Wednesday, March 30, 2016

Today's Headlines

Posted by Gary .....at 2:33 PM
Bloomberg:
  • ICBC, Bank of China Cut Dividend Payouts as Profit Growth Stalls. Industrial & Commercial Bank of China Ltd. and Bank of China Ltd., two of the nation’s largest state-controlled lenders, cut their dividend payout ratios for 2015 as profit growth stalled amid rising bad loans. Net income at ICBC rose 0.5 percent to 277.1 billion yuan ($42.8 billion) last year while Bank of China reported a 0.7 percent profit gain, the Beijing-based lenders reported to the Hong Kong exchange on Wednesday. The percentage of profit they paid out as dividends fell to about 30 percent from 33 percent in 2014 as the two lenders sought to preserve capital. 
  • Chinese Authorities Trying to Avoid Credit Crunch. (video)
  • China's Big Three Airlines Take $2.5 Billion Currency Hit. China’s Big Three state-owned airlines combined suffered about $2.5 billion in foreign-exchange losses last year after the country unexpectedly devalued the yuan in August, squeezing passenger yields and limiting profit gains from declining oil prices. Net income at China Southern Airlines Co., Asia’s largest carrier by passengers, more than doubled to 3.7 billion yuan ($571.2 million), while China Eastern Airlines Corp.’s profit climbed 33 percent to 4.5 billion yuan. Both fell short of the average analyst estimates -- 3.9 billion yuan and 5.3 billion yuan, respectively -- compiled by Bloomberg. Air China Ltd.’s net income rose 83 percent to 7.06 billion yuan, beating an estimate of 6.78 billion yuan. The companies released separate statements to the Hong Kong exchange Wednesday, based on international accounting standards.
  • Hon Hai's Quarterly Profit Slides as Smartphone Demand Wilts. Hon Hai Precision Industry Co.’s quarterly profit dropped for the first time in more than three years after the main assembler of Apple Inc.’s devices fell prey to slowing iPhone sales and intensifying competition in contract manufacturing. The largest member of billionaire Terry Gou’s Foxconn Technology Group reported a 7 percent slide in fourth-quarter net income to NT$52.9 billion ($1.6 billion), compared with the NT$59.1 billion average of analysts’ estimates. The fall in profit was Hon Hai’s first since the second quarter of 2012 on a comparable basis, according to data compiled by Bloomberg. Hon Hai’s 2015 profit exceeded expectations but it’s grappling with a slowdown in smartphone demand.
  • Abe Weighs Stimulus Package Before Japan Summer Vote, NHK Says. Just a day after parliament passed a record budget for the fiscal year starting April 1, Japanese Prime Minister Shinzo Abe said he was considering a new economic stimulus package ahead of elections this summer, public broadcaster NHK reported Wednesday. Abe made the remarks to Natsuo Yamaguchi, head of junior coalition partner Komeito, NHK said, without saying where it got the information. Abe on Tuesday brushed off suggestions that the government would announce stimulus steps -- which some members of his own party said could amount to as much as 10 trillion yen ($89 billion). Abe reiterated that Japan will go ahead with a plan to increase the sales tax next year, barring a major economic shock on a scale of the collapse of Lehman Brothers or a major earthquake, NHK reported. Public debt is piling up and the Bank of Japan’s unprecedented asset-purchase program and negative-rate policy has so far been unable to stoke inflation and break a cycle of economic expansion and contraction. With some economists suggesting that central banks are reaching their limits, the onus is falling back on governments to deliver fiscal stimulus and structural reform.
  • Bank of Korea Warns Economic Growth Is Poised to Drop Below 3%. Bank of Korea Governor Lee Ju Yeol warned Wednesday that economic growth for 2016 is poised to fall below 3 percent and said the impact of further interest-rate cuts may be limited. The comments come amid a change in the BOK’s board and speculation of additional rate cuts given the ruling party’s request for the bank to follow the lead of Japan and Europe’s central banks to purchase more bonds. Korea’s government bond yields fell to the lowest level in more than a month on Wednesday. “First-quarter growth was weaker than expected, but recently there are some positive signs like the rebound in global oil and improvement in sentiment,” Lee said at a press briefing. “While volatility in financial markets has decreased recently and capital outflow has stabilized, factors remain that limit the impact of rates, like sluggish external demand and financial stability issues like household debt.”
  • Europe's Bond Shortage Means Draghi Is About to Shock the Market. (video) As European Central Bank Governor Mario Draghi prepares to increase and broaden his bond-buying program, the shrunken market might be in for a shock. While policy makers will expand their asset-purchase plan by 20 billion euros ($22.7 billion) a month at the start of April, corporate debt won’t be included until later in the quarter. That’s leaving investors to face even higher demand for government bonds with supply unable to keep up and some of Europe’s biggest banks are predicting yields are headed for even more record lows. “All of that is going to be in covered bonds, in govvies, in agencies,” Vincent Chaigneau, global head of rates and foreign-exchange strategy at Societe Generale SA in London, said in an interview on Bloomberg Television’s “On The Move” with Guy Johnson. “That’s going to create a shock on supply-demand in Europe.”
  • Euro-Area Economic Confidence Falls to Lowest in 13 Months. Euro-area economic confidence fell to the lowest level in more than a year just as the European Central Bank deployed fresh stimulus to spur growth and quash the threat of deflation. An index of executive and consumer confidence slumped for a third month, declining to 103.0 in March from a revised 103.9 the previous month, the European Commission in Brussels said on Wednesday. That’s the weakest since February 2015 and compares with a median estimate for a reading of 103.8 in a Bloomberg survey of economists.
  • Europe Shares Gain After Yellen Reiterates Rates to Rise Slowly. European shares advanced for a second day after Federal Reserve Chair Janet Yellen reiterated that interest rates will be raised gradually in light of uncertain global growth. The Stoxx Europe 600 Index climbed 1.3 percent to 341.18 at the close of trading. Before yesterday’s advance, it had fallen for four consecutive sessions, signaling a loss of momentum in the rebound that more than halved its 2016 decline. It is on course for a 2.2 percent gain in March, its first monthly rise since November, paring its loss for the year to 6.7 percent from as much as 17 percent.
  • The $90 Billion Default Flood. If anyone doubts that the credit cycle is souring quickly, just have a look at the mounting tally of defaults in the world’s biggest corporate-bond market.
  • Exxon(XOM) Climate Science Probe Expands as New York Gains Allies. Massachusetts became the latest state investigating whether Exxon Mobil Corp. misled investors and the public about how climate change may affect its business. News of the state’s probe came as part of a larger announcement on Tuesday by attorneys general from California to New York who are joining forces to fight global warming and look into whether companies have understated its effects. The group of 17 states and territories may jointly investigate the climate change disclosures of individual oil and natural gas companies, according to a statement from New York Attorney General Eric Schneiderman. “With more states jumping on board, these investigations are sure to generate some serious waves,” May Boeve, executive director of 350.org, an environmental advocacy group, said in an e-mailed statement. “We’ll be looking for the Department of Justice and many more cities and states to get involved.” Suzanne McCarron, Exxon’s vice president of public and government affairs, described climate-change allegations leveled against the company as “politically motivated and based on discredited reporting funded by activist organizations.” The company is “assessing all legal options,” she said in an e-mailed statement.
  • Trump’s New Russia Adviser Has Deep Ties to Kremlin’s Gazprom. Carter Page brings a “real-world” resume—and says his close relations with Russian business are a strength.
Wall Street Journal:
Fox News: 
  • North Korea warns of new famine as Kim's weight, belligerence balloon. (video) Portly North Korean dictator Kim Jong Un, whose hostile actions have brought crippling international sanctions to his impoverished nation, has a new message for the Hermit Kingdom's starving masses: Get ready to eat plant roots. Kim, whose weight the South Korean government estimates has ballooned to 290 pounds, signaled through state media that the nation could be headed for another famiine like the one that killed an estimated 3.5 million people in the 1990s.  
  • Cuomo hit for visiting Cuba, but banning North Carolina travel. (video) New York Gov. Andrew Cuomo will go to Cuba … but North Carolina is off-limits. What gives?
CNBC:
  • Fed's Evans: April rate hike would be surprising. (video) The Federal Reserve is reluctant to plow ahead with more interest rate hikes because of increased global risks, Chicago Fed President Charles Evans told CNBC on Wednesday. Evans spoke a day after central bank Chair Janet Yellen struck a dovish tone compared with recent comments by other Fed officials advocating hiking interest rates. He told CNBC's "Squawk Box" he believes Yellen has made it clear all meetings are live.
Zero Hedge:

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