Evening Headlines
Bloomberg:
- Cameron Ignores ‘Rubbish’ Stories, Focusing on Economy. Prime
Minister David Cameron, speaking after three weeks of reports of
lawmakers questioning his leadership, said he ignores such “rubbish” and
is focusing
on securing the U.K.’s international economic competitiveness. Cameron
saw the U.K.’s top credit rating downgraded last
month and his party, already behind in the polls for a year, was
pushed into third place in a special election, stoking criticism
of his leadership. Following Cabinet revolts over spending plans
and alcohol pricing, he hit back last night, saying his Tory
party and voters need to concentrate on the longer-term goal of
restoring economic growth.
- Merkel's Reform Crown Slips at
Home as She Turns Europe German. The political heirs to a decade-old
strategy that turned Germany into the economic powerhouse of Europe risk
squandering the gains. Ten years to the day since Gerhard Schroeder
unveiled a welfare and labor-market overhaul that economists credit with
reinvigorating the Germany economy, his Social Democratic Party is
backtracking while his successor as chancellor, Angela Merkel, may not
be doing enough to keep the reform flame alive.
- China Stocks in Hong Kong Fall, Drop 10% From Recent Peak. Chinese
stocks fell in Hong Kong, dragging the benchmark index down 10 percent
from its peak, amid concern the government will take steps to avert
asset bubbles. Haitong Securities Co. paced declines by brokerages
in Hong
Kong, while China Life Insurance Co. dropped to a six-month low. Country
Garden Holdings Co. (2007) slumped 4.6 percent, leading losses by
developers. Beijing will strengthen reviews of homebuyers’
qualifications to purchase property in the city amid real estate curbs,
the China Securities Journal reported, citing an unidentified person. “Not-too-ample
liquidity and the weak economic recovery are a very bad combination for
stocks,” said Li Jun, a strategist at Central China Securities Co. in
Shanghai. The Hang Seng China Enterprises Index (HSCEI) retreated 0.8
percent
at 10:50 a.m. in Hong Kong. The gauge is poised to enter a
correction after losing 10 percent from its Feb. 1 high.
- Little Chance of Better China-Japan Ties Now, Global Times Says. There is almost “no possibility”
that China and Japan will restore ties to the level they were before an island dispute so long as Prime Minister Shinzo Abe
remains in power, the Global Times newspaper said. China should aim to force the Abe government to negotiate
over islands in the East China Sea claimed by both sides, the
paper said in an editorial. Doing so would be a strategic
victory though it could create the risk of war, the state-run
newspaper said. The deputy head of China’s mapping agency
said surveyors will land on the island at an “appropriate
time,” China National Radio reported March 12. “China needs to give up its dreaming and should be tough
in response to Abe’s toughness,” the Chinese-language editorial
said.
- China Money-Market Rate Rises as Zhou Signals Inflation Concern. China’s money-market rate rose to a
one-week high after central bank Governor Zhou Xiaochuan said yesterday the nation should be on “high alert” over inflation. “The
PBOC is still withdrawing liquidity” said Weisheng He, a Shanghai-based
strategist at Citigroup Inc. “The authorities are somewhat concerned
about rapid monetary growth.” The seven-day repo rate, which measures
interbank funding availability, climbed six basis points, or 0.06
percentage point, to 3.08 percent as of 10:45 a.m. in Shanghai, according to a
weighted average compiled by the National Interbank Funding
Center.
- Hong Kong Banks Boost Rates as Government Cools House Market.
HSBC Holdings Plc (HSBA) and Standard Chartered Plc (2888) raised Hong
Kong mortgage rates for the first time since 2011, after the banking
regulator tightened risk rules on concern a property bubble may
undermine financial stability. The lenders will raise home
loan charges priced at the best lending rate by 25 basis points,
starting today, they said in separate e-mailed statements yesterday.
- Industrial Metals Retreat Amid Tightening Concerns in China. Lead
declined from the highest
level in more than a week as copper and zinc dropped after China’s
central bank governor’s comments on inflation signaled a heightened
focus on controlling prices. Lead for delivery in three months lost
as much as 0.7 percent to $2,235 a metric ton on the London Metal
Exchange and was at $2,239 at 10:49 a.m. in Shanghai. Copper fell 0.2
percent to $7,772 a ton and zinc dropped 0.3 percent to $1,977 a ton.
“Concerns over China’s macro economy persist,” Li Peng, an analyst at
Guotai Junan Futures Co., said by phone from
Shanghai. “Real estate is a so-called ‘pillar’ industry to the
Chinese economy and has a great impact on metals demand.”
- Rebar Tumbles to Lowest in Three Months After Iron Ore Slumps. Steel
reinforcement-bar futures in Shanghai declined for a seventh day to the
lowest level in three months after the raw material used in steel
making fell. Rebar for delivery in October on the Shanghai Futures
Exchange retreated as much as 2.4 percent to 3,741 yuan ($602) a metric
ton, the lowest since Dec. 14, before trading at 3,770 yuan at 10:02
a.m. local time. The price has dropped 12 percent since touching this
year’s high of 4,297 yuan on Feb. 8. Iron ore dropped the most yesterday
since January to the lowest level this year amid concern curbs on
construction in China will reduce demand for the commodity used to make
steel. Imported ore with 62 percent iron content at the Chinese port of
Tianjin dropped 3.1 percent to $139 a dry ton, the most since
Jan. 16, according to The Steel Index Ltd. “Lower raw-material prices have weighed on steel
products,” Zheng Ge, an analyst at Wanda Futures Co., said in a
report today. “The market is awash with inventory so we may see
steel prices fall further.”
- Rubber Drops to Lowest in Three Months on Malaysian Exports, Yen. Rubber
declined for a third day to
the lowest level in three months after exports surged from Malaysia, the
third-largest producer, and the Japanese currency strengthened,
reducing the appeal of yen-based contracts. The contract for
delivery in August on the Tokyo Commodity Exchange fell as much as 2.9
percent to 272.4 yen a kilogram ($2,843 a metric ton), the lowest since
Dec. 14, before trading at 275 yen at 10:21 a.m. Futures have lost
8.7 percent in the past three days. “Production is greater than demand,
raising inventories,” said Gu Jiong, an analyst at commodity broker
Yutaka Shoji Co. (8747) “This puts pressure on the rubber market.” Inventories in China, the largest user, jumped to 107,481
tons, the highest level in three years, based on a survey of
nine warehouses in Shanghai, Shandong, Yunnan, Hainan and
Tianjin, the Shanghai Futures Exchange said March 8. Stockpiles
in Japanese warehouses rose 3.8 percent to 11,363 tons on Feb.
28, the Rubber Trade Association of Japan said March 11.
- Brazil Real Drops on Speculation Credit Rating May Be Lowered. Brazil’s real declined, giving up earlier gains, on speculation among traders that the nation’s credit rating may be lowered.
Credit-default swaps for Brazil rose while the benchmark stock index
fell for a second day and interest-rate swaps jumped to an eight-month
high. The real slid 0.4 percent to 1.9721 per dollar. It earlier
advanced as much as 0.3 percent.
- Fed to Release Statment, Projections on March 20 at 2 PM. The Federal Reserve starting next
week will cut to 30 minutes the gap between the release of the
Federal Open Market Committee policy statements and the start of
Chairman Ben S. Bernanke’s press conferences. The central bank will release the FOMC statement and the
Summary of Economic Projections at 2 p.m. Washington time,
followed by Bernanke’s briefing to reporters at about 2:30 p.m.,
the Fed said today in a statement. Prior FOMC statements were
released at about 12:30 p.m. on press conference days, with
Bernanke starting his briefing at 2:15 p.m. The change will “better facilitate the release of
information in conjunction with the chairman’s quarterly news
conferences,” the Fed said in a statement today in Washington.
- Dallas Fed Cap Seen Shrinking U.S. Banking Units by Half. A
proposal by the Federal Reserve Bank of Dallas to limit government
support for banks could force JPMorgan Chase & Co. (JPM) and Bank of
America Corp. to shrink their U.S. consumer and commercial-lending
units by more than half. The plan would cap assets at
deposit-insured divisions of the largest U.S. financial firms at about
$250 billion and wall off investment banking from traditional lending,
Dallas Fed
Executive Vice President Harvey Rosenblum said in an interview.
The limit is needed to allow the Federal Deposit Insurance Corp.
to shut a failed bank without using taxpayer funds, he said.
- Morgan
Stanley(MS) Cautions on Junk Quality Souring: Credit Markets. An
improving economy is emboldening junk-rated borrowers in the U.S. to
boost debt ratios from the highest level since 2009. Leverage is poised
to rise this year from 3.8 times in the fourth quarter and 3.38 times at
the end of 2011, according to Morgan Stanley.
Wall Street Journal:
- U.S. Catholics Express High Hopes for New Pope. Pope Francis has a unique opportunity to modernize the church, reach
its areas of growth more effectively and take a tougher stance on the
sexual-abuse scandals that have tarnished its reputation, U.S. Catholics
said Wednesday. From Los Angeles to Miami to Boston, archbishops and parishioners
alike praised the election of the former Cardinal Jorge Mario Bergoglio
of Buenos Aires, the first pope from the Americas. His ascent is "a
great thing for the United States and for Latin America," said Thomas
Wenski, the archbishop of Miami, at a news conference. "All of us that
live in the Americas, we have a greater freedom a lot of times than
people in Europe or more traditional societies."
- Henninger: Escape From Spending Hell. The sequester proved that spending cuts aren't a political third rail.
So it looks like we've all been sentenced to spending at least two more
years in budget hell with Barack Obama. Under the rules of budget hell
set the past four years by the prince of Pennsylvania Avenue, you're not allowed to do anything real about federal spending. You can only fight over federal spending. Forever.
Fox News:
- Obama meets with House Republicans, downplays 'immediate' debt crisis. President Obama met Wednesday with House Republicans in an apparent
bid to find consensus on fiscal policy, even as he seemed to antagonize
the other side by claiming there's no "immediate crisis in terms of
debt." His statement would be sharply at odds with a core Republican
principle that the debt must be addressed soon -- and which underpinned
the cost-cutting GOP budget released Tuesday. The president also
acknowledged, in an interview aired earlier in the day, that differences
with the GOP might be "too wide" to bridge.
MarketWatch.com:
CNBC:
- Fed Gets Ready to Judge Big Bank Plans to Redistribute Cash. The
Federal Reserve plans to unveil Thursday afternoon the results of its
review of bank plans for their piles of cash — from mergers to dividends
and stock buybacks. This will be the second half of what is now an
annual round of stress tests for the nation's 18 largest banks. Last
Thursday, the Fed announced the results of its stress tests: Seventeen
banks passed, which means the
Fed believes that they would be able to survive a nasty recession or
what the Fed calls a "seriously adverse scenario."
- Doctor Shortage Getting Worse.
Experts often call it the "invisible problem," because the shortage
of doctors in the U.S. is not as conspicuous or talked about as much as
home foreclosures or job losses. But the growing
scarcity—most specifically of primary care physicians—is clear for
patients who sit for hours in waiting rooms, must drive long distances
to a physician's office or simply can't find a doctor. Some observers
say that the shortage is a major threat to the nation's health care
system. The U.S. is estimated to be short about 16,000 primary care
doctors. That leaves about 55 million people without a doctor or
struggling to find one. The Association of American Medical Colleges predicts bigger shortages
in all types of physicians: 63,000 by 2015 and 130,600 by 2025. Entering the system in 2014 will be the 30 million additional
people with access to services through the Affordable Care Act
(Obamacare). "There were shortages in doctors when
Massachusetts did their version of the Affordable Care Act," said
Ruselle Robinson, a health care business attorney and former general
counsel to the Massachusetts Department of Public Health. "It's hard to say how this will play out with all the new people being added to health care next year," Robinson said.
Zero Hedge:
Business Insider:
U.S. News:
- Democrats Fret Over Obama Poll Numbers. Democratic strategists are increasingly worried about the decline in President Obama's job approval ratings. "We aren't panicking but it's a source of concern," a senior Democrat told me.
Reuters:
- S&P cuts Puerto Rico GO rating to near-junk status. Standard & Poor's Ratings Services cut
its general obligation credit rating for Puerto Rico on
Wednesday to BBB minus, just one step from junk status, saying
it was worried the Caribbean island's government budget gaps
would prove hard to close. "The outlook is negative," the Wall Street credit-ratings
group said in a news release. "We base the downgrade on the result of an estimated fiscal
2013 budget gap, which we view as significantly larger than
originally budgeted, absent corrective action," said S&P credit
analyst David Hitchcock.
Financial Times:
- Tax blow to Italian stock trading. Trading
in Italian stocks through the desks of major banks has dropped sharply
amid a wider fall in volumes since Italy introduced a tax on financial
transactions. Data from Thomson Reuters suggest that banks – which have been some
of the most outspoken critics of a so-called Tobin tax – have emerged as
the biggest losers since a levy on equity and derivative transactions
came into force in Italy at the beginning of the month.
- Germany defies calls for stimulus. Germany
has ignored calls from its eurozone partners for more economic stimulus
by tabling plans to cut spending and balance its budget ahead of
schedule on the eve of an EU summit dedicated to growth. Wolfgang Schäuble, German finance minister, said on Wednesday that
his budget for 2014, involving spending cuts of more than €5bn to trim
the total below €300bn, was “a strong signal for Europe”.
Telegraph:
- Labour's toxic legacy has become a bad excuse for doing nothing. The purpose of a good graphic is to tell the story better than words: few do
it better than the National Institute of Economic and Social Research's
long-standing chart tracking the progress of the UK recession and recovery
relative to previous downturns.
Shanghai Securities News:
- China Banking Regulatory Commission drafts guideline on
strengthening risk supervision for local government financing vehicle
loans, citing a person familiar with the situation. The draft reiterates
controls on total amount of LGFV loans.
China Securities Journal:
- Beijing
will strengthen review of homebuyers qualifications to purchase
property in the city as a local policy for real estate curbs, citing a
person familiar with the situation. Beijing may also release some
policies on exiting home transactions, the person said.
- China
Securities Regulatory Commission will try to release supervision rules
for listed companies this year, citing Ouyang Zehua, an official at the
regulator.
Securities Times:
- Banks are under pressure to increase profits because of narrowing net interest margins resulting from interest rate liberalization and falling non-interest income, citing Bank of China Chairman Xiao Gang. Profit growth rate is slowing, Xiao said.
Evening Recommendations
Night Trading
- Asian equity indices are -1.25% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 102.50 -.5 basis point.
- Asia Pacific Sovereign CDS Index 81.0 +.5 basis point.
- NASDAQ 100 futures +.04%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Producer Price Index for February is estimated to rise +.7% versus a +.2% gain in January.
- The PPI Ex Food & Energy for February is estimated to rise +.1% versus a +.2% gain in January.
- Initial Jobless Claims are estimated to rise to 350K versus 340K the prior week.
- Continuing Claims are estimated to fall to 3090K versus 3094K prior.
Upcoming Splits
Other Potential Market Movers
- The Eurozone unemployment report, SNB rate decision, EU Economic
Summit, Japan vote on Kuroda nomination, $16B 30Y T-Bond auction, Round
Two of CCAR Results, Bloomberg March US Economic Survey, weekly EIA
natural gas inventory report, weekly Bloomberg Consumer Comfort Index,
(ONXX) analyst day and the Samsung Galaxy 4 introduction could also
impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity 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.
Broad Market Tone:
- Advance/Decline Line: Slightly Higher
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- ISE Sentiment Index 103.0 -8.04%
- Total Put/Call .77 -28.04%
Credit Investor Angst:
- North American Investment Grade CDS Index 79.16 -.72%
- European Financial Sector CDS Index 145.43 +1.12%
- Western Europe Sovereign Debt CDS Index 97.60 +1.14%
- Emerging Market CDS Index 237.44 +.48%
- 2-Year Swap Spread 13.25 -.25 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -16.5 +.25 bp
Economic Gauges:
- 3-Month T-Bill Yield .09% unch.
- China Import Iron Ore Spot $139.0/Metric Tonne -3.07%
- Citi US Economic Surprise Index 27.4 +6.3 points
- 10-Year TIPS Spread 2.57 +1 bp
Overseas Futures:
- Nikkei Futures: Indicating +101 open in Japan
- DAX Futures: Indicating +14 open in Germany
Portfolio:
- Slightly Higher: On gains in my retail sector longs and emerging markets shorts
- Disclosed Trades: Covered some of my (IWM), (QQQ) hedges, then added them back
- Market Exposure: 50% Net Long
Bloomberg:
- Euro-Region Industrial Output Drops as Slump Persists: Economy. Euro-area industrial output fell
more than economists forecast in January, adding to signs that
the region’s recession extended into the first quarter. Factory
production in the 17-nation euro zone dropped 0.4 percent from December,
when it rose a revised 0.9 percent, the European Union’s statistics
office in Luxembourg said today. The median forecast in a Bloomberg News
survey of 32 economists was
for a 0.1 percent decline. Production fell 1.3 percent in
January from a year earlier.
- Italian Bonds Decline as Borrowing Costs Climb at Debt Auction. Italian bonds fell, with two-year
yields rising the most in two weeks, as borrowing costs
increased at an auction amid concern a political deadlock will
derail plans to fix the nation’s finances. Shorter-maturity notes led declines as the country sold
3.32 billion euros ($4.3 billion) of securities due in December
2015 at an average yield of 2.48 percent versus 2.30 percent at
the previous offering last month. “The market is a bit complacent about the risks that can
happen in Italy,” said Mohit Kumar, head of Europe and U.K.
rates strategy at Deutsche Bank AG in London. “If you have a
government that is unable to pursue structural reforms, it will
have an impact on economic growth in Italy.”
- Europe to Contract as Much as 1.5%, El-Erian Says: Tom Keene.
- PBOC Chief Says China Should Be on ‘High Alert’ on Inflation. China
should be on “high alert”
over inflation after February’s figures exceeded forecasts,
central bank Governor Zhou Xiaochuan said, signaling a heightened focus
on controlling prices. Monetary policy is “no longer relaxed” and is
“relatively neutral” as demonstrated by a 13 percent target for
money-supply growth that’s tighter than expansion in the last two years,
Zhou, head of the People’s Bank of China, said at a press
conference today during the annual gathering of China’s National
People’s Congress. Zhou’s comments add to signs that officials are
tightening
policies even as the recovery in the world’s second-biggest
economy shows signs of weakness.
- China’s Stocks Slump to Two-Month Low on Property Curbs. Chinese stocks fell, dragging the
benchmark index to a two-month low, as real estate and
construction companies tumbled on concern policy makers will
step up property curbs. Sina.com reported the southern city of Shenzhen banned
developers from raising home prices, citing discussions with
property companies. Poly Real Estate Group Co. and Gemdale Corp.
declined more than 3 percent. Sany Heavy Industry Co. (600031), the
nation’s biggest maker of construction machinery, lost 2.1
percent. CSR Corp. (601766) and China CNR Corp., the nation’s top train
makers, slumped at least 3.7 percent on concern the dismantling
of the rail ministry will curb state spending. “Property curbs and the central bank’s possible attitude
towards tightening liquidity make investors nervous,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai.
“There’s concern the economic recovery will falter.” The Shanghai Composite Index (SHCOMP) dropped 1 percent to 2,263.97
at the close, capping a five-day, 3.6 percent losing streak
that’s the longest in four months. The gauge also erased its
gain for the year.
- Copper Falls on Concern China Housing Curbs Will Sap Demand. Copper
fell the most in a week amid
concern that policy makers will expand efforts to cool the
housing market in China, the world’s biggest consumer. Chinese stocks
fell, dragging the benchmark index to a two- month low, as real estate
and construction companies tumbled. Sina.com reported the southern city
of Shenzhen banned developers from raising home prices. Accelerating
inflation means the country should be on “high alert,” Zhou Xiaochuan,
head of the People’s Bank of China, said today, signaling a
heightened focus on controlling prices. On the Comex in New York, copper futures for delivery in
May slid 0.7 percent to $3.5285 a pound at 12:01 p.m., heading
for the biggest decline since March 1.
- Iron Ore Falls Most Since January Amid China Property Concerns. Iron ore fell the most since
January amid concern curbs on construction in China will reduce
demand for the commodity used to make steel. Imported ore with 62 percent iron content at the Chinese
port of Tianjin dropped 3.1 percent to $139 a dry metric ton
today, the most since Jan. 16, according to The Steel Index Ltd.
The global benchmark fell 13 percent from a 16-month high
reached Feb. 20. Sentiment is deteriorating because of concerns about demand
from real estate in China, Oscar Tarneberg, an analyst at The
Steel Index, said by e-mail today. “China’s panicked basic-material destock continues, with
construction and real-estate firms caught up in a severe
economic slump, caused by tightening liquidity and the ongoing
threat of negative property policies,” Melinda Moore, an
analyst at Standard Bank Plc, said in an e-mailed report today.
- Import Prices in U.S. Climbed in February as Energy Costs Jumped. The cost of goods imported into the
U.S. climbed in February by the most in six months, reflecting a
jump in energy expenses that is now receding. The 1.1 percent
increase in the import-price index followed a 0.6 percent gain in the
prior month, Labor Department figures showed today in Washington. The
median forecast of 43 economists in a Bloomberg survey called for a 0.6
percent advance. Prices
dropped 0.3 percent over the past 12 months.
- Business Inventories in U.S. Increase by Most Since May 2011. Inventories in the U.S. rose in
January by the most since May 2011 as companies replenished
warehouses and shelves amid signs demand will pick up. The 1 percent
increase in goods on hand exceeded the highest forecast in a Bloomberg
survey and followed a 0.3 percent gain in December that was more than
previously estimated, Commerce Department figures showed today in
Washington. The median estimate was for a 0.5 percent advance. At the January sales pace, businesses had enough goods on
hand to last 1.29 months, up from 1.28 months in the prior month
and the highest since August. Business sales dropped 0.3 percent in January, reflecting
declines at factories and wholesalers.
Wall Street Journal:
- New Pope: Live Updates.
- The Resilient Consumer? Not Quite. Resilient?
That’s not exactly the word we’d use to describe it. The bulk of the
gain came courtesy of auto sales and rising gas prices. Excluding those two items, and building materials, sales were up a far less impressive 0.36%. Sales were down at department stores, restaurants and furniture stores. “That indicates consumers may have cut their spending on non-essentials,” Dow Jones’ Sarah Portlock and Jeffrey Sparshott wrote this morning.
CNBC:
- Crumbling BRICs: Why You're Better Off Elsewhere. The
BRIC nations increasingly look like they will no longer be the building
blocks of international investing. As a group, Brazil, Russia, India
and China have been seen as the
collective pillar of emerging market growth, leading to an exodus of
money from U.S. stocks and into global equities. But signs indicate that trade has begun to run its course, and investors are looking for opportunity elsewhere.
Zero Hedge:
Business Insider:
NYPost:
- Goldman’s(GS) Blankfein on trader talent hunt at Morgan Stanley(MS). Lloyd Blankfein smells blood in the water. The Goldman Sachs
CEO is taking dead aim at Morgan Stanley’s most prized assets — its best
and brightest employees — after his rival decided to defer pay for
senior bankers. Blankfein, as a big game hunter, recently landed
13-year Morgan Stanley veteran Kate Richdale, head of its Asia Pacific
investment banking business. The CEO’s talent hunt is continuing,
sources said. Goldman currently is in selective talks with other Morgan
Stanley bankers and has also lured a handful of traders from the bank.
The classic Wall Street maneuvering comes months after Morgan Stanley
told some execs it would defer pay, including their cash bonuses, over
three years — a move that caused some bankers to grouse.
c/net:
Reuters:
- Exclusive: Obama administration to let spy agencies scour Americans' finances. The Obama
administration is drawing up plans to give all U.S. spy agencies full
access to a massive database that contains financial data on American
citizens and others who bank in the country, according to a Treasury
Department document seen by Reuters. The proposed plan represents a
major step by U.S. intelligence agencies to spot and track down
terrorist networks and crime syndicates by bringing together financial
databanks, criminal records and military intelligence. The plan, which
legal experts say is permissible under U.S. law, is nonetheless likely
to trigger intense criticism from privacy advocates.
-
Italy's Berlusconi promises parliamentary battle against magistrates. Italy's former prime minister,
Silvio Berlusconi, facing trial on tax fraud and sex charges and
under investigation for suspected political bribery, promised to
take on prosecutors after parliament opens this week.
- Russia risks billions of dollars if Cyprus defaults - Moody's.
Telegraph:
Style Underperformer:
Sector Underperformers:
- 1) Gold & Silver -2.03% 2) Steel -1.94% 3) Telecom -.75%
Stocks Falling on Unusual Volume:
- AMX, CVI, NGD, RY, MLNX, FN, NTWK, CYOU, CLMS, ESC, BNNY, PAMT, EXPR, DOLE, JIVE, CLMS, VLO, PBF, SLCA, FN, HFC, IOC, TLLP, EPB, RGLD, STLD, SA, ASR, EBAY, NUE, KRO and NTWK
Stocks With Unusual Put Option Activity:
- 1) ETFC 2) EA 3) ARO 4) SMH 5) CTSH
Stocks With Most Negative News Mentions:
- 1) VLO 2) CVI 3) WMT 4) EPB 5) DKS
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Airlines +1.65% 2) Homebuilders +.66% 3) Defense +.62%
Stocks Rising on Unusual Volume:
- VMW, YNDX, NFP, JBHT, DWA, CZR and WAG
Stocks With Unusual Call Option Activity:
- 1) WFR 2) SPPI 3) IAU 4) UUP 5) WAG
Stocks With Most Positive News Mentions:
- 1) PBR 2) COH 3) DFS 4) MRK 5) DPZ
Charts:
Evening Headlines
Bloomberg:
- EU Closes German-Designed Fiscal Straitjacket for Region. The European Union completed a
framework for tougher controls on spending by euro-area
governments in a German-led bid to prevent a repeat of the debt crisis that has threatened to break apart the single currency.
The European Parliament voted to let the EU screen the budgets of euro
nations earlier and more closely monitor countries where rising
borrowing costs pose risks to financial
stability. The assembly also approved tighter EU fiscal
surveillance of nations after they exit rescue programs.
- Italian Billionaire Says Bankers Must Follow Lawmakers Out Door.
Italian billionaire Diego Della
Valle, head of shoemaker Tod’s SpA (TOD), welcomed the wave of public
disgust that swept established politicians from parliament last month
and said it’s time to dislodge some top bankers as well. “It’s clear
that people said, ‘That’s enough, it’s time to
change, show us a decent country,’” Della Valle said March 6 in
a Bloomberg Television interview. “That also has to happen in
the world that we represent, finance and business and the civil
society that guides the country.”
Della Valle, 59, is picking fights with finance executives
as banks curb lending and Italy slides deeper into recession.
- IMF’s Lipton Urges Officials to Redouble Bank Oversight Reform. The
International Monetary Fund’s
No. 2 official urged policy makers to clean up banks and
strengthen oversight of their financial systems or risk stalling
a recent rally in global markets. With the world economy still subdued,
further repair of banks’ balance sheets is necessary, which may require
more capital for some lenders and closure for others, David Lipton, the fund’s first deputy managing director, said in a speech in
Washington today. He also called for unwinding of excessive
public and private debt.
- U.S. Intelligence Chief ‘Very Concerned’ on North Korea. North Korea’s nuclear weapons and
missile programs pose a “serious threat” to the U.S. and its
allies in Asia, according to U.S. intelligence agencies in an
unclassified worldwide threat assessment. Presenting the report to the Senate intelligence committee
yesterday, Director of National IntelligenceJames Clapper said
he is “very concerned” about the actions of North Korea’s
leader Kim Jong Un and the “very belligerent” rhetoric that
has been emanating from his regime. His testimony comes as tensions on the Korean peninsula are
at the highest since at least 2010, with North Korea threatening
nuclear strikes and withdrawing from the 1953 armistice ending
the Korean War. “The rhetoric, while it is propaganda laced, is also an
indicator of their attitude and perhaps their intent,” Clapper
told the committee. “So, for my part, I am very concerned about
what they might do.” The North is capable of initiating “a
provocative action against the South,” he said.
- China’s Stocks Drop for Fifth Day as Industrial Companies Slump. Chinese
stocks fell for a fifth day, dragging the benchmark index to its
longest losing streak in four months, as industrial and financial
companies slid amid concern the government will take steps to avert
asset bubbles. Sany Heavy Industry Co. lost 2.1 percent, while
Gemdale Corp paced declines by property developers, after news portal
Sina.com reported the southern city of Shenzhen banned developers from
raising prices of new residential properties. “Property curbs and the
central bank’s possible attitude towards tightening liquidity make
investors nervous,” said Wang Weijun, a strategist at Zheshang
Securities Co. in Shanghai. “There’s concern the economic recovery will
falter.” The Shanghai Composite Index (SHCOMP) dropped 0.5 percent
to 2,274.07 at 9:46 a.m. local time, adding to a four-day, 2.6 percent
slump. The Shanghai gauge has declined 6.5 percent since its high on Feb. 6 amid concern the government will tighten monetary
policy at the same time as economic expansion slows. Data over
the weekend showed inflation accelerated in February, while
industrial output had the weakest start to a year since 2009 and
lending and retail sales growth slowed.
- Stranded Hotel in Australia Emblem of Mining Bust: Commodities. Global
capital spending by mining companies is set to drop by a third next
year to $96 billion, from a record $141 billion last year, according
to UBS AG estimates. Producers have slowed expansions and delayed
projects on expectations that commodities prices have passed their
highs, after economic growth began slowing in China, the biggest buyer
of metals.
- Rubber Declines Amid Yen’s Advance, Rising Stockpiles in China. Rubber
dropped for a second day to
the lowest level in more than a week as Japan’s currency climbed,
reducing the appeal of yen-denominated contracts, and on concern that
reserves in China are increasing. The contract for delivery in August
fell as much as 2.7 percent to 284.5 yen a kilogram ($2,967 a metric ton) on the Tokyo Commodity Exchange, the lowest most-active price since
March 5. It traded at 285.1 yen at 10:51 a.m. in Tokyo after
losing 2.9 percent yesterday.
- Rebar Falls to Lowest Level This Year on Inventory, Production. Steel
reinforcement-bar futures declined for a sixth day to the lowest level
this year as swelling inventory and record output in China increased
concern that the market is oversupplied. Rebar for delivery in October
on the Shanghai Futures Exchange fell as much as 1 percent to 3,853
yuan ($620) a metric ton, the lowest level for a most-active contract
since Dec. 25, before trading at 3,862 at 9:59 a.m. local time. Inventory jumped 86 percent this year through March 8, according to Shanghai Steelhome Information. Total crude-steel
production in China gained 9.8 percent in February from a year
ago to 61.83 million tons, the statistics bureau said yesterday.
Average daily crude-steel output rose to 2.2 million tons last
month, a record high, according to a report by Wanda Futures Co.
Wall Street Journal:
- Big Sugar Is Set for a Sweet Bailout. Candy makers will suffer if the U.S. government buys sugar.
The U.S. Department of Agriculture is considering buying 400,000 tons
of sugar—enough for 142 billion Hershey's Kisses—to stave off a wave of
defaults by sugar processors that borrowed $862 million under a
government price-support program. The
action aims to prop up tumbling U.S. sugar prices, which have fallen
18% since the USDA made the nine-month operations-financing loans
beginning in October. The purchases could leave the price-support
program with an $80 million loss, its biggest in 13 years, said Barbara
Fecso, an economist at the USDA, in an interview.
- White Pressed on Past Representing Banks. Mary Jo White, in a Senate hearing Tuesday, fended off pointed questions
from lawmakers about whether her time spent defending Wall Street banks
would impinge on her ability to police Wall Street.
- U.S. Steps Up Alarm Over Cyberattacks. The nation's top spies warned Tuesday of the rising threat of
cyberattacks to national and economic security, comparing the concern
more directly than before to the dangers posed by global terrorism.
U.S. intelligence officials told a
Senate hearing that the nation is vulnerable to cyberespionage,
cybercrime and outright destruction of computer networks, both from
sophisticated, government-sponsored assault as well as criminal hacker
groups and cyberterrorists.
- A Ryan Reboot. The budget will never balance without faster economic growth.
Fox News:
MarketWatch.com:
- Equifax(EFX), others admit to being hacked: reports. Credit
reporting agencies Equifax Inc., Experian PLC, and TransUnion Corp.
have said their credit reports have been breached by computer hackers, according to media reports Tuesday. The
confirmation comes after reports from TMZ.com Monday that several
celebrities ranging from Michelle Obama to Paris Hilton had their
financial information posted online.
CNBC:
Zero Hedge:
Business Insider:
Reuters:
Sina.com:
- China's southern city of Shenzhen banned developers from raising
prices of new residential properties, citing officials with developers
including Vanke, Merchants Property and Gemdale. Developers are ordered
to have "zero-price-increase" for new homes on a monthly basis, the
report said.
Shanghai Securities News:
- Shanghai Futures Exchange will try to start futures trading at
night time from this year, citing the exchange's chairman Yang Maijun.
21st Century Business Herald:
- The China Banking Regulatory Commission warned financial institutions to be cautious of their local government financing vehicle bond holdings, citing a person familiar with draft guidelines. This is the first time the CBRC has issued a warning on LGFV bonds. CBRC reiterated that "total amount" of LGFV lending should be controlled. CBRC ordered banks to centralize approval of all LGFV bond transactions at their head offices, citing the draft rules.
Evening Recommendations
Night Trading
- Asian equity indices are -1.0% to -.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 103.0 +3.0 basis points.
- Asia Pacific Sovereign CDS Index 80.5 +.75 basis point.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Import Price Index for February is estimated to rise +.6% versus a +.6% gain in January.
- Advance Retail Seals for February are estimated to rise +.5% versus a +.1% gain in January.
- Retail Sales Less Autos for February are estimated to rise +.5% versus a +2% gain in January.
- Retail Sales Ex Auto & Gas for February are estimated to rise +.2% versus a +.2% gain in January.
10:00 am EST
- Business Inventories for January are estimated to rise +.5% versus a +.1% gain in December.
10:30 am EST
- Bloomberg
consensus estimates call for a weekly crude oil inventory gain of
+2,300,000 barrels versus a +3,833,000 barrel gain the prior week.
Gasoline supplies are estimated to fall by -1,200,000 barrels versus a
-616,000 barrel decline the prior week. Distillate inventories are
estimated to fall by -2,000,000 barrels versus a -3,830,000 barrel
decline the prior week. Finally, Refinery Utilization is estimated unch. versus a -2.9% decline the prior week.
2:00 pm EST
- The Monthly Budget Deficit for February is estimated at -$205.0B versus -$231.68B in January.
Upcoming Splits
Other Potential Market Movers
- The Italy 10Y bond auction, 10Y T-Note auction, Basal Committee
meeting, Australia unemployment report, (LYB) investor day, (CAB)
investor day, weekly MBA mortgage applications report and the UBS
Consumer Conference could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by commodity and financial 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.
