Evening Headlines
Bloomberg:
- Draghi Confronts Italy Impact as ECB Seen Keeping Rates on Hold. The
European Central Bank has to decide how big a threat Italy poses to
Europe’s recovery. A rejection of austerity in the euro area’s
third-largest economy has produced a political stalemate that’s driven
up bond yields and undermined confidence in ECB President Mario Draghi’s
scenario of a gradual economic upturn. While that’s prompted some
observers to bring forward expectations for lower interest rates,
economists from Nomura International Plc to ABN Amro Bank NV say the ECB
is more likely to hold fire and keep the pressure on governments to
enact reforms. “The Italian election has brought the centrifugal force
of dysfunctional politics back into focus, but rate cuts are not the
answer,” said Richard Barwell, senior economist at Royal Bank of
Scotland Group Plc in London. “The ECB cannot save
governments and countries that do not want to save themselves.”
- Napolitano Girds for Battle to Resolve Italy Election Impasse. President
Giorgio Napolitano, a
former communist resistance fighter who negotiated Silvio Berlusconi’s
resignation, is preparing his final political battle as he seeks to
steer Italy out of its latest government crisis before his term expires
in May. Napolitano, 87, is charged with resolving the political logjam
caused by elections last month that produced a hung parliament. To avoid
a new vote, he can try to forge a national- unity government, accept an
administration without a majority or appoint a non-politician to head a
so-called technical government, similar to that of Prime Minister Mario
Monti. Markets are pricing in two scenarios, “another technical government or the possibility, which is less and less likely, of
a bipartisan government,” Mario Spreafico, who manages 1.5
billion euros ($1.95 billion) as chief investment officer at
Schroders Private Banking for Italy, said in a phone interview.
“Both would be temporary solutions” before new elections.”
- Merkel’s One Europe Attacked by Adenauer Grandson. Stephan Werhahn remembers playing at
the feet of his grandfather as a child. The man was a towering
figure in more ways than one. Lionized as Der Alte, or the Old
One, Konrad Adenauer was West Germany’s first post-war
chancellor, a founder of the Christian Democratic Union (CDU)
political party and an early proponent of European unification. At 59, Werhahn is adding politics to a 30-year career in
finance by running against Chancellor Angela Merkel in an
election scheduled for Sept. 22, Bloomberg Markets will report
in its April issue. Werhahn says he’s doing his bit to protect
his grandfather’s greatest legacy, the European Union. Werhahn’s proposed resolution to the crisis is harsh in its
own way: He would forgive most of the money owed by Greece and
other debt-choked countries and then banish them from the euro
area in order to save the single currency.
- China Opposes Others’ Loose Policy, Li Keqiang Co-Author Says. China
doesn’t approve of excessively loose monetary policies by other
nations, according to a senior government adviser who wrote a book with
Li Keqiang, the country’s incoming premier. “We have already taken a
position on this before and China doesn’t approve of some countries’
overly accommodative monetary policy,” Li Yining, 82, a Peking
University professor and delegate to China’s top advisory body, said at a
briefing in Beijing today when asked about Japan’s recent easing. “This
is an act of transferring the crisis to others.” The remarks may
reflect official displeasure over the yen’s depreciation amid Japanese
Prime Minister Shinzo Abe’s campaign
for more monetary easing to fight deflation.
- Fed’s Fisher Says He’s Worried Abe Has ‘Politicized’ BOJ. Federal Reserve Bank of Dallas
President Richard Fisher said Japanese Prime Minister Shinzo Abe
has “politicized” the Bank of Japan (8301) in a quest to halt more
than a decade of falling prices. “He’s aggressive. He has basically politicized the central
bank, which worries me personally,” Fisher said today in a
speech in San Antonio.
- Korea Data Heralds Surprise China Exports Drop: Chart of the Day. South Korea is the only one of Asia’s 10 biggest economies
to report February trade data thus far. Given that China is its
biggest export market, Korea’s sales drop signals that its
larger neighbor is poised to report weaker-than-expected
shipments, said Zhang Zhiwei, Nomura’s chief China economist. “The data suggests China’s recovery is not so strong,”
Hong Kong-based Zhang said. “We still call for the People’s
Bank of China to tighten policies, hike interest rates and
regulate shadow banking activities this year. But recent weak
macro data will only make the central bank delay it.”
- China’s Property Curbs Are Not Successful, Billionaire Lo Says.
China’s property curbs in the past decade have been unsuccessful and
the new round of measures will slow property sales, said billionaire
Vincent Lo, also a member of the government’s advisory board. “Certainly
they haven’t been,” said Lo, chairman of Shui On Land Ltd. (272), a
Shanghai-based developer, in an interview in Beijing yesterday. “Had
they been successful, home prices wouldn’t have risen higher the more
the government curbed.” The new measures will slow down property sales immediately because the 20 percent tax is not that easy to bear, Lo said.
- Chinese Anger Over Pollution Becomes Main Cause of Social Unrest. Pollution
has replaced land disputes as the main cause of social unrest in China,
a retired Communist Party official said, as delegates to the country’s
legislature lamented environmental degradation. China
now sees 30,000 to 50,000 so-called mass incidents every year, Chen
Jiping, a former leading member of the party’s Committee of Political
and Legislative Affairs, said yesterday. Increased use of mobile phones
and the Internet has allowed protesters to show their anger more
effectively, he said.
- BOJ Rejects Accelerated Open-Ended Asset Buys as Shirakawa Exits.
The Bank of Japan (8301) rejected a call for an immediate start to
open-ended asset purchases in Governor Masaaki Shirakawa’s final meeting
before new leaders take over. The board voted against a proposal by
member Sayuri Shirai, the BOJ said in a statement in Tokyo today after a
two-day meeting. Policy makers left an asset-purchase fund unchanged at
76 trillion yen ($810 billion) as forecast by all 23 analysts in
a Bloomberg News survey.
- Iron Peaked After Restocking Rally, Morgan Stanley Says. Iron
ore is poised to decline over the rest of the year as global supply
increases and a rally spurred by restocking in China ends, according to
Morgan Stanley. The price probably peaked at about $159 a ton last
month and will average $129 over the rest of the year, analysts Joel
Crane and Peter Richardson said in a report. The raw material
may average $133 a ton over 2013, with prices seen dropping to
$130 in the fourth quarter from $142 in the first, they said.
- Sumitomo Sees Aluminum Surplus at Highest Level in Two Years. Sumitomo Corp. (8053), Japan’s fourth-
largest trading house, raised its forecast for a global aluminum
surplus to the highest level in two years as demand from China,
the biggest consumer, won’t be enough to absorb new capacity. Supply will outpace demand for a seventh year by 866,000
metric tons this year from 760,000 tons in 2012, said Shingi Yamagiwa, manager of light metals trading at Sumitomo, which has
stakes in smelters in Australia, Brazil, Malaysia and Indonesia.
- Impotent Mursi Losing Grip on Egypt as Unrest Prompts Reversals. Egyptian President Mohamed Mursi’s declaration of a state of
emergency in three restive provinces had all the earmarks of an
autocrat’s command, right down to the 9 p.m. curfew. “When I see
the security of the nation is in peril, then I act. And I now act,”
Mursi thundered in a Jan. 27 late-night television broadcast. After
protestors ignored him -- some in the port of Ismailia played 9 p.m.
soccer games in front of the provincial government headquarters -- the
president backed down. Within 48 hours, he allowed local officials to
relax the late-night ban.
Wall Street Journal:
- Tracking Sensors Invade the Workplace. Devices on Workers, Furniture Offer Clues for Boosting Productivity. As Big Data becomes a fixture of office life, companies are turning to
tracking devices to gather real-time information on how teams of
employees work and interact. Sensors, worn on lanyards or placed on
office furniture, record how often staffers get up from their desks,
consult other teams and hold meetings.
- Mideast Defies U.S. Bid to 'Pivot'. The Obama administration hopes to "pivot" away from a hyper-focus on
the Middle East during its second term, but John Kerry's maiden overseas
mission as secretary of state—a nine-nation odyssey across Europe and
the Persian Gulf—highlighted why that goal may be elusive. Imminent threats posed by Syria's civil war and Iran's nuclear
program, and longer-term challenges of Egypt's flagging economy and the
moribund Arab-Israeli peace process, dominated Mr. Kerry's 11-day trip,
even his stops in European capitals.
- Offshore Tax Probe Picks Up. U.S. Chase for Cheats With Secret Accounts Looks to Israel, India and Elsewhere. We're still coming after you. That is the message from the U.S. government to Americans who evaded
federal taxes by stashing money in secret offshore accounts, say lawyers
who represent some of those people.
Fox News:
- Paul mounts Senate filibuster of Obama's CIA nominee over drone concerns. Business in the Senate ground to a halt Wednesday as Sen. Rand Paul
-- aided by colleagues from both parties -- launched into an
old-fashioned filibuster, as he tried to hold up the nomination of John
Brennan for CIA director over concerns about the president’s authority
to kill Americans with drones. Paul's filibuster was shaping up to be among the longest in U.S.
history. The late Rep. Strom Thurmond holds the record, at more than 24
hours, but Paul was cruising into his ninth hour -- which is around when
most filibusters flame out. As of 8 p.m., Paul was still talking on the
Senate floor.
MarketWatch.com:
CNBC:
- Sorry, Stock Pickers—You're Still Getting Crushed. Just 37 percent are faring better than the basic indexes they compete
against, according to data from JPMorgan Chase, while 63 percent are
missing. A mere 7 percent are topping benchmarks by more than 2.5
percentage points.
Zero Hedge:
Business Insider:
Vanity Fair:
- The Big Short War. Hedge-fund titan Bill Ackman has vowed to bring down Herbalife, the
33-year-old nutritional-supplement company, which he views as a pyramid
scheme. With his massive shorting of Herbalife stock, the price
plummeted, prompting two fellow billionaires—Ackman’s former friend Dan
Loeb and activist investor Carl Icahn—to take the opposing bet on
Herbalife. As the public brawl rivets Wall Street, William D. Cohan
learns why, this time, it’s personal.
Politico:
- Holder: Obama could order lethal force in U.S. President Barack Obama could order the use of deadly force against an
American inside the United States, Attorney General Eric Holder said in
a letter to Sen. Rand Paul (R-Ky.) released Tuesday.
Paul and other senators had asked various administration officials
whether deadly drones strikes like the ones the U.S. carries out in
Pakistan, Yemen and other foreign countries could ever be used in the
U.S. Paul said he would seek to block the confirmation of John Brennan
as Central Intelligence Agency director if the question was not
answered.
Reuters:
- Leaked email leads traders to fear worst from USDA furloughs. A leaked Agriculture
Department email briefly rattled the U.S. livestock market on
Wednesday as traders interpreted it as meaning the department
might implement mandatory budget cuts in ways that deliberately
worsen disruptions at meat-packing plants.
- U.S. economy, world's engine, remains in 'neutral' -Fed's Fisher. Despite
the efforts of the
U.S. Federal Reserve to use easy monetary policy to boost jobs,
the country's economy is stuck in "neutral" more than three years after
the end of the recession, a top Fed official said on Wednesday. "It
is not possible to create jobs through monetary policy alone," Dallas
Fed President Richard Fisher said at a World Affairs Council of San
Antonio event. "The U.S. remains the economic engine of the world ...
it's not China, it's not Europe, it's the U.S., and the U.S. remains in
neutral." Fisher, repeating a well-worn analysis of the limits of the
Fed's super-easy monetary policies, said the U.S. central bank
did not have the power to pull the economy from its standstill
as long as U.S. lawmakers did not do their part. "You know how horrid things are in Washington," Fisher said.
"We have provided fuel for an economic recovery because Congress
and the executive have not provided the incentives for growth."
- Illinois governor calls budget plan toughest in state's history. Illinois Governor Pat
Quinn presented on Wednesday what he called the most difficult
budget in the state's history, saying he was slashing spending
on programs such as education to pay the skyrocketing costs of
public pensions. Democrat Quinn, the most unpopular governor in the nation
according to one polling firm, proposed a "balanced" operating
budget of $35.6 billion in revenue and spending in the fiscal
year starting July 1, up just over 3 percent from fiscal 2013. All of the increased state revenue in fiscal 2014 would be
gobbled up by an $929 million increase in pension costs for
state workers such as teachers, bringing the cost of pensions to
nearly one in every five dollars, according to the budget. Illinois faces a fiscal crisis with the worst funded state
pension system in the nation and the lowest debt rating among
the states analyzed by major agencies Moody's Investors Service
and Standard & Poor's.
Telegraph:
Sueddeutsche Zeitung:
- Germany to Lose Supervisory Powers Over Banks. The German govt, parliament to lose authority over the financial system under EU plans due to take effect in 2014. All systemically important banks to be monitored by the ECB. The ECB won't be accountable to the German govt, unlike BaFin. This marks the largest transfer of sovereignty
since the creation of the euro, citing Carsten Schneider of SPD. The
ECB will have the right to supervise smaller banks as well.
Hong Kong Economic Times:
- Liu
Mingkang Says U.S. Quantitative Easing "irresponsible'. The
expansionary measures are leading to inflation pressures in China,
citing the former chairman of the China Banking Regulatory Commission.
Current easing in the U.S. and E.U. aren't solving the real economic
problems and only creating moral risks, Liu said.
Evening Recommendations
Night Trading
- Asian equity indices are -.50% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 103.50 -2.5 basis points.
- Asia Pacific Sovereign CDS Index 81.50 -2.5 basis points.
- NASDAQ 100 futures +.06%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Final 4Q Non-farm Productivity is estimated at -1.6% versus a prior estimate of a -2.0% decline.
- Final 4Q Unit Labor Costs are estimated to rise +4.3% versus a prior estimate of a +4.7% gain.
- Initial Jobless Claims are estimated to rise to 355K versus 344K the prior week.
- Continuing Claims are estimated to rise to 3120K versus 3074K prior.
3:00 pm EST
- Consumer Credit for January is estimated to rise to $14.7B versus $14.595B in December.
Upcoming Splits
Other Potential Market Movers
- The Fed's Powell speaking, ECB's Draghi speaking, ECB rate decision,
BoJ rate decision, BoE rate decision, Bank CCAR Results/Dodd-Frank
tests, Japan gdp report, Challenger Job Cuts for February, RBC Consumer
Outlook Index for March, weekly Bloomberg Consumer Comfort Index, 4Q
Household Change in Net Worth, weekly EIA natural gas inventory report,
BofA Refining Conference, JPM Gaming/Lodging/Restaurant/Leisure
Conference, Morgan Stanley Utilities Conference, (TXN) Mid-Quater
Update, (FB) Event, (A) analyst meeting and the (MTH) analyst day could
also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology 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 50% net long heading into the day.
Broad Market Tone:
- Advance/Decline Line: About Even
- Sector Performance: Mixed
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- ISE Sentiment Index 173.0 +66.35%
- Total Put/Call .72 -35.71%
Credit Investor Angst:
- North American Investment Grade CDS Index 83.68 +.42%
- European Financial Sector CDS Index 148.99 -1.85%
- Western Europe Sovereign Debt CDS Index 98.99 -1.78%
- Emerging Market CDS Index 240.10 +.19%
- 2-Year Swap Spread 13.50 -.5 bp
- TED Spread 18.25 -1.75 bps
- 3-Month EUR/USD Cross-Currency Basis Swap -18.75 -1.5 bps
Economic Gauges:
- 3-Month T-Bill Yield .10% +2 bps
- China Import Iron Ore Spot $145.80/Metric Tonne +.41%
- Citi US Economic Surprise Index 7.0 +.7 point
- 10-Year TIPS Spread 2.57 +1 bp
Overseas Futures:
- Nikkei Futures: Indicating +150 open in Japan
- DAX Futures: Indicating +9 open in Germany
Portfolio:
- Slightly Lower: On losses in my retail sector longs and emerging markets shorts
- Disclosed Trades: None
- Market Exposure: 50% Net Long
Bloomberg:
- Euro Exports Fell in Fourth Quarter as Slump Deepened: Economy. Euro-area
exports fell in the fourth quarter for the first time in more than
three years and investment declined as the sovereign debt crisis pushed
the
region deeper into a recession. Shipments from the euro area dropped 0.9
percent in the
last three months of 2012, helping to drive gross domestic
product down 0.6 percent, the European Union’s statistics office
in Luxembourg said today. Exports last declined in the second
quarter of 2009. Imports also fell 0.9 percent in the fourth
quarter. “Real economic activity is yet to show major improvement in
many countries and it looks highly likely that growth will remain a
major struggle for the euro zone for some time to come,” Howard Archer,
chief European economist at IHS Global
Insight in London, wrote in a note today.
- Bersani Says Recession Emergency as He Bids for Premiership. Democratic
Party leader Pier Luigi Bersani called on Beppe Grillo’s
anti-establishment Five Star Movement and Prime Minister Mario Monti’s
coalition to back his efforts to form a government based on a program of
easing austerity in recession-wracked Italy. The nation’s priority is
getting “out of the austerity cage,” Bersani,
whose bloc won the most votes in inconclusive election last month, told
about 100 members of the party’s top body in Rome today. Italy’s next
government should be an “active protagonist of a rectification of the
European policies for stability,” he said.
- Monti Won’t Back Italian Government That Threatens EU Reforms. Italian Prime Minister Mario Monti
said he won’t back a new government that would threaten his
country’s commitments to the Europe Union and that Italy should
hold a new vote rather than install an administration that could
reverse fiscal discipline. In his most detailed comments since Feb. 24-25 elections
produced a hung parliament and saw his coalition win less than
10 percent of the vote, Monti said none of Italy’s political
parties is capable of addressing the country’s problems. “If the alternative is a government oriented to
interrupting Italy’s European path or the way of reforms, I
believe it would be better to hold new elections,” Monti said
at a press conference in Rome today.
- Kuroda to Hit ‘Wall of Reality’ at BOJ, Ex-Board Member Says. Haruhiko
Kuroda will have limited options for aggressive easing if he’s
confirmed as central bank governor as more Japanese government bond
purchases heighten the risk of a market bubble, a former BOJ policy
board member said. “Kuroda will hit the wall of reality,” Atsushi
Mizuno, vice chairman at Credit Suisse AG in Tokyo and a member of the
BOJ board from 2004 to 2009, said in an interview today. “Increased bond
buying
would cause over-dependence on the BOJ and that’s not healthy for the
market. I see the risk of a JGB bubble.”
- AIG Betting on Homeowners as Benmosche Chases Yield: Mortgages.
American International Group Inc., the insurer that was rescued by the
U.S. government in 2008 after soured bets on mortgage securities, is
building a unit to buy individual home loans amid a rebound in the
housing market. AIG plans to buy loans backed by its United Guaranty
Corp. unit, the largest seller of traditional private mortgage insurance
last year, according to Donna DeMaio, 54, the unit’s chief executive
officer. The debt will be held as long-term investments by AIG
insurance companies.
AIG has boosted investment in U.S. property markets less than five years
after real-estate wagers forced the government to rescue the insurer,
once the world’s largest. The Fed had to step in after AIG sold
derivatives to banks protecting them against losses on housing debt,
with the U.S. bailout reaching $182.3 billion.
- Too-Big-to-Fail Banks Limit Prosecutor Options, Holder Testifies. The size of the largest financial
institutions has made it difficult for the U.S. Justice
Department to bring criminal charges, Attorney General Eric Holder said. Criminal charges against a bank -- something that could
threaten its existence -- may also endanger the national or
global economies in the case of the largest ones, because of
their size and interconnectedness. That has “made it difficult
for us to prosecute” some of those institutions, Holder said
today at a Senate Judiciary Committee hearing.
Wall Street Journal:
- Honeywell's(HON) Hiring Is Bleak. Conglomerate's CEO Says Job Growth Won't Pick Up Until GDP
Growth Tops 3%. Honeywell International Inc. Chief Executive David Cote says job growth won't
improve much until U.S. economic growth tops 3%, in a bleak outlook for
employment as the economy continues to bump along.
- House Approves Stopgap Budget Deal. The U.S. House on Wednesday voted to extend spending cuts that went
into effect on March 1 and keep the government operating for the
remainder of the fiscal year, which ends on Sept. 30. The
legislation is necessary to keep the federal government open after
current funding runs out on March 27. It would keep in place automatic
spending cuts known as the sequester for all federal agencies, while
giving the Defense and Veterans Affairs departments more flexibility in
setting spending priorities.
- Syrian Rebels Seize U.N. Forces in Golan Height.
Around 20 United Nations peacekeepers in the Golan Heights were
abducted by a Syrian rebel group, which said it would keep them as
hostages unless the Syrian government withdraws its forces from the
region within 24 hours, a U.N. spokesman said Wednesday. "The U.N. Disengagement Observer Force, or Undof, has reported that,
earlier today, approximately 30 armed fighters stopped and detained a
group of around 20 peacekeepers" in the demilitarized zone patrolled by
the U.N., said U.N. spokesman Farhan Haq in New York.
- CIC President Warns Japan on Yen Devaluation. The president of China's giant sovereign-wealth fund warned Japan
against using its neighbors as a "garbage bin" by deliberately devaluing
the yen, joining a growing number of Chinese officials sounding alarms
about a potential currency war. "I would hope that it doesn't do that as a responsible government," Gao
Xiqing, president of China Investment Corp., said in an interview with
The Wall Street Journal on Wednesday. He was responding to questions
about worries among some finance ministers and central bankers that the
new Japanese government would devalue its currency to boost exports at
other countries' expense.
- Chávez Death Opens Uncertain Period. Crowds
of weeping supporters surrounded the flag-draped coffin of President
Hugo Chávez Wednesday as it was escorted through the streets of the
capital, with many in this deeply divided nation mourning the loss of a
man they
considered their champion and others hoping for change after 14 years of
populist policies.
Fox News:
- Obama Falls Farther Behind in Spending Fight. “So it is our opinion that however you manage that reduction, you
need to make sure you are not contradicting what we said the impact
would be.” -- An email from USDA official Charles Brown rejecting a
subordinate’s suggestion of a way to lessen the consequences of budget
cuts for citizens. Americans have a government that now claims the power to execute its
own citizens on its own soil without trial but that cannot find a way to
afford public tours of government buildings.
CNBC:
- Retail Investor Sentiment Near All-Time High: TD Ameritrade. "Retail
investors and professionals are both bullish on stocks," said Tom
Bradley, president of retail distribution at TD Ameritrade on "Squawk on
the Street." "Bullish sentiment is definitely high," he added, citing a
TD Ameritrade index
on sentiment of both retail and professional investors.
Zero Hedge:
Business Insider:
Propublica:
- After Sandy, Government Lends to Rebuild in Flood Zones.
The Small Business Administration has approved the restaurant for a
disaster loan of almost $1 million. There’s just one problem: Newly
drawn FEMA flood maps show the cafe is at high risk of flooding again,
raising the question of whether it makes sense to rebuild there or move
elsewhere.
Reuters:
- China blames manipulation for iron ore price surge. China's top economic planning agency lashed out at the world's top three iron
ore miners on Wednesday, accusing them and some traders of manipulating the
market to drive an 80 percent rally in ore prices in just six
months. "The three major miners and some traders have delayed shipments and held back
cargoes to control supplies in order to send a fake market signal that there was
a supply shortage," according to a report published on the National Development
& Reform Commission (NDRC) website.
- DBRS downgrades Italy's debt rating over political uncertainty. Credit-rating agency DBRS
downgraded Italy's debt to A (low) from A with a negative
outlook on Wednesday, the first downgrade of the heavily
indebted country since elections last month produced a political
stalemate.
- American Eagle Outfitters(AEO) outlook soft. American Eagle Outfitters Inc on
Wednesday gave a profit forecast that fell short of Wall Street
expectations and said same-store sales would fall in the current
quarter, a setback for a company that has been winning market
share from rivals. Shares were down 10.2 percent to $20.26 in late morning
trading.
- Euro slides vs dollar as ECB seen signaling future easing.
eFXNews:
Telegraph:
Handelsblatt:
- BDI's Grillo Sees Potential Return to Crisis. Ulrich Grillo,
president of Germany's BDI industry association, cites developments in
Italy and France. The Italian elections and deindustrialization of
France show the danger, Grillo said in an interview.
CNTV:
- China's property control measures may get "stricter," citing
Housing and Urban-Rural Development Minister Jiang Weixin. China won't
cancel its latest property curbs "for awhile," Jiang said.
Shanghai Securities News:
- People's Bank of China adviser Qian Yingyi said today that he
can't rule out an interest rate increase this year. China faces "very
big" pressures in achieving M2 growth target of 13% and CPI growth
target of 3.5%, Qian said.
Style Underperformer:
Sector Underperformers:
- 1) Oil Tankers -1.42% 2) Retail -.87% 3) Road & Rail -.78%
Stocks Falling on Unusual Volume:
- SOHU, QIHU, TV, BTI, RBS, BKU, ARII, TEO, LGCY, PHI, HAFC, CSX,
AVAV, ARI, TFM, O, FWRD, NCS, AEO, WD, JAKK, PER, SPLS, YOKU, CYOU, JCP, MFB, SQM, FGP, BKU, GTLS, MR, CWH, SDT, MITT, FGP, LOGM and HPY
Stocks With Unusual Put Option Activity:
- 1) ITB 2) MTG 3) AEO 4) IYR 5) XRT
Stocks With Most Negative News Mentions:
- 1) COG 2) SQM 3) ARO 4) VNO 5) NVDA
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gold & Silver +2.90% 2) Gaming +1.28% 3) HMOs +.90%
Stocks Rising on Unusual Volume:
- PBR, VIP, CTCM, ENOC, FCX, MHO, HCI, PAY, GRA, AEGR, BIG, BSFT, TIBX, WPRT, TRIP, FSLR, CLDX and LCC
Stocks With Unusual Call Option Activity:
- 1) ALXA 2) SYK 3) SPLS 4) NDAQ 5) XLNX
Stocks With Most Positive News Mentions:
- 1) DF 2) BBY 3) OSIS 4) MW 5) XOM
Charts:
Evening Headlines
Bloomberg:
- Merkel Looks East for Austerity Allies in Talks With Hollande. German
Chancellor Angela Merkel is turning east as she pushes plans for a more
competitive Europe, seeking to bring on board the leaders of Poland and
other eastern countries as allies elsewhere prove hard to find.
Merkel and French President Francois Hollande, the key players in the
euro-area debt crisis, travel to Warsaw today for talks on closer
European Union integration with Polish Prime Minister Donald Tusk and
his peers from the Czech Republic, Slovakia and Hungary. The six leaders are due to hold a joint
news conference at about 4 p.m. Warsaw time.
- Merkel’s Working Poor Pose Election-Year Dilemma as Divide Grows. Every Saturday, about a hundred
people arrive in a silent procession at a small church in the
north of Berlin, armed with empty shopping carts. Some smoke, others play with their children as they wait
patiently to be called for the packets of noodles, vegetables
and cans of soup that are handed out. They are Germany’s poor,
come for out-of-date food that has been collected from
supermarkets by the Laib und Seele charity. “It’s scary, nearly every week more people sign up who
can’t make ends meet,” Antje Grund, a local coordinator for the
charity, said in a Feb. 23 interview while preparing some of the
900 kilograms (2,000 pounds) of food that are doled out each
week. “There are pensioners and unemployed, but even people who
have a job and a regular income come to us to get food.”
- Chavez Legacy of Polarized Venezuela Endangers Smooth Transition. Venezuela
faces political infighting and the risk of unrest after the death of
Hugo Chavez, whose personal brand of socialism left the region’s biggest
oil exporter polarized and among the world’s most violent countries. As
government control of the economy spread, Chavez’s critics blamed the
nationalization of more than 1,000 companies or their assets, currency
controls and price caps for discouraging investment, creating food
shortages and fueling inflation. The former paratrooper’s departure
after 14 years in office opens up a void, even after the cancer-stricken
leader in December urged supporters to elect Vice President Nicolas
Maduro to succeed him if he couldn’t fulfill a term that began Jan. 10.
- China Agrees to Additional UN Sanctions on North Korea. North
Korea and its ruling elite are
facing additional sanctions after the U.S. and China agreed on a United
Nations Security Council resolution punishing the Communist nation for
its February nuclear test explosion. U.S. Ambassador to the UN Susan
Rice announced the agreement yesterday after a meeting of the council,
which plans to adopt the measure with a vote later this week. Russia,
which like China has veto-power, also supports the sanctions, Russian
UN Ambassador Vitaly Churkin said in comments reported by the
RIA news agency.
- Rubber Trades Near Two-Month Low on Demand Outlook Concerns. Rubber futures traded close to the
lowest level in more than two months as investors remained
cautious about demand growth prospects. The contract for delivery in August dropped as much as 0.4 percent
to 286.4 yen a kilogram ($3,074 a metric ton) and was at 287 yen on the
Tokyo Commodity Exchange at 12:17 p.m. local time.
Futures closed at 283.9 yen on March 4, the lowest since Dec. 20.
- Traders Flee Asia Hedge Funds as Job Haven Turns Dead End. Paul
Smith moved from London to Hong Kong to work in Asia’s hedge-fund
industry almost 17 years ago, and he rode the boom to its peak. Last
year, like other industry veterans, he quit. “I decided not to wait
the cycle out but to do something more productive with my time,” said
Smith, 53, who remains in the city heading the Asia-Pacific office of
the nonprofit CFA Institute, the global association of chartered
financial analysts. “The hedge-fund
industry in Asia will continue to struggle to raise funds for the next
few years as banks continue to have liquidity issues.”
- Sharp Said in Talks for 10 Billion Yen Samsung Investment.
Sharp Corp. (6753), the unprofitable Japanese electronics maker, is in
talks to obtain an investment of about 10 billion yen ($107 million)
from Samsung Electronics Co. (005930), according to two people familiar
with the situation.
Wall Street Journal:
- Venezuela Leader Chávez Dies at 58. Hugo Chávez, a former tank commander turned populist politician who
used Venezuela's oil riches to challenge the U.S. with his fiery brand
of socialism, died Tuesday from complications related to cancer. With Mr. Chávez just months into his fourth term, his death plunged Venezuela into political uncertainty.
The foreign minister said Mr. Maduro, as expected, would take over for
Mr. Chávez until an election is held within 30 days. But some in the
ruling party disputed that, saying it should be the head of the
assembly. The Supreme Court declined to immediately weigh in on the
controversy.
- ADP CFO: Companies Accelerated Bonuses at Year-End to Lower Taxes. Companies
heavily accelerated bonuses and payroll at the end of last
year to avoid higher tax rates on personal income in 2013, a move which
could take a bite out of overall wage growth figures this year,
according to Automatic Data Processing Inc. Chief Financial Officer Jan
Siegmund. When the Commerce Department in January said bonus payments
that were shifted into 2012 from this year helped push personal income
in the U.S. 2.6% higher in December, it confirmed what Mr. Siegmund had
known was coming for months.
- New York City Leads Jump in Homeless.
An average of more than 50,000 people slept each night in New York
City's homeless shelters for the first time in January, a record that
underscores an unsettling national trend: a rising number of families
without permanent housing. Families have become a larger share of the nation's homeless
population, growing 1.4% from 2011 to 2012, after their numbers fell as
the economy emerged from recession.
In Boston, authorities said there were
1,166 homeless families in December 2012, up 7.8% from the previous
year. In Washington, D.C., homeless families grew 18% from 2011 to 2012,
according to the U.S. Department of Housing and Urban Development. The
numbers in New York, however, are starker, according to a report
to be published Tuesday by the Coalition for the Homeless, a New York
advocacy group, citing New York City government figures.
More than 21,000 children—an
unprecedented 1% of the city's youth—slept each night in a city shelter
in January, an increase of 22% in the past year, the report said, while
homeless families now spend more than a year in a shelter, on average,
for the first time since 1987. In January, an average of 11,984 homeless
families slept in shelters each night, a rise of 18% from a year
earlier.
- White House Asked Gensler to Stay at CFTC. The Obama administration has asked Gary Gensler to serve a second
term as the U.S.'s top futures-industry regulator, according to people
familiar with the matter. The question now is whether Mr. Gensler will say yes. Mr. Gensler, who heard from the White House in January, hasn't
decided whether he will stay as chairman of the Commodity Futures
Trading Commission. Instead, he is interested in taking on a role as a
senior economic official elsewhere in the administration, these people
say.
- Fed Holds Ground on 'Stress Test' Releases.
Banks Argued Against the New Plan to Issue Results in Two Components, a
Week Apart, Citing Possible Stock Volatility. Large U.S. banks and the
Federal Reserve are clashing over the
two-part "stress test" release schedule adopted this year, in the latest
flash point between large financial institutions and their overseers. A conference call last week between Fed officers and bank
representatives ended with the central bank refusing to accommodate
demands from some lenders for a one-day release of results, according to
a person briefed on the call.
- Copper Market Prepares for a Flood. Price of the Industrial Metal Has Plunged Amid Forecasts of the Biggest Increase in Output in 13 Years. The copper market is bracing for a wave of new mine openings this year. Copper prices recently fell to three-month lows as investors and
traders anticipate an onslaught of supplies, estimated to be the biggest
increase in global copper mine output in 13 years.
At the same time, the outlook for growth in copper demand remains
dim: The No. 2 and No. 3 users of the industrial metal, Europe and the
U.S., continue to face economic headwinds.
- #SequesterThis. Meat inspectors have to go, but fine wines are still on the USDA menu. In its bid to make the sequester as painful as possible, the White House
announced Tuesday that it is canceling all visitor tours of the White
House "during the popular Spring touring season." This fits President
Obama's political strategy to punish the eighth graders visiting from
Illinois instead of, say, the employees of the Agriculture Department
who will attend a California conference sipping "exceptional local
wines" and sampling "tasty dishes" prepared by "special guest chefs."
Fox News:
CNBC:
- Oil Industry Mulls Next Steps for Venezuela.
Venezuelan President Hugo Chavez's death is not likely to result in
near-term changes to the Venezuelan oil industry or global energy
landscape, but it could ultimately result in
political change that would reopen the country's energy industry to
foreign investment.
- Paulson's Gold Fund Limps Forward. Gold is up 70 percent since hedge-fund manager John Paulson turned
bullish in the spring of 2009. So why has Paulson & Co.'s dedicated
gold fund suffered double digit declines?
Zero Hedge:
Business Insider:
Reuters:
- EMERGING MARKETS-Brazilian stocks fall on rates speculation.
- Unpaid bills, pensions loom large in new Illinois budget. Illinois Governor Pat
Quinn will unveil a fiscal 2014 budget on Wednesday that will
chip away at a huge pile of overdue bills and cut spending to
accommodate growing public pension costs, top state officials
said on Tuesday.
- Google(GOOG) tests same-day delivery, raising marketplace speculation. Google
Inc began testing a same-day delivery service with retailers in recent
weeks, the latest move into Amazon.com Inc's e-commerce turf by the
world's largest Internet search company. Google Shopping Express helps local retail stores sell
products online and have the items delivered to shoppers the
same day, according to a person familiar with the test.
- Italy president mulls new technocrat government-sources. President Giorgio Napolitano is
considering appointing a new technocrat government led by a
non-politician as one way out of Italy's political stalemate,
Italian officials said on Tuesday. Such a solution would come into play if centre-left leader
Pier Luigi Bersani failed to form a government after receiving
an initial mandate from Napolitano, as is expected, they said.
Telegraph:
Hong Kong Economic Times:
- Centaline Founder Says
Hong Kong Property Curbs 'Last Straw'. Shih Wing Ching said the latest
round of property measures is the "last straw to break the camel's back" and will lead to "big adjustments" in prices. Transaction volumes may fall by half, Shih said.
South China Morning Post:
- Dry Cargo Bulk Shippers to Remain Under Pressure. China Merchants Group Chairman Fu Yuning says he doesn't expect the problem of excess capacity to be resolved this year.
Shanghai Securities News:
- The China Banking Regulatory Commission will issue new rules on
housing loans following property curbs announced last Friday by the
State Council, citing Chairman Shang Fulin.
China Securities Journal:
- China Should Use Property Tax to Curb Speculation. Property control
suppresses prices, preventing it from rising too quickly which will
impact macroeconomic and social stability, citing a commentary by Mei
Xinyu, a researcher with the Ministry of Commerce.
Evening Recommendations
Oppenheimer:
- Rated (UPS) Outperform, target $95.
- Rated (FDX) Outperform, target $124.
Night Trading
- Asian equity indices are +.25% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 106.0 -3.5 basis points.
- Asia Pacific Sovereign CDS Index 84.0 -1.0 basis point.
Morning Preview Links
Earnings of Note
Company/Estimate
- (AEO)/.56
- (BF/B)/.70
- (PETM)/1.21
- (DYN)/-.46
- (SPLS)/.45
- (TFM)/.44
- (BIG)/1.98
- (KFY)/.29
- (HOV)/-.10
Economic Releases
8:15 am EST
- The ADP Employment Change for February is estimated to fall to 170K versus 192K in January.
10:00 am EST
- Factory Orders for January are estimated to fall -2.2% versus a +1.8% gain in December.
10:30 am EST
- Bloomberg
consensus estimates call for a weekly crude oil inventory build of
+788,000 barrels versus a +1,130,000 barrel gain the prior week.
Gasoline supplies are estimated to fall by -1,000,000 barrels versus a
-1,857,000 barrel decline the prior week. Distillate inventories are
estimated to fall by -1,000,000 barrels versus a +557,000 barrel gain
the prior week. Finally, Refinery Utilization is estimated to rise by
+.4% versus a +2.2% gain the prior week.
2:00 pm EST
Upcoming Splits
Other Potential Market Movers
- The Fed's Fisher speaking, Fed's Plosser speaking, Eurozone gdp
report, Canadian rate decision, weekly MBA mortgage applications report,
Cowen Healthcare Conference, Wedbush Tech/Media/Telecom Conference,
(HON) investor conference and the (XOM) analyst meeting could also
impact trading today.
BOTTOM LINE: Asian indices are higher, boosted by technology 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 50% net long heading into the day.
