- NATO Blames Russia for Ethnic Unrest Amid Gas Threat. Russian President Vladimir Putin threatened to shut off gas deliveries through Ukraine unless European leaders took steps to stabilize the country as NATO accused Russia of stoking ethnic unrest in its eastern regions. With some 40,000 combat-ready troops massing along the border with Ukraine, Russia is trying to subvert its neighbor’s government and force it to devolve power, North Atlantic Treaty Organization Secretary-General Anders Fogh Rasmussen said today in Prague. Rasmussen is using “Cold War-era rhetoric” in a bid to “close the ranks” between member countries in the face of a “sham external threat,” the Russian Foreign Ministry said on its website. “Russia is stirring up ethnic tensions in eastern Ukraine,” Rasmussen said. “If Russia is serious about a dialogue, the first step should be to pull back its troops.”
- Goldman(GS) Says China Junk Debt Not Paying Enough for Default Risk. Investors in high-yield bonds from China, the majority of which come from the real estate industry, aren’t being paid enough for assuming the risk of economic slowdown and defaults, Goldman Sachs Group Inc. said. “For China high yield, we do not think there is sufficient premium to compensate for these risks, especially given the potentially high correlation risks in the real estate sector,” analysts at the New York investment bank including Hong Kong-based Kenneth Ho wrote in a report today. Dollar bonds from issuers in China returned 2.24 percent since Dec. 31, tied with South Korea for third-worst performer in 15 Asian markets tracked by JPMorgan Chase & Co.
- Property Trust Sales Drop 49% as Vicious Loop Seen: China Credit. Chinese developers raised 49 percent less through trusts in the first quarter as the collapse of Zhejiang Xingrun Real Estate Co. highlighted default risks. Issuance of the property-related plans, which raise funds from wealthy investors, slid to 50.7 billion yuan($8.16 billion) from 99.7 billion yuan in the fourth quarter, according to data compiled by Use Trust. The yield on AA rated five-year bonds has climbed 172 basis points in the past year to 7.25 percent, according to Chinabond. "The banking system and the shadow banking system are becoming concerned about exposure in the property sector," David Cui, China strategist at Bank of America said in an interview yesterday. "Once people refuse to provide credit to developers, developers' balance sheets will be under pressure, forcing them to cut prices. Once enough of them cut prices, fewer people would buy because most people buy property only when they think the price is going up. If this persists, it will turn into a vicious loop." The collapse of Xingrun, a builder in a city south of Shanghai, with 3.5 billion yuan in liabilities last month is adding to concerns as developers grapple with trust repayments equivalent to the size of Puerto Rico's economy this year.
- Rupiah Falls as Stocks Drop Most Since August on Election. Indonesian stocks had the biggest drop since August and the rupiah weakened by the most in three weeks after Jakarta Governor Joko Widodo’s party received less support than expected in parliamentary elections. The Jakarta Composite index of shares fell 3.2 percent from April 8 to close at 4,765.729, the steepest decline since Aug. 27. The currency weakened 0.6 percent, the most since March 20, to 11,355 per dollar, prices from local banks show.
- Fast Retailing Cuts Profit Forecast Amid Waning Japan Demand. Fast Retailing Co. (9983), Asia’s biggest clothing retailer, cut its forecast for annual profit as costs rose and demand weakens for the company’s casual wear in Japan. Net income will be about 88 billion yen ($865 million) for the year ending August, lower than its previous forecast of 92 billion yen, the maker of Uniqlo brand clothing said yesterday. That compares with the 94.5 billion yen average of 19 analyst estimates compiled by Bloomberg.
- Japan’s Dispatches of Jets Against China Rise to Record. Japan’s dispatches of fighter jets to pursue Chinese aircraft rose by a third in the past year to a record 415 times, reflecting growing tensions stemming from a territorial dispute in the East China Sea.
- European Stocks Drop as China Imports Unexpectedly Plunge. European stocks declined as a report showed Chinese imports unexpectedly slumped last month, outweighing gains by personal- and household-goods companies after LVMH Moet Hennessy Louis Vuitton SA posted results. Tryg A/S lost 4 percent after reporting first-quarter net income that missed analysts’ estimates. LVMH added 3.2 percent as the world’s largest luxury-goods company posted the fastest growth in fashion and leather-goods sales in two years. The Stoxx Europe 600 Index fell 0.5 percent to 333.41 at the close of trading.
- Dollar Drops to Lowest in 5 Months as Yen Gains. The yen gained to the strongest in three weeks against the greenback as an unexpected decline in Chinese exports revived demand for safer assets.
- Treasuries Rise as Cooled Fed Rate Concern Fuels Bond Sale Bids. Treasuries rose as the U.S. sale of $13 billion in 30-year bonds drew higher-than-average demand a day after Federal Reserve minutes damped bets policy makers would accelerate interest-rate increases. Benchmark 10-year yields declined five basis points to 2.64 percent.
- Faulty Hedges in Junk Loans Foil Rate Protection: Credit Markets. Ashish Shah, who manages company-debt investments for a living, has a message for individuals who’ve poured $70.7 billion into junk-rated loans since 2012: You’ll probably be disappointed. Below-investment grade loans have attracted new cash for a record 94 weeks by promising interest payments that will float higher along with benchmark rates. The catch: More than 85 percent of the debt won’t actually do that until the three-month London interbank offered rate, or Libor (US0003M), more than quadruples to exceed 1 percent, Morgan Stanley data show. Futures show that traders don’t expect Libor to breach that level for almost two years. In the meantime, prices on the $1 trillion of outstanding U.S. loans are poised to fall when the Federal Reserve raises borrowing costs.
- Technology IPOs Face Skittishness as Market Momentum Slips. Goodbye, momentum. Technology companies had a relatively easy time marketing initial public offerings while stock markets were steadily rising: the Nasdaq 100 Index rose 33 percent to a 14-year high in the year through early March. For Sabre Corp., Weibo Corp., Leju Holdings Ltd. and Paycom Software Inc., which are pitching to raise $1.63 billion over the next week, the timing may not be ideal. Since that early March peak, the technology benchmark has dropped more than 5 percent - and newly public shares have been hit particularly hard. Almost all the Internet and software IPOs that were conducted since 2012 fell in the 10 days through April 7, and the median drop was about 11 percent, data compiled by Deutsche Bank AG show.
- Chinese Premier Li Warns Southeast Asia Nations Against 'Provocations'. Remarks Follow Philippines Legal Challenge to Its Claims in South China Sea.
- China Prepares Way for New Low in Growth. Amid More Signs of Weakening, Premier Leaves Wiggle Room to Miss 7.5% Target.
MarketWatch:
- OPEC oil output drops; cartel lowers 2014 forecast. Production by the Organization of the Petroleum Exporting Countries, which supplies more than a third of the oil consumed globally each day, fell by over half a million barrels a day last month to 29.6 million barrels a day, the group said in its monthly oil market report. A steep drop in Iraq’s oil output of nearly 300,000 barrels a day led the decline, though there was also a substantial downturn in Angola, Libya and Saudi Arabia last month.
- Gold near 3-week high after ‘dovish’ Fed minutes. Prices close above $1,320; sharp drop in U.S. equities adds support.
- Fidelity looking to open new trading platform. Fidelity Investments is working with other asset managers to create a new trading platform aimed at lowering costs for its customers.
- Why tech losses at hedge funds can hurt you. Is it only the rich who get hurt when hedge funds lose money, or should regular investors pay attention?
- Is The Fed To Blame For The Bursting Of The Tech Bubble? *TARULLO SEES RISK OF LARGE LOSSES IN LEVERAGED LOAN FUNDS *TARULLO: FARMLAND, SMALL TECH FIRM VALUATIONS SEEM `STRETCHED' *TARULLO SEES RISK OF LARGE LOSSES IN HIGH-YIELD CORPORATE BONDS *TARULLO FAVORS KEEPING OPTION OF USING RATES AGAINST BUBBLES.
Politico:
Reuters:
- Family Dollar(FDO), other retailers see shoppers pull back. Family Dollar Stores Inc, seeking to reverse declining sales and profit, said on Thursday it is slashing prices to win shoppers, cutting jobs, and shutting hundreds of weak performing stores. The discount retailer, which caters to lower income shoppers, many living paycheck to paycheck, reported sales at stores open at least a year fell 3.8 percent in the quarter ended March 1. It expects sales to decline this quarter, too. Family Dollar Chief Executive Howard Levine on a call with investors pointed to "a more financially constrained consumer," echoing recent comments from rivals. Wal-Mart Stores Inc a few weeks ago said sharp cuts in food stamp benefits and higher payroll taxes had pinched its customers.
- Beijing rules out strong stimulus despite trade decline. Beijing maintains emphasis on structural reforms and urbanisation to drive growth after a decline in exports and imports for March. He said: "We won't adopt short-term strong stimulus policies just because of temporary fluctuations in the economy. Instead, we will put more emphasis on promoting healthy development.
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