Evening Headlines
Bloomberg:
- Spain Yields Trouble Guindos as Rajoy Rallies Party. Spanish Economy Minister Luis de Guindos said the surge in borrowing costs will be a “problem” if it persists, as the government used the threat of a European bailout to rally support behind austerity measures. Spanish 10-year bond yields surged as high as 6 percent yesterday, approaching the levels that pushed Greece, Ireland and Portugal into bailouts, and the extra yield over German bunds held above 400 basis points. In a test of appetite for bonds from the euro region’s periphery, Italy sells as much as 5 billion euros ($6.6 billion) of bonds today. “A spread of more than 400 basis points is obviously a problem” if it persists over the medium term, de Guindos said in Barcelona yesterday. “The government needs to put the house in order because the alternative is much worse.” Prime Minister Mariano Rajoy and his government, in power since Dec. 21, are signaling to Spaniards they risk losing access to financing if they fail to convince investors they can reorder public finances and steer the economy back to growth. Rajoy is trying to persuade voters to accept budget cuts, tax increases and fewer subsidies as the economy suffers its second recession in three years and half of young people are unemployed.
- Europe's Debt Crisis Worsening, Fuels Instability, El-Erian Says. Europe's fiscal crisis is getting worse and will keeping fueling market instability, according to Pacific Investment Management Co.'s Mohamed A. El-Erian. "The problems in Europe are getting bigger," El-Erian, co-chief investment officer at the world's biggest bond fund, said on Bloomberg Radio's "The Hays Advantage" with Kathleen Hays as he prepared to speak before the Federal Reserve Bank of St. Louis. "Europe has a debt issue and Europe has a growth issue, and until Europe deals with both, we are going to have these reoccurring periods of nervousness in the market."
- North Korea Names Kim Jong Un Party Chief. Kim Jong Un was named head of North Korea’s sole political party, solidifying his status ahead of a planned missile launch as soon as today that could halt a U.S. food deal and raise regional tensions. Kim, who is believed to be younger than 30, was named first secretary of the Workers’ Party of Korea, the state-run Korean Central News Agency said yesterday. It was his first government post since becoming head of the country after the December death of his father Kim Jong Il, who was named “eternal general secretary” of the party yesterday, the agency said.
- Roche Signals It's Willing to Up Offer for Illumina(ILMN). Roche Holding AG (ROG) indicated it is willing to raise a $51-a-share bid for Illumina Inc. (ILMN) (ILMN), calling its current offer a “more than reasonable starting point for negotiations” in a letter to Illumina shareholders.
- Inflation Lurks as Stealth Tax on Top of Form 1040 by Caroline Baum. It distorts price signals and leads to a misallocation of capital. It’s a silent way for the government and central bank to devalue the currency, raise prices, help borrowers and punish savers. And it’s exactly the wrong prescription for the U.S. The official push for higher inflation as a cure for a sluggish U.S. recovery began about two years ago with a paper by International Monetary Fund economists, including Chief Economist Olivier Blanchard, titled “Rethinking Macroeconomic Policy.”
- Oil Trades Near One-Week High on U.S. Fuel-Inventory Drop.
- World Bank Cuts China 2012 Growth Outlook on Exports. China’s economic growth may slide to a 13-year low in 2012 as a sluggish world recovery damps export demand and domestic investment and consumption growth decelerate, the World Bank’s latest forecast shows. The Washington-based lender cut its estimate for China’s expansion this year to 8.2 percent in a report released today in Beijing from a January projection of 8.4 percent.
- Google(GOOG), Amazon(AMZN) Are Potential Buyers for Deal Site Travelzoo(TZOO). Travelzoo’s stock soared by nearly 30 percent today on news that the 14-year-old deals site is planning to sell itself.
- Short Selling Drops on NYSE and Nasdaq. Short-selling fell at the New York Stock Exchange and the Nasdaq Stock Market during the second half of March. In the exchanges' latest twice-a-month statistics, the number of short-selling positions at the NYSE not yet closed out, known as short interest, decreased 1.55%. Those figures were for the period ended March 30, The positions stood at 12,632,330,667 shares, from a revised 12,830,691,538 shares in the period ended March 15. On Nasdaq, short interest decreased 1.29% to 6,872,608,156 shares from 6,962,358,936 shares, over the same period.
- Fearful Final Hours for Briton in China. The day before his death in the fog-shrouded Chinese city of Chongqing, Neil Heywood sensed that something was amiss. The British businessman had been summoned on short notice to a meeting in Chongqing in early November with representatives of the family of Bo Xilai, the local Communist Party chief, according to an account by a friend whom Mr. Heywood contacted at the time. Mr. Heywood told the friend he was "in trouble."
- School Vouchers Gain Ground. Louisiana is poised to establish the nation's most expansive system of school choice by adopting a package of vouchers and other tools that would give many parents control over the use of tax dollars to educate their children. The initiative would effectively redefine vouchers.
- Demolishing Paul Ryan. On current course, House GOP Budget Chairman Paul Ryan himself may exhaust their entire thermonuclear arsenal before November. Once again, the Campaigner in Chief threw the switch himself, calling the Ryan House budget "social Darwinism," "a Trojan horse" and "antithetical to our entire history." Rev. Samuel Rodriquez of the Hispanic Evangelical Association said the poor would be "budget-war collateral damage."
- GEORGE SOROS: The Euro Crisis Just Entered A 'Less Volatile But More Lethal Phase'.
- This Might Have Something To Do With The Sudden Carnage In Italy.
- Bruno Iksil, JPMorgan and the Real Conflict with Credit Default Swaps.
- Global Systemic Risk Is Rising Rapidly Again. (graph)
- Bernanke's Right Hand Dove, Janet Yellen, Hints At ZIRP Through Late 2015.
- Herman Cain: 'We're Becoming a Perpetual Nanny State'. The government’s safety net is too big and “growing too fast” under the Obama administration, former contender for the Republican presidential nomination Herman Cain said Wednesday. “We’re not only becoming this perpetual nanny state, the government is encouraging people to come to the government trough,” he said on “The Kudlow Report.”
- PC Shipments Up Nearly 2% in 1st Quarter. The number of personal computers shipped worldwide rose more than expected in the first quarter, but the bump did little to mask the larger challenges for the industry. Gartner Inc. said Wednesday that there were 89 million PCs shipped in the first three months of the year, an increase of 1.9 percent from a year earlier. That's above the research firm's earlier expectations of 1.2 percent. Another research group, IDC, also announced Wednesday that shipments were up 2.3 percent, above its expectations of a 0.9 percent decline. The reports may have beat expectations, but confirmed that the PC industry is in a state of flux.
- Greek Crisis Leaves Cyprus Mired in Debt. Banks in Europe must demonstrate to the European Banking Authority by the end of June that they have enough capital to be viable. Banks that cannot provide that evidence will face pressure to accept government bailouts or, in extreme cases, be shut down. The failure of its biggest bank would have grave consequences for Cyprus, where the economy revolves around financial services — a result of the island’s appeal as a low-tax gateway to the Middle East and Africa for companies from Russia and elsewhere in Europe.
Seeking Alpha:
- Iran Woos Oil Buyers With Easy Credit. Iran is trying to skirt US and European sanctions by luring nations to buy its oil on highly advantageous credit terms, say officials in the industry. Tehran has been offering a handful of potential customers in Asia, including India, 180 days of free credit, according to the officials. They estimate that each month of credit amounts to a discount of roughly $1.2 to $1.5 a barrel.
- Teen Financial Confidence Plunges. Talk about teen angst. The latest concerns of the 18-and-under set go way beyond pimples and prom dates: Their level of financial confidence has taken a dramatic slide. Just 56% of kids 14 to 18 think they will be as financially well-off, or better off, than their parents, according to a new survey from Junior Achievement and The Allstate Foundation. That's a huge plunge from 89% in 2011.
- Schwab Warns Against Proposed Money Market Rules. Proposals to further regulate money market funds offer little new protection for investors and could end up devastating the $2.6 trillion industry, Charles Schwab Corp said in a letter sent last week to the U.S. Securities and Exchange Commission.
- Italy 3-Yr Yields Seen Jumping At Auction On Spain, Reform Fears. Italian three-year borrowing costs are set to jump by a full percentage point from a month ago at a bond auction on Thursday, the latest sign investors' concerns about Spain are spreading to other euro zone countries hit by recession.
- McKesson(MCK) Wins New 2-Yr Veterans Affairs Contract. Pharmaceutical wholesaler McKesson Corp on Wednesday said it was selected by the U.S. Department of Veterans Affairs to continue as the VA's prime pharmaceutical supplier for at least two more years. News of the contract, which includes options for up to three two-year extensions, sent shares of McKesson up more than 4 percent in after hours trading.
- U.S. SEC Sues AutoChina for Securities Fraud. U.S. securities regulators on Wednesday sued AutoChina International Ltd, its executives and others for securities fraud. The Securities and Exchange Commission said the company's employees, board members and other Chinese citizens unlawfully bought and sold AutoChina stock to boost its trading volume as the company sought loans. AutoChina, which is based in China and owns and operates a commercial vehicle leasing business there, traded its shares on the NASDAQ stock market until last October.
- Avid(AVID) 1st-Qtr Revenue Forecast Misses, Shares Slip. Avid Technology Inc forecast quarterly revenue that missed analysts' estimates, hurt by weaker demand at one of its business segments, sending the digital audio and video editing software maker's shares down 17 percent after the bell.
- Chinese Take to Web to Debate Bo's Downfall. China’s web censors laboured in vain on Wednesday as the country’s citizens messaged each other about the one topic on everyone’s mind: the fate of Bo Xilai, the purged party official, and his wife.
- Europe's Banks Beached as ECB Stimulus Runs Dry. The European Central Bank's €1 trillion (£824bn) lending spree over the winter has stored up a host of fresh problems, leaving parts of the banking system more vulnerable than before as the short-term "sugar rush" nears exhaustion. Credit experts say the Spanish and Italian banks are trapped with large losses on sovereign bonds bought with ECB funds under the three-year lending programme, or Long-Term Refinancing Operation (LTRO). Andrew Roberts, credit chief at RBS, said Spanish banks used ECB funds to purchase five-year Spanish bonds at yields near 3.5pc in February and 4.5pc in December. The same bonds were trading at 4.77pc on Wednesday, implying a large loss on the capital value of the bonds. It is much the same story for Italian banks pressured into buying Italian debt by their own government. Any further dent to confidence in Italy and Spain over coming weeks – either over fiscal slippage or the depth of economic contraction – could push losses to levels that trigger margin calls on collateral. "The banks are deeply underwater. This is turning into a disaster for the eurozone periphery now that the liquidity tap has been turned off," said Mr Roberts. "But given the opposition in Germany, the ECB can't easily do another LTRO until there is a major crisis."
- None of note
- Asian equity indices are unch. to +.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 166.0 -6.5 basis points.
- Asia Pacific Sovereign CDS Index 138.50 -1.5 basis points.
- FTSE-100 futures +.01%.
- S&P 500 futures +.28%.
- NASDAQ 100 futures +.28%.
Earnings of Note
Company/Estimate
- (FAST)/.34
- (GOOG)/9.64
- (JBHT)/.52
8:30 am EST
- The Trade Deficit for February is estimated to shrink to -$51.8B versus -$52.6B in January.
- The Producer Price Index for March is estimated to rise +.3% versus a +.4% gain in February.
- The PPI Ex Food & Energy for March is estimated to rise +.2% versus a +.2% gain in February.
- Initial Jobless Claims are estimated to fall to 355K versus 357K the prior week.
- Continuing Claims are estimated to fall to 3335K versus 3338K prior.
Upcoming Splits
- None of note
Other Potential Market Movers
- The Fed's Dudley speaking, Fed's Lockhart speaking, Fed's Plosser speaking, Fed's Raskin speaking, China Fixed Asset Investment/GDP/Industrial Production/Retail Sales data, 30Y T-Bond Auction, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index and the (AYR) analyst event could also impact trading today.
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