Evening Headlines
Bloomberg:
- Qaddafi Hometown Readies for Battle as Obama Defends Move. Libya government troops dug in with tanks to block the advancing rebels at Sirte, Muammar Qaddafi’s hometown, as U.S. President Barack Obama defended his decision to commit U.S. forces in Libya as necessary to avert “a massacre that would have reverberated across the region and stained the conscience of the world.”
- Kan Says Japan Nuclear Crisis Unpredictable as Radiation Spreads. Japan’s Prime Minister Naoto Kan said the situation at a radiation-leaking nuclear plant is unpredictable as hazardous conditions hamper efforts to reconnect power needed to cool down the reactors. Radiation levels that can prove fatal were yesterday detected for the first time outside reactor buildings, signaling a partial fuel meltdown. Preventing contaminated water from leaking into the ground or air is key to containing the spread of radiation beyond the Fukushima Dai-Ichi plant. "The situation of the nuclear accident still doesn’t allow us to let down our guard," Kan told an upper house budget committee today. "We’ll continue to work on this with our full attention."
- Japan May Scrap Company Tax Cut, Lift Household Levies. Japan’s ruling party is considering abandoning a proposed corporate-tax cut and boosting levies on individuals to help pay for earthquake reconstruction and reduce the need to step up bond sales. Increasing taxes would risk deepening the hit to economic growth in the aftermath of the nation’s record earthquake and ensuing tsunami on March 11. “A tax increase will likely dampen personal consumption when household sentiment has already cooled,” said Norio Miyagawa, senior economist at Mizuho Securities Research and Consulting Co. in Tokyo. He also said that “if the government totally calls off a corporate tax cut, not temporarily abandons it, it could accelerate the risk of the hollowing out of Japan” as manufacturers shift operations abroad.
- Halliburton(HAL) Says Middle East to 'Severely' Hurt Results. Halliburton Co. (HAL) said disruptions in the Middle East and North Africa will “severely” affect first- quarter results, reducing earnings in the range of 3 cents to 4 cents a share.
- Fed's Rosengren Says Economy Won't Make 'Much of a Dent' in Unemployment. Federal Reserve Bank of Boston President Eric Rosengren said that recent economic growth will not do much to lower the unemployment rate. “While GDP, the growth in the economy, has been positive, it hasn’t been positive enough to make much of a dent on the unemployment rate,” Rosengren said today in a panel discussion hosted by the Boston Globe. “If we only get growth around 3 percent that doesn’t bring the unemployment rate down very quickly,” he said.
- BP(BP) Managers Said to Face U.S. Manslaughter Charges Review.
- Buy Emerging-Market ETF Put Options, Sell Japan's, Barclays Says. Investors should buy put options to sell emerging-market stocks because they may retreat amid rising commodity prices, while selling puts on Japanese stocks, which may rally on earthquake reconstruction, Barclays Plc (BARC) said. Maneesh Deshpande, who leads the top-ranked equity-linked strategies team in Institutional Investor magazine’s 2010 survey, recommended buying January $47 puts on the iShares MSCI Emerging Markets exchange-traded fund and selling January $9 puts on the iShares MSCI Japan ETF.
- Four Scenarios for Libya - Some Good and Some Bad.
- Government Shutdown Grows Likelier. Talks between congressional leaders and the White House on a deal to fund the government for the rest of the year appear to have slowed, with Democrats and Republicans loudly bickering over the fate of their negotiations. Failure to reach a deal by April 8, a milestone that appears increasingly difficult to achieve, would result in a government shutdown.
- Amazon(AMZN) Planning Online Media 'Locker'. Amazon.com Inc. is planning to start a service that would let people store music and video online and access it from various digital devices, people familiar with the matter said.
- A Requiem for Detroit. A once-great American city today repels people of talent and ambition.
- What if Gadhafi Had Gone Nuclear? The Libya experience highlights the risk of letting dangerous regimes—like Iran's—gain the world's most powerful weapons. America and its allies, empowered by the United Nations and the Arab League, are interceding militarily in Libya. But would that action have been delayed or even precluded if Libyan leader Moammar Gadhafi had access to nuclear weapons? No doubt Gadhafi is asking himself that same question.
- FDIC's Plan for 'Skin-In-The-Game' Loans. Federal regulators drafting tighter underwriting standards for mortgages are planning to exempt banks from a key rule if they sell loans to two seized mortgage-buying giants. The long-awaited proposal is due to be publicly released by the Federal Deposit Insurance Corp. Tuesday, and the proposal was obtained ahead of that by MarketWatch.
- Saudi Arabia Prepares Oil Rig Boost: Report. Saudi Arabia, the world's top oil exporter, has unexpectedly called on top oilfield service companies to help quickly boost the country's oil rig count by 30 percent to expand production capacity, Simmons & Co analyst Bill Herbert said Monday.
- The Muslim Brotherhood Rises In Egypt. In the aftermath of Mubarak's downfall, the Muslim Brotherhood cut their deal with the Egyptian military, leaving the secular forces on the outside looking in. How the Muslim Brotherhood "played" the uprising is the subject of a compelling two-hour "Frontline" documentary, produced in concert with The Global Post. It is worth watching in full.
- STRATFOR: Israel's Security Is Now Being Threatened On Multiple Fronts.
- Obama Nears Appointment of Eric Schmidt As Commerce Secretary.
- Barclays(BCS) Says CFTC Should Delay Limits Decision Indefinitely. So while we await the CFTC to issue its decision on position limits, any minute now, we wonder just how many other banks (wink wink Blythe) will follow up with comparable objections demanding an "indefinite" delay to what may soon unleash true price discovery, particularly in the PM market. And incidentally, whatever happened to the Fed's mandated disclosure of the confidential bank rescue information. At what point will Ben Bernanke be held in contempt to court for not following the decision of the Superior Court?
- IAEA on Fukushima Plutonium. It appears the plutonium discovered earlier, which according to some Japanese reports was so safe it was borderline edible, may not be all that safe. Per the IAEA:
- Goldman Sachs Partners(GS) Sell Shares, and Their Stake Slides. Goldman Sachs’s elite partners have sold $108 million in shares in recent months, driving their total ownership stake in the Wall Street firm down to almost 10 percent, from 11.2 percent. The sales are a small yet significant dilution of the influence the partners have over the firm.
- Japan's Electricity Shortage to Last Months. Utility experts and economists say it will take many months, possibly into next year, to get anywhere close to restoring full power.
- The Real Cost of U.S. in Libya? Two Billion Dollars Per Day.
- Sprint(S) Asks Government to Block AT&T(T)/T-Mobile Deal.
- The 10 Best Cities for Home Buyers. You better believe it -- the real estate market is back. It's time to buy again, and here are the 10 best cities for doing so, according to a new report from Deutsche Bank.
- Washington Post: Why is Obama Pursuing a "Drill, Brazil, Drill" strategy? Good question! In fact, as the Washington Post editorial board notes, it’s actually a series of good questions. Not only does Barack Obama need to explain his enthusiasm for drilling and oil consumption apparently everywhere but in the US, he also needs to explain why the US wants to import oil from Brazil, but not ethanol:
- 69% Still Angry at Government's Current Policies. Likely U.S. Voters remain at least somewhat angry with the current policies of the federal government, up slightly from 65% last August. Just 25% don't share that anger. These findings include 38% who are Very Angry versus only 12% who say they are Not At All Angry.
- GOP on Obama Libya Speech: Too Little, Too Late. For Republicans on Capitol Hill, the president’s speech on Libya Monday night was too little, too late. Barack Obama’s primetime address – in which he announced that the U.S. military will hand NATO allies enforcement of the no-fly zone and arms embargo in the North African nation – was roundly criticized by GOP moderates and conservatives alike.
- Auditor: Financial Overhaul Law Cost $1 Billion Per Year. The financial overhaul law that President Barack Obama and Democrats enacted last year will cost nearly $1 billion to implement this year, according to Congress’ chief auditor.
- Ally to File for IPO in Next Two Weeks - Sources. Ally Financial, the auto and mortgage lender majority-owned by the U.S. government, is expected to file paperwork for its initial public offering in the next two weeks, two sources familiar with the situation said on Monday. The IPO will ultimately raise between $6 billion and $7 billion, including common stock and convertible securities, one of the sources said. Citigroup Inc (C.N), Goldman Sachs Group Inc (GS.N), JPMorgan Chase & Co (JPM.N) and Morgan Stanley (MS.N) will be listed as the four lead underwriters on the IPO paperwork, that source said.
- Japan Gemba: Debate Possible on Nationalising Tokyo Electric - Kyodo. Japanese National Strategy Minister Koichiro Gemba said on Tuesday that a debate on nationalising Tokyo Electric Power Co is possible, Kyodo news agency reported.
- JPM's(JPM) $20 Billion AT&T(T) Loan a "Credit Negative" - Moody's. JPMorgan Chase & Co's (JPM) decision to be the sole underwriter on a $20 billion bridge loan to AT&T Inc (T) is a "credit negative," according to Moody's Investors Service.
- Fed's Evans: Quake's Effect on Auto Sales "Noticeable". Supply disruptions stemming from the Japanese earthquake will likely have a visible effect on auto sales, Chicago Federal Reserve Bank President Charles Evans said on Monday. "There is going to be an effect on the global supply chain," Evans told reporters at an event at the University of South Carolina.
- Portugal Bailout Pressures Grow as Borrowing Costs Hit Another Record. Portugal felt the pressure to seek a bailout build as its borrowing costs once more hit a euro lifetime record, on the back of downgrades of its banks' credit ratings. The debt-laden nation, which investors believe is merely delaying the inevitable rescue, saw investors' flight from its debt push the yield, or return, on its benchmark 10-year bond to 8.17pc, setting a new high after Friday's climb to 8pc. The rise came as credit rating agency Standard & Poor's downgraded its view of five of the country's banks, having last week slashed its rating of Portugal's sovereign debt after the government's collapsed.
- Egypt's Labor Party Leader Says to Run for Presidency. Egyptian Islamic-oriented Labor Party Secretary-General Magdy Ahmed Hussein announced Monday that he decided to run for Egypt's next president. At a press conference, Hussein said he decided to run for the presidential polls due to unconvincing presidential candidates who have been announced so far. "We're at a critical time... We're facing a duty of taking Egypt out of disastrous state caused by (former president) Hosni Mubarak to its normal status as an honorable nation among other nations," he said. Hussein is a journalist who has been jailed several times by the former regime for publishing and political issues. The views of Egypt's Labor Party are close to those of liberalism in terms of freedom and to those of socialism in terms of social justice.
- China may raise interest rates in April or the middle of this year as inflation continues to exceed the government's target, the China Securities Journal said in a front page editorial today. Consumer prices may increase by 6% in June and July. Continued negative real rates for deposits and inflationary pressures may lead China to raise interest rates, according to the editorial.
- Beijing is preparing more measures to curb property price increases, citing people familiar with the matter.
Collins Stewart:
- Rated (DNDN) Buy, target $55.
- Asian equity indices are -.25% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 111.0 +1.5 basis points.
- Asia Pacific Sovereign CDS Index 117.0 unch.
- S&P 500 futures +.12%.
- NASDAQ 100 futures +.10%.
Earnings of Note
Company/Estimate
- (APOL)/.69
- (LEN)/-.07
- (TIBX)/.16
- (ACMR)/.03
- (MKC)/.54
9:00 am EST
- The S&P/CS 20 City MoM% SA for January is estimated to fall -.44% versus a -.41% decline in December.
- Consumer Confidence for March is estimated to fall to 65.0 versus a reading of 70.4 in February.
- (FTI) 2-for-1
- The Fed's Bullard speaking, $35 Billion 5-Year Treasury Notes Auction, weekly retail sales reports, JPMorgan Insurance Conference, (CPN) analyst day, (AIZ) investor day, (EPD) analyst meeting and the (IPG) investor day could also impact trading today.
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