Monday, March 29, 2010

Monday Watch

Weekend Headlines

  • Dollar Heads for Biggest Quarterly Gain Versus Euro Since 2008. The dollar rose, poised for the biggest quarterly gain versus the euro since 2008, as European leaders’ struggle to forge a plan to bail out Greece pushed investors toward the perceived safety of the greenback. “The dollar is still the safety currency,” said Jonathan Xiong, a senior portfolio manager and director at Mellon Capital Management Corp. in San Francisco, where he helps oversee $18 billion. “The European news that is coming out is unclear, clouded and uncertain. When investors are uncertain, what happens is they buy dollars.”
  • Obama Gets More Support With Young Voters Seeing U.S. Improving. Young adults, who responded to Barack Obama’s 2008 campaign theme of hope and change, are more optimistic than older Americans about the country’s direction and continue to be more supportive of the president. The Bloomberg National Poll shows 41 percent of those younger than 35 believe the country is heading in the right direction, compared with just a quarter of those 65 and older. The upbeat attitude among younger Americans provides a boost to the president’s overall approval rating, with 56 percent of those under 35 saying they are happy with his job performance, compared with 41 percent among senior citizens. “His approval ratings among younger Americans have eroded, just not as much as with older Americans,” said J. Ann Selzer, president of Selzer & Co., a Des Moines, Iowa-based firm that conducted the nationwide survey. “Their continued support may be the result of what they see as policies that will work to their advantage. Seniors may think they have more at risk and stand to lose what they already have.” Obama, 48, has seen his approval rating drop 5 percentage points among those under 35 since a Bloomberg poll in September, while it has fallen 15 percentage points among senior citizens. The president can’t count on younger voters to turn out to back Democrats in November’s congressional elections, the poll shows. Just more than half of those under 35 say they plan to vote, compared with roughly three-quarters among older adults. Those under 35 are divided roughly equally between supporters and opponents of the health-care legislation, the poll shows. That’s stronger support than recorded overall. With nationwide unemployment at 9.7 percent, Americans as a whole are in a sour mood, with 34 percent saying they believe the country is heading in the right direction, the poll shows. One area where they line up with other age groups is in their disapproval of Obama’s job performance on dealing with the federal budget deficit, with 50 percent disapproving and 40 percent approving. Obama’s approval remains strongest with those who have lower incomes, often younger people. Among those making less than $25,000 annually, his approval is 56 percent, while it drops to 45 percent among those making $100,000 or more.
  • PetroChina Plans $60 Billion of Overseas Expansion. PetroChina Co. plans to spend at least $60 billion in the next decade on overseas acquisitions, challenging Exxon Mobil Corp. and BP Plc in the race to control oil and gas fields. “Ten years ago, PetroChina was a state-owned oil company, but now we have a goal of becoming an international, integrated energy company,” Jiang Jiemin, chairman of the world’s largest company by market value, said in a March 25 interview, where he announced the investment plan.
  • Freed Guantanamo Inmate Likely With Taliban, U.S. Official Says. Abdul Hafiz, a terror suspect released from the Guantanamo Bay prison last December, likely has joined the Taliban in Afghanistan, a U.S. counterterrorism official said. If true, it would be the first known case of a former detainee at the facility in Cuba enlisting with a terrorist group after being released by President Barack Obama’s administration.
  • Chicago Taxi Driver Accused of Providing Support to Al-Qaeda. U.S. prosecutors accused a Chicago taxi driver of providing material support to the al-Qaeda terrorist network by attempting to send money overseas. Raja Lahrasib Khan also allegedly discussed plans to attack an unidentified stadium in the U.S. later this year, according to the criminal complaint and a supporting affidavit unsealed yesterday after Khan’s arrest.
  • China Orders Tighter Property Lending as Risks Grow. China’s banking regulator ordered lenders to take more care when making real-estate loans, widening efforts to prevent property speculators from causing asset bubbles and bad debt. Banks should not lend to developers found by state agencies to have held land without building houses, the government said in a statement posted online yesterday evening. They should also stop approving new lines of credit to 78 government-controlled companies whose core business isn’t property development if they use collateral other than construction projects already in progress, the statement said.
  • Canadian Dollar Depreciates Amid Bets Rally Can't Be Sustained.
  • Iraq Election Results Give Allawi Group Largest Bloc. Former Iraqi Prime Minister Ayad Allawi’s secular alliance won the biggest bloc of seats in parliament as his rival, Prime Minister Nuri Al-Maliki, said his second-place Shiite slate won’t accept the results. Allawi’s Iraqiya alliance secured 91 seats in the March 7 election, the Independent High Electoral Commission said. Al-Maliki’s Shiite Muslim State of Law alliance won 89 seats. “There is no evidence of widespread or serious fraud,” Philip J. Crowley, a spokesman for the U.S. State Department, told reporters in Washington. “This marks a significant milestone in the ongoing democratic development of Iraq.”
  • Abu Dhabi Fund Director Search Continues After Glider Crash. The search for Abu Dhabi Investment Authority Managing Director Sheikh Ahmed bin Zayed Al Nahyan was continuing after a glider he was in crashed into a lake in Morocco, the official Emirates News Agency said. ADIA is one of the world’s largest sovereign wealth funds and managed an estimated $328 billion at the end of 2008, according to economists at the New York-based Council on Foreign Relations. Abu Dhabi possesses about 8 percent of the world’s oil supply.
  • Axelrod Defends Obama Over Making Recess Appointments. Senior White House adviser David Axelrod defended President Barack Obama’s recess appointments made yesterday, including a National Labor Relations Board candidate opposed by business groups. The administration had to act because Republicans are trying to “slow and block progress on all fronts, whether it’s legislation or appointments,” Axelrod said on the CNN program “State of the Union.” The appointments include union lawyer Craig Becker, whose nomination to the labor relations board was blocked last month with the help of two Democrats. The appointment procedure bypasses the need for Senate confirmation when Congress isn’t in session. “He decided to circumvent Congress again, which has become his style on so many issues,” said Representative Jim DeMint, a South Carolina Republican, on the CBS program “Face the Nation.” Asked about the appointments on NBC’s “Meet the Press,” Senator Lindsey Graham, a South Carolina Republican, said, “it’s going to make problems worse” instead of “trying to bring us together.” Graham, the South Carolina senator, said on NBC that the health care measure will “blow up the deficit.” “It’s going to affect every business, every family in this country,” Graham said. “It was done by one-party rule.”
  • Treasuries Find Greenspan's Canary Fainting in Government Mine. Former Federal Reserve Chairman Alan Greenspan’s warning that rising yields on government debt will drive up American borrowing costs is resonating with the world’s biggest bond traders, who say this month’s losses in the market for U.S. Treasuries are just the beginning. Yields on 10-year notes, the benchmark for everything from mortgages to corporate bonds, climbed as high as 3.92 percent last week from a low of 3.53 percent in February. The 18 primary dealers of U.S. debt forecast the rate will reach 4.2 percent this year, the highest since October 2008, according to the median estimate in a survey by Bloomberg News.
  • Papandreou Faces 15.5 Billion-Euro Bond Burden After Aid Plan. Greek Prime Minister George Papandreou, fresh from winning a European Union aid package last week, now has to prove he can keep his nation’s finances afloat. His government still has to raise as much as 15.5 billion euros ($21 billion) by the end of May, almost as much debt as it sold in the first quarter, says Petros Christodoulou, head of the country’s debt agency. Failure to do so could spark a new round of the fiscal crisis and trigger the use of the aid plan crafted by EU leaders in Brussels on March 25.
  • China's Geely to Buy Ford's(F) Volvo in Record Deal. Zhejiang Geely Holding Co. agreed to buy Volvo Cars from Ford Motor Co. for $1.8 billion in the biggest overseas acquisition by a Chinese automaker more than one-and-half-years after the two companies first entered discussions. The price includes a $200 million note and the remainder to be paid in cash, Ford Chief Financial Officer Lewis Booth said yesterday in Gothenburg, Sweden. Time spent on seeking regulatory approval in different jurisdictions means the companies now aim to complete the deal in the third quarter, Geely Chairman Li Shufu said.
Wall Street Journal:
  • Bank-Tax Concept Gains Momentum. The U.S. and European governments are moving toward a consensus on taxing large banks to cover the cost of any future bailouts rather than asking taxpayers to foot the bill, as happened regularly in past banking crises.
  • EBay(EBAY) Adds 'Flash' Fashion. EBay Inc. will launch "flash sales" of high-end fashion brands Monday in its latest bid to revive its giant online marketplace. On a portion of its Web site dubbed Fashion Vault, the company will offer discounts starting at 50% off retail for a limited time, beginning with offerings from French Connection Group PLC. The business model, which follows a trial in the fall featuring Hugo Boss, DKNY and Max Mara, takes a page from such Web sites as Gilt Groupe Inc. and GSI Commerce Inc.'s Rue La La. Those sites have carved out a fast-growing niche in e-commerce.
  • Paulson's $32 Billion Funds Prompt Too-Big-to-Succeed Concerns. John Paulson started the year overseeing $32 billion in hedge funds, third in the world behind JPMorgan Chase & Co. and Bridgewater Associates LP. Unlike many of his biggest rivals, he’s taking in new cash, raising the question of how much money is too much for a hedge-fund manager. “There’s no doubt that Paulson is a big draw for investors at the moment,” said Richard Tomlinson, founder of London-based Tomlinson Investment Consulting, which advises clients on hedge funds. “As with all managers that bulk up, there’s always the risk of returns becoming mediocre.”
  • Rapid Rise in US Budget Deficit Projection. Many Americans know the deficit has exploded this year. What may be less well-known is that the problem is not confined to this year or next, but stretches out at least a decade and represents a historic, multi-trillion-dollar change in the country's fiscal fortunes. CNBC, working with the Congressional Budget Office, found that the 10-year outlook for the nation's deficit has deteriorated by almost $8 trillion. In effect, every man, woman and child in the United States has taken on an extra $25,000 in debt, CNBC has learned. Comparing the CBO's outlook in 2008 to the current forecast, CNBC found that what was once a projected $247 billion surplus for the years 2009 through 2018, is now an estimated $7.4 trillion deficit.
  • China Handling of Rio Trial Violated Chinese Law. China's decision to bar Australian diplomats from part of an Australian Rio Tinto executive's trial was in violation of Chinese law as well as consular agreements, a prominent legal scholar said on Sunday.
  • German Victory in Brussels Blows Away EU Illusions. The message from last week’s European Union summit: there is no more pretence. If EU nations want to sustain a currency union with Germany, they have to implement economic and budgetary changes that bring their performance into alignment with Germany, according to the Marc Ostwald, strategist at Monument Securities, said. Ostwald, who will guest host “Squawk Box Europe” Monday, said the commitment of support for Greece coming out of Brussels at the tail end of last week shows the illusion of economic uniformity within the union.
  • Morgan Stanley(MS) Will Be Citi(C) Stake Underwriter. Morgan Stanley has won a hotly-contested competition among Wall Street investment banks to be the underwriter and advisor on the sale of the U.S. government’s stake in Citigroup, one of the biggest stock sales in history, according to people familiar with the discussions.
NY Times:
  • Some States Find Burdens in Health Law. Because of the new health care law, Arizona lawmakers must now find a way to maintain insurance coverage for 350,000 children and adults that they slashed just last week to help close a $2.6 billion budget deficit. Louisiana officials say a reduction in federal money to that treat the uninsured under the bill could be a death knell for their state-run charity hospital system. In California, policymakers estimate they will have to come up with an additional $500 million a year to make necessary increases in payments to hospitalsMedicaid providers. Across the country, state officials are wading through the minutiae of the health care overhaul to understand just how their governments will be affected. Even with much still to be digested, it is clear the law may be as much of a burden to some state budgets as it is a boon to uninsured consumers. States with the largest uninsured populations, like Texas and California, might be considered by its backers the biggest winners to emerge from the law, because so many additional residents will have access to health insurance. But because those states are being required to significantly expand their Medicaid programs, they are precisely the ones that will face the biggest financial strains, in many cases magnified by existing budget shortfalls. “The federal government has to account for states’ inability to sustain our current programs, much less expand,” said Kim Belshé, secretary of California’s Health and Human Services Agency. Even with more federal help, the challenge for states like Alabama, Arkansas and Texas that now offer only limited Medicaid coverage will be substantial. In these states, Medicaid has been mostly restricted to low-income families with children, pregnant women, certain people with disabilities and some elderly. The income cutoffs have also been extremely low. Beginning in 2014, however, anyone with an income of up to 133 percent of the federal poverty level, or $29,300 for families of four, will be eligible for coverage under Medicaid. For the first three years, the federal government will pick up the entire cost of these new enrollees, but the state share then gradually increases until it reaches 10 percent in 2020. California’s fiscal woes have been particularly devastating and unrelenting. The state is now facing a $20 billion shortfall. California officials said they also believe they will have to significantly raise rates for other outpatient Medicaid providers to ensure an adequate supply of providers for all the newly insured. They believe this will cost an additional $2 billion a year.
  • Agencies Suspect Iran Is Planing Atomic Sites. Six months after the revelation of a secret nuclear enrichment site in Iran, international inspectors and Western intelligence agencies say they suspect that Tehran is preparing to build more sites in defiance of United Nations demands. The United Nations inspectors assigned to monitor Iran’s nuclear program are now searching for evidence of two such sites, prompted by recent comments by a top Iranian official that drew little attention in the West, and are looking into a mystery about the whereabouts of recently manufactured uranium enrichment equipment.
  • States Seeking Cash Hope to Expand Taxes to Services. In the scramble to find something, anything, to generate more revenue, states are considering new taxes on virtually everything: garbage pickup, dating services, bowling night, haircuts, even clowns. “It’s hard enough doing what we do,” grumbled John Luke, a plumber in the Philadelphia suburbs. His services would, for the first time, come with an added tax if the governor has his way. Opponents of imposing taxes on services like funerals, legal advice, helicopter rides and dry cleaning argue that this push comes as businesses are barely clinging to life and can ill afford to see customers further put off by new taxes. This is especially true, they say, in states like Michigan and Pennsylvania, where some of the most sweeping proposals are being considered this spring. But this is also a period of economic gloom for states. Pension funds are in the red, federal stimulus help will soon vanish, and revenues from traditional sources like income and property taxes are slumping ever lower, with few elected officials willing to risk voter wrath by raising them.
  • Obama's Health Care Reform: VAT or Sinkhole? In President Obama's 2011 budget, a kind of fiscal "cigarette warning" appears in a box on page 146 under a table displaying a future of big deficits and mounting debt. The Administration, the warning declares, is creating a "Fiscal Commission" to "achieve sustainability over the long-run." With those bland words, the Administration is acknowledging that the immense weight of the national debt poses a dire threat to the economy, unless America takes radical action. Yet with the signing of the $931 billion healthcare overhaul, fixing future budget problems becomes far more difficult. The reform will immensely swell the amount of federal borrowing, even while the Administration touts the bill as a model of fiscal responsibility. Even before the bill became law, many economists -- and this writer -- argued that only one tax could raise the giant revenues needed to escape a ruinous rise in debt: a European-style Value-Added Tax, or VAT. "The healthcare bill makes the logical case for the VAT stronger, because it's not clear that Congress will make the difficult spending reductions the bill mandates," says William Gale, an economist with the Brookings Institution.
Business Insider:
  • The NY Fed's Trading Desk Head Laments The End of Stupid Leverage and Wants His Derivatives Back. In a video conference before the ACI 2010 World Congress in Sydney, Australia, the head of the FRBNY's trading desk, aka, the busiest daytrader over the past year, Brian Sack, demonstrated once again that Fed members are either completely clueless about ongoing market dynamics or are so good at octuple re-reverse psychology, that they make the squid pale in shame and squirt ink in envy.
  • It's Official - America Now Enforces Capital Controls. On March 18, with very little pomp and circumstance, president Obama passed the most recent stimulus act, the $17.5 billion Hiring Incentives to Restore Employment Act (H.R. 2487), brilliantly goalseeked by the administration's millionaire cronies to abbreviate as HIRE. As it was merely the latest in an endless stream of acts destined to expand the government payroll to infinity, nobody cared about it, or actually read it. Because if anyone had read it, the act would have been known as the Capital Controls Act, as one of the lesser, but infinitely more important provisions on page 27, known as Offset Provisions - Subtitle A—Foreign Account Tax Compliance, institutes just that. In brief, the Provision requires that foreign banks not only withhold 30% of all outgoing capital flows (likely remitting the collection promptly back to the US Treasury) but also disclose the full details of non-exempt account-holders to the US and the IRS.
The Chicago Tribune:
  • FHA Puts the Squeeze on Borrowers to Keep a Prudent Reserve. The de facto engine of the housing market is about to tighten the screws, a little, for some borrowers.The Federal Housing Administration, which went from barely-there status in the marketplace during the real estate bubble to playing a crucial role after it popped, is set to raise one of its requirements April 5, with others to take effect sometime this summer. Basically, the changes will affect homebuyers with less-than-good credit.
Seeking Alpha:
  • SEC Freeze on New Swap and Derivative-Based ETF Applications a Boon to Existing Issuers. The SEC’s decision to freeze all applications for new ETF issuers that want to use swaps and derivatives is a boon for ProShares, Direxion, Rydex, iShares and even ETN issuers. As reported here, the SEC has temporarily stopped issuing OKs for new ETF firms to develop ETFs that rely on swaps and other derivatives. That primarily impacts leveraged and inverse ETFs, but also applies to certain actively managed strategies.

The Philadelphia Inquirer:
  • Rise of Virtual Offices Cuts into Conventional Leases. In the troubled world of commercial real estate, where available space far exceeds what is currently needed, landlords have another reason to reach for the antacids: Demand is growing for virtual offices. That's not a patch of beach where you plant a chair, crack open a cold one and your laptop, and declare yourself "at the office." A virtual office is shared work space - meeting and conference areas, reception desks, copy rooms - used on an as-needed basis, at a cost that could be considerably less than rent under a conventional multiyear office lease. It includes shared support services, too. Depending on the provider, that could mean a receptionist along with a team of administrative assistants to help develop marketing plans, create business cards and brochures, even assist at trade shows.
Rasmussen Report:
  • Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Sunday shows that 28% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as President. Forty-four percent (44%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -16 (see trends).
  • Most Say Tea Party Has Better Understanding of Issues than Congress. In official Washington, some consider the Tea Party movement a fringe element in society, but voters across the nation feel closer to the Tea Party movement than they do to Congress. The latest Rasmussen Reports national telephone survey finds that 52% of U.S. voters believe the average member of the Tea Party movement has a better understanding of the issues facing America today than the average member of Congress. Only 30% believe that those in Congress have a better understanding of the key issues facing the nation. When it comes to those issues, 47% think that their own political views are closer to those of the average Tea Party member than to the views of the average member of Congress. On this point, 26% feel closer to Congress.
  • President Obama's Mideast Gamble. President Barack Obama’s relations with the Israeli government have hit a new low, but the tensions on display this week between him and Prime Minister Benjamin Netanyahu may be reviving another presidential project: Obama's quest to improve America’s image in the Arab and Muslim world. Obama raised high expectations among Arab leaders and citizens with his promise of dramatic change from the days of George W. Bush and high-profile gestures in the first days of his administration, but the administration’s awkward retreat last year from an initial demand of a total Israeli freeze on settlements dissipated much of that goodwill.
Real Clear Politics:
  • Gallup: Obama's Health Care Bounce Dissipates. The spike in President Obama's Gallup approval ratings seems to have disappeared. As health care reform moved toward its denouement, the President's approval briefly moved upward, from an upside-down 46%-48% in the March 15-17 sample, to a 50%-43% rating on the eve of the vote. It went as high as 51%-43% during the previous week. In today's report, however, the President splits 46%-46% in the poll of adults, tying the lowest approval rating of his Administration.
Financial Times:
  • Fears Rise Over Dubai Debt Plan. Some of Dubai World's bank creditors are concerned about the company's proposal to restructure its debts a day after markets broadly welcomed plan s to pay back loans in up to eight years. People close to the seven banks negotiating with Dubai World say concerns centre on the lack of clarity on payment of interest to Dubai World lenders. The banks, which sit on the co-ordinating committee and include HSBC, Standard Chartered, RBS and Lloyds, are the biggest lenders to Dubai World. They fear they will have to endure too much of a loss when compared with the preferential treatment given to bondholders and creditors to Nakheel, one of the conglomerate's development arms. Nakheel, a troubled developer hit by Dubai's real estate crash, makes up the bulk of the debts being restructured. Some members of the co-ordinating committee also disagree with the way the proposal - which includes a government injection of $9.5bn - was presented without sufficient agreement on interest payments, which will be important in determining how much of a loss they have to absorb. One person close to the banks said they were angry at the preferential treatment given to various types of creditor, including lenders to Nakheel and the bondholders in the developer's 2010 and 2011 sukuks , or Islamic bonds. The bondholders will be repaid in full if Dubai World's proposals are accepted by the more than 90 banks to which it owes money. The committee is expected to present a response to the company before communicating with the 90-plus other creditors. "This is the first step on a very long road, and it will be very tight to get agreement before the sukuk matures," another person close to the situation said, referring to Nakheel's Dh3.6bn ($980m) sukuk that matures early May.
  • UK Hedge Funds Make Millions from Betting on Decline in Value of Sterling. Some of the UK's biggest hedge funds have made hundreds of millions of pounds by betting on a decline in the value of sterling this year in trades that suggest rising expectations of further falls over the next few months. Flagship funds of Man Group, Winton Capital and BlueCrest have profited from big positions speculating on the drop in sterling, which has come under pressure over worries about the UK national debt, electoral uncertainty and the sluggish state of the economy. Although currency markets remained sanguine after the Budget, official data yesterday showing business investment had suffered the biggest annual drop on record in the fourth quarter unnerved investors. More discretionary hedge funds have also piled into shorting the pound, capitalising on growing uncertainty over the outcome of May's expected general election. The February newsletter of Brevan Howard, Europe's largest hedge fund, said that politics remained high on market participants' agendas. "A narrowing of the Conservative poll lead was accompanied by some renewed weakness in sterling, as the prospect of no clear majority in government raised questions about the fiscal consolidation path," the hedge fund wrote to clients.
  • IMF Likely to Take Lead if Loans Sought. If Greece is forced to seek financial assistance from its eurozone partners and the International Monetary Fund under a deal agreed in Brussels last week, the IMF would almost certainly take the lead in lending, according to officials in Brussels. However, they insist that the conditions of any such programme, and its surveillance, would be decided by European institutions and the IMF together, as a “joint mechanism”.
  • China Knows the Time for Lying Low Has Ended. With Google pulling out of China and US senators urging the White House to exert pressure for a renminbi revaluation, friction between the world’s great powers seems depressingly normal. Sadly the reality is even worse. The mutual dependence of America and China is grounded in commercial ties, and the two sides will be doing business for decades to come. But a new conflict is unfolding that could be more dangerous even than the cold war. Soviet economic decisions had little impact on western standards of living. But today, globalisation means there is no equivalent to the Berlin Wall. Nothing can insulate China and America from each other’s turmoil. The list of irritants in US-Chinese relations reaches beyond the current rows over Google and the renminbi, to include broader cyberattacks, disagreements over Iranian sanctions, China’s failure to protect intellectual property, and trade disputes over tyres and steel pipes. There are other nascent conflicts, too – from control of natural resources to the militarisation of the Indian Ocean. These problems are symptoms of an illness that has progressed further than most observers realise. Put bluntly, Beijing no longer believes American power is indispensable to Chinese economic expansion and the Communist party’s political survival. China’s leadership has begun to consider a gradual shift in its global strategy. Though this will not be easy to carry out, it is now quietly embarking on political and economic “decoupling” from the US. While China will not mount a military challenge to the US any time soon, its ambitions to extend its influence in Asia and its plan to do business in far-flung places have given new momentum to its military plans. Military spending is thought to have gone through double-digit growth every year for the past decade – indicating a potential regional arms race. A broader shift in the balance of power is also likely to empower Chinese hawks to call for greater resistance to US pressure in places such as North Korea, Burma and Sudan. The extent of China’s change hit me most clearly during the Copenhagen talks, when He Yafei, Chinese vice-foreign minister, dressed down Mr Obama during a meeting that Premier Wen Jiabao was expected to attend. It brought to mind Deng Xiaoping’s famous dictum that China must “keep a low profile and never take the lead”. Now Beijing thinks the time for it to lie low has ended. The west must respond with wisdom and a firm hand, or low rumbling tensions will quickly grow into something much more damaging.
  • Citi(C) Adds to Hedge Fund Operation. Citigroup has expanded its up and coming hedge fund servicing team by adding 13 new hires to its Global Prime Finance Group in London and New York. The newcomers specialise in trading and risk and are led by John Nicholson, a former Barclays Capital executive who will become a managing director in Citi’s US trading team, and Eric Hughson, a former Commerzbank executive who will become a managing director in Citi’s European trading team. BarCap is the big loser in this particular hiring spree: seven of Citi’s new employees are former Lehman Brothers employees who moved on to BarCap after the US bank’s demise. Citi has also picked up five new directors who formerly worked at Morgan Stanley, one of the sector leaders.
  • Vodafone(VOD) Explores Verizon(VZ) Merger Options. Vodafdone is in talks with US counterpart Verizon Communications about resolving the future of their American mobile phone joint venture, Verizon Wireless. Several options are being discussed – in what is described as an "informal dialogue" – including a full merger of the two companies.
The Observer:
  • If the US Declares Economic War on China, We Should All Tremble. In the darkest hours of the financial crisis in the autumn of 2008, it was obvious that all nations' economic destinies were intertwined. Today, that sense of a collective global economic interest is receding. On 15 April, a decision in Washington will be taken, the impact of which will be a sharp reminder than in 2010 all still connects. The United States is to rule, unilaterally, whether China is unfairly manipulating its currency against the dollar to promote its exports; if the case is accepted, it's a de facto declaration of economic war and a signal that now it is every country for itself. The Americans aren't just making a noise. They will back their judgment with a tariff on Chinese imports into the US and China is unlikely to back down. It will fight fire with fire. Other countries, worried that the Americans and Chinese will dump goods on them that were destined for the Chinese and American markets, will feel it is legitimate to protect themselves in turn. Britain's export markets, open for two generations, will regress towards the closure of the 1930. Hopes of economic recovery will be dashed.
Welt am Sonntag:
  • Angel Gurria, secretary general of the OECD, said Greece should keep "all its options open," including taking aid from the International Moetary Fund, citing an interview. "Every aid solution that brings down interest rates" for the country's refinancing of debt "is appropriate," Gurria was quoted as saying. " A European Monetary Fund probably is a good idea but its foundation needs time. Greece needs help today," he said.
Business Line:
  • India Threatens to Move WTO on Carbon Tax Issue. India has warned that it could exercise the option of moving the WTO Dispute Settlement Body if the European Union and the US impose carbon tax on Indian exports. “If they impose such a tax, we will take them to the WTO dispute settlement forum,” the Environment Minister, Mr Jairam Ramesh, told Business Line. Indicating that there is every possibility of imposition of such an import barrier by the developed countries, Mr Ramesh said, “We will deal (with this) through hard negotiations. Such barriers are not going to be WTO-compatible and we will fight it”.
Weekend Recommendations
  • Made positive comments on (GME), (GS), (CHK), (VIA/B), (NYX), (ITT), (C), (AIG), (BAC) and (WDC).
Night Trading
  • Asian indices are -.25% to +1.0% on average.
  • Asia Ex-Japan Investment Grade CDS Index 96.0 -1.0 basis point.
  • S&P 500 futures +.30%.
  • NASDAQ 100 futures +.24%.
Morning Preview Links

Earnings of Note
  • (APOL)/.82
Economic Releases
8:30 AM EST
  • Personal Income for February is estimated to rise +.1% versus a +.1% gain in January.
  • Personal Spending for February is estimated to rise +.3% versus a +.5% gain in January.
  • The PCE Core for February is estimated to rise +.1% versus unch. in January.
10:30 AM EST
  • Dallas Fed Manufacturing Activity for March is estimated to rise +5.2% versus a -.1% decline in February.
Upcoming Splits
  • (OMI) 3-for-2
Other Potential Market Movers
  • The (PNM) Analyst Meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and consumer stocks in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the week.

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