Style Outperformer:
Sector Outperformers:
- 1) Restaurants +.89% 2) Biotech -.03% 3) Homebuilders -.05%
Stocks Rising on Unusual Volume:
- SBGI, ASH, IOC, BZH and RATE
Stocks With Unusual Call Option Activity:
- 1) RAD 2) ACAD 3) MDVN 4) BKS 5) AGQ
Stocks With Most Positive News Mentions:
- 1) CSX 2) JBHT 3) MCD 4) HLF 5) WAG
Charts:
Evening Headlines
Bloomberg:
- Italy’s bond rally threatened by political reality. As an Italian bond rally wraps up a sixth week, investors risk having
their enthusiasm jolted by the country’s political gridlock. Italian bonds delivered returns of 3.4 percent since inconclusive
elections on Feb 24-25 produced a hung parliament. Prime Minister
Monti’s caretaker government has little scope to combat the longest
recession in more than two decades and said this week its debt will
reach 130.4 percent of gross domestic product this year, more than twice
the euro-region limit. The Bank of Japan’s unprecedented bond-buying stimulus coupled with
the European Central Bank’s renewed pledge to defend the euro have
underpinned the gains even as Italy’s political stalemate and recession
deepen.
- Merkel’s One-Time Ally Steinbrueck Forges Platform to Unseat Her. German
opposition candidate Peer Steinbrueck’s drive to become chancellor is
going into reverse. Steinbrueck’s Social Democratic Party gathers this
weekend in the Bavarian town of Augsburg as the gap with Chancellor
Angela Merkel’s bloc widens. The SPD’s answer is a platform that
appeals to core Socialist values through reining in banks,
taxing the rich and reducing social inequality it says has grown
under Merkel. Delegates will vote on the platform on April 14.
- N Korea May Be Able to Make Nuclear Missiles, U.S. Says. The
U.S. Defense Intelligence Agency has reported that North Korea now has
some nuclear weapons small enough to be delivered by its ballistic
missiles. The
DIA cautioned in a classified report last month that it has only
“moderate confidence” in that finding, which also said that the
reliability of North Korea’s missiles “will be low.”
- China Rebound at Risk as Xi Curbs Officials’ Spending.
Chinese President Xi Jinping’s campaign to rein in lavish spending by
officials and state-owned companies is proving so effective that it
risks helping end the nation’s economic rebound after one quarter. Xi’s
efforts are restraining consumer spending and making it tougher for the
new government to boost domestic demand as factory output slows.
Large-restaurant and catering sales fell for the first time in
more than three decades in the first two months of the year, while
demand and prices for luxury items such as Moutai liquor and Longjing
tea have slumped.
- China Customs Official Apologizes for Incorrect Data. A Chinese government spokesman said
he gave incorrect and “groundless” investment data sourced
from the Internet at a briefing this week, underscoring concern
that official numbers may not be credible. Zheng Yuesheng, spokesman
and head of the statistics
department at the Beijing-based General Administration of
Customs, said in a statement yesterday that he “expresses deep
apologies” for citing unconfirmed figures from online sources he didn’t
identify. Zheng was referring to remarks he made at a customs
administration press conference on April 10 where he also acknowledged
concerns that China’s export data may be overstated.
- Kerry Said Ready to Ask China to Obey UN North Korea Sanctions. The U.S. will ask China to abide by
United Nations sanctions against North Korea and shut off the
flow of money that could be used to develop weapons of mass
destruction, a State Department official said. Secretary of State John Kerry, on his first trip to Asia as
the top U.S. diplomat, is scheduled to meet with leaders in
Beijing, Seoul and Tokyo as the region confronts threats of war
by North Korea. Two U.S. officials briefed reporters
accompanying Kerry on the condition of not being named. The U.S. wants to convince China, North Korea’s main ally,
that it’s in China’s economic and political interests to reverse
a long-standing practice of looking the other way regarding
banned cross-border trade with its Communist neighbor, an
administration official said. Kerry will also urge China to toughen its message to
leaders in Pyongyang and will seek information about
conversations between China and North Korea as well as what kind
of leverage the new Chinese leader, Xi Jinping, has on North
Korean dictator Kim Jong Un, the State Department official said. There will be no quid pro quo in U.S.-China discussions and
the U.S. won’t soften its criticism of China’s human-rights
record and assertiveness over disputed areas in the South China
Sea in exchange for greater cooperation on North Korea, the
official said.
- Japan, World Economy at Risk If Abenomics Fails. The Bank of Japan’s strategy to end almost two decades of stagnation
through unprecedented monetary stimulus may set off a ticking time-bomb
for financial markets if it’s not followed by extensive structural
reforms. Such reforms, critical to the success of Prime Minister Shinzo Abe’s
economic program — dubbed Abenomics — have historically proved difficult
to implement. The combination of a debt load accounting for more
than
200 percent of GDP and diminishing domestic demand for government bonds
may sound the death knell for Japan’s economy, with or without Abe’s new
economic policy. This would have global consequences. Click here to
continue reading.
- Infosys Plunges as Sales Forecast Lags. Infosys Ltd. (INFO), India’s second-
largest software services exporter, fell in Mumbai trading as it
forecast annual sales will rise slower than analysts estimated. Shares plunged 15 percent to 2,491.7 rupees as of 9:16 a.m.
The company expects revenue to increase 6 percent to 10 percent
in the year that started April 1, it said. Analysts estimated
sales to grow 12.7 percent to 454.7 billion rupees, based on the
average of 66 estimates compiled by Bloomberg.
- Asian Stocks Fall From 20-Month High as Yen Strengthens.
Asian stocks fell from the highest level in 20 months, paring the
biggest weekly advance since September. Japan’s Topix Index (TPX)
dropped for the first time in eight days as the yen strengthened against
the dollar. Canon Inc. (7751), a Japanese camera maker that gets 80
percent of sales abroad, slid 2.3 percent. GS Engineering &
Construction Corp. (006360) tumbled by the daily 15 percent limit in
Seoul for a second day after reporting an unexpected loss.
- Bovespa Index Tumbles Most in the World on Brazil Growth Concern. The Bovespa index tumbled the
most among the world’s major equity gauges as a report showing retail
sales unexpectedly dropped in February rekindled concern that Brazil’s
economic recovery will falter. Lojas Americanas SA led losses among retailers, sinking the most
since August. Oil services provider Lupatech SA tumbled after missing a
$6.79 million bond payment. OGX Petroleo & Gas Participacoes SA, the
crude oil producer controlled by billionaire Eike Batista, declined to a
record low. The Bovespa fell 1.4 percent to 55,400.91 at the close of trading in
Sao Paulo, the most in dollar terms among 94 major global stock
measures tracked by Bloomberg. Fifty-four stocks dropped on the gauge
while 14 advanced. The real dropped 0.1 percent to 1.9756 per dollar.
- IMF Trims U.S. Growth Outlook in Draft Report. U.S. gross domestic product will expand 1.7 percent this
year compared with a previously forecast 2 percent advance,
according to the draft report obtained by Bloomberg News. The
draft, which was presented to the IMF board last week, may be
subject to revisions before its scheduled April 16 release. The
global economy will expand 3.4 percent this year, compared with
3.5 percent forecast in January, according to projections in the
report.
- JPMorgan(JPM) Analysts Say Big Investment Banks Are ‘Uninvestable’.
JPMorgan Chase & Co., the largest U.S. bank by assets and the top
investment bank by fees, is questioning the so-called universal bank
model’s future. Top-tier investment banks are “uninvestable at this
point with a risk of spinoff from universal banks,” JPMorgan analysts
led by London-based Kian Abouhossein wrote in a research note today.
They cited potential rule changes and curbs on capital and funding.
Investors should avoid Goldman Sachs Group Inc., once the world’s most
profitable securities firm, and Deutsche Bank AG, Germany’s largest
bank, because of pressure on earnings and the unknown impact of new
regulations, according to the report. Both firms rank
among the biggest sales and trading rivals for New York-based JPMorgan,
which isn’t mentioned in the report. The bank is scheduled to report
first-quarter results tomorrow.
- Oil Outlook ‘Bearish’ on Demand Drop, U.S. Shale Boom. Crude prices will probably drop, at
least in the first half, amid rising U.S. shale-oil production
and slowing economic growth, according to analysts.
“I’d stay moderately bearish from here,” Seth Kleinman,
head of energy strategy at Citigroup Inc., said at the Bloomberg
Oil Forum in London today. “Everything looks pretty weak,” he said,
citing downward revisions to global demand growth forecasts by the
International Energy Agency and the Organization of Petroleum Exporting
Countries. Global crude production will be “robust” this year as output
rises in the U.S., Iraq and Kazakhstan, while demand growth may slow in
consuming nations including China, he said.
Wall Street Journal:
- John Paulson to Start New Hedge Fund.
John Paulson took flack for considering a move to Puerto Rico, one that
would have cut his tax bill. Mr. Paulson dropped the idea of a move.
But the hedge fund manager seems more determined to help his clients
reduce their own tax bills. On Thursday, Mr. Paulson, who is trying to
turn around his hedge-fund firm after a period of difficult trading,
sent an invitation to clients and potential clients, announcing the
launch of the Paulson Partners Premium L.P. Fund. The invitation said the fund is for investors “looking to mitigate income taxes.”
- New Drive for Tougher Testing of European Banks.
Europe is embarking on a new attempt to pull its banks out of the
molasses of its debt crisis, hoping an aggressive cleanup of toxic
assets will get banks to lend again and kick-start its flailing
economies. The push is being led by several key officials in Brussels and
Frankfurt, who want to see a new round of much-tougher stress tests
before the European Central Bank becomes the euro zone's main banking
policeman next year, according to four European officials familiar the
talks.
- Two Firms Amass Much of World's Copper Supply. Commodities Traders Pay to Divert Shipments From Other Warehouses; Manufacturers Worry About Access. Two major commodities-trading firms have amassed much of the world's
copper supplies in their warehouses, partly by paying to divert
shipments away from other storage hubs, traders and analysts say. This concentration of copper supplies has sparked concerns among
industrial consumers of the metal.
- Can We Afford Another Housing Boom? With prices rising, now is the time to prevent over-investment. With prices rising again, now is precisely the time to begin reducing
the federal subsidies that encourage over-investment in housing. In some
areas of the country Fan and Fred still back mortgages of more than
$600,000, while the FHA backs loans of more than $700,000. Reform-minded
lawmakers may not be able to stop Fed Chairman Ben Bernanke from
dropping money from helicopters, but they can begin reducing the
conforming loan limits at Fan, Fred and FHA to put some guardrails
around Washington's reckless credit policies.
Fox News:
- IRS tells agents it can snoop on emails without warrant, internal documents show. The Internal Revenue Service believes it doesn’t need permission to
root through emails, texts or other forms of electronic correspondence,
according to recently released internal agency documents. The documents, which were obtained through a Freedom of Information
Act request by the American Civil Liberties Union, reveal that tax
department agents have been operating under the assumption that they can
bypass warrants. The ACLU claims this would in turn violate the Fourth
Amendment. According to a 2009 IRS employee handbook, though, the tax agency
said the Fourth Amendment does not protect emails because Internet users
don’t “have a reasonable expectation of privacy in such
communications.” A lawyer for the agency reiterated the policy in 2010. And the
current online version of the IRS manual says that no warrant is
required for emails that are stored by an Internet storage provider for
more than 180 days.
CNBC:
- Shorts Getting Longer as Stock Market Bears Throw In the Towel. Short interest as a percentage of total available shares reached a
12-month low of 3.6 percent as a profitable March ended, according to
Bespoke Investment Group. The finding sends
two potentially important messages: that investors are finally buying
into the rally (a contrarian signal); and that a good portion of the
recent move probably came from a short-squeeze in which those betting
against the market had to cover their positions.
- Suckers! Tech Execs Selling Stock as Nasdaq Hits High.
Insider selling at the biggest technology companies hit a record pace
over the last six months even as investors snatched up shares, pushing
the Nasdaq Composite Index to a 12-year high. More than 55 million
shares were sold versus 1,780 shares bought for a sell-buy ratio of an
eye-popping 31,109 to 1 at the 10 biggest tech companies, including
Microsoft, Oracle and Qualcomm, according to Alan Newman, editor of the Crosscurrents newsletter and market analyst for 49 years.
Zero Hedge:
Business Insider:
New York Times:
- Herbalife(HLF) Ties to ‘Work From Home’ Promoters May Draw New Scrutiny. Entities
that promote “work from home” opportunities could be a new source of
scrutiny for Herbalife, the nutritional products company that has become
the subject of a pitched battle on Wall Street. The Federal Trade
Commission has received scores of complaints from people who paid money
to operations with names like Income At Home and Online Business
Systems, according to materials the agency released
under the Freedom of Information Act. In many of the complaints,
consumers who contacted such companies
said they discovered at a later stage that they were being recruited to
sell Herbalife products, an opportunity many did not wish to pursue.
Reuters:
- Chinese officials even more pessimistic on local debt than Fitch. Fitch Ratings' estimate of
China's local government debt is vastly more pessimistic than
other analyses, but recent statements from government officials
suggest that even Fitch may be too optimistic. The agency, which downgraded the country's sovereign credit
rating this week, puts China's overall sovereign debt at 74
percent of GDP by the end of 2012, of which 49 percent is
central government and 25 percent is local. Recent data indicates
that, after stabilizing in 2011, local debt surged again last year as
policymakers launched a new wave of infrastructure spending to stabilize
the world's No.2 economy amid its slowest growth in 13 years. Even Fitch's relatively pessimistic estimate may
be too rosy. The head of China's
National Audit Office (NAO), which
published a detailed survey of local debt in 2011, recently estimated
current local debt outstanding at 15 to 18 trillion yuan -- equal to 29
to 35 percent of GDP -- by the end of 2012. That's well ahead of Fitch's
estimate of 12.85 trillion yuan
and an increase from the NAO's previous estimate of 10.7
trillion yuan in local debt outstanding by end-2010. A former finance minister, Xiang Huaicheng, said at a forum
last week that local debt may total as much 20 trillion yuan. Fitch's calculation of China's total non-financial debt is
broadly in line with other analysts at 198 percent of GDP. The
disagreement arises from the lack of clarity over how large
swathes of Chinese debt should be classified.
- U.S. Fed balance sheet grows again in latest week. The U.S. Federal Reserve's
balance sheet liabilities reached a fresh record size on an
increase in the central bank's holdings of U.S. government debt,
Fed data released on Thursday showed.
The Fed's balance sheet liabilities, a broad gauge of its
lending to the financial system, stood at $3.210 trillion on
April 10, compared with $3.198 trillion on April 3.
Telegraph:
Bild:
- German Financial Advisers Call for Abolition EU500 Note. Reiner Holznagel, president of Germany Taxpayers Association, says move would make it harder to take money out of the country.
ChannelNewsAsia:
- Singapore's GDP contacts in Q1. Singapore's
economy unexpectedly contracted in the first quarter of 2013, hurt by a
sharp decline in manufacturing. Singapore: Advance estimates indicate
that in the first quarter of
2013, the Singapore economy contracted by 0.6 per cent compared to the
1.5 per cent growth in the preceding quarter. On a
quarter-on-quarter seasonally-adjusted annualised basis, the economy
contracted by 1.4 per cent, down from the 3.3 per cent growth in the
previous quarter noted the Trade and Industry Ministry. Market watchers had expected 1 per cent growth and point out worries in the manufacturing sector.
Evening Recommendations
Night Trading
- Asian equity indices are -.75% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 112.0 -4.0 basis points.
- Asia Pacific Sovereign CDS Index 90.5 -2.0 basis points.
- NASDAQ 100 futures -.16%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Advance Retail Sales for March are estimated unch. versus a +1.1% gain in February.
- Retail Sales Less Autos for March are estimated unch. versus a +1.0% gain in February.
- Retail Sales Ex Autos & Gas for March are estimated to rise +.3% versus a +.4% gain in February.
- The Producer Price Index for March is estimated to fall -.2% versus a +.7% gain in February.
- The PPI Ex Food & Energy for March is estimated to rise +.2% versus a +.2% gain in February.
9:55 am EST
- Preliminary Univ. of Mich. Consumer Confidence for April is estimated to fall to 78.5 versus 78.6 in March.
10:00 am EST
- Business Inventories for February are estimated to rise -.4% versus a +1.0% gain in January.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Bernanke speaking, Fed's Rosengren speaking, Eurozone industrial
production data, EU Finance Ministers Meeting and the (IMGN) analyst
meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by industrial and technology shares in the region. I expect US stocks to open mixed and weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.
Broad Market Tone:
- Advance/Decline Line: Slightly Lower
- Sector Performance: Mixed
- Market Leading Stocks: Performing In Line
Equity Investor Angst:
- ISE Sentiment Index 94.0 -30.37%
- Total Put/Call .88 +3.53%
Credit Investor Angst:
- North American Investment Grade CDS Index 82.07 +.09%
- European Financial Sector CDS Index 158.98 -.29%
- Western Europe Sovereign Debt CDS Index 102.33 unch.
- Emerging Market CDS Index 224.89 -1.55%
- 2-Year Swap Spread 14.0 -.5 bp
- 3-Month EUR/USD Cross-Currency Basis Swap -17.25 -.5 bp
Economic Gauges:
- 3-Month T-Bill Yield .06% -1 bp
- Yield Curve 156.0 -1 basis point
- China Import Iron Ore Spot $140.90/Metric Tonne +.21%
- Citi US Economic Surprise Index 9.0 +1.8 points
- 10-Year TIPS Spread 2.47 +3 bps
Overseas Futures:
- Nikkei Futures: Indicating +29 open in Japan
- DAX Futures: Indicating -21 open in Germany
Portfolio:
- Higher: On gains in my medical/biotech/retail sector longs
- Market Exposure: 75% Net Long
Style Underperformer:
Sector Underperformers:
- 1) Disk Drives -2.07% 2) Computer Hardware -2.01% 3) Steel -1.90%
Stocks Falling on Unusual Volume:
- FTNT, NIHD, MSFT, HFC, LFC, ACHN, CBSH, OZRK, IART, APOG, RTI, MPW, JOY, CBI, MSFT, AMBA, GDOT, HPQ, CLF, VALE and VLO
Stocks With Unusual Put Option Activity:
- 1) CTIC 2) ACAD 3) TXN 4) MSFT 5) JOY
Stocks With Most Negative News Mentions:
- 1) IART 2) ANDE 3) BRCM 4) DELL 5) YUM
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Retail +1.78% 2) Hospitals +1.26% 3) Biotech +1.20%
Stocks Rising on Unusual Volume:
- TVL, GTN, TM, ACAD, ZUMZ, PRLB, BKW, SBGI, ROST, OXY, DGX, LTD, FSLR, LRCX, NXST, URI and ONXX
Stocks With Unusual Call Option Activity:
- 1) LRCX 2) RAD 3) A 4) CVC 5) ACAD
Stocks With Most Positive News Mentions:
- 1) TOL 2) GD 3) BA 4) LMT 5) BRCM
Charts:
Evening Headlines
Bloomberg:
- Italy Sells Bonds With Debt Level Approaching Postwar Record. One day after Prime Minister Mario Monti announced Italy’s debt will reach a postwar record this year, the Treasury is tapping investors with the sale of as much
as 7.5 billion euros ($9.8 billion) of bonds. The Rome-based Treasury will offer as much as 4 billion
euros of a new three-year bond, 2 billion euros of 15-year debt
and 1.5 billion euros of floating-rate notes. The auction should
get “strong support” from 16.7 billion euros in redemptions
due April 15 that will leave investors with funds to reinvest,
UniCredit analysts including Chiara Cremonesi wrote in a note
yesterday.
Italy’s bond yields declined yesterday even after the
government announced that its debt will rise to 130.4 percent of
gross domestic product from 127 percent last year as the third-
biggest economy borrows to contribute to bailouts and pay
arrears to government suppliers.
- Merkel’s No-Nuke Stumble May Erode Re-Election Support: Energy. Chancellor Angela Merkel’s sweeping
plan to transform Germany into a green-energy giant almost
destroyed Nordseewerke GmbH, one of the country’s leading makers of wind-turbine foundations. Nordseewerke, which produces Statue of Liberty-sized
foundations, ramped up its manufacturing capacity and head count
in 2011 after Merkel declared that Germany would begin a massive
project to install 25,000 megawatts of offshore wind power by
2030.
- Hagel Calls on North Korea to Tone Down Rhetoric. U.S. Defense Secretary Chuck Hagel said North Korea has “been skating
very close to a dangerous line” and should tone down its “bellicose
rhetoric” to ease mounting tensions in the region. “Their actions and their words have not helped defuse a combustible
situation,” Hagel said yesterday at a Pentagon news conference. He said
the U.S. is “fully prepared to deal with any contingency.”
- Australia’s Unemployment Rate Jumps to Three-Year High: Economy. Australia’s unemployment rate climbed in March to the highest level in more than three years,
sending the local dollar and bond yields lower as traders added
to bets the central bank will resume interest rate cuts.
The jobless rate rose to 5.6 percent from 5.4 percent, the
statistics bureau said in Sydney today, the highest since
November 2009.
- Bank of Korea Resists Rate-Cut Pressure as North Threatens War.
The Bank of Korea held borrowing costs unchanged for a sixth month,
resisting pressure from the government for a reduction even as North
Korean threats of war threaten to undermine confidence. Governor Kim
Choong Soo and his board kept the benchmark seven-day repurchase rate at
2.75 percent, the central bank said in a statement in Seoul today. Nine of 20 economists surveyed by Bloomberg News predicted the move while the remainder forecast a
25-basis-point cut.
- Fed’s Fisher Says Benefits and Costs of Asset Purchases Unclear. Federal
Reserve Bank of Dallas
President Richard Fisher said that both the ultimate benefits and costs
of the central bank’s asset purchases are unclear. “Companies are
starting to use the copious cheap money they have access to for
investing in capital projects and employing increasing amounts of
workers,” Fisher said in the text of prepared remarks given today in El
Paso, Texas. “But it is not yet clear that we will achieve a justifiable bang for the trillions of bucks the Fed has flooded the economy with.” “The
Federal Reserve has provided plenty of, if not too much, high-octane
fuel in the form of cheap and abundant money to propel the economy
forward,” Fisher said at the University of Texas at El Paso.
- Microsoft(MSFT) Windows Weak Demand Drives Worst PC Drop on Record. Personal-computer
shipments plummeted in every region of the world in the first quarter
as buyers opted for smartphones and tablet computers and Microsoft Corp.
(MSFT)’s newest operating system met with weak demand. Global PC
unit shipments fell 14 percent in the first quarter -- the worst such
decline on record -- to 76.3 million, a bigger drop than the 7.7 percent
decline IDC had forecast, the market researcher said in a statement. The slump was the steepest since IDC began tracking shipments in 1994.
Every PC maker except China’s Lenovo Group Ltd. (992) experienced
declines as businesses chose to install Microsoft’s Windows 7 operating
system on employees’ computers instead of the newer Windows 8, Jay Chou,
an analyst at Framingham, Massachusetts- based IDC, said in an
interview. Consumers also shunned Windows 8 in favor of smartphones and
tablets, which can handle many of
the same tasks, he said. “We don’t have a lot of reason to be optimistic
that the
market will remain in more than replacement-cycle mode,” Chou
said. Consumers have found Windows 8’s redesigned user interface
disorienting, and prices for touch-screen enabled computers that
run the software are still too high, he said. The last time worldwide PC shipments experienced a double-
digit percentage decline was in the third quarter of 2001, when
the market was roiled by the Sept. 11 terrorist attacks and the
impact of a decline in technology stocks, Chou said.
- Goldman Sachs(GS), Citigroup(C), Carlyle Received Fed Minutes Early. Banks
including Citigroup Inc. and Goldman Sachs Group Inc., along with
congressional staff members and trade groups, received potentially
market-moving Federal Reserve information 19 hours before the public in a
release the central bank called accidental. Brian Gross, a member
of the Fed’s congressional liaison staff, distributed the March 19-20
minutes of the Federal Open Market Committee meeting at 2 p.m. yesterday
Washington time, according to an e-mail obtained by Bloomberg News.
Gross referred questions to Fed spokeswoman Michelle Smith.
- Iron Ore’s $250 Billion Glut Pressures Rio to Vale: Commodities. The
world’s biggest iron-ore producers are planning $250 billion of new
mines, threatening to deepen a price slump for the commodity already
forecast to drop for at least the next three years. Mining companies
are facing growing investor pressure to defer or cancel projects to
stem price declines. Rio Tinto Group (RIO), the second-largest iron ore
exporter, will decide on one of the biggest industry expansions in
Western Australia in the
second half. A decision to delay would boost its earnings in
2015 by $3.7 billion, according to Liberum Capital Ltd.
Wall Street Journal:
Fox News:
- Obama budget proposes more than $1 trillion in taxes, fees. President Obama's budget proposal includes new tax increases that hit
everything from deductions for top earners to packs of cigarettes. Though the president's newly released plan claims to include $580
billion in new revenue over the next decade, when all taxes and fees are
counted the real number is slightly higher than $1 trillion.
- N. Korea positions missile launchers on coast, Hagel says regime close to 'dangerous line'. North Korea has positioned two mobile missile launchers on the
country's east coast, senior Pentagon officials tell Fox News --
movement that comes as Defense Secretary Chuck Hagel warned Wednesday
that North Korea is "skating very close to a dangerous line." The senior Pentagon officials told Fox News that a test of the
Musudan missiles could occur "at any time." If the North Koreans
proceed, it would be the first mobile test of this specific
intermediate-range missile, which has a range of 2,500 miles. The fact that this would be their first test is giving military
leaders an added layer of uncertainty about the potential for an
unintended mistake.
CNBC:
Zero Hedge:
Business Insider:
Reuters:
- Yum(YUM) says bird flu hits China April sales; March down. KFC parent Yum Brands Inc
warned that a new bird flu outbreak in China badly hit
restaurant sales there this month, even as the company also
reported a sharper-than-expected slide in March sales in the
country caused by the lingering impact of a separate food safety
scare. "Within the past week, publicity associated with Avian flu
in China has had a significant, negative impact on KFC sales,"
the company said in a regulatory filing on Wednesday.
Telegraph:
- Christine Lagarde: crisis has created 'three-speed economy'. The global financial crisis has created a "three-speed economy" with
the eurozone at the bottom and a too-big-to-fail banking model that is "more
dangerous than ever", the managing director of the International Monetary
Fund has said.
Kyodo:
- Japan stays alert for potentially more than one missile launch by North Korean, citing Defense Minister Itsunori Onodera.
South China Morning Post:
- Chinese North Korea Scholar Says 70%-80% Chance of War. Zhang Liangui, professor of intl. strategic research at the Chinese Communist Party's Central Party School, says North Korean leader Kim Jong Un may want to use crisis as an opportunity to force reunification of Korean Peninsula.
China Securities Journal:
- China
Small Firms "Not Optimistic" on Economy. Chinese small and medium-sized
companies are "not optimistic" about the economy this year because of
weak domestic and overseas demand, China Securities Journal reports after a tour in Shandong
and Zhejiang provinces and Shenzhen city. Coal and cotton stockpiles
in Qingdao's bonded zone remain high. Some small companies report
falling profit because of rising labor, land leasing and other operating
costs, the report said.
- China's southern city of Guangzhou will raise the minimum down payment requirement for second home purchases to 70% if its home prices rise by more than 2% in April on month, citing a person familiar with the matter.
Evening Recommendations
Night Trading
- Asian equity indices are unch. to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 116.0 -.75 basis point.
- Asia Pacific Sovereign CDS Index 92.5 -1.75 basis points.
- NASDAQ 100 futures -.20%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Import Price Index for March is estimated to fall -.5% versus a +1.1% gain in February.
- Initial Jobless Claims are estimated to fall to 360K versus 385K the prior week.
- Continuing Claims are estimated to rise to 3067K versus 3063K.
Upcoming Splits
Other Potential Market Movers
- The
Fed's Plosser speaking, Fed's Bullard speaking, Italian 10Y bond
auction, German CPI, Australia Unemployment data, 30Y T-Bond auction,
weekly Bloomberg Consumer Comfort Index and the (NVDA) investor day
could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and technology shares in the region. I expect US stocks to open modestly lower and rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.