- Spain Vows to Resist Strikers’ Demands to Reverse Labor Law. Spain’s government vowed to stick to its labor overhaul, defying union leaders who threatened further unrest after staging the first general strike since Prime Minister Mariano Rajoy took office three months ago. Iberia, the Spanish unit of International Consolidated Airlines Group SA (IAG), canceled 65 percent of its flights, while national power demand was about 17 percent below usual, grid operator Red Electrica Corp. SA data showed. Unions said 77 percent of workers took part, more than during a walkout in 2010, even as the People’s Party government said fewer workers stayed home than last time. Shops, restaurants and banks in central Madrid opened as usual. While Rajoy’s measures have angered unions and undermined support for the party in a regional election on March 25, the government is still struggling to convince investors it can cut debt and reduce a 23 percent jobless rate. Spain’s extra borrowing costs compared with Germany’s increased to the most in more than a month today, surging 67 basis points from the start of March.
- Monti's Labor Law Marks Return of Political Risk: Euro Credit. Investors are facing the return of political risk in Italy as Prime Minister Mario Monti’s plan to make it easier to fire workers divides his ruling coalition. Unless Italy is “ready for what we think is a good job, we may not seek to continue,” Monti said on March 26, prompting concern the government won’t last until elections due by May 2013. He made the comments after leaders of the Democratic Party, which has backed his unelected government, said they would seek to reverse the change in Parliament. The rate on Italy’s benchmark 10-year bond has risen 27 basis points to 5.11 percent since March 20 when Monti unveiled his change to the firing rules, prompting Italy’s biggest union to call a general strike. The yield difference with comparable German bunds was at 327 basis points today, up from a seven- month low of 278 the day before the announcement.
- Sovereign, Corporate Bond Risk Rises, Credit-Default Swaps Show. The cost of insuring against default on European sovereign and corporate debt rose, according to traders of credit-default swaps. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments increased 1.5 basis points to 269.5, according to BNP Paribas SA at 10:45 a.m. in London. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings added 9.5 basis points to 602.5. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings was up 2.5 at 123.5 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers rose 5.5 basis points to 214.5 and the subordinated gauge was 11.5 higher at 349.5.
- Emerging Stocks Tumble to 2-Month Low on Slowdown Concern. Emerging-market stocks fell to a two-month low as U.S. jobless claims exceeded economists’ estimates and Chinese earnings missed forecasts. The MSCI Emerging Markets Index (MXEF) declined 1.4 percent to 1,029.67 by 11:34 a.m. in New York, on course for its weakest close since Jan. 31. Information technology and energy companies led declines.
- H&M Profit Misses Estimates as Margin Reaches Eight-Year. Hennes & Mauritz AB (HMB), Europe’s second-largest clothing retailer, reported first-quarter profit that missed estimates as increased textile costs and markdowns led to the weakest profitability in eight years. H&M fell as much as 5.9 percent in Stockholm trading, the most since August. The retailer, which sells jeans for less than 20 euros ($26.70) and underwear designed by soccer player David Beckham, said the gross margin narrowed to 55.8 percent of sales from 57.8 percent a year earlier. That was the lowest since the first quarter of 2004, according to data compiled by Bloomberg. “H&M is having to give up margin to drive sales,” Richard Chamberlain, an analyst at Bank of America, wrote in a report.
- Goldman(GS) Should Stop Saying Clients Come First, Levitt Says. Goldman Sachs Group Inc. (GS) should stop promoting itself as “putting customers first” because the slogan ignores conflicts inherent in trading, said Arthur Levitt, the former Securities and Exchange Commission chairman and a senior adviser to the firm. “We probably ought to stop saying that because nobody really puts customers first,” Levitt, 81, said in an interview with Erik Schatzker on Bloomberg Television today. “Business is a tension between sellers and buyers.”
- Pension Deficit for 100 U.S. Company Plans Increased 41% in 2011. The pension-funding deficit for 100 of the largest defined-benefit pension plans at U.S. companies, including Boeing Co. (BA) and AT&T Inc.(T), increased 41 percent last year as low interest rates drove up liabilities. The 100 largest plans posted a record shortfall of $326.8 billion for 2011, up from $232.1 billion a year earlier, according to a report by Milliman Inc., a Seattle-based actuarial and consulting company. Pension-related charges to earnings rose to $38.3 billion, also a record, from $30.5 billion in 2010, according to the report, based on figures for the largest U.S. plans that reported 2011 data in 10K filings to the U.S. Securities and Exchange Commission by March 5. Contributions to pensions were $55.1 billion for the 100 companies tracked, according to the report. Costs related to pensions will continue to rise because of low interest rates, which cause estimated pension payouts to increase after they are calculated at net present value.
- Best Buy to Cut Costs Close 50 Stores. Best Buy Co. said it plans to close 50 U.S. big box stores and open 100 small mobile locations in the U.S. in fiscal 2013 and cut $800 million in costs by fiscal 2015. The news came Thursday as the biggest U.S. specialty electronics retailer posted a fiscal fourth quarter loss partly due to restructuring charges. Despite the loss, Best Buy's adjusted results for the quarter topped Wall Street's expectations. But the company's full year revenue guidance fell slightly short of analysts' expectations, sending its stock down 6 percent.
- Fed Nominees Powell, Stein, Approved by Senate Banking Committee. The Senate Banking Committee approved both of President Barack Obama’s nominees to the Federal Reserve’s Board of Governors, advancing them to the full Senate for a final confirmation vote. The panel voted to approve the nominations of Harvard University professor Jeremy Stein and Jerome Powell, an attorney and private equity investor who was a Treasury undersecretary for President George H.W. Bush.
- Jobless Claims More Than Estimates: Economy. Applications for jobless insurance dropped by 5,000 last week to 359,000, the Labor Department said today in Washington. The Labor Department revised the claims data to reflect updates to the seasonal adjustments used to help smooth out week-to-week changes. The result of the adjustment led to higher levels of initial claims over recent weeks, while leaving intact the trend of declining dismissals over the past year. The median forecast in the Bloomberg survey of 46 economists called for 350,000 claims. The Labor Department revised the previous week’s figure to 364,000 from an initially reported 348,000.
- Fed's Plosser Says Fed May Need to Raise Rates Before End of 2014. Federal Reserve Bank of Philadelphia Charles Plosser said the Fed may need to raise interest rates before late 2014 and that additional stimulus isn’t needed as the U.S. economy shows signs of strength.
- Euro-Zone Fix Would Cost EUR5.1 Trillion, Says New Report. Remember euro bonds? The Boston Consulting Group is reviving that highly contentious topic in a sweeping new proposal that, even if it never flies, highlights the giant amounts at stake in Europe's debt crisis. BCG's report estimates the amount of debt to be restructured at an alarmingly large EUR5.1 trillion ($6.8 trillion) -- more than seven times the size of German Chancellor Angela Merkel's latest proposal for an expanded European bailout facility. That is hardly going to go over well with Merkel and leaders of other bailout-weary electorates among the euro zone's creditor nations. But the advisory firm believes the eventual alternative to jointly restructuring the region's excess sovereign and private debt is worse: a chaotic breakup in the euro zone with "devastating consequences."
- India Raises Heat on Foreign Companies. If businesses like certainty, then India has been a big turnoff for foreign companies. A series of recent developments have greatly increased the perception that the country has a risky business environment where policies suddenly can turn hostile. Tax proposals in the national budget unveiled in March stunned foreign firms. They could create significant retroactive tax liabilities for international mergers stretching back a half-century and eliminate a tax exemption many investors now have, wreaking havoc on corporate deal making, legal experts say. More than a half-billion dollars in foreign capital has left the Indian stock market in recent days.
- BRIC Nations Push for Faster Change at IMF. The Brics group of nations expressed concern Thursday over the West's slow pace at giving developing nations greater control over the International Monetary Fund, and they bashed Western countries' loose monetary policies for causing instability in global financial markets.
- Autism Cases Rise in U.S., Report Finds. One in every 88 U.S. children has been diagnosed with an autism-like disorder, a government report says, up sharply since figures were last published in 2009, but the reasons for the increase largely remain a puzzle to public-health officials. The number of kids in the U.S. who have been identified with autism-spectrum disorders, characterized by substantial social impairment and repetitive behaviors, has been on the rise for years. Thursday's numbers, put out by the Centers for Disease Control and Prevention, show a 23% increase over data gathered in 2006 and a 78% increase from 2002.
- The ObamaCare Reckoning. After the third and final day of Supreme Court scrutiny of the Affordable Care Act, the bravado of the legal establishment has turned to uncertainty and in some cases outright panic. Everyone who said the decision was an easy fait accompli has been proven wrong by a Court that has treated the constitutional questions that ObamaCare poses with the seriousness they deserve. This reckoning has also been a marvelous public education.
- Most Tax-Friendly States For Retirees.
- Europe ends sharply lower on data; yields jump. Italy’s FTSE MIB index drops more than 3%.
- Jes Staley, chief executive officer of JPMorgan Chase & Co.'s(JPM) investment bank, told CNBC that equities trading in the first quarter was "still lighter than we'd like to see it." Asked about the trading environment in the quarter, particularly in equities, Staley said it's "down about 20%" from a year ago.
- Do We Have a Hot IPO Market or Not? So do we have a hot initial public offering market or not? After yesterday's stunning debut of Annie's Foods and Vocera Communications, everyone was watching to see if today's IPO crop would outperform. So far, the picture is mixed:
- Investors Brace for China's First Bond Default. China's fledgling corporate debt market will face a watershed moment next month, when an insolvent manufacturer of chemical fibers may become the first company in the brief history of the country's bond market to default on its obligations.
- Spain Is The New Greece: And This Time It's Big Enough To Matter...
- The Citi US Economic Surprise Index Continues To Drop. (graph)
- These Are Not Good Charts For Spain.
- European Stress Getting Progressively Worse As LTRO Boost A Distant Memory. (graph)
- European Weakness Spreads and Accelerates.
- Fighting With Spanish Windmills, Or How Spain's Debt/GDP Ratio Is Double What Is Reported.
- Greek Deposit Run Update: Hopeless and Getting Worse. (graph)
- Wolf: Obamacare's Inescapable Death March. The die is cast: Obamacare will not survive. This is not a prediction of how the Supreme Court will rule on President Obama’s health care takeover, mind you. It’s the harsh reality that if Obamacare does not die a judicial or political death - or better yet, both - it will die an economic death, and if it does, it will take America down with it.
- U.S. Moving Minesweepers to Waters Near Iran. Four Navy minesweepers will be on their way to the Persian Gulf within weeks as part of an effort to boost American military capability in the region amid rising tensions with Iran, a Navy official says. The minesweepers will be loaded onto cargo ships leaving the United States in late April, according to the Navy official. The deployments were publicly confirmed by Adm. Jonathan Greenert, chief of naval operations, earlier this month in testimony before the Senate Armed Services Committee. "We are moving four more mine sweeps to the theater," he said. "That'll make eight. We are moving airborne mine countermeasure helicopters. That'll take us to eight in theater. And ... those, working with the British mine sweeps there, which we exercise with frequently, sets us up a little bit there."
- Goldman(GS) Commodities Crown Slips As Traders Exit.
- US Gold and Copper Slide as Dollar Strengthens.
- Oil Slips Under $123/bbl. U.S. unemployment claims fell to a four-year low but still failed to meet heightened market expectations, leaving investors to wonder whether the economy can sustain a rally. Brent crude futures fell $1.30 to $122.86 a barrel at 1601 GMT, extending losses after falling 1.09 percent the previous session. U.S. crude futures also fell, down $2 to $103.41 a barrel, having dropped by 1.79 percent on Wednesday. Signs of slowing economic growth also emerged from China, where the Shanghai exchange closed at a two-and-a-half month low on weaker-than-expected corporate results.
- Pentagon Sees Mass Layoffs If Budget Cuts Prevail. The Pentagon said on Thursday it would expect hundreds of thousands of layoffs across the defense industry if lawmakers did not take action to avert an additional $500 billion in defense budget cuts that could take effect in January 2013.
- Debt Crisis: Live. Investors remain jittery after the OECD warns the eurozone is holding back a shaky G7 recovery while a general strike in Spain and a fall in unemployment in Germany highlights the two-speed nature of the eurozone economy.
- UK is Back in Recession, Says OECD. Britain has plunged back into a recession, as the economy continued to shrink in the first three months of the year, according to a leading global authority.
Het Financieele Dagblad:
- Portugal May Need More European Aid, ECB's Knot Tells Dagblad. Portugal's adjustment program has been affected by the prolonged discussion on private sector involvement in the Greek rescue package, ECB Governor Klaas Knot said in an interview.
- Italy's economic recession will last the entire year, Development Minister Corrado Passera told a parliamentary committee.
- Sales of New Homes Fall for Third Straight Quarter. Between January 1 and Wednesday, a total of 1.18 million square meters of new apartments, excluding government-funded affordable units, were sold, down 11 percent from the previous three months, Century 21 China Real Estate said in a report released yesterday. "Compared with the same period in 2011 and 2010, this quarter's apartment transaction would also be the lowest as buying momentum didn't pick up until this month," said Huang Hetao, a research manager at Century 21. "The real estate developers also seemed not keen to release their projects over the past three months amid sluggish sentiment."