North American Investment Grade CDS Index 95.77 +10.50%
European Financial Sector CDS Index 99.75 -2.84%
Western Europe Sovereign Debt CDS Index 164.58 bps -1.05%
Emerging Market CDS Index 214.26 -.83%
2-Year Swap Spread 20.0 -1 bp
TED Spread 24.0 -1 bp
Economic Gauges:
3-Month T-Bill Yield .07% +1 bp
Yield Curve 269.0 +1 bp
China Import Iron Ore Spot $163.80/Metric Tonne -.55%
Citi US Economic Surprise Index +61.60 -1.7 points
10-Year TIPS Spread 2.45% +1 bp
Overseas Futures:
Nikkei Futures: Indicating +350 open in Japan
DAX Futures: Indicating +15 open in Germany
Portfolio:
Higher: On gains in my Biotech, Tech, Retail and Medical longs
Disclosed Trades: Covered all of my (IWM)/(QQQQ) hedges and then added them back
Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades meaningfully higher, despite rising energy prices, growing Mideast unrest, Japan concerns and weak US housing data. On the positive side, Road & Rail, Education, Gaming, Construction, Disk Drive, Semi, Oil Service and Energy shares are especially strong, rising more than 2.0%. Tech shares, which have lagged badly of late, are outperforming. Cyclicals and small-caps are outperforming again. The Japan sovereign cds is falling -2.19% to 106.44 bps. On the negative side, Bank shares are down on the day. (XLF) has underperformed badly throughout the day. Copper is falling -1.19%, gold is jumping +.69% and oil is rising +.35%. China Iron Ore Spot has declined -14.1% in a little more than 1 month. The avg. US price for a gallon of gas is +.01/gallon today to $3.55/gallon. It is up .43/gallon in 34 days. The Portugal sovereign cds is climbing +3.49% to 517.11 bps. The Citi Eurozone Economic Surprise Index is falling to -11.40 today and is now at the lowest since March 23rd of last year. As well, the Asia Pacific Sovereign CDS Index is climbing +2.68% to 120.82 bps. India's Sensex finished -.22% lower overnight. As well, Brazil's Bovespa, which is at a key technical juncture, gave back an +800 point morning gain to finish at session lows, down -.23%. I still suspect that global growth is slowing more than economists perceive right now and that this is not factored into most stocks. However, the market's resilience in the face of numerous mounting headwinds is very impressive. The S&P 500 is right at its 50-day moving average after a low-volume rally. If the benchmark can break convincingly above this level I will add back market exposure. I expect US stocks to trade mixed-to-lower into the close from current levels on growing Mideast unrest, rising energy prices, US housing worries, Japan concerns, more shorting, profit-taking and technical selling.
Allies Extend No-Fly Zone as Strikes Halt Libya Attacks. Allied forces are expanding their air campaign over Libya after strikes forced fighters loyal to leader Muammar Qaddafi to halt their attacks against the rebel stronghold of Benghazi. “Our actions today are focused on extending the no-fly zone southward, then westward from Benghazi,” General Carter Ham, the top U.S. general for the attacks on Libya, said speaking from Stuttgart, Germany. U.K. Foreign Secretary William Hague today refused to rule out the possibility that special forces will be deployed as the allied mission grows, saying only that there would be no occupation of the country.
Oil Climbs on Allied Military Strikes in Libya, Mideast Unrest. Oil rose as allied air strikes in Libya threatened to prolong a supply disruption in Africa’s third-biggest producer and on concern that escalating turmoil may curtail Middle East shipments. Futures climbed as much as 2.3 percent after Muammar Qaddafi vowed to repel attacks against military installations. Libya’s crude output has fallen to a quarter of pre-crisis levels and may stop entirely, the chairman of the national oil company said. Some army leaders abandoned Yemeni President Ali Abdullah Saleh’s regime after it cracked down on protesters. “Prices are going to go up when there are explosions in a major oil-producing country,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “Uncertainty in the Middle East is always bad for oil.” Crude oil for April delivery increased $1.45, or 1.4 percent, to $102.52 a barrel at 11:34 a.m. on the New York Mercantile Exchange. Prices rose as much as $2.28 to $103.35. Brent crude oil for May settlement climbed $1.41, or 1.2 percent, to $115.34 a barrel on the London-based ICE Futures Europe exchange.
U.S. Existing Home Sales Slump in February. Sales of U.S. previously owned homes dropped more than forecast in February and the median purchase price declined to the lowest since the same month in 2002, indicating the housing market is struggling to recover. Purchases decreased 9.6 percent to a 4.88 million annual rate, less than the 5.13 million median forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed today in Washington. The median price declined 5.2 percent from a year earlier, and 39 percent of the sales were distressed properties. Foreclosures are adding to the glut of distressed properties and pressuring prices, leaving some Americans with bigger mortgages than their homes are worth as joblessness hovers near 9 percent. Of all existing-home purchases, cash transactions accounted for 33 percent, the highest since at least August 2008, when the group began tracking the monthly figure. Sales fell in all regions in February, led by a 12 percent drop in the Midwest and a 10 percent decrease in the South. The median sales price dropped to $156,100 last month from $164,600 in February 2010. The number of previously owned homes on the market rose 3.5 percent to 3.49 million from January. At the current sales pace, it would take 8.6 months to sell those houses compared with 7.5 at the end of the prior month.
ECB Officials Signal They're on Track for April Rate Increase. European Central Bank officials indicated the economic uncertainty caused by Japan’s earthquake may not deter them from raising interest rates next month. ECB Executive Board member Gertrude Tumpel-Gugerell and Governing Council member Yves Mersch both said today that “strong vigilance” is necessary to keep a lid on inflation, a phrase the central bank uses to signal a rate increase is imminent. ECB President Jean-Claude Trichet also told the European Parliament he has “nothing to add” to his March 3 remarks, when he said policy makers may raise the benchmark rate from a record low of 1 percent at their next meeting in April. The euro rose above $1.42 for the first time since November and government bonds declined as investors increased bets on higher ECB borrowing costs.
Schwab(SCHW) to Acquire Options Brokerage OptionsExpress(OXPS) for $1 Billion. Charles Schwab Corp. (SCHW) agreed to buy OptionsXpress Holdings Inc. (OXPS) for about $1 billion in stock, adding the retail options brokerage founded in 2000 to its equity and mutual fund offerings. Schwab, the largest independent broker by client assets, will exchange 1.02 shares for each share of Chicago-based OptionsXpress, according to a statement today. Based on San Francisco-based Schwab’s closing price on March 18, the transaction values OptionsXpress at $17.91 a share. The stock jumped 15 percent to $17.67 at 11:04 a.m. New York time, while Schwab lost 0.7 percent to $17.44.
Citigroup(C) to Reinstate 1-Cent Dividend, Plans Reverse Split. Citigroup Inc. (C), the U.S. bank that received the largest taxpayer bailout, said it would reinstate a dividend at 1 cent per share in the second quarter after a planned 1-for-10 reverse split of its common stock. Citigroup, which hasn’t paid a quarterly dividend since 2009 because of the financial crisis, will exchange 1 new share for every 10 of common stock after the close of trading on May 6, the New York-based bank said today in a statement.
Fed Must Release Loan Data as High Court Rejects Appeal. The Federal Reservewill disclose details of emergency loans it made to banks in 2008, after the U.S. Supreme Court rejected an industry appeal that aimed to shield the records from public view. The justices today left intact a court order that gives the Fed five days to release the records, sought by Bloomberg News’s parent company, Bloomberg LP. The Clearing House Association LLC, a group of the nation’s largest commercial banks, had asked the Supreme Court to intervene. “The board will fully comply with the court’s decision and is preparing to make the information available,” said David Skidmore, a spokesman for the Fed.
Production halts at Shin-Etsu Chemical Co. and MEMC Electronic Materials Inc.(WFR) because of the Japan earthquake have idled 25% of the global production of silicon wafers used to make chips, according to researcher IHS iSuppli.
Wall Street Journal:
Egypt Vote Results Shows Islamists' Rising Sway. Egyptians' embrace of a set of proposed constitutional amendments in this weekend's referendum is the clearest sign yet that leadership of the country's revolution may be passing from youthful activists to Islamist religious leaders, according to analysts. The results from Saturday's referendum signal a shift in Egypt's continuing revolution: The protest leaders, once celebrated as heroes and martyrs, are no longer the leading voice in Egypt's transition to democracy. In their place are popular religious leaders, whose strong backing of the amendments held sway. These leaders see approval of the amendments as an avenue to political power and a means of preserving the country's Islamic identity. With their influence in what appeared to be Egypt's first free and fair election, these political playmakers show how they are positioned to help define Egypt's democratic future. The powerful Muslim Brotherhood, a once-illegal Islamist political group, was joined in supporting the amendments by leaders of the Salafi Islamist movement—which follows the ultra-conservative brand of Islam widely practiced in Saudi Arabia—and residual elements of the former ruling National Democratic Party, or NDP. Opponents of the amendments, which included many in the youth movement, said the Muslim Brotherhood allied with the NDP as part of a cynical power grab: The approval of the amendments has set the stage for parliamentary elections this summer, for which only the Brotherhood and the NDP have the organizational structures to compete. Posters and leaflets distributed throughout the country said that voting "yes" on the 10 amendments—not one of which made any mention of religion—was a spiritual obligation. Prominent Salafi clerics openly championed the amendments, telling satellite television audiences that a "no" result would lead to the drafting of a new constitution that might exclude a controversial article in Egypt's existing constitution that embraces Sharia, or Islamic, law as the root of all legislation in the Egyptian parliament. The nature of the campaign led some Egyptians to describe their "yes" votes as a religious obligation. "This is a nightmare for intellectual Egyptians," said Nabil Abdel Fattah, a political analyst for the Al Ahram Center for Political and Strategic Studies, a government-funded think tank based in Cairo. "All the youth accepted the results of the referendum as a form of democracy. But at the same time, they felt very deceived by the dangerous role the religious groups played against them," Mr. Abdel Fattah said. "They felt that their revolution is being aborted and there is a huge, huge threat to the unity of the country from using religious campaigns." Egypt's Coptic Orthodox Church—whose adherents account for about 10% of the country's 80 million people—came out against the amendments, which they said amounted to an Islamist power-play.
New Attacks as Allies Remain Divided on Libya. The U.S. and its allies launched new missile strikes against Col. Moammar Gadhafi Monday and said they would expand the no-fly zone over the country, as coalition officials work to ease divisions about the course of the military intervention in Libya. European Union foreign ministers remained at odds over the strikes in Libya even while the 27-nation bloc said it agreed a significant extension of its economic sanctions on Col. Gadhafi's regime, the second time in just over a week that the EU has broadened its sanctions.
Progress at Nuclear Plant is Slow. Tokyo Electric Power Co. continued to report progress in restoring order at the Fukushima Daiichi nuclear reactors, but finishing the job is turning out to be a painstaking process plagued by damaged equipment and unexpected incidents. Smoke rose from two of the plant's six reactors Monday, forcing workers to retreat temporarily. The cause of the smoke wasn't immediately clear. Radioactivity returned to previous levels after a brief rise, officials said. "We aren't out of the crisis situation yet, but we are seeing a light at the end," said Prime Minister Naoto Kan.
Rising Gas Prices Eating Into Shopping Budgets. Shoppers plan to wait until next year and beyond to spend generously again, a survey on Monday showed, in an early sign that rising gasoline prices could make the spring selling season tough for retailers. About three-quarters of Americans surveyed by America's Research Group said they were shopping less due to rising gas prices, with more than 62 percent of the participants planning to spend generously only next year or beyond.
Treasury's Mortgage Debt Sale Comes at Tough Time for Housing. The Treasury Department’s move to start unloading its portfolio of mortgage debt likely will add one more point of pressure—albeit a small one—to a housing market hardly in a position for additional stress.
Business Insider:
Stalemate: Benghazi is Safe, While Qaddafi Holds Human Shields in Tripoli.Operation Odyssey Dawn may be quickly losing steam in Libya. Qaddafi has surrounded himself with civilian supporters in Tripoli, according to the NYT. His forces are bringing civilians to Misrata to use as human shields, a rebel spokesman told Reuters.
Netflix(NFLX) Takes It to HBO. It's not TV. It's not HBO either. It's Netflix. After refusing to sell Netflix rights to stream its shows, Time Warner's pay-TV juggernaut, HBO, is getting its comeuppance from Netflix, which announced late last week it's jumping into the original content business. Netflix's $100 million, two-season deal for original series "House of Cards" puts it in direct competition with HBO, which was already fielding questions about the threat of online video services after its subscriber rolls declined last year despite higher profits and revenues.
New York Times:
How the iPhone Led to the Sale of T-Mobile USA. Until Apple introduced its highly popular touchscreen device in 2007, which went on to become the world’s leading smartphone, Deutsche Telekom had been generating decent sales from its American operation, with growth in some years surpassing that achieved in Germany. But after the iPhone went on sale, sold exclusively at first by AT&T in the United States, T-Mobile USA began to lose its most lucrative customers, those on fixed monthly plans, who defected to its larger American rivals — AT&T and Verizon Wireless, which began selling the iPhone in February.
Joe Manchin Keeps Hitting Dems Over Budget. Less than two weeks after he delivered his maiden floor speech denouncing President Barack Obama’s “failure to lead” on cutting deficit spending, freshman Democratic Sen. Joe Manchin is taking his argument home to his West Virginia constituents. Warning that “we cannot ignore the fiscal Titanic of our national debt and deficit,” the Democrat stressed his unwillingness to simply rubber-stamp his party’s positions in a Monday morning speech at the University of Charleston.
Reuters:
WHO Warns of "Serious" Food Radiation in Disaster-Hit Japan.The World Health Organization said on Monday that radiation in food after an earthquake damaged a Japanese nuclear plant was more serious than previously thought, eclipsing signs of progress in a battle to avert a catastrophic meltdown in its reactors. News of progress at the nuclear plant was overshadowed by mounting concern that radioactive particles already released into the atmosphere have contaminated food and water supplies. "Quite clearly it's a serious situation," Peter Cordingley, Manila-based spokesman for the World Health Organization's (WHO) regional office for the Western Pacific, told Reuters in a telephone interview. "It's a lot more serious than anybody thought in the early days when we thought that this kind of problem can be limited to 20 to 30 kilometers ... It's safe to suppose that some contaminated produce got out of the contamination zone."
Tiffany(TIF) Outlook Keeps Luster Despite Japan Quake. Tiffany & Co (TIF.N) expects significant sales growth this year in markets such as China, Brazil and Australia, illustrating the strength of global demand for luxury products despite the earthquake and tsunami in Japan. The luxury jeweler forecast higher fiscal-year sales than analysts expected, sending its shares up more than 5 percent.
Nokia(NOK) Sees Shortages as Some Japan Plants Restart. Nokia faces shortages of some phones due to disruption caused by Japan's devastating earthquake, although the mobile phone maker said the impact on earnings would be limited.
Portugal Austerity Vote Likely Wednesday, Could Topple Government. Portugal's main opposition Social Democrats (PSD) again refused on Monday to back new government austerity measures, raising the risk the minority administration could fall after a vote later this week.
Les Echos:
French finance minister Christine Lagarde said in an interview that no calendar has been established for any further intervention to limit the appreciation of the yen.
El Universal:
A survey showed 79% of Mexicans want controls on the country's southern border to impede illegal immigration. Of the 2,400 people surveyed last year by the Centro de Investigacion y Docencia Economicas, a Mexican university known as CIDE, 66% agreed that undocumented immigrants should be deported from Mexico. 86% said it was important for immigrants who reside in Mexico to speak Spanish and 81% said they should have a good level of education.
Edmonton Journal:
Al-Qaida Wants $128-Million Ransom for French Hostages. Al-Qaida in the Islamic Maghreb (AQIM) is demanding at least $128-million in a ransom for the release of four French hostages held since September, a source close to mediators said Monday.
Business Line:
Japan to Monitor Seawater Near Nuclear Plant. “There is a possibility that a very small amount of radiation may flow into the sea. But even if it happens, considering the current radiation level in the air, there will not be an impact on human health,” the official said. Abnormal levels of radiation have already been detected in samples of milk and spinach taken from areas near the plant, as well as in tap water in Tokyo and surrounding prefectures including Fukushima.
Kyodo News:
Tokyo Electric says radioactivity has been found in sea water. Radio active iodine found in sea water 126.7 times limit. Radioactive cesium found 24.8 times limit. Tokyo electric says can't judge impact on sea products.
NHK:
Tokyo Electric Power Co. detected five kinds of radioactive material at the site of the crippled Fukushima Dai-Ichi nuclear plant, confirming fuel rods have been damaged.
Sina.com:
Former Chinese central bank deputy governor Wu Xiaoling said the nation has more room to raise the reserve requirement for banks.
Haberturk:
Turkey is blocking NATO's military involvement in implementing a no-fly zone over Libya, citing diplomats. Ambassadors of NATO members failed to reach an agreement in meetings yesterday after Turkey objected.
Al Watan:
Palestinian extremists were the main agitators behind unrest yesterday in the southern Syrian city of Daraa that left one person dead. About 30 people were also injured in the unrest.
Thousands of people have marched in the southern Syrian town of Daraa today after the funeral of a protester killed yesterday by security forces during a demonstration, citing a resident. The demonstrators chanted "Revolution, Revolution" and "God, Syria, freedom and that's all."
Allies Expand Attack as Qaddafi Vows to Repel 'Christian States'. Allied officials said their attacks have effectively grounded Muammar Qaddafi’s air force, adding that they are not targeting the Libyan leader himself. Vice AdmiralBill Gortney told reporters at the Pentagon yesterday that Libya’s military had not flown an aircraft in two days and the coalition is in full control of airspace. It was possible that a Libyan jet or helicopter would still take off but it would be targeted by coalition patrols over the country, he said. Qaddafi denounced the coalition allied against him -- including the U.S., the U.K. and France -- as “the party of Satan” after Tomahawk missiles were fired at Libyan targets and fighter jets patrolled the North African country’s skies. The military action continued with B-2 bombers attacking airfields and air-defense sites, CBS reported. “We will not leave our oil to America or France or Britain or the enemy Christian states that are now aligned against us,” the Libyan leader, who has ruled since 1969, said on state television yesterday. “We will not leave our land. We will fight for every inch of our land and liberate every inch of it.”
Libyan Oil Chief Says Production Falls, 'Could Reach a Halt'. Libya’s oil production fell to less than 400,000 barrels a day after foreign companies pulled out their staff, the chairman of the country’s state-run National Oil Corp., Shokri Ghanem, said in a televised media conference from Tripoli. Ghanem said the North African country had no intention of breaking commitments with foreign companies and called on them to send their employees back to resume work. Libya may otherwise award new oil and gas concessions directly to companies in countries such as China, India and Brazil in order to raise production, which “could reach a halt,” he said.
Oil Rises on Airstrikes Against Qaddafi, Further Unrest in Bahrain, Yemen. Oil climbed in New York after the U.S., U.K. and France launched cruise missiles and airstrikes at targets in Libya and as continuing unrest in the region renewed concerns the turmoil may spread and disrupt supplies. Futures advanced as much as 2.3 percent after Libyan leader Muammar Qaddafi vowed to repel allied forces pounding military installations. Ninety percent of Bahrain Petroleum Co.’s employees went on strike last week in response to a police crackdown on anti-government demonstrations, while Yemen declared a state of emergency on March 18. “Bahrain is more of the hotspot rather than Libya,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. “The focus will have to be on Saudi Arabia and Iran, that is where the powder keg is at the moment and it’s based on Bahrain.” Crude oil for April delivery gained as much as $2.28 to $103.35 a barrel, in electronic trading on the New York Mercantile Exchange, and was at $103.26 at 12:58 p.m. Sydney time.
Allies' Lack of Exit Plan Risks Splitting Libya, Qaddafi Staying. Allied military leaders said the attack on Libya may end without dislodging Muammar Qaddafi, pointing to the risk of splitting up the country and the absence of a clear exit strategy, analysts said.
Japan Atomic Crisis Eases as U.S. Says Worst May Be Over. Japan had some success cooling reactors at the crippled Fukushima Dai-Ichi plant, bringing two of the six reactors under control and connecting a second electric cable to the station, according to reports. Tokyo Electric Power Co., the operator, declared Units 5 and 6 safe after cooling water pumped into them reduced temperatures. An electric cable was hooked up to the No. 5 reactor, Kyodo News said, citing Tepco. U.S. Energy Secretary Steven Chu said the Obama administration believes the worst of the crisis is over.
Death Toll From Japan Quake Eclipses Kobe as Tokyo Struggles to Move On. The death toll from Japan’s strongest earthquake on record eclipsed that of the 1995 Kobe temblor and foreign rescue workers began leaving as the chances of pulling survivors from the rubble faded. Police confirmed yesterday that at least 7,348 people died when the March 11 quake sent a surge of water inland, smashing ships, cars and buildings and razing entire towns.
Toyota, Sony Disruptions May Last Weeks on Supplier, Power Supply Damage. Toyota Motor Corp. (7203) and Sony Corp. (6758), two of Japan’s biggest manufacturers, are facing worst-case scenarios of long-term production shortfalls as scores of plants remain closed and workers are idled in the aftermath of the March 11 earthquake and tsunami. “The current situation is still difficult,” Chisato Kitsukawa, a spokesman for Tokyo-based Sony, by phone yesterday. The company has shut eight plants in Miyagi, Ibaraki and Fukushima prefectures, and workers are inspecting equipment and facilities, he said. Toyota has said it will keep 21 auto and components plants closed until March 22. Sony and Toyota’s efforts to resume production are complicated by the need for hundreds of different components to build TVs and cars from a variety of different suppliers that may have suffered plant damage in the earthquake and tsunami. Japan is also facing electricity shortages because a nuclear- power plant was crippled by the temblor. “This will be played out not in days, but in weeks,” said John Hoffecker, head of the automotive practice at consulting firm AlixPartners LLP in Detroit. “Nothing on this scale has really occurred before.”Panasonic Corp. (6752), the nation’s biggest maker of batteries, has closed two plants in the area hit by the quake. It didn’t have an estimate for when production would resume, Akira Kadota, a spokesman, said by phone.Fujitsu Ltd. (6702), the maker of personal computers and home appliances, has closed 10 plants and it isn’t able to say when they will reopen, said Etsuro Yamada, a spokesman. Camera-maker Nikon Corp. (7731) is yet to decide when it will reopen four plants shut since the quake. Sharp Corp. is operating its Tochigi audiovisual products plant and several others at reduced hours to conserve power, Miyuki Nakayama, spokeswoman for the company, said by phone. Hitachi, Japan’s second-largest manufacturer by revenue, began receiving fuel at some of its plants, said Kenichiro Mizoguchi, a spokesman. Seven of its factories, including facilities for making elevators, car parts and home appliances, remain closed. The company’s air-conditioning unit factory in Tochigi prefecture is operating at reduced hours because of power shortages.
Japan's BP(BP) Moment Troubles Global Economy: William Pesek. A week ago, before radiation fears prompted a mass exodus from Tokyo, a downturn was of the “if” variety. Japan’s prospects then dimmed with each passing day of blackouts and panicked news reports. The questions now are when the recession will officially begin, how bad it will be and when might it end? There’s this bizarre notion that Japan’s crisis is a non- event for the world economy -- that at just 9 percent of global gross domestic product, Japan’s zigs and zags mean little. And besides, it’s thought, the Group of Seven stepped in to cap the yen and all’s well again. Perhaps. Yet Japan’s near-term trajectory may surprise the global bulls out there. Many worry that aftershocks and rolling blackouts following the March 11 earthquake are with us indefinitely. That augurs poorly both for business investment and household spending for the remainder of 2011. Household savings may soar as Japanese worry about another huge temblor or tsunami. Events at two of Japan’s most fabled names -- Toyota Motor Corp. and Sony Corp. -- tell the story. Both face worst-case scenarios of long-term production shortfalls as scores of plants remain closed and workers are idled. And this will be playing out for weeks, if not months, to come as the nuclear reactors Japan Inc. took for granted stay offline.
AT&T(T) Has to Fend Off Scrutiny to Win Nod for 'Unthinkable' T-Mobile Bid. AT&T Inc. (T)’s $39 billion purchase of T-Mobile USA, the biggest acquisition worldwide in almost a year, may take a year to gain regulators’ approval even if the carrier pledges to sell assets and expand rural coverage. The acquisition would push AT&T past its largest rival, Verizon Wireless, to become the biggest U.S. mobile-phone carrier. AT&T and T-Mobile combined have 39 percent of the market, according to research firm EMarketer Inc. The U.S. Federal Communications Commission and consumer groups may be concerned the deal will reduce competition and consumer choices, pushing up prices. AT&T anticipates regulators will require it to divest wireless spectrum and subscribers as a condition for approval, said a person with knowledge of the situation. A failure to complete the deal would mean AT&T may need to pay to a breakup fee of $3 billion and some spectrum, said two people with knowledge of the matter.
ECB's Nowotny Says Bailout Fund No Solution for Country Problems. European Central Bank Governing Council member Ewald Nowotny said that the European bailout fund won’t solve the problems of some member states, Kleine Zeitung reported, citing an interview. “Nobody should claim we have a crisis of the euro,” Nowotny told the Austrian newspaper. “We have a crisis of the member states. Either because of too little productivity and too high debt or because of their banking systems. And these issues won’t be solved by the bailout fund.”The countries facing problems need to “put their budgets in order and if their bonds are risky, they will have to pay more interest on them,” the report cited Nowotny as saying. “These countries have to vow to be transparent and abandon egoism.” Nowotny also said that the catching-up process of the economically weaker countries in the euro zone “is taking much longer than we had anticipated,” Kleine Zeitung reported.
Bond Sales Stifled by Debt Crisis, Japanese Threat: Euro Credit. Companies are selling the fewest bonds in euros since 2008 as the failure of European politicians to resolve the debt crisis, protests in the Middle East and Japan's unfolding nuclear disaster push up borrowing costs. Investment-grade borrowers sold 122.9 billion euros of bonds this year, down from 191 billion euros in the same period of 2010, with companies from Europe's most indebted nations bearing the brunt.
Ireland's Hayes Irish Banking Crisis a 'European-Wide Problem'. Brian Hayes, Ireland’s junior minister for public service reform, said the country’s banking crisis is a “European-wide problem” and that the European Union has a “responsibility to help” solve it. “Part of the problem was created by Europe, by cheap money coming into this country, but a lax regulatory system across the euro zone,” Hayes said in an interview with Dublin-based broadcaster RTE Radio today. “They have a responsibility to help us solve this problem. I think we’re getting that message through right now.” The government is unlikely to have an outcome on its aim to share the burden of banking losses with bondholders before the results of central bank stress tests of lenders are published on March 31, he said. Ireland “can’t take some kind of unilateral action,” he said.
Atomic Fuel Stored at U.S. Plants Poses Risks Similar to Japan Facilities. U.S. nuclear power plants that store thousands of metric tons of spent atomic fuel pose risks of a crisis like the one unfolding in Japan, where crews are battling to prevent a meltdown of stored fuel, nuclear safety experts said. U.S. nuclear plants had an estimated 63,000 metric tons (138.9 million pounds) of spent fuel stored on site as of January 2010, according to a report from the U.S. Nuclear Regulatory Commission. About 2,000 metric tons a year is expected to be added to that total, the NRC said.
Lipsky Says Advanced-Nation Debt Risks Future Crisis as Yields Set to Rise. The mounting debt burden of the world’s most developed nations, set for a post-World War II record this year, is unsustainable and risks a future fiscal crisis, the International Monetary Fund’s John Lipsky said. The average public debt ratio of advanced countries will exceed 100 percent of their gross domestic product this year for the first time since the war, Lipsky, the IMF’s first deputy managing director, said in a speech at a forum in Beijing today. “The fiscal fallout of the recent crisis must be addressed before it begins to impede the recovery and create new risks,” said Lipsky.
Bahrain Shia Village Treats Injured Protesters in Homes Amid Arrest Fears. Bahraini security forces pushed into the Shiite village of Karzakan as part of the government’s efforts to quell more than a month of unrest in the Persian Gulf island nation. About 12 young men were injured yesterday when police fired tear gas and birdshot pellets at them, said Jasim Marzooq, a nurse who witnessed the incursion. “We treat the wounded in homes, they are afraid of being arrested if they go to hospitals,” Marzooq said in an interview.
Saudi Activist Says Protesters Detained After Rally. Saudi demonstrators gathered outside the Interior Ministry in the morning demanding the release of political prisoners held without trial, Mohammed al- Qahtani, a Riyadh-based activist, said by phone. Al-Qahtani, who is the head of the Saudi Civil and Political Rights Association, said he saw police detain about half of the estimated 100 protesters and place them on buses. A similar rally was held on March 13. “The police ordered them to leave or risk arrest,” said al-Qahtani.
Debt Insurance Costs Increase on Protest Risk: China Credit. The cost of insuring China's dollar debt from losses has risen above that for the UK and Chile this year as interest rates jump, protests against the government increase and on concern banks' bad debts will climb. Five-year credit-default swaps for China, which as been controlled by the Communist Party since 1949, climbed 6 basis points this year to 74, according to CMA prices in NY. That's up from a two-year low of 52.0 on Oct. 13, before policy makers stepped up monetary tightening to damp increases in costs of food and housing. A Fitch Ratings gauge signals that there's a 60% chance of a banking crisis in China by mid-2013, raising the odds of a government bailout after record lending in the last two years. In 1999 state asset-management companies started buying about 1.4 trillion yuan of bad loans from the nation's four biggest banks, a legacy of decades of government-directed lending to unprofitable state-owned enterprises. "Weaker purchasing power increases the probability of social unrest and puts the economy at risk, hence the higher credit-default swap levels," said Tobias Bettkober, who manages $500 million of global bonds at Holinger Asset Management AG in Zurich. China deployed hundreds of police in Beijing and Shanghai earlier this month after online activists called for nationwide "Jasmine" rallies to demand the Communist Party combat corruption, promote an independent judiciary and address income inequality. "Mass incidents," which include everything from strikes to riots and demonstrations, doubled from 2006, rising to at least 180,000 cases in 2010, Sun Liping, a professor of sociology at Beijing's Tsinghua University, the nation's top academic institution, said. The extra yield on China's debt has risen 27 basis points this year to 153 basis points more than U.S. Treasuries.
One-Year High Overnight-Rate Spurred by Inflation: India Credit. India's money-market rates are climbing to their highest level in a year on speculation money supply will tighten after the central bank signaled Asia's most aggressive pace of interest-rate increases will continue. The overnight call-money rate advanced 58 basis points, or .58 percentage point, the biggest increase since November, to 7.58% last week, according to data compiled by Bloomberg.
Japan May Take Five Years to Rebuild After Quake, World Bank Says. The World Bank said it may take five years for Japan to rebuild after this month’s earthquake and tsunami, which killed at least 8,450 and destroyed thousands of buildings. The automotive and electronics industries are likely to be most affected, it added.
Bankers Not Hearing Calls for Bonus Restraint, Barnier Tells FT. European Union Financial Services Commissioner Michel Barnier said some bankers haven’t heard “the calls for moderation” on bonuses and “haven’t understood” the importance of the issue, the FT reported, citing an interview. The application of new EU-wide rules governing bankers’ bonuses “hasn’t been adequate,” Barnier also said, the FT reported. Barnier plans to address the issue, firstly, through the EU, which will be studying whether the new rules were applied correctly, and secondly, through France’s presidency of the Group of 20 leading economies, where Barnier said he intends to “pose questions to finance ministers,” according to the FT.
Hedge Funds Slash Bullish Commodity Bests Most in Eight Months. Hedge funds cut their bullish bets on commodities by the most for any week since June as Japan's nuclear crisis threatened the global economic recovery. In the week ended March 15, an index of managed-money net-long positions in 18 commodities tumbled 14% from a week earlier to 1.27 million U.S. futures and options contracts, Bloomberg data show. That's the biggest drop since the week ended June 29, and the smallest net-long holdings since early August.
Wall Street Journal:
Allies Press Libya Attacks. Airstrikes Boost Rebel Forces; U.S. Lauds Efforts, but Some Partners Show Unease.
U.S. Eyes Gadhafi Terror Response. U.S. intelligence agencies are watching for signs that a desperate Col. Moammar Gadhafi, under attack from a coalition air assault, could resort to acts of terrorism against Western targets. Col. Gadhafi has extensive stockpiles of mustard gas and high explosives at his disposal that could be used in attacks against targets in Europe or against his own people. He also has a documented history of orchestrating strikes against civilians and other world leaders. "U.S. officials are keeping an eye on that possibility," one U.S. official said.
GM(GM) Halts 'Nonessential' Spending Globally Due to Japan Crisis. General Motors Co. has halted all nonessential spending and travel while it gets a better handle on the potential impact of Japan's crisis on the company, the auto maker said Saturday. GM Chairman and Chief Executive Dan Akerson sent a companywide notice asking to hold off on any expenses that aren't critical, a company spokesman said. GM has been the most vocal of Detroit's auto makers in voicing concerns about the magnitude of potential supply chain troubles in the wake of Japan's disaster.
U.S. Coal Miners Set to Profit as Fears Rise Over Nuclear Power. U.S. coal companies are poised to benefit from a move away from nuclear energy because of concerns raised by the severe crisis at reactors in Japan. More coal from the Appalachian mountains in the eastern U.S. will be routed to European power plants to replace an electricity shortfall in Germany, which this week issued a three-month ban on operations at seven old nuclear reactors.
Nasdaq(NDAQ) Bid for NYSE(NYX) Would Face Antitrust Tangle. Nasdaq OMX Group Inc.'s potential hostile bid for NYSE Euronext would face substantial antitrust questions in the U.S., where it would merge two direct competitors and create a monopoly in the market for corporate listings, according to antitrust lawyers. Much will depend on how a bid might be structured, but antitrust experts see few palatable options for Nasdaq to allay concerns that the deal will harm competition.
Promise on Taxes Sparks GOP Rift. Two decades after President George H.W. Bush abandoned his "read my lips" promise, some Republicans are chafing at their party's stand against new taxes. A few prominent GOP lawmakers believe they will have to raise some tax revenue if they are to bring Democrats along on a bipartisan compromise to address the U.S.'s long-term fiscal problems. Many Democrats want higher taxes to cover at least part of future budget gaps. That has led to clashes between Republican lawmakers and a Washington advocacy group, Americans for Tax Reform, the self-appointed keeper of the party's anti-tax flame. Grover Norquist, the group's president, said he has "sent up a flare" against placing trust in Democrats, given how bipartisan agreements, including the one struck by then-President Bush in 1990, eventually unraveled. Those tax increases took effect as scheduled, but Democrats didn't always deliver on promised spending cuts, Mr. Norquist said. Raising taxes will only deflect needed spending cuts, said GOP senators including Charles Grassley of Iowa and John Barrasso of Wyoming. "If you send more money to Washington, all they're going to do is spend it," Mr. Barrasso said.
With Sales Flabby, Wal-Mart(WMT) Turns to Its Core. After attempting to appeal to a wider variety of shoppers backfired, discount giant Wal-Mart Stores Inc. now is mired in its worst U.S. sales slump ever. But William Simon, the former Navy officer put in charge of the flagging U.S. division last June, says he is confident that the lumbering giant can reverse its fortunes after seven consecutive quarters of domestic sales declines at stores open at least a year. Part of his strategy includes returning to the "Every Day Low Prices" formula Wal-Mart popularized.
Democrats Split on Social Security. Democrats have broken ranks over a move to consider Social Security changes—including possibly raising the retirement age—to ensure its long-term fiscal health in combination with an effort to reach a deficit-reduction package. The idea of putting Social Security into play has triggered a firestorm of opposition from several corners of the Democratic party.
AIG(AIG), Fed in Subprime-Bond Standoff. American International Group Inc. is trying to force the hand of the Federal Reserve on a large portfolio of subprime-mortgage bonds it wants to repurchase, putting the central bank in the position of weighing taxpayers' interests against those of the government-controlled insurer.
Bloomberg Businessweek:
CBO: Obama Understates Deficits by $2.3 Trillion. A new assessment of President Barack Obama's budget released Friday says the White House underestimates future budget deficits by more than $2 trillion over the upcoming decade. The estimate from the nonpartisan Congressional Budget Office says that if Obama's February budget submission is enacted into law it would produce deficits totaling $9.5 trillion over 10 years -- an average of almost $1 trillion a year. Obama's budget saw deficits totaling $7.2 trillion over the same period. The difference is chiefly because CBO has a less optimistic estimate of how much the government will collect in tax revenues, partly because the administration has rosier economic projections. But the agency also rejects the administration's claims of more than $300 billion of that savings -- to pay for preventing a cut in Medicare payments to doctors -- because it doesn't specify where it would come from. Likewise, CBO fails to credit the White House with an additional $328 billion that would come from unspecified "bipartisan financing" to pay for transportation infrastructure projects such as high speed rail lines and road and bridge construction.
What Has Economists Most on Edge: Oil Prices. The U.S. economy faces numerous obstacles that threaten to derail the recovery. But economists are most fearful of one major headwind: oil prices. More than two-thirds of the 23 economists surveyed by CNNMoney identified high oil prices as the most serious risk facing the economy.
Rasmussen Reports:
Just 31% Now Give Obama Positive Marks for the Economy. A new Rasmussen Reports national telephone survey of Likely Voters show that just 31% rate Obama’s handling of economic issues as good or excellent. Forty-five percent (45%) say the president is doing a poor job handling these issues.
Politico:
John Boehner to President Obama: Define the Mission. House Speaker John Boehner said on Sunday that President Barack Obama must “better explain what America’s role” is in the Libya offensive before further military action is taken. It was the speaker’s first public remarks since the U.S. and allies launched an air and sea attack on Col. Moammar Qadhafi on Saturday.
Market News International:
Tokyo Electric Power Co. workers won't be able to switch on power at damaged reactors at the Fukushima plant for another two to three days, citing Tepco. Destroyed parts need to be replaced.
AP:
Radioactive iodine found in drinking water in Fukushima prefecture was above the government-recommended limit, citing Japanese officials.
Radioactive dust and particles were found in the greater Tokyo area, citing the government. The particles were detected over a 24-hour period starting on the morning of March 18.
UK Reforms Could Cost Banks Up to 15 Bln Pounds - Paper. Making UK banks restructure their operations by splitting their retail and investment arms could cost the nation's big five lenders up to 15 billion pounds($24 billion) a year, according to a report in the Sunday Telegraph quoting a study.
Telegraph:
Obama Says US To Be Major Purchaser of Brazilian Oil. Mr Obama spoke of the US's desire to secure more of its oil from Brazil in future after talks with his counterpart, President Dilma Rousseff, in Brasilia at the start of a two-day visit to Latin America's biggest country. "I have told her that the United States wants to be a major customer, which can be a win-win for both our countries," he said. Brazil possesses some of the world's biggest offshore oil reserves in the pre-salt area off its south-east coast.
The Guardian:
Google(GOOG) Accuses China of Interfering with Gmail Email System. Chinese government's crackdown on activists thought to be behind what Google calls 'politically motivated attacks'. Google has accused the Chinese government of interfering with its popular Gmail email system. The move follows extensive attempts by the Chinese authorities to crack down on the "jasmine revolution" – an online dissident movement inspired by events in the Middle East. According to the search giant, Chinese customers and advertisers have increasingly been complaining about their Gmail service in the past month. Attempts by users to send messages, mark messages as unread and use other services have generated problems for Gmail customers.
Der Standard:
The European Union will pass a decree that freezes the assets of Libya's National Oil Corp. in the "coming days," citing people in the European Commission. The decree will also ban business contacts with the company, also known as NOC.
O Estado de S. Paulo:
The Brazilian President Dilma Rousseff will "soon" take measure against inflation, citing vice-president Michel Temer. Temer said the government may expand next week the talks on the macroprudential measures to be announced.
The levels of radiation detected in spinach grown in Ibaraki Prefecture, north of Tokyo, were 12 times the provisional regulatory limits, citing the local government. The spinach was grown in the town of Kitaibaraki, near the border of Fukushima Prefecture.
Japanese Self Defense Forces resumed spraying water on the No. 4 reactor at Tokyo Electric Power Co.'s Fukushima Dai-Ichi nuclear plant at 6:37 a.m. local time today.
A workers at Tokyo Electric Power Co.'s Fukushima Dai-Ichi nuclear plant was exposed to more than 150 millisieverts of radiation, citing Japan's nuclear safety agency.
Yomiuri:
Group of Seven nations spent between 2 trillion yen and 2.5 trillion yen to push down the value of the Japanese yen in the first coordinated intervention in the currency maker in more than a decade last week.
China turned away Japanese plane cargo at the Dalian airport because authorities said the loads had radiation levels that exceeded limits, citing Japan's land ministry.
Caijing:
China's consumer price gains will be high in the first half and lower in the second half, citing Zhang Yutai, director of the Development Research Center of the State Council. The country faces relatively large pressure from consumer price increases, citing Zhang.
China Economic Net:
China will extend its pilot resource tax program to cover coal and power, from oil and natural gas currently, citing Jia Kang, head of the Ministry of Finance's research institute. The government will also extend the program to central China from western provinces.
China "has room" to further raise the bank reserve requirement ratio, citing Lu Zhongyuan, a deputy director of the Development Research Center under the State Council. The country may adopt other measures such as increasing interest rates to tackle inflation, Lu said.
China National Radio:
The March 11 earthquake that struck Japan may cut Chinese growth by .5 percentage point should Japanese companies halt production for a month, citing Zhang Yansheng, a researcher with an institute under the National Development and Reform Commission. Chinese companies that rely on Japan-made parts, such as semiconductor components, are especially vulnerable, Zhang said.
Weekend Recommendations Barron's:
Made positive comments on (SVU).
Citigroup:
Reiterated Buy on (GOOG), Top Picks Live List, target $750.
Night Trading
Asian indices are unch. to +1.0% on average.
Asia Ex-Japan Investment Grade CDS Index 116.0 +4.5 basis points.
Asia Pacific Sovereign CDS Index 117.50 -4.5 basis points.
Existing Home Sales for February are estimated to fall to 5.11M versus 5.36M in January.
Upcoming Splits
None of note
Other Potential Market Movers
The Chicago Fed National Activity Index for February and the $32 Billion 3-Month/$30 Billion 6-Month Treasury Bills Auctions could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and financial shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the week.
BOTTOM LINE: I expect US stocks to finish the week mixed as Japan concerns, Mideast unrest, emerging market inflation worries and more shorting offset buyout speculation and mostly positive economic data. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 75% net long heading into the week.
