Friday, March 11, 2016

Today's Headlines

  • China’s February New Credit Plunged From Prior Month Record. China’s broadest measure of new credit dropped sharply after a record surge a month earlier. Aggregate financing was at 780.2 billion yuan ($120 billion) in February, according to a report from the People’s Bank of China on Friday, compared with the median forecast of 1.84 trillion yuan in a Bloomberg survey. New yuan loans were 726.6 billion yuan, compared to the estimate of 1.2 trillion yuan. China’s money supply increased 13.3 percent from a year earlier, the PBOC said, less than the 14 percent gain in the prior month and below the 13.7 percent economists projected.
  • Draghi Can Cut Borrowing Costs, But Can't Make Companies Spend. (video) Mario Draghi’s plans to buy corporate bonds will cut financing costs for European companies, if history is any guide. Getting the firms to actually borrow and spend money will be harder. Corporations already have hefty incentives to sell debt, with average yields on investment-grade bonds in the region below 2 percent for a second year. But they have little appetite to raise money to invest in new factories and equipment, as the outlook for the global economy dims. Euro-area consumer spending growth slowed to 0.2 percent in the fourth quarter from 0.5 percent in the third. While investment picked up in the quarter, total economic growth was still limited to just 0.3 percent. Confidence among households dropped in February to its lowest level in more than a year. “If you don’t need the funds then why should you raise them?” said Ivo Kok, the treasurer of Alliander NV, an investment-grade Dutch gas and electricity distribution company. “It is more of a risk to have an awful lot of cash around that you’re not putting to work.”
  • Deutsche Bank Sees 2016 Industrywide Trading Revenue Drop. Deutsche Bank AG, which runs Europe’s biggest investment bank, said it expects the industry’s revenue to decline this year as clients consider pulling back from trading some fixed-income securities and refrain from doing deals. Securities firms will see debt trading revenue fall “slightly” from a year earlier as “an increase in macro revenues due to monetary policy divergence will be more than offset by lower credit revenues,” Deutsche Bank said in a statement from Frankfurt on Friday. Income from equity trading will probably be “moderately lower” in 2016, while corporate finance industry fee pools will fall due to a decline in deals to advise on, it said. “The beginning of 2016 has seen volatility in the world’s financial markets,” co-Chief Executive Officers John Cryan and Juergen Fitschen said in a note to shareholders. “This has impacted the banking sector. The seasonally strong first quarter might turn out to be challenging for the sector overall. Deutsche Bank is no exception to this.”
  • BNP Paribas Cut to A From A+ by Standard & Poor's.
  • Iraq's Abadi Says Islamic State Used Gas in Attack Near Kirkuk. Iraqi Prime Minister Haider al-Abadi said Islamic State militants used gas in an attack on the northern town of Taza and requested help from international experts to investigate. “The random gas attack against the town of Taza is a big crime and the response will be tough,” Abadi said in a statement posted on his website on Friday. He said he sent a team of medics to Taza, south of Kirkuk. 
  • Banks Lead Rebound in Europe Stocks; DAX Jumps Most Since August. (video) Europe’s stocks bounced back, recovering from Thursday’s losses, as traders reassessed Mario Draghi’s expanded stimulus package versus his signal that it might be the end of interest-rate cuts. The Stoxx Europe 600 Index climbed 2.6 percent to a six-week high, boosted by gains in financial firms and automakers.
  • Oil boom built on junk debt sees $19 billion default wave. Investors are facing $19 billion in energy defaults as the worst oil crash in a generation leaves drillers struggling to stay afloat. The wave could begin within days if Energy XXI Ltd., SandRidge Energy Inc. and Goodrich Petroleum Corp. fail to reach agreements with creditors and shareholders. Those are three of at least eight oil and gas producers that have announced missed debt payments, triggering a countdown to default. "Shale was a hot growth area and companies made the mistake of borrowing too much," said George Schultze, founder and chief investment officer of Schultze Asset Management in New York, which has been betting against several distressed energy companies. "It's amazing that so many people were willing to lend them money. Many are going to file for bankruptcy, and bondholders and equity are going to get wiped out en masse."
  • Iron Ore's `Insane' Advance Gets Rolled Back as Wild Week Ends. Iron ore sank, adding to signs the record leap at the start of the week wasn’t justified given the global market’s poor fundamentals, with banks and even miners lining up to say the spurt was destined to fade. Ore with 62 percent content delivered to Qingdao retreated 1.4 percent to $57.09 a dry metric ton, according to Metal Bulletin Ltd. The price has declined every day after Monday’s 19 percent rally to $63.74, the biggest gain in daily data going back to 2009. Friday’s drop was foreshadowed by losses in futures in Singapore, which fell near $50. “The insane rise at the start of the week was irrational and is unlikely to continue,” Huang Huiwen, an analyst at Shanghai Cifco Futures Co, said before the Metal Bulletin data was released. “Usually after a period of abrupt gains, prices tend to drop back quite sharply. I think we’ll see that in iron ore.”
Wall Street Journal:
  • Bundesbank Opposed Latest ECB Stimulus Package. German central bank fears ‘doom loop’ of high expectations followed by disappointment. Germany’s Bundesbank opposed the European Central Bank’s stimulus package as structured Thursday and fears a “doom loop” of high market expectations followed by disappointment, people familiar with the matter said. The ECB on Thursday announced a larger-than-expected package of interest-rate cuts, bond purchases and ultracheap loans, boosting its stimulus for the second time in three months in an effort to spur inflation and bolster the eurozone’s fragile economy. While stock and bond markets initially rallied,...
Fox News: 
  • Source: Clinton IT specialist revealing server details to FBI, 'devastating witness'. (video) Former Hillary Clinton IT specialist Bryan Pagliano, a key witness in the email probe who struck an immunity deal with the Justice Department, has told the FBI a range of details about how her personal email system was set up, according to an intelligence source close to the case who called him a “devastating witness.” The source said Pagliano told the FBI who had access to the former secretary of state’s system – as well as when – and what devices were used, amounting to a roadmap for investigators. "Bryan Pagliano is a devastating witness and, as the webmaster, knows exactly who had access to [Clinton's] computer and devices at specific times. His importance to this case cannot be over-emphasized," the intelligence source said.
  • Strategist: Fed to pave the way for June hike. (video)
  • Trump 'fundamentally breaks' the GOP: Ex-Bush 43 aide. (video) The Republican Party needs candidates to stay in the presidential race in order to force a brokered convention and deny front-runner Donald Trump the nomination, a former senior aide to President George W. Bush said Friday. That strategy will surely alienate some of Trump's supporters, said Sara Fagen, now a partner at public affairs firm DDC. But while Texas Sen. Ted Cruz, who trails Trump in the delegate count, would have a tough time against Hillary Clinton in a general election, he would keep the core of the party together, she added. "Donald Trump fundamentally breaks the Republican Party, and it is not the same party moving forward ever again," she told CNBC's "Squawk Box." "That is a worse prospect for most Republicans than Ted Cruz or a weakened Marco Rubio or some other scenario."
Zero Hedge:
Business Insider:
Ship & Bunker: 
  • WCI World Container Freight Rate Index Drops to Record Low. Drewy Maritime Research Thursday announced that the World Container Index (WCI) has dropped to its lowest reading ever, at just $701 per 40-foot container. This was the lowest reading since the WCI started tracking weekly transatlantic, transpacific and Asia-Europe rates in June 2011. Drewry also noted that index rate assessments for the Shanghai-Rotterdam and the Shanghai-Genoa routes fell to all-time lows of $354 and $341 per 40-foot box respectively, while the latest Shanghai-Los Angeles rate of $878 per 40-foot container was said to be "marginally higher" than the record low for that route. "The World Container Index's composite index is now 60% lower than the average of the past five years and has decreased by 62% in the past year," said Richard Heath, director of WCI. "Rate reductions are spreading across all routes, as the shipping market continues to soften.
  • GOP Divisions Remain Amid New Calls for Unity. Even amid calls for party unity, there remain sharp divisions in the Republican presidential contest. Marco Rubio warned on CBS’s “This Morning” that Donald Trump could destroy the GOP, given the many Republicans who vow never to support him. Rubio said, “There is a very significant number of Republicans that will never vote for him. And you can’t win unless the party’s united.”
Latvia Public TV:
  • ECB Can't Act Alone to Stimulate Euro Area Economy. Euro area needs more contribution from other policies, for example in increasing competitiveness and structural reforms, ECB Governing Council member Ilmars Rimsevics says. There are no more "sweet medicines," says Rimsevics, who's also governor of Latvian central bank. Geopolitical and global factors are unfavorable, he said. Latvia needs to be ready for slower economic growth, has to revise its GDP and inflation forecasts for 2016.

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