Evening Headlines
Bloomberg:
Bloomberg:
- China Credit Outlook Cut to Negative From Stable by Moody's. (video) China’s credit-rating outlook was lowered to negative from stable at Moody’s Investors Service, which highlighted the country’s surging debt burden and questioned the government’s ability to implement reforms just days before leaders gather to approve a five-year road map for the economy. The government’s financial strength may come under pressure if it takes on liabilities from troubled state-owned companies, while capital outflows have limited policy makers’ scope to stimulate the weakest economy in a quarter century, the ratings company said in a statement on Wednesday. State intervention in equity and foreign-exchange markets has heightened uncertainty about the leadership’s commitment to reforms, Moody’s said. While market reaction to the outlook cut was muted on Wednesday, it highlights growing concern among global investors that the ruling Communist Party will struggle to overhaul Asia’s largest economy at a time when debt levels have climbed to an unprecedented 247 percent of gross domestic product. Chinese leaders will begin nearly two weeks of policy meetings on Saturday to map out how to tackle the nation’s economic challenges and meet the government’s goal of doubling per-capita income by 2020. “The government’s ability to absorb shocks has diminished and we want to signal this in the negative outlook,” Marie Diron, a senior vice president at Moody’s, said in an interview on Bloomberg Television. Authorities “have stepped backward in their reform steps and so that is creating some uncertainty.”
- Death and Despair in China's Rustbelt. This is the city of Tonghua in China’s rustbelt, where a desperate handful of steelworkers has gathered each week outside the management office of their mill in freezing temperatures to demand months of wages they say they’re owed. The answer, according to interviews with workers and residents, is always the same: there is no money. This is the last vestige of protests that once drew thousands, and which, one fateful day nearly seven years ago, ended with a manager being beaten to death.
- China's Real Estate Frenzy Is Back as Shenzhen Prices Surge 50%. After getting burned by the bursting of China’s stock-market bubble, Liu Yihui is seeking salvation from the country’s latest investment mania: big-city properties. The 35-year-old civil engineer dumped his equity holdings after losing 40 percent last year, using the proceeds to buy a 5 million yuan ($763,464) apartment in Shenzhen. Prices in the southern business hub have surged more than 50 percent over the past year, the fastest pace since at least 2011. “People are a bit crazy in this market, but what can you do?” said Liu, who took on a mortgage to buy the apartment, an investment property that he’s renting out. “Stock returns were terrible, so I made up my mind to put my money in real estate.” In an echo of the buying frenzy that propelled Chinese shares to unsustainable valuations last June, leveraged speculators are snapping up homes in top-tier cities in hopes that prices will keep surging. The boom, fueled by monetary stimulus and a loosening of property curbs in February, shows how government efforts to revive the world’s second-largest economy risk fueling asset bubbles instead.
- Offshore Yuan Falls as PBOC Weakens Fixing, Moody's Cuts Outlook. China’s yuan weakened offshore after the central bank cut the reference rate to the lowest in four weeks and Moody’s Investors Service reduced its credit-rating outlook on the nation to negative. The yuan traded in Hong Kong declined 0.05 percent to 6.5521 a dollar at 10:24 a.m. The onshore exchange rate rose for a second day, gaining 0.03 percent to 6.5519, according to China Foreign Exchange Trade System prices.
- Funds Exit Opening Door to China Bond Market as Risks Escalate. China is opening its bond market to foreign investors just as they head for the exit at a record pace amid warnings of rising debt risks. Global funds’ holdings shrank by a record 49.6 billion yuan ($7.6 billion) to 553 billion yuan in January, Chinabond data going back to July 2014 show. That’s more than double the 22.7 billion yuan of net sales in August, when China shocked global markets by devaluing its currency. Aberdeen Asset Management Plc says investors are still withdrawing money, after the yuan slumped 3 percent in the past six months. Moody’s Investors Service Inc. cut China’s credit outlook to negative from stable on Wednesday.
- South Korea's Output Drops More Than Estimates as Exports Slump. South Korea’s industrial output dropped even more than estimated in January as a slump in exports and the end of temporary tax benefits weighed down production. Output dropped 1.9 percent from a year earlier (estimate -0.6 percent). Decline was 1.8 percent from December (estimate -1.0 percent). Notable drops in electronic parts, devices and machines. Falling production is a risk to the government’s target of achieving 3.1 percent growth this year. Overseas shipments dropped for a 14th straight month in February as the export-dependent economy suffered from weaker demand in key markets including China.
- Japan's Three Biggest Banks Declare Yen's Depreciation Is Over. Japan’s megabanks are calling time on the yen’s four years of depreciation, a blow to Haruhiko Kuroda’s chances of reviving inflation and growth. Bank of Tokyo-Mitsubishi UFJ Ltd., Sumitomo Mitsui Banking Corp. and Mizuho Bank Ltd. all see the yen ending the year stronger than where it started. And all three have revised up their 2016 forecasts as the yen gained 6.7 percent in the first two months of the year.
- Capital Expenditure in Japan May Be Running Out of Steam. Capital expenditure is shaping up as another area of concern for Japan as economists trim their forecasts for this key measure of economic health. With exports and household spending already in decline, Japan can ill-afford any weakness in expenditure from the corporate sector. Yet with the economy contracting in the final three months of last year, volatility in financial markets and gains in the yen eroding the competitiveness of Japanese goods overseas, companies may be thinking twice before spending.
- Asian Stocks Extend Global Rally as Aussie Advances; Gold Drops. A global equities rally gained momentum in Asian trading and emerging-market currencies strengthened as economic data from the U.S. and Australia spurred risk-taking. Gold fell for a second day. Asian stocks jumped the most in two weeks, led by gains in Japan. Australia’s dollar rose for a third day and the nation’s bonds tumbled as the nation’s economic growth beat estimates. The offshore yuan weakened after China’s central bank lowered the currency’s reference rate and Moody’s Investors Service cut the outlook on the nation’s credit rating. Oil fell for the first time this week after industry data showed American stockpiles increased. Standard & Poor’s 500 Index futures held steady as results of the so-called Super Tuesday U.S. presidential candidate contests started to come in. The MSCI Asia Pacific Index surged 2.5 percent as of 11:01 a.m. Tokyo time, headed for its highest close since January as all 10 industry groups advanced.
- Deutsche Bank Says Fed Should Move in March Based on the Data. Deutsche Bank AG, one of the Wall Street firms that trade directly with the Federal Reserve, says U.S. policy makers should raise interest rates this month if the latest economic figures are any guide. “If the Fed is truly data dependent then they should be raising rates at their next meeting,” Torsten Slok, the chief international economist for the company in New York, wrote in a report Tuesday. Manufacturing, factory jobs, consumer spending and inflation are all improving, according to the report.
- Rubio Slams Trump, Reiterating ‘Con Artist’ Charge. “Just 5 days ago we began to unmask the true nature of the frontrunner so far in this race. Five days ago we began to explain to American people that Donald Trump is a con artist,” says GOP presidential candidate Marco Rubio.
Wall Street Journal:
- Trump Voters Need a Mirror. The blaming of elites has gone too far. The U.S. voter is behind his own disappointments. Trump supporters are disappointed in America’s leadership elites. They have this feeling even if they lack clear thoughts. Yet this late moment is not too late for some political types to insist that Trump voters must be understood, even though Trump voters have been easy to understand all along. Indeed, a whiff of fear enters the air as Mr. Trump progresses toward the nomination. These disappointed-with-elites people are in...
Fox News:
- Fox News projects: Trump nails down wins in Ala., Mass., Tenn., Va.; Clinton wins in Ala., Ark., Tenn. (video) Donald Trump and Hillary Clinton racked up a string of Super Tuesday victories, with Fox News projecting each to win key contests across the South and beyond. Trump is projected to win in Virginia, Tennessee, Alabama, Massachusetts and Georgia. Clinton is projected to win Alabama, Arkansas, Tennessee, Georgia and Virginia. On the Democratic side, Bernie Sanders was projected to notch his first win of the night in his home state of Vermont. But elsewhere, races were too close to call, including in Oklahoma and Massachusetts, where Sanders has a slight lead over Clinton in both states. On the GOP side, Sen. Ted Cruz enjoys a slight lead in Oklahoma, though it's too early to call.
MarketWatch:
CNBC:
Earnings of Note
Company/Estimate
8:15 am EST
- Ex-Chesapeake Energy CEO indicted on conspiracy charges. Former Chesapeake Energy CEO Aubrey McClendon was indicted Tuesday on federal charges of conspiring to rig bids for oil and natural gas leases.
- Tesla(TSLA) shares slide as Citron reveals short. (video) Dominic Chu looks into Tesla shares dropping after a tweet from Citron Research fixed a $100 price target for the stock citing supply and demand problems. Tesla Motors shares slid Tuesday as Citron Research revealed a short position in the electric automaker's stock. In a tweet, the short-selling firm contended that Tesla shares could fall to roughly half their current value by the end of the year due to supply and demand problems. The "news flow all around does not look good" for Tesla, Citron wrote.
- Peddling Non-Fiction. (graph)
- Bill Ackman is getting obliterated. Pershing Square Holdings, his fund's publicly traded vehicle, has fallen 19.9% through the end of February, according to a performance update.
- The GOP governor of South Dakota just vetoed a bill that would have restricted transgender students' bathroom use. South Dakota's governor vetoed a bill Tuesday that would have made the state the first in the U.S. to approve a law requiring transgender students to use bathrooms and locker rooms that match their sex at birth.
- Brazil's No. 2 builder admits illegal Rousseff campaign funding: paper. Executives from Brazil's second-largest engineering company, Andrade Gutierrez, have testified that the company paid suppliers for President Dilma Rousseff's 2010 electoral campaign off the books, newspaper a Folha de S.Paulo reported on Tuesday. The testimony, as part of a plea bargain by 11 executives, would be the first direct link between the widening "Operation Carwash" investigation into bribes and political kickbacks at state-run oil company Petrobras and the election of Rousseff, the paper said.
- Nato accuses Russia of ‘weaponising’ immigrants. Nato’s top commander accused Russia and the Syrian regime on Tuesday of “weaponising” immigration by using bombs aimed at civilians to deliberately cause large flows of refugees and challenge European political resolve. General Philip Breedlove, Nato’s supreme allied commander, said that the types of bombs being used in Syria — especially the Assad regime’s barrel bombs — were designed to force civilians from their homes.
- We need to capitalise on America’s overly hostile business environment. Soaring tax rates. Punitive charges for leaving the country. A steady flow of companies fleeing an over-zealous revenue system turning into a stampede for the exit.
- UK oil firms face further credit rating woe, Moody’s warns. Moody’s has cut the credit ratings of independent explorer Enquest and downgraded oil drill operator Seadrill, warning that ratings pressure will persist for European oil firms as market price falls continue to sap cash flow.
- China 1Q Industrial Output May Slow to About 5.6%. China's industrial output growth may slow to about 5.6% in 1Q because of overcapacity in energy and raw materials industries and high levels of real estate inventory, the State Information Center says. 1Q exports in dollar terms may decline 9% because of slower global economic growth as imports decline 15.2%.
- China Reserve Ratio Cut Not Sign of Large-Scale Stimulus. China's cut of the reserve requirement ratio recently indicates that monetary policy is "easing slightly" but still within a "prudent" stance, Xinhua says in a commentary. China won't initiate a large-scale stimulus, the commentary said. PBOC moves in cutting the reserve ratio and interest rate since end-2011 shouldn't be seen as "significant" money stimulus.
- Asian equity indices are +1.0% to +2.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 151.50 -7.5 basis points.
- Asia Pacific Sovereign CDS Index 73.0 -1.5 basis points.
- Bloomberg Emerging Markets Currency Index 69.06 +.04%.
- S&P 500 futures +.01%.
- NASDAQ 100 futures +.15%.
Earnings of Note
Company/Estimate
- (ANF)/.99
- (BF/B)/.99
- (DSX)/-.24
- (AEO)/.42
- (COST)/1.28
- (SMTC)/.16
- (SINA)/.34
- (SKUL)/.25
- (WB)/.13
8:15 am EST
- The ADP Employment Change for February is estimated to fall to 190K versus 205K in January.
- The ISM New York for February.
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +2,540,000 barrels versus a +3,502,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,148,000 barrels versus a -2,236,000 barrel decline prior. Distillate inventories are estimated to fall by -960,000 barrels versus a -1,660,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.31% versus a -1.0% decline the prior week.
- US Fed Beige Book release.
Upcoming Splits
- None of note
- The Fed's Williams speaking, China Services PMI, Swiss GDP report, weekly MBA mortgage applications report, BofA Merrill Ag Conference, (HUN) investor day, (MDP) investor day, (XOM) analyst meeting and the (HON) investor conference could also impact trading today.
No comments:
Post a Comment