Tuesday, March 06, 2012

Tuesday Watch

Posted by Gary .....at 12:00 AM

Evening Headlines
Bloomberg:
  • Greek Debt Private Investors Join Swap. The private investors that so far declared their participation in Greece’s debt restructuring hold about 20 percent of the bonds involved in a swap required for an international bailout. The 12 members of the creditors’ steering committee that said yesterday they would join in the exchange have debt with a face value of at least 40 billion euros ($53 billion), compared with the 206 billion euros of Greek bonds in private hands, according to data compiled by Bloomberg from company reports.
  • Portugal in Crosshairs as Yields Fuel Bailout Talk: Euro Credit. Portuguese bond yields are rising as investors are busy putting cheap money from the ECB to work elsewhere. The increase in 10-year borrowing costs by almost two percentage points in the past two weeks is stocking concern among investors that the nation will struggle to resume bond sales in 2013. Portugal has been unable to see debt due in more than a year since it was given a $103 billion bailout in May 2011, following Greece and Ireland. "The ECB's cash provides liquidity, but not solvency," said Stuart Thomson, who helps oversee the equivalent of $110 billion as a portfolio manager at Ignis Asset Management in Glasgow. "If the perception is that a country is already bankrupt, these liquidity measures won't work. There is growing concern that Portugal may need a second bailout."
  • Goldman(GS) Secret Greece Loan Shows Two Sinners as Client Unravels. Greece’s secret loan from Goldman Sachs Group Inc. (GS) was a costly mistake from the start. On the day the 2001 deal was struck, the government owed the bank about 600 million euros ($793 million) more than the 2.8 billion euros it borrowed, said Spyros Papanicolaou, who took over the country’s debt-management agency in 2005. By then, the price of the transaction, a derivative that disguised the loan and that Goldman Sachs persuaded Greece not to test with competitors, had almost doubled to 5.1 billion euros, he said. Papanicolaou and his predecessor, Christoforos Sardelis, revealing details for the first time of a contract that helped Greece mask its growing sovereign debt to meet European Union requirements, said the country didn’t understand what it was buying and was ill-equipped to judge the risks or costs. “The Goldman Sachs deal is a very sexy story between two sinners,” Sardelis, who oversaw the swap as head of Greece’s Public Debt Management Agency from 1999 through 2004, said in an interview. Goldman Sachs’s instant gain on the transaction illustrates the dangers to clients who engage in complex, tailored trades that lack comparable market prices and whose fees aren’t disclosed. Harvard University, Alabama’s Jefferson County and the German city of Pforzheim all have found themselves on the losing end of the one-of-a-kind private deals typically pitched to them by securities firms as means to improve their finances.
  • Netanyahu Vows to Prevent Iran From Gaining Atomic Bomb After Obama Talks. Israeli Prime Minister Benjamin Netanyahu, capping a day he started in White House talks with President Barack Obama, told Jewish leaders he won’t allow his nation to be threatened by an Iranian nuclear bomb. Iran would be more reckless and dangerous with a nuclear weapon, Netanyahu said tonight in a speech in Washington to the American Israel Public Affairs Committee. He said he wouldn’t let Israel live in the “shadow of annihilation.” While Netanyahu praised Obama for leading a campaign to toughen economic sanctions on Iran, he said such actions haven’t led Iran to curtail its nuclear program and Israel must be able to defend itself against a threat to its existence. “None of us can afford to wait much longer,” Netanyahu said.
  • China's Stocks Decline Most in a Month on Slowing Economic Growth Concern. China’s stocks fell, sending the benchmark index down the most in a month, on concern slowing growth will curb demand for building materials and dent profits. Anhui Conch Cement Co., the nation’s biggest maker of the building material, slid 3 percent as property developer China Vanke Co.’s sales slumped. Vanke dropped 0.5 percent. Poly Real Estate Group Co. sank 1.2 percent after the 21st Century Business Herald cited a legislator as saying home prices need to fall as much as 30 percent. Industrial Bank Co. (601166) retreated the most in almost four months amid plans to sell new shares. The Shanghai Composite Index (SHCOMP) fell 27.71 points, or 1.1 percent, to 2,417.29 at the 11:30 a.m. local-time break, set for the biggest loss since Feb. 7. Anhui Conch fell 3 percent to 17.45 yuan. Gansu Qilianshan Cement Group Co. tumbled 5.2 percent to 11.40 yuan. Huaxin Cement Co., the Chinese affiliate of Holcim Ltd., dropped 3 percent to 15.94 yuan. Sales at China Vanke, the nation’s biggest listed property developer, dropped 27 percent in the first two months of 2012 from a year earlier to 19.05 billion yuan ($3.02 billion). Sales last month slumped 40 percent from January, the company said.
  • Goldman Sachs's Soured Stock Bets Led to Asia Unit's 2011 Loss. Goldman Sachs Group Inc. lost money in Asia last year for the first time since 2008 as the Wall Street firm's stock investments in the region, led by a holding in China's biggest bank, backfired. A 46 percent decline in Asia revenue compared with 2010 was driven by markdowns on the company's stakes in public equities, the firm disclosed in its annual 10-K filing with the U.S. Securities and Exchange Commission. The bank lost $103 million in the region, compared with a $2.08 billion profit a year earlier, according to the New York-based company. The figures illustrate how losses in Goldman Sachs's Investing & Lending unit, which makes so-called principal investments with the company's own money, can surpass the bank's revenue from working with clients.
  • The Children of Fukushima Wait for UN Radiation Study. As five-year-olds charge through the corridors of a kindergarten in northeast Japan at lunchtime, teacher Junko Kamada says she is still unsure if their food is safe a year after the Fukushima nuclear accident.
  • Paulson's Advantage Plus Fell 1.5% Last Month, Bringing 2012 Gain to 3.5%. John Paulson lost 1.5 percent in February in one of his largest hedge funds, according to an investor update, even as the Standard & Poor’s 500 Index gained 4.1 percent during the month. Paulson’s Advantage Plus Fund, which seeks to profit from corporate events such as takeovers and bankruptcies and uses leverage to amplify returns, has gained 3.5 percent this year, according to the update, a copy of which was obtained by Bloomberg News. The S&P 500 Index rose 8.6 percent during the same period.
  • Oil Trades Near Two-Day High as Tension With Iran Counters Economy Outlook. Oil traded near the highest price in two days as concern that tension with Iran will disrupt crude supplies countered concern the global economy will slow. Futures were little changed after rising as much as 0.6 percent. Israel reserves the right to defend itself and keep Iran from acquiring a nuclear weapon, Prime Minister Benjamin Netanyahu said in Washington. The world economy will grow at a below-trend pace this year, according to the Reserve Bank of Australia. South Korea’s finance ministry said uncertainty over the nation’s economic outlook has increased because of higher oil prices. Oil for April delivery was at $106.68 a barrel, down 4 cents, in electronic trading on the New York Mercantile Exchange at 11:38 a.m. Singapore time. The contract yesterday advanced 2 cents to $106.72, the highest settlement since March 1. Brent oil for April settlement rose 7 cents to $123.87 a barrel on the London-based ICE Futures Europe exchange.
Wall Street Journal:
  • New Sites Unleash Pets.com 2.0. The economics of Internet commerce have changed so much that Alex Zhardanovsky is now taking on the once-seemingly impossible challenge of selling pet food online. Mr. Zhardanovsky in 2010 co-founded PetFlow.com Inc., a Manhattan start-up that has raised $10 million in venture capital and that now ships one million pounds of pet food a month. "We want to prove that the pet category can be successful online," said the 34-year-old entrepreneur, who said he expected his company to break even by the second quarter and have sales of $30 million this year, up from $13 million in 2011.
  • Tech Titans Aid Undocumented Students. A group of Silicon Valley technology leaders, impatient with attempts to rewrite immigration laws, is funding efforts to help undocumented youths attend college, find jobs and stay in the country despite their illegal status.
  • Money-Fund Plan Hits Resistance. A Securities and Exchange Commission plan to shore up the $2.7 trillion U.S. money-market mutual-fund industry is struggling to overcome opposition within the agency. SEC Chairman Mary Schapiro is leading the push for stricter money-fund regulation, which would follow a round of rule tightening in 2010. The effort is aimed at avoiding a repeat of 2008, when the collapse of Lehman Brothers Holdings Inc. sparked a financial panic and threatened the savings of millions of investors.
  • Companies' Pension Plea. Business groups are urging Congress to let employers put less money into their pension funds, saying that exceptionally low interest rates are forcing them to set aside too much cash. A provision attached to the Senate highway bill would change the formula many large companies, including General Electric Co., Boeing Co. and Lockheed Martin Corp., must use to calculate how much to add to their pension funds, potentially shrinking their combined contributions by billions of dollars a year.
  • China Foothold in U.S. Energy. Fu Chengyu's first attempt to buy a piece of the U.S. oil industry kicked up a storm of protest and ended in failure. Seven years later, the Chinese executive is pouring billions of dollars into the oil patch without even a whisper of trouble. His new recipe for success: Seek minority stakes, play a passive role and, in a nod to U.S. regulators, keep Chinese personnel at arm's length from advanced U.S. technology.
  • Clock Ticks on Buyout Debt. A wave of leveraged-buyout debt is beginning to crash down on Europe's shores. Over the next five years, some $550 billion of loans made to European companies taken over in leveraged buyouts will mature, according to data crunched by Dealogic for U.K. law firm Linklaters LLP, in a study to be published Tuesday. The scale of the maturing debt is daunting in itself, but a number of additional factors—including weak economies in Europe and tightening capital requirements for banks—could make it particularly acute for lenders and borrowers, according to the report, titled "Negotiating Europe's LBO debt mountain." In a worst-case scenario, default rates, already rising sharply, could surge further, resulting in additional pain for both banks and private-equity firms, whose returns have been hampered by economic head winds and the absence of robust markets for deals and initial public offerings that they rely on for selling their investments.
  • Limbaugh and Our Phony Contraception Debate by Cathy Cleaver Ruse. Ms. Fluke's crusade for reproductive justice is simply a demand that a Catholic institution pay for drugs that make it possible for her to have sex without getting pregnant. It's nothing grander or nobler than that. Georgetown's refusal to do so does not mean she has to have less sex, only that she has to take financial responsibility for it herself. Should Ms. Fluke give up a cup or two of coffee at Starbucks each month to pay for her birth control, or should Georgetown give up its religion? Even a first-year law student should know where the Constitution comes down on that.
MarketWatch:
 Business Insider:
 Zero Hedge:
 CNBC:
  • India Bans Cotton Exports, Global Prices Jump. India banned cotton exports with immediate effect on Monday to ensure supplies for domestic mills, boosting global prices some 4.5 percent as the absence of shipments from the world's second-largest producer might tighten a market facing weak demand.

NY Times:

  • Dykstra Given Three Years in State Prison. The former Mets outfielder Lenny Dykstra was sentenced to three years in a California state prison on Monday after pleading no contest to grand theft auto and providing a false financial statement.
  • As New iPad Debut Nears, Some See Decline of PCs. The chief executive of Apple, Timothy D. Cook, has a prediction: the day will come when tablet devices like the Apple iPad outsell traditional personal computers.
  • Signs of Slowing in China. The nights are a little darker now here in the main metropolis of southeastern China, at the center of one of the country’s largest export hubs. It is but one sign of the slightly dimmer economic outlook for China that Premier Wen Jiabao forecast on Monday, when he reduced the government’s minimum growth target for 2012 to what would be, if growth fell that far, the lowest rate in more than two decades. Construction sites across Guangzhou used to be floodlit, so that work could continue through the night on the forests of new residential and office towers reaching toward the stars. But now, during a nationwide real estate downturn, builders are not starting projects or scrambling to finish ones already under way, so there is little need for night-work illumination.
  • Texas Teacher Pension Buys Stake in Hedge Fund Giant Bridgewater. The Teacher Retirement System of Texas just went from hedge fund investor to hedge fund owner. Last month, the Texas pension took a $250 million stake in Bridgewater Associates, the giant money manager. Now, rather than plowing money into specific portfolios, it can claim a piece of the whole operation.
Forbes:
Chicago Tribune:
  • G-8 Summit to be Held at Camp David, Not Chicago. President Obama is moving one of two major world summits from Chicago to the presidential retreat near Washington, with an aide saying the president has decided he wants a more "intimate" setting than his hometown for the May gathering. Chicago police estimated that 2,000 to 10,000 demonstrators were expected to show up for the overlapping G-8 and NATO summits. At least two major demonstrations were already planned for downtown during the summit, and organizers said they wanted to send crowds of marchers down Michigan Avenue in the middle of the day. Police sources said the department has already sent about 8,400 of its roughly 12,000 sworn officers through some form of crowd-control training.
Real Clear Politics:
 AP:
  • Riot Police Break Up Anti-Putin Protest in Moscow. (videos) An attempt by Vladimir Putin's foes to protest his presidential election victory by occupying a Moscow square ended Monday with riot police quickly dispersing and detaining hundreds of demonstrators — a stark reminder of the challenges faced by Russia's opposition. The harsh crackdown could fuel opposition anger and bring even bigger protests of Putin's 12 years in power and election to another six, but it also underlined the authorities' readiness to use force to crush such demonstrations.

Reuters:

  • Romney, Santorum Hunt For Super Tuesday Votes in Ohio. Rivals Mitt Romney and Rick Santorum made their final pitch for support in the vital battleground state of Ohio on Monday, the day before 10 states hold Super Tuesday nominating contests that could be pivotal in an unpredictable Republican presidential race. Romney has been gaining on Santorum in polls in Ohio all week, erasing a double-digit lead for the former senator from Pennsylvania. Three new surveys on Monday showed a tight race: one gave Romney a slight edge, one had Santorum with a small lead and the third showed a dead heat.
  • Venezuela to Ship More Fuel to Syria as Crackdown Spreads. Venezuela is readying a third shipment of diesel to the government of Syria even as President Bashar al-Assad intensifies a crackdown against protesters, said a Venezuelan lawmaker on Monday. Last month, Venezuela's government confirmed it had sent at least two shipments of fuel to Syria, potentially undermining Western sanctions as a rare supplier to the increasingly isolated Assad regime.
  • US Forecaster Sees Average 2012 Atlantic Hurricane Season. The 2012 Atlantic hurricane season will likely see average storm activity with sea surface temperatures forecast to be cooler than last year, the director of the U.S. National Hurricane Center said on Monday.
The Economist Intelligence Unit:
  • Greece passed a law making it a crime for doctors to prescribe brand-name drugs rather than the generic version.
Telegraph:
  • Dutch Freedom Party Pushes Euro Exit as €2.4 Trillion Rescue Bill Looms. The Dutch Freedom Party has called for a return to the Guilder, becoming the first political movement in the eurozone with a large popular base to opt for withdrawal from the single currency. "The euro is not in the interests of the Dutch people," said Geert Wilders, the leader of the right-wing populist party with a sixth of the seats in the Dutch parliament. "We want to be the master of our own house and our own country, so we say yes to the guilder. Bring it on."

South China Morning Post:
 People's Daily:
  • The Chinese economy faces quality and efficiency problems and no longer speed of development, citing Yao Jingyuan, a researcher at the State Council counselors' office.
China Securities Journal:
  • Chinese bank lending to local government financing vehicles won't be extended and loan policies haven't changed, citing China Banking Regulatory Commission Assistant Chairman Yan Qingmin. The pace of China's interest-rate liberalization will quicken, lowering banks' interest margins and earnings, citing Yan.
Evening Recommendations
Morgan Stanley:
  • Rated (A) Overweight, target $54.
  • Rated (AFFX) Underweight, target $4.
  • Rated (WAT) Overweight, target $105.
Night Trading
  • Asian equity indices are -1.5% to -.50% on average.
  • Asia Ex-Japan Investment Grade CDS Index 162.0 +1.5 basis points.
  • Asia Pacific Sovereign CDS Index 132.50 +2.0 basis points.
  • FTSE-100 futures -.30%.
  • S&P 500 futures -.34%.
  • NASDAQ 100 futures -.34%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (MTN)/1.38
  • (UNFI)/.44
  • (DKS)/.88
  • (SSI)/1.07
  • (P)/-.02
  • (AVAV)/.43
Economic Releases
  • None of note

Upcoming Splits

  • None of note

Other Potential Market Movers

  • The weekly retail sales reports, ISI Industrial Conference, Susquehanna Semi Summit, Stifel Nicolaus Consumer Conference, BofA Merrill Consumer/Retail Conference, (CHS) Analyst Day and the (PCL) Analyst Day could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by industrial and technology shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.
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Monday, March 05, 2012

Stocks Falling into Final Hour on Rising Eurozone Debt Angst, Less Tech Sector Optimism, Rising Energy Prices, Global Growth Fears

Posted by Gary .....at 3:54 PM

Broad Market Tone:
  • Advance/Decline Line: Lower
  • Sector Performance: Most Declining
  • Volume: Below Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • VIX 18.18 +5.15%
  • ISE Sentiment Index 88.0 -7.37%
  • Total Put/Call .93 +2.20%
  • NYSE Arms 1.31 +32.25%
Credit Investor Angst:
  • North American Investment Grade CDS Index 95.50 +1.38%
  • European Financial Sector CDS Index 166.09 +2.72%
  • Western Europe Sovereign Debt CDS Index 347.85 +.43%
  • Emerging Market CDS Index 241.98 +1.75%
  • 2-Year Swap Spread 26.50 +1.5 bps
  • TED Spread 41.50 unch.
  • 3-Month EUR/USD Cross-Currency Basis Swap -70.75 +1.75 bps
Economic Gauges:
  • 3-Month T-Bill Yield .06% unch.
  • Yield Curve 170.0 -1 bp
  • China Import Iron Ore Spot $143.20/Metric Tonne unch.
  • Citi US Economic Surprise Index 48.20 +3.1 points
  • 10-Year TIPS Spread 2.21 -3 bps
Overseas Futures:
  • Nikkei Futures: Indicating -3 open in Japan
  • DAX Futures: Indicating +11 open in Germany
Portfolio:
  • Slightly Lower: On losses in my Tech and Biotech sector longs
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges
  • Market Exposure: Moved to 50% Net Long
BOTTOM LINE: Today's overall market action is mildly bearish, as the S&P 500 trades lower on rising Eurozone debt angst, rising energy prices, global growth fears, less tech sector optimism, technical selling and profit-taking. On the positive side, Computer Service, Drug, REIT, Tobacco and Restaurant shares are especially strong, rising more than +.5%. Small-Caps have outperformed throughout the day. The Brazil sovereign cds is falling -1.5% to 131.40 bps. On the negative side, Coal, Alt Energy, Oil Tanker, Oil Service, Ag, Computer, Disk Drive, Airline, Steel and Semi shares are under meaningful pressure, falling more than -1.5%. Cyclicals are substantially underperforming. Tech shares have been heavy throughout the day. Copper is falling -.96%, Oil is rising +.37% and Lumber is down -1.2%. The 10Y T-Note Yield at 1.99%, remains a concern considering the recent stock rally, falling Eurozone debt angst and improvement in US economic data. Despite the recent positive US economic data, the Philly Fed/ADS Real-Time Business Conditions Index has declined -5.08% over the last week and continues to trend lower from its peak in mid-December. Lumber is -5.0% since its Dec. 29th high despite the better US economic data, more dovish Fed commentary, improving sentiment towards homebuilders, equity rally and decline in eurozone debt angst. Moreover, the weekly MBA Purchase Applications Index has been around the same level since May 2010. The Baltic Dry Index has plunged over -60.0% from its Oct. 14th high and is now down over -50.0% ytd. The Western Europe Sovereign CDS Index is still fairly close to its Jan. 9th all-time high. Overall, credit gauge improvement has stalled over the last few weeks and these gauges are still at stressed levels. China Iron Ore Spot has plunged -21.0% since Sept. 7th of last year. Shanghai Copper Inventories are up +707.0% ytd and are still very near their recent all-time high. I still think this is more of a red flag for falling demand rather than the intentional hoarding, which many suggest. Major Asian indices fell around -1.25% overnight on growth worries, led by a -1.55% decline in Indian shares. Major European indices fell around -.75% today, led lower by a -1.28% decline in Spanish shares. Spain remains one of the worst-performers this year, falling -1.0% ytd. The Bloomberg European Financial Services/Bank Index fell -1.55%. The Bloomberg Coal Index has plunged -20.1% since Feb. 6 and is very close to its early Oct. low. As well, Alt Energy shares continue to trade very poorly given $100+ oil and the recent broad market rally, falling another -2.0% today. The Chinese government’s recent forecast for 7.5% growth is getting very close to the rate that many said a couple of years ago would be considered a “China hard-landing”. While I don’t expect a serious market correction yet, market risk looks moderately skewed towards the downside near-term. A sell-the-news reaction in shares of market leader Apple(AAPL), a sell-the-news reaction on an expected “blow-out” jobs report, rising oil, technical concerns(resistance/divergences), emerging markets growth worries, a surge in Eurozone debt angst and less dovish fed commentary are all potential downside catalysts near-term. I would become more aggressive on the long-side after further sideways action and then a convincing break above DJIA 13K and Naz 3K. For an intermediate-term equity advance from current levels, I would still expect to see further European credit gauge improvement, a further subsiding of hard-landing fears in key emerging markets, a rising 10-year yield, better volume, stable-to-lower energy prices and higher-quality stock market leadership. I expect US stocks to trade mixed-to-lower into the close from current levels on rising Eurozone debt angst, less tech sector optimism, rising energy prices, global growth fears, technical selling and profit-taking.
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Today's Headlines

Posted by Gary .....at 3:08 PM

Bloomberg:
  • Venizelos: Greek Debt Swap Best, Only Offer. Greece expects bondholders to accept a one-time offer to write off about 100 billion euros ($140 billion) of Greek debt and is ready to force them to participate if necessary, Finance Minister Evangelos Venizelos said. “This is the best offer,” Venizelos said in a Bloomberg Television interview with Nicole Itano in Athens today. “This is the best offer because this is the only one, the only existing offer.” European leaders are facing the first test of their attempt to turn the page on the two-year debt crisis as Greece’s private creditors decide whether to sign off on the biggest sovereign- debt restructuring in history. The success of the 106 billion- euro swap, confirmed on the eve of last week’s European summit, depends on how many investors agree to the writedown by the March 8 deadline. “This is the critical week,” Venizelos said.
  • European Services Output Declines More Than Initially Estimated: Economy. Euro-area services output shrank more than estimated in February, led by Italy and Spain, as the region’s economy struggled to rebound from a contraction in the fourth quarter. An index based on a survey of purchasing managers in the services industry dropped to 48.8 from 50.4 in January, London- based Markit Economics said on its website today. That’s below an initial figure of 49.4 published on Feb. 22. A reading below 50 indicates contraction. Howard Archer, chief European economist at IHS Global Insight in London, said today’s report suggests that the euro- area economy will shrink in the first quarter, sending the region into recession after a 0.3 percent contraction in the fourth quarter.
  • Coelho Won't Follow Spain in Seeking More Room for Portuguese Deficit Goal. Prime Minister Pedro Passos Coelho said he won’t follow Spain’s example and seek to ease Portugal’s deficit targets to withstand a deepening recession. Portugal will “absolutely not” alter the deficit goals it pledged in return for a European Union-led aid package last year, Passos Coelho said in an interview in Lisbon today. “Spain is in a different situation. They have more space to maneuver to get to the target in 2013. We are in an adjustment program, so we cannot fail the targets.”
  • Copper Futures Fall Most in Two Weeks on Signs That China Demand May Ease. Copper fell the most in two weeks in New York on concern that demand will slow after China, the world’s biggest consumer of the metal, cut its economic-growth target. Copper futures for May delivery slid 1.4 percent to $3.848 a pound by 10:55 a.m. on the Comex in New York. A close at that price would be mark the biggest loss since Feb. 17. Stockpiles monitored by the Shanghai Futures Exchange have climbed to the highest since at least January 2003, weekly data showed. Deliveries of passenger autos in China, including sport- utility vehicles and light-goods vans, fell 3 percent in the first two months of 2012 from a year earlier, based on the median estimate of five analysts surveyed by Bloomberg. That would be the biggest drop since 2005, according to the China Association of Automobile Manufacturers. A luxury automobile may use as much as 28 kilograms (62 pounds) of the metal, according to the Copper Development Association.
  • Electric-Car Loans Dry Up Ahead of Election on Solyndra. While Energy Secretary Steven Chu says the vehicle program is evaluating applications, it hasn’t awarded new money since the bankruptcy of solar-panel maker Solyndra LLC, which won a $535 million loan guarantee through another department program. “In an election year, there will be more caution and delay as a result,” said Julian Zelizer, a political historian at Princeton University. Solyndra’s bankruptcy filing put a damper on all Energy Department loans, Zelizer said in an e-mail. “Inevitably it will slow down the program the closer we get to the election,” he said. The $25 billion vehicle-loan program, created in 2008, last made an award in March 2011. Republicans subpoenaed documents about the Solyndra loan from President Barack Obama’s administration, questioning whether campaign fundraiser George Kaiser, whose family foundation was the company’s biggest investor, pressed for the loan guarantee.
  • Iraq Crude Output at Highest Since 1979, Oil Minister Says. Iraq is pumping more than 3 million barrels a day of crude, its highest average output since Saddam Hussein seized power in the country 33 years ago, the oil minister said. BP Plc and Schlumberger Ltd. (SLB) have made separate bids to develop the Kirkuk oil field in northern Iraq, Abdul Kareem al- Luaibi said today at a news conference in Baghdad. The oil ministry is studying offers to boost dwindling production at the field, one of the country’s oldest, he said. Iraq is the third-largest producer in OPEC, behind Saudi Arabia and Iran, and its output is rising after years of conflict, sanctions and sabotage. The nation holds the world’s fifth-largest crude deposits that also include Canadian oil sands, according to data from BP Plc (BP/), and the government seeks investment to help boost exports and rebuild the economy. “Crude oil production exceeds 3 million barrels a day and is at the highest since 1979,” Luaibi said, reiterating Iraq’s target of producing 3.4 million barrels by the end of the year.
  • Orders to U.S. Factories Fall for First Time in Three Months. Orders to U.S. factories decreased in January for the first time in three months, a sign manufacturing is cooling at the beginning of the year. Bookings (TMNOCHNG) fell 1 percent after a revised 1.4 percent gain in December that was larger than previously estimated, figures from the Commerce Department showed today in Washington. The median of 61 economists’ projections in a Bloomberg News survey called for a 1.5 percent decline.
  • U.S. Service Industries Unexpectedly Expand to a One-Year High: Economy. The Institute for Supply Management’s non-manufacturing index climbed to 57.3 from 56.8 in January, the Tempe, Arizona- based group’s data showed today. Readings above 50 signal expansion, and the median forecast of economists surveyed by Bloomberg News was 56.
  • Chinese Stocks Traded in U.S. Drop Most in Two Weeks as Growth Target Cut. Chinese equities traded in the U.S. fell the most in two weeks after the government pared the nation’s economic growth target for the first time since 2005. China Life Insurance Co. (LFC), the nation’s largest life insurer, fell the most in almost three months, leading a 2 percent slide in the Bloomberg China-US 55 index of the most- traded Chinese stocks in the U.S. Commodity producers Yanzhou Coal Mining Co. (YZC) and Aluminum Corp. of China Ltd. also tumbled as metal prices sank and coal stagnated.
Wall Street Journal:
  • Brazil Has Little Room For Maneuver On Rates - Economist. Brazil's central bank has little room for maneuver when it comes to reductions in the nation's sky high interest rates, with deep cuts likely to be put off for at least another year, according to the president of the Sao Paulo Economists Association.
CNBC.com:
Business Insider:
Zero Hedge:

Forbes:

MercuryNews.com:
FINalternatives:
  • BofAML: Hedge Funds Trail S&P 500 In February. Hedge fund performance still trailed that of the S&P 500 in February, according to the latest Hedge Fund Monitor from Bank of America Merrill Lynch. BofAML’s investable hedge fund composite index was up about 1.19% in February, while the S&P 500 was up 2.87%. According to analyst Mary Ann Bartels, event driven and convertible arbitrage strategies were the best performers for the month, up 2.36% and 1.48%, respectively. The worst performing strategy for the month was equity market neutral, which lost 0.83%.
  • Hedge Fund Redemptions, Assets Up In February. Investors pulled $15.2 billion from hedge funds in January 2012, as overall industry assets climbed to $1.70 trillion from $1.68 trillion at end-2011. “January marked the biggest monthly outflow since July 2009, when hedge funds redeemed $17.7 billion,” said Leon Mirochnik, an analyst at TrimTabs. “The hedge fund industry has experienced net outflows in four out of the last five months.”
Business Recorder:
  • Italian, Spanish Bond Yields, CDS Rise After PMI Data. Italian and Spanish government bond yields rose on Monday after PMI surveys of the service sector activity in the two countries came in below expectations. "The Spanish (PMI) was shocking, it came in way below, the Italian one was quite weak and the French one was quite weak as well. That's not helping and given the performance of the periphery last week it's probably not that surprising it gives back a little bit," one trader said. Italian two-year yields were up 8 basis points at 1.9 percent, while Spanish 2-year yields were up 7 bps at 2.39 percent. The Italian/German 10-year yield spread widened by 8 bps to 319 bps, while the equivalent Spanish spread expanded by 6 bps to 317 bps. The cost of insuring debt issued by Italy and Spain against default also rose, according to data provider Markit. Spanish 5-year credit default swaps rose 13 basis points to 388 bps, while Italian CDS were up 12 bps at 370 bps.

Telegraph:

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Bear Radar

Posted by Gary .....at 2:16 PM

Style Underperformer:
  • Large-Cap Growth -1.11%
Sector Underperformers:
  • 1) Coal -4.70% 2) Steel -3.11% 3) Oil Service -3.0%
Stocks Falling on Unusual Volume:
  • FSLR, TER, SWC, FCX, PTR, EIG, ECHO, HMSY, CEVA, SUSS, VNET, AAPL, Z, SODA, AREX, DIOD, EBIX, SZYM, HTWR, CCMP, GRPN, IRWD, XLNX, NXTM, ICON, SGA, NPK, CFI, EZA, REN, AGNC, NOR, MKTG, Z and PPO
Stocks With Unusual Put Option Activity:
  • 1) KERX 2) KEY 3) WSM 4) PPO 5) EEM
Stocks With Most Negative News Mentions:
  • 1) ZNGA 2) JBL 3) CF 4) RIMM 5) WFC
Charts:
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Bull Radar

Posted by Gary .....at 11:34 AM

Style Outperformer:
  • Large-Cap Value -.42%
Sector Outperformers:
  • 1) Drugs +.39% 2) Education +.29% 3) Tobacco +.18%
Stocks Rising on Unusual Volume:
  • AIG, FSYS, FIRE, CLNE, BVSN, NTRI and SUP
Stocks With Unusual Call Option Activity:
  • 1) GME 2) P 3) KERX 4) ILMN 5) LEAP
Stocks With Most Positive News Mentions:
  • 1) P 2) AIG 3) LCC 4) LMT 5) NTRI
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Monday Watch

Posted by Gary .....at 12:35 AM

Weekend Headlines
Bloomberg:
  • Greece Debt-Swap Deadline This Week to Show If Europe Moving Past Crisis. The European Union faces a first test in its attempt to turn the page on the two-year debt crisis when Greece’s private creditors decide this week whether to sign off on the biggest sovereign-debt restructuring in history. The success of the 106 billion-euro ($140 billion) debt swap, confirmed on the eve of last week’s European Union summit, depends on how many investors agree to the writedown by the March 8 deadline. Euro-area finance ministers will hold a teleconference on March 9 to review the deal’s outcome. “The European crisis is not quite over yet,” Erik Nielsen, chief global economist at UniCredit SpA in London, wrote in a note to clients yesterday. He said enough creditors will probably participate in the writedown to avoid triggering so-called collective action clauses, which could be used by Greece to compel investors to participate and roil markets by triggering credit-default swap insurance contracts.
  • Greece Ratings Cut to Lowest Level by Moody's. Greece’s credit rating was cut to the lowest level by Moody’s Investors Service after the country began the biggest sovereign debt restructuring ever. Greece’s long-term foreign currency debt was downgraded to C from Ca late yesterday, with Moody’s saying in a statement that investors who participate in the nation’s debt exchange will get about 70 percent less than the face value of their holdings. The deal constitutes “a distressed exchange, and hence a default,” the New York-based rating company said.
  • German Banks Make Up More Than Half of ECB Tender, Welt Reports. More than half of the 800 lenders that tapped the European Central Bank’s Feb. 29 tender of three- year loans were German, mainly small savings and cooperative banks, Die Welt newspaper reported. Germany’s biggest 15 so-called systemically relevant banks were underrepresented in the tender with fewer than half tapping the loan and, while numerous, the savings and cooperative banks borrowed small sums, the newspaper said in a pre-released report. It didn’t say where it got the information. In all, German banks borrowed less than 10 percent of the tender, worth 529.5 billion euros ($699 billion), compared with 26 percent, or 140 billion euros, borrowed by Italian banks, Die Welt said. German banks make up a quarter of the euro-area’s total bank balance sheet while Italian banks have a 12 percent share, the newspaper said.
  • Merkel Needs Two-Thirds Majority for EU Budget Accord, SZ Says. German Chancellor Angela Merkel needs a two-thirds majority in parliament to obtain approval of the European Union agreement requiring balanced budgets, Sueddeutsche Zeitung reported. The agreement, signed yesterday in Brussels by 25 of the European Union’s 27 states, requires more than a simple parliamentary majority because it shifts fiscal authority to the EU level, the newspaper said, citing unidentified German officials. Germany’s constitution requires a broad consensus for such a step when it’s put up for a vote, the newspaper said. The requirement means Merkel depends on the support of opposition parties in both houses to ensure the accord is approved, SZ said.
  • Merkel Faces Opposition in Coalition to Boost Rescue Fund, Spiegel Reports. German Chancellor Angela Merkel may be prepared to increase the size of Europe’s permanent rescue fund, though she faces opposition from her junior coalition partner, the Christian Social Union, Der Spiegel reported. Both Merkel and Finance Minister Wolfgang Schaeuble may be ready to bow to international pressure to increase the 500 billion-euro ($660 billion) European Stability Mechanism, the magazine reported today. Schaeuble recommends running the fund in parallel with its temporary predecessor, the European Financial Stability Facility, to create a 750 billion-euro fund, Spiegel reported, without citing anyone. The proposal is opposed by the CSU, the Bavarian sister party of Merkel’s Christian Democrats, because the group views the 211 billion euros pledged by Germany to the temporary fund as the upper limit, Spiegel said.
  • Dutch Freedom Party Wants Euro Exit Referendum, Telegraaf Says. The Dutch Freedom party wants voters in the Netherlands to decide in a referendum whether the country should return to the guilder, De Telegraaf reported today, citing an interview with party leader Geert Wilders. Leaving the euro will cost money, especially the first year, after which loss will be recovered in 2014, the newspaper cited Wilders as saying. Wilders added that this at least warrants a referendum, De Telegraaf reported. The Freedom Party hired Lombard Street Research to investigate the cost of maintaining the Euro zone and alternative scenarios if countries elect to leave, according to a statement by London-based FTI Consulting. The report will be presented in The Hague on March 5.
  • China's February Non-Manufacturing Index Falls in Sign Economy Weakening. China’s non-manufacturing industries contracted for the first time in three months in February, adding to signs the world’s second-biggest economy is weakening. The non-manufacturing purchasing managers’ index fell to 48.4 from 52.9 in January, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in a statement today in Beijing. A reading above 50 indicates an expansion. Today’s data may increase concerns that the economy will see a deeper slowdown after a decline in overseas sales and weaker-than-forecast lending in January.The federation’s non-manufacturing PMI is based on a survey of about 1,200 companies in 20 industries including transportation, real estate, retailing, catering and software.
  • China Lowers GDP Target as Exports Slow. China pared the nation’s economic growth target to 7.5 percent from an 8 percent goal in place since 2005, a signal that leaders are determined to reduce reliance on exports and capital spending in favor of consumption. Officials will also aim for inflation of about 4 percent this year, unchanged from the 2011 goal, according to a state- of-the-nation speech that Premier Wen Jiabao delivered to about 3,000 lawmakers at the annual meeting of the National People’s Congress in Beijing today.
  • China Car Sales Seen Having Worst Start Since 2005 on Economy. Automobile sales in China, the world’s biggest car market, may be having their worst start in seven years as a slowing economy and record gasoline prices keep consumers away from dealerships. Deliveries of passenger autos, including sport-utility vehicles and light-goods vans, in the first two months of 2012 fell 3 percent from a year earlier, based on the median estimate of five analysts surveyed by Bloomberg. That would be the biggest drop since 2005, when they fell 8.9 percent, according to the China Association of Automobile Manufacturers, which will release industry data later this month.
  • China to Curb Auto Production Capacity, Promote New-Energy Car Development. China will control the increase in auto manufacturing capacity and encourage mergers and reorganizations in the industry, according to a work report that Premier Wen Jiabao delivered at the nation’s legislature. The government will promote new-energy vehicles and encourage the scrapping of old vehicles to reduce pollution, according to a separate report today by the National Development and Reform Commission, the country’s top economic planner.
  • Romney Gains Ahead of Super Tuesday. Republican presidential candidate Mitt Romney gained momentum in the Republican presidential primary, picking up endorsements and rising in polls before state contests March 6 that may determine the party nomination. Fresh off a victory yesterday in Washington’s caucus, Romney won the backing of U.S. House Majority Leader Eric Cantor of Virginia and Oklahoma Senator Tom Coburn, as surveys showed him building support in Ohio, a political bellwether, and holding an outsized advantage over rivals in Virginia.
  • Fed's Bullard Says U.S. Growth Indicates Non Need for Additional Stimulus. The Federal Reserve should hold off on additional accommodation because the U.S. economy is growing moderately and risks from the European debt crisis have eased, said St. Louis Fed President James Bullard. “I wouldn’t take anything off the table,” Bullard said yesterday in an interview with BNN Television in Vancouver. “For now things are looking better for the U.S. economy and it is a good time to wait and see.” Bullard said in a speech that he expects the U.S. unemployment rate to drop to 7.8 percent by year’s end, as a “moderate expansion” spurs improvement in the labor market. His comments echoed Chairman Ben S. Bernanke, who said in congressional testimony last week that maintaining monetary stimulus is warranted even as the unemployment rate falls and rising oil prices may push up inflation temporarily. The central bank could damage its credibility by signaling policy that will stay unusually easy for a specified time frame, Bullard said at Simon Fraser University in Vancouver. “If the economy is performing well at the point in the future where the promise begins to bite, then the committee may simply abandon the promise and return to normal policy,” he said. The result would be “unhelpful” and result in “credibility problems.” The Fed’s asset purchase program, or quantitative easing, may worsen the risk that prices will rise, Bullard said. “Increases in the size of the balance sheet entail additional inflationary risks if accommodation is not removed at an appropriate pace,” he said. “I’d be concerned that we not undertake a policy move like QE that would possibly feed into a global increase in oil prices,” Bullard said to reporters after his speech. In the television interview, Bullard said he is “a bit concerned with rising energy prices.” While $4-per-gallon of gasoline doesn’t seem to be hurting consumer spending, an increase to $5-per-gallon would be “enough to get the attention of households,” he said. Bullard said in the interview that the Fed could boost its target rate “sooner if the economy behaves better than expected. We have to be ready to make an adjustment,” which could also mean postponing an interest rate increase.
  • Boom-Era Property Speculators to Get Foreclosure Aid: Mortgages. The Obama administration will extend mortgage assistance for the first time to investors who bought multiple homes before the market imploded, helping some speculators who drove up prices and inflated the housing bubble. Landlords can qualify for up to four federally-subsidized loan workouts starting around May, as long as they rent out each house or have plans to fill them, under the revamped Home Affordable Modification Program, also known as HAMP, according to Timothy Massad, the Treasury’s assistant secretary for financial stability. The program pays banks to reduce monthly payments by cutting interest rates, stretching terms, and forgiving principal.
  • Japan May Double Consumption Tax: Noda. Japanese Prime Minister Yoshihiko Noda said yesterday he thinks he can reach a deal with the opposition to double the 5 percent consumption tax in order to shore up the country’s social security system.
  • BP(BP) Set to Rise as Spill Settlement Lifts Cloud. BP Plc (BP/) is poised to gain at least 5 percent this week after a $7.8 billion settlement with victims of the worst U.S. oil spill, an analyst survey showed. BP shares will probably rise to a minimum of 520 pence from the close of 496.5 pence on March 2, according to the forecasts of five oil industry analysts. Jason Kenney, an analyst for Banco Santander SA (SAN) in Edinburgh, said the stock may climb as high as 580 pence over time if additional spill costs stay within the company’s estimates.
  • Oil Rises on Iran Tension, Enbridge Pipeline Shutdown. Oil rose from a three-day low in New York after President Barack Obama said the U.S. may use military force to stop Iran from developing a nuclear weapon and Enbridge Inc. (ENB) shut a pipeline in Illinois. Futures climbed as much as 0.6 percent, rebounding from the firstly weekly loss in four. Oil for April delivery gained as much as 59 cents to $107.29 a barrel in electronic trading on the New York Mercantile Exchange and was at $106.92 at 3:17 p.m. Sydney time. Brent oil for April settlement was at $123.81 a barrel, up 16 cents, on the London-based ICE Futures Europe exchange.
  • Speculative Wagers on Agriculture Surge to a Five-Month High: Commodities. Speculators increased bets on higher agricultural prices to a five-month high on mounting concern that a South American drought will curb supplies of soybeans, corn and sugar at a time of record global demand. A measure of speculative positions across 11 farm goods jumped 26 percent to 607,721 futures and options in the week ended Feb. 28, U.S. Commodity Futures Trading Commission data show. Corn bets increased the most in eight weeks, and sugar holdings climbed to the highest since August. Wagers on higher soybean prices rose to a five-month high. Hedge funds and other speculators are the most bullish on commodities since September as sanctions on Iran over its nuclear program disrupt oil supplies and weather damages crops in South America.
  • GM(GM) Will Stop Making Volt Plug-In for 5 Weeks. General Motors Co. (GM), missing sales goals for the Chevrolet Volt plug-in hybrid, plans to halt production of the sedan for five weeks beginning later this month rather than discount the high-technology cars. GM will stop making Volts at its Detroit-Hamtramck assembly plant from March 19 until April 23, Chris Lee, a company spokesman, said in an e-mail March 2. The factory had ramped up to full-speed production Feb. 6 after the New Year’s shutdown. “The fact that GM is now facing an oversupply of Volts suggests that consumer demand is just not that strong for these vehicles,” said Lacey Plache, chief economist for auto-research website Edmunds.com. “Even as gas prices continue to climb, President Obama’s attempt to manipulate the free market and force consumers into purchasing electric vehicles like the GM Volt has failed despite the use of taxpayer dollars to prop up production,” U.S. Representative Darrell Issa, the California Republican chairman of the House Oversight and Government Reform Committee, said in a statement.
  • VIX Rises With S&P by Most Since 1996 on Europe Concern: Options. U.S. stocks are the price of protection against losses are rising in unison more frequently than at any time since 1996, as investors anticipate the end of the biggest S&P rally in two decades. The CBOE VIX Index and S&P 500 increased together on 23% of days in January and February, the most during those months in 16 years, according to Bloomberg. In the 22-year history of the VIX, as the options gauge is known, the two indexes climbed at the same time on only 12% of days, the data show.
  • Protesters Tell Hong Kong's Tsang to Resign. Thousands of protesters marched through Hong Kong for a second day yesterday demanding the immediate resignation of Donald Tsang as the city’s chief executive. The rally, organized by political group People Power, held up effigies of Hong Kong’s leader and railed against Tsang’s alleged acceptance of favors from local tycoons.
  • Putin Denounces Rivals Claiming Fraud. Russian Prime Minister Vladimir Putin claimed victory in a presidential election that his opponents say was marred by fraud, accusing protesters against his rule of seeking to usurp power. “We won in an open and honest fight,” Putin said in front of thousands of supporters near the Kremlin last night as tears streamed down his face. “We showed that our people can easily distinguish between a desire for novelty and renewal from political provocations which have only one goal: to destroy Russian statehood and usurp power.”
  • Jailed Lawmakers Rule India in Corrupt System. Mukhtar Ansari has been in jail since 2005, charged with ordering a rival’s murder by hit men who pumped 400 bullets into the victim’s car. He doesn’t expect that or more than 30 other charges to bounce him out of his day job as a state legislator.
  • Syrian Army Battles Armed Fighters in Daraa After Subduing Homs, 70 Dead. Syrian army troops battled opposition fighters in the south of the country two days after the government regained control of the Baba Amr district in the central city of Homs.

Wall Street Journal:
  • Romney, Toughening Stance, Would Repeal Sarbanes-Oxley. Mitt Romney pledged during a campaign event Saturday to repeal the Sarbanes-Oxley corporate accounting overhaul. After Mr. Romney vowed to repeal President Barack Obama’s health care overhaul and the Dodd-Frank financial regulation law, a voter in the crowd asked whether his list of repeals would include Sarbanes-Oxley, as well. “Yes,” Mr. Romney said. “People who have spent their life in Washington in many cases … don’t understand that when they write a piece of legislation what kind of impact that’s going to have in the private sector, how many people’s lives will be affected by it.” The candidate took his plans a step further this weekend. “These legislative monsters that have been created kill jobs,” Mr. Romney said.
  • Lenders Stress Over Test Results. Some very large banks are clashing with the Federal Reserve over how much detail the central bank will reveal about them when it releases the results of its latest stress test. The 19 biggest U.S. banks in January submitted reams of data in response to regulators' questions, outlining how they would perform in a severe downturn. Now, citing competitive concerns, bankers are pressing the Fed to limit its release of information—expected as early as next week—to what was published after the first test of big banks in 2009. The Clearing House Association, a lobbying group owned by units of companies such as J.P. Morgan Chase & Co., Bank of America Corp. and Wells Fargo & Co., warned in a letter this month to the Fed that making the additional information public "could have unanticipated and potentially unwarranted and negative consequences to covered companies and U.S. financial markets." Government officials aren't backing down from their plan to publish detailed projections of how the biggest lenders would fare in a steep economic downturn lasting two years. Regulators view full disclosure as critical to assuaging investor concerns about banks' capacity to withstand a market shock or economic setback.
  • Al Qaeda is Blamed For Attack in Yemen. At least 35 Yemeni soldiers were killed Sunday in an attack by al Qaeda-linked fighters that began with twin suicide bombings, medical officials said, continuing a wave of attacks launched since a new president took office vowing to fight the group. A Yemeni army officer said at least 20 Islamist militants also died in the fighting in the country's unstable south, located near Red Sea oil-shipping routes. The militants overran a military base after the bombings, capturing heavy weapons and turning them on soldiers, officials said.
  • AIG(AIG) to Sell $6 Billion In Asian Insurer's Stock. American International Group Inc. kicked off a $6 billion sale of shares in Asian life insurer AIA Group Ltd. on Monday morning in Hong Kong, moving forward with plans to repay another chunk of its 2008 U.S. bailout.
  • Fed Takes a Break to Weigh Outlook. The Federal Reserve is pausing after a six-month campaign to boost growth, while policy makers assess a puzzling economic outlook. Fed officials meeting next week are unlikely to take any new actions to spur the recovery, and they are likely to emerge with a slightly more upbeat—but still very guarded—assessment of the economy's performance. This comes after a series of moves in recent months, including recasting its securities portfolio in January as a way to spur growth. Then the central bank signaled in January that short-term interest rates are likely to stay near zero through most of 2014.
  • States Assess Twisters' Wrath. The twister Friday destroyed nearly all of the roughly 30 homes in the center of Marysville, which sprouted up 140 years ago around a train station. Although no one died, the storm scattered pieces of homes across miles of surrounding farmland, peeled the roof from Marysville's community center, and shifted the town's only church off its foundation.
  • The 60th ObamaCare Vote. A soon-to-be released report shows how rogue prosecutors defeated Ted Stevens.
Marketwatch.com:
  • China Sovereign Wealth Fund Gets $30 Billion Boost. China Investment Corp. recently received $30 billion from the Chinese government, according to published reports.
  • China's Commodity Demand Declining: Credit Suisse. The commodity super-cycle underpinned by China has drawn to a close, according to new research by Credit Suisse, which says the Chinese commodity needs have peaked as the nation transitions to domestic consumption and away from exports and infrastructure building as a driver of the economy. Credit Suisse analyst Dong Tao said the shift is part of China's changing industrialization model and a slower-growth era ahead.
Business Insider:
Zero Hedge:

CNBC:

  • 'The Lorax' Brings Green Controversy and Green at the Box Office. The Lorax, is about a character with a giant mustache trying to protect his forest and all its animals from a factory. Since the book was published in 1971, it's been characterized as an environmental tale and attacked for turning kids against business. Lou Dobbs famously banged this drum on his show on Fox, saying Universal is anti-business.
  • Apple's(AAPL) App Store Tops 25 Billion Downloads. More than 25 billion apps have been downloaded from Apple’s App Store, the company has announced, in a milestone that highlights the shift to a new model for computing, digital content, software and the web.
IBD:
NY Times:
  • Greek Official Warns Debt Holdouts. For the hedge funds who are looking to sue Greece instead of taking a 75 percent loss on their bonds, the head of Greece’s debt management agency has some blunt advice: Think twice before racking up those big legal bills. “There is just no money for holdouts,” said Petros Christodoulou, who has been at the forefront of Greece’s debt restructuring process since it began last summer. “We are prepared for legal challenges but the risk here is that people are trying to be too smart.”

CNN:

  • Gas Prices Climb Again, Topping $3.76. The nationwide average for gasoline prices rose for the 26th straight day Sunday, topping the $3.76-a-gallon mark, according to the motorist group AAA. The average price of regular unleaded gasoline climbed 0.7 cent in the latest 24-hour period. The price of gas is up from $3.47 a month ago and $3.69 a week ago. Last year at this time, gas was $3.49 a gallon.
Rasmussen Reports:
  • Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Sunday shows that 27% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-two percent (42%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -15 (see trends).
Chicago Tribune:
  • JPMorgan(JPM) Star Trader Set to Start Hedge Fund. A team of top proprietary traders at JPMorgan Chase & Co is set to launch what is likely to be one of the largest hedge fund start-ups in 2012, the Financial Times reported on Sunday. London-based Mike Stewart, JPMorgan's global head of proprietary trading and former head of emerging markets, is expected to start his own hedge fund, Whard Stewart, in the second quarter, the FT cited people familiar with his plans as saying.
Reuters:
  • IMO Set to Collide With EU Over Vessel CO2 Emissions. The International Maritime Organization (IMO) is making little headway on market-based measures to curb carbon dioxide emissions from international shipping, putting it on a policy collision course with the European Union, observers said. An IMO spokeswoman said discussions on market-based measures, such as a levy on CO2 emissions and a cap-and-trade scheme, will resume in October when the Marine Environment Protection Committee meets again. International shipping accounts for around 3 percent of the world's emissions of the greenhouse gas that is widely blamed for global warming, and this share could go to 18 percent by 2050 if regulation is not in place, according to the IMO. The European Union executive of the 27-nation European Union bloc has threatened to enforce its own shipping regulations if the IMO fails to act, as it has with aviation.
  • China Boosts Defense Budget 11% After U.S. "pivot". China will boost military spending by 11.2 percent this year, the government said on Sunday, unveiling Beijing's first defense budget since President Barack Obama launched a policy "pivot" to reinforce U.S. influence across the Asia-Pacific. The increase announced by parliament spokesman Li Zhaoxing will bring official outlays on the People's Liberation Army (PLA) to 670.3 billion yuan ($110 billion) for 2012, after a 12.7 percent increase last year and a near-unbroken string of double-digit rises across two decades. Beijing's public budget is widely thought by foreign experts to undercount its real spending on military modernization, which has unnerved Asian neighbors and drawn repeated calls from Washington for China to share more about its intentions.
Financial Times:
  • ECB Loans 'Could Harm' Debt Market. Fears are growing that a European initiative to underpin banks by offering them cheap medium-term funding could lead to a sharp contraction in corporate debt markets.
Der Spiegel:
  • The European Central Bank is alarmed by Bundesbank President Jens Weidmann's criticism of mounting Target-2 imbalances, citing officials at the "top" of the ECB. Weidmann's criticism amounts to an admission that the Bundesbank doesn't rule out a break-up of the euro area, because Target-2 imbalances would only become a problem if the monetary union collapsed, the ECB officials said. Weidmann warned ECB President Mario Draghi about growing risks in a letter on Feb. 29.
  • European Central Bank council member Jens Weidmann is concerned about the quality of the collateral the ECB has accepted from banks in return for three-year loans. The conditions for the loans have become "very generous," Weidmann said. "The program has a calming effect in the short term, but it's a calm that could be deceptive," he said. Weidmann, who heads Germany's Bundesbank, said euro-area central bans are taking "substantial risks" onto their balance sheets and the loans are "at the limits" of the Eurosystem's mandate. He wants the collateral rules to be tightened as soon as possible.
China Times:
  • The central government plans to expand property taxes to more cities year by year, with 3-5 more this year, citing an official at the State Administration of Taxation. All tier 1, 2 cities have met the technical requirements for property taxes, citing the official. The Housing ministry wants the tax to cover cities beyond major cities like Beijing, Guangzhou and Shenzhen.
Financial News:
  • China should be cautious on interest rate liberalization as the financing cost for small and medium-sized companies may rise as a result, citing Ma Jing, an official at the People's Bank of China.
China Economic Net:
  • Housing Policies Should Not Be Relaxed. Over-speculation in the real estate market supported by a loose credit policy from 2009 to 2011 created a huge property bubble. Responding to the public's concerns, the government has sought to return property prices to a rational level by introducing regulatory measures. However, the more bite the policies have had, the more barriers they have encountered, especially when sales declined recently and housing prices in some cities started to fall. Although the NPC and CPPCC this year will be an important venue for these lobbyists, it is encouraging that the government's approach to the real estate market is unlikely to change this year. The government is expected to continue its policies aimed at curbing speculation and over-investment, thereby regulating property prices down to rational levels. Local governments and real estate developers would do better to change their policies, as it is wishful thinking to try and keep prices high based on the belief that the "rigid demand" of first-time buyers and people's desire to move up the property ladder mean that demand will always exceed supply. It will be hard for them to realize this supposed demand because at the current price levels it is mainly speculators that are entering the market. Most non-speculative consumers are either waiting for prices to fall to more reasonable levels or, as is more often the case, they simply cannot afford to buy any at the current prices. Even when the developers do make offers to lighten the burden for non-speculative buyers, these offers are not enough to enable buyers to either enter the market or move up the property ladder.
Weekend Recommendations
Barron's:
  • Made positive comments on (VRSK), (CNX), (WPX) and (TIF).
Night Trading
  • Asian indices are -1.25% to -.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 160.50 +3.5 basis points.
  • Asia Pacific Sovereign CDS Index 130.5 -1.0 basis point.
  • FTSE-100 futures -.33%.
  • S&P 500 futures -.30%.
  • NASDAQ 100 futures -.33%.
Morning Preview Links

Earnings of Note
Company/Estimate
  • (PAY)/.52
  • (ABM)/.22
  • (EEP)/.38
Economic Releases
10:00 am EST
  • ISM Non-Manufacturing for February is estimated to fall to 56.2 versus 56.8 in January.
  • Factory Orders for January are estimated to fall -1.5% versus a +1.1% gain in December.

Upcoming Splits

  • None of note
Other Potential Market Movers
  • The RBA Rate Decision, Cowen Health Care Conference, BofA Merrill Refining Conference, Sandler O'Neill Financial Services Conference and the (COP) Investor Update could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and financial shares in the region. I expect US stocks to open modestly lower and to maintain losses into the afternoon. The Portfolio is 75% net long heading into the week.
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