Evening Headlines
Bloomberg:
Bloomberg:
- China's $1 Trillion Bond Leverage Unwinds as Pimco Senses Panic. China’s bond traders are getting a painful lesson on the dangers of leverage. After years of racking up profits by borrowing cheaply and plowing the proceeds into higher-yielding debt, investors are now rushing to unwind those wagers amid the deepest selloff in 13 months. The bets are getting squeezed from both sides as bond prices sink and borrowing costs rise to one-year highs in the 8 trillion yuan ($1.2 trillion) market for repurchase agreements, used by traders to amplify their buying power.
- China Factory Deflation Seen Turning on Commodities, Stimulus. China’s producer-price deflation, now in its fifth year, looks like it has turned a corner. Prices for products leaving the factory will improve in each of the next four quarters and turn positive in 2018, according to economists surveyed by Bloomberg. Producer prices rose in March on a month-on-month basis for the first time since September 2013. The comeback is being driven by rising home and commodity prices, an avalanche of credit and a steep slowdown in manufacturing investment. That’s good news for companies because recovering factory prices boost revenues and help reduce real interest rates, easing the burden of repayment on corporate debt that’s equivalent to about 165 percent of gross domestic product.
- BOJ Stimulus Never Less Effective as Cash Idles, Indicator Shows. A benchmark gauge shows the Bank of Japan’s stimulus has never been less effective and some bankers say negative interest rates have only made it harder to put cash to work in the economy. Consider the money multiplier. The measure of how much financial activity is spurred by an addition of cash by the central bank sank to the lowest on record last month, in data back to 2003. That’s even as BOJ Governor Haruhiko Kuroda’s bond buying has swelled the monetary base by around 170 percent since March 2013. Much of the injected funds are sitting idle, with bank deposits exceeding loans by close to an all-time high.
- Asian Stocks Rally Before BOJ as Oil Holds Above $45; Yen Falls. Asian stocks rose for the first time in a week after the Federal Reserve’s interest-rate signals calmed markets before a forecast expansion of monetary stimulus in Japan. New Zealand’s dollar strengthened and crude oil held above $45 a barrel. All 10 industry groups advanced on the MSCI Asia Pacific Index, led by raw-materials producers. The MSCI Asia Pacific Index rose 0.7 percent as of 11:08 a.m. Tokyo time, with the Topix halting a three-day drop to advance 1.1 percent. The Nikkei 225 Stock Average climbed 1.3 percent.
- Bill Gross: Smart Investors Know There's Something Wrong. (video)
- Be Afraid, Be Very Afraid If You're Investing for the Long Run. Turning 30 just got a lot scarier. A coming collapse in investment returns means that people that age today will have to work seven years longer or save almost twice as much to end up with the same nest egg as those of roughly a generation ago. So says the research arm of McKinsey & Co. in a new report that argues that investors of all ages need to resign themselves to diminished gains. The consulting company maintains that the last 30 years have been a “golden era” of exceptional inflation-adjusted returns thanks to a confluence of factors that won’t be repeated.
- Fed Signals No Rush to Raise Rates. Low inflation and possible ‘Brexit’ among concerns clouding a move at June meeting. Federal Reserve officials left interest rates unchanged and remained ambiguous about raising rates in June as mixed global economic signals and low inflation at home weighed on policy makers struggling to spark robust growth seven years after the recession’s end.
- Valeant Pharmaceuticals(VRX) to Make Sweeping Changes to Board. Four new directors and incoming CEO Papa are lined up to join the board of the drugmaker.
- America’s Coming Tax Increase. With the deficit projected to hit 5% of GDP in only a decade, the choice is either spending cuts or tax hikes. In this bizarre election year, the leading candidates have failed to engage in a serious discussion of one of the top economic issues on voters’ minds—federal deficits and the national debt. Yes, Donald Trump suggested he’d wipe out the $14 trillion public debt in eight years. But even with the economic growth from his tax plan, this is highly unrealistic, and he now says he’d “rather not be so aggressive.” Still, he has proposed an enormous tax cut and promised not to tamper with Social Security or Medicare, all of which points...
- Cruz announces Fiorina as choice for running mate. (video) Ted Cruz, looking for a shake-up in the 2016 race as Donald Trump moves steadily closer to the Republican nomination, on Wednesday announced former GOP primary rival Carly Fiorina as his choice for running mate should he win the party nod.
CNBC:
- Stinky first-quarter growth and lots of earnings. (video) With the Fed meeting out of the way, market focus shifts to the U.S. economy and Thursday's GDP report should show it barely grew in the first quarter. First-quarter growth was tracking at 0.7 percent, according to the latest CNBC/Moody's Analytics Rapid Update of economists' forecasts. The report is expected at 8:30 a.m. EDT, the same time as the release of weekly jobless claims.
Zero Hedge:
Earnings of Note
Company/Estimate
8:30 am EST
- Chinese Commodity Trading Volume Crashes: "Most Don't Even Know What They Are Trading". (graph)
- China Industrial Profits Soar Most In 18 Months But Overcapacity Looms. (graph)
- Debt Is Growing Faster Than Cash Flow By The Most On Record. (graph)
- Central Bankers To The Masses: "Let Them Eat Rate".
- "We All Work As A Team" - Millennials Explain How It's Going Living 'Rent-Free' At Home.
- Someone Is Pouring Record Amounts Of Money Into Bets On Soaring Volatility. (graph)
- What $499,000 Buys You In Brooklyn: A 20-by-97 Foot Lot With A "House".
- It's That Time Again For Stocks. (graph)
- Facebook(FB) Soars After Beating Sales, EPS As Tax Rate Tumbles: Reports 1.09 Billion Daily Users.
- Fed-nado Trumps AAPLocalypse: Panic-Buying Spree Pushes S&P Back Over 2,100 (And Fails). (graph)
- China's army of investors haven't learned their lesson, and it looks like history is going to repeat itself.
- Chesapeake(CHK) is hanging on for dear life.
- Trump's use of the 'woman card' against Clinton will backfire.
- These three numbers from Tuesday's primaries should worry Donald Trump.
- Europe doesn't work for Germany either, as Schauble's faux pas demonstrates. Such are the perils of speaking the truth. “Ultra low interest rate policies are 50pc responsible for the rise of the Alternative for Germany party”, Wolfgang Schäuble said recently in a characteristically blunt assessment of growing support for Germany’s far right. There followed a predictable flurry of condemnation, including chastisement from the president of Germany’s own Bundesbank, Jens Weidmann, who saw it as a challenge to the independence of the European Central Bank. Thereby reprimanded, Mr Schäuble has since rowed back somewhat on his remarks.
- The European Union always was a CIA project, as Brexiteers discover.
- Asian equity indices are unch. to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 138.75 -1.25 basis points.
- Asia Pacific Sovereign CDS Index 57.75 -. basis point.
- Bloomberg Emerging Markets Currency Index 72.91 -.05%.
- S&P 500 futures +.11%.
- NASDAQ 100 futures +.31%.
Earnings of Note
Company/Estimate
- (AET)/2.23
- (APD)/1.81
- (ALXN)1.13
- (MO)/.68
- (ADP)/1.18
- (BZH)/.02
- (BMY)/.65
- (CAH)/1.33
- (CELG)/1.27
- (CLF)/-.29
- (CL)/.63
- (COP)/-1.04
- (DBD)/.16
- (DPZ)/.98
- (DOW)/.83
- (F)/.47
- (MA)/.85
- (POT)/.15
- (RTN)/1.38
- (SEE)/.47
- (UPS)/1.21
- (VRX)/1.38
- (VIA/B)/.72
- (AMZN)/.59
- (BIDU)/1.05
- (EXPE)/-.73
- (GILD)/3.13
- (JNPR)/.38
- (LNKD)/.60
- (WYNN)/.82
- (YRCW)/-.39
- (WDC)/1.29
8:30 am EST
- Initial Jobless Claims for last week are estimated to rise to 259K versus 247K the prior week.
- Continuing Claims are estimated at 2137K versus 2137K prior.
- Advance 1Q GDP is estimated to rise +.7% versus a prior estimate of a +1.4% gain.
- Advance 1Q Personal Consumption is estimated to rise +1.7% versus a prior estimate of +2.4% gain.
- Advance 1Q GDP Price Index is estimated to rise +.6% versus a prior estimate of a +.9% gain.
- Kansas City Fed Manufacturing Activity for April is estimated unch. versus -6.0 in March.
- None of note
- The weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, (UA) general meeting, (ARMH) general meeting and the (NXPI) investor day could also impact trading today.
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