Today's Headlines

Bloomberg:

• Spain's Castilla Said to Sell Debt as Rajoy Backs Regions. Spain’s region of Castilla y Leon is selling bonds in the third public transaction by a regional administration in the past week after Prime Minister Mariano Rajoy offered the states loans to help them meet liabilities. The 2014 bonds issued in euros by Junta de Castilla y Leon will be priced to yield 210 basis points more than Spanish government bonds, according to a banker involved in the transaction, who declined to be identified before the transaction was completed. Aragon and the Madrid region issued debt last week, according to Bloomberg data. Spain’s regions, which control more than a third of public spending, have been locked out of capital markets, forcing them to sell debt to their citizens and leave bills to suppliers unpaid. The central government is offering regions credit lines to help them meet bond redemptions and pay suppliers, a move Moody’s Investors Service said yesterday was positive for the states. Rajoy’s government created a credit line of as much as 15 billion euros ($19.8 billion) via the Official Credit Institute on Feb. 3, part of which was aimed at helping regions meet bond redemptions. It approved on March 2 another 35 billion euros of loans, mostly through the country’s banks, to enable regions and town halls to pay suppliers.
  
• Pimco's Kashkari Says Greece, Portugal to Need More Bailouts. Pacific Investment Management Co.’s Neel Kashkari, who heads global equities at the Newport Beach, California-based investment firm, said Greece and Portugal will need additional bailouts. “We don’t think that Greece will actually be able to deliver on the austerity measures they’re promising,” Kashkari said today in an interview on Bloomberg Television’s “InBusiness with Margaret Brennan.” “Risks in Europe remain, so we’re being very selective.” Europe’s approval of a 130 billion-euro ($172 billion) rescue package for Greece, the second such bailout since 2010, doesn’t solve the region’s sovereign-debt crisis, Kashkari said. While U.S. economic indicators have been improving, risks of further “shocks” coming out of Europe and slowing growth in the emerging markets are leading Pimco to buy stocks only selectively, he said.
• Greece's Third Bailout Seen in Debt With Junk Grade: Euro Credit. Greece’s bonds and credit ratings are factoring in a third bailout for the nation that analysts and investors say will require greater concessions from its international creditors. Within a week of euro-area member states giving their formal approval to a second bailout package for Greece, the International Monetary Fund said the country may require additional funding or a further debt restructuring. Pacific Investment Management Co., which runs the world’s biggest bond fund, said it remains “cautious” on euro-area government debt even after the largest-ever sovereign refinancing because the risk remains that Greece will leave the single-currency area. It’s still a very steep mountain to climb,” said Harvinder Sian, a senior fixed-income strategist at Royal Bank of Scotland Group Plc in London. The restructuring deal “doesn’t do anything to put Greece on a sustainable path,” he said. “A third bailout will become necessary.” The price of Greek government bonds maturing in February 2042 that were provided as part of its debt exchange was at 21.48 cents on the euro at 8:04 a.m. London time, with yields at 15.02 percent. Standard & Poor’s said on March 15 it rated the securities CCC, its fourth rank above default, citing questionable growth prospects, a weakening political consensus to implement budget cuts, and a “still large” debt burden.
• Oil Drops From Three-Week High on Speculation of Supply, China Demand Worries. Oil dropped on forecasts that U.S. crude stockpiles increased to a six-month high and on signals that economic growth and fuel demand will slow in China. Oil for April delivery fell $1.91, or 1.8 percent, to $106.18 a barrel at 11:47 a.m. on the New York Mercantile Exchange. The contract gained 1 percent to $108.09 a barrel yesterday, the highest settlement since March 1. Futures are up 7.4 percent this year. The April contract expires today. More actively traded May futures declined $1.99, or 1.8 percent, to $106.57 a barrel. Brent oil for May settlement decreased $1.63, or 1.3 percent, to $124.08 a barrel on the London-based ICE Futures Europe exchange.
• Goldman's(GS) Russia Exodus Grows as Workman Quits for Otkritie. Michael Workman, Goldman Sachs Group Inc. (GS)’s executive director in fixed income in Moscow, quit to join Otkritie Financial Corp., a month after the U.S. bank’s co-heads and chief trader in the Russian capital left.
• IRS Flags Almost 2 Million Tax Returns in Anti-Fraud Efforts. The Internal Revenue Service has identified and started reviewing almost 2 million tax returns for possible fraud, Deputy Commissioner Steven Miller told a U.S. Senate subcommittee.
• U.S. Housing Heals as Starts Near Three-Year High: Economy. Builders broke ground on 698,000 homes at an annual rate, in line with the median forecast of economists surveyed by Bloomberg News and down 1.1 percent from a January pace that was stronger than previously reported, Commerce Department figures showed today in Washington. Building permits, a proxy for future construction, climbed to the highest level since October 2008.
• China's Stocks Fall Most in Almost a Week on Profit Concerns. “Higher energy costs and falling profits may worry investors that the economy is slowing even further,” said Dai Ming, a fund manager at Shanghai Kingsun Investment Management & Consulting Co. The Shanghai Composite Index lost 33.35 points, or 1.4 percent, to 2,376.84 at the close. The CSI 300 Index declined 1.7 percent to 2,584.45.
• China Auto Sales May Miss Growth Goal on Economy, Fuel Costs. China's vehicle sales this year will probably miss their 8 percent growth forecast as the slowing economy and rising fuel costs curb buying, said an official at the state-backed auto association. Bayerische Motoren Werke AG, Daimler AG and Volkswagen AG shares dropped. Total vehicle deliveries may fail to increase by even 5 percent because of the "difficult" economic backdrop, Gu Xianghua, deputy secretary general of the China Association of Automobile Manufacturers, said today, citing his personal opinion. Demand for commercial automobiles may be affected the most, falling as much as 8 percent, Gu said. "The slowing macro-economy will make it difficult to secure loans for commercial vehicles, restrictions on car ownership such as in Beijing, and car ownership costs such as fuel and parking fees are increasing," said Gu, who was speaking at a conference in the eastern Chinese port city of Qingdao. "All these factors will have an impact on car buying in China." Chinese auto sales, which jumped more than fivefold in the last decade, may increase at a slower pace than the economy if Gu's projection is realized. Passenger-car sales had their worst two-month start in seven years in January and February, declining 4.4 percent to 2.37 million units, according to the association's data.
• Afghan Night Raids May Need Warrants Under U.S. Offer to Karzai. Night raids involving U.S.-led forces in Afghanistan might require court warrants under a compromise being considered to remove a hurdle to partnership with the Afghan government after most American troops withdraw, a U.S. defense official said.
• Free Lunches Pushing U.S. to Involvency, Columbia's Mundell Says. Political competition for votes and lack of fiscal discipline are pushing the world’s largest economy toward solvency issues, according to the Nobel Prize- winning economist Robert Mundell. “The public is looking for free lunches, and the political competition for votes makes the politicians offer them free lunches,” Mundell, a professor of economics at Columbia University, said on Bloomberg Radio interview with Tom Keene and Ken Prewitt. “That’s what gets us in to the difficulties of insolvency.” The U.S. plans to finance a budget deficit forecast to exceed $1 trillion for a fourth year and outstanding U.S. marketable debt expanded to $10 trillion in February. “You could have fiscal stimulus back in the day of Keynes, when the government was a small proportion of gross domestic product and there was no insolvency problem,” he said, referring to British economist John Maynard Keynes. “You can’t just issue more bonds to pay for deficits and expect it to solve the employment problem.”

Wall Street Journal:

• Copper Another Victim of China Worries. Copper futures sank amid worries that higher energy prices could sap global economic growth and on renewed concerns about China's economic slowdown. The most actively traded contract, for May delivery, was down 8.40 cents, or 2.2%, at $3.8240 a pound in Tuesday morning trade on the Comex division of the New York Mercantile Exchange. Copper futures were roiled amid comments from two of the world's largest mining companies that growth in China, the world's second-largest economy, is slowing. The president of BHP Billiton's BHP -3.75% iron-ore division, Ian Ashby, cautioned that China's demand for iron ore will drop "to single digits, if it is not already there."
• The GOP Budget and America's Future by Paul Ryan. The president's budget gives more power to bureaucrats, takes more from taxpayers to fuel the expansion of government, and commits our nation to a future of debt and decline.
  

MarketWatch:

• S&P Indices, ISDA Launch 2 New Credit Default Swap Indices Measuring the Credit Quality of US and European Finance Sectors.

CNBC.com:

• Economy 'Very Challenging' as Interest Rates Rise: Bernanke. A recent rise in interest rates has caught the attention of the Federal Reserve, whose chief sees an economy that is showing gradual improvement.
• Strong Recovery May Speed 2014 Rate Hike: Fed Nominee. One of President Barack Obama's nominees to the Federal Reserve Board said on Tuesday it would be appropriate for the central bank to start raising interest rates before 2014 if the recovery accelerates.

Business Insider:

• A Black Militia Group Says It Plans To Arrest The Neighborhood Watchman Who Shot A Black Teenager.
• You're Nuts If You Think There's A Better Tablet Than The iPad. (review)
• Cheap Natural Gas is Having a Big Effect on American Industry.
  
• YARDENI: The NY Fed President Is Suffering From The Same Behavioral Disorder As UFO Cult Followers From The 1950s.
  

Zero Hedge:

• US Taxpayers Commence Bailing Out ECB, With Greece As Intermediary.
• Will China's 'Soft' Landing Be 'Hard' on Global Exporters?
• $4 Gas Average Is Here. (graph)
• Obama Adviser, And Goldman(GS) Client, Gene Sperling Filibusters CNBC With "Shared Sacrifice" Speech In Response To Ryan Budget.

New York Times:

• U.S. to Place Tariffs on Solar Panels From China. The tariffs were smaller than many industry executives had expected — 2.9 to 4.73 percent — which could blunt their effect on sales. But the decision was nonetheless likely to be seen as a milestone because of its implications for international trade, renewable energy and American manufacturing.
  

US News:

• Why War With Iran Is Likely by James Rickards. Uncertainty reigns because of doubts about the sustainability of the recovery without continual doses of more zero-cost money from the Federal Reserve. The last thing capital markets need is an exogenous shock in the form of war in a critical part of the world, but that is exactly what is coming.

NY Post:

• Obama's Angry Adviser. Back when he agreed to advise the Obama administration on economics, General Electric CEO Jeff Immelt told friends that he thought it would be good for GE and good for the country. A life-long Republican, Immelt said he believed he could at the very least moderate the president’s distinctly anti-business instincts. That was three years ago; these days Immelt is telling friends something quite different. Sure, GE has managed to feast on federal subsidies, particularly the “green-energy” giveaways that are Obamanomics’ hallmark. But Immelt doesn’t think he’s had anywhere near as much luck moderating the president’s fat-cat-bashing, left-leaning economic agenda of taxing businesses and entrepreneurs to pay for government bloat. Friends describe Immelt as privately dismayed that, even after three years on the job, President Obama hasn’t moved to the center, but instead further left. The GE CEO, I’m told, is appalled by everything from the president’s class-warfare rhetoric to his continued belief that big government is the key to economic salvation. Or, as one friend recently put it to me, “Jeff thought he could make a difference, and now realizes he couldn’t.” Immelt’s conversion from public Obama supporter to a private detractor is important: It shows how even businessmen who feast off his subsidies worry about his overall economic agenda and its long-term impact on the economy.

Reuters:

• Angry Birds Partners With Major U.S. Retail Chain. Angry Birds maker Rovio is teaming up with a major U.S. retail chain to put its branded toys, books and T-shirts in dedicated areas of thousands of stores nationwide, the Finnish company's marketing chief told Reuters on Tuesday.

Financial Times:

• Slower China: End of the Commodity Super-Cycle? (graphs)
  

Der Spiegel:

• Poor Western German Cities Fed Up With Funding East. Closed swimming pools, potholed streets, run-down buildings. Many western German cities, especially in the industrial Ruhr rust belt, are looking worse for wear after years of neglect in which they've had to transfer billions funds to help rebuild the former communist east. Now their mayors want to stop paying.

FT Deutschland:

• German cities and towns are finding it increasingly difficult to obtain loans as banks begin to doubt the creditworthiness of municipalities previously deemed to offer riskless returns, citing banking executives. Several banks are analyzing the possibility of municipal defaults as the Greek sovereign debt crisis alters their risk perceptions.