Evening Headlines
Bloomberg:
- Allies' Control of Libyan Airspace Puts Qaddafi's Forces at Risk. Allied forces are expanding their air campaign over Libya in an effort to thwart Muammar Qaddafi’s fighters and enable rebels to control cities, such as opposition capital of Benghazi, that had been under attack by troops loyal to the regime.
- Yen Near Two-Week Low Versus Euro as Nuclear Crisis Eases, Stocks Advance. The yen was within 0.4 percent of a two-week low against the euro as Asian stocks rose and progress by Japan in restoring a crippled nuclear plant’s cooling systems reduced demand for the currency as a refuge. The euro was 0.1 percent from the strongest in four months against the dollar on speculation European Central Bank officials will reiterate this week their willingness to raise interest rates next month. The yen erased earlier losses against the greenback on concern Japanese investors are repatriating overseas assets. South Korea’s won rose on bets policy makers will allow the currency to strengthen to temper inflation. “The markets appear to be taking the view that the situation at the nuclear plant is stabilizing,” said Akira Hoshino, Tokyo-based chief manager of foreign-exchange trading at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s largest lender by market value. “Risk aversion may ease, which would likely be negative for the yen.” The yen traded at 115.14 per euro as of 12:08 p.m. in Tokyo from 115.26 in New York yesterday, after falling to 115.57 on March 18, the weakest since March 4. Japan’s currency was at 80.96 per dollar from 81.03, after earlier dropping 0.3 percent. The euro bought $1.4223 from $1.4226, after climbing to $1.4240 yesterday, the strongest since Nov. 5. The MSCI Asia Pacific Index of shares rose 1.6 percent and the Nikkei 225 (NKY) Stock Average surged 2.9 percent, as Japanese trading resumed after a holiday yesterday.
- Nuclear Plant's Fuel Rods Damaged, Leaking Into Sea. Tokyo Electric Power Co. said fuel rods at its Fukushima Dai-Ichi power plant have been damaged, releasing five kinds of radioactive material and contaminating seawater nearby. The acknowledgements from the utility indicate poisons emanating from the plant may be spreading through the air and sea, raising concern over the safety of seafood from the coast of northeastern Japan and agriculture in the region. The decay of radioactive fuel rods, composed of uranium and plutonium, was suspected by company officials five days after the March 11 magnitude-9 earthquake and tsunami off the main island of Honshu.
- Japan Economy V-Shaped Rebound Hangs on End to Blackouts. Japan is likely to see a rebound in the second half of this year after a blow that will be determined by the magnitude of electricity disruptions caused by the earthquake and tsunami, a survey of economists showed. Banks are split on whether the nation will slip into a recession, with Mizuho Securities Co. saying that’s “almost certain,” and Barclays Capital not seeing a single quarter of contraction. Annualized growth will trough at 0.4 percent in the second quarter, the median forecasts of nine economists surveyed by Bloomberg News show. “The hits to the electricity supply and extent of the hits to the supply chain are making it harder to analyze,” said Michael Buchanan, chief Asia-Pacific economist at Goldman Sachs Group Inc. in Hong Kong, who previously worked at the International Monetary Fund. The longer it takes to restore electricity, the bigger the damage, he said.
- Bank of America's(BAC) Bad Loans Stalled U.S. Approval of Dividends, KBW Says. Bank of America Corp. (BAC), the biggest U.S. lender by assets, must resubmit plans for a dividend increase to the Federal Reserve because the regulator probably found fault with the firm’s capital, according to KBW Inc.
- Obesity Lap Bands May Cause More Complications Than Weight Loss. Almost half of patients undergoing gastric banding for obesity needed to have the device removed, often because of erosion, according to a study that found the treatment caused more complications than weight loss.
- Libyan Rebel Council Sets Up Oil Company to Replace Qaddafi's. Libyan rebels in Benghazi said they have created a new national oil company to replace the corporation controlled by leader Muammar Qaddafi and whose assets were frozen by the United Nations Security Council. The Transitional National Council released a statement announcing the decision taken in a March 19 meeting to establish the “Libyan Oil Company as supervisory authority on oil production and policies in the country, based temporarily in Benghazi, and the appointment of an interim director general” of the company. The Council also said it “designated the Central Bank of Benghazi as a monetary authority competent in monetary policies in Libya and the appointment of a governor to the Central Bank of Libya, with a temporary headquarters in Benghazi.”
- Wells Fargo(WFC) CEO Stumpf Says U.S. Limit on Debit-Card Fees 'Make No Sense'. Wells Fargo & Co. (WFC) Chief Executive Officer John Stumpf said limits on fees charged to merchants for debit-card transactions “make no sense” and distort free- market economics. “What’s next?” Stumpf, 57, wrote in his annual letter to shareholders of the San Francisco-based bank. “Will the government require car dealers to sell a new vehicle for $5,000 or grocers a gallon of milk for 50 cents?”
- Bristol-Myers(BMY) skin Cancer Drug Extends Survival in Trial. An experimental skin cancer drug being developed by Bristol-Myers Squibb Co. (BMY) boosted the survival of patients with advanced melanoma when combined with chemotherapy. A final-stage trial required for regulatory approval found that melanoma patients receiving Bristol-Myers’s drug ipilimumab and chemotherapy lived longer than patients who got chemotherapy alone, the New York-based company said in a statement today.
- KNOC Buys Texas Shale Stake From Anadarko(APC) for $1.55 Billion. Korea National Oil Corp. agreed to buy a stake in a Texas shale-oil block from Anadarko Petroleum Corp. for $1.55 billion, the second-largest purchase of U.S. oil and natural-gas fields this year, as Asian companies increase access to U.S. reserves.
- China Operations More Profitable as Climate Worsens, Amcham Says. More U.S. businesses in China said they were profitable last year even as they became increasingly pessimistic about the Chinese government’s commitment to improving market access, the American Chamber of Commerce in China said today. 24 percent of respondents said China’s economic reforms had done nothing to improve the environment for U.S. businesses in the country, up from 9 percent who said the same in the previous poll. The disconnect between performance and perception comes as U.S. companies, including Google Inc. (GOOG), say the Chinese government is making it increasingly difficult to do business in the world’s second-biggest economy.
- Allies Spar but Renew Airstrikes on Libya. The U.S. and its allies worked to expand the protective shield in the skies over Libya on Monday, while political skirmishing broke out over who would take command of the continuing international operation.
- Arab Regimes Under Siege. A contingent of Yemen's key military commanders defected to the political opposition Monday, the most significant challenge yet to the ability of the country's president, a U.S. ally against al Qaeda, to hold on to power. The development followed a bloody weekend crackdown on pro-democracy protesters that left dozens dead, as other countries in the region tipped toward instability. In Syria, residents of a town south of the capital demonstrated against the government for a fourth straight day, undeterred by protester deaths and the authoritarian regime's threats of crackdown.
- U.S. Reacts to Fear of Iran's Rising Clout. White House Eyes Islamist State While Strategizing in Libya, Bahrain, Yemen and Syria; But Its Approach Could Backfire.
- At Plant, Repair is Painstaking Task. Tokyo Electric Power Co. continued to report progress in restoring order at the Fukushima Daiichi nuclear reactors, but finishing the job is turning out to be a painstaking process plagued by damaged equipment and unexpected incidents. Smoke rose from two of the plant's six reactors Monday, forcing workers to retreat temporarily. The cause of the smoke wasn't immediately clear. Radioactivity returned to previous levels after a brief rise, officials said. "We aren't out of the crisis situation yet, but we are seeing a light at the end," said Prime Minister Naoto Kan.
- U.S. Banks Oppose Tighter Money Rules. Even as governments freeze assets tied to regimes in Libya, Egypt and Tunisia, U.S. banks are resisting efforts to tighten international rules to prevent the flow of money from corrupt politicians. U.S. banks are pushing back against a proposal by the FATF that would require financial institutions to identify the person who ultimately benefits from an account. The proposal would toughen the existing standards, which call on banks to take reasonable measures to identify the beneficial owner of an account. The strengthened requirements would force banks to "identify and take reasonable measures to verify the identity" of an individual who controls the account. While some countries such as Switzerland, already require that banks know the individual, U.S. banks generally allow accounts to be opened in the name of a trust, without mandated disclosure of the beneficiary. While the group includes banking-industry associations from around the world, people familiar with the matter said most of the opposition comes from U.S. banks, especially those with large trust operations.
- AT&T(T) Digs In for a D.C. Fight. With Deal to Buy Rival T-Mobile Sealed, Battle Now Moves to Washington.
- Reagan's Legacy and the Current Malaise by Steve Forbes. Lower taxes and a strong dollar could spur growth once again.
- China's Shrinking Labor Pool Creating 'Spoilt' Workers. "Mama Mia," the GM of an Italian company lamented to me over lunch in Shanghai, "The corruption I can deal with, but human resource issues are driving me insane. Workers are too short-term focused – 50 percent leave within two months no matter how much money and training we give."
- Warnings Signs Over Crony Capitalism in India. India and Russia are accustomed to being bracketed together as two of the world’s most promising high growth markets. But is there more to it than just being adjacent initials in the fabled BRICs acronym? Foreign investors are not alone in worrying this might be the case. Even as the country becomes one of the great economic growth stories of the 21st century, significant members of the Indian elite fear it may be following Russia in developing a kind of crony capitalism dominated by powerful insiders. A slew of recent corruption scandals – notably in telecommunications – has nourished anxieties that the combination of fantastic wealth creation and weak governance threatens to undermine India’s long-term success.
- Shep Smith: Welcome to America's THIRD War. Shep Smith gave one of (what is quickly becoming his trademark) fiery asides today. This one was inspired by Adam Mullen's revelation on Meet the Press this Sunday that even if the Coalition is successful in its goal there is a possibility Qaddafi could stay in power in Libya. That was too much for Shep:
- Microsoft's(MSFT) Latest Legal Attack On Android Shows Desperation.
- Goldman Sachs(GS) Is Close to Making a "Meaningful Investment" in China That People Think Might Defy The Volcker Rule.
- As BOJ Injects Fresh ¥2 Trillion, Radiation Measured 20 km Away From Fukushima Is 1,600 Times Normal. While Japanese futures briefly flirted with another advance, they subsequently dropped by 1% to 9,450, even despite the BOJ's latest injection of 2 trillion yen, which if it continues at this rate will surpass 100 trillion yen in injections within two weeks: an unprecedented feat, even by the Federal Reserve's standards. Of particular note weighing on the markets has been the news from Kyodo that, in confirmation of our fears that zones "Under Survey" are nothing but hotbeds of unprecedented radiation, reported radiation levels are 1,600 times higher than normal 20 kilometers from the power plant. Recall that the first evacuation radius was just 10 km. Assuming a power rate of declining fall out strength, means that the radiation within the 20 km diameter circle centered on Fukushina is currently hundreds of thousands to millions of time higher than normal.
Forbes:
- A Not-So-Happy Birthday for Obamacare. One year after the passage of the final version of ObamaCare, it's destabilizing insurance markets and government budgets in ways both foreseen and unexpected.
- California Tax Collectors Eye Buying Names Of Web Shoppers.
- It's Time To Curb Uncle Sam's Wasteful Spending Habits.
Politico:
- Did Obama Lose Congress on Libya? President Barack Obama is facing growing anger from lawmakers who believe he overstepped his authority by launching missile strikes into Libya without first seeking the consent of Congress. The criticism is from all directions: from moderates, like Sens. Jim Webb (D-Va.) and Dick Lugar (R-Ind.); from those on the far left and right, like Reps. Dennis Kucinich (D-Ohio) and Ron Paul (R-Texas), who believe the president acted outside the Constitution; and from the establishment on both sides, including House Democratic Caucus Chairman John Larson of Connecticut and Republican Rep. Candice Miller of Michigan, a self-described “hawk.”
- Sony(SNE) Says Supply-Chain Woes to Affect 5 More Plants. Sony said on Tuesday shortages of parts and materials would force it to reduce or suspend production at five additional plants in Japan following the catastrophic earthquake this month. The plants, mostly in central and southern Japan, make products from digital cameras and video cameras to televisions and microphones, the company said in a statement. A sixth plant in Chiba, north of Tokyo, was set to resume production on Tuesday, but it could be interrupted by the rolling blackouts that are affecting some areas supplied by Tokyo Electric Power (TEPCO).
- California Cap-And-Trade Plan Faces Setback. California did not adequately consider alternatives to its plan to create a cap-and-trade market for carbon emissions, a judge ruled on Monday, throwing a wrench into the most aggressive U.S. effort to combat climate change. The state's regulator on climate change matters, the Air Resources Board (ARB), will need to consider other possibilities to meet state environmental law, San Francisco Superior Court Judge Ernest Goldsmith wrote in an opinion. In particular he said that the state had not made a thorough examination of putting a tax on carbon.
- The Chinese government will include local government debt in its national budget, Finance Minister Xie Xuren said. The Asian nation will establish a risk warning system for local government debt, Xie said.
- Rift Over Command of Libya Campaign. French attempts to sidestep Nato at the outset of military operations against Libya have divided the international coalition enforcing a no-fly zone over the country, western diplomats said. The French moves, which western diplomats said included launching the first attack on Libya without fully informing its allies, angered US and UK officials and are hampering efforts to transfer command of the operation to Nato, officials said. Relations grew so tense on Monday that French and German ambassadors to Nato walked out of a meeting of the North Atlantic Council, the alliance’s decision-making body, after Anders Fogh Rasmussen, secretary-general, criticised Paris for impeding Nato involvement and Germany for not actively participating.
- Arab Bankers Association Chief Executive Officer George Kanaan said in an interview the turmoil in the Middle East and North Africa has created an environment of "great uncertainty" in which banks can no longer "function properly." The political unrest in Bahrain will end the country's aspirations of becoming a regional financial center, and its hopes "are no difficult to achieve," Kanaan said.
- The Portuguese government forecasts the country's gross domestic product will contract .9% this year, citing the stability and growth program handed in to parliament today.
- Apple Inc.(AAPL) sent procurement staff to Taiwan after the earthquake in Japan to secure component supply for for the second quarter.
Kyodo News:
- Tokyo Electric Power Co. can't say when it can resume spraying water and restoring power at its crippled Fukushima Dai-Ichi nuclear plant because of steam and smoke coming from the reactors, citing the utility.
- The crisis at the Fukushima nuclear plant is not necessarily improving, citing Japan's Trade Minister Banri Kaieda.
- Seafood caught near Japan's crippled Fukushima Dai-Ichi nuclear plant hasn't entered the food supply, citing the Fukushima prefectural government.
- Sustainable economic growth in China is being hurt by weakening "momentum" from investment and exports and "slow progress" in raising personal incomes, Zhang Monan, an economic researcher at the State Information Center, wrote today.
- Procter & Gamble Co. and Unilever raised prices for detergents in China by as much as 10%, citing dealers.
Citigroup:
- Reiterated Buy on (DV), raised target to $64.
- Asian equity indices are -.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 115.0 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 117.0 -.5 basis point.
- S&P 500 futures -.27%.
- NASDAQ 100 futures -.20%.
Earnings of Note
Company/Estimate
- (CMC)/-.07
- (DG)/.58
- (WAG)/.79
- (JEF)/.37
- (CCL)/.19
- (JBL)/.51
- (ADBE)/.57
- (CTAS)/.36
- (DFS)/.57
10:00 am EST
- The January House Price Index is estimated to fall -.2% versus a -.3% decline in December.
- None of note
- The Fed's Fisher speaking, Fed's Pianalto speaking, Richmond Fed Manufacturing Index for March, weekly retail sales reports, Sidoti Emerging Growth Forum, CTIA Wireless, JPMorgan Aviation/Transportation/Defense Conference, (FLO) analyst day, (UNFI) investor day, (GT) investor meeting and the (PCL) analyst meeting could also impact trading today.
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