Evening Headlines
Bloomberg:
- Weidmann Says Bundesbank Is Preserving Euro Stability. Bundesbank President Jens Weidmann said the German central bank’s actions are aimed at maintaining the stable foundation of the euro and preventing an erosion of the single currency’s acceptance. “What we are doing is preserving the stability foundation of the single currency,” Weidmann said today in an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “If the stability foundation of the euro is eroded, then we will also see the acceptance of the single currency eroded.” The Bundesbank has faced criticism, including from billionaire George Soros, for speaking out against some European Central Bank crisis-fighting measures such as government bond purchases. Weidmann said Soros’s charge that the Bundesbank is preparing for the end of the euro is “ridiculous.” “We shouldn’t get so excited about bond yields rising for a limited period of time,” Weidmann said. “They also constitute an incentive to reform, to embark on consolidation.” The ECB, which has pumped more than 1 trillion euros ($1.3 trillion) into the banking sector since December in a bid to avert a credit crunch, has “done its job,” Weidmann said. Weidmann added that governments must now press on with budget cuts and structural reforms to encourage economic growth. “It’s important to get the message to governments, ‘this is your job now,’” Weidmann said.
- Dutch Cabinet Collapse Shows Folly of Merkel Fiscal Pact. Alarm over Europe’s financial predicament is surging again. The immediate cause is the European Union’s fiscal pact. Germany insisted on this plan to cut public borrowing sharply and immediately, and euro-area governments hoped it would restore stability. It’s doing the opposite. The pact is proving so unpopular that it’s undermining governments, and not just in the peripheral countries most obviously at risk. The stresses caused by the EU’s strategy influenced presidential elections on Sunday in France and forced a crucial partner in German Chancellor Angela Merkel’s austerity drive, Dutch Prime Minister Mark Rutte, to offer his cabinet’s resignation on Monday. While socialist Francois Hollande’s campaign against French President Nicolas Sarkozy’s “excessive austerity” has received considerable attention, Europe’s big surprise came when the Dutch coalition government resigned, days after the far-right anti-EU Freedom Party refused to go along with the center-right Liberals’ plans for budget cuts to comply with the new fiscal pact. Voters in the Netherlands don’t appear to be deserting the Liberals, but the collapse of the coalition and the need for new elections complicates parliamentary ratification of the budget deal, due by the end of the year.
- Hollande Blames Europe’s Austerity Plan for Le Pen’s Rise. Francois Hollande, the winner of the first round of France’s elections, said Europe’s austerity drive fueled despair and created conditions for the record-high score for anti-euro National Front leader Marine Le Pen. Le Pen, the leader of the nationalist, anti-immigrant party, won 17.9 percent, or 6.4 million votes, surpassing poll estimates with the highest tally for the National Front created by her father Jean-Marie Le Pen in 1972. Hollande, the Socialist candidate, got 28.6 percent in the April 22 ballot, leaving him to face President Nicolas Sarkozy in next month’s runoff. Sarkozy won 27.2 percent.
- China's Stocks Drop on Economic Slowdown, European Debt Concerns. China’s stocks fell for a second day after a leading index for the nation rose at a slower pace in March and political uncertainty in Europe hurt the outlook for Chinese exports to its biggest trading partner. Yanzhou Coal Mining Co. (600188), China’s fourth-biggest coal miner, slid 3.4 percent after net income slumped in the first three months of the year. Jiangxi Copper Co. led a decline for commodity producers on concern Europe will struggle to contain its debt crisis as a political backlash against budget cuts gained momentum. Risen Energy Co. plunged more than 8 percent for a second day after officials tightened standards for small companies listed on the ChiNext Board. “Europe’s political uncertainty adds to the risk from the debt crisis,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “The environment isn’t favorable for risk assets like equities.” The Shanghai Composite Index fell 19.8 points, or 0.8 percent, to 2,368.75 at 11:14 a.m. local time, after gaining as much as 1.1 percent.
- SEC Claims Ex-Calpers CEO Steered $20 Million to Friend. A former chief executive of the California Public Employees’ Retirement System was sued by U.S. regulators over claims he defrauded an investment firm into paying $20 million in fees to a friend’s placement agencies. Federico Buenrostro, who was Calpers CEO from 2002 to 2008, and Alfred Villalobos, the former deputy mayor of Los Angeles, fabricated documents given to New York private-equity firm Apollo Global Management (APO) to present the false impression that the pension fund had reviewed and signed placement-agent fee- disclosure letters, the Securities and Exchange Commission said today in a lawsuit filed in U.S. District Court in Nevada.
- Wal-Mart(WMT) Said to Be Subject of U.S. Criminal Probe. Wal-Mart Stores Inc. is the subject of a U.S. Justice Department criminal investigation into allegations of bribery in its Mexican subsidiary, according to a person familiar with the probe. Allegations that representatives of the Bentonville, Arkansas-based retailer bribed local officials in Mexico to get stores opened faster in the early 2000s were described in an April 21 New York Times story.
- Afghan Stability Undermined by Pakistan, General Says. Hard-won stability in Afghanistan’s Helmand Province is undermined by the Pakistan Army’s failure to help stem the flow of arms coming into the area and drugs going out, a U.S. general said. “Everything is good, but it’s not irreversible,” Marine Corps Major General John Toolan said in an interview in Washington yesterday after appearing before the Atlantic Council, a policy research group. He ended a one-year tour last month as the commander in charge of the NATO coalition’s southwestern regional command responsible for Helmand.
- Economic Gloom Deepens Europe's Political Crisis. The Dutch government fell amid a dispute over budget cuts, underscoring the growing difficulty Europe's leaders face against a darkening economic picture, massive debts, angry voters and volatile financial markets. On Monday, Dutch Prime Minister Mark Rutte became the latest euro-zone leader to fall victim to the region's economic funk, tendering his resignation after failing to win enough backing in parliament for measures to cut the country's budget deficit. The leaders of Greece, Portugal, Ireland, Spain and Italy also have been forced out recently as the region's economy worsens.
- Stress Rises on Social Security. Social Security, which pays retirement and disability benefits to 56 million Americans, will exhaust its reserves by 2033, three years sooner than previously estimated, a new government report said Monday. The forecast raises pressure on the White House and Congress to tackle the entitlement program, which many politicians fear changing because of potential voter backlash.
- Facebook's(FB) Growth Slows as IPO Nears. As Facebook Inc. enters the final weeks before its landmark initial public offering, not all of the arrows are pointing up. In what is likely to be the last snapshot of its financial condition before the expected May IPO, Facebook disclosed Monday that its first-quarter profit and revenue declined from the final quarter of 2011.
- Judge: DA Can Subpoena NY Occupy Protester Tweets. A judge says an Occupy Wall Street protester can't stop prosecutors from getting his tweets as part of a case surrounding his arrest at a demonstration. A Manhattan criminal court judge ruled Friday there are reasonable grounds to believe the information is relevant. The judge also says Malcolm Harris can't legally challenge the subpoena sent to Twitter Inc., not him.
- Running Mate Dance Begins. Mitt Romney worked to lock up the Republican presidential nomination in a Pennsylvania campaign swing Monday that also served a general-election purpose: debuting a potential running mate. The likely GOP nominee shared the stage in this Philadelphia suburb with Florida Sen. Marco Rubio, a 40-year-old Cuban-American conservative, as he focused his attention on the November matchup with President Barack Obama.
- Big Lots(BIG) Plunges as Electronics Sales Drop. Big Lots (BIG) fell 15% after the retailer said it now expects to post negative comparable store sales in the first quarter after previously issuing guidance for 2% to 4% growth. The company said its electronics sales in particular have performed worse than expected.
- China Tops World in Shopping Mall Construction. China dominates the world in terms of shopping-mall construction, with some cities little-known in the West throwing up retail centers on a scope unmatched anywhere else in the world, as developers place high expectations on the spending power of the Chinese consumer. In terms of shopping-center space under construction, China holds the top three spots worldwide, and accounts for 8 of the cities that make up the top 10, according to CBRE, which released the data as part of its global retail survey earlier last week. The world’s busiest mall-construction hub, Tianjin, a major northeastern Chinese port city near the capital Beijing, has more shopping-center space under construction than the entire existing mall-space inventory of any single European city, apart from Paris and Moscow, according to CBRE. About 16 projects are in various stages of completion, entailing 2.45 million square meters (26.4 million square feet), according to the CBRE data.
- You Have To See How North Korea Just Threatened The South.
- These 5 Companies Account For 50% Of The Aggregate Earnings Surprises.
CNBC:
- Texas Instruments(TXN) Profits Top Forecast, Shares Jump. Texas Instruments posted a 60 percent decline in its quarterly profit but revenue was slightly ahead of analysts' expectations and the chip maker said a prolonged inventory related decline in demand had come to an end.
- Home Depot's(HD) Bernie Marcus Blasts Obama Record. (video) What businesses need right now is for the government to eliminate regulations and simplify the tax code, Home Depot co-founder Bernie Marcus said Monday. “I think that this administration is not friendly to business. I don’t mean they’re not friendly. They just don’t understand what makes business work,” he said on CNBC’s “The Kudlow Report.”
- Housing Short Sales Higher, Home Prices Lower.
- Netflix(NFLX) Beats Expectations But Stock Plummets on Subscriber Concerns. Netflix shares have plummeted after hours, despite the fact that the top and bottom line both came in better than expected.
- Why China's Economic Policies Are a Failure: Andy Xie. China's economy has slowed significantly since mid-2011. The growth rate of electricity consumption has roughly halved in two quarters. Property bubble, local government debt overhang, and eurozone crisis have significantly cut demand. The slowdown itself, however, shouldn't be viewed as a bad thing.
NY Times:
- Medicare Funding Runs Short by 2024, Trustees Say. Highlighting the fiscal problems posed by growing health costs and an aging population, the trustees of the nation's main entitlement programs estimated Monday that Medicare will only be able to pay a portion of its expected costs starting in 2024.
- Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Monday shows that 24% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-three percent (43%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -19 (see trends).
- Philadelphia Refinery Would Run Bakken, Syncrude - Source. Refiner Sunoco Inc and private equity firm Carlyle Group are planning to revive the fortunes of the 335,000 barrel per day refinery in Philadelphia by running about half of it on crude from North Dakota and Canada, a source familiar with the plan said on Monday.
- Google(GOOG) to Launch Online Storage Service for Consumers - Source. Google Inc is preparing to roll out a service to let consumers store photos and other content online, a source familiar with the matter said, pushing into a market now dominated by the likes of Dropbox and Box.
- ECB to Take All Necessary Measures for Prices - Noyer. Europe's central bank will take "all necessary measures" to stabilize prices, and banks and governments should see its recent exceptional measures as a "window of opportunity" to make improvements, ECB governing council member Christian Noyer said on Monday. Noyer was one of two ECB policymakers to speak about the importance of remaining focused on the central bank's mission of keeping prices in check. Recent funding operations to help stave off a liquidity crunch have raised worries about inflation among hard-liners. "First and foremost, we are providing price stability and will continue to take all necessary measures to fulfill this mandate," Noyer, who is also governor of the Bank of France, said at a conference at the New York Stock Exchange. "Moreover, our recent exceptional and temporary measures should be seen as a window of opportunity for banks to strengthen their balance sheets and for governments to step up their efforts in a less troubled financial environment."
- US SEC Charges SinoTech, Execs With Lying to Investors. U.S. securities regulators charged China-based SinoTech Energy Ltd and its senior executives with misleading investors on Monday, part of an effort to crack down on accounting problems at Chinese companies listed in the United States.
- Spanish Banks Need Urgent Halt to Avert Crisis - Sweden's Borg. Europe must deal urgently with Spain's banking problems, which hang like a dark cloud threatening global economic recovery, Sweden's Finance Minister Anders Borg said on Monday. Failure to recapitalize Spanish banks quickly could throw Madrid into a bailout program, even though its current fiscal situation is manageable, Borg told the Peterson Institute for International Economics.
Evening Recommendations
Piper Jaffray:
- Rated (LNKD) Overweight, target $130.
- Asian equity indices are -1.25% to unch. on average.
- Asia Ex-Japan Investment Grade CDS Index 169.0 +1.5 basis points.
- Asia Pacific Sovereign CDS Index 135.50 +.75 basis point.
- FTSE-100 futures +.18%.
- S&P 500 futures +.11%.
- NASDAQ 100 futures +.11%.
Earnings of Note
Company/Estimate
- (UTX)/1.19
- (TROW)/.77
- (R)/.58
- (HSY)/.81
- (BHI)/.80
- (APD)/1.33
- (AKS)/-.12
- (X)/.49
- (ALXN)/.39
- (WAT)/.04
- (LXK)/1.04
- (RF)/.08
- (COH)/.75
- (MHP)/.48
- (MMM)/1.49
- (ITW)/.95
- (T)/.57
- (PCAR)/.79
- (RHI)/.28
- (CHRW)/.65
- (AFL)/1.65
- (BCR)/1.57
- (PNRA)/1.34
- (IGT)/.25
- (AAPL)/9.96
- (AMGN)/1.46
- (JNPR)/.13
- (CBG)/.13
- (NSC)/1.12
- (BWLD)/.96
- (DV)/.99
9:00 am EST
- The S&P/CS 20 City Home Price Index MoM% SA for February is estimated to rise +.2% versus a -.04% decline in January.
10:00 am EST
- Consumer Confidence for April is estimated to fall to 69.7 versus 70.2 in March.
- New Home Sales for March are estimated to rise to 318K versus 313K in February.
- Richmond Fed Manufacturing for April is estimated to fall to 6.0 versus 7.0 in March.
- The House Prices Index for February is estimated to rise +.1% versus unch. in January.
Upcoming Splits
- (HEI) 5-for-4
Other Potential Market Movers
- The Italian Note/Bond Auctions, Spanish 3-6 Month Bill Auction, 2-Year T-Note Auction, weekly retail sales reports and the Barclays Capital Retail/Restaurants Conference could also impact trading today.
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