Wednesday, March 08, 2017

Today's Headlines

  • Draghi Caution on Inflation Signals Stimulus Stays for Now. (video) Mario Draghi has left little doubt that he’s not ready to accept euro-area inflation has truly returned, and a closer look at data from the 19-nation region helps explain his hesitation. The European Central Bank president will probably reiterate his assessment on Thursday that underlying price growth remains subdued even after inflation accelerated to 2 percent -- nominally above the institution’s goal. A hefty upgrade of near-term projections as flagged by Bundesbank President Jens Weidmann is unlikely to change that message. Currency options show little expectation among traders of any immediate action by the Governing Council.
  • Le Pen Says Her New Franc Would Fluctuate on Currency Markets. (video) Presidential candidate Marine Le Pen has repeatedly said the euro is bad for France but she hasn’t always been consistent about what she’d do about it. On Wednesday, she said she’d introduce a new franc at a rate of one-to-one to the euro and then allow it to fluctuate, even though she and her aides previously said any new national currency would continue to be pegged to a basket of currencies. Speaking on RTL radio, Le Pen said the new franc would likely fall against whatever currency Germany uses, making French car exports more competitive, but said it might rise against the currency in Italy, a country she said would also be better off without the euro.
  • China's Imports Surge in February, While Exports Miss Estimates. (video) Imports soared 38.1 percent in U.S. dollar terms, almost double economist projections. Exports dropped 1.3 percent versus estimated 14 percent increase in Bloomberg survey. Trade deficit was $9.15 billion, the first negative reading in three years. That compared with projections for a $27 billion surplus.
  • Wealth Divide Spurs Rise of Trump-Style Populism in Australia.
  • Europe Stocks Close Little Changed as Bank Gains Offset Oil Drop. (video) European stocks closed little changed, halting a four-day losing streak, as gains in lenders were tempered by losses in energy and mining shares. The Stoxx Europe 600 Index added 0.2 percent at the close. Banks advanced, boosted by rising bond yields across the euro area and stronger-than-forecast U.S. private jobs data. Deutsche Bank AG climbed, snapping a four-day drop. Oil fell to a one-month low after government data showed U.S. crude stockpiles climbed to a record last week, weighing on energy-related stocks.
  • Saudi Arabia, Russia Offer United Front on Oil Supply Cuts. Saudi Arabia and Russia, the architects of an oil production cut that has stabilized prices, presented a united front on compliance just as rising U.S. inventories have sparked doubts about the OPEC and non-OPEC deal. Khalid Al-Falih, the Saudi energy minister, acknowledged that global crude inventories aren’t draining as quickly as he expected, opening the door for an extension of the production cuts into the second half of the year. The potential rollover is a subtle yet significant shift from just six weeks ago, when the minister said that an extension probably wouldn’t be needed. 
  • The Shipping News From China Is Good for Iron Miners, Mills. Record cargoes of iron ore coming into China and fewer boatloads of steel going out signal a boon for miners including BHP Billiton Ltd., Rio Tinto Group and Vale SA, as well as welcome news for rival metal producers like Europe’s ArcelorMittal. Purchases of ore rose 13 percent to 83.5 million metric tons in February, an all-time high for that month, with year-to-date shipments up 13 percent to 175 million tons, according to customs data Wednesday. Exports of steel products sank to 5.75 million tons in February, the lowest since the same month in 2014.
  • Steel Delivers Big Payoff Long Before Trump Spends $1 Trillion. Long before President Donald Trump has made good on his pledge to spend $1 trillion on U.S. infrastructure projects, investors already are seeing a big payoffs from domestic steel producers. The VanEck Vectors Steel ETF delivered an 82 percent return in the year through Monday as shares surged in the industry it tracks, posting the third-best performance among non-leveraged exchange-traded funds in the U.S. A Bloomberg gauge of iron ore and steel producers --- which just a year ago was at its lowest since at least 2003 -- climbed more than 40 percent. Investors poured about $476 million into industrial-metals ETFs, and billionaire Stan Druckenmiller’s Duquesne Family Office boosted by 80 percent its stake in Nucor Corp., the largest U.S. steelmaker.
  • Border-Tax Proposal Would Make Most Automakers Unprofitable, Study Says. (videoU.S. Republicans’ proposal to tax imports would make most automakers unprofitable, strain consumers and lead to job losses instead of gains, according to a study by consultant Roland Berger GmbH. The planned charge would increase the average cost of a car by $3,300, prompting a drop in demand and forcing manufacturers to react by shrinking their U.S. workforce, the Munich-based firm said Wednesday in a presentation. Because parts are sourced around the globe, all automotive companies would be affected. “Even American manufacturers would lose so much profit in their most important market that they would slide into losses globally,” Roland Berger partner Wolfgang Bernhart said in a statement. “The result will be lower vehicle sales, reduced income and fewer jobs in the local automotive industry.”
  • USDA Says Tennessee Bird-Flu Strain Distinct From China Variety. A case of bird flu at a Tennessee farm has been identified as highly-pathogenic H7N9 avian influenza, while distinct from an infectious variety in China. The type is “a different virus and is genetically distinct” from China’s H7N9 bird-flu strain that has sickened poultry and infected humans in Asia, the U.S. Department of Agriculture said in a statement Tuesday. The variety found in the U.S. is from North American wild bird lineage, the agency said. Humans face a “very low” threat of infection during bird-flu outbreaks in poultry flocks, according to a release earlier this week from Tennessee’s agriculture department.
  • These Are the 25 Best-Paying Jobs in America. Time for medical school.
  • Microsoft(MSFT) Pledges to Use ARM Server Chips, Threatening Intel's Dominance. The software maker seeks to cut costs in its Azure cloud business by developing new hardware.
  • A Freakish Calm Surrounds the Eight-Year Bull Market. (video) Eight years along and no existential crisis plagues this advance, whose unbroken march from the depths of the Great Recession is the second longest ever. Valuations are stretched and going by its age the rally is in rarefied air. But volatility, the ticker tape of investor anxiety, is nowhere to be found.
  • Starbucks(SBUX) Loses Market Share as Competitors Roll Out Drink Deals.
Wall Street Journal:
Zero Hedge:
China Securities Journal:
  • China CBRC Urges Trust Firms to Support Economy. Chinese trust firms should shift their business focus back to supporting growth of the real economy, citing Deng Zhiyi, director of China Banking Regulatory Commission's trust regulation department. CBRC would like to see trust companies curb or cut down on pure "fund channeling businesses," which normally involves off-balance-sheet wealth-management products, Deng said.

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