Bloomberg:
- Merkel’s Party Shuns ‘Stone Age’ Greens After Tax-Raising Pledge. Germany’s Greens party backed a campaign platform of tax increases that members of Chancellor Angela Merkel’s Christian Democratic bloc said rules out a coalition after national elections in September. Delegates at a Greens party convention in Berlin yesterday voted through plans to raise the top rate of income tax to 49 percent for those earning 80,000 euros ($104,000) a year or more, and to 45 percent from 42 percent above 60,000 euros. They also backed a “wealth levy” on the richest to pay down 100 billion euros of Germany’s state debt over 10 years.
- China Industrial Profit Growth Slows as Economic Recovery Wanes. Growth in Chinese industrial companies’ profits slowed in March, adding to evidence the nation’s economic recovery is losing steam. Net income increased 5.3 percent from a year earlier to 464.9 billion yuan ($75 billion), down from a 17.2 percent pace in the first two months, the National Bureau of Statistics said on its website on April 27. Profit in the first quarter rose 12.1 percent to 1.17 trillion yuan, it said. China’s stocks fell for a third straight month in April amid investor concern that the recovery in the country’s economic expansion is losing momentum and will hurt corporate earnings. The benchmark Shanghai Composite Index (SHCOMP) closed 1 percent lower on April 26, the last trading day before a three- day holiday ending May 1. “Profits are only growing in line with sales and with problems of overcapacity and the sluggish global picture, it doesn’t bode well for a speedy return to higher profit margins,” said Louis Kuijs, chief China economist at Royal Bank of Scotland Group Plc in Hong Kong.
- Omega Joins Patek Philippe Seeking Growth to Offset Slower China. Patek Philippe Chairman Thierry Stern had advice for Swiss watchmakers several years ago that most rivals didn’t heed: don’t overinvest in China. Amid the recent slowdown in China, the executive’s call has proved prescient. Stern said everyone laughed at him when he decided to limit sales in that market to 130 pieces a year as brands including Omega and Cartier opened shops across the mainland. Patek is now selling about 3 percent of the 53,000 watches it makes annually to shops there, reserving the bulk of its production for traditional U.S. and European markets and making Chinese customers who want its watches travel to buy them. Stern warned two years ago that market would slow down.
- China’s Military Says No Plates for Porsches in Crackdown. China will ban the use of military number plates on luxury cars, including Porsche and Bentley, in a crackdown on abuse of vehicle management within the armed forces amid President Xi Jinping’s campaign against corruption. The change was ordered by the Central Military Commission, headed by Xi, and is part of the military’s effort to reinforce discipline and protect its image, the PLA Daily, the armed forces’ official newspaper, said in a report yesterday. A new license system will go into force on May 1 to clamp down on the sale and use of legal and counterfeit military plates in order to “maintain social harmony, stability and the reputation of the military,” the paper said. Existing plates for all military vehicles will be canceled, it said.
- Piaget Sees China Sales Slowing as Stronger Yuan Boosts Travel. Swiss luxury watchmaker Piaget said its sales in China may grow less than 10 percent this year, the slowest in eight years, as Chinese consumers take advantage of the stronger yuan and travel overseas to buy premium goods. Piaget, which makes the $53,000 Altiplano Skeleton 1200S, is also tempering the pace of store openings in China, Dimitri Gouten, its Asia Pacific president, said in an April 27 interview from Shanghai. Sales may lag the “double-digit” growth rates since around 2005, he said. The watchmaker, which is owned by Cie. Financiere Richemont SA (CFR), has 20 boutiques in China and 50 points of sale in total.
- Detained U.S. Citizen to Face Verdict in N. Korean Court. North Korea said it will hand down a verdict on a detained American citizen accused of crimes against the state, the communist country’s official Korean Central News Agency reported yesterday. Pae Jun Ho, who entered North Korea’s Rason City on Nov. 3 as a tourist, will face judgment in the Supreme Court after admitting to the charges, KCNA said, without citing a source. Pae was involved with a Protestant Christian religious movement, according to a Dec. 11 CNN report that identified him as Kenneth Bae. The State Department is aware of the reports a U.S. citizen will face trial in North Korea, department spokeswoman Jen Psaki said in an e-mail.
- Abe Makes First Russian Visit in Decade as China Tensions Build. Shinzo Abe is making the first visit to Russia by a Japanese prime minister in a decade, seeking to shift an almost seven-decade-long stalemate over disputed islands and win more access to energy resources.
- Asian Officials Must Respond Early to Overheating Risk, IMF Says. Asian policy makers must be ready to respond “early and decisively” to overheating risks in their economies stemming from rapid credit growth and rising asset prices, the International Monetary Fund said. Growth is set to pick up gradually during the year and inflation is expected to stay within central banks’ comfort zones, the Washington-based lender said in a report today. Greater exchange-rate flexibility in the region would play a “useful role” in curbing overheating pressures and coping with speculative capital inflows.
- Copper Declines for Second Day on U.S., China Demand Concerns. Copper dropped for a second straight session amid concern that lower-than-forecast growth in the U.S. and China, the world’s biggest consumers of the metal, will damp demand. Zinc and lead retreated. Copper for delivery in three months lost as much as 0.7 percent to $6,980 a metric ton on the London Metal Exchange and was at $7,008.25 by 10:23 a.m. in Seoul. Prices slumped 2.1 percent on April 26, the most in more than a week.
- Gold Gains as Higher Physical Demand Counters Decline From ETPs. Gold advanced, trimming the worst monthly loss since December 2011, as demand for physical metal countered outflows from bullion-backed exchange-traded products. Silver climbed. Bullion for immediate delivery rose as much as 0.6 percent to $1,470.40 an ounce, and traded at $1,469.60 at 9:53 a.m. in Singapore. Gold is heading for an 8.1 percent drop in April after the metal plunged into a bear market this month.
- Companies Feel Pinch on Sales in Europe. Hiding behind the profit gains of America's biggest companies is a worrying slowdown in sales growth. U.S. companies ranging from International Business Machines Corp. to United Technologies Corp. to 3M Co. to Xerox Corp. have missed revenue forecasts, hurt by a combination of Europe's malaise, a stronger dollar and sluggish consumer spending. With earnings reports in from more than half the companies in the Standard & Poor's 500-stock index, first-quarter revenue for the group is expected to shrink 0.3% from a year earlier, according to Thomson Reuters. That would cut short the sales improvement reported at the end of last year and mark the third quarter out of the past four in which revenues have failed to grow by 1% or more.
- Uncertainty Is the Enemy of Recovery by Bill McNabb. At Vanguard, we estimate that policy uncertainty has created a $261 billion drag on the U.S. economy. Developing a credible, long-term solution to the country's staggering debt is the biggest collective challenge right now. It should be America's biggest collective priority, too. Any comprehensive deficit reduction must take on the imbalance between revenues and expenditures as a share of GDP. That means entitlement reforms, spending reductions and additional tax revenues. This does not have to be about European-style "instant austerity." Because the U.S. dollar is the world's reserve currency, America doesn't have to balance the budget tomorrow. The key is to provide clarity to businesses, financial markets and everyday savers and investors. Make no mistake: A comprehensive, long-term, binding plan that brings the budget into balance over a reasonable time frame is essential. If Washington fails to achieve one, the consequences will be harsh.
- Hollywood Pushes Back Against New China Tax. Twentieth Century Fox is refusing to accept about $23 million it is owed on Chinese box-office receipts for producing "Life of Pi" as a result of a clash between Hollywood and Chinese authorities, studio executives say.
- Hong Kong Steps Up Flu Fight. Hong Kong immigration and hospital officials are stepping up efforts to fend off the spread of H7N9 bird flu, which surfaced outside China for the first time last week, as floods of mainland Chinese tourists descend on Hong Kong for the Labor Day holiday.
- In Stocks, Payouts Trump Potential. Investors searching for higher yields are driving up the shares of dividend-paying companies, fueling a debate over whether these traditional haven stocks are getting dangerously expensive. Some buyers argue that dividend stocks have entered a period where demand for income will keep valuations high, perhaps for years, thanks to Federal Reserve easy-money policies that are expected to remain in place at least into 2015. Skeptics say the "this time is different" thesis will prove wrong, and that investors will discover they have overpaid.
- U.S. Rejects Cash Pay Increases for GM Executives. The U.S. blocked 2013 cash pay increases for top executives at General Motors Co. but allowed several raises to stock-based compensation. The U.S. Treasury Department gained power in 2009 to approve executive compensation at firms that received exceptional federal assistance, following public outrage at bonuses paid at American International Group Inc. after the financial crisis bailouts. AIG has repaid its bailout, leaving GM and Ally Financial Inc., formerly known as GMAC Inc., as the last big firms still under the government's crisis-era bailout programs.
Marketwatch.com:
- Violence mars swearing-in of new Italy government. 2 police officers shot near site of ceremony; no connection seen.
CNBC:
- China's Growth in Question as PMI Data Loom. The latest snapshot of manufacturing activity in China could be a key focus for Asian markets this week as talk of slowdown in the region's biggest economy grows.
- Loans Borrowed Against Pensions Squeeze Retirees. To retirees, the offers can sound like the answer to every money worry: convert tomorrow's pension checks into today's hard cash. But these offers, known as pension advances, are having devastating financial consequences for a growing number of older Americans, threatening their retirement savings and plunging them further into debt. The advances, federal and state authorities say, are not advances at all, but carefully disguised loans that require borrowers to sign over all or part of their monthly pension checks. They carry interest rates that are often many times higher than those on credit cards.
Zero Hedge:
Business Insider:- Boston Bombing Investigators Want To Speak To More 'Persons Of Interest' Living In The United States.
CNN:
- South Korea withdraws citizens from joint factory after North snubs talks. South Korea started withdrawing its last remaining citizens Saturday from the manufacturing zone jointly operated with North Korea following weeks of tensions between the two. Pyongyang this week shunned an offer by Seoul to hold talks over the Kaesong Industrial Complex after it halted activity there this month. The complex in North Korea was one of the few symbols of inter-Korean cooperation.
Reuters:
Financial Times:- U.S. lawmakers press Obama to take action on Syria. Republican senators on Sunday pressed U.S. President Barack Obama to intervene in Syria's civil war, saying America could attack Syrian air bases with missiles but should not send in ground troops. Pressure is mounting on the White House to do more to help Syrian rebels fighting against the government of President Bashar al-Assad, which the Obama administration last week said had probably used chemical arms in the conflict.
- Europe austerity debate to test periphery political will. Readers of Ireland's largest-selling daily newspaper were confronted by an unexpected front page headline this week when the Irish Independent proclaimed the 'End Of Austerity'. In a country that began cutting spending and hiking taxes almost five years ago, well before the scale of the euro zone's debt crisis was evident, weary Irish voters have more interest than most in the fresh debate over Europe's cornerstone policy.
- China’s bosses criticised over high pay. In China, it is not a case of shareholder revolt – the government is the controlling shareholder of virtually all major Chinese companies and has the power to easily change salaries. Rather, public anger about inequality and corruption has made executive pay a focus for media attacks, even from official outlets. The government-run Xinhua news agency said in an editorial: “If the top executives of state-owned companies just fatten themselves, giving themselves high salaries and rich benefits, this is a departure from the original intent of the founding of these companies.” The People’s Daily, the mouthpiece of the Communist party, said: “High pay for high-level executives and low pay for ordinary employees is immoral.
- High-frequency traders face speed limits. High-frequency traders are facing “speed limits” for the first time on a major trading platform, under a proposal that is being touted as a template for a regulatory clampdown on computer-driven activity. EBS, one of the two dominant trading platforms in the foreign exchange market, is suggesting scrapping the principle of “first in, first out” trading, which it says gives an unfair advantage to the fastest computers and has led to an arms race of spending on technology.
- Spanish house prices need to fall further, Goldman warns. Spanish house prices need to fall another 10pc, posing fresh problems for the country’s troubled banking sector, Goldman Sachs has warned. House prices have already collapsed 30pc from their high but are still over-valued, the investment bank claimed as it called for a fundamental restructuring of the country’s lenders. The warning that Spain’s banks are holding the country back followed the government’s decision last week to tear up its deficit reduction plan in the face of collapsing growth.
- Financial Transaction Tax 'may add to eurozone’s debt woes’. The world’s largest banks have warned European finance ministers that plans to impose a Financial Transactions Tax (FTT) could deepen the Continent’s sovereign debt crisis.
- There is no likelihood of reaching agreement with France on main problems facing Europe before Germany's September elections, Nikolaus Meyer-Landrut, Chancellor Angela Merkel's adviser on European politics, said in an interview. France doesn't want to hold talks with Germany before polls, he said.
- S. Korea fuming over Abe's remarks. South Korea is boiling over in anger at Japan after its prime minister suggested that Tokyo's colonization of Korea may not be determined as an "act of aggression," a remark that touched a raw nerve in the neighbor, which still deeply resents its colonial-era suffering.
- North Korea is still in process of preparing Musdan missile launch, citing presidential office spokesman Yoon Chang Jung. Yoon replied to questions on media reports that North Korea stopped millile launch preparation.
news.com.au:
Xinhua:
- North Korea set to stage a major military operation, reports say. NORTH Korea appears to be gearing up for a major military exercise amid tensions over an expected missile test and South Korea's pullout from the joint Kaesong industrial complex.
- More H7N9 cases reported in China. Five more H7N9 bird flu cases were confirmed Sunday in four Chinese provinces, according to local health authorities. The latest confirmed cases came from east China's Zhejiang, Jiangxi and Shandong provinces, as well as southeast China's Fujian Province.
Weekend Recommendations
Barron's:- Bullish commentary on (HBI) and (DELL).
- Asian indices are unch. to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 111.50 +.5 basis point.
- Asia Pacific Sovereign CDS Index 88.0 -.75 basis point.
- FTSE-100 futures +.05%.
- S&P 500 futures -.04%.
- NASDAQ 100 futures +.07%.
Earnings of Note
Company/Estimate
- (L)/.84
- (CNA)/.71
- (IRF)/-.38
- (HIG)/.82
- (ADVS)/.30
- (PCL)/.32
- (GGP)/.22
- (PPS)/.70
- (RVBD)/.24
- (MAS)/.13
- (BWLD)/.99
- (ESRX)/.98
- (NEM)/.77
- (HTZ)/.22
- (RGR)/1.01
- (JEC)/.82
8:30 am EST
- Personal Income for March is estimated to rise +.4% versus a +1.1% gain in February.
- Personal Spending for March is estimated unch. versus a +.7% gain in February.
- The PCE Core for March is estimated to rise +.1% versus a +.1% gain in February.
- Pending Home Sales for March are estimated to rise +.9% versus a -.4% decline in February.
- The Dallas Fed Manufacturing Index for April is estimated to fall to 5.0 versus a reading of 7.4 in March.
- None of note
- The Italian 10Y auction, China HSBC Manufacturing PMI, Japan Manufacturing PMI and the German CPI could also impact trading today.
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