Bloomberg:
- Osborne Pledges Five More Years of U.K. Austerity. U.K. Chancellor of the Exchequer George Osborne held firm to his austerity plan as the economy continues to stagnate, saying government spending cuts will carry on for three years after the 2015 election. As official growth forecasts were further downgraded, Osborne sought in his budget speech to Parliament yesterday to regain voters’ support. He announced tax cuts for low earners and companies and measures to boost home ownership, all financed by a squeeze on departmental budgets and a renewed crackdown on tax avoiders.
- Italy President Meeting Draws Grillo to Government Talks. Beppe Grillo, the ex-comic and anti-austerity crusader, is being drawn into talks over the formation of an Italian government after three weeks in which the country’s political vacuum gave his influence room to grow. Leaders of Grillo’s Five Star Movement will meet President Giorgio Napolitano today as the head of state seeks to build consensus in a divided parliament. The grizzled entertainer, who punctuated campaign speeches with jokes and profanity, has kept his distance from rivals even as they adjust their programs to win his backing. Grillo will be asked once more to submit to an alliance during his meeting with Napolitano at the presidential palace in Rome. “He will behave properly, but he will say no,” said Giovanni Orsina, a history professor at Luiss Guido Carli University.
- EU to Curb Banker Bonuses After Clinching Deal on Basel III Law. The European Union is to press ahead with planned banker bonus curbs that were opposed by the U.K. after Britain failed to water down a tentative agreement from last month. European Parliament lawmakers and Ireland, which holds the rotating presidency of the EU, kept bonus restrictions unchanged, as they sealed a deal yesterday overhauling bank capital and liquidity rules for the 27-nation EU.
- Japan Posts Longest Run of Trade Deficits in Three Decades. Japan posted its longest run of trade deficits in three decades as exports fell in February, underscoring challenges for Bank of Japan (8301) Governor Haruhiko Kuroda in reviving the world’s third-biggest economy. Shipments dropped 2.9 percent from a year earlier, the Finance Ministry said in Tokyo today. The median estimate of 22 economists surveyed by Bloomberg News was for a 1.7 percent decrease. Imports rose 11.9 percent, leaving a trade shortfall of 777.5 billion yen ($8.1 billion). Exports to China fell 15.8 percent as Asia’s largest economy celebrated the week-long Lunar New Year holiday in February, while shipments to Asia dropped 5.2 percent. Exports to the U.S. rose 5.7 percent, while those to the European Union fell 9.6 percent.
- FedEx(FDX) Pares Asia Flights Amid Shift to Cheaper Deliveries. FedEx Corp. plans to cut cargo flights to Asia as customers accelerate their shift to the company’s slower, less expensive international services. The shipping company is making the changes after missing analysts’ estimates yesterday on both fiscal third-quarter profit and its full-year forecast. An economic bellwether that moves goods as varied as medical supplies and auto parts, FedEx had already begun a $1.7 billion restructuring to make up for a move away from its fastest, most expensive deliveries. “The trade lane between Asia and the U.S., in particular, remains weak in terms of air freight,” said Logan Purk, a St. Louis-based analyst at Edward Jones & Co. who has a buy rating on the shares. “With FedEx leveraged more to a discretionary air-freight model, they suffer.” The company, which operates a shipping hub at Guangzhou, China, and plans to open one in Osaka, Japan, is also studying grounding some planes.
- Gillard Faces Leadership-Contest Call as Australia’s Labor Lags. Senior Labor Party lawmakerSimon Crean called on Australian Prime MinisterJulia Gillard to hold a leadership ballot, saying the government can’t win elections due in six months from its current position in opinion polls. Crean said he doesn’t expect Gillard to agree and urged Labor lawmakers in that instance to petition the prime minister for a leadership ballot. Crean told reporters in Canberra he would stand for the position of deputy and urged former leader Kevin Rudd to put his name forward for the leadership.
- Tencent Falls as Analysts Cut Share Price Forecasts. Tencent Holdings Ltd (700), China’s largest Internet company, fell the most in 17 months in Hong Kong trading after at least seven analysts cut share price forecasts on the stock. The shares fell as much as 8.7 percent to HK$240, the most since October 2011, before trading at HK$255.40 as of 9:47 a.m. in Hong Kong.
- Biggest Solar Collapse in China Imperils $1.28 Billion: Energy. Investors stand to lose most of the $1.28 billion they put into Suntech Power Holdings Co. (STP) after the solar manufacturer said it wouldn’t resist a bankruptcy petition filed in China.
- Bernanke Saying He’s Dispensable Suggests Tenure Ending. Federal Reserve Chairman Ben S. Bernanke said he’s “spoken to the president a bit” about his future and that he feels no personal responsibility to stay at the helm until the Fed winds down its unprecedented policies to stimulate the economy. “I don’t think that I’m the only person in the world who can manage the exit,” Bernanke said when asked at a news conference in Washington if he’s discussed his plans with President Barack Obama. His term expires at the end of January.
- Syrian Fighting Fuels Growing Refugee Crisis in Region. The Syrian refugee crisis, which is already straining aid groups and fueling tensions in neighboring countries, will get much worse if that nation’s civil war continues through the year, U.S. officials said.
- Aluminum May Extend Losses on Bear Flag: Technical Analysis. Aluminum prices, down 6.5 percent this year, probably will extend the slump to the lowest since October on the London Metal Exchange, according to technical analysis by Matt McKinney at Zaner Group LLC. After touching a low of $1,934.85 a metric ton on March 11, prices jumped two days later to $1,996.25, creating a so-called bear flag pattern that signals a drop by the end of this month to $1,887, the lowest since Oct. 29, McKinney said.
- Lenders Reject New Plans to Assist Cyprus. Tapping Pensions for Bailout Spurned; Moscow Cool to Gas-for-Cash Proposal. Cyprus on Wednesday was left with narrowing options to rescue its outsize financial-services sector from collapse—something that could end its membership in the euro zone—after international lenders rejected an alternative government plan to secure a multibillion-euro bailout and Russian officials remained cool to a Cypriot gas-for-cash deal.
- Stagnant Japan Rolls Dice on New Era of Easy Money. Japan's new central bank governor, Haruhiko Kuroda, begins work Thursday on a feat no one before has managed: reversing nearly two decades of falling prices to lift wages and profits in the world's third largest economy.
- U.S. to Shift Drone Command. Mounting Criticism Sparks Push to Move Lethal Program to Military From CIA. The White House is working to shift control of the Central Intelligence Agency's lethal drone program to the military, U.S. officials say, a move that redefines the widely contested campaign that targets suspected terrorists. The new directive is intended to shift the covert drone program to one that is subject to international laws of war and undertaken with the consent of host governments. The draft document reflects a growing consensus within the Obama administration that the long-term future of the program lies with the military, where U.S. officials say it will be on firmer legal footing and be more transparent. The drone program has drawn fire from both Democrats and Republicans who say it is secretive and unpredictable.
- Boeing(BA) Works to Redeem Dreamliner. Plane Maker Hopes to Persuade Potential Passengers That Troubled 787 Will Be Safe to Fly.
- Paul Light: The Sequester Is an Overhaul Opportunity. A top-to-bottom reform of the federal bureaucracy would yield massive savings.
- Obama says 'still time' for diplomacy with Iran, Netanyahu suggests time running short. President Obama, while seeking to reassure Israel that America has its back in the face of a nuclear Iran, said Wednesday he believes there's "still time" to resolve the stand-off diplomatically -- as Israeli Prime Minister Benjamin Netanyahu suggested time is running short.
- Cyprus mulls plan to stem capital flight. Doubt over Cyprus’ financial future showed no sign of lifting Thursday, with officials reportedly set to introduce new legislation to try to prevent capital exiting the country, amid negotiations to shore up the country’s finances.
- North Korea Military Threatens US Bases as 'Within Target'. North Korea's supreme military command said on Thursday its "precision attack" weapons have U.S. navy bases in Guam and Okinawa in their sights and will attack them if it is provoked. "The United States is advised not to forget that our precision target tools have within their range the Anderson Air Force base on Guam where the B-52 takes off, as well as the Japanese mainland where nuclear powered submarines are deployed and the navy bases on Okinawa," the North Korean command spokesman was quoted by KCNA news agency. North Korea earlier made a threat to stage a nuclear attack on the United States, something that is well outside of its current military capacity, although the U.S. Pacific bases are in range of its medium range missiles.
- South Korea: Chinese Address Source of Cyberattack. A Chinese Internet address was the source of a cyberattack on one of the South Korean companies hit in a massive computer shutdown that affected five other banks or media companies, initial findings indicated Thursday.
- Guess(GES) profit falls, issues weak forecast. Guess Inc.'s fiscal fourth-quarter dropped 24 percent as the company discounted more clothing due to economic pressures on European shoppers and fewer customers in North America. It issued a disappointing forecast and shares fell in after-hours trading.
- China PMI Vs Electricity Production. (graph)
- Why You Should Ignore The Strong China Flash PMI Report. Furthermore, he points to non-recurring items and the fact that the report conflicts with the recent slew of disappointing data out of the world's second largest economy. "That said, there are significant distortions on PMI readings around the Lunar New Year (LNY) holiday, so investors should view those volatilities in PMI with caution. Other leading indicators such as daily power output suggest that March manufacturing activities remain relatively weak and street economists will likely cut their 1Q13 GDP growth forecasts."
- Exclusive: German union chief to VW Tennessee workers - Join UAW. The United Auto Workers has won the backing of the head of an influential German union in its effort to represent the hourly workers at Volkswagen AG's Chattanooga, Tennessee, assembly plant. "In Chattanooga, you need union representation" to negotiate working conditions, IG Metall President Berthold Huber said in a letter distributed in early March to the plant's 2,350 hourly employees. A copy of the letter was obtained by Reuters. "We strongly recommend that the eligible employees at Volkswagen, Chattanooga, decide that the UAW should represent them," he added.
- Cyprus scrambles to avert meltdown, EU threatens cutoff. Cyprus considered nationalizing pension funds and ordered banks to stay shut till next week to avert financial chaos after it rejected the terms of a European Union bailout and turned to Russia for aid. Crisis talks among the political leadership in Nicosia are set to resume on Thursday after late-night meetings to discuss a "Plan B" broke up on Wednesday without result. EU officials voiced frustration but little sympathy for an ambitious but now bust banking system that extended itself well beyond the island; Russia, whose citizens have billions to lose in those Cypriot banks, called the EU a "bull in a china shop".
- Moody's downgrades Brazil's BNDES, Caixa on eroding capital. Moody's Investors Service lowered on Wednesday the long-term issuer ratings of Brazilian state banks BNDES and Caixa Econômica Federal, citing their eroding capital position after years of rapid credit expansion. Analysts led by Alexandre Albuquerque cut ratings on state development bank BNDES and on Caixa, the country's largest mortgage lender, to "Baa2" from "A3," according to a statement. Both rankings, which are within investment-grade ratings, bear a positive outlook - meaning that an upgrade would be likely to happen within 12 to 18 months.
- Fitch: Lower Profit Growth Adds to Chinese Banks' Capital Strain. Lower earnings growth at Chinese banks is likely to weaken internal capital generation and put further pressure on capital in 2013-2014, Fitch Ratings says.
- Oracle(ORCL) blames sales force for Q3 miss, stock drops. Oracle Corp blamed its rapidly expanding salesforce for a severe miss in third-quarter software sales and warned that its ailing hardware business will lose more ground this quarter, driving its shares 8 percent lower on Wednesday.
- Brazil flat steel inventory rises, sales fall in February. Steel
distribution companies in Brazil sold 317,900 tonnes of flat products
in February, a drop of 13.8 percent from the prior month, industry group Sindisider said in a report
on Wednesday. February sales were 7.5 percent below the amount sold a year
earlier. Distributors bought 8.7 percent less steel in February
from the previous month. Inventory rose 2.4 percent from
September to the equivalent of 3.1 months of sales, or 970,400
tonnes, Sindisider said.
- Cyprus: capital controls imposed to prevent crisis spreading to the rest of eurozone. Capital controls on cash and bank transactions in Cyprus are aimed at stopping the collapse of its financial sector but could become a reality throughout Europe if there is contagion to the wider eurozone.
- Japan plans to request the EU to keep arms embargo on China, citing a Japanese government official.
- Japan and the U.S. will draft a plan to counter Chinese military action to seize disputed island in East China Sea, citing a U.S. defense official. Shigeru Iwasaki, Chief of Joint Staff of Japanese Self Defense Forces, and Samuel Locklear, commander of the U.S. Pacific Command, will meet in Hawaii this week.
- Corrupt Chinese officials splurge US$160bn in tax dollars a year. Corrupt officials from China waste about 1 trillion yuan (US$160 billion) in public funds every year, according to a survey conducted by the party-run People's Tribune in Beijing.
Oppenheimer:
- Rated (GY) Outperform, target $20.
- Asian equity indices are -.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 118.25 -3.25 basis points.
- Asia Pacific Sovereign CDS Index 82.5 unch.
- FTSE-100 futures -.18%.
- S&P 500 futures +.04%.
- NASDAQ 100 futures unch.
Earnings of Note
Company/Estimate
- (MOV)/.26
- (KBH)/-.22
- (WOR)/.49
- (IHS)/.85
- (SCHL)/-.39
- (CAG)/.56
- (ROST)/1.07
- (NKE)/.67
- (MU)/-.20
8:30 am EST
- Initial Jobless Claims are estimated to rise to 340K versus 332K the prior week.
- Continuing Claims are estimated to rise to 3050K versus 3024K prior.
- The Preliminary Markit US PMI for March is estimated to rise to 54.8 versus 54.3 in February.
- The House Price Index forJanuary is estimated to rise +.7% versus a +.6% gain in December.
- The Philly Fed for March is estimated to rise to -3.0 versus -12.5 in February.
- Existing Home Sales for February are estimated to rise to 5.0M versus 4.92M in January.
- Leading Indicators for February are estimated to rise +.4% versus a +.2% gain in January.
- None of note
- The Eurozone PMI, Bloomberg Economic Expectations Index for March, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, JP Morgan Insurance Conference, (AZN) investor day and the (PANW) analyst day could also impact trading today.
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