Bloomberg:
- ECB Decision on Greek Haircuts Said to Depend on Political Talks. The European Central Bank will decide after next week’s meeting of euro region finance ministers whether to tighten Greek access to emergency liquidity, two people familiar with the matter said. The ECB is prepared to raise the discount demanded on Greek collateral to a level last seen in 2014 unless the country’s government shows a willingness to compromise in bailout talks, said one of the officials, who spoke on condition of anonymity. An ECB spokesman declined to comment.
- Euro-Area Bonds Caught in QE Paradox as Short Sellers Book Gains. The European Central Bank’s bond-buying program has landed investors in a quandary that’s whipping up volatility in the region’s fixed-income markets. Signs the plan is helping turn around the euro area’s economy triggered a 1.4 percent loss on the region’s government bonds in April, the first in 16 months. That selloff has spiraled into a rout in the first days of May, with seven straight days of declines for German 10-year bonds.
- Morgan Stanley(MS) Ends Seven-Year Bullish Call on Chinese Equities. Morgan Stanley downgraded Chinese stocks for the first time in more than seven years, saying the market has become expensive after share prices surged and profitability fell to the weakest level since the global recession in 2009. The U.S. brokerage lowered its rating to equal-weight from overweight on the MSCI China Index, Jonathan Garner, its Hong Kong-based head of strategy for Asia and emerging markets, wrote in a report dated May 7.
- China’s Manufacturing Hub Faces Labor Shortage and Higher Wages. Chinese exporters in the Pearl River Delta manufacturing hub are facing persistent labor shortages and rising wages even as the economy continues to slow. Wages in the region are forecast to rise by 8.4 percent this year, according to a survey of manufacturing clients by Standard Chartered Plc. Over 85 percent of respondents said labor shortages are at least as bad as last year.
- Global Bond Rout Spreads to Japan as Three-Day Break Ends. Japan’s government bonds joined a worldwide rout in sovereign debt as investors in Tokyo returned from a three-day national holiday. Benchmark 10-year yields were set for their biggest increase since Feb. 3 after losses in U.S. Treasuries mounted following comments by Federal Reserve Chair Janet Yellen on Wednesday that long-term government debt is overpriced. Yields on 10-year German bunds rose to their highest level this year as investors bet whether European yields were too low given rising oil prices and a deadlock in Greece’s debt talks.
- China’s Stocks Head for Biggest Three-Day Rout Since June 2013. China’s stocks headed for their worst three-day performance in almost two years amid speculation new share sales will sap funds, valuations have become excessive and the government will take measures to control margin trading. Utilities and industrial companies, which posted the biggest gains in Shanghai in the past three months, led declines. China Railway Group Ltd. and Huadian Power International Corp. dropped more than 5 percent. China Life Insurance Co. slid 4.8 percent after rising 6 percent yesterday. The Shanghai Composite Index fell 1.4 percent to 4,168.23 at 9:50 a.m.
- Asian Stocks, Bonds Extend $2 Trillion Global Selloff; Oil Drops. Asian stocks and bonds retreated, extending a global rout, as Japan returned from a three-day holiday. Oil slipped after reaching its highest this year. The MSCI Asia Pacific Index slid 1 percent by 11.06 a.m. in Tokyo, with all major gauges in the region retreating.
- The World Has Shrunk for Goldman as Commodity Rout Sinks Freight. The collapse in global rates for shipping commodities from the world’s mines to mills and utilities will persist until at least 2020 on a glut of vessels and stalling cargo growth, according to Goldman Sachs Group Inc. The extended slump is set to intensify competition in the iron ore and coal markets, benefiting the biggest, low-cost suppliers, analysts Christian Lelong and Amber Cai wrote in a report. Higher-cost producers may suffer, they said.
- Loeb Says Buffett Full of Inconsistencies on Hedge Funds, Taxes. Hedge-fund manager Daniel Loeb said he enjoys reading Warren Buffett’s annual letters to shareholders of Berkshire Hathaway Inc., and finds the billionaire full of inconsistencies on topics like hedge funds and taxes. “I love contrasting his words with his actions,” Loeb said at the SkyBridge Alternatives Conference in Las Vegas on Wednesday, a gathering of hedge fund managers, former politicians and celebrities at the Bellagio hotel. “But I also like how he criticizes hedge funds yet he really had the first hedge fund. He criticizes activists. He was the first activist. He criticizes financial service companies, yet he likes to invest in them. He thinks that we should all pay more taxes but he loves avoiding them himself.”
Zero Hedge:
Business Insider:
Reuters:
- GM(GM) says China April vehicle sales down 0.4 pct. General Motors and its Chinese joint ventures sold 258,484 vehicles in China in April, down 0.4 percent from a year earlier, the U.S. automaker said on Thursday. GM for the first time reported retail sales to customers rather than wholesale vehicle sales to dealers. Retail figures are generally viewed as a more accurate gauge of consumer demand. Under the previous methodology, the automaker had reported an 8 percent year-on-year rise in March and a 1.3 percent increase in February.
- Keurig cuts 2015 forecast as new brewer sales fail to take off. Keurig Green Mountain Inc cut its full-year sales and profit forecasts as the company struggles to convince consumers to take up its new Keurig 2.0 brewing system, sending its shares sharply lower in extended trading. Sales of Keurig's brewers have slowed in the past two quarters due to high prices of the 2.0 brewing system, poor initial reviews and confusion over whether the new machine could still brew certain brands. Shares of the company, which also reported lower-than-expected second-quarter profit and sales, fell as much as 19 percent in extended trading.
- China Checks Banks' Non-Compliant Stock Investment. Regulators asked for "strict" scrutiny over whereabouts of bank funds, especially loans, citing an unidentified industry participant.
- None of note
- Asian equity indices are -1.25% to -.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 108.0 +2.5 basis points.
- Asia Pacific Sovereign CDS Index 60.0 -.5 basis point.
- S&P 500 futures +.09%.
- NASDAQ 100 futures +.07%.
Earnings of Note
Company/Estimate
- (BABA)/.42
- (APA)/-.57
- (MT)/-.03
- (BDX)/1.53
- (CDW)/.53
- (TAP)/.45
- (MWW)/.07
- (PCLN)/7.73
- (ADVS)/.36
- (CBS)/.75
- (CERN)/.45
- (JAZZ)/2.16
- (MCHP)/.66
- (MHK)/1.61
- (MNST)/.68
- (NVDA)/.33
- (Z)/-.11
7:30 am EST
- Challenger Job Cuts for April.
- Initial Jobless Claims are estimated to rise to 278K versus 262K the prior week.
- Continuing Claims are estimated to rise to 2270K versus 2253K prior.
- Consumer Credit for March is estimated at $15.8B versus $15.516B in February.
- None of note
- The German Factory Orders report, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, (ALK) annual meeting, (BID) annual meeting and the (ETFC) annual meeting could also impact trading today.
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