Evening Headlines
Bloomberg:
- Portugal Town Halls Face Default Amid $12 Billion Debt. Portugal’s town halls face default amid 9 billion euros ($12 billion) of debt unless the government provides aid soon, said Fernando Ruas, president of the nation’s association of municipalities. “At a company we call it insolvency,” Ruas said in a telephone interview from Lisbon on March 21. “It could happen that some town halls could have to restructure their debt if the government doesn’t intervene.” Ruas blamed a sharp decline in money transfers from the government in Lisbon to municipalities for their growing financial woes. Portugal last year became the third euro-area country to request external aid, following Greece and Ireland. Prime Minister Pedro Passos Coelho is cutting spending and raising taxes to meet the terms of the 78 billion-euro rescue. “A sharp decrease in money transfers has made it harder for many town halls to comply with their ongoing commitments,” said Ruas. His association estimates town halls face about 9 billion euros in liabilities. The southern European country’s 308 town halls and two semi-autonomous regions face similar problems to those of Spain, whose regions have been shut out of capital markets due to the credit squeeze, leaving many bills to suppliers unpaid. Spain’s government is offering credit lines to help regions meet bond redemptions and pay suppliers.
- China's Stocks Drop on Earnings, European Concerns. China’s stocks fell, extending the benchmark index’s biggest weekly loss in four months, as European manufacturing weakened and concern intensified slowing economic growth is hurting earnings. China United Network Communications Ltd. (600050), which controls the nation’s second-largest cell phone operator, dropped 0.9 percent after the company reported profit that trailed analyst estimates. Agricultural Bank of China Ltd. declined 0.4 percent after the lender posted its first quarterly profit decline in two years. Poly Real Estate Group Co. and Gemdale Corp. slid more than 1 percent after the Economic Information Daily said the nation may expand property tax trials. “The prospect of negative earnings in the first quarter hasn’t been priced in yet,” said Wang Weijun, an analyst at Zheshang Securities Co. in Shanghai. “Bad data from Europe may also change investors’ risk appetite.” The Shanghai Composite Index (SHCOMP) dropped 16.20 points, or 0.7 percent, to 2,359.57 at the 11:30 a.m. local-time break, the lowest level since Feb. 17.
- Fed's Bullard Says Monetary Policy May Be at a Turning Point. Federal Reserve Bank of St. Louis President James Bullard said monetary policy may be at a turning point and the Fed should be cautious about stepping up accommodation as the U.S. economy rebounds. With policy currently “on pause, it may be a good time to take stock of whether we may be at a turning point,” Bullard said in a speech in Hong Kong today. “As the U.S. economy continues to rebound and repair,” further action “may create an overcommitment to ultra-easy monetary policy.” “With numerous monetary policy actions still on the table, and others still affecting the economy with a lag, it may be especially difficult to remove policy accommodation at the appropriate pace and at the appropriate time,” Bullard said at an investment conference sponsored by Credit Suisse Group AG. “One may want to approach such a situation with caution.” Inflation remains higher than the Fed’s target of 2 percent, which may indicate the U.S. economy has less slack than most economists estimate, he said.
- Copper Bear Streak Extends as Manufacturing Shrinks: Commodities. Copper traders extended a bearish streak into a second week on mounting concern that demand is weakening after manufacturing contracted from China to Europe. Twelve of 29 analysts surveyed by Bloomberg expect the metal to decline next week and seven were neutral. Inventories at bonded warehouses in Shanghai more than doubled since the fourth quarter, a survey of seven traders and analysts showed. Separate stockpiles monitored by the Shanghai Futures Exchange are their highest in at least nine years, bourse data show. China consumes 40 percent of the world’s copper.
- Volcker Rule Delay and Simplification Gains Support in Congress. A bipartisan group of U.S. lawmakers is backing a delay in finalizing a ban on proprietary trading by banks without urging regulators to ease the rule. Six senators introduced legislation yesterday that would postpone implementation of the so-called Volcker rule from the July 21 deadline set by the Dodd-Frank Act and align it with regulators' completion of detailed rules for the trading ban. Meanwhile, Representative Barney Frank, the Massachusetts Democrat who co-authored the law that requires regulators to impose the ban, released a statement urging banking agencies to complete a simplified version by Sept. 3.
- Credit Swaps in U.S. Rise by Most This Year on Global Concerns. A benchmark gauge of U.S. company credit risk rose by the most since December on declining confidence in the global economy as reports showed manufacturing contracted in Europe and China. The Markit CDX North America Investment Grade Index of credit-default swaps, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, increased 3.7 basis points to a mid-price of 90.5 basis points at 4:50 p.m. in New York, according to Markit Group Ltd.
- JPMorgan(JPM) Told to Pay $373 Million in American Century Funds Case. JPMorgan Chase & Co. (JPM) was ordered by arbitrators to pay $373 million to American Century Investments over claims that executives led by Jes Staley enriched the bank at the expense of the fund-management firm.
- Living Together Trumps Matrimony for Recession-Wary Americans. The probability of a woman getting married by age 25 dropped to less than half as more Americans opt to cohabitate with their romantic partners rather than tie the knot, a U.S. government study shows. The proportion of women living with men without marriage almost quadrupled to 11 percent as of 2010 from 3 percent in 1982, according to data released today by the Centers for Disease Control and Prevention. For men, the proportion rose to 12 percent in 2010 from 9 percent in 2002, said Casey Copen, a demographer at the National Center for Health Statistics.
- Missing Nukes Fuel Terror Concern as Obama Drawn to Seoul. The legacy of the Soviet Union’s breakup, inadequate atomic stockpile controls and the proliferation of nuclear-fuel technology mean the world may be awash with unaccounted-for weapons ingredients, ripe to be picked up by terrorists. “If material is loose, it may already be impossible to contain or account for it,” said Graham Allison, director of Harvard University’s international security program and a former nuclear-security adviser to President Ronald Reagan. “There are no precise figures for how much high-enriched uranium or plutonium is missing.”
- Health Law Slow to Win Favor. When the health-care overhaul became law after a bitter debate, many Democrats predicted Americans would grow to like it as they started enjoying some of the early benefits. The day after the president signed the bill into law, which happened exactly two years ago, an average of major polls collated by the website Real Clear Politics showed 50.4% of Americans opposed. This week, that had changed only by a tenth of a percentage point, ticking up to 50.5%.
- Liberty and ObamaCare.
- A French Killer's Path to Jihadist Rampage. The death of Mohamed Merah, the suspected French killer who met his end Thursday in a barrage of special-forces gunfire, left officials piecing together how he became the alleged homegrown terrorist behind the most violent attacks on French soil in almost two decades.
- Boom Times Roll On For U.S. Gun Industry. Sturm Ruger(RGR) stops taking new orders, citing enormous backlog.
- Delta's(DAL) New 'Basic Economy' Fare Could Be A Game-Changer.
- Facebook Is About To Be About The Size Of Google(GOOG) With 1/10th The Revenues.
CNBC:
- Oil Boom to Create Jobs: SandRidge Energy(SD) CEO. “There’s been a renaissance in production in not only Canada but the United States just recently,” he said. “In the next three years, we believe our industry will be creating over 100,000 jobs just in Kansas and Oklahoma.”
IBD:
Washington Post:- Intelligence Community Can Keep Data On Americans With No Ties To Terrorism For Up To 5 Years. The U.S. intelligence community will now be able to store information about Americans with no ties to terrorism for up to five years under new Obama administration guidelines. Until now, the National Counterterrorism Center had to immediately destroy information about Americans that was already stored in other government databases when there were no clear ties to terrorism.
- Detroit's Credit Rating Downgraded by Second Agency. Another blow came to Detroit fiscal health today as a second bond rating agency downgraded the city’s credit rating. Fitch Ratings cited the potential for the city to run out of cash and “a lack of progress in resolving an acute situation” as reasons for the downgrade. “The downgrade and maintenance…are based on delays in implementation of actions at the city and state level that might avert a fiscal crisis for the city,” the Fitch report said. “Fitch sees no assurance that the considerable hurdles to implementing urgently needed changes in the city's financial profile will abate.”
- Exclusive: UAW Steps Up Bid To Organize VW U.S. Plant: Sources. The United Auto Workers union is soliciting signatures of support from workers at Volkswagen AG's U.S. factory, an escalation of its effort to establish a foothold outside the Detroit automakers. In early March, the UAW started passing out authorization cards for workers to sign in an early formal step needed for union representation, workers at the factory in Chattanooga, Tennessee, told Reuters. UAW President Bob King has said organizing U.S. plants run by foreign automakers, known in the industry as transplants, is crucial for the union's survival. After three decades of declining membership, the UAW faces a financial crunch that has been exacerbated by the U.S. economic downturn. This has forced America's richest union to sell assets and dip into its strike fund to pay for activities.
- Nike(NKE) Sees Strong Demand, Better Margins in Spring. Nike Inc headed into the spring quarter with strong demand and improving margin trends, as the top sporstwear retailer forecast a strong year with plans to cash in on the Olympics. The Beaverton, Oregon-based company saw futures orders for delivery from March through July rise 15 percent even as rival Adidas expects a slowdown in sales growth in 2012.
- Micron(MU) Posts Mixed Results as Low Chip Prices Weigh. Micron Technology posted mixed quarterly results, and investors pushed its shares lower after the company said persistently low prices for its memory chips had yet to recover. The slide into bankruptcy of Japanese DRAM chipmaker Elpida in February has created expectations that chipmakers' pricing power, diminished by oversupply, will bounce back this year. But Micron said DRAM prices had yet to rise and that prices for NAND had fallen compared with the prior quarter. In after-hours trade, its shares were down 3.2 percent at $8.43, after having closed at $8.71 on the Nasdaq.
- Clinton to Let Military Aid to Egypt Continue: State Department Official. Secretary of State Hillary Clinton will allow U.S. military aid to Egypt to continue despite Cairo's failure to meet pro-democracy conditions, a senior State Department official said on Thursday, a move sharply criticized on Capitol Hill. The office of Senator Patrick Leahy, who chairs the Senate subcommittee on foreign aid, revealed Clinton's decision and made clear his deep unhappiness with it, arguing that Clinton should now limit the amount of military aid that is released. Clinton should "release no more taxpayer funds than is demonstrably necessary, withholding the rest in the (U.S.) Treasury pending further progress in the transition to democracy" in Egypt, Leahy said in a statement. Congress has approved $1.3 billion in military aid to Egypt - the same level the country has received for years - for the current fiscal year, which ends on September 30. Congress also approved $250 million in economic aid and up to $60 million for an "enterprise fund."
- Weak Recovery, Job Cuts Seen Ahead Of French Election. France will see a slow economic recovery and unemployment will keep rising until the middle of the year, national statistics agency INSEE said on Thursday, less than five weeks from a presidential election.
- Spain's Borrowing Costs Up Amid Fresh Deficit Fears. SPAIN’S BORROWING costs rose above 5.5 per cent for the first time since January as investors fretted about another escalation of the euro zone crisis amid signs of further economic weakening even in Germany. Investors, already nervous about Madrid’s deficit and weak growth prospects, pushed Spain’s benchmark 10-year bond yields up 14 basis points (bp) to as high as 5.53 per cent. Italy’s borrowing costs also rose with the yield on its 10-year bond breaking through 5 per cent. Markets have been calmed in recent weeks by the European Central Bank’s cheap loans for lenders, known as the longer-term refinancing operation. But investors are becoming nervous that the impact of the two LTROs is wearing off. Marc Chandler, currency strategist at Brown Brothers Harriman, noted that Italian 10-year yields have fallen 180bp so far this year while Spain’s have risen 39bp. “That is after two LTROs,” he said. “That definitely concerns me. When the bonds rally it helps the banks’ balance sheets. But when yields start rising it hurts the banks even more. It is a vicious circle.”
- Canada's Mortgage Body Moves To Slow Booming Housing Market. Canada Mortgage and Housing Corp. has signalled it will dramatically curtail its growth in the mortgage market in the coming years in an effort to cool Canada’s sizzling housing sector. Documents released by the Crown corporation this week show CMHC expects to increase mortgage insurance over the next few years at only a fraction of the pace seen recently.
Japan Times:
- Fear of Radiation Creeping South. Some parents with young kids relocating from Tokyo area. Lingering concerns about radiation a year into the Fukushima nuclear crisis have prompted people even as far away as the Tokyo area, some 100 to 250 km from the Fukushima No. 1 power plant, to move away.
Economic Information Daily:
- Guangzhou, Shenzhen May Start Property Tax Trial. The Chinese cities of Guangzhou and Shenzhen may follow Chongqing and Shanghai to start property tax trials, citing Jia Kang, head of the Finance Ministry's research institute for fiscal science, and Wang Haibin, an analyst at Shenzhen World Union Properties Consultancy Co. Property tax trials should be widened to target existing home owners, they said.
- None of note
- Asian equity indices are -1.0% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 154.50 +1.5 basis points.
- Asia Pacific Sovereign CDS Index 118.50 +5.0 basis points.
- FTSE-100 futures +.39%.
- S&P 500 futures +.16%.
- NASDAQ 100 futures +.20%.
Earnings of Note
Company/Estimate
- (DRI)/1.23
- (KBH)/-.23
10:00 am EST
- New Home Sales for February are estimated to rise to 325K versus 321K in January.
Upcoming Splits
- None of note
Other Potential Market Movers
- The Fed's Bernanke speaking, Fed's Lockhart speaking and the (HLF) analyst day could also impact trading today.