Evening Headlines
Bloomberg:
- Merkel Says Europe Is 'Good Way' Up Mountain, Not Over It. German Chancellor Angela Merkel said that European efforts to resolve the debt crisis are making progress, even as “imbalances” in euro-area economies show that the task is far from complete. “We’ve come a good way along the mountain path, but we’re not completely over the mountain,” Merkel told reporters in Rome late yesterday after talks with Italian Prime Minister Mario Monti. “I suspect that in the next few years there will continue to be new mountains -- there won’t be a celebratory event in which we say we’re over the mountain and now we can sit among the trees and say that we’ve done it.” Merkel praised Monti’s “bold” efforts since taking office on Nov. 16 to overhaul Italy’s economy, which include 20 billion euros in austerity measures and steps to deregulate services amid surging Italian bond yields that threatened to rip apart the currency region. Aided by European Central Bank liquidity measures, Italian 10-year borrowing costs have fallen to 4.89 percent from a euro-era record of 7.26 percent on Nov. 25. Monti, a former European Union competition commissioner, said Italy has “arrested” the crisis though not yet overcome it. “Italy still has homework to do,” he said. Italy prefers to rely on its “own strengths” rather than seek any external aid during the worst moments of the crisis.
- Fed Says 15 of 19 Banks Have Adequate Capital in Stress Scenario. The resilience of the largest U.S. financial firms when tested against a recession more severe than the last one shows regulators have succeeded in pushing banks to build fortress-like balance sheets. The Fed yesterday said 15 of 19 banks would be able to maintain capital levels above a regulatory minimum in an “extremely adverse” economic scenario, even while continuing to pay dividends and repurchasing stock. Those results were due to scrutiny by the Fed on capital payouts over the past three years, the central bank said.
- Rising Costs, Risks Threaten Futures Brokers, DeWaal Says. Changes to how clearinghouses are used to back derivatives trades are putting brokerages on “a dangerous path” that threatens the futures business model, said Gary DeWaal, general counsel of Newedge USA LLC. The risk to brokerages, known as futures commission merchants, or FCMs, began with the Dodd-Frank Act requirement to guarantee swap trades with clearinghouses, DeWaal said in an interview today at the Futures Industry Association annual conference in Boca Raton, Florida.
- Oil Trades Near 2-Day High as Economy Lifts U.S. Demand Outlook. Oil for April delivery was at $106.63 a barrel, down 8 cents, in electronic trading on the New York Mercantile Exchange at 1:43 p.m. Sydney time. The contract yesterday increased 37 cents to $106.71 a barrel, the highest close since March 9. Prices are 7.9 percent higher this year. Brent oil for April settlement slid 21 cents to $126.01 on the London-based ICE Futures Europe exchange.
- Apple(AAPL) Drives Record $1.24 Trillion of Company Cash, Moody's Says. Apple Inc. (AAPL), the world’s most valuable business, led U.S. corporations in amassing a record $1.24 trillion of cash last year as memories of the 2008 credit crisis linger, according to Moody’s Investors Service. Excluding Apple, with $97.6 billion of cash and no outstanding debt, the figure was relatively unchanged at $1.15 trillion, even as revenue and cash flow from operations rose to a record, Moody’s analysts led by Richard Lane said in a report yesterday. Investment-grade companies graded A3 or higher by Moody’s hold $594.3 billion, or 54 percent, Moody’s said in the report, which tracked cash and liquid investments for non- financials.
- Santorum Wins Alabama, Mississippi. Former Pennsylvania Sen. Rick Santorum won the Alabama and Mississippi primaries Tuesday, pulling off another pair of surprise victories and boosting his claim to be the conservative alternative to Republican front-runner Mitt Romney.
- Romney's Delegate Strategy Pressures Rivals.
- China's Wage Hikes Rip9ple Across Asia. More Asian governments are pressing businesses to hike wages as a way to prevent outbreaks of labor unrest, raising the specter of higher manufacturing costs for global companies—and the products they sell world-wide. In the latest move, Malaysia's cabinet has approved the country's first-ever minimum wage to be imposed soon, according to people familiar with the matter. The decision follows similar moves elsewhere in the region, as officials from Thailand to Indonesia follow efforts by China over the past two years to boost pay after years of widening gaps between rich and poor.
- A Warning for Women of the Arab Spring by Shirin Ebadi. I hope that in the countries where people have risen against dictatorships, they will reflect on and learn from what happened to us in Iran.
- Canada's Housing Market Flirts With Bubble. After a brief dip, home prices have shot up; incomes haven’t kept up.
- Here's What Really Happened Today When JPMorgan(JPM) Announced Its New Dividend.
- Obama's Big Health-Care Reform Is Going To Cost Double What He Said. The Congressional Budget Office, the bi-partisan number-crunching office that 'scores' legislation for the cost has revised its forecasts for the cost of health-care reform. Obamacare is going to cost about double what the president and Democrats promised. When the bill was passed, President Obama and Nancy Pelosi would cost "around $900 billion over ten years." Looks like it is going to be close to $1.8 trillion.
- Japan's Shocking Keynesian Slip: "We Are Worse Than Greece".
- Troika Finds Greece Already Likely To Miss Bailout Budget Targets.
- Fed Stress Test Released: Citi, SunTrust, Ally and MetLife Have Insufficient Capital.
- 4 Big 'Troubles' in Little China. (graphs)
IBD:
Washington Post:- CBO: Deficit Estimate for 2012 Hiked to $1.2 Trillion After Payroll Tax Cut, Jobless Benefits. A new estimate from congressional economists says the government will run a $1.2 trillion deficit for the budget year ending just a few weeks before Election Day. It would be the fourth straight year of trillion dollar-plus deficits. The almost $100 billion spike from earlier projections for the fiscal 2012 deficit comes almost exclusively because Congress passed legislation recommended by President Barack Obama to renew a 2 percentage point cut in payroll taxes and jobless benefits for people languishing on unemployment rolls for more than six months.
- The Chu Energy Plan. The administration's pie-in-the-sky energy planning is working exactly as one might have predicted. Dr. Chu's proposal to hike gas prices in the United States to European levels was published in the Wall Street Journal on December 12, 2008. Six weeks later, on January 21, 2009, he was sworn into office as President Obama's Secretary of Energy.
- Most Americans Would Back US Strike Over Iran Nuclear Weapon - Poll. The poll showed 56 percent of Americans would support U.S. military action against Iran if there were evidence of a nuclear weapon program. Thirty-nine percent of Americans opposed military strikes. Asked whether they would back U.S. military action if it led to higher gasoline prices, 53 percent of Americans said they would, while 42 percent said they would not. The Reuters/Ipsos poll also found that 62 percent of Americans would back Israel taking military action against Iran for the same reasons.
- Japan Q1 Business Mood Worsens But Seen Improving. Big Japanese manufacturers turned slightly more pessimistic about business conditions in January-March, but sentiment is expected to improve in the next quarter with the yen off record highs and due to spending for post-quake reconstruction. Wednesday's data suggests the Bank of Japan's closely-watched tankan sentiment survey, due next month, is unlikely to show a sharp worsening in sentiment.
- Exclusive: US Dangles Secret Data for Russia Missile Shield Approval. The Obama administration is leaving open the possibility of giving Moscow certain secret data on U.S. interceptor missiles due to help protect Europe from any Iranian missile strike. A deal is being sought by Washington that could include classified data exchange because it is in the U.S. interest to enlist Russia and its radar stations in the missile-defense effort, a Pentagon spokeswoman said Tuesday in written replies to Reuters.
- Hedge Funds to Pay More for Litigation Insurance. Hedge funds are being asked to pay an average 5 per cent to 10 per cent more to buy officers’ and directors’ insurance in response to an expected increase in litigation from insider trading and regulatory investigations, a survey has found. Richard Canter, president of SKCG, the New York risk management adviser to hedge funds that conducted the survey, said hedge funds with poor performance and high redemption requests are quoted rates that are 15 per cent higher than three months ago.
- Bundesbank Steps Up Pressure On Draghi. Germany’s Bundesbank has stepped up pressure on Mario Draghi, European Central Bank president, to plan the withdrawal of exceptional help for eurozone banks, warning of potentially dangerous side-effects for the region’s financial system.
- Brusssels Probes Possible Telecoms Collusion. Europe’s biggest telecoms companies are facing the threat of a European Commission probe focusing on whether meetings between their top executives led to possible collusion.
- Getting to Grips With the EU's New Fiscal Pact. A picture paints a thousands words. Over the course of countless summits, European leaders have strained to produce the right narrative for photographers: extravagant triple-kiss greetings, toothy grins, and wistful stares between Angela Merkel and Nicolas Sarkozy. But tonight in Brussels the choreography went horribly wrong: Jean Claude Juncker, head of the group of 17 euro zone finance ministers, was snapped strangling his Spanish counterpart.
- North Korean secret agents are luring defectors in South Korea to China to abduct and execute them, citing unidentified sources.
Citigroup Global Markets:
- Reiterated Buy on (CLF), target $96.
- Asian equity indices are +.75% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 147.0 -8.5 basis points.
- Asia Pacific Sovereign CDS Index 123.25 -4.25 basis points.
- FTSE-100 futures +.67%.
- S&P 500 futures -.03%.
- NASDAQ 100 futures -.06%.
Earnings of Note
Company/Estimate
- (GEOI)/.39
- (GES)/1.04
8:30 am EST
- The Import Price Index for February is estimated to rise +.6% versus a +.3% gain in January.
- The Current Account Deficit for February is estimated to widen to -$115.0B versus -$110.3B in January.
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,600,000 barrels versus an +832,000 barrel gain the prior week. Distillate supplies are estimated to fall by -1,500,000 barrels versus a -1,944,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -1,000,000 barrels versus a -396,000 barrel decline the prior week. Finally, Refinery Utilization is estimated unch. versus a +.3% gain the prior week.
Upcoming Splits
- (ALK) 2-for-1
Other Potential Market Movers
- The Fed's Bernanke speaking, Italian Bond auction, 30Y T-Note auction, weekly MBA mortgage applications report, BoJ Monthly report and the UBS Consumer Conference could also impact trading today.
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