Evening Headlines
Bloomberg:
- Spain Confronts Crisis Threat as Rajoy Seeks Deficit Cuts. Spanish Prime Minister Mariano Rajoy stepped up efforts to reassure investors he can bring the country’s deficit under control as his government fights to avoid becoming the fourth euro-area member to require a bailout. Rajoy met with his health and education ministers yesterday to discuss cuts of more than 10 billion euros ($13 billion), the Spanish government said in an e-mailed statement. The government reiterated its pledge to reduce the deficit to 3 percent of gross domestic product next year, and will accelerate its sale of stakes in lenders under government administration, according to the statement late yesterday. Spanish bonds slumped last week, with 10-year yields posting their biggest weekly gain since January, as investors’ concern mounted that Rajoy’s government may join Greece, Ireland and Portugal in requesting an international rescue. Spain’s premier spoke on April 4 of “extreme difficulty” as the country barely covered its minimum target at a debt auction. “As a result of Spain’s challenges, sentiment towards its sovereign bonds is now the bellwether for Europe’s debt crisis,” Mansoor Mohi-uddin, chief currency strategist at UBS AG (UBSN), wrote in an e-mailed note on April 7. “If investor appetite wanes, then currency markets will start to price in either ECB rate cuts to help restore sentiment, or Madrid requires external assistance from its European Union partners.”
- Financial Bonds Sag as Europe Tensions Smolder: Credit Markets. Bonds from financial companies are lagging behind industrial securities for the first time since November as a failed bond auction in Spain and rising French borrowing costs drive concern that Europe's sovereign-debt crisis may reignite. Relative yields are rising from the lowest levels in seven months as optimism fades that Europe will be able to avoid a default that would infect bank balance sheets worldwide.
- China's Stocks Drop as Trade Data Stoke Concerns About Economy. China’s stocks fell, dragging the benchmark index to the lowest level in more than a week, as trade data stoked concerns about the slowing economy. China Cosco Holdings Co. led declines for shipping companies as export growth decelerated in March. Tianjin FAW Xiali Automobile Co. dropped the most in two weeks after sales slumped last month. Jiangxi Copper Co., the nation’s biggest producer of the metal, slid 1.6 percent on concern demand for metals may weaken after the U.S. added fewer jobs. “The economy isn’t in very solid shape and growth may trend down further in coming months,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “The market may be under selling pressure because of growth concerns.” The Shanghai Composite Index (SHCOMP) dropped 22 points, or 1 percent, to 2,263.78 at the 11:30 a.m. local-time break.
- Las Vegas Deficit Leads Fitch to Drop Credit Outlook to Negative. Las Vegas’s credit outlook was lowered to negative from stable on $561.2 million of debt by Fitch Ratings, which cited budget deficits and the lingering housing crisis. The company assigned AA ratings, its third-highest, to $19.9 million of limited tax general-obligation bonds expected to be priced April 17 in a negotiated sale. It also affirmed its AA rating on $353 million of outstanding limited tax general- obligation bonds and AA- rating on $188.3 million of 2009 certificates of participation.
- Evan Greenberg Says Businesses Face Regulatory 'Assault'. Ace Ltd. (ACE) Chairman and Chief Executive Officer Evan Greenberg said regulators in the U.S. and Europe are stymieing private-sector growth as he expands the Swiss insurer’s operations in Asia and Latin America. “In the U.S. and much of Europe, we face an unrelenting assault on business by government,” Greenberg said in an annual letter to shareholders posted today on the Zurich-based company’s website. “Rather than creating an environment of certainty where business thrives, government is discouraging risk-taking and investment.”
- VIX Posts Longest Streak of Gains Since 2003. The benchmark gauge for U.S. options prices rose for a seventh day, the longest streak since August 2003, as concern about employment growth and earnings spurred investors to guard against losses in stocks.
- Profit Growth Stalls as European Slump Hampers Recovery. U.S. corporate profit growth stalled in the U.S. last quarter as companies from McDonald’s Corp. (MCD) (MCD) to 3M Co. (MMM) (MMM) saw gains in the world’s largest economy eroded by a slump in Europe. Earnings at Standard & Poor’s 500 Index companies, excluding financials, are seen gaining 0.6 percent in the first and the second quarter from a year earlier, according to analysts’ estimates compiled by Bloomberg, the slowest growth rate since 2009.
- Obama's Fantasy Budget Suggests Tax Hike Surprise. If a big, automatic tax increase is Obama’s plan for the start of his second term, it’s not a good plan. But it is more alarming to think that he has no plan at all.
- Bernanke Calls on Regulators to Limit Risks of Shadow Banking. Federal Reserve Chairman Ben S. Bernanke called for new steps to curb “shadow banking” operating beyond standard oversight while saying the economy has far to go before fully recovering from the credit crisis. “The heavy human and economic costs of the crisis underscore the importance of taking all necessary steps to avoid a repeat of the events of the past few years,” Bernanke said yesterday in a speech in Stone Mountain, Georgia.
- JAC: Brazil Auto Sales Won't Rise In 2012 On Credit Pullback. Brazil auto sales likely will stay flat this year as the country's banks pull back on vehicle financing, auto importer Sergio Habib said Monday. Habib, whose importer SHC is helping finance the construction of an auto factory for China's Jianghuai Automobile Co. in Brazil, said banks have been reducing the maturity of auto loans, hurting sales. Despite the drop in the benchmark interest rate, which Brazil's central bank has been slashing since August and stands at 9.75%, the length of the financing matters more to Brazilian consumers, Habib said. "This year the market won't grow," he said.
- Syria Fight Spills Over Borders. Shots Kill, Injure Civilians in Turkey and Lebanon, Jeopardizing Cease-Fire Plan.
- China Sends Another Warning to Banks. In a fresh sign of official displeasure with the nation's state-run banking system, China's bank regulator has warned lenders they will be "severely punished" for charging excessive fees. In a notice on its website dated Friday, the China Banking Regulatory Commission said it began an investigation into bank fees on April 1, adding that banks that are found to be charging high fees for routine services will be punished. It didn't elaborate on how it defines high fees or what the punishment would be.
- A History Lesson on Capital Gains Taxes.
- Total Collapse In The Egypt Market.
- Now America LOVES The Supreme Court Because It Looks Like It Will Strike Down Obamacare.
- No Mention of QE3 in Bernanke's Big Speech in Atlanta.
- Goldman(GS) Explains Why Economic Downturns Just Feel More Dangerous These Days.
- Putting It Into Perspective: Bruno Iksil's $100 Billion Position Makes Him The Seventh Largest Bank Holding Company By CDS Exposure.
- BoJ Follows In China's Foosteps, Defers To Fed On Easing.
- China Swings to Surprise Trade Surplus in March. China swung to a surprise trade surplus of $$5.35 billion in March as exports grew faster than expected and import growth eased from a 13-month peak, customs data showed on Tuesday. Import and export growth were both down sharply from February's Lunar New Year distorted surge, and within sight of the government's target of 10 percent expansion for 2012. The data reinforced the view of most analysts that China's trade-sensitive economy is set for a soft landing, with GDP growth likely to have eased for a fifth successive quarter to 8.3 percent in the first three months of 2012 and remaining on course for its slowest year of expansion in a decade. Import growth of 5.3 percent in March compared with economists' expectations of 9.0 percent and February's 39.6 percent growth, while export growth of 8.9 percent compared with a consensus call for 7.2 percent, still a marked easing from February's 18.4 percent rate.
- Kansas Prepares for Gold-Rush Style Oil Boom.
- Easing Inflation in Asia? Not So Fast Say Analysts. Depending on where you look, Asia's inflation is either benign or stubbornly hot.
- Brazil's Rousseff tells Obama of 'currency war' worries. Brazil's President Dilma Rousseff has voiced concern to US President Barack Obama that the easy money policies of developed countries threaten the growth of emerging economies like Brazil. The comments from the leader of Brazil, the world's sixth largest economy, came Monday on her first visit to the White House -- for talks that yielded little in the way of concrete announcements. "Such expansionist monetary policies... ultimately lead to a depreciation in the value of the currencies of developed countries, thus impairing growth outlooks in emerging countries," Rousseff said.
- North Korea Also Plans to Fire Rocket From Eastern Site. North Korea has "detailed plans" to launch a rocket from its eastern Musudan-ri base, separate from the western Tongchang-ri site, citing the head of the Tongchang-ri facility.
- China's 2012 consumer price rise may move between 3%-5%, citing Wang Jian, secretary general of the China Society of Macroeconomics.
- None of note
- Asian equity indices are -1.0% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 165.50 +4.0 basis points.
- Asia Pacific Sovereign CDS Index 135.0 +2.25 basis points.
- FTSE-100 futures -.90%.
- S&P 500 futures +.13%.
- NASDAQ 100 futures +.18%.
Earnings of Note
Company/Estimate
- (AA)/-.04
- (SVU)/.35
7:30 am EST
- The NFIB Small Business Optimism Index for March is estimated to rise to 95.0 versus 94.3 in February.
Upcoming Splits
- None of note
Other Potential Market Movers
- The Fed's Kocherlakota speaking, Fed's Lockhart speaking, Fed's Fisher speaking, JOLTs Job Openings report for February, IBD/TIPP Economic Optimism Index for April, 3Y T-Note Auction, G-7 Meeting and the weekly retail sales reports could also impact trading today.
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