Friday, April 19, 2013

Friday Watch

Evening Headlines 
  • Italy Impasse Deepens as Bersani Bowed by Failed Berlusconi Deal. Italy’s political deadlock deepened over the selection of the next president, raising the threat of snap elections after Democratic Party lawmakers refused orders to back a compromise candidate. Party head Pier Luigi Bersani signaled he will abandon his nominee, Franco Marini, after his allies rebelled over the choice, leading to two failed ballots yesterday. Voting resumes today at 10 a.m. in Rome. “This challenge of keeping the party together is clearly growing more acute,” said Peter Ceretti, a Eurasia Group analyst in New York. “If a consensus candidate can’t be elected politically things become much more uncertain." 
  • Dutch Recession Woes Haunt Rutte as Deficit Breach Persists. Record unemployment in the Netherlands is compounding Dutch Prime Minister Mark Rutte’s dilemma on how far to push austerity measures needed to curb the country’s deficit. Consumer confidence due today and statistics on house prices, consumer spending and manufacturers’ confidence next week will confirm just how far the slump has damaged sentiment in the euro-area’s fifth largest economy. Data yesterday showed the jobless rate reached an 18-year high of 8.1 percent in March, with 643,000 people out of work.
  • South Korea’s Hyun Says Yen Bigger Issue Than North Korea. South Korean Finance Minister Hyun Oh Seok said Japan’s weakening yen is hurting his country’s economy more than North Korean threats, an example of a “spillover” that merits discussion. “Japan’s economic policies are doing their part to help the world economy recover,” Hyun said yesterday in an interview in Washington before a meeting of Group of 20 finance chiefs. “But if this causes problems, and then the problems cause new responses from partnering nations, for example a currency war, the world economy will have a hard time.”
  • China’s Anti-Carrier Missile Now Opposite Taiwan, Flynn Says. The Chinese military has deployed its new anti-ship ballistic missile along its southern coast facing Taiwan, the Pentagon’s top military intelligence officer said today. The missile, designated the DF-21D, is one of a “growing number of conventionally armed” new weapons China is deploying to the region, adding to more than 1,200 short-range missiles opposite the island democracy, U.S. Army Lieutenant General Michael Flynn, the Defense Intelligence Agency director, said in a statement to the Senate Armed Services Committee.
  • Asian Stocks Rise as Commodity Companies Pare Weekly Drop. Asian stocks rose, erasing earlier losses, as commodity companies pared their worst weekly decline since August. Taiwan Semiconductor Manufacturing Co. and Lenovo Group Ltd. led technology shares higher. The MSCI Asia Pacific Index (MXAP) gained 0.3 percent to 136.29 as of 11:26 a.m. in Tokyo, reversing a decline of 0.3 percent. A gauge of material producers in the measure climbed 1.1 percent, paring its weekly loss to 4.3 percent, the most since August.
  • Copper Set for Weekly Drop Amid High Stockpiles, Economic Woes. Copper declined in London, poised for the biggest weekly drop in 16 months as inventories swelled to the highest level since 2003 and the outlook for the global economy weighed down metals prices. Aluminum, zinc, nickel and lead also dropped. Copper for delivery in three months lost as much as 1.7 percent to $6,966.75 a metric ton on the London Metal Exchange, before trading at $6,970 by 9:41 a.m. Shanghai time, putting on course for a weekly decline of 6 percent.
  • Rebar Rises to Pare Weekly Loss, Supported by Iron Ore, Demand. Steel reinforcement-bar futures rose for the first time in three days, paring a weekly loss, supported by iron ore prices and as rising demand helped draw down inventory. The contract for October delivery on the Shanghai Futures Exchange gained as much as 1 percent to 3,687 yuan ($597) a metric ton, before trading at 3,666 yuan at 10:23 a.m. local time. Futures have lost 4.5 percent this week.
Wall Street Journal: 
  • Blackstone(BX) Ends Pursuit of Dell(DELL). Blackstone Group LP has ended its pursuit of Dell Inc. less than a month after the private-equity firm said it would try to top a leveraged buyout by the computer maker's founder and a rival private-equity firm. Blackstone had been putting together a bid for Dell to top the offer from founder Michael Dell and private-equity firm Silver Lake Partners. Blackstone's offer would have kept part of the company in the hands of public shareholders. Blackstone, in a letter to the special board committee handling the deal negotiations for Dell, cited declining personal-computer sales industrywide as a factor in its decision, along with concerns about declines in Dell operating income, according to people familiar with the matter
  • IRS Workers Get Caught With Their Hands in Cookie Jar. Twenty-four current and former Internal Revenue Service employees have been charged with stealing government benefits, federal prosecutors said Wednesday. The IRS employees were indicted on charges that they illegally received more than $250,000 in benefits, including unemployment insurance payments, food stamps, welfare, and housing vouchers, the U.S. attorney's office in Memphis said in a news release. Prosecutors say 13 of the IRS employees face federal charges of lying about being unemployed while applying for or recertifying their government benefits. They each face up to five years in prison if convicted of making false statements to receive the benefits. Eleven others face state charges of theft of property over $1,000, a felony that can carry a sentence of probation up to 12 years in prison if they are convicted.
Zero Hedge: 
Business Insider: 
  • Lenovo says in potential M&A talks; report of IBM server deal. Lenovo Group said on Friday it was in preliminary talks about a potential acquisition, following a media report that IBM Corp was negotiating the sale of its x86 server hardware business to the Chinese computer maker. IBM wants $5 billion to $6 billion for the business, which sells low-priced servers traditionally used to power large corporate data centers, said technology news site CRN, citing a high ranking industry executive. Lenovo did not identify the acquisition target.
  • Google(GOOG) Internet business solid despite Motorola losses. Google Inc's core Internet business grew net revenue 23 percent in the first quarter, softening the effect of a sharp decline in its Motorola mobile phone division. Shares of Google, which reached an all-time high of $844 in March, were up 1.5 percent to $777.75 in after hours trading on Thursday.
  • Intuitive Surgical(ISRG) narrows 2013 forecast, shares fall. Intuitive Surgical Inc on Thursday narrowed its 2013 forecasts for growth of revenue and procedures using its da Vinci surgical robots rather than raising them as it often does when reporting quarterly results, and its shares fell. 
  • U.S. Fed balance sheet grows to record again in latest week. The U.S. Federal Reserve's balance sheet hit a new record in the latest week on increased holdings of U.S. government debt and mortgage-backed securities, Fed data released on Thursday showed. The Fed's balance sheet - a broad gauge of its lending to the financial system - stood at $3.252 trillion on April 17, up from $3.210 trillion on April 10. The Fed's holdings of Treasuries totaled $1.825 trillion as of Wednesday, April 17, versus $1.814 trillion the previous week.
  • FAA warns of 3.5 hour flight delays this summer. Flight delays of up to 3-1/2 hours are expected at some busy U.S. airports this summer because of furloughs of air-traffic controllers, the top U.S. aviation regulator warned on Thursday. The estimate from the Federal Aviation Administration is the first to detail, in minutes and hours, the potential delays from the agency's decision to furlough 10 percent of its staff, starting Sunday, as it struggles to meet budget cuts required under so-called sequestration.
Financial Times: 
  • Osborne girds for battle with IMF. Mr Osborne believes that the change of heart at the IMF on Britain reflects a power struggle within the fund between fiscal hawks and Keynesians, including Olivier Blanchard, chief economist, and David Lipton, first deputy managing director and a former adviser to Barack Obama, US president. The chancellor believes the UK has become a pawn in a bigger game: beating up Britain over its austerity programme makes it easier for the IMF to criticise Republicans insisting on a tough US fiscal tightening.
China Securities Journal:
  • The city of Shenzhen may start property tax trial in near term, citing people from the real estate industry in the city.
Financial News:
  • Chinese first-tier city home price surges may be driven by "hot money," according to a commentary by Financial News, run by China's central bank, written by reporter Xu Shaofeng today. Home prices in 1st-tier cities didn't fall after China issued new curbing policies earlier this year, the commentary said.
People's Daily:
  • China's urbanization shouldn't be used as excuse for some local governments to accumulate excessive debt and pursue blind investment, according to a commentary today written by reporter Liu Xianyun. Governments should be aware of risks in the drop in the value of land used as collateral, slower fiscal revenue growth and shrinking investment returns, the commentary said.
Evening Recommendations 
  • None of note
Night Trading
  • Asian equity indices are unch. to +1.0% on average.
  • Asia Ex-Japan Investment Grade CDS Index 116.50 +1.0 basis point.
  • Asia Pacific Sovereign CDS Index 91.75 -.25 basis point.
  • FTSE-100 futures +.27%.
  • S&P 500 futures +.44%.
  • NASDAQ 100 futures +.46%.
Morning Preview Links

Earnings of Note

  • (BHI)/.63
  • (BGG)/1.04
  • (GE)/.35
  • (GPC)/.98
  • (HON)/1.14
  • (KSU)/.88
  • (KMB)/1.33
  • (LH)/1.77
  • (MAN)/.46
  • (MCD)/1.26
  • (COL)/1.17
  • (SAP)/.58
  • (SLB)/.99
  • (STT)/.93
  • (STI)/.62
  • (UA)/.03 
Economic Releases
  • None of note
Upcoming Splits
  • None of note
Other Potential Market Movers
  • The Fed's Stein speaking could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by real estate and technology shares in the region. I expect US stocks to open modestly higher and weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

No comments: