Late-Night HeadlinesBloomberg:
- European Central Bank Executive Board member Lorenzo Bini Smaghi said the bank can intervene in the currency market if needed. “Exchange-rate markets are prone to episodes of overshooting and undershooting,” Bini Smaghi said in a speech in Brussels today. “Public intervention -- in the form of public statements or even outright interventions in FX markets - - may thus be warranted.” Euro-area policy makers have expressed concern that the pound’s 13 percent slide against the euro in the past year could push the 16-nation bloc deeper into recession by undermining exports to its biggest trading partner. The region is already grappling with the worst recession since World War II as a collapse in global demand chokes foreign sales, prompting companies to scale back output and cut jobs. “If market perceptions of the inadequacy of the euro area’s response to the crisis grow and the euro loses out to competitive devaluations elsewhere, pushing it higher, the zone’s ability to take advantage of a tentative global recovery will be impeded,” Deutsche Bank AG economist Mark Wall wrote in a report published on April 3.
- The largest U.S. foreign aid program fighting the AIDS epidemic has cut the disease’s death toll by 1.2 million from 2004 to 2007 in a dozen hard-hit African countries, researchers said. The President’s Emergency Plan for AIDS Relief, started by President George W. Bush in 2003, lowered the AIDS death rate on average by 10.5 percent a year in those countries, said study author Eran Bendavid of Stanford University in a study published online today in the Annals of Internal Medicine. The program’s benefits didn’t extend to preventing new infections or lowering overall prevalence of the AIDS virus. The largest single U.S. foreign aid program for health in history, the PEPFAR program has invested most of its $18.8 billion to date in treatment for people already infected by the AIDS virus. The relief plan devoted a smaller share to prevention programs that often focused on sexual abstinence.
- The cost of protecting Asian bonds from default fell, according to traders of credit-default swap contracts. The Markit iTraxx Japan index fell 25 basis points to 318 at 9:48 am in Tokyo The Markit iTraxx Australia
- International Business Machines Corp.(IBM) and Computer Sciences Corp.(CSC) won the first major contracts in the U.K. government’s identity card program. The two awards are worth 650 million pounds ($971 million) over 10 years.
- Treasuries rose, ending three days of losses, as the Federal Reserve prepared to buy government securities tomorrow for the second time this week to hold down borrowing costs.
- The U.S. Securities and Exchange Commission sued a Toronto hedge-fund manager, claiming he touted himself as a Chinese Warren Buffett while raising as much as $75 million for a fund the agency said became a Ponzi scheme.
- Usinas Siderurgicas de Minas Gerais SA and Cia. Siderurgica Nacional SA, Brazil Brazilian steel prices will likely fall in the second quarter, Itau Corretora said, citing Christiano Freire, president of the country’s National Institute of Steel Distributors. Domestic prices are “too high,” compared with global prices and will likely fall 10% by May after declining 15% from the fourth quarter, Itau analysts led by Paula Kovarsky wrote. Distributors likely will pare inventories of flat steel until the second quarter, leading to a 20% decline in purchases this year, the analysts cited Freire as saying. Separately, Deutsche Bank AG analysts David Martin and Jorge Beristain cut their average steel price estimates for 2009 by 14% to $515 a metric ton. Steel demand will fall 20% in Latin America and 25% in North America this year, the analysts wrote. The analyst reduced their rating for Gerdau SA, Latin America ’s largest steelmaker, to “sell” from “hold.” Analysts covering Brazil
- China
- David Dreman was fired as manager of a Deutsche Asset Management mutual fund he has run for 20 years after a bet on financial stocks contributed to a 47 percent loss in the past year. The trustees of the $2.2 billion DWS Dreman High Return Equity Fund voted to remove Dreman Value Management LLC on June 1, according to a filing last week with the U.S. Securities and Exchange Commission. The fund’s loss in the past year placed it in the bottom 3 percent of its peers, according to data compiled by Bloomberg.
- Cisco Systems Inc.(CSCO) is ready to pick up the pace of mergers and acquisitions over the next year after the valuations of technology companies slumped, said Ned Hooper, the company’s top dealmaker. “We will be active -- not hope to be -- will be,” Hooper, Cisco’s senior vice president of corporate business development, said in an interview. “We continue to use M&A as a key part of our growth strategy. The downturn for us is a big positive.”
- Earnings at companies such as Alcoa Inc.(AA) and Dow Chemical Co.(DOW) may show the first signs of recovery in the second quarter after profits at Standard & Poor’s 500 Index members fell 37 percent in the first three months of 2009. The slide may moderate in the second and third quarters, and earnings may start growing by the end of year, according to data compiled by S&P and Bloomberg. The first quarter may mark the seventh straight period of profit declines, the longest slump since the Great Depression. “This is a throwaway quarter -- everyone expects it to be bad,” said Richard Vanden Boogard, who helps oversee $60 billion at Victory Capital Management in Cleveland. “People will be looking forward to the commentary for guidance. It’s all about the outlook.”
- Defense Secretary Robert Gates today offered a blueprint for reorienting U.S. military purchases that calls for more to be spent on immediate battlefield needs and threats while eliminating programs designed in the Cold War-era and those exceeding budget estimates. Standard & Poor’s Aerospace & Defense Index rose 8.4, or 3.6 percent, to 244.12 after Gates’s announcements.
- Harley-Davidson Inc.(HOG), the biggest U.S. motorcycle maker, named Keith Wandell of Johnson Controls Inc.(JCI) chief executive officer and brought in a new president as part of a management restructuring. Wandell, 59, will replace retiring CEO James Ziemer May 1, the Milwaukee-based Harley said in a statement today. Wandell was formerly Chief Operating Officer and President of Johnson Controls Inc., North America’s largest auto supplier, also based in Milwaukee.
- Yemen, the ancestral homeland of al- Qaeda leader Osama bin Laden, is facing a rising tide of terrorist attacks as militants strengthen their base in the poorest Arab nation, which borders Saudi Arabia.
- General Motors Corp.(GM) is speeding up preparations for a possible bankruptcy filing even as directors seek deeper savings this week to avoid that outcome, people familiar with the plans said.
- The U.S. is pushing for the United Nations Security Council to condemn North Korea for firing a missile in violation of a UN resolution, Secretary of State Hillary Clinton said. “We remain convinced that coming out with a strong position in the United Nations is the first and important step that we intend to take,” Clinton told reporters in Washington yesterday. “We know that working out the exact language is not easily done overnight.” The U.S. is involved in consultations with members of the Security Council, Clinton said, adding that North Korea’s April 5 missile launch “has grave implications.” The U.S. says the launch violated a UN resolution prohibiting North Korea from developing missile technology. President Barack Obama called the test a “provocation” that “underscores the need for action” from the UN. “North Korea ignored its international obligations, rejected the unequivocal calls for restraint and further isolated itself from the community of nations,” Clinton said, according to a State Department transcript. China and Russia initially resisted U.S. and Japanese calls for tougher sanctions against North Korea at an emergency Security Council meeting. They can both veto any resolution, increasing the likelihood of prolonged negotiations at the UN.
- Hitachi Construction Machinery Co., Asia’s second-largest maker of earthmovers, tumbled by the most in a month in Tokyo trading on a report its operating profit may decline about 50 percent this fiscal year. The stock fell as much as 4.5 percent and traded 3.7 percent lower at 1,363 yen as of 10:20 a.m. on the Tokyo Stock Exchange.
Wall Street Journal:
- Treasury Revisits Rules for Toxic-Asset Sales. The Treasury Department, facing criticism over its bank-rescue program, said it may allow a broader group of private investors to purchase toxic securities. The Treasury said it may select more than five asset managers to coinvest with the government to purchase distressed real-estate investments. And it may allow firms with less than $10 billion under management to qualify for the program. "There are several ways smaller firms can partner with fund mangers, including as an asset manager, an equity partner or a fund-raising partner," the Treasury said Monday. "Other ways to participate include providing such services as trade execution, valuation and other important financial services." Some on Wall Street, primarily hedge funds, have criticized the Treasury's program as limiting access to a select few, such as Pacific Investment Management Co., a unit of Allianz SE, as well as BlackRock Inc. and Goldman Sachs Group Inc.
- A contentious public hearing Monday highlighted the Obama administration's challenge to craft an energy policy that emphasizes alternative fuels but also recognizes the dominance of traditional sources. Opponents of offshore drilling dominated the hearing, convened by the White House to gauge public opinion on whether the government should expand oil and natural-gas production in federal waters. Drilling supporters focused on the industry's improved safety record, as well as billions of dollars in potential government revenue. Many of President Barack Obama's supporters, particularly in the Northeast, strongly object to new drilling off their shores. According to an analysis of federal data by Securing America's Future Energy, a Washington-based group of business and retired military leaders that advocates increased domestic production, the offshore industry produced 10.2 billion barrels of oil between 1985 and 2007 with a spill rate of .001%. Many who attended Monday's hearing said they were more favorably inclined toward using coastal waters to host wind and wave-power projects. Mr. Salazar said the Interior Department will release final rules governing offshore renewable-energy projects "in a month or two," which would then allow lease sales and project development off the coasts. Mr. Salazar also said wind turbines off the East Coast could generate enough electricity to replace most, if not all, the coal-fired power plants in the U.S. Revis James, a spokesman for the Electric Power Research Institute, a nonprofit group based in Palo Alto, Calif., said that while such a development "might be theoretically possible, in practical terms, it's not very likely that it will be economical."
- A field of 111 teams -- ranging India's Tata Motors Ltd., Silicon Valley startup Tesla Motors Inc. and a team backed by musician Neil Young -- will compete for a $10 million prize to build a practical vehicle capable of getting the equivalent of 100 miles per gallon of gas, the contest's backers said Monday. The Progressive Automotive X-Prize contest, with its underlying premise that the legacy auto industry needs a shot of innovation to escape its current woes, coincides with the wrenching restructuring of Detroit's big automakers and heated debates about energy policy in Washington.
- Securities regulators and some financial firms are making it more difficult for investors to pile on when stocks are falling and further drive down prices. The Securities and Exchange Commission, facing years of criticism, has begun to crimp the ability of traders who bet against stocks to depress prices by selling millions of shares they don't possess, known as naked short selling. And some financial firms have cut back on lending to traders who want to bet against stocks. The result: The number of stocks in which big chunks of shares haven't properly been delivered to investors has plummeted.
- Barack Obama, in his first appearance as U.S. president in a Muslim nation, waded Monday into Turkey's thorniest issues -- the slaughter of Armenians in World War I and the rising power of political Islam in a secular state.
- President Barack Obama's plans to keep the estate tax in place are running into some resistance in Congress, where lawmakers may prefer a plan less burdensome on wealthy families. Congress is expected to act later this year to rewrite estate tax rules, to head off the full repeal of the tax which would take effect next year under legislation backed by former President George W. Bush.
- Record companies, weary of scraping by on 99-cent song downloads and dwindling CD sales, are trying to dress up and reimagine their most profitable product -- the album -- to woo music fans on Apple Inc.'s iTunes Store. On Tuesday, Sony Corp.'s Epic Records plans to release a $17 iTunes "pass" for pop band the Fray.
- General Motors Corp. (GM) will on Tuesday make another push into the realm of alternative vehicle technology through a joint venture with Segway Inc. to produce a two-wheeled upright personal transporter. The auto maker is targeting a 2012 launch for its electric-powered PUMA transporter, which would also employ wireless technology to allow users to navigate in urban areas and avoid traffic congestion.
NY Times:
- Sanford I. Weill, the man who built Citigroup, had not planned to donate the money until his death. He had already given more than $200 million to revamp the medical school at Cornell University into a more modern, competitive and research-focused institution (it has borne his name for a decade). At 76, Mr. Weill thought his third and final nine-digit gift could wait. But the university, like so many nonprofit institutions, has recently found itself in rough financial straits: its endowment — $5.39 billion last June — has lost more than a third of its value, its $2.9 billion annual budget has a deficit of 8 percent, and donations are down. So Mr. Weill, heart still beating, sent $170 million in December and January to Weill Cornell Medical College, where he serves as board chairman, he and university officials revealed on Monday.
Business Week: Credit default swaps got American International Group (AIG) into its current mess. Unraveling them might get U.S. taxpayers out of it. But it won't be easy or cheap. New York State Attorney General Andrew Cuomo is probing the $165 million bonus payments and the billions AIG transferred to such banks as Goldman Sachs (GS) and Société Générale.
Pensions & Investments:
- All talk, little action about hedge funds. Hedge fund experts shrugged off the results of the Group of 20 meeting in London on April 2, saying the results were expected and manageable.
Google Blog:
- We like to make search as easy as we can, so we've just finished the worldwide rollout of local search results on a map, which will now appear even when you don't type in a location. When you search on Google, we will guess where you are and show results near you.
CNNMoney.com:
- Unemployment at a 25-year high. Housing prices continuing to fall. Corporate titans such as General Motors on the brink of bankruptcy. There's no lack of bad economic news. And yet, amid the gloom, there are a growing number of economists that see a recovery on the horizon -- perhaps even a strong rebound. They say that a number of indicators appear to have bottomed out in recent months. Job losses may have peaked in January. Home sales are starting to pick up. Stocks are enjoying a strong rally. And because the economy has experienced such a steep decline in the current downturn, some economists are hopeful the recovery ahead will be much stronger than the anemic gains that came about after the end of the previous two recessions. Lakshman Achuthan, managing director of Economic Cycle Research Institute, said the economy could be as close to four months away from a recovery.
Reuters:
- Investors seem to be getting comfortable with Apple Inc's stable of executives amid uncertainty about Steve Jobs' return to the helm of the consumer electronics titan he founded. Apple shares have surged in the 10 weeks since Jobs stepped away on a five-month medical leave. The stock is up more than 45 percent since it bottomed out at a two-year low on January 20, days after Jobs, a pancreatic cancer survivor, announced he would hand over day-to-day duties to lieutenant Tim Cook to seek treatment for an undisclosed condition. "The management team is pretty good," said Bob Turner, chief investment officer for Turner Investment Partners. "I would say don't short-change the team that's in place now."
- Australia's government will build a A$43 billion ($30.7 billion) national high-speed fibre-optic broadband network, rejecting bids in a controversial tender involving some of the country's top telecoms firms. In a surprise decision, Prime Minister Kevin Rudd said on Tuesday the government would ask private companies join a new private-public firm to build the network.
- The Associated Press unveiled rate cuts on Monday to help member newspapers reeling from declining advertising revenue and said it would sue websites that use its members' articles without permission. Changes announced by the AP at its annual meeting in San Diego include $35 million in rate assessment reductions for 2010 on top of $30 million it already instituted for 2009.
Financial Times: The proposal was made by the IMF as part of a regional anti-crisis strategy, citing an interview with Ewald Nowotny, ECB governing council member.
- Art prices plunged during the first quarter of the year as cash-strapped collectors looked to unload works by postwar masters that had earlier boomed in price along with the stock market. The Mei Moses index, set for release on Tuesday, shows art prices fell 35 per cent in the first quarter, having held up during earlier months of the financial crisis. The overall index fell 4.8 per cent last year.
TimesOnline:
- Lord Mandelson called on British business to “seize the opportunity” of investing in Iraq as he led the first British trade delegation in two decades to the war-torn country. The Business Secretary was joined by representatives from 23 British companies, including Wood Group, Rolls-Royce, HSBC, BP and Shell. It is the first such trip to Iraq after business links were severed by years of sanctions and war. A sharp decline in violence over the past 18 months has allowed foreign investors to start thinking seriously about ventures in Iraq, home to one of the world's largest oil reserves. It is also a country in desperate need of reconstruction work. Chinese, Russian, Iranian, French, German and American companies are among those competing for Iraqi government contracts in sectors including energy, health, transport and finance. “Things are settling down,” Mr Cave said. “There is change in the air.”
IFSL: Hedge funds’ assets are likely to fall by over 20 per cent in 2009, according to International Financial Services London (IFSL), the independent organisation promoting UK financial services worldwide. Its annual Hedge Funds report indicates that in the first two months of 2009 hedge fund assets fell by 9 per cent, largely due to redemptions. The surge in withdrawals at the start of the year came as restrictions on redemptions in some hedge funds, particularly in the US, were lifted.
Edaily:
- Hynix Semiconductor Inc. is in talks with clients to increase4 contract prices of dynamic random access memory, or DRAM, by between 10% to 20% this month. Samsung Electronics Co. may also seek to raise prices, citing an industry official.
Late Buy/Sell Recommendations Citigroup:
- Upgraded (AXP) to Hold.
- Reiterated Buy on (PVH), target $24.
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BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and shipping stocks in the region. I expect US
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