Evening Headlines
Bloomberg:
- Spain Holds First Bond Sale Since Budget as Debt Nears Record. Spain sells bonds today for the first time since announcing a 2012 budget that shows public debt surging to a record, though the fading impact of European Central Bank three-year loans to lenders may crimp demand. The Treasury will auction bonds maturing in 2015, 2016 and 2020, and release the results at about 10:40 a.m. in Madrid. All three securities have been auctioned before. The 2015 bond is one of the Spain’s most liquid with 19.3 billion euros ($25.7 billion) issued, according to data compiled by Bloomberg. “It won’t be a complete disaster, but I’d be surprised if we saw the strength of the auctions we’ve seen in the past,” Harvinder Sian, a senior interest-rate strategist at Royal Bank of Scotland Group Plc in London, said by telephone. The auction is the first since Budget Minister Cristobal Montoro presented this year’s budget and said public debt will rise to 79.8 percent of gross domestic product as the government makes the deepest budget cuts in three decades. That narrows the gap between Spain’s debt load and the European Commission’s projected average for the euro area to 10.6 percentage points, compared with 30.1 points in 2007 when Spain used budget surpluses to reduce borrowing. In its forecast, the commission put Spain’s debt burden at 73.8 percent of GDP this year. Spain’s financing costs have been held down by the ECB’s 1 trillion euros of unlimited three-year loans to banks, some of which have been recycled into high-yielding government debt.
- Draghi Tested as German Pay Deals Add to Euro Divergence Threat. Wage moderation in Germany may be coming to an end at precisely the wrong time for European Central Bank President Mario Draghi. As nations from Greece to Spain battle recessions and record unemployment, workers in Germany are winning some of the biggest pay increases in two decades, with public service staff set to gain 6.3 percent more by the end of next year. That’s widening the gaps between Europe’s largest economy and its euro- area peers, making the ECB’s one-size-fits-all monetary policy less effective.
- SanDisk(SNDK) Reduces Forecast for Quarterly Sales, Profitability. SanDisk Corp. (SNDK) (SNDK), the biggest maker of flash-memory cards, cut its forecast for first-quarter sales and profitability, citing weaker-than-expected pricing and demand for components that store data in mobile phones. Revenue in the quarter that ended April 1 will be about $1.2 billion, compared with an earlier forecast for $1.3 billion to $1.35 billion, Milpitas, California-based SanDisk said in a statement. Gross margin, a yardstick of profitability, will be below 39 percent to 42 percent, the company’s previous prediction, said SanDisk, which also makes the chips that go into flash-memory cards. The stock (SNDK) fell as much as 8 percent to $46.06 in extended trading, following the announcement.
- Taiwan Bourse Says Likely Tax on Trading Will Cause Stock Slump. Taiwan is likely to impose a capital-gains tax on share transactions to bolster revenues, causing equities to decline, said Schive Chi, the chairman of the island’s stock exchange. “The market will certainly react to this but I think that is because how the capital gains are going to be taxed is still not clear,” Schive said yesterday in an interview in Boao, China. “That will cause some kind of concern for uncertainty.”
- Fed's Lockhart Says Sustained Job Gains Reduce Need for Easing. “I would have to see some pretty severe circumstances before I endorse for another round of quantitative easing,” Lockhart said today on Bloomberg Radio’s “Hays Advantage” with Kathleen Hays.
- Australia Posts Back-to-Back Trade Deficits on Coal Export Slump. Australia unexpectedly recorded a trade deficit for a second straight month in February, the first consecutive shortfalls in two years, as coal and metal exports slumped. The local currency fell to a 2 1/2-month low. Exports fell 2 percent to A$24.4 billion, led by a 16 percent drop in coal shipments and a 10 percent decline in metals, today’s report showed. Imports also weakened, slumping 4 percent to A$24.9 billion on a 14 percent decline in consumption goods and a 12 percent fall in machinery and industrial equipment, the report showed.
- Romney Wins Easily in D.C. and Maryland. Mitt Romney coasted to a pair of victories in Maryland and the District of Columbia and looked set to post a strong showing in Wisconsin on Tuesday night, further widening the gap between the Republican front-runner and the rest of the GOP presidential field. Mr. Romney won a sweeping victory in Maryland, with voters of many different backgrounds coalescing around the former Massachusetts governor, acording to exit polls. A plurality of voters said they most wanted a Republican candidate who is able to defeat President Barack Obama. Of those, nearly 3-out-of-4 favored Mr. Romney, according to CNN exit polls. Mr. Romney tied Mr. Santorum among voters who described themselves as "very conservative,'' a slice of the electorate that normally tilts heavily in Mr. Santorum's favor.
- Union Disapproves of Goldman's(GS) Choice for Lead Director. A union that brokered a deal under which Goldman Sachs Group Inc. agreed to appoint a new lead director isn't happy with the New York securities firm's choice. The American Federation of State, County and Municipal Employees disapproves of Goldman's choice this week of James J. Schiro, said Lisa Lindsley, director of capital strategies for the union.
- Samsung Pushes Into Mobile-Ad Market. Samsung Electronics Co. is taking a more hands-on role in the advertising on its mobile devices, putting the company in greater competition with Apple Inc.(AAPL) and Google Inc(GOOG). Samsung said Tuesday it's adding a mobile phone advertising exchange platform using technology from closely held U.S. firm OpenX Technologies Inc. The platform, called Samsung AdHub Market, will enable advertisers to place targeted messages within apps on Samsung phones and tablets.
- SEC Probes Ties to High-Speed Traders. U.S. securities regulators are conducting a wide-ranging investigation into the complex relationships between rapid-fire trading firms and stock exchanges, according to the official overseeing some 20 probes into computerized trading. The inquiry into ownership and other ties is part of a broader probe into whether high-speed traders have unfair advantages over other investors, according to people familiar with the matter.
- Tornadoes Barrel Through Dallas. Twisters menaced Dallas on Tuesday, stripping roofs off houses, prompting office workers to take shelter in the basements of downtown towers and forcing students to hunker down at schools in the area. In suburban Dallas, Lancaster police officer Paul Beck said 10 people were injured, two of them severely, according to the Associated Press. The city of Dallas reported damage to houses and businesses, including a trucking company, Schneider National Inc. The company said none of its workers were injured but reported "massive damage to our trucks and trailers located in the yard area," which held 254 trucks and 204 trailers.
- Paul Ryan's Hunger Games. The last two days have revealed Mr. Obama at his least appealing—and least Presidential—first warning the Supreme Court not to dare overturn his health-care law, and now demonizing the motives of his political opposition. It is a long, long way from his "there's no red America, there's no blue America" stuff of 2004, much less the inspiration of 2008. If nothing else, Americans are getting a preview of the rhetorical uplift, the bipartisan problem-solving, and the unifying national purpose that would attend another four years.
- POLL OF THE DAY: Favorability Ratings On Obamacare Have Plummeted.
- Something Strange: The Economy Is Behaving Badly In The Least Expected Way.
- NOKIA LUMIA 900: Microsoft's Final Hope For Windows Phone Is Mediocre At Best [REVIEW].
- Family Member Of George Zimmerman To The NAACP: 'There Will Be Blood On Your Hands' The most interesting part of the letter letter includes a brief story of how Zimmerman did activist work on behalf of a black homeless man who was beaten by the son of a Sanford, Florida police officer–work he did alongside the NAACP.
- Putting It All Into Perspective.
- "The Broken Window Fallacy": Why Government Stimulus Spending Will Keep The Unemployment Rate High.
- T.Boone Pickens: Oil Could Hit $148 Per Barrel. Tightening oil production worldwide could mean prices hitting $148 per barrel this summer, Texas billionaire investor T. Boone Pickens said Tuesday. Not even spare capacity from Saudi Arabia would be enough to make up the difference amid increasing sanctions against Iranian oil, Pickens said in an interview to be aired on “The Kudlow Report.”
- Burger King Returns to Stock Market. The hamburger chain, which is revamping its menu in an attempt to revive its struggling business, says it will list its stock on the New York Stock Exchange. The company says its international growth plans will benefit from better visibility as a public company.
- US Risk Council Ready to Tap for More Scrutiny. The U.S. financial risk council approved a final rule on Tuesday laying out how it will decide which financial companies outside the banking industry will face new scrutiny by the Federal Reserve in hopes of preventing a repeat of the 2007-2009 financial crisis.
IBD:
- Americans Want More Control Over Their Own Health Care. ObamaCare's popular provisions lose their appeal once Americans are confronted with the consequences. With the three-day ObamaCare circus at the Supreme Court behind us, let’s fast-forward to June. Suppose that five justices find their constitutional bearings and do what a majority of Americans want them to do: Scrap the individual mandate, the key provision without which the law will collapse. What then?
- Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Tuesday shows that 23% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty percent (40%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -17 (see trends).
- JPMorgan(JPM) Stable Value Fund Exiting Private Mortgages. JPMorgan Chase & Co is shedding mortgage debt from a stable value fund, under pressure from insurers in a case raising questions about suitable investments for funds normally regarded as a super-safe haven for retirement savings.
- Moody's Downgrades GE(GE), Citing GE Capital Risks. Moody's on Tuesday said it had downgraded the ratings of conglomerate General Electric Co and its finance unit General Electric Capital Corporation eac h by a notch, to reflect risks in GE Capital's funding model. Moody's said there are still remaining "material risks associated with the firm's funding model" even though GE Capital improved its liquidity and capital levels since the credit crisis. It said that the risk profiles of market-funded financial institutions like GE Capital are higher than was previously reflected in its ratings. The ratings agency said it had downgraded General Electric Co's debt to Aa3 from Aa2 and downgraded GE Capital to an A1 rating from Aa2.
- NBC News Regrets Editing of Trayvon Shooting Call. NBC News apologized on Tuesday for the way it edited a broadcast of a conversation between George Zimmerman and a police dispatcher before teenager Trayvon Martin was killed by Zimmerman. Last week Fox News did a report in which it presented "before" and "after" versions of the call. NBC had broadcast the edited exchange on its flagship "Today" morning show. NBC News launched an investigation after the Fox report.
- Fed's Williams - Jobless Rate Not Sole Trigger For Rate Hike. The U.S. Federal Reserve will need to begin raising rates well before unemployment falls to its long-term "natural" rate of 5.5 percent, but will look at a much broader range of economic data before making its decision, a top Fed official said on Tuesday.
Telegraph:
- Wolfson Gurus See Euro Break-Up As Dangerous But Liberating. A disorderly break-up of the euro would set off a cataclysmic chain-reaction and a collapse of Europe’s banking system, pushing the world into full-blown depression. That is the shared nightmare of those shortlisted for the £250,000 Wolfson Economics Prize - the richest economic award after the Nobel Prize - on how to "manage" a full or partial disintegration of monetary union. They agree on little else.
Piper Jaffray:
- Raised (GPS) to Overweight, target $34.
- Rated (TIBX) Buy, target $42.
- Rated (INFA) Buy, target $63.
- Asian equity indices are -1.25% to -.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 154.50 unch.
- Asia Pacific Sovereign CDS Index 128.25 +1.25 basis points.
- FTSE-100 futures -.23%.
- S&P 500 futures -.35%.
- NASDAQ 100 futures -.29%.
Earnings of Note
Company/Estimate
- (AYI)/.62
- (MON)/2.12
- (BBBY)/1.32
- (PSMT)/.67
- (RT)/.16
8:15 am EST
- The ADP Employment Change for March is estimated to fall to 206K versus 216K in February.
10:00 am EST
- The ISM Non-Manufacturing Composite for March is estimated to fall to 56.8 versus 57.3 in February.
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +2,500,000 barrels versus a +7,102,000 barrel gain the prior week. Distillate supplies are estimated to fall by -500,000 barrels versus a -711,000 barrel decline the prior week. Gasoline inventories are expected to fall by -1,400,000 barrels versus a -3,537,000 barrel decline the prior week. Finally, Refinery Utilization is estimated to rise +.35% versus a +2.3% gain the prior week.
Upcoming Splits
- None of note
Other Potential Market Movers
- The ECB rate announcement, Fed's Williams speaking, weekly MBA mortgage applications report, BOA/Merrill NY Auto Summit, (RRGB) analyst day and the (DVN) analyst day could also impact trading today.