North American Investment Grade CDS Index 93.24 -1.03%
European Financial Sector CDS Index 94.72 +7.13%
Western Europe Sovereign Debt CDS Index 165.17 bps -.70%
Emerging Market CDS Index 198.25 -1.11%
2-Year Swap Spread 18.0 unch.
TED Spread 26.0 +2 bps
Economic Gauges:
3-Month T-Bill Yield .04% -2 bps
Yield Curve 266.0 +1 bp
China Import Iron Ore Spot $173.90/Metric Tonne unch.
Citi US Economic Surprise Index +41.10 -8.4 points
10-Year TIPS Spread 2.55% +3 bps
Overseas Futures:
Nikkei Futures: Indicating +30 open in Japan
DAX Futures: Indicating +16 open in Germany
Portfolio:
Slightly Lower: On losses in my Tech sector longs
Disclosed Trades: None
Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is mildly busllish as the S&P 500 consolidates recent gains, despite Mideast unrest, rising energy/food prices, tech sector worries, emerging market inflation fears and Japan concerns. On the positive side, Drug, Steel and Ag shares are especially strong, rising .75%+. The Italy sovereign cds is falling -3.67% to 139.30 bps, the Ireland sovereign cds is declining -3.7% to 602.12 bps, the Japan sovereign cds is falling -5.24% to 92.17 bps, the US sovereign cds is falling -6.11% to 39.50 bps and the Saudi sovereign cds is declining -3.7% to 114.0 bps. On the negative side, Education, Homebuilding, I-Banking, Wireless, Networking, Disk Drive, Semi, Computer, Oil Tanker and Defense shares are under pressure, falling more than -.75%. Tech shares have underperformed throughout the day again. (XLF) is also relatively weak again. Oil is rising +.3%, copper is falling -.18%, gold is rising +.42% and the UBS-Bloomberg Spot Ag Index is gaining another +1.18%. The UBS-Bloomberg Spot Ag Index looks poised to test its record highs over the coming weeks, which would again raise emerging market inflation worries. Chinese pork prices are up 41% over the last 10 months. The US price for a gallon of gas is up +.04 today to $3.66/gallon. It is up .54/gallon in 48 days. The Spain sovereign cds is rising +3.09% to 224.80 bps, the Portugal sovereign cds is gaining +1.57% to 578.33 bps and the US Muni CDS Index is gaining +1.85% to 153.47 bps. Action in copper, bonds and t-bills is a concern again today. The TED spread has broken out of an eight-month range. With the DJIA back to multi-year highs, the tech and financial sectors must join in soon for the recent rally to gain much traction from current levels, in my opinion. Both sectors remain below their 50-day moving averages. I expect US stocks to trade mixed-to-lower into the close from current levels on more shorting, profit-taking, technical selling, tech sector weakness, emerging market inflation fears, rising energy/food prices, Mideast unrest and Japan concerns.
European Producer-Price Inflation Accelerates to 6.6% on Oil. European producer-price inflation accelerated to the fastest in more than two years in February, led by increasing energy costs, adding to pressure on the European Central Bank to raise key interest rates. Factory-gate prices in the euro region jumped 6.6 percent from a year earlier, the fastest since September 2008, after increasing a revised 5.9 percent in January, the European Union’s statistics office in Luxembourg said today.
Corn Rallies to Highest Since 2008 as Stockpiles Drop, Goldman(GS) Sees Record. Corn rose for a third day to the highest price since 2008 in Chicago on concern that a planned increase in sowing in the U.S. will fail to rebuild global inventories drained by stronger demand. U.S. corn stockpiles on March 1 dropped to 6.52 billion bushels, the lowest level for that date since 2007, the Department of Agriculture said on March 31. Farmers in the country will expand corn sowing to 92.178 million acres this year, the second-largest area since 1944, it said, citing a survey. Goldman Sachs Group Inc. increased its three-month forecast for corn by 39 percent to $8.60 a bushel after the USDA figures last week.
Possible Greek Default May Have Domino Effect. A sovereign debt default by Greece, which prices in the derivatives market suggest is likely, may condemn Ireland and Portugal to the same fate, as investors dump bonds of all three nations and voters resist economic austerity measures. “Greece will restructure in 2013, or perhaps before,” said Marie-Anne Allier, Paris-based head of the euro-aggregate group at Amundi Asset Management. “If Greece restructures, it will be very difficult for Ireland and Portugal to impose a very strict austerity program and not restructure. It’s a domino effect.”
Google(GOOG) Enters Pact to Buy Nortel Networks Patents for $900 Million. Google Inc. (GOOG) offered $900 million for the rights to about 6,000 Nortel Networks Corp. patents as the world’s biggest Internet-search company seeks to stave off lawsuits by bolstering its portfolio of intellectual property.
Sept. 11 Trial to Military Commission, Not New York Court. The Obama administration reversed its plan to put the self-proclaimed mastermind of the Sept. 11 attacks on trial in civilian court in New York and instead will send the case to a military commission. The case of Khalid Sheikh Mohammed and four alleged co- conspirators is being referred to the military justice system, Attorney General Eric Holder said in a statement in Washington today. The military trial will be held at the U.S. prison at Guantanamo Bay, Cuba, said two U.S. officials, who weren’t authorized to discuss the matter publicly and spoke on condition of anonymity.
Wall Street Journal:
Fujitsu Chief Looks at Japan's Crisis. Top executives at major Japanese companies are collectively facing the biggest test in crisis management they have ever experienced.
Grand Jury Investigates Apps. Online music service Pandora Media Inc. said it had received a subpoena related to a federal grand-jury investigation of information-sharing practices by smartphone applications.
Police Kill Yemen Protesters. Police opened fire on protesters in the southern city of Taiz Monday, killing at least 11 and injuring more than 200, in an abrupt return to violence that increases pressure on President Ali Abdullah Saleh to break a dangerous political stalemate with the opposition.
Chip Stocks Pull Down Tech Sector.Semiconductor stocks such as Intel Corp. and Nvidia Corp. led a mostly down day in the tech sector Monday following the latest chip-sales figures and reports on how the industry may respond to the effects of the recent earthquake and tsunami in Japan.
Oil Futures Rise Above $108 a Barrel. Crude-oil futures edged higher Monday as tensions in key oil-exporting countries kept investors worried about supply constraints. Prices earlier spiked to the highest levels in 30 months. Although investors remain worried about geopolitics, nothing “was dramatically new over the weekend so we’re in something of a mixed bag,” said Bill O’Neill, a principal at Logic Advisors in New Jersey. But as the situation in Libya and elsewhere in the Middle East and North Africa shows no signs of a speedy resolution, prices could hit $110 in short order and $120 by the end of the year, if not sooner, O’Neill added. Brent for May delivery added $1.51, or 1.3%, to $120.28 a barrel on the ICE Futures Exchange in London.
More ETFs Reach Far and Wide, Focus is Narrower Than Ever. March's tally isn't in yet, but another 700 to 800 new ETF issues are in the pipeline, says Michael Johnston, a senior analyst at ETF Database.
How a Major US Bank Laundered Billions in Mexican Drug Money. The Guardian has an alarming story detailing the central role that Wachovia played in money laundering for Mexico's lucrative drug trade. The newspaper's investigation shows how the bank - now owned by Wells Fargo(WFC) - moved $378.4 billion from powerful drug cartels into currency exchange houses in Mexico. That's one-third of Mexico's annual GDP.
Foreign Currency Trading Is Easy - An Easy Way to Lose Money. More and more Americans are dabbling in currency trading and losing in spectacular fashion. Experts say the structure of the currency market makes it hard for amateurs to beat the house. An estimated 615,000 Americans are dabbling in foreign currency trading, encouraged by advertising from the two biggest U.S. brokers, FXCM Inc. and Gain Capital Holdings Inc., both based in New York. Combined, FXCM and Gain have about 260,000 accounts, a third of them in the U.S. These customers are losing money in spectacular fashion. At FXCM, 75% to 77% of customers lost money each quarter last year, according to newly required disclosures to the Commodity Futures Trading Commission. At Gain, which operates through http://www.forex.com, the number of unprofitable customers hovered between 72% and 79% every quarter last year, according to its filing.
The amount of oil products stored in tankers at sea rose 22% in March, citing data from E.A. Gibson Shipbrokers Ltd. Thirty seven tankers held 3.7 million metric tons of oil products last month, up from 29 vessels in February.
Now Libya Steps on President Obama's Message. President Barack Obama’s decision to intervene in Libya has presented him with a whole new set of political problems with members of both parties. But its most worrisome effect for the White House is the way it’s undermining his efforts to address what has been his administration’s longest-running issue — the economy.
Reuters:
European Banks Seen Raising $57 Billion - Morgan Stanley Poll.European banks will raise at least 40 billion euros ($57 billion) capital this year and fewer than 10 banks will fail an upcoming health check, according to a majority in a poll of investors at a Morgan Stanley conference. Morgan Stanley said 26 percent of respondents to a poll of 800 investors at its European financial services conference in London last week said listed banks would raise 40-50 billion euros of capital this year, 14 percent expected 50-70 billion to be raised, and 10 percent expected over 70 billion to be needed. A third expected 30-40 billion euros to be raised. European banks have raised or announced they will raise about 10 billion euros so far this year. Morgan Stanley said on Monday 43 percent of those polled -- which it said represented a range of international investors -- expected 5-10 listed banks would fail a European stress test of the sector, or would be prompted to raise captail ahead of the test results due in June. Another 42 percent said there would be less than five failures. Some 12 percent said 10-15 banks would fail.
Libya Rebels to Sell First Oil Cargo This Week - Report. Libyan rebels will this week load the first tanker with crude since an uprising against leader Muammar Gaddafi fully suspended exports from the North African country, Platts news agency reported on Monday. The agency said Liberian-registered tanker Equator was due to arrive in the rebel-held eastern Libyan port of Tobruk on Monday to load a cargo of Serir/Mesla blend crude oil. The agency quoted Wahid Bougaighis, head of the newly established oil company, as saying: "They are coming for sure because there was a contract signed already."
Exclusive - Al Qaeda Acquiring Weapons in Libya: Algerian Official. Al Qaeda is exploiting the conflict in Libya to acquire weapons, including surface-to-air missiles, and smuggle them to a stronghold in northern Mali, a security official from neighbouring Algeria told Reuters. The official said a convoy of eight Toyota pick-up trucks left eastern Libya, crossed into Chad and then Niger, and from there into northern Mali where in the past few days it delivered a cargo of weapons. He said the weapons included Russian-made RPG-7 anti-tank rocket-propelled grenades, Kalashnikov heavy machine guns, Kalashnikov rifles, explosives and ammunition. He also said he had information that al Qaeda's north African wing, known as al Qaeda in the Islamic Maghreb (AQIM), had acquired from Libya Russian-made shoulder-fired Strela surface-to-air missiles known by the NATO designation SAM-7.
European Insurers See "Dire" Impact of Capital Rules. Europe's proposed Solvency II capital rules for insurers could have "dire consequences" for the sector, making it more vulnerable to economic downturns and forcing it to charge higher prices, insurers warned on Monday.
Telegraph:
Nuns Ask Goldman Sachs(GS) Bosses Whether They're Really Worth $69.5 Million. Goldman Sachs is facing a call from four leading orders of catholic nuns to review whether the pay awarded to chief executive Lloyd Blankfein and other top executives is excessive. The proposal will be put forward at the Wall Street bank’s annual general meeting next month by the orders, who own shares in Goldman, the bank revealed in a filing with the Securities and Exchange Commission.
Qaddafi Emissary Meets Greece's Papandreou as U.S. Extends Air Assistance. An emissary of Muammar Qaddafi met with Greece’s prime minister in Athens today and may be seeking a political or diplomatic solution for hostilities in the north African country, according to Greek Foreign Minister Dimitris Droutsas. NATO today said the U.S. would extend through the weekend its combat role in air strikes against forces loyal to the Libyan leader.
Oil Rises for a Third Day in New York. Crude for May delivery gained as much as 66 cents to $108.60 a barrel in electronic trading on the New York Mercantile Exchange, and was at $108.45 at 8:21 a.m. Sydney time. The contract rose $1.22, or 1.1 percent, to $107.94 on April 1. Prices are up 25 percent from a year ago.
Tokyo Electric Sawdust Solution Fails to Stop Radiation Leak. Tokyo Electric Power Co.’s attempt to clog a cracked pit with a mixture of sawdust, newspaper and plastic failed to stop radioactive water leaking into the sea from its crippled nuclear plant. The absorbent material, including the same polymer used in baby diapers, was injected into a power-cable storage pit at the plant where radiation-contaminated water is escaping through a crack, the power utility said yesterday. The company is injecting a tracer dye to try to gain more information about where and how fast the water is flowing before continuing efforts to halt it, a spokesman said at a Tokyo press conference. The leak may not pose a severe threat to the public or wildlife, said Kathryn Higley, department head and professor of nuclear engineering and radiation health physics at Oregon State University. “You’re likely to have a footprint in the soil and the sands and sediments as that material leaks out, but the impact is likely to be pretty minimal,” Higley said yesterday in a telephone interview. “Even if it does get out into that marine environment, that area around there has been pretty badly torn up, so there’s not a lot of life to be impacting.”
Goldman Sachs(GS) Almost Doubles Blankfein Pay Package to $19 Million for 2010. Goldman Sachs Group Inc. (GS) awarded Chairman and Chief Executive Officer Lloyd C. Blankfein $19 million in compensation for 2010, almost double the prior year, and granted him the first cash bonus in three years. The total includes $5.4 million in cash, $12.6 million in restricted stock, a $600,000 salary and about $464,000 in other benefits, the New York-based firm’s proxy statement showed. Blankfein’s $9.8 million pay for 2009 included $9 million in restricted stock plus salary and other compensation. Goldman Sachs, the fifth-biggest U.S. bank by assets, boosted Blankfein’s compensation for a year in which earnings dropped 38 percent and the stock price was little changed.
Minmetals Offers to Acquire Equinox for $6.5 Billion.Minmetals Resources Ltd. (1208), the Hong Kong unit of China’s biggest metals trader, made an unsolicited offer of about C$6.3 billion ($6.5 billion) in cash for Equinox Minerals Ltd. (EQN) to add copper assets in Africa and the Middle East.
Sokol's Resignation Called 'Credit Negative' for Berkshire(BRK/A) in Moody's Note. Berkshire Hathaway Inc. executive David Sokol’s resignation points to “governance challenges” at the company and may affect its credit quality, Moody’s Investors Service said. “The recent developments are credit negative for Berkshire,” Moody’s analysts led by Bruce Ballentine wrote in a note yesterday. “More broadly, the events underscore governance challenges at Berkshire that could impact credit quality.”
GM(GM) China March Sales Growth Slows for Second Month on End of Incentives. General Motors Co. (GM), the biggest overseas automaker in China, reported slower sales growth for the second straight month as the removal of government incentives cut deliveries at its local minivan venture. GM sold 233,014 vehicles in China last month, the Detroit- based company said in a statement today. Deliveries barely rose from March 2010’s 230,048 and follow a 6 percent increase in February and a 19 percent rise in January.
Tainted Pork Adds to Pressure on China Inflation: Chart of the Day. The cost of fixing China's interest rates for five years will rise as a scandal over illegal additives in pig feed becomes the latest driver of food inflation, according to Bank of America Merrill Lynch. Wholesale pork prices in China surged 40% since late May to a 30-month high. “The inflation cycle has yet to peak in China,” said Ashok Bhundia, a Hong Kong-based rates strategist for emerging Asia at Bank of America. “There will be greater paying interest in swaps coming back into the market if we see further increases in inflation to somewhere close to 5.5 percent over the next couple of months.” The government began a probe into the use of clenbuterol in pig feed after state broadcaster China Central Television reported on March 15 that farmers in Henan province were using the illegal additive, which induces growth of lean meat and can damage the heart and lung function of consumers. Food accounts for around a third of the consumer price index. The scandal is an “accidental new inflation driver,” Bank of America said in a March 25 report, predicting the central bank will raise its one-year lending rate by a quarter of a percentage point in April and July. Pork prices may climb 8.3 percent from current levels to 22 yuan a kilogram in the fourth quarter, according to a forecast last month by Bocom International Securities Ltd.
Report to Detail Subprime Underside. A report by a Senate subcommittee investigating the subprime implosion is likely to cast a harsh spotlight on Wall Street's mortgage machine and detail bad blood between Goldman Sachs Group Inc.(GS) and Morgan Stanley(MS) over one of the most controversial pools of bonds, according to people familiar with the report. The Senate Permanent Subcommittee on Investigations is expected to release the report soon, and the panel's findings are expected to include previously undisclosed emails obtained from securities firms that developed, sold or bet on subprime mortgages and financial vehicles such as collateralized debt obligations, or CDO.
GOP Aim: Cut $4 Trillion. Republicans will present this week a 2012 budget proposal that would cut more than $4 trillion from federal spending projected over the next decade and transform the Medicare health program for the elderly, a move that will dramatically reshape the budget debate in Washington. The budget has been prepared by Rep. Paul Ryan, a Wisconsin Republican and the new chairman of the House Budget Committee, and it represents the most complete attempt so far by Republicans to make good on their promises during the 2010 midterm elections to cut government spending and deficits.
Wachovia Targeted Over Sale of CDOs. The Securities and Exchange Commission is preparing to bring civil charges against Wachovia Corp., the once-troubled bank now owned by Wells Fargo & Co.(WFC), for allegedly overpricing mortgage-bond deals, according to people familiar with the matter.
Rich Are Targeted in IRS Audit Offensive. The Internal Revenue Service is stepping up audits of wealthier taxpayers as part of a multiyear effort to crack down on tax avoidance.
Bloomberg Businessweek:
Trichet Seen Burying Ailing Nations With Rate Rise on Inflation. Jean-Claude Trichet’s shot against inflation may end up inflicting collateral damage on Europe’s most cash-strapped economies. Primed to raise its benchmark interest rate this week for the first time in almost three years, President Trichet’s European Central Bank again faces the conundrum that its monetary policy rarely suits all 17 members of the euro area, where the kaleidoscope of growth ranges from record expansion to recession paired with a sovereign-debt crisis.
CNBC:
Charlie Sheen: From 'Winning. Duh' to 'Losing, Really'. Actor Charlie Sheen, whose assertion that he is always "winning, duh" has become a pop catchphrase, faced a new reality the day after his stage show bombed. Fans and critics said: "losing, really."
Japan Business Mood to Worsen After Quake: BOJ Tankan. Big Japanese manufacturers expect business conditions to worsen in the next three months, responses to a Bank of Japan survey collected after a devastating March 11 earthquake showed, as rolling power blackouts and a nuclear safety crisis threaten to delay the country's return to a moderate economic recovery. But the degree of deterioration was less than analysts had expected, leaving them wondering how much stock they should put in the results.
Religious Radicals' Turn to Democracy Alarms Egypt. Abboud al-Zomor — the former intelligence officer who supplied the bullets that killed President Anwar el-Sadat and is Egypt’s most notorious newly released prisoner — waxes enthusiastic about ending the violent jihad he once led. “The ballot boxes will decide who will win at the end of the day,” Mr. Zomor said during an interview in his large family compound in this hamlet on Cairo’s western edge. “There is no longer any need for me to use violence against those who gave us our freedom and allowed us to be part of political life.” In its drive to create a perfect Islamic state, his Islamic Group and other groups like it were once synonymous with some of the bloodiest terrorist attacks in Egypt. But they are now leaping aboard the democracy bandwagon, alarming those who believe that religious radicals are seeking to put in place strict Islamic law through ballots.
China Takes Dissident Artist Into Custody. The Chinese authorities on Sunday detained Ai Weiwei, a high-profile artist and stubborn government critic, as he tried to board a plane for Hong Kong, his friends and associates said. Mr. Ai’s wife, his nephew and a number of his employees were also taken into custody during a raid on his studio on the outskirts of the capital. Rights advocates say the detentions are an ominous sign that the Communist Party’s six-week crackdown on rights lawyers, bloggers and dissidents is spreading to the upper reaches of Chinese society. Mr. Ai, 53, the son of one of the country’s most beloved poets, is an internationally renowned artist, a documentary filmmaker and an architect who helped design the Olympic stadium in Beijing known as the Bird’s Nest.
Hole in Southwest(LUV) Jet Attributed to Cracks. The five-foot hole that ripped open midflight Friday in the roof of a Southwest Airlines jet and terrified passengers on their way to Sacramento from Phoenix was caused by fatigue cracks in the aluminum underskin of the lap joints, the National Transportation Safety Board said Sunday.
U.S. Consumer Have Big Banks to Blame for High Gasoline Prices. There is a bit of irony here in that the very same banks that taxpayers bailed out, and saved from going completely belly up, are now making you pay once again in the form of higher Oil prices, and the resultant higher gasoline prices at the pump (Fig. 1). Don`t be fooled by the rhetoric generated in the media by the Big Banks regarding the Middle East.
Assessing The Fukushima Radiation Danger "Near and Far". The NYT has compiled a useful visual summary of the current assessment of the Fukushima radiation, distributed by either air, soil, water and food, compiled through the work of the International Atomic Energy Agency and others.
800 People Reportedly Massacred in Ivory Coast. More than 800 civilians have been killed in a western Ivory Coast town where hundreds of U.N. peacekeepers are based, the International Federation of the Red Cross said Saturday, but the U.N. military spokesman said he had no information about mass killings there. The Roman Catholic charity Caritas put the toll at more than 1,000 dead, an estimate reached by its workers who visited the town of Duekoue on Wednesday. Spokesman Patrick Nicholson said the killings occurred over three days in a neighborhood controlled by fighters loyal to internationally recognized President Alassane Ouattara, though it was not clear who the perpetrators were.
Taliban Exploits Afghan Riots That Follow Florida Church's Burning of Koran. Officials say Taliban insurgents in Afghanistan have used the riots as cover for attacks against Western and government targets. Seven U.N. workers are among 22 who have been killed in the riots that followed the burning of the Koran by followers of Florida's Terry Jones.
NATO Forces Accidentally Kill 15 Libyan Rebels, Injure 7. A Plane Enforcing the International No-Fly Zone Hit Rebel Vehicles, Including an Ambulance. NATO forces accidentally struck a convoy of five cars belonging to rebel forces west of Ajdabiyah today, reportedly killing at least 15 Libyan rebels and injuring seven. A plane enforcing the international no-fly zone hit the rebel vehicles, including an ambulance, between Brega and Ajdabiyah when an anti-aircraft gun was fired into the air, the BBC reported. The accidental hit was a result of NATO forces, who are aiding Libyan civilians, confusing forces loyal to strongman Moammar Ghadafi and rebel groups.
Pittsburgh-Tribune Review:
Keep An Eye on InterOil & George Soros. Are Barack Obama's energy policies influenced by hedge fund billionaire and political patron George Soros? The administration is derailing oil and gas exploration and development here in America while taking steps to help foreign nations develop their own energy resources. The latest beneficiary of his efforts is the island nation of New Guinea. This effort by the administration is especially galling since the Interior Department has been blaming its delay in issuing drilling permits on lack of money and staff to process the permits. Why devote the department to helping another nation reap riches? To which one may also ask — why New Guinea? Perhaps the better question might be: Who benefits from President Obama's push to help New Guinea become an energy power?
Rasmussen Reports:
Ratings for Obama's National Security Performance Fall to New Low. Likely Voters shows 37% give the president good or excellent ratings on his handling of national security issues. Slightly more voters (40%) say the president is doing a poor job when it comes to national security.
Politico:
Budget Countdown: Deal or No Deal? The time frame: five days. The dollar figure: $33 billion. The stakes: The size, scope and ongoing operation of the federal government. A deal: Priceless.
Reuters:
U.S. Drilling Agency Says No Deal With BP(BP). The U.S. Bureau of Ocean Energy Management said on Sunday it had not struck a deal with BP to allow the oil company to resume deepwater drilling in the Gulf of Mexico, refuting a press report.
Financial Times:
US Regulators Divided on Systemic Risk List. US officials are split on how many financial institutions should be branded systemically important, say people familiar with inter-agency talks, amid desperate lobbying by non-bank financial groups to avoid the designation. The Federal Deposit Insurance Corporation is arguing for a broad approach, pulling in large hedge funds, insurers and asset managers, while the Treasury and the Federal Reserve prefer to designate only a handful.
The Independent:
Banks Seek to Hold Back the Tide of Regulation. Banks and other financial companies claim new regulation is the biggest threat they face in the next year as industry unrest about tougher rules hits a record high, a CBI survey shows. Some leading banks have reportedly offered the compromise of "ring-fencing" their core functions that carry a taxpayer guarantee, rather than having them hived off. The moves come as the Independent Banking Commission, chaired by Sir John Vickers, prepares to release its interim report in about a week.
Sunday Business Post:
Ireland's government will impose haircuts on the holders of subordinated debt in the country's banks as it seeks to lower the cost of rescuing its banking sector. An "aggressive" buy-back program may seek to recoup 5.5 billion euros of the total 6.6 billion euros of subordinated debt held in Ireland's banks.
Handelsblatt:
The German government needs to reduce its role in the economy, ECB Executive Board member Juergen Stark wrote. Stark called for the amount of government spending as a percentage of the economy to return to pre-crisis levels. Germany needs to consolidate its budget because it has a stabilizing role for the euro area.
Focus:
Egypt has started supplying Libyan rebels with guns and ammunition in the past few days, citing U.S. government officials. Iran is helping to finance vehicles for the rebels, citing information from German and other intelligence agencies.
Der Spiegel:
The International Monetary Fund is pushing for an early restructuring of Greece's debt amid concern that planned budget reforms may be inadequate. The IMF wants Greece to reduce its debt burden, which is about 150% of the country's annual economic output. All the options under consideration would require bondholders to accept lower interest rates.
Bild am Sonntag:
Sixty percent of Germans would be willing to accept a lower standard of living to shut down the country's nuclear power plants, citing a survey.
Berliner Zeitung:
Deutsche Boerse AG Chief Executive Officer Reto Francioni remains committed to the German exchange's plans to merge with NYSE Euronext(NYX), even after a rival bid by Nasdaq OMX Group Inc.(NDAQ), citing an interview. "We are still firmly convinced that the planned merger with NYSE Euronext offers the best possible combination for the respective shareholders and customers," Francioni said.
Asian Investor:
Asia Will Endure Bursting Economic Bubble, Say Hedgies. The West can’t keep blowing up bubbles that lift the global markets, opines a panel of risk-seeking investors at a roundtable. The global post-crisis recovery is being buoyed by a government-funded bubble, carrying with it the risk of a sovereign credit problem – although Asia is the best-positioned region to weather a shakeout, hedge fund managers said at a UBS roundtable in Hong Kong last week. “There’s always a bubble in something, at any time,” notes William Kay, founder of The Pacific Group which manages the Greater Asian Hedge Fund. “The next crisis is going to be a sovereign crisis and that’s going to be the lynchpin of the markets.” The underlying reason, he believes, is that the force which has lifted global markets over the past few years is merely a government-inflated bubble. “This is the phoniest recovery, globally, I’ve ever seen in my life,” says Kay. “So much has been thrown at the global economy by governments and central banks that the numbers we’re looking at, that are supposed to be celebrated, are incredibly suspicious.”
NHK:
Radioactive iodine twice the legal limit was found in seawater 40 kilometers from the Fukushima Dai-Ichi nuclear plant, citing measurements taken by Japan's science ministry.
Tokyo Electric Power Co.'s damaged nuclear power plant may continue spreading radiation for months before workers are able to restore reactor cooling systems, citing Hedehiko Nishiyama, a spokesman for Japan's Nuclear and Industrial Safety Agency.
Kyodo News:
Tokyo Electric Power Co. was ordered by the government to cover damaged reactor buildings with special sheeting material.
China Business Journal:
China may "gradually" invest more than $1.5 billion to stockpile rare earths as state reserves, citing a person familiar with the situation.
Weekend Recommendations Barron's:
Made positive comments on (GE).
Night Trading
Asian indices are -.50% to +1.0% on average.
Asia Ex-Japan Investment Grade CDS Index 104.50 -3.5 basis points.
Asia Pacific Sovereign CDS Index 111.0 -4.75 basis points.
The Fed's Bernanke speaking, Fed's Evans speaking, Fed's Lockhart speaking, $32 Billion 3-Month/$30 Billion 6-Month Treasury Bills Auction, Wells Fargo Tech Transformation Summit and the (ABMD) investor meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and industrial 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 modestly lower on profit-taking, technical selling, Japan concerns, tech sector worries, Mideast unrest, rising energy prices, emerging market inflation fears and more hawkish Fed commentary. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 75% net long heading into the week.
