Thursday Watch

Evening Headlines 
Bloomberg:

• Russia’s Trade, Energy Might Frustrates EU Move for Sanctions. European Union leaders are set to spar over punishing Russia for seizing Crimea after preparatory meetings between EU government officials failed to reach a consensus. Beset by east-west divisions and concerns that trade curbs would do self-inflicted damage to Europe’s economy, the EU’s 28 member states remain divided over whether and how to press further sanctions against Russia for its move to annex Ukrainian territory. As leaders including President Francois Hollande of France and Germany’s Chancellor Angela Merkel prepare to gather for a two-day summit in Brussels today, it is unclear whether they will be able to agree on a road map for economic sanctions, six EU officials told reporters yesterday. One less controversial option would be to expand an existing blacklist of 21 Russian and Crimean officials, they said.

• China Developers Get Share-Sale Approval in Government Shift. Chinese developers Tianjin Tianbao Infrastructure Co. and Join.In Holding Co., received regulatory approval for new-stock sales, the first the government has allowed by real estate companies in about four years. The China Securities Regulatory Commission said yesterday the companies are allowed to sell yuan-denominated A shares in private placements, according to separate statements to Shanghai and Shenzhen stock exchanges. China hasn’t allowed developers to raise money by selling shares since 2010, when it stepped up efforts to cool the real estate market amid rising home prices, according to Zheshang Securities Co. and Haitong Securities Co. Yesterday’s approval comes after a developer collapsed under its debt, prompting declines in property companies’ shares and bonds. 

• Australia May Have Found Objects Linked to Missing MH370 Flight. Australian authorities combing the Indian Ocean for missing Malaysian Airline Flight MH370 have found two objects and diverted surveillance aircraft to locate them, Prime Minister Tony Abbott said. “The Australian Maritime Safety Authority has received information based on satellite imagery of objects possiblyrelated to the search,” Abbott told lawmakers in parliament today. “Following specialist analysis of this satellite imagery, two possible objects related to the search have been identified.”

• Asia Stocks Drop to Six-Week Low as Fed Signals Rate Rise. Asian stocks fell, with the regional gauge heading for a six-week low, as the Federal Reserve signaled it may raise U.S. interest rates from the middle of next year. Newcrest Mining Ltd. (NCM), Australia’s biggest gold producer, slumped 6.4 percent after bullion dropped the most in three months as the Fed’s announcement curbed demand for the metal as a store of value. Myer Holdings Ltd. declined 5.3 percent in Sydney as the retailer reduced its forecast for gross profit margin. Toyota Motor Corp., the world’s largest carmaker, rose 0.5 percent in Tokyo after the yen slumped yesterday. The MSCI Asia Pacific Index declined 0.8 percent to 133.61 as of 9:45 a.m. in Tokyo, heading for the lowest close since Feb. 7.

• Yellen Retreat From Policy Thresholds Doubted as Yields Rise. Janet Yellen said the Federal Reserve wasn’t altering policy when it overhauled the way it signals changes in borrowing costs. Investors didn’t buy it. In her first press conference as Fed chair, Yellen emphasized that dropping a 6.5 percent unemployment threshold for considering an interest-rate increase “does not indicate any change in the committee’s policy intentions.”

• BofA(BAC) Said to Cut Jobs Across Montag’s Banking, Trading Divisions.

• Obama Aides’ Anti-Keystone View Clashes With Risk of Senate Loss. President Barack Obama’s advisers are lining up against the proposed Keystone XL oil pipeline. Top Democratic donors oppose the project. And Obama himself dismisses claims that it will create many jobs. Yet there’s still one big obstacle to the president saying no to Keystone: election-year politics. If Obama rejects the pipeline, it might sink Democratic candidates in states with big energy industries, such as Louisiana and Alaska. That could cost Democrats control of the Senate -- a risk that’s likely to weigh heavily on any decision the president makes, to approve the pipeline, reject it or wait until after November to announce a decision.

Wall Street Journal: 

• Yellen Debut Rattles Markets. Wary Investors Seize on New Fed Chief's Mixed Message on Pace of Rate Increases.

• Falling Yuan Curbs Cash Entering China. Chinese Currency Trades Past Its Previous 1% Band for the First Time.

MarketWatch.com:

• Investors now fear China more than Janet Yellen: Barclays survey.

CNBC:

• Why equities sold off despite a dovish Fed.

Zero Hedge:  

• The Music Just Ended: "Wealthy" Chinese Are Liquidating Offshore Luxury Homes In Scramble For Cash.

• The Chinese Yuan Is Collapsing. (graph)

• "The Cacophony Of Fed Confusion," David Stockman Warns Will Lead To "Economic Calamity".

• The Problem With Forward P/Es. (graph)

• The 16 "Dots" That Sent Stocks Reeling.

• Beef Prices Surge Most In A Decade As Food Inflation Soars. (graph)

• Serfs Up – Average Healthcare Premiums Have Soared 39%-56% Post Obamacare.

• Goldman's(GS) FOMC Statement Post-Mortem.

• Busted! – U.S. Tech Giants Knew Of NSA Spying Says Agency's Senior Lawyer.

Business Insider:

• Russia Just Warned The US That It May Play The 'Iran Card' On Ukraine.

• HP(HPQ) CEO Says The Company Will Flesh Out 3D-Printing Entry In June.

• Markets Have To Increasingly Price In The End Of Cheap Money.

Washington Post:

• The Insiders: Democrats should bail on Obamacare.

Reuters: 

• Starbucks(SBUX) faces higher milk, coffee costs.

• Russia will respond in kind to US sanctions - deputy foreign minister.

China Securities Journal:

• China Corporate Bond Default Risk Rises. Default risk of China's corporate bonds rises as economic growth and property investment growth slow, according to a front-page commentary. Cos. relevant to the property sector will face a "more severe" situation of overproduction, the commentary said. More defaults may have an impact on banks. China should keep economic policies stable and prevent risks from becoming systemic.

Evening Recommendations
Keybanc:

• Rated (CVD) Buy, target $121.

Goldman Sachs:

• Cut (BYI) to Sell.

Night Trading

• Asian equity indices are -1.25% to -.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 130.25 +2.25 basis points.

• Asia Pacific Sovereign CDS Index 98.0 +1.75 basis points.

• FTSE-100 futures -.68%.

• S&P 500 futures -.28%.

• NASDAQ 100 futures  -.27%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (IHS)/1.24

• (LEN)/.28

• (SCHL)/-.37

• (CAG)/.60

• (NKE)/.72

• (SCVL)/.04

• (TIBX)/.18

• (CKP)/.31 

Economic Releases
8:30 am EST

• Initial Jobless Claims are estimated to rise to 322K versus 315K the prior week.

• Continuing Claims are estimated to rise to 2880K versus 2855K prior.

10:00 am EST

• Philly Fed Business Outlook for March is estimated to rise to 3.2 versus -6.3 in February.

• Existing Home Sales for February are estimated to fall to 4.6M versus 4.62M in January.

• Leading Index for February is estimated to rise +.2% versus a +.3% gain in January.

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed Bank Stress Test results, weekly EIA natural gas inventory report, Bloomberg Economic Expectations Index for March, weekly Bloomberg Consumer Comfort Index and the (TRI) investor day could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by technology and industrial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Falling into Final Hour on Rising Emerging Markets Debt Angst, Fed Statements, Higher Long-Term Rates, Gaming/REIT Sector Weakness

Broad Equity Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Slightly Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 14.30 -1.52%

• Euro/Yen Carry Return Index 147.85 +.27%

• Emerging Markets Currency Volatility(VXY) 8.97 +.56%

• S&P 500 Implied Correlation 52.93 -1.38%

• ISE Sentiment Index 151.0 -3.82%

• Total Put/Call .75 +1.35%

• NYSE Arms .80 -.10% 

Credit Investor Angst:

• North American Investment Grade CDS Index 63.64 +.74%

• European Financial Sector CDS Index 87.38 -.84%

• Western Europe Sovereign Debt CDS Index 47.89 -.95%

• Asia Pacific Sovereign Debt CDS Index 96.37 +.10%

• Emerging Market CDS Index 319.06 +1.02%

• China Blended Corporate Spread Index 389.44 +2.01%

• 2-Year Swap Spread 11.75 -1.75 basis points

• TED Spread 18.25 -.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -3.5 -.25 basis point

Economic Gauges:

• 3-Month T-Bill Yield .05% unch.

• Yield Curve 234.0 +1.0 basis point

• China Import Iron Ore Spot $110.50/Metric Tonne unch.

• Citi US Economic Surprise Index -34.80 -1.3 points

• Citi Emerging Markets Economic Surprise Index -6.10 unch.

• 10-Year TIPS Spread 2.18 -1.0 basis point

Overseas Futures:

• Nikkei Futures: Indicating +119 open in Japan

• DAX Futures: Indicating -35 open in Germany

Portfolio: 

• Slightly Higher: On gains in my index hedges and emerging markets shorts

• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short

• Market Exposure: Moved to 25% Net Long

Today's Headlines

Bloomberg:  

• EU Struggles for Common Russia Front Amid Crimea Tensions. Ukraine ordered the removal of its military from Crimea and said it will strengthen its deployments on the country’s border with Russia a day after Vladimir Putin cemented his grip over the breakaway Black Sea region. Andriy Parubiy, head of Ukraine’s National Security Council, said in Kiev that the government would seek compensation from Russia for its seized assets and would bolster security at nuclear installations. The move came after unarmed civilians stormed Ukraine’s naval headquarters in Sevastopol, home to Russia’s Black Sea Fleet, detaining officers, including the navy chief.

• Faltering Bonds Condense Risk as Builder Collapses: China Credit. China’s faltering bond market is forcing banks to pick up the slack, spoiling Premier Li Keqiang’s efforts to spread financial risks as defaults extend from solar companies to real-estate developers. New notes issued minus maturing securities slumped 64 percent to 133 billion yuan ($21.5 billion) in the first two months of 2014, while new yuan loans made up about 69 percent of total credit in February, the most in seven months, according to central bank data. The yield on five-year company securities rated AA- jumped 128 basis points in the past year to 7.71 percent yesterday, compared with an average 5.64 percent on high-yield U.S. debt, according to a Bank of America Merrill Lynch Index.

• Deutsche Bank(DB) Said to Plan Job Cuts at Investment Bank. Deutsche Bank AG(DB), Germany's biggest bank, plans to cut more jobs at its investment bank to lower costs as business stagnates, two people with knowledge of the plan said. The bank is weighing the reductions, which come in addition to the 2,000 announced in 2012, over the coming months across its corporate finance, capital markets and trading businesses, said the people, who asked not to be identified because the details aren’t public. Managing directors are included in the plan, they said. 

• European Stocks Are Little Changed Before Fed Decision. European stocks were little changed, following two days of gains, as investors awaited a speech by Federal Reserve Chair Janet Yellen to gauge the central bank’s views on its stimulus program and interest rates. Inditex SA added 4.9 percent after saying sales rose in the first six weeks of the fiscal year. Bayerische Motoren Werke AG jumped to a record after forecasting pretax profit will rise this year. Ophir Energy Plc tumbled to its lowest price since December 2011 after saying it discovered little evidence of hydrocarbons at a well in Gabon. The Stoxx Europe 600 Index dropped 0.1 percent to 327.63 at the close of trading.

• Gold Falls Most in Six Weeks on Bets Fed to Cut Stimulus. Gold futures for April delivery fell 1.4 percent to $1,340.20 at 10:41 a.m. on the Comex in New York.

• Copper Drops to Lowest Since July 2010 on China Concerns. Copper futures for delivery in May lost 2.3 percent to $2.8835 a pound at 11:03 a.m. on the Comex in New York, after touching $2.877, the lowest for a most-active contract since July 1, 2010.

• Fed Links Rate Outlook to Range of Data; Drops 6.5% Threshold. The Federal Reserve said it will look at a wide range of data in determining when to raise its benchmark interest rate from zero, dropping a pledge tying borrowing costs to a 6.5 percent unemployment rate. “A highly accommodative stance of monetary policy remains appropriate,” the Federal Open Market Committee said in a statement today following a meeting in Washington that was the first led by Chair Janet Yellen. In determining how long to keep rates low, the committee will assess progress towards its goals of maximum employment and 2 percent inflation, it said.

• Junk Bonds at $2 Trillion as Gundlach Pulls Back: Credit Markets. The junk-bond bonanza that’s doubled the market to almost $2 trillion since the credit crisis has Jeffrey Gundlach heading toward the exit. Less than 12 months after saying the Federal Reserve’s stimulus and a plunge in defaults would support the market for speculative-grade debt for another four years, the head of DoubleLine Capital LP is trimming its allocations. With borrowing costs for the least-creditworthy companies approaching a record low, junk bonds no longer provide enough of a buffer from rising Treasury yields as the Fed scales back its bond buying, said Gundlach, whose firm oversees $49 billion. “They’ve squeezed all the toothpaste out of the tube,” the bond manager said in a telephone interview from Los Angeles. “There is interest-rate risk that’s just being masked by fund flows holding up the prices of junk bonds.” 

• FedEx(FDX) Cuts Full-Year Forecasts as Winter Storms Add Costs. FedEx Corp. (FDX), operator of the world’s largest cargo airline, cut its 2014 profit forecast after unseasonably harsh winter weather grounded flights and slowed shipments by truck and train last quarter. The company trimmed its profit forecast for the full year to a range of $6.55 to $6.80 a share, from $6.73 to $7.10 previously. That falls short of analysts’ estimates of $6.90 a share, according to data compiled by Bloomberg. 

Wall Street Journal: 

• Ukraine Navy Base in Crimea Stormed by Pro-Russian Forces. Ukraine Acting President Issues Ultimatum in Response.

• Crisis in Ukraine. Streaming Coverage:

• Jon Hilsenrath’s Takeaways From the Fed Statement and Economic Projections. 

Fox News:

• Author of ‘EPA Playbook’? Report claims notorious fraudster was behind costly EPA regulations. John Beale, the former EPA official who fooled his bosses into believing he worked for the CIA, was deeply involved in crafting costly environmental standards which still are having an impact today -- though he came into the job with little, if any, environmental experience.

ZeroHedge:

• China's "Minsky Moment" Is Here, Morgan Stanley Finds.

• CFTC Investigates The "Secret" HFT-Exchange Incentive Programs.

• Ukraine Demands Its "Seized Personnel" Be Released Shortly, Or Else.

• China's Housing Problem In One Chart. (graph)

• Netanyahu Orders Israel Army To Prepare For Possible Military Strike Against Iran In 2014.

• Copper Plunges To Fresh 5-Year Low. (graph)

• Goodbye Blythe Masters: JPM Sells Its Physical Commodities Business To Mercuria For $3.5 Billion.

Business Insider:

• The Chinese Currency Just Fell To A Key Level And Billions Of Dollars Are At Stake.

Washington Post:

• Democrats face turnout problem, dissatisfaction in ranks leading to midterms.

Reuters:

• Moscow signals concern for Russians in Estonia. Russia signaled concern on Wednesday at Estonia's treatment of its large ethnic Russian minority, comparing language policy in the Baltic state with what it said was a call in Ukraine to prevent the use of Russian. Russia has defended its annexation of Ukraine's Crimea peninsula by arguing it has the right to protect Russian-speakers outside its borders, so the reference to linguistic tensions in another former Soviet republic comes at a highly sensitive moment.

The Hill:

• Obamacare Premiums to Skyrocket.

Financial Times:

• Yellen points to earlier rate rises. Janet Yellen has begun her term as chair of the US Federal Reserve with a hawkish set of forecasts that point to earlier interest rate rises than previously thought.

• Frustrations over China increase at US companies. Almost 80 per cent of US companies participating in an annual survey reported that their China revenues had “increased slightly” or were in decline over the past year, as frustrations mount over everything from government investigations to internet censorship.

• US Pacific Fleet commander warns Asia it risks Crimea-like crisis. The commander of the US Pacific Fleet has hit out at China’s “revanchist tendencies” and warned that Asia-Pacific nations must forsake “unilateral actions and inflammatory rhetoric” or risk stumbling into a Crimea-like crisis that would damage the global economy.

Die Welt:

• Russia Wants More Than Crimea, Ukraine's Parubiy Says. Russia is targeting wider Ukraine and Kiev, not just Crimea, Andriy Parubiy, head of Ukraine's National Security Council, says in an interview. Russia wants war with Ukraine. Ukraine will defend itself in case of new aggression such as in Crimea.

Epoch Times:

• China's Bear Stearns Moment. In the end, it’s just going to be a few hundred million in write-offs. But the second imminent default of a Chinese corporate bond shows that China has passed its “subprime” moment and is staring into the face of a bankrupt debt juggernaut. It was only last week that Chinese Premier Li Keqiang told the world that defaults on private company bonds and packaged investment products called trusts are “unavoidable.” After years of unchecked credit growth and misallocation of resources, they indeed are. What Li didn’t tell us is: They cannot be centrally planned.

Bear Radar

Style Underperformer:

• Small-Cap Growth -.51%

Sector Underperformers:

• 1) Gold & Silver -1.35% 2) I-Banks -.90% 3) REITs -.81%

Stocks Falling on Unusual Volume:

• VGR, CYNO, RAVN, BOFI, RBCN, AV, OZM, WETF, OCIP, FEYE, FDS, MANH, DANG, KNDI, FPRX, DK, VOYA, PUK, SPH, ADBE, BIND, SCTY, NHI, KMP, TISI, CHKR, ENLK and RBCN

Stocks With Unusual Put Option Activity:

• 1) CWH 2) NAV 3) ORCL 4) FSLR 5) YRCW
  

Stocks With Most Negative News Mentions:

• 1) GM 2) FDX 3) MGM 4) MBI 5) WFM
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Mid-Cap Value +.03%

Sector Outperformers:

• 1) Homebuilders +1.94% 2) HMOs +1.58% 3) Hospitals +1.07%
  

Stocks Rising on Unusual Volume:

• PRTA, EXAS, HZNP, VRA, FF, FSLR, KONG, CWH, KBH and SNCR

Stocks With Unusual Call Option Activity:

• 1) XRX 2) WLP 3) ECYT 4) PEG 5) NBL

Stocks With Most Positive News Mentions:

• 1) GIS 2) A 3) GOOG 4) KBH 5) FDX
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Wednesday Watch

Evening Headlines 
Bloomberg: 

• Russia Shrugs Off Sanctions as It Seals Claim to Crimea. Russia cemented its claim to Crimea as President Vladimir Putin showed no sign of backing down in the standoff over Ukraine’s breakaway Black Sea region, prompting Western leaders to vow further sanctions this week. Putin signed an accord yesterday setting in motion Crimea’s accession to Russia, while British Prime Minister David Cameron vowed to push European leaders to agree on additional measures against Russia when they meet tomorrow in Brussels. As tensions rose, Ukraine accused Russian forces of being involved in a shooting that killed a Ukrainian soldier.
• Short Sellers Target Chinese Developers as Rout Deepens. Stock traders have doubled bearish bets against some of the biggest Chinese developers amid growing concern that a weaker real-estate market will curb property sales just as borrowing costs surge. Short interest in Evergrande Real Estate Group Ltd. (3333), the nation’s fourth-largest developer by market value, was at 8.4 percent yesterday, up from 3.2 percent a year ago, according to data compiled by Bloomberg and Markit Group Ltd. It reached a record 8.6 percent of shares outstanding on March 4. Wagers against Hong Kong-listed Guangzhou R&F Properties Co. and Agile Property Holdings Ltd. have both reached the highest since December 2012.
• China Mobile Under Pressure as IPhones, WeChat Curb Profit. China Mobile Ltd. (941) faces a triple whammy of apps, iPhone subsidies and regulations that likely will cost the world’s largest carrier as much as $1.8 billion in profit this year. The state-run phone company is contending with falling income as customers flock to free messaging applications like Tencent Holdings Ltd.’s WeChat and buy Apple Inc. devices at a subsidized discount. The government also will impose a new telecommunications tax as part of an effort to lower prices and improve customer service. 
• Japan Posts Bigger-Than-Forecast Trade Deficit for February. Japan’s trade deficit exceeded analysts’ estimates in February, underscoring drags on the nation’s recovery as a sales-tax increase looms in April. The 800 billion yen ($7.9 billion) shortfall reported by the finance ministry in Tokyo today was more than the 600 billion yen median estimate in a Bloomberg News survey of 31 economists. Imports (JNTBIMPY) expanded 9 percent from a year earlier, and exports rose 9.8 percent. Import volumes fell 0.5 percent from a year earlier, the first decline since September, today’s report showed.
• Japan Display Slumps in Trading Debut After $3.1 Billion IPO. Japan Display Inc. plunged in its debut after the supplier of screens for Apple Inc. devices priced shares through an initial public offering at the bottom of a planned range. The IPO raised 318.5 billion yen ($3.1 billion) with an offer price of 900 yen. The stock declined as much as 22 percent and traded at 749 yen as of 10:04 a.m. in Tokyo.
• Asian Stock Gauge Fluctuates Before Fed Policy Statement. Asia’s benchmark stock gauge fluctuated as investors weighed the prospect of further sanctions against Russia and awaited the Federal Reserve’s policy statement. Japan Display Inc. sank in its trading debut. Nufarm Ltd. climbed 4.3 percent in Sydney as Credit Suisse Group AG and UBS AG raised their ratings on Australia’s biggest supplier of agricultural chemicals after the company said it would close two manufacturing sites. Japan Display tumbled 17 percent on its first trading day in Tokyo after the supplier of screens for Apple Inc. devices raised 318.5 billion yen ($3.1 billion) through an initial public offering. Newcrest Mining Ltd. advanced 3.6 percent in Sydney after CLSA Asia Pacific Markets raised its rating on the stock to buy. The MSCI Asia Pacific Index was little changed at 135.06 as of 10:23 a.m. in Tokyo, after rising 0.2 percent and falling 0.1 percent.
• VIX Trader Pays $8 Million on Bet Gauge to Rally 60% by May. An investor paid about $7.95 million for a trade that will pay off if the Chicago Board Options Exchange Volatility Index rallies at least 60 percent by May. The trader bought 150,000 bullish contracts on the VIX expiring in May with a strike price of 22, while selling the same number of May 30 calls in a strategy known as a call spread, according to New York-based Miller Tabak & Co. The trade cost 53 cents to put on for each contract and it will profit if the volatility gauge rises above 22.53 from the current level around 14, data compiled by Bloomberg show. It has a maximum payoff if the VIX more than doubles to 30. 
• Junk Bonds at $2 Trillion as Gundlach Pulls Back: Credit Markets. The junk-bond bonanza that's doubled the market to almost $2 trillion since the credit crisis has Jeffrey Gundlach heading toward the exit. With borrowing costs for the least-creditworthy companies approaching a record low, junk bonds no longer provide enough of a buffer from rising Treasury yields as the Fed scales back its bond buying, said Gundlach, whose firm oversees $49 billion. "They've squeezed all the toothpaste out of the tube," the bond manager said in a telephone interview from Los Angles. "There is interest-rate risk that's just being masked by fund flows holding up the prices of junk bonds." Junk bonds, which have returned 148% since the end of 2008, are showing signs of froth as five years of easy-month policies by central banks caused investors to pour unprecedented amounts of money into the high-yield market. That's helped push the amount of junk bonds worldwide to $1.97 trillion from less than $1 trillion in March 2009, Bank of America Merrill Lynch index data show.
• Corporates Surpass ’07 Mortgage Bonds as Risk Escalates. Corporate debt is accounting for the biggest portion of the U.S. bond market ever, with $9.8 trillion of debentures surpassing the 2007 peak of the mortgage-securities boom that triggered the financial crisis. Debt issued by companies from Verizon Communications Inc. (VZ) to Caesars Entertainment Corp. (CZR) made up almost 25 percent of the $39.9 trillion in U.S. bonds outstanding at year-end, up from 19 percent five years earlier, according to data published March 14 by the Securities Industry and Financial Markets Association. Outside the $11.9 trillion of Treasuries, corporates are the largest component of the world’s biggest debt market. Obligations are mounting as the Federal Reserve pulls back from more than five years of easy-money policies that spurred the borrowing glut. With economists forecasting benchmark yields will rise, that’s raising concern companies facing $3.5 trillion of maturities by the end of 2018 will find it more costly to refinance, similar to what U.S. homeowners faced six years ago. “The market is getting more and more similar to that 2007 time period,” Jody Lurie, a corporate credit analyst at Janney Montgomery Scott LLC in Philadelphia, said in a telephone interview. Investors “are going down in credit quality to the point that it’s detrimental to potentially getting back the principal.”
• IRS Employee Took Home Data on 20,000 Workers at Agency. A U.S. Internal Revenue Service employee took home a computer thumb drive containing unencrypted data on 20,000 fellow workers, the agency said in a statement today.

Wall Street Journal: 

• How Putin Parried Obama's Overtures on Crimea. Five Years After Russia 'Reset,' Ukraine Crisis Shows Limits of U.S. Approach.
• Crisis in Ukraine. Streaming Coverage:
• Hedge Fund Shutdowns Hit Nearly Five-Year High. Here comes the flip side of the coin. Amid a booming environment for hedge-fund launches comes some sobering news for industry newbies: Last quarter saw the most hedge-fund liquidations in nearly five years, research firm HFR said Tuesday. Some 296 funds liquidated in the fourth quarter, the most since the first quarter of 2009. In total, 904 funds closed in 2013, with the majority either long/short equity or macro themed. HFR tracks a universe of about 10,000 funds.
• In Business Roundtable survey, CEOs See No Quick Increase in Hiring. 
• The Economic Roots of American Retreat. Enduring a jobless recovery has discouraged many from supporting a robust U.S. foreign policy.

MarketWatch.com:

• Fed transparency boils down to 16 dots on a page. Of all the Federal Reserve’s moves toward transparency since Ben Bernanke took over the central bank in 2006 , the one with the most impact this week will be 16 dots on a piece of paper, said  Joseph Lavorgna, chief U.S. economist at Deutsche Bank.

Zero Hedge: 

• The Dominoes Begin To Fall In China.
• Paris Is Not Beijing But The Pollution Is As Bad. (video)
• Citi On International Finance As War By Any Other Means.
• Inflation Does Not Produce Economic Growth. (graph)
• China "Ready To Cooperate" With Crimea.
• Things That Make You Go Hmmm... Like Every New Fed Chair Gets A Test.
• Has The World Gone Mad (Again)?
• Chinese Foreign Policy: A New Era Dawns.

Business Insider:

• European Banks Have A Ton Of Exposure Ukraine And Russia.
• Putin Would Rather See Civil War In Ukraine Than A Western-Leaning Democracy.

NY Times:

• Costly Loans Are Drawing Attention From States. The crackdown gained momentum on Tuesday when the Illinois attorney general, Lisa Madigan, accused All Credit Lenders of misleading borrowers into taking out expensive loans that come with insurance products that they do not need or cannot use.

Reuters: 

• Adobe(ADBE) forecasts results above estimates as web subscriptions rise. Adobe Systems Inc, the maker of Photoshop and Acrobat software, forecast current-quarter profit and revenue above analysts' estimates, citing strong demand for its Creative Cloud suite and digital marketing software. Shares of the company, which also posted better-than-expected results for the first quarter ended Feb. 28, rose 1 percent in extended trading.
• Oracle(ORCL) quarterly results disappoint Wall Street; shares fall. Oracle Corp(ORCL) posted higher third-quarter revenue and profit that failed to satisfy investors looking for signs of a sustained turnaround and its shares fell about 4 percent. Shareholders had grown more optimistic after Oracle's previous quarterly results, but still worried about slow IT spending and growing competition from smaller, nimble rivals.

Telegraph:

• Market rally on Russia's annexation of Crimea leaves experts shaking their heads. European diplomats are drawing up plans to punish Vladimir Putin for pushing the crisis to the next level.

Bild:

• Tymoshenko Says Putin Speech 'Fascist Propaganda'. Ukraine hoping for "more" when it comes to Western sanctions against Russia, Yulia Tymoshenko is cited as saying in an interview. Says Putin speech sends message he doesn't care about the Western opinion of Ukraine crisis.

Liquidity crunch a catalyst for big China slowdown – analysts The mini liquidity crunch is the early warning sign of a substantial economic correction long overdue, amid rising leverage and a broken growth model, say bearish analysts.


While we want you to share, we ask you use the functions on-site rather than copy/paste. See T's & C's for details. http://www.euromoney.com/Article/3222433/Liquidity-crunch-a-catalyst-for-big-China-slowdownanalysts.html?copyrightInfo=true

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.50% to +.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 128.0 unch.

• Asia Pacific Sovereign CDS Index 96.25 -1.25 basis points.

• FTSE-100 futures +.03%.

• S&P 500 futures -.12%.

• NASDAQ 100 futures  -.07%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (GIS)/.61
• (KBH)/.08
• (FDX)/1.46
• (VRA)/.46
• (XONE)/.01
• (GES)/.79
• (JBL)/.11
• (CTAS)/.69
• (MLHR)/.34

Economic Releases
8:30 am EST

• The 4Q Current Account Deficit is estimated at -$88.0B versus -$94.8B in 3Q.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +2,315,000 barrels versus a +6,180,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,245,000 versus a -5,230,000 decline the prior week. Distillate supplies are estimated to fall by -745,000 versus a -533,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to fall by -.47% versus a -1.4% decline the prior week.

2:00 pm EST

• The FOMC is expected to leave the benchmark fed funds rate at .25%.
• The Fed's QE3 pace for March is estimated at $55B versus $65B in February.

Upcoming Splits

• (WLK) 2-for-1

Other Potential Market Movers

• The FOMC Economic Projections, Fed's Yellen speaking, BoE Minutes, weekly MBA mortgage applications report, weekly retail sales reports, (GRA) investor day and the (FSLR) analyst meeting could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and financial 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.