Bloomberg:
- Italian Banks’ Bad Loans Seen Rising as Gridlock Hampers Growth. UniCredit SpA (UCG) and Intesa Sanpaolo SpA (ISP), Italy’s biggest banks, may struggle to boost profit as political gridlock threatens to increase borrowing costs, worsen an economic contraction and drive up bad loans. The Italian benchmark 10-year bond yield climbed as much as 0.44 percentage point and an index of the country’s financial shares dropped as much as 11 percent after last week’s general election left Italy’s largest political parties groping to form a government amid a four-way parliamentary split. The disarray may impede economic growth as the longest recession in 20 years and tougher rules from regulators, including the Bank of Italy, are already forcing banks to set aside more money against doubtful loans, said Jacopo Ceccatelli, a partner at JC & Associati SIM, a Milan-based financial advisory firm. “Given the worsening of the economic environment and the pressure from the Bank of Italy to raise bad-loan coverage, I expect Italian banks’ profitability and capital generation to continue to deteriorate,” Ceccatelli said. “The political uncertainty may add further pressure on banks as the increasing spreads affect the lenders’ funding costs and the value of their sovereign-debt holdings.”
- Austrian Banks Rated Negative by Moody’s on Bad-Debt Charges. Austrian banks’ creditworthiness is still deteriorating because the cost of rising bad debt in eastern Europe is slowing their efforts to raise capital buffers, Moody’s Investors Service said. “Underpinning our negative outlook for the banking system are the limited capital buffers to absorb potential losses in a stressed economic environment,” Moody’s analysts Swen Metzler and Carola Schuler wrote. “Our stress test shows that most Austrian banks have limited resources to cope with substantial potential losses on their high exposures to central and eastern European regions as well as to domestic corporate borrowers.”
- China’s Exports Top Estimates While Imports Miss Forecasts. Overseas shipments increased 21.8 percent from a year earlier, the customs administration said on its website today, in a month that had four fewer working days than last year. The number compares with the 8.1 percent median estimate in a Bloomberg News survey. Imports fell a more-than-estimated 15.2 percent, leaving a trade surplus of $15.25 billion. There are also “some discrepancies” between China’s reporting of exports to Hong Kong and Hong Kong’s reporting of imports from China, Chang Jian, an economist at Barclays Plc in Hong Kong, said in a Bloomberg Television interview.
- Maersk Sees Tanker Slump Persisting Amid Biggest Glut Since 1996. The biggest glut since 1996 in the supply of the largest oil tankers means owners will have to wait three more years for rates to recover, according to A.P. Moeller-Maersk A/S. The global fleet of very large crude carriers expanded 28 percent over the last four years, Hanne Sorensen, chief executive officer of Maersk Tankers, said in response to e- mailed questions yesterday. The fleet is currently oversupplied by about 70 ships and as many as 50 more VLCCs will be delivered this year, Sorensen said. The expansion followed a surge in shipbuilding that began in 2007 and 2008, when daily returns rose as high as $229,000, according to data from Clarkson Plc, the world’s biggest shipbroker. Daily earnings for supertankers plunged 71 percent to $8,705 in the past 12 months, Clarkson data show, amid the longest series of OPEC production cuts in four years. Frontline Ltd., the VLCC operator led by billionaire John Fredriksen, said Feb. 22 it needs daily returns of $24,200 to break even. “We have to go back to 1996 to find a situation as challenged as the one we have today,” Sorensen said. “A recovery must be supply-driven, and that is not likely in the coming three years.
- China Copper Imports Slump to 20-Month Low. Copper imports by China tumbled to the lowest level in 20 months as a week-long holiday slowed customs procedures amid high local inventories. Stockpiles tallied by the Shanghai Futures Exchange climbed to 226,201 tons last week, the highest since March of last year. Inventories at bonded warehouses were as high as 900,000 tons, said Zhong Min, vice general manager of Jinrui Futures Co., a unit of Jiangxi Copper Co., on March 6.
- Rebar Trades Near Lowest Level in Two Months as Output Increases. Steel reinforcement-bar futures in Shanghai traded near the lowest level in more than two months as steel mills increased output and spot market price dropped. Rebar for delivery in October on the Shanghai Futures Exchange fell as much as 1.1 percent to 3,890 yuan ($625) a metric ton, before trading at 3,927 yuan at 11 a.m. local time. The most-active contract on March 4 closed at 3,905 yuan, the lowest level since Dec. 27. China’s daily crude steel output in late-February was estimated to have risen by 1.4 percent from the middle of the month to 2.03 million tons, according to industry consultancy Custeel.com. The average spot price for rebar fell for the fourth session yesterday to 3,764 yuan a ton, according to data from Beijing Antaike Information Development Co.
- Molybdenum to Drop as China Curbs Weaken Steel: Chart of the Day. Molybdenum, the steel-hardening ingredient that's plunged by two-thirds since September 2008 even as most non-ferrous metals gained, is poised to fall further after China cracked down on some property sales. "China's restrictions on speculative investment has had an immediate impact to reduce transactions in steel and therefore molybdenum," said Wang Min, an analyst at Beijing Antaike Information Development Co.
- Roach Says BOJ, Fed Currency Weakening Won’t End in ‘Pretty Way’. (video) “Whether it’s the Bank of Japan (8301), the Federal Reserve or even the ECB, the idea that they can engineer economic recovery by quantitative easing that may lead to weaker currencies ultimately is not a story that will end in a pretty way. Currency devaluation as a recipe for economic growth always comes at a cost of taking market share from someone else.” “China is understandably concerned about that, as has been Brazil, as has been most major developing economies that rely on exports as a source of economic growth.” “The developed economies say, well we’re not trying to depreciate our currencies, but they know this is going to happen.” “This is one of the unintended and potentially dangerous consequences of the financial engineering of quantitative easing.”
- Raped Egypt Women Wish Death Over Life as Crimes Ignored. The back seat of Joanna Joseph’s Hyundai is still stained with the young woman’s blood. Joseph, a volunteer with Operation Anti-Sexual Harassment, helped rescue the 19-year-old from Cairo’s Tahrir Square on Jan. 25 as Egyptians marked the second anniversary of the uprising that toppled Hosni Mubarak. Walking through the square on her way home from work, the victim was accosted by a gang that raped her with a knife, according to the doctor who operated on her and witnesses of the attack. It was one of 29 assaults documented that day in Tahrir, which has been plagued by sexual violence since it became the center of political protests.
- China Investor Said in Talks for Stake in NYC GM(GM) Building. A Chinese investor is in talks to buy a 40 percent stake in Manhattan’s General Motors Building, a 50-story tower near the southeast corner of Central Park. The prospective buyer is the family of Zhang Xin, chief executive officer of office landlord Soho China Ltd. (410), according to a person with knowledge of the negotiations who asked not to be named because the talks are private. The sellers are a Goldman Sachs Group Inc. (GS) fund that invests on behalf of the sovereign wealth funds of Kuwait and Qatar, and Meraas Capital LLC, a Dubai-based private-equity firm, the person said. If completed, the deal would value the tower at about $3.4 billion, according to the Wall Street Journal, which reported the talks earlier today.
- Citigroup(C) Seeks $1.2B of Buybacks After 2012 Rejection. Citigroup Inc. (C), the third-biggest U.S. bank, asked the Federal Reserve for permission to repurchase $1.2 billion of shares without seeking a dividend (C) increase a year after its previous request was rejected.
- UN Votes for Sanctions on North Korea Despite Threats. The UN Security Council unanimously approved tougher sanctions on North Korea for a forbidden nuclear test, hours after the totalitarian state threatened a preemptive atomic strike on the U.S. and other “aggressors.” The United Nations body yesterday voted 15-0, with no debate, to adopt a resolution drafted by the U.S. and China in the aftermath of the Feb. 12 underground blast. North Korea responded by nullifying the 1953 armistice that ended the Korean War and canceling a hotline with the U.S. and South Korea.
- Firms Send Record Cash Back to Investors. U.S. companies are showering investors with a record windfall in the form of dividends and share buybacks, helping to propel the stock market's rally. Companies in the S&P 500 index are expected to pay at least $300 billion in dividends in 2013, according to S&P Dow Jones Indices, which would top last year's $282 billion.
- Republicans Point to Falling Oil Production on Federal Lands. The nomination of REI Chief Executive Sally Jewell to lead the Interior Department is drawing attention to declining rates of oil and natural gas production on federal lands - a trend Republicans say undermines President Barack Obama's pledge to support all forms of energy production and use. Statistics from the Congressional Research Service released this week show oil production on federal lands and waters dropped 18% between fiscal year 2010 and fiscal year 2012, which ended Sept. 30, 2012. The report shows natural gas production dropped 28% over the same period.
- Strassel: Jumping the Sequester. When the president canceled White House tours, he revealed his claims as ludicrous.
- Cost of Entitlements: To cover $35T promise, future generations face steep tax hikes. Babies who can't even count yet have a nasty surprise coming once they start working and paying taxes. If no changes are made in entitlements such as Medicare, younger taxpayers will have to cover unfunded promises of $35 trillion. That means future generations, unless lawmakers can break the gridlock and agree to entitlement reform soon, will see massive tax hikes, massive benefit cuts -- or both. Sacrifice will be required either way, but analysts say the pain is greater the longer lawmakers wait.
- US postpones award for Egyptian woman after anti-Semitic tweets surface. The Obama administration pulled back on plans to give an award to an Egyptian activist after anti-American and anti-Semitic messages were discovered on her Twitter account. Samira Ibrahim, an Egyptian activist who rallied worldwide attention against forced "virginity tests" on female protesters, was supposed to be honored Friday along with nine others by first lady Michelle Obama and Secretary of State John Kerry. The State Department, though, announced that it would postpone the International Women of Courage award while officials investigate the tweets. Ibrahim is now headed back home. "We, as a department, became aware very late in the process about Samira Ibrahim's alleged public comments," State Department spokeswoman Victoria Nuland told reporters.
- China central-bank chief warns on money supply. The high ratio of money supply to gross domestic product in China means risks are excessively concentrated in the banking sector, according to a top official. This demonstrates the need for financial reform, People's Bank of China Gov. Zhou Xiaochuan was quoted as saying in the China Business News on Friday.
- China's Middle Class in No Mood to Spend. (video)
- Goldman Sachs(GS) and Morgan Stanley(MS) Near Bottom of Stress Tests.
- Chinese Parliament Holds 83 Billionaires. The legislature of the world's last major communist country is almost certainly the wealthiest in the world, according to a popular rich list that names 83 dollar billionaires among the delegates to China's parliament this year.
- Federal Government Injects Near Record Amount In Student Loans In January As Consumer Credit Rises.
- Icahn Adds Another Two Million HLF(HLF) Shares, Now Owns 15.5% Of Company.
- Who Is Absent (For Now) From The Record High Party? (graph)
- "The Entire West Is In The Yo-Year Years".
- How Many Billions Of Drug-Laundered Money Does It Take To Shut Down A Bank?
- The Dollar Is Undergoing A Major Change In Behavior, And Almost No One Has Noticed.
- Dozens Of World Leaders Are Expected To Pay Their Respects At Hugo Chavez's Funeral.
- Ford(F) CEO Mulally's $317 million haul. Mulally now has about 7.3 million shares worth more than $93.5 million, at the recent share price. He has 17.1 million in-the-money stock options. That translates to stock worth another $220.2 million, though he'll have to pay $107.3 million to exercise those options. And Mulally has a separate retirement account with $3 million in company contributions. That brings his Ford holdings to $317 million.
- States probing top U.S. banks over debt collection. The largest U.S. banks face a multi-state investigation into whether they helped debt collectors pursue faulty judgments against credit card customers, according to people familiar with the matter. At issue is whether weak record-keeping by banks or a failure to pass accurate information to collection agencies harmed consumers. The allegations against the banks echo those central to last year's $25 billion federal-state mortgage settlement to resolve charges that the banks "robo-signed" documents and pursued foreclosures with faulty information. This latest probe targets the same banks, including Bank of America (BAC.N), JPMorgan Chase (JPM.N), Citigroup (C.N) and Wells Fargo (WFC.N), said the sources who spoke on condition of anonymity because the investigations are continuing.
- US-based stock funds take in $5.7 bln latest week-Lipper.
- Texas Instruments(TXN) raises its earnings, revenue target. Texas Instruments raised its targets for first-quarter earnings and revenue to the upper end of its previous forecast ranges, due to improving demand for its chips in an industry that has been hit for several quarters by a weak global economy.
- Fed's Fisher: tapering Fed's bond buys could help housing. Slowing the Federal Reserve's current pace of monthly asset purchases could paradoxically help the U.S. housing market, a top Fed official said on Thursday.
- Fed 'stress test': banks would lose $460bn if crisis struck again. America's biggest banks would face losses of almost half a trillion dollars should a deep financial crisis and recession hit the US again, regulators said.
- Euro Group head says UK at risk of 'sterling crisis'. The pound’s recent slide could be the start of “a new sterling crisis” sparked by concerns about the state of the public finances, according to the Euro Group’s new president.
- Japan to End Uptick Rule on Short-Selling. The change will increase market liquidity, according to the report. The current rule allows short sales only on an uptick.
- People's Bank of China will allow branches to raise the down payment and interest rate on second homes according to local government's property control targets and policy requirements, citing a document from the central bank. Some cities with property prices rising "overly fast" may have second home down payment raised to 70% and interest rate increased to 1.3 times, the report said.
- PBOC's Pan Says 3.5% CPI Target Has Challenges. China's consumer prices currently face pressures from imported inflation and carry over effects, citing People's Bank of China Deputy Governor Pan Gongsheng. Price adjustments of resource products will also put upward pressure on CPI, Pan said.
Piper Jaffray:
- Rated (TIVO) Overweight, target $16.
- Rated (ZTS) Underperform, target $28.
- Asian equity indices are -.25% to +1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 103.0 -.5 basis point.
- Asia Pacific Sovereign CDS Index 80.50 -1.0 basis point.
- FTSE-100 futures +.07%.
- S&P 500 futures +.01%.
- NASDAQ 100 futures +.04%.
Earnings of Note
Company/Estimate
- (ANN)/.01
- (FL)/.72
- (GCO)/2.12
8:30 am EST
- The Change in Non-Farm Payrolls for February is estimated to rise to 165K versus 157K in January.
- The Unemployment Rate for February is estimated at 7.9% versus 7.9% in January.
- Average Hourly Earnings for for February are estimated to rise +.2% versus a +.2% gain in January.
- Wholesale Inventories for January are estimated to rise +.3% versus a -.1% decline in December.
- None of note
- The USDA crop report could also impact trading today.
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