Today's Headlines

Bloomberg:

• Spain's Debt to Rise to Record 79.8%; Bond Sales to Decline. Spain’s public debt will rise to a record this year as it sells almost 37 billion euros ($49 billion) of bonds to finance a budget deficit that was nearly three times the euro-area limit last year. Total borrowing will reach 79.8 percent of gross domestic product as the country breaches the European Union’s deficit rules for a fifth year. That’s the highest since before the country’s return to democracy in 1978 and up from 68.5 percent last year, according to the 2012 budget that the government presented to Parliament today in Madrid. The yield on Spain’s 10-year bonds rose 6 basis point to 5.41 percent today and has gained more than 50 basis points since March 2 when Rajoy raised the deficit target, citing a deepening recession and his Socialist predecessor’s failures.
• Spanish Puts Hit Record Discount to Swaps in Santander: Options. The cost of options protecting against losses in shares of Banco Santander SA and Telefonica SA, Spain's biggest stocks, has never been lower relative to credit-default swaps on their bonds, spurring concern investors are underestimating risk in the equities. Implied volatility for three-month puts priced 10% below shares of Santander, Spain's largest lender, fell to 39.75 yesterday, while five-year swaps were at 359.48 basis points, Bloomberg data show. The ratio between the values fell to .107-to-1, an unprecedented level, on March 29. The equivalent figure for Telefonica reached a low yesterday.
• European Stocks Fall; Banks Lead Losses. European (SXXP) stocks dropped, paring the benchmark Stoxx Europe 600 Index’s biggest two-day rally since February, as Spanish bond yields rose and U.S. factory orders rebounded less than economists had estimated. Banca Popolare di Milano Scarl (PMI) led a gauge of European (SXXP) banking shares lower. Ferrovial SA (FER) tumbled 6.4 percent as Spain’s government published its budget for 2012.
• Home Prices Seen Dropping 10% in U.S. on Foreclosures: Mortgages. As many as 1.25 million of America's least cared for homes are headed for auction after a year-long probe into foreclosure practices kept them off the market. Sales of repossessed properties probably will rise 25 percent this year from 1 million in 2011, according to Moody's Analytics Inc. Prices for the homes could drop as much as 10 percent because they deteriorated as they were held in reserve during investigations by state officials resolved in February, according to RealtyTrac Inc. That month, 43 percent of foreclosures were delinquent for two or more years, from a 21 percent share in 2010, according to Lender Processing Services Inc. in Jacksonville, Florida. "The longer a foreclosed home is in the mill, the bigger the losses," said Todd Sherer, who manages distressed mortgage investments for Dalton Investments LLC, a Los Angeles-based hedge fund that oversees $1.5 billion. "We have a bulge of these properties coming through the system."
• Oil Declines After U.S. Factory Orders Gained Less Than Expected. Oil fell for the first time in three days as U.S. factory orders climbed less than expected in February. Oil for May delivery slipped 51 cents, or 0.5 percent, to $104.72 a barrel at 11:59 a.m. on the New York Mercantile Exchange. Oil climbed 2.1 percent yesterday after U.S. manufacturing in March expanded at a faster pace than estimated. Oil is 6 percent higher this year. Brent crude for May settlement slid 9 cents to $125.34 a barrel on the London-based ICE Futures Europe exchange.
• PBOC's Zhou Urges Fed to Consider Global Effects of Policy Easing. China’s central bank Governor Zhou Xiaochuan said the U.S. Federal Reserve has a responsibility to consider the global effects of its actions after emerging-market economies suffered from capital inflows. Because the U.S. dollar is the world’s main reserve currency, the Fed “may have more responsibility not only to consider the U.S. economy but also the global economy,” Zhou said today during a panel discussion at the Boao Forum for Asia on the southern Chinese island of Hainan. Zhou’s comments reprise criticism of the U.S. from emerging nations who complained that so-called quantitative easing was sending unwanted cash into their economies, adding to inflation risks.
• U.S. Factory Orders Rose 1.3% in February on Capital Goods. Orders to U.S. factories climbed in February for the third month in the last four, boosted by demand for business equipment. Bookings rose 1.3 percent after a revised 1.1 percent decline in January, figures from the Commerce Department showed today in Washington. The median of 60 economists’ projections in a Bloomberg News survey called for a 1.5 percent advance. Orders excluding transportation equipment increased by the most in five months.
• GM(GM) Ford(F) U.S. Sales Increase Less Than Predicted. General Motors Co. (GM), with its premium brands losing ground, posted gains in U.S. vehicle sales that trailed analysts’ estimates while Chrysler Group LLC and Nissan Motor Co. reported better-than-projected increases.
• 'Apple(AAPL) Fever' to Push Stock to $1,000 for $1 Trillion Valuation. Apple Inc. (AAPL), already the world’s most valuable company, rose to an intraday record after two analysts said the stock could surge to $1,000 for the first market capitalization topping $1 trillion. Shares climbed 1.7 percent to $628.88 at 10:36 a.m. in New York, and earlier touched $631.29, after analysts from Piper Jaffray and Topeka Capital Markets said demand for Apple’s iPhone would propel shares. “There will be enough value over the next two plus years for Apple to add another $400 billion in market cap from a combination of growth in dollars invested in tech and continued shift from major Apple competitors,” said Gene Munster of Piper Jaffray, in a note today predicting that the stock can reach $1,000 in 2014.
• FOMC Saw No Need of New Monetary Easing, March Minutes Show. The Federal Reserve is holding off on increasing monetary accommodation unless the U.S. economic expansion falters or prices rise at a rate slower than its 2 percent target. “A couple of members indicated that the initiation of additional stimulus could become necessary if the economy lost momentum or if inflation seemed likely to remain below” 2 percent, according to minutes of their March 13 meeting released today in Washington.

Wall Street Journal:

• Spanish Banks Find New Source of Capital. The key in a banking crisis is to keep the confidence of depositors. But while many countries relied on capital injections and government guarantees, Spanish banks have added a unique twist of effectively turning some depositors into equity holders. That puts customers on the front line.
• China Permier: Considering Breaking Bank Monopoly. Chinese Premier Wen Jiabao told a national audience on Tuesday that China's state-controlled banks are a "monopoly" that must be broken, in an unusually blunt appeal for a shake-up of the creaky financial system of the world's No. 2 economy.
• GOP, Romney to Raise Funds Jointly. In a move that shows Republicans are coalescing around the party's front-runner, Mitt Romney plans to begin raising money jointly with the Republican National Committee this week as both the candidate and the GOP brace for an expensive general-election fight against President Barack Obama.
  

CNBC.com:

• Iran Says Could Hit U.S. If It Came Under Attack: Paper. The United States would not be safe from retaliation if Iran is attacked by Washington, the Iran newspaper quoted a senior Revolutionary Guards commander on Tuesday as saying. "In the face of any attack, we will have a crushing response. In that case, we will not only act in the boundaries of the Middle East and the Persian Gulf, no place in America will be safe from our attacks," Massoud Jazayeri was quoted as saying by the daily.
• Small Business Lending Barely Grew in February: Study. Lending to small business in the United States barely grew in February, supporting the view that economic growth was lackluster at the start of the year. The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to U.S. small businesses, edged up to 98.3 in February from 98.2 a month earlier, PayNet said on Tuesday. Borrowing rose 14 percent from a year earlier, the lowest 12-month growth rate since September.
• Break Up the Big US Banks? Why It Could Actually Happen.
  

Business Insider:

• Private Equity And Hedge Funds Take Note: Here's How A Big Tax Hike Is Coming From Somewhere You'd Never Expect. The hedge fund and private equity industries have been talking about this for a while — a potential tax hike from the Obama administration. Now we know more about where it's coming from. Bloomberg's Cristina Alesci reported on Money Moves yesterday that the tax hike would come from health care reform legislation passed two years ago.
• Gene Munster: Research In Motion Is Going 'Out of Business'. (video)
• No One Knows Where The Money Will Come From For California's $68 Billion High Speed Rail Plan.

Zero Hedge:

• On The Demise Of European Bank Debt.

Telegraph:

• Troika Praises Portugal's Austerity Measures But Spanish Fears Grow. Portugal has been praised by its international paymasters for its austerity progress but European markets still lurched amid fears over the stability of Spain and Italy. A report by Open Europe argued Spain's banks hold €136bn of "doubtful loans" and now represent the biggest threat to the country and the eurozone. The London-based think-tank said Spanish banks need to double their provisions to €100bn to protect themselves and the economy from further property price falls. Raoul Ruparel of Open Europe said the €50bn provisions ordered by the Spanish government was "woefully short", adding: "All the austerity efforts made by the Spanish government could be wiped out by the banks." The report warned: "Given its size, the fate of the Spanish economy will also largely decide the fate of the euro."