Bloomberg:
- Spanish Pain Shows ECB Cut Means Nothing to Banks: Euro Credit. Banks in Spain and Italy are hobbling European Central Bank efforts to resuscitate growth as they ratchet up the interest rates on company loans just as official borrowing costs move closer to zero. The increase in what companies are paying for money underscores the conflict between lenders bolstering their balance sheets, while central bankers try to drive the euro-region economy out of recession using monetary policy.
- Japan Seeks to Boost Financial Ties With Asean Amid China Row. Japan said it will boost financial cooperation with Southeast Asian nations, support their bond markets and make it easier for Japanese companies to raise funds in local currencies. Asia’s second-largest economy will also consider reviving emergency monetary arrangements with Malaysia, Singapore and Thailand, the Japanese finance ministry said in a statement after a meeting of finance ministers and central bankers from Japan and the Association of Southeast Asian Nations, or Asean, near New Delhi on May 3. Japan is strengthening ties with countries in the region as it tries to revive growth and as tensions with China escalate over a territorial dispute.
- Gillard Says Aussie’s Strength Forces ‘Grave’ Budget Decisions. Prime Minister Julia Gillard said a 50 percent rise in the value of the Australian dollar is squeezing trade-exposed businesses and cutting tax revenue, forcing her government to make “grave” budget decisions. The erosion of tax receipts played a part in the government’s decision to raise health-care taxation by 0.5 percentage point to fund a national disability insurance program, Gillard said in an interview with Australian Broadcasting Corp. television today.
- Australia Retail Sales Fall in March as Households Turn Cautious. Australian retail sales unexpectedly declined in March for the first time this year as consumers spent less on household goods, clothing and footwear in an economy grappling with a weaker outlook. Sales dropped 0.4 percent to A$21.9 billion ($22.5 billion) from a month earlier, when they rose 1.3 percent, the Bureau of Statistics said in Sydney today. The result compares with the median forecast in a Bloomberg News survey of 22 economists for a 0.1 percent gain.
- N. Korea Says Won’t Invite Anyone From U.S. to Discuss Detainee. North Korea said it has no plans to invite anyone from the U.S. to discuss the case of Pae Jun Ho, the American citizen sentenced to 15 years’ hard labor for unidentified “hostile acts” against the communist country. Pae was arrested for “many different acts of crime” including plotting to overthrow the North Korean regime, an unidentified Foreign Ministry spokesman was cited as saying by the official Korean Central News Agency. “We have no plans to invite anyone from the U.S. over the problem of Pae,” the spokesman said, vowing that North Korea will “sternly respond to illegal acts of U.S. citizens.”
- Indonesia Bulls Brace for Drop as Stocks Collide With Inflation. Money managers who profited most from Indonesia’s 57 percent stock-market rally are preparing for a temporary retreat as valuations climb to record highs and inflation accelerates. The MSCI Indonesia Index is poised to drop as much as 10 percent before resuming the advance that sent it to a record on May 1, say Samsung Asset Management and Panin Asset Management, whose stock picks in Asia’s sixth-largest economy helped their funds beat 97 percent of peers since May 2010.
- Algorithms Seen by Marex Driving More Than Half of LME Trading. So-called algorithmic traders may account for more than half of activity on the London Metal Exchange, the world’s biggest marketplace for metals, according to Marex Spectron Group. “Algo-driven trading is probably in the north of 50 percent of LME trading,” Simon Van Den Born, global head of metals at Marex Spectron, said in an interview in London last week. He was referring to so-called “outright” trades that don’t involve borrowing or lending on the exchange.
- WTI Crude Advances a Third Day as Syria Says Attacked by Israel. West Texas Intermediate crude gained for a third day amid concern that an attack on Syria will raise tension in the Middle East and disrupt supplies. London-traded Brent also advanced. WTI futures climbed as much as 1.4 percent in New York after Syria’s state news agency said Israeli aircraft attacked a military research center on the outskirts of Damascus yesterday. The strikes were a “declaration of war,” Faisal al-Mekdad, Syria’s Deputy Foreign Minister Faisal, told CNN.
- Rio Tinto(RIO) Says ‘Tough’ Energy, Aluminum Units Need Cost Cutting. Rio Tinto Group (RIO) needs to cut costs to remain competitive amid ‘very tough times’ for its aluminum, coal and uranium businesses, Chief Executive Officer Sam Walsh said. China’s economy dipped in the first three months of the year and the world economy remains volatile, the head of the London-based company said today in an interview with Nine Entertainment Co. television. Waning global demand for commodities is prompting Rio and rival miners of commodities from gold to coal to trim assets and staff as they are squeezed by unfavorable foreign exchange rates, falling prices and rising costs. Iron ore, which accounts for 91 percent of Rio Tinto’s net income, fell 4.5 percent last week to its lowest level this year. Cost cutting “is not easy, this is a process that is very, very tough, but we need to get on top of it because we need to have a business that will be competitive,” Walsh said. “When I look at both our energy and our aluminum business, they’re going through very tough times.”
- JPMorgan(JPM) Should Name Chairman to Watch CEO, ISS Tells Investors. JPMorgan Chase & Co. (JPM), the biggest U.S. bank, should separate the roles of chairman and chief executive officer that are both held by Jamie Dimon, according to advisory firm Institutional Shareholder Services. Stockholders should vote in favor of a proposal to name an independent chairman at New York-based JPMorgan’s annual meeting May 21, ISS said yesterday in a report. ISS, a unit of New York- based MSCI Inc. (MSCI), advises investors on proxy voting and corporate governance. It also endorsed the proposal for an independent board chairman last year.
- Chinese Protest Plans for Industrial Plants. Environmental Fears Are Fueling Opposition Against New Projects That Officials Say Are Needed for Economic Growth. Tension is bubbling in two western Chinese cities as opposition grows against planned industrial facilities, the latest examples of growing public environmental concern threatening to derail projects that officials say are needed for economic growth. In the southwest city of Kunming, capital of Yunnan province, at least several hundred people flooded downtown streets on Saturday, demonstrating against an oil refinery and petrochemical processing plant planned nearby. Local organizers and the state-run Xinhua news agency confirmed the protest. Photos posted to China's Sina Weibo microblogging service showed crowds of perhaps more than 1,000 gathering in downtown Kunming.
- A Tale of Two Oil States. While the shale boom lifts Texas, California sits on vast resources.
Marketwatch.com:
Fox News:
- Clinton sought end-run around counter-terrorism bureau on night of Benghazi attack, witness will say. On the night of Sept. 11, as the Obama administration scrambled to respond to the Benghazi terror attacks, then-Secretary of State Hillary Clinton and a key aide effectively tried to cut the department's own counterterrorism bureau out of the chain of reporting and decision-making, according to a "whistle-blower" witness from that bureau who will soon testify to the charge before Congress, Fox News has learned. That witness is Mark I. Thompson, a former Marine and now the deputy coordinator for operations in the agency’s counterterrorism bureau. Sources tell Fox News Thompson will level the allegation against Clinton during testimony on Wednesday before the House Oversight and Government Reform Committee, chaired by Rep. Darrell Issa, R-Calif. Fox News has also learned that another official from the counterterrorism bureau -- independently of Thompson -- voiced the same complaint about Clinton and Under Secretary for Management Patrick Kennedy to trusted national security colleagues back in October.
- Tens of Thousands of French Protesters Reject Austerity. Ten of thousands of far-left French protesters marched to denounce economic austerity on Sunday to mark the end of President Francois Hollande's first year in office. The march, organised by the Left Front coalition, drew a range of left-wingers from greens to trade unionists to the symbolic venue of Bastille Square, site of a Paris prison that was stormed during the French Revolution of 1789.
Zero Hedge:
Business Insider:- A Market "Based" On Monetary Surreality. (graphs)
- Are Stocks Still Cheap? (graphs)
- Niall Ferguson – The Great Degeneration. The core message of his presentation was clear: the party of the last 20 years is now over and the longer we fail to address the real issues the bigger the hangover will be in the future.
- ROSENBERG: Economic Presentation.
ValueWalk:
- Hedge fund Leverage Hits an All-Time High: BAML. Hedge fund leverage has been on the rise over the past few months. We have already covered the topic several times in 2013. According to the latest data the trend has continued and is close to the peak reached in 2007. BAML is out with its latest weekly hedge fund monitor (although they skipped last week). In the report issued on Sunday the 5th of May, BAML notes that hedge fund leverage is now at $380 billion, which is only $1 billion short of the high reached in 2007. For all intents and purposes, hedge fund leverage is basically at an all time high.
Reuters:
AFP: - China HSBC April services PMI falls to lowest in nearly two years. Growth in China's services sector slowed sharply in April to its lowest point since August 2011, a private sector survey showed on Monday, in fresh evidence that economic revival will remain modest and may be facing wider risks. The HSBC services Purchasing Managers' Index (PMI) fell to 51.1 in April from 54.3 in March, with new order expansion the slowest in 20 months and staffing levels in the service sector decreasing for the first time since January 2009. The HSBC services PMI follows a similar survey by China's National Bureau of Statistics, which found non-manufacturing activity eased to 54.5. In the latest survey, the sub-index measuring new business orders dropped sharply to a 20-month low of 51.5 in April, with only 15 percent of survey respondents reporting an increased volume of new orders that month, HSBC said.
- French Finance Minister Stays Firm on Reducing Deficit. French government won't "loosen in any way" its deficit-reduction measures, French Finance Minister Pierre Moscovici is cited as saying in an interview.
- EU levy on Chinese solar panels risks stirring wider tensions. Europe’s trade chief is pushing to impose provisional duties of about 40 per cent on Chinese solar panels in a move that risks stirring wider trade tensions with Beijing and dividing the EU industry.
- Threat to the eurozone is as strong as ever. The eurozone economy has contracted every single quarter since the end of 2011. During the first three months of 2013, the region's GDP shrank by a punishing 0.6pc, having fallen at a similar pace the quarter before.
- German euro founder calls for 'catastrophic' currency to be broken up. Oskar Lafontaine, the German finance minister who launched the euro, has called for a break-up of the single currency to let southern Europe recover, warning that the current course is "leading to disaster".
- German 2013 Tax Revenue May Be Less Than Forecast. German tax estimator sees tax revenue at EU4bn-EU5bn less than forecast in October. Would be the first time in 3 yrs estimator cut forecast.
- Barroso Defends Merkel Against Critics of Austerity. It isn't Angela Merkel's or Germany's mistake for what happens in France or Portugal, everyone needs to do his homework, Jose Manuel Barroso said in an interview. Says crisis isn't "result of German politics or mistakes by the EU". Says Merkel is one of the people, if not the person, who understands best what happens in Europe.
- SMT Scharf Sees Slower Growth as Boom Fades. Growth will be "flatter" over next three to five years as volatile commodity markets slow demand, citing CEO Christian Dreyer in interview.
- EU's Barroso Warns Germany Against Reform Complacency. EU Commission President Jose Manuel Barroso warns Germany not to be content with results of past reforms, saying "complacency" would be "dangerous," citing him in an interview.
- Magna to Cut Jobs in Europe, US on Market Downturn. Magna examining which parts have to be produced close to clients in Europe and which can be delivered from elsewhere, citing CEO Donald Walker in an interview. Co. to cut US jobs as well, Walks said.
- Giving Spain, France more time to improve their budgets is compliant with enforced stability and growth pact, Germany Finance Minister Wolfgang Schaeuble said in an interview. Says EU Commission, German govt agree not to let reform process abate.
- EU’s Barnier urges France to economic reforms. European Union Internal Market Commissioner Michel Barnier, the EU's top financial regulator, called on the French government to pursue its planned reforms despite the Commission allowing two more years to meet its budget deficit target. Olli Rehn, the European monetary affairs commissioner, said on Friday France badly needed to unlock its growth potential and create jobs, adding Spain, Italy and the Netherlands as well as France - four of the euro zone's five largest economies - would remain in recession this year. "It's a moment of truth for the government which needs to have the political courage to carry out those reforms which will sometimes not be understood, and require effort," he told French radio Europe 1 in an interview.
- State-owned bank rescue fund FROB may increase capital injections in banks it has aided and provide capital to more banks, citing sources familiar with the matter who are in the financial industry. Spain so-called bad bank Sareb to require all EU2.5b of European aid planned for it. Increasing capital needs linked to economic recession, new rules on bad loans provisioning.
- Unravel Obamacare and You Get a Train Wreck. Doctors drop out of Medicare; employers turn full-time jobs to part time; plan premiums skyrocket. All result from Obama’s health care law.
- In Advance Of Orthodox Easter In Egypt, Muslim Brotherhood And Salafis Issue Fatwas Forbidding Greeting Copts On Their Holidays. In advance of Orthodox Easter, which will be celebrated by Egypt's Copts in early May 2013, fatwas have been issued by a Muslim Brotherhood (MB) official and by officials in Egypt's Salafi stream forbidding Muslims from greeting Christians on their religious holidays. It should be mentioned that these fatwas are a departure from the practice of past MB leaders, who sent greeting cards to the Patriarch and Coptic figures on their holidays, including Easter, and dispatched representatives to greet Copts in churches.
Weekend Recommendations
Barron's:- Bullish commentary on (AAWW) and (CAT).
- Bearish commentary on (FB).
- Asian indices are +.25% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 102.50 -2.5 basis points.
- Asia Pacific Sovereign CDS Index 84.0 -1.25 basis points.
- FTSE-100 futures n/a.
- S&P 500 futures +.04%.
- NASDAQ 100 futures +.22%.
Earnings of Note
Company/Estimate
- (TSN)/.45
- (SYY)/.43
- (APC)/.94
- (SMG)/2.0
- (WMS)/.25
- (VNO)/1.71
- (FSLR)/.75
- (CECO)/-.11
- None of note
- None of note
- The ECB's Draghi speaking, Eurozone Services PMI, Eurozone Retails Sales data, Spanish Unemployment Rate, RBA rate decision, (QSII) analyst day, (CELG) analyst meeting, (AZPN) investor day and the Value Investing Congress could also impact trading today.
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