Evening Headlines
Bloomberg:
Bloomberg:
- China's Plan to Clear Bad Loans Could Backfire, IMF Staff Warn. China’s plan to rid banks of bad loans could backfire, allowing debt-laden “zombie” companies to stay afloat and creating conflicts of interest for bankers, International Monetary Fund staffers warned. China is drafting rules to make it easier for lenders to convert bad loans into equity stakes in debtor companies, people familiar with the matter said last month, in a move that would help authorities clean up banks’ soured credit, which has climbed to the highest in a decade. Chinese banks may also repackage non-performing loans and sell them as securities. The Chinese government hasn’t released details of the proposal yet. “While such techniques can play a role in addressing these problems and have been used successfully by other countries, they are not comprehensive solutions by themselves,” the IMF staffers said in a blog post Tuesday that accompanied a short report. “Unless they are carefully designed and part of a sound overall framework, they could actually worsen the problem,” such as by allowing “zombie” firms to survive, they said. Banks don’t generally have the expertise to run or restructure businesses, and debt-to-equity conversions could create conflicts of interest, they warned.
- Apple(AAPL) Suppliers Fall After Forecast for Slowing IPhone Sales. Apple Inc.’s suppliers’ shares fell in Asia on Wednesday after the iPhone maker posted its first quarterly revenue drop in more than a decade and forecast another decline in the current period. Shares of Taiyo Yuden Co. slumped as much as 5.1 percent in early trade, while those of Alps Electric Co. and Murata Manufacturing Co. fell 5 percent and 5.2 percent respectively -- all of them make the basic electronic parts that go into smartphones. The Nikkei 255 Stock Average was little changed.
- Australian Lenders Are Clamping Down on Foreign Buying of Homes. Australian lenders are clamping down on home loans to foreigners as concerns about the health of the nation’s housing market mount. Westpac Banking Corp. will no longer lend to offshore customers who aren’t citizens or who don’t hold appropriate residency visas, it said in an e-mail Wednesday. It follows Commonwealth Bank of Australia, National Australia Bank Ltd. and Australia & New Zealand Banking Group Ltd., which have tightened funding to overseas customers. The changes made by the biggest banks in the country are part of a broader scrutiny of foreign buying of Australian homes, which has helped drive a 55 percent jump in home prices across the nation’s capital cities in the past seven years. Rising demand, particularly from China, has triggered community concern that locals are being priced out of the property market, prompting the government to tighten scrutiny of foreign investment. “In line with Westpac Group’s responsible lending practices, we have strengthened our policies regarding non-residents lending and foreign income, which represent a very small component of our loan book,” the Sydney-based lender said.
- Australian Consumer Prices Unexpectedly Fall. Australia’s core inflation slowed and the consumer price index unexpectedly fell as a rebounding currency cut import prices, giving the central bank scope to ease further if needed. The Reserve Bank of Australia looks at two core inflation measures -- trimmed mean and weighted median -- and Wednesday’s report showed:
- Asian Stocks Drop Ahead of Fed, Bank of Japan Policy Meetings. Asian stocks fell as suppliers to Apple Inc. declined and earnings from Canon Inc. disappointed investors, while fund managers awaited policy decisions from the Federal Reserve and the Bank of Japan. The MSCI Asia Pacific Index dropped 0.5 percent to 131.69 as of 11:16 a.m. in Tokyo.
- Diamond Demand Fell 2% Last Year as Oil Rout, Dollar Hit Buyers. Global diamond demand slipped 2 percent last year as a stronger dollar and collapse in oil income for buyers in Russia and the Middle East offset record purchases in the U.S. Total polished diamond sales fell to $79 billion from $81 billion in 2014, De Beers, the biggest producer, said in a report on Wednesday. Demand in the U.S., the top consumer, rose 5 percent to an all-time high of $39 billion. It was a difficult year for the industry outside of the U.S. as the dollar rose 9 percent against a basket of 10 peers last year, making stones more expensive for buyers using other currencies. Also, Brent crude tumbled toward the lowest in more than a decade, curbing disposable income in oil-producing nations, while China’s slowdown deepened.
- Apple(AAPL) Forecasts Second Sales Drop as iPhone Woes Deepen. (video) Apple Inc.’s streak of 51 consecutive quarters of uninterrupted sales growth is over -- and its expansion may not resume until late this year. A boom in demand for smartphones, music players and other electronic devices propelled Apple’s annual revenue by $227 billion in the 13 years since the last quarterly drop, resulting in a skyrocketing stock price that made Apple the world’s most valuable company. That era of untrammeled expansion hit a wall in the quarter that ended in March as fewer people upgraded to the latest iPhones, and the company is predicting another decline in the current period. With the introduction of a new model still months away, Apple investors are seeking answers on whether lackluster sales of the device, the company’s biggest revenue generator, reflect a broader slowdown in the market for high-end smartphones -- or just the pause before the next upgrade frenzy. Forecasts from suppliers such as Qualcomm Inc. and Taiwan Semiconductor Manufacturing Co. have suggested demand is cooling, and stalled economic growth in China is paring Apple’s sales in that region. “I see nothing on the horizon from a component or a technology perspective that’s going to drive these major upgrades,” Bob O’Donnell, chief analyst at TECHnalysis Research LLC, said in a televised interview on Bloomberg West. “We’re going to see people hold onto these things longer, just like we saw with PCs.”
- Northeast Primaries: Live Coverage.
- S&P Strips Exxon of Triple-A Credit Rating. Exxon was one of very few American companies that had retained the top ranking.
CNBC:
- Sports Authority to opt for liquidation: Report. Sports Authority won't be restructuring and is instead planning to liquidate. The Wall Street Journal reported that Robert Klyman, legal representation for the sportswear retailer, said that the company decided against attempting to reorganize itself.
- Blame 26% decline in China's sales for lion's share of Apple's loss. (video)
Zero Hedge:
Earnings of Note
Company/Estimate
8:30 am EST
- China Is Building An Army Of Worker Robots.
- Stories Of Despair From The Forgotten People That The U.S. Economy Has Left Behind.
- Wall Street In Pain: 163 Hedge Funds Are Long AAPL(AAPL) Stock.
- Apple(AAPL) Tumbles After Missing Sales And Earnings, Guides Below Lowest Estimate.
- Life Is Good In The Corner Suite: Highest-Paid CEOs See Pay Jump Despite Dismal Performance.
- Twitter(TWTR) Crashes After Slashing Revenue Forecast. (graph)
- The "Fracklog Trigger": Why 500,000 Barrels Of Shale Crude Could Hit The Market At Any Moment.
- Trump And Hillary Refuse To Explain Why They Both Share The Same Address In Delaware.
- FANGs Slump Despite Crude Pump As China Commodity Carnage Continues. (graph)
- Comcast(CMCSA) is reportedly in talks to acquire DreamWorks Animation in a multibillion deal.
- Chipotle(CMG) just said it will break one of its cardinal rules to win back customers.
- China's economy is on steroids, and things could get messy when they run out.
- It's possible we are seeing China's 'Lehman moment'.
Reuters:
21st Century Business Herald:- Gundlach says 'reasonable' to start moving into Treasuries. Jeffrey Gundlach, the influential head of DoubleLine Capital, said on Tuesday that investors looking to purchase Treasuries in the wake of the bond market's sell-off are making a prudent move. "I think it is a reasonable strategy to start legging into the Treasury market," Gundlach said in a telephone interview. U.S. Treasury yields rose on Tuesday, with the benchmark 10-year yield hitting its highest levels in almost five weeks.
- China April Crude Steel Daily Output May Reach Record. China April crude steel daily output may reach record as steel plants are resuming production amid a price increase. Most companies that resumed production are state-owned ones. Lower efficiency at state cos. poses challenge to the nation's plan to cut steel capacity, the report said.
- Asian equity indices are -.50% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 140.0 -.75 basis point.
- Asia Pacific Sovereign CDS Index 57.75 -.25 basis point.
- Bloomberg Emerging Markets Currency Index 72.82 -.02%.
- S&P 500 futures -.20%.
- NASDAQ 100 futures -1.01%.
Earnings of Note
Company/Estimate
- (AGCO)/.05
- (BHI)/-.33
- (BA)/1.84
- (BSX)/.24
- (CMCSA)/.79
- (DPS)/.86
- (GCI)/.17
- (GD)/2.16
- (GT)/.71
- (HES)/-1.82
- (HLT)/.16
- (IP)/.69
- (LEA)/2.77
- (NOC)/2.49
- (OC)/.35
- (ROL)/.15
- (STT)/.90
- (SUP)/.54
- (UTX)/1.40
- (AVB)/1.96
- (CAKE)/.61
- (CRY)/.04
- (DLB)/.61
- (ESV)/.76
- (FB)/.62
- (FSLR)/.92
- (GG)/.05
- (MAR)/.84
- (NE)/.32
- (PYPL)/.35
- (RCII)/.40
- (SNDK)/.54
- (TXN)/.66
- (VAR)/1.08
- (XLNX)/.52
8:30 am EST
- The Advance Goods Trade Deficit for March is estimated at -$62.8B versus -$62.86B in February.
- Pending Home Sales MoM for March are estimated to rise +.5% versus a +3.5% gain in February.
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,415,000 barrels versus a +2,080,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,034,100 barrels versus a -110,000 barrel decline the prior week. Distillate inventories are estimated to fall by -675,000 barrels versus a -3,554,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise by +.41% versus a +.2% gain prior.
- The FOMC is expected to leave the benchmark Fed Funds rate between .25-.5%.
- None of note
- The weekly MBA mortgage applications report, $28B 7Y T-Note auction and the (CLF) annual meeting could also impact trading today.