Bloomberg:
- Euro-Crisis Redux Seen as Greatest Threat to German Powerhouse. A resurgence of the debt crisis that scarred the euro-area over the past 3 1/2 years is the biggest threat facing Germany in an election year, policy makers and leading economists said. With sovereign bond yields declining in countries such as Italy and Ireland, governments across Europe cannot be lulled into thinking they can let up on their budget-cutting efforts, economists including Deutsche Bank AG senior adviser Thomas Mayer and Holger Schmieding of Berenberg Bank said during Bloomberg’s first Germany Day conference in Berlin yesterday. “No nonsense,” Schmieding said during a panel discussion at the event, urging governments not to “backtrack in any way on the achievements” made so far. “If any country tried now to undo austerity, it would likely shatter confidence, it would probably spark another row in Europe, another wave of the euro crisis, and that wave of crisis would leave us all with less business investment, less jobs across the euro area.”
- Italian Lawmakers Face Backlash as Grillo’s Force Arrive. Italy’s incumbent lawmakers, who united last year to impose austerity on taxpayers, are bracing for a fight over their own privileges as the upstart movement led by Beppe Grillo enters parliament and vies for key roles. Up for grabs as the legislature convenes today are the speakerships of the Senate and Chamber of Deputies, followed by appointments to budget committees and commission chairmanships. The posts could give Grillo’s Five Star Movement, which took a quarter of the votes in elections last month, enough leverage over the bodies’ more than 2 billion euros ($2.6 billion) in annual operating expenses. “The costs could be cut in half,” said Elio Lannutti, a consumer advocate, ex-senator and a friend of Grillo’s. “If they keep these people out, the revolution is just going to get bigger.”
- China Seen Overstating Exports to Hong Kong: Chart of the Day. Widening differences in bilateral trade data reported by China and Hong Kong suggest export-import activity is being overstated by the mainland as companies report inflated figures, according to Mizuho Securities Asia Ltd. China's numbers were 47% higher than Hong Kong's in January, compared with a 13% difference two years earlier.
- Wen’s Failure to Tame China Home Prices Leaves Li With Challenge. China’s new leaders are inheriting a challenge that stymied the outgoing government: deflating a bubble in big-city home prices without damping economic growth. In one of its final acts before the leadership change, China’s State Council on March 1 imposed tough new measures intended to cool the market, a step that sent property stocks tumbling. While curbs initiated last year had some success, prices resumed climbing in the second half as the central bank cut interest rates to reverse an economic slowdown.
- BRICs Abandoned by Locals With Fund Outflows Highest Since 1996. The 2.5 million rupees ($45,984) Nirav Vora had in the Indian stock market six years ago have plunged by 72 percent. Now the 39-year-old father of two in Mumbai, who depends on investment income for his livelihood, is plowing money into government bonds. “The confidence of small investors is rock bottom,” Vora said by phone on Feb. 26. “They have no faith in the markets.” Vora’s exit from equities is being repeated across the biggest emerging markets as disappointing profits and growing state intervention cause stocks to trail global shares for a fourth year. Trading by Brazilian individuals has dropped to the lowest level since 1999, exchange data show. Russian mutual funds posted 16 straight months of outflows, the most since at least 1996, and withdrawals in India are the biggest in more than two years. Chinese investors emptied more than 2 million stock accounts in the past 12 months.
- Rebar Pares Fourth Weekly Drop as Sharp Decline Spurs Purchases. Steel reinforcement-bar futures climbed for the first time in eight days, paring a fourth weekly drop, as the lowest prices in three months spurred purchases. Rebar for delivery in October on the Shanghai Futures Exchange advanced as much as 0.7 percent to 3,791 yuan ($610) a metric ton and was at 3,773 yuan at 9:55 a.m. local time. The price has dropped 4 percent this week, the most since the week ended Feb. 22. “The slump in the rebar futures was too far and too swift,” Dang Man, analyst at Maike Futures Co., said by phone from Xi’an today. “We think rebar futures will remain weak for a while as bearish fundamentals have to run their course.”
- Goldman(GS), JPMorgan(JPM) Ordered to Fix Capital Planning by Fed. Goldman Sachs Group Inc. and JPMorgan Chase & Co., the world’s biggest trading firms, must submit new capital plans to regulators to address weaknesses the Federal Reserve found in their planning processes. The central bank didn’t object to the capital plans of the two New York-based companies, and approved proposals from 14 other banks, the Fed said yesterday in a report. Capital plans submitted by Ally Financial Inc. and BB&T Corp. were rejected, while American Express Co., the biggest U.S. credit-card issuer by customer spending, revised its submission to win approval. The deficiencies found at Goldman Sachs and JPMorgan related to projections of losses and revenue, according to a Fed official.
- JPMorgan(JPM) Hid Trades Banned by Volcker Rule, Senate Probe Finds. JPMorgan Chase & Co. (JPM) engaged in high-risk proprietary trading under the guise of ordinary hedging, said Senate investigators, who urged U.S. regulators to strengthen the proposed ban on such trades known as the Volcker rule. Regulators should require banks that hold federally insured deposits to explicitly link positions in derivatives to the underlying risk they are hedging, the Senate’s Permanent Subcommittee on Investigations recommended in a 300-page report released yesterday.
- Morgan Stanley(MS) Can Be Sued by Hong Leong Over Misselling. Morgan Stanley (MS) can be sued by Singapore’s Hong Leong Finance Ltd. in a New York court over claims it deceptively sold instruments designed to fail.
- U.S. Drone Over Persian Gulf Pursued by Iranian Jet. A U.S. military drone operating over international waters in the Persian Gulf was pursued by an Iranian military aircraft on March 12, according to the Pentagon. The MQ-1 Predator drone, which was accompanied by two manned U.S. military airplanes, was conducting a classified surveillance flight in international airspace when it was approached by an Iranian F-4 jet that came within 16 miles (26 kilometers) of the unmanned plane, Pentagon spokesman George Little said yesterday in an e-mailed statement. After a “verbal warning” from the U.S., the Iranian plane broke off, according to the statement.
- Microsoft’s(MSFT) Surface Tablet Is Said to Fall Short of Predictions. Microsoft Corp. (MSFT) has sold about 1.5 million Surface devices, people with knowledge of the company’s sales said, a slow start in its bid to crack the fast-growing tablet market to make up for slumping personal-computer demand.
- Ulta Salon(ULTA) Plunges After Forecast Trails Analysts’ Estimates. Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA), the beauty-product retailer that has full-service salons in all its stores, plunged in late trading after its first- quarter profit forecast was less than analysts’ estimates. Ulta slid 12 percent to $78 at 4:30 p.m. in New York.
- Employers Blast Fees From New Health Law. Employers are bracing for a little-noticed fee in the federal health-care law that will charge them $63 for each person they insure next year, one of the clearest cost increases companies face when the law takes full effect. Companies and other plan providers will together pay $25 billion over three years to create a fund for insurance companies to offset the cost of covering people with high medical bills. The fees will hit most large U.S. employers, and several have been lobbying to change the program, contending the levy is unfair because it subsidizes individually purchased plans that won't cover their workers.
- New Push to Securitize Renewable-Power Pacts. The Obama administration and some on Wall Street are laying the groundwork for bundling renewable-power contracts into securities, part of an effort to make it cheaper to finance alternative energy. The initiative aims to extend to renewable energy a financial tool already used in the mortgage and credit-card industries. The securities could be sold to pension funds or other investors, who would receive a return funded by payments from users of electricity where solar panels or other equipment is installed. An early focus is the military, which is preparing to spend billions of dollars on electricity from solar, wind and other renewable sources during the next decade. The military services can enter into electricity-purchase agreements without new appropriations from Congress.
- Obama Sets Timeline on Iran Nuclear Bomb. Ahead of Israeli Visit, U.S. Leader Says Tehran Is a Year or More Away from Atomic Weapon; Netanyahu Has Different View. Barack Obama said it would take Iran a year or more to build a nuclear weapon, an assessment that sets up a potential area of discord with Israel's leader days before the U.S. president visits the Middle East. Mr. Obama, who will travel to Israel and Palestinian territories next week in his first presidential visit, told Israel's Channel 2 television that an Iranian atomic weapon was a "red line" that threatened Israel and the U.S. But in setting a timeline for development of an Iranian nuclear weapon that is longer than the more urgent one usually cited by Prime Minister Benjamin Netanyahu, Mr. Obama appeared to be tamping down any expectations for pre-emptive action against Iran while aiming to assure its closest Mideast ally of U.S. support. It was the first time Mr. Obama had himself publicly stated a timeline.
- Wells(WFC) CEO Pay Is Tops Among Peers. Wells Fargo & Co. awarded Chief Executive John Stumpf $22.9 million in compensation for 2012, making him the highest-paid chief of a major U.S. commercial bank.
- The Doctor Won't See You Now. He's Clocked Out. ObamaCare is pushing physicians into becoming hospital employees. The results aren't encouraging. Big government likes big providers. That's why ObamaCare is gradually making the local doctor-owned medical practice a relic. In the not too distant future, most physicians will be hourly wage earners, likely employed by a hospital chain. Why? Because when doctors practice in small offices, it is hard for Washington to regulate what they do. There are too many of them, and the government is too remote. It is far easier for federal agencies to regulate physicians if they work for big hospitals. So ObamaCare shifts money to favor the delivery of outpatient care through hospital-owned networks. The irony is that in the name of lowering costs, ObamaCare will almost certainly make the practice of medicine more expensive. It turns out that when doctors become salaried hospital employees, their overall productivity falls.
CNBC:
- Rusal CEO: 'Last Act of Drama' in Commodity Market. Oleg Deripaska, the CEO of the world's largest aluminum company Rusal said global commodity producers need to cut output by up to 10 percent to bring the market back to balance. "At the moment in many industries not just aluminum, [but] steel, cement, nickel we have a very urgent call to reduce output because the financial crisis created huge distortions in terms of demand," Deripaska told CNBC Europe's "Closing Bell" in London. "We are seeing maybe the last act of the drama when a lot of CEOs with a very good career were punished last year because of shareholders suffering on the return on their investments and I think this has created a very important shift of paradigm," Deripaska added. "We produce so much product which currently occupies warehouse [space] around the world and at the moment we should take a significant reduction, up to 10 percent. Of course, it's different for different industries," Deripaska said of the commodity market.
- How Your 2012 Tax Return Affects Health Care in 2014. For many Americans, the health reform law passed in 2010 will forevermore tie their health to their taxes. And even though the big changes required by the Patient Protection and Affordable Care don't start until 2014, the tax impact starts now.
- 'Abenomics’ Is Going to Fail: Mr Yen. "Abenomics" will not be able to achieve the two percent inflation target in Japan, Eisuke Sakakibara, former vice finance minister of Japan told CNBC on Friday, referring to Prime Minister Shinzo Abe's combination of ultra-loose monetary policy and fiscal stimulus. He noted that if dollar-yen breaks 100, the next stop for the currency pair could be 130, adding that this would be "risky" for the Japanese economy. "I remember in 1998, 1999 – it [dollar-yen] did go to 150 – I was at that time in the government, I was terrified," he said.
- The Complete History Of JPMorgan's "Monstrous" Derivative Risks And Abuses - The Full Senate Report.
Washington Post:
Reuters: - Grand jury investigating Sen. Robert Menendez (D-N.J.), people familiar with probe say. A federal grand jury in Miami is investigating Sen. Robert Menendez (D-N.J.), examining his role in advocating for the business interests of a wealthy donor and friend, according to three people aware of the probe.
- EU finance experts burn midnight oil over Cyprus deal. EU and IMF officials planned to work on a rescue package for Cyprus through the night in Brussels with the aim of presenting the outline of a bailout programme to euro zone finance experts on Friday morning, sources said.
- Molycorp(MCP) posts loss on writedown, to cut jobs. Molycorp Inc said on Thursday it planned to cut an unspecified number of jobs as it reported a fourth-quarter loss and booked an impairment charge related to its 2012 takeover of rare earth processer Neo Material Technologies.
- Washington could wind up running more health exchanges -official. The U.S. government could have to run more state health insurance exchanges than expected under President Barack Obama's healthcare law, if U.S. states pursuing their own marketplaces cannot complete them on time, a senior official said on Thursday.
- Aeropostale(ARO) posts weak holiday results, forecasts 1st-qtr loss. Teen clothing retailer Aeropostale Inc on Thursday forecast a loss and a sharp drop in sales for the current quarter, blaming the ongoing need to slash prices and a weak economy. Shares fell 6.7 percent to $13.60 in afterhours trading.
- EU needs austerity and reform, not spending By Guido Westerwelle. In the wake of the elections in Italy, some people are trotting out an old theory: that it was not homegrown problems that produced this election result, but a unilateral austerity policy imposed from outside. This “austerity course”, they say, has now been rejected. Growth, according to that thinking, can be created easily through spending programmes financed by borrowing. But this is wrong on two counts.
- Germany’s prudence is Europe’s poison. The spending cuts planned in Berlin by finance minister Wolfgang Schäuble to balance the budget a year early will make it impossible for others to grow.
Keefe Bruyette:
- Downgraded (PGR) to Underperform, target $23.
- Asian equity indices are -.25% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 101.50 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 80.25 -.75 basis point.
- FTSE-100 futures +.05%.
- S&P 500 futures +.06%.
- NASDAQ 100 futures +.11%.
Earnings of Note
Company/Estimate
- (BWS)/.08
- (FSS)/.11
- (HIBB)/.72
- (AVID)/.12
- (VECO)/.10
8:30 am EST
- Empire Manufacturing for March is estimated to fall to 10.0 versus 10.04 in February.
- The Consumer Price Index for February is estimated to rise +.5% versus unch. in January.
- The CPI Ex Food & Energy for February is estimated to rise +.2% versus a +.3% gain in January.
- Net Long-term TIC Flows for January are estimated to fall to $40.0B versus $64.2B in December.
- Industrial Production for February is estimated to rise +.4% versus a -.1% decline in January.
- Capacity Utilization for February is estimated to rise to 79.4% versus 79.1% in January.
- Manufacturing Production for February is estimated to rise +.5% versus a -.4% decline in January.
- Preliminary Univ. of Mich. Consumer Confidence for March is estimated to rise to 78.0 versus 77.6 in February.
- (JAH) 3-for-2
- (FELE) 2-for-1
- The Eurozone CPI data, JPMorgan(JPM) Senate Hearing and the Japanese upper house vote on Kuroda could also impact trading today.
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