Bloomberg:
- ECB Said Likely to Delay Vote on Emergency Cyprus Bank Lending.
The European Central Bank is likely to delay a decision on whether to
continue to supply Cypriot banks with emergency funds as it awaits
clarity on the nation’s
bailout, two people familiar with the deliberations said. The ECB assumes that a bank holiday in Cyprus will be
extended to the end of the week, and there is a public holiday
on the Mediterranean island on March 25, the people said on
condition of anonymity. That means policy makers don’t need to
vote on whether to extend or halt Emergency Liquidity Assistance
to Cypriot banks at their mid-month meeting in Frankfurt, which
starts today and ends tomorrow, the people said. The delay gives the Cypriot government and euro-area
finance ministers five more days to forge a deal to prevent the
implosion of the island’s banking sector.
- Europe Plays I-Didn’t-Do-It Blame Game on Cyprus Bank Tax.
To listen to the German and French
governments, the European Central Bank and European Commission, no one
was responsible for the Cypriot deposit tax that was unanimously
endorsed in the early hours of March 16 and fell apart yesterday.
German Finance Minister Wolfgang Schaeuble opened the blame game on
Sunday, telling ARD television that the commission, ECB and Cypriot
government engineered the swoop on ordinary bank accounts and “now they
have to explain it to the Cypriot people.” By then, the Cypriot people
were lining up at cash machines and painting “No” on the palms of their
hands to protest the levy that, even with a tax-free allowance built in
for the smallest savers, didn’t win a single “Yes” vote in the Cypriot
parliament. “The Cyprus fiasco has the hallmark of a classic whodunit,”
Sony Kapoor, head of the Re-Define think tank, said
in an e-mailed note. “Someone somewhere took a decision that
now no one nowhere appears to have made.”
- Osborne Says 2013 U.K. Growth Forecast Cut in Half. Chancellor of the Exchequer George Osborne said the forecast for U.K. economic growth this year was
cut by half as he lowered corporation tax and set out an updated
central-bank remit to aid Britain’s recovery. Gross domestic product will increase 0.6 percent this year,
compared with a previous forecast of 1.2 percent, Osborne told
Parliament in London as he delivered his annual budget statement
today, citing the Office for Budget Responsibility’s
predictions. The economy will grow 1.8 percent next year,
compared with a previous estimate of 2 percent, and it will
expand 2.3 percent in 2015, he added. “It is taking longer than anyone hoped, but we must hold
to the right track,” Osborne told lawmakers. “The problems in
Cyprus this week are further evidence that the crisis is not
over, and the situation remains very worrying,” he said,
referring to the uncertainty over a planned European Union
rescue package for the Mediterranean island.
- Hollande Woes Deepen With Resignation Before Confidence Vote. French President Francois Hollande’s government faces its first confidence vote over its
handling of the economy as Budget Minister Jerome Cahuzac’s
resigned amid an investigation into his finances. Cahuzac, 60, is the first minister to exit since Hollande
won power last May and is stepping down after a probe into
whether he had an undeclared Swiss bank account. Today’s
confidence vote, called by the opposition and unlikely to
prevail because of Hollande’s Socialist Party’s majority in the
National Assembly, will follow a speech by Prime Minister Jean- Marc Ayrault. “The French economy is paralyzed,” Jean-Francois Cope,
head of the opposition Union for a Popular Movement, said today
on I-tele television. “Our confidence motion is intended as a
wake-up call for the government.”
- European Stocks Advance as Leaders Weigh Cyprus Fate. European
stocks climbed, snapping a
three-day loss for the benchmark Stoxx Europe 600 Index, as the region’s
policy makers weighed options for keeping Cyprus in the euro area.
Deutsche Bank AG and BNP Paribas SA paced a rebound in
banks, both rising at least 1 percent. U.K. homebuilders rallied
as Chancellor of the Exchequer George Osborne announced a new
program to support British housing. Rheinmetall AG lost 6.9
percent after forecasting lower earnings in 2013. The Stoxx 600 advanced 0.3 percent to 296.5 at the close of
trading, after falling 1 percent in the past three days.
- Fed Officials Trim Forecasts for 2013, 2014 Jobless Rate. Federal
Reserve officials forecast
the nation’s unemployment rate will hit the central bank’s threshold for
raising interest rates sometime in 2015, while projecting faster
improvement in the labor market this year. U.S. central bankers estimate the jobless rate will average
6.7 percent to 7 percent in the final quarter of 2014 and 6
percent to 6.5 percent in 2015, according to their central
tendency estimates. Similarly, 13 of the 19 Federal Open Market
Committee participants estimated that the first increase in the
federal funds rate from its current range of zero to 0.25
percent will occur in 2015, the same as at the December meeting. Four estimated the first tightening in 2014, up from 3 in
December. Eleven estimated that the benchmark lending rate will
be 1 percent or lower by the end of 2015, compared with 12 in
December.
- Caterpillar(CAT) Machine Retail Sales Drop Accelerates, Led by Asia. Caterpillar Inc., the biggest maker
of construction and mining equipment, said global retail machine
sales fell 13 percent in the three months through February. Asia Pacific sales declined 26 percent from the same period
a year earlier, the Peoria, Illinois-based company said today in
a filing. North American sales were 12 percent lower and Europe,
Africa and the Middle East slid 9 percent. Latin America was up
3 percent. Caterpillar last month said global retail machine sales
fell 4 percent in the three months through January.
- Synthetic CDOs Making Comeback as Yields Juiced. Derivatives that pool credit-
default swaps to make magnified bets on corporate debt,
popularized in the last credit bubble, are making a comeback as
investors search farther afield for alternatives to bonds at
record-low yields. Citigroup Inc. is among banks that have sold as much as $1
billion of synthetic collateralized debt obligations this year,
following $2 billion in all of 2012, according to estimates from
the New York-based lender. Trading in so-called tranches of
indexes that use a similar strategy to juice yields rose 61
percent in the past month. Synthetic credit, which amplified the financial crisis five
years ago, is enticing investors after corporate-bond yields
dropped to less than half the 20-year average.
Wall Street Journal:
- Creditors Set to Reject Cyprus's Plan B.
International creditors were set to reject an alternative bailout plan
Cyprus cobbled together a day after the government's divisive tax on
bank deposits died a quick death, two officials with knowledge of the
situation said on Wednesday, leaving the island nation with narrowing
options to rescue its outsize financial-services sector from collapse.
MarketWatch:
CNBC:
- US Mortgage Applications Fell Again Last Week as Rates Rose: MBA. Applications for U.S. home mortgages tumbled for a second week in a
row last week as interest rates continued to climb to seven-month
highs, data from an industry group showed on Wednesday. The
Mortgage Bankers Association said its seasonally adjusted index of
mortgage application activity, which includes both refinancing and home
purchase demand, fell 7.1 percent in the week ended March 15. The index of refinancing applications dropped 8 percent, while the gauge
of loan requests for home purchases, a leading indicator of home sales,
slipped 3.9 percent.
- Caution: China Stocks May See Double-Digit Correction. After a positive start to the year, Chinese equities have fast fallen
out of favor with investors, down more than 6 percent in the past month
on worries over a bubble building in the property market and on the
overall growth outlook. According to technical analyst Ray Barros of Ray Barros Trading Group,
the worst is not over for the market, he expects a further correction of up to 15 percent for the benchmark Shanghai Composite in the next two months.
Zero Hedge:
Business Insider:
- Here's Where The Ugly Consequences Of Easy Monetary Policy Will First Appear. Some
have argued that this mis-pricing is actually a bubble in the junk bond
market. "More to the point, these are parts of the financial system
where
developed market central banks would likely be unwilling or unable to
‘do whatever it takes’ to prevent a serious setback. The question would
then be whether setback and stress in these sectors could be contained
in a world of high leverage." Keep an eye on the junk bond market.
Project Syndicate:
- China's Hidden Debt Risk. Now China is experiencing a fourth instance of elevated debt risk, this
time characterized by high levels of accumulated local-government and
corporate debt. To be sure, China’s national balance sheet, which boasts
positive net assets, has garnered significant attention in recent
years. But, in order to assess China’s financial risk accurately,
policymakers and economists must consider the risks that lie in the
country’s asset structure – and the liabilities that are not included on
its balance sheet.
NY Daily News:
benzinga:
- Agriculture Equipment Likely to Lose Demand in 2014, According To Wells Fargo Analyst.
Andrew Casey, an analyst at Wells Fargo, is growing more and more
bearish on agriculture equipment next year, based on a likely decrease
in cash flow among farmers. Casey went on to say that he believes commodity prices will come down
in price soon too, specifically citing that corn may be closer to
$4.25/bu, rather the current $7/bu that it is now. Because of the expected lower demand, Deere(DE)
has been slashed to underperform from market perform with a price
target of $72-75 from $90-93. AGCO Corp.(AGCO) was also cut to
underperform from market perform and had its price target lowered to
$40-43 from $51-54.
Reuters:
- FedEx(FDX) cuts forecast as air freight weakness hits profit. FedEx Corp cut its full-year forecast after a worse-than-expected
quarterly profit as customers shift from air express to slower but
cheaper modes of international shipping. Shares of the No. 2 U.S.
package-delivery company fell 5 percent in early trading on the New York
Stock Exchange. FedEx's express unit, its
biggest source of revenue, has also been hit by overcapacity in the
industry that has squeezed margins. Operating income in the express unit
fell 66 percent. FedEx said the express unit
underperformed due to weakness in Asia and other international markets,
where margin pressures arising from excess capacity more than offset
increased volumes. "We have a yield issue that
exaggerated itself this quarter over last quarter," Dave Bronczek, CEO
of FedEx Express, said on a conference call with analysts. FedEx plans to cut express capacity to and from Asia from April 1
and is looking at reducing its fleet by retiring more of its older,
less-efficient aircraft.
- Analysis: ECB prepared to let Cyprus go, protect others. The European Central
Bank is prepared to cut off funding to Cyprus and let the Mediterranean
island succumb to financial meltdown if it has to, confident it has
unlimited firepower to protect the rest of the euro zone.
- Europe transaction tax raises collateral crunch fears. A financial transaction tax (FTT) proposed
by the European Commission could unleash a collateral crunch as
much of the US$639trn over-the-counter derivatives market shifts
to central clearing. Plans to slap a 0.1% levy on stock and bond transactions and
0.01% on derivatives could raise as much as EUR35bn each year.
But the unintended consequences could pose a problem for
implementation of the swaps clearing mandate that forms the
backbone of the European Markets and Infrastructure Regulation
(EMIR).
Telegraph:
- Bank of England warns QE could hit sterling - minutes. Bank of England policymakers have warned that more quantitative easing could
lead to “an unwarranted depreciation of sterling” if markets interpreted the
move as evidence that the central bank was abandoning its commitment to low
inflation.
Die Zeit:
- Asmussen Says ECB Will Only Fund Solvent Banks. European Central
Bank Executive Board member Joerg Asmussen comments in interview. Says
ECB can "only provide emergency liquidity to solvent banks". Says
solvency of Cypriot banks "can't be considered a given unless an aid
package, which ensures a fast recapitalization of the banking sector, is
agreed soon". Says it's important that Cyprus's contribution is
sufficient to guarantee debt sustainability.
Cadena Ser:
- Spain to Deny Aid to Regions Breaching Deficit Limit. Budget
Ministry Montoro will deny subsidies for training medical professionals
to work on organ transplants, citing a written order from the ministry.
Luxembourg RTL:
- Dutch Finance Minister Jeroen Dijsselbloem, who leads the group
of euro-area finance ministers, is "tainted" by debates over rescue
plans in the Netherlands, Luxembourg Finance Minister Luc Frieden said
in an interviwew.
Style Underperformer:
Sector Underperformers:
- 1) Agriculture -.34% 2) HMOs -.31% 3) Road & Rail -.22%
Stocks Falling on Unusual Volume:
- MXWL, FDX, AGCO, CNW, DE, XEC, ANW, ECT, CHKR, ATOS, MXF, TEI, CTAS, RNF, IEP, FNV, PER, CNW, FDS, CYNO, ADUS, PTEN, CIG, ATU, CAT, SHG, CSL and NCT
Stocks With Unusual Put Option Activity:
- 1) FDX 2) CIE 3) DISH 4) CY 5) ORCL
Stocks With Most Negative News Mentions:
- 1) DE 2) AGCO 3) JPM 4) GM 5) DVN
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Gaming +1.56% 2) Homebuilders +1.49% 3) Airlines +1.23%
Stocks Rising on Unusual Volume:
- CIE, OMPI, WSM, FRAN, PLCM, SPRD, ADBE, TMH, TFM and HLS
Stocks With Unusual Call Option Activity:
- 1) WSM 2) FDX 3) SYMC 4) EVEP 5) GDXJ
Stocks With Most Positive News Mentions:
- 1) SYNT 2) ADSK 3) EDU 4) GIS 5) APA
Charts:
Evening Headlines
Bloomberg:
- Spanish Banks Cut Developers as Zombies Dying: Mortgages. Spain’s zombie developers are
finally about to die. Spanish banks are pulling the plug on thousands of builders
kept alive during the past five years even as they built almost
nothing, said Mikel Echavarren, chief executive officer of Irea,
a Madrid-based consulting firm that has advised on 22 billion
euros ($28.5 billion) of refinancing. The banks, forced by the
government last year to set aside provisions for the developers,
have no incentive to keep funding them. “Banks have taken the hit, so extend and pretend is
over,” said Echavarren. “There’s no motivation to refinance
companies that aren’t viable, have no liquidity or possibility
of future earnings so we’ll see a tsunami of developer
bankruptcies in the next two years.” The final collapse of an industry that accounted for as
much as 18 percent of Spain’s growth amid the country’s decade-
long real estate boom will add to unemployment, already at a
record 26 percent, depress consumer spending needed to turn
around the economy and push down the value of residential real
estate that’s already dropped more than 30 percent since 2007,
said Raj Badiani, an economist at IHS Global Insight in London. While job losses in the construction industry continued in
recent quarters, “they’ve been less severe than expected given
the scale of the real estate slump,” said Badiani. “With banks
cutting financial life support to many developers living on
borrowed time, we can expect an accelerated downward adjustment
in employment levels.” Badiani estimates the jobless rate could
climb to more than 27 percent this year and house prices will
fall at least 50 percent from the peak by 2015.
- Europe Weighs Cyprus’s Fate After Lawmakers Reject Bailout Deal. European policy makers must weigh
how far to push Cyprus after lawmakers in the Mediterranean
nation rejected an unprecedented levy on bank deposits, throwing into limbo a rescue package designed to keep it in the euro.
Luxembourg Finance Minister Luc Frieden called for the 17 euro-area
finance ministers to reconvene “as soon as possible” to cobble together a
new package. The European Central Bank, whose Governing Council meets
today in Frankfurt, will also have to decide whether to give Cyprus more
time or consider cutting off liquidity to the country’s banks. “This is not a good result -- neither for Cyprus, nor for
the euro zone, and we have to look together for alternatives to
the negotiated package,” Frieden said yesterday in a phone
interview from Frankfurt. He called the vote “very sad news,”
though said the decision by its parliament must be respected.
- Two-Year Swap Spread in U.S. Surges to Highest Since September. The U.S. two-year interest-rate
swap spread, a measure of debt market stress, surged to the
highest level in six months as European policy makers struggle
to forge a bailout plan for Cyprus. The gauge, which widens when investors seek the perceived
safety of government securities and narrows when they favor
assets such as company debentures, increased 2.9 basis points to
17.97 basis points as of 3:43 p.m. in New York. That’s the
highest level on an intra-day basis since Sept. 4. “You’ve got the beginnings of an indicator of bank
stress,” Jim Vogel, an interest-rate strategist at FTN
Financial in Memphis, Tennessee, said in a telephone interview.
Investors may “back away from risk commitments” given the
uncertain outcome of Cyprus’s potential bank-deposit levy, he
said.
- North Korea Vows Military Action Against More U.S. B-52 Flights. North Korea warned of “strong military counter-action” if the U.S.
again flies B-52 bombers over the Korean peninsula, with two flights
this month after the totalitarian regime threatened preemptive nuclear
strikes. The U.S. Pacific Air Forces Command successfully
carried out the latest training flight, 7th Air Force spokeswoman Maj.
Richelle Dowdell said in an e-mail yesterday without giving further
details. A B-52 can carry nuclear warheads and air-to- ground missiles
with a range of 3,000 kilometers (1,864 miles).
- Copper Seen Dropping as Stockpiles Increase. Copper is poised to decline 2
percent this year as supply outpaces demand and boosts
stockpiles, while aluminum may advance as demand gains, said Australia’s Bureau of Resources and Energy Economics. World inventories may surge 16 percent to 1.3 million tons in 2013, or three weeks of consumption, it said. That compares with a December forecast of 1.1 million tons.
Prices fell to a seven-month low yesterday on concerns that Europe’s
debt turmoil will damp the economy and property curbs will erode demand
in China, the biggest user. The country’s industrial output had the
weakest start to a year since 2009 and copper imports slid to the lowest
in 20 months in February, when there was a weeklong New Year holiday. Stockpiles are rising at
an “alarming” rate, Barclays Plc said March 18. “Copper consumption is forecast to grow, primarily in
emerging economies, but by a lower amount than the increase in
production,” today’s report said. “The increase in supply will
come from a number of large recently commissioned mines in
Indonesia, Peru and Mongolia ramping up to full production.”
Wall Street Journal:
- SEC Digging Into Fund Fees. Focus on Expenses Billed to Investors by Hedge Funds and Private-Equity Firms. The Securities and Exchange Commission is closely scrutinizing the
fees and expenses, including travel and entertainment, that hedge funds
and private-equity firms charge to their investors. Many managers of hedge funds and private-equity funds—collectively
called "private investment advisers"—had long been largely unregulated
and therefore had less oversight in how they billed their investors.
- Demonstration Against Sequestration Has Reasons, but Few Rhymes. Federal Worker Unions Face Hurdles in Staging Protest; Signs Fall Short of Poetry. For many workers, this turns out not to be the most rousing cause.
The cuts roll out slowly, in early April for some agencies and programs
but not until May for others. Most agencies aim to trim around the edges
to avoid layoffs. Workers in some departments aren't in line for
furloughs at all, and for others it might be just a few days.
"I'll be honest. People are saying
'you're giving me a day without pay? I'll take July 5,' " says Brent
Barron, president of AFGE Local 648.
- Visa(V) May Have to Buy Europe System. Visa
Inc. could be forced to pay billions of dollars to buy the Visa Europe
payments system, under a plan being discussed by the European banks that
own the business. The shift would significantly expand Visa's footprint as it battles for a bigger share of the international market.
- J.P. Morgan(JPM), Trustee for MF Global Reach Pact. J.P. Morgan Chase & Co. has reached a settlement that will return an estmated $546 million to MF Global Holdings Ltd. customers, likely bringing an end to a major chapter in customers' effort to recover money from the securities firm's 2011 collapse. J.P. Morgan, the trustee for the failed company's brokerage unit, and
lawyers representing customer plaintiffs in the case filed their
settlement agreement after finalizing terms in recent days, according to
a person familiar with the process.
MarketWatch.com:
Zero Hedge:
Business Insider:
NY Times:
- Nigeria: Death Toll in Kano Bombing Rises to 41. The death toll of a suicide bombing in a Christian neighborhood of Kano
on Monday has risen to at least 41, the police said Tuesday. At least 44
others were wounded, officials said. The Kano state police said that
two men rammed an explosives-laden blue VW Golf into a full passenger
bus in Kano, northern Nigeria’s busiest commercial center, the deadliest
attack in nine months attributed to Islamic extremists.
CNN:
benzinga:
- Cintas(CTAS) Trades Lower After Q3 Results; Lowers Full-Year Guidance Range. Uniform-maker Cintas released its fiscal third-quarter results after the closing bell on Tuesday. The company reported earnings per share which were below Wall Street
consensus, revenue which beat expectations and also lowered its
full-year earnings guidance range. In late trading, the stock was last
down a little more than two percent to $44.85.
Federal Computer Week:
- Sources: Amazon(AMZN) and CIA Ink Cloud Deal. In a move sure to send ripples through the federal IT community, FCW
has learned that the CIA has agreed to a cloud computing contract with
electronic commerce giant Amazon, worth up to $600 million over 10
years. Amazon Web Services will help the intelligence agency build a private
cloud infrastructure that helps the agency keep up with emerging
technologies like big data in a cost-effective manner not possible under
the CIA's previous cloud efforts, sources told FCW.
Reuters:
- Freddie Mac sues more than a dozen banks over Libor. U.S.
mortgage finance company Freddie Mac is suing more than a dozen banks
for losses from the alleged manipulation of the benchmark interest rate
known as Libor. Bank of America Corp, JPMorgan Chase & Co, UBS AG and Credit
Suisse Group AG are among the banks named as defendants in the
lawsuit.
- Adobe(ADBE) raises profit forecast as subscription model gains traction. Adobe Systems Inc, maker of
Photoshop and Acrobat software, raised its full-year adjusted
earnings forecast after reporting first-quarter results above
Wall Street estimates as more customers chose its
subscription-based model. The company raised its full-year adjusted earnings forecast
to about $1.45 per share from about $1.40 per share, above
analysts' estimates of $1.41 per share. Shares of the company, which said Chief Technology Officer
Kevin Lynch would be leaving, rose 7 percent in extended trade.
- Anadarko(APC) makes large oil find in Gulf of Mexico. "The successful Shenandoah-2 well marks one of Anadarko's
largest oil discoveries in the Gulf of Mexico," Bob Daniels,
Anadarko's head of exploration, said in a statement. Log and pressure data from the appraisal well indicate
excellent-quality reservoir and fluid properties and more
drilling will be done to advance this "potentially giant
project," Daniels said.
Telegraph:
- OECD cuts French growth forecast. The OECD trimmed its growth forecast for France and said it must do more to
boost competitiveness and create jobs, but recommended the government avoid
more spending cuts to meet it EU deficit reduction pledges.
BBC:
- Cyprus warned over parliament's bailout rejection. Germany's finance
minister has warned Cyprus that its crisis-stricken banks may never be
able to reopen if it rejects the terms of a bailout. Wolfgang Schaeuble said major Cypriot banks were "insolvent if there are no emergency funds".
China Securities Journal:
- China may lower threshold for short selling and margin trading, citing people from securities companies.
21st Century Business Herald:
- Beijing May Tighten Home Buying Restrictions for Singles. Beijing may allow single or divorced local residents to own only one home, citing people who participated in drafting the rules.
Want China Times:
- Local governments await Beijing's new rules on housing market. Local governments in China are still awaiting the implementation of
housing market curbs at ministerial level before they announce their own
policies, despite allegations that a leaked copy from the central
authorities has surfaced recently, the Guangzhou-based 21st Century
Business Herald reports.
Evening Recommendations
Raymond James:
- Rated (TFM) Strong Buy, target $50.
Night Trading
- Asian equity indices are -.50% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 121.50 new series.
- Asia Pacific Sovereign CDS Index 82.5 -1.0 basis point.
- NASDAQ 100 futures -.06%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil inventory
build of +2,000,000 barrels versus a +2,624,000 barrel gain the prior
week. Gasoline inventories are estimated to fall by -2,000,000 barrels
versus a -3,571,000 barrel decline the prior week. Distillate supplies
are estimated to fall by -1,000,000 barrels versus a +83,000 barrel gain
the prior week. Finally, Refinery Utilization is estimated unch. versus
a -1.2% decline the prior week.
2:00 pm EST
- The FOMC is expected to leave the benchmark fed funds rate at .25%.
Upcoming Splits
Other Potential Market Movers
- The Fed's Bernanke speaking, China HSBC Manufacturing PMI, UK FY13
Budget, Germany PPI, weekly MBA mortgage applications report, BB&T
Industrial Conference, (TEX) analyst meeting, (FLS) analyst day, (JBLU)
analyst day and the (CRM) analyst day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by automaker and real estate shares in the region. I expect US stocks to open modestly higher 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: Lower
- Sector Performance: Most Sectors Declining
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- ISE Sentiment Index 88.0 -22.1%
- Total Put/Call .95 +5.56%
Credit Investor Angst:
- North American Investment Grade CDS Index 82.95 +3.22%
- European Financial Sector CDS Index 162.13 +6.45%
- Western Europe Sovereign Debt CDS Index 101.0 +.39%
- Emerging Market CDS Index 246.07 +1.7%
- 2-Year Swap Spread 18.0 +3.0 bps
- 3-Month EUR/USD Cross-Currency Basis Swap -21.25 -2.25 bps
Economic Gauges:
- 3-Month T-Bill Yield .06% -1 bp
- China Import Iron Ore Spot $134.40/Metric Tonne -.15%
- Citi US Economic Surprise Index 26.90 +5.9 points
- 10-Year TIPS Spread 2.52 -2 bps
Overseas Futures:
- Nikkei Futures: Indicating -33 open in Japan
- DAX Futures: Indicating +9 open in Germany
Portfolio:
- Slightly Higher: On gains in my index hedges and emerging markets shorts
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges, then covered some of them
- Market Exposure: 50% Net Long
Bloomberg:
- Cyprus Rejects Deposit Levy in Blow to European Bailout Plan. Cyprus’s parliament rejected an
unprecedented levy on bank deposits, dealing a blow to European plans to force savers to shoulder part of the country’s bailout
in a standoff that risks renewed tumult in the euro area. Cypriot legislators in the capital Nicosia voted 36 against
the proposal with none in favor in a show of hands today. There
were 19 abstentions. Hammered out by euro-area finance chiefs at
the weekend, the deal had sought to raise 5.8 billion euros
($7.5 billion) by drawing funds from Cyprus bank accounts in
return for 10 billion euros in international aid. “There is no
precedent for what would happen if Cyprus
rejected the conditions,” Holger Schmieding, chief economist at
Berenberg Bank in London, wrote in a note before the vote. “Our best
guess is that Europe would give Cyprus a brief and final chance to
rethink and vote again.”
- European Car-Sales Drop Accelerates on Decline in Germany. Europe’s car-sales contraction
accelerated in February as a steepening decline in Germany, the
region’s biggest market, hurt previously resilient Volkswagen AG (VOW), Bayerische Motoren Werke AG and Daimler AG. Registrations dropped 10 percent to 829,359 vehicles last month from 923,553 a year earlier, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today in a
statement. Two-month sales fell 9.3 percent to 1.75 million
cars. The decline in January amounted to 8.5 percent.
- Cyprus Deposit Raid Stokes Senior Bond Concerns. Europe’s unprecedented tax on
Cyprus bank deposits is raising concern among holders of senior
bank bonds that they’ll be made to take losses should another
country need rescuing. The Markit iTraxx Financial Index of credit-default swaps
insuring senior debt of 25 banks and insurers rose as much as 19
basis points to 162 basis points yesterday, according to prices
compiled by Bloomberg. That’s the biggest jump since Aug. 2,
before the European Central Bank steadied markets by announcing
its bond-buying program, and the gauge is now at the highest in
almost three weeks.
- Irish Foreclosure Wave Risks Housing Recovery: Mortgages. Irish bankers preparing for the biggest wave of foreclosures
in the nation’s history are struggling with how to dispose of the homes
as the central bank pressures them to go after owners of investment
properties. Ireland, which had the biggest real estate crash in
Europe with a 50 percent plunge in residential prices since 2007, is
only now contemplating significant repossessions. The focus is on the
so-called buy-to-let market, or properties bought to rent, which jumped
during Ireland’s decade-long real estate boom, and now account for more
than a fifth of the 142 billion- euro ($184 billion) mortgage market.
- Euro at Almost Three-Month Low as Cyprus Delays Vote. “The
uncertainty regarding the vote is helping the market
try to challenge a very key support at $1.2872, $1.2874 and
$1.2876, which are absolutely key levels for euro-dollar,” said
Sebastien Galy, a foreign-exchange strategist in New York at Societe
Generale SA, said in a telephone interview. The euro’s
drop reflects “deeper uncertainty regarding the outcome of the
vote, the timing of the vote for that matter, and the general
willingness to buy the dollar as a hedge.” The euro fell 0.5 percent to $1.2899 as of 11:51 a.m. in
New York, touching the weakest since Nov. 23.
- European Stocks Fall on Concern Cyprus to Reject Bank Tax. National
Bank of Greece SA led a gauge of lenders to the lowest close this year.
Rio Tinto Group (RIO) sank the most since 2011 as Goldman Sachs Group
Inc. downgraded the shares. ThyssenKrupp AG fell the most in a year
after a report the German steelmaker
is considering raising capital. Cie. Financiere Richemont SA
slid the most in almost two months as an investor sold a stake
in the luxury-goods company.
- Japan Vows Foreign-Policy Response to Territorial Incursions. Japanese
Prime Minister Shinzo Abe signaled he will implement a more robust
foreign policy in the midst of disputes with Russia and China that
underscore his push
to boost defense spending. Japan yesterday said two Russian fighter jets intruded on
its airspace, which Russia’s Defense Ministry denied. The
alleged incursion followed accusations that Chinese ships used
weapons-targeting radar on a Japanese destroyer and helicopter
last month near islands claimed by both countries. China today
issued a denial and accused Japan of spreading falsehoods, while
the Foreign Ministry in Tokyo summoned the Chinese ambassador. “When our sovereignty and national interests are
threatened we must change our foreign policy to firmly express
our point of view,” Abe told parliament today.
- Vale(VALE) Slumps to Six-Month Low as Goldman Cuts Iron Ore Forecast. Vale
SA (VALE5), the world’s biggest iron- ore producer, fell to a six-month
low after Goldman Sachs Group Inc. cut its price estimate for the
commodity this year. The shares slumped 3.5 percent to 32.51 reais at
1:05 p.m. in Sao Paulo. A close at that level would be the lowest since
Sept. 4. The stock contributed the most to the benchmark Bovespa index
(IBOV)’s 1.4 percent drop today. “The two key drivers of this more subdued outlook are the
growing role of scrap in Chinese steel production, and ongoing
investment in Chinese domestic iron-ore production,” the
Goldman Sachs analysts wrote.
Wall Street Journal:
- Workers Saving Too Little to Retire. Workers and employers in the U.S. are bracing for a retirement
crisis, even as the stock market sits near highs and the economy shows
signs of improvement.
New data show that powerful financial
and demographic forces are combining to squeeze individuals and
companies that are trying to save for the future and make their money
last.
Fifty-seven percent of U.S. workers surveyed reported less than
$25,000 in total household savings and investments excluding their
homes, according to a report to be released Tuesday by the Employee
Benefit Research Institute. Only 49% reported having so little money
saved in 2008. The survey also found that 28% of
Americans have no confidence they will have enough money to retire
comfortably—the highest level in the study's 23-year history.
- U.S. Probes Microsoft, Partners Over Bribery Claims.
Federal regulators are investigating Microsoft Corp.'s relationship with
business partners that allegedly bribed foreign government officials in
return for software contracts, according to people familiar with the matter. Lawyers from the Justice
Department and the Securities and Exchange Commission are examining
kickback allegations made by a former Microsoft representative in China,
as well as the company's relationship with certain resellers and
consultants in Romania and Italy, these people said.
MarketWatch:
CNBC:
Zero Hedge:
Business Insider:
CNN:
- Syrian regime, rebels blame each other for chemical attacks. The specter of chemical weapons attacks in the Syrian civil war
emerged Tuesday, with the government and rebels each blaming the other
for using such munitions. The embattled government
of President Bashar al-Assad accused rebels of a deadly chemical weapons
missile attack. At least 25 people died and dozens more were injured
Tuesday in the town of Khan al-Asal in Aleppo province, Syrian state
media said, quoting government figures. Rebels rebuffed the claims and
blamed the regime.
Reuters:
- PIMCO cuts euro exposure as investors decry Cyprus bailout plan. A
demand that Cyprus seize money from depositors to help rescue the
island's banks is a wake-up call for those who believed the euro zone
crisis was solved, institutional investors and hedge funds said. One of the world's biggest money managers, PIMCO, has
already reduced its euro currency allocations in response to the
planned levy unveiled at the weekend, a senior executive told
Reuters on Tuesday.
Telegraph:
- Cyprus bailout - live. Eurozone governments are "essentially blackmailing" Cyprus, said
Anthanasios Orphanides, former governor of the Cypriot central bank, as he
warned against the "slow death of the European project".
