per share on $3.38 billion in revenue. It beat estimates of 30 cents per share but missed the expected $3.42 billion in revenue. GPS shares traded 2.5% higher in after-hours.

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