Bloomberg:
- Spanish Banks Cut Developers as Zombies Dying: Mortgages. Spain’s zombie developers are finally about to die. Spanish banks are pulling the plug on thousands of builders kept alive during the past five years even as they built almost nothing, said Mikel Echavarren, chief executive officer of Irea, a Madrid-based consulting firm that has advised on 22 billion euros ($28.5 billion) of refinancing. The banks, forced by the government last year to set aside provisions for the developers, have no incentive to keep funding them. “Banks have taken the hit, so extend and pretend is over,” said Echavarren. “There’s no motivation to refinance companies that aren’t viable, have no liquidity or possibility of future earnings so we’ll see a tsunami of developer bankruptcies in the next two years.” The final collapse of an industry that accounted for as much as 18 percent of Spain’s growth amid the country’s decade- long real estate boom will add to unemployment, already at a record 26 percent, depress consumer spending needed to turn around the economy and push down the value of residential real estate that’s already dropped more than 30 percent since 2007, said Raj Badiani, an economist at IHS Global Insight in London. While job losses in the construction industry continued in recent quarters, “they’ve been less severe than expected given the scale of the real estate slump,” said Badiani. “With banks cutting financial life support to many developers living on borrowed time, we can expect an accelerated downward adjustment in employment levels.” Badiani estimates the jobless rate could climb to more than 27 percent this year and house prices will fall at least 50 percent from the peak by 2015.
- Europe Weighs Cyprus’s Fate After Lawmakers Reject Bailout Deal. European policy makers must weigh how far to push Cyprus after lawmakers in the Mediterranean nation rejected an unprecedented levy on bank deposits, throwing into limbo a rescue package designed to keep it in the euro. Luxembourg Finance Minister Luc Frieden called for the 17 euro-area finance ministers to reconvene “as soon as possible” to cobble together a new package. The European Central Bank, whose Governing Council meets today in Frankfurt, will also have to decide whether to give Cyprus more time or consider cutting off liquidity to the country’s banks. “This is not a good result -- neither for Cyprus, nor for the euro zone, and we have to look together for alternatives to the negotiated package,” Frieden said yesterday in a phone interview from Frankfurt. He called the vote “very sad news,” though said the decision by its parliament must be respected.
- Euro Falls Toward 4-Month Low Versus Dollar; Drops Against Yen. The euro slid toward the lowest in almost four months against the dollar after the Cypriot parliament voted down a bank-deposit levy needed to secure a bailout, risking renewed tumult in the currency bloc.
- Two-Year Swap Spread in U.S. Surges to Highest Since September. The U.S. two-year interest-rate swap spread, a measure of debt market stress, surged to the highest level in six months as European policy makers struggle to forge a bailout plan for Cyprus. The gauge, which widens when investors seek the perceived safety of government securities and narrows when they favor assets such as company debentures, increased 2.9 basis points to 17.97 basis points as of 3:43 p.m. in New York. That’s the highest level on an intra-day basis since Sept. 4. “You’ve got the beginnings of an indicator of bank stress,” Jim Vogel, an interest-rate strategist at FTN Financial in Memphis, Tennessee, said in a telephone interview. Investors may “back away from risk commitments” given the uncertain outcome of Cyprus’s potential bank-deposit levy, he said.
- North Korea Vows Military Action Against More U.S. B-52 Flights. North Korea warned of “strong military counter-action” if the U.S. again flies B-52 bombers over the Korean peninsula, with two flights this month after the totalitarian regime threatened preemptive nuclear strikes. The U.S. Pacific Air Forces Command successfully carried out the latest training flight, 7th Air Force spokeswoman Maj. Richelle Dowdell said in an e-mail yesterday without giving further details. A B-52 can carry nuclear warheads and air-to- ground missiles with a range of 3,000 kilometers (1,864 miles).
- Copper Seen Dropping as Stockpiles Increase. Copper is poised to decline 2 percent this year as supply outpaces demand and boosts stockpiles, while aluminum may advance as demand gains, said Australia’s Bureau of Resources and Energy Economics. World inventories may surge 16 percent to 1.3 million tons in 2013, or three weeks of consumption, it said. That compares with a December forecast of 1.1 million tons. Prices fell to a seven-month low yesterday on concerns that Europe’s debt turmoil will damp the economy and property curbs will erode demand in China, the biggest user. The country’s industrial output had the weakest start to a year since 2009 and copper imports slid to the lowest in 20 months in February, when there was a weeklong New Year holiday. Stockpiles are rising at an “alarming” rate, Barclays Plc said March 18. “Copper consumption is forecast to grow, primarily in emerging economies, but by a lower amount than the increase in production,” today’s report said. “The increase in supply will come from a number of large recently commissioned mines in Indonesia, Peru and Mongolia ramping up to full production.”
- SEC Digging Into Fund Fees. Focus on Expenses Billed to Investors by Hedge Funds and Private-Equity Firms. The Securities and Exchange Commission is closely scrutinizing the fees and expenses, including travel and entertainment, that hedge funds and private-equity firms charge to their investors. Many managers of hedge funds and private-equity funds—collectively called "private investment advisers"—had long been largely unregulated and therefore had less oversight in how they billed their investors.
- Demonstration Against Sequestration Has Reasons, but Few Rhymes. Federal Worker Unions Face Hurdles in Staging Protest; Signs Fall Short of Poetry. For many workers, this turns out not to be the most rousing cause. The cuts roll out slowly, in early April for some agencies and programs but not until May for others. Most agencies aim to trim around the edges to avoid layoffs. Workers in some departments aren't in line for furloughs at all, and for others it might be just a few days. "I'll be honest. People are saying 'you're giving me a day without pay? I'll take July 5,' " says Brent Barron, president of AFGE Local 648.
- Visa(V) May Have to Buy Europe System. Visa Inc. could be forced to pay billions of dollars to buy the Visa Europe payments system, under a plan being discussed by the European banks that own the business. The shift would significantly expand Visa's footprint as it battles for a bigger share of the international market.
- J.P. Morgan(JPM), Trustee for MF Global Reach Pact. J.P. Morgan Chase & Co. has reached a settlement that will return an estmated $546 million to MF Global Holdings Ltd. customers, likely bringing an end to a major chapter in customers' effort to recover money from the securities firm's 2011 collapse. J.P. Morgan, the trustee for the failed company's brokerage unit, and lawyers representing customer plaintiffs in the case filed their settlement agreement after finalizing terms in recent days, according to a person familiar with the process.
- Michael Solon: The Revenue Deficit From Progressive Tax Rates. The government now relies far more on fewer and wealthier taxpayers. No wonder revenues are lower.
- Eliot Cohen: American Withdrawal and Global Disorder. As Obama ends U.S. security guarantees, nuclear weapons and violence will spread.
- Cyprus vote raises more doubt over euro membership. The Cypriot parliament’s rejection of a plan to bail out the country’s banking sector has opened the door a bit wider to the possibility of its exit from the currency bloc, say analysts.
Business Insider:
NY Times:
CNN:- Nigeria: Death Toll in Kano Bombing Rises to 41. The death toll of a suicide bombing in a Christian neighborhood of Kano on Monday has risen to at least 41, the police said Tuesday. At least 44 others were wounded, officials said. The Kano state police said that two men rammed an explosives-laden blue VW Golf into a full passenger bus in Kano, northern Nigeria’s busiest commercial center, the deadliest attack in nine months attributed to Islamic extremists.
benzinga:
- Cintas(CTAS) Trades Lower After Q3 Results; Lowers Full-Year Guidance Range. Uniform-maker Cintas released its fiscal third-quarter results after the closing bell on Tuesday. The company reported earnings per share which were below Wall Street consensus, revenue which beat expectations and also lowered its full-year earnings guidance range. In late trading, the stock was last down a little more than two percent to $44.85.
- Sources: Amazon(AMZN) and CIA Ink Cloud Deal. In a move sure to send ripples through the federal IT community, FCW has learned that the CIA has agreed to a cloud computing contract with electronic commerce giant Amazon, worth up to $600 million over 10 years. Amazon Web Services will help the intelligence agency build a private cloud infrastructure that helps the agency keep up with emerging technologies like big data in a cost-effective manner not possible under the CIA's previous cloud efforts, sources told FCW.
- Freddie Mac sues more than a dozen banks over Libor. U.S. mortgage finance company Freddie Mac is suing more than a dozen banks for losses from the alleged manipulation of the benchmark interest rate known as Libor. Bank of America Corp, JPMorgan Chase & Co, UBS AG and Credit Suisse Group AG are among the banks named as defendants in the lawsuit.
- Adobe(ADBE) raises profit forecast as subscription model gains traction. Adobe Systems Inc, maker of Photoshop and Acrobat software, raised its full-year adjusted earnings forecast after reporting first-quarter results above Wall Street estimates as more customers chose its subscription-based model. The company raised its full-year adjusted earnings forecast to about $1.45 per share from about $1.40 per share, above analysts' estimates of $1.41 per share. Shares of the company, which said Chief Technology Officer Kevin Lynch would be leaving, rose 7 percent in extended trade.
- Moody's downgrades four Hungarian banks. Moody's Investors Service said on Wednesday it downgraded the ratings of four Hungarian banks, citing a weak economic environment in the country.
- Anadarko(APC) makes large oil find in Gulf of Mexico. "The successful Shenandoah-2 well marks one of Anadarko's largest oil discoveries in the Gulf of Mexico," Bob Daniels, Anadarko's head of exploration, said in a statement. Log and pressure data from the appraisal well indicate excellent-quality reservoir and fluid properties and more drilling will be done to advance this "potentially giant project," Daniels said.
- OECD cuts French growth forecast. The OECD trimmed its growth forecast for France and said it must do more to boost competitiveness and create jobs, but recommended the government avoid more spending cuts to meet it EU deficit reduction pledges.
- Cyprus warned over parliament's bailout rejection. Germany's finance minister has warned Cyprus that its crisis-stricken banks may never be able to reopen if it rejects the terms of a bailout. Wolfgang Schaeuble said major Cypriot banks were "insolvent if there are no emergency funds".
- China may lower threshold for short selling and margin trading, citing people from securities companies.
- Beijing May Tighten Home Buying Restrictions for Singles. Beijing may allow single or divorced local residents to own only one home, citing people who participated in drafting the rules.
- Local governments await Beijing's new rules on housing market. Local governments in China are still awaiting the implementation of housing market curbs at ministerial level before they announce their own policies, despite allegations that a leaked copy from the central authorities has surfaced recently, the Guangzhou-based 21st Century Business Herald reports.
Raymond James:
- Rated (TFM) Strong Buy, target $50.
- Asian equity indices are -.50% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 121.50 new series.
- Asia Pacific Sovereign CDS Index 82.5 -1.0 basis point.
- FTSE-100 futures +.16%.
- S&P 500 futures -.12%.
- NASDAQ 100 futures -.06%.
Earnings of Note
Company/Estimate
- (GIS)/.57
- (ATU)/.37
- (LEN)/.15
- (FDX)/1.38
- (JBL)/.54
- (GES)/.87
- (ORCL)/.66
- (MLHR)/.28
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +2,000,000 barrels versus a +2,624,000 barrel gain the prior week. Gasoline inventories are estimated to fall by -2,000,000 barrels versus a -3,571,000 barrel decline the prior week. Distillate supplies are estimated to fall by -1,000,000 barrels versus a +83,000 barrel gain the prior week. Finally, Refinery Utilization is estimated unch. versus a -1.2% decline the prior week.
- The FOMC is expected to leave the benchmark fed funds rate at .25%.
- (TRMB) 2-for-1
- The Fed's Bernanke speaking, China HSBC Manufacturing PMI, UK FY13 Budget, Germany PPI, weekly MBA mortgage applications report, BB&T Industrial Conference, (TEX) analyst meeting, (FLS) analyst day, (JBLU) analyst day and the (CRM) analyst day could also impact trading today.
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