Bloomberg:
- Italy Led by Letta Brings Berlusconi Back to Governing as Winner. Silvio Berlusconi, the three-time prime minister and two-time convicted lawbreaker, won a path back to power in Italy by outmaneuvering rivals during an eight- week political stalemate. A year and a half after resigning in near-disgrace, the 76- year-old billionaire became the key figure in talks to form the next Cabinet after Enrico Letta of the Democratic Party was appointed prime minister yesterday. Berlusconi and his 241 lawmakers, the second-biggest contingent, hold the votes Letta, 46, needs to secure a parliamentary majority. “Silvio Berlusconi is the real winner,” Nichi Vendola, an opponent and head of the Left, Ecology and Freedom party, said April 20 after the owner of broadcaster Mediaset SpA (MS) laid the groundwork to be part of the governing alliance.
- Slovenian Banks Need $1.2 Billion by July 31, May Require More. Slovenian banks including Nova Ljubljanska Banka d.d and Nova Kreditna Banka Maribor d.d. will need a capital injection of at least 900 million euros ($1.2 billion) by the end of July as the government works to fix the banking industry without seeking outside aid. The government of Prime Minister Alenka Bratusek, in power for five weeks, included a list of priorities in a draft document posted yesterday on the website of the parliament in Ljubljana. It said the plan will be sent to European officials by May 9.
- Renault First-Quarter Revenue Falls 12% on European Drop. Renault SA (RNO), France’s second-biggest carmaker, said first-quarter revenue fell 12 percent as an intensifying car-market contraction in Europe that’s now in its sixth year overwhelmed delivery growth outside the region. Sales dropped to 8.27 billion euros ($10.7 billion) from a restated 9.37 billion euros a year earlier, the Boulogne- Billancourt, France-based company said yesterday in a statement. Revenue was less than the 8.57 billion-euro average of 11 analyst estimates compiled by Bloomberg. Renault and larger competitor PSA Peugeot Citroen (UG) cut their forecasts for industrywide European car sales in 2013 as a recession in the 17 countries that use the euro pushed the automotive market in Europe to a two-decade low.
- Mutant Bird Flu Virus Evolves to Show Pandemic Characteristics. A mutant version of a bird flu virus created by scientists last year to show its ability to spread between humans evolved to show characteristics of previous pandemic viruses, a study found. A genetic component of the mutant H5N1 virus developed a 200-fold preference for binding with human over avian receptors, according to a study led by researchers at the MRC National Institute for Medical Research in London. Their paper was published today in the scientific journal Nature.
- China Stocks Fall for 3rd Time in Four Days as Volatility Rises. China’s stocks fell for the third time in four days, led by banks and developers, as a gauge of price swings on the benchmark index rose to a one-year high. Industrial Bank Co. sank 1.9 percent, while Poly Real Estate Group Co. (600048) fell to a two-week low, leading a 1 percent slump in the CSI 300 Financials Index. Jiangsu Yueda Investment Co. posted the third-biggest decline in the Shanghai Composite (SHCOMP) Index after first-quarter profit fell. “Investors are still very concerned about the economy after the slew of bad data recently,” Deng Wenyuan, an analyst at Soochow Securities Co., said by phone from Suzhou, near Shanghai. “Financials and property stocks get affected the most because they take up a large percentage of the index and they are cyclical stocks, which don’t do well when economic growth is slowing.” The Shanghai Composite slumped 8.9 percent from a Feb. 6 high to yesterday on concern slowing growth will hurt earnings.
- Risk of Miscalculation Over North Korea Has Grown, Dempsey Says. The risk of a miscalculation in the dispute over North Korea’s nuclear and missile programs has increased, and China takes the tensions “very seriously,” the chairman of the U.S. Joint Chiefs of Staff said yesterday. North Korea is “in a period of prolonged provocation rather than cyclical provocation,” Martin Dempsey told reporters yesterday after arriving in Beijing April 21 and meeting officials including President Xi Jinping.
- Rebar Trades Near Lowest in Four Months as Iron Ore Declines. Steel reinforcement-bar futures in Shanghai traded near the lowest level in more than four months, as ironore prices retreated to the lowest since March 21 and high output weighed on the market. The contract for October delivery on the Shanghai Futures Exchange fell as much as 0.6 percent to 3,625 yuan ($587) a metric ton and was at 3,632 yuan at 10:09 a.m. local time. Futures touched 3,578 yuan yesterday, the lowest since Dec. 5. Spot iron ore at Tianjin port fell 1 percent to $135.10 a dry ton yesterday, Steel Index Ltd. data show. The China Iron and Steel Association will release its production estimate tomorrow for the mid-April period. Output should have increased, Dang Man, an analyst at Maike Futures Co., said by phone from Xi’an today. “The market is still quite bearish given the high output and declining raw-material prices,” Dang said. “Futures could test the 3,500 yuan support level in the next few days.”
- Zinc Falls as Base Metals Slip Amid Weak Economic Data in China. Zinc led declines in base metals in London as signs of slowing economic growth in China added to concerns that demand for industrial metals will decline. Aluminum and lead also slipped, while copper and nickel were little changed. Zinc for delivery in three months on the London Metal Exchange dropped 0.6 percent to $1,907 a metric ton at 11:09 a.m. Seoul time. Copper dropped as much as 0.7 percent to $6,982.75 and swung between losses and gains before trading little changed.
- Paulson to Start Second Real Estate Fund After Decline in Assets. Billionaire John Paulson is starting another private-equity fund to invest in real estate, marking the second time this month that his money-management firm has revealed plans to raise additional assets. Paulson & Co., which is based in New York, will seek capital for Paulson Real Estate Fund II LP as well as an offshore affiliate, according to a private-placement notice it filed with the U.S. Securities and Exchange Commission on April 22. The funds haven’t begun taking money from clients, according to the filing. The investment firm’s assets under management have declined to $18 billion from a peak of about $38 billion in early 2011 after money-losing bets tied to gold, the European sovereign- debt crisis and the U.S. economy.
- Lew, Brainard Urge Congress to Reinforce IMF’s Loan Capacity. Treasury Secretary Jacob J. Lew urged Congress to fulfill a U.S. pledge to reinforce the war chest of the International Monetary Fund, saying the lender has helped mitigate financial crises from the Middle East to Europe.
- Bomb Suspect Was Put on Two Watch Lists. CIA, FBI Flagged Him for Concern, Raising New Questions About Missed Opportunities to Prevent Fatal Boston Attack. U.S. authorities put alleged Boston bomber Tamerlan Tsarnaev on two separate watch lists in 2011 after Russian security agencies twice reached out to their American counterparts, raising new questions about missed opportunities to prevent the attack. Russian officials contacted the Federal Bureau of Investigation in March 2011, then reached out to the Central Intelligence Agency in September of that year, citing concerns Mr. Tsarnaev might have been associating with extremists, according to U.S. officials.
- Wheels Are Falling Off the Commodities Supercycle. Two things underpinned the upswing in industrial commodities. First, low prices discouraged investment in new oil fields and mines through most of the 1980s and 1990s. Second, demand in emerging markets, especially China, jumped. Neither factor will hold this decade in the way they did during the last.
- CFTC's Chilton Says Staff Eyeing Trading After Hoax. Commodity Futures Trading Commissioner Bart Chilton said agency officials are looking into trading that took place after the Tuesday Twitter hoax that sent markets careening sharply lower in a matter of minutes. Mr. Chilton, a Democrat, told The Wall Street Journal that the CFTC is looking into the trading of 28 heavily traded futures contracts during a five-minute period after a false tweet from the Associated Press's Twitter feed said there were two explosions at the White House and President Barack Obama was injured. A group identifying itself as the Syrian Electronic Army claimed responsibility for the fake tweet.
- European Bonds Are Defying Gravity. "The markets are overestimating the capacity of the European Central Bank to intervene in case of need," said Roberto Perotti, an economist at Bocconi University in Milan. He argues that Italy is essentially too big to save, even by the ECB, if it ran seriously aground. And Italy's weak economy raises its risk: Without economic growth, it is difficult to contain Italy's huge public debt—the second-largest as a proportion of GDP in the euro zone, after Greece. Moreover, restarting economic growth will be a significant challenge. Low rates from the central bank—the ECB's main interest rate is 0.75%, and many analysts now expect a cut as soon as next week—haven't effectively percolated down to small businesses and consumers in Italy or Spain. "On our reckoning, liquidity conditions in the euro zone are as poor as they've been at any time in the past four or five years," said Mike Howell of CrossBorder Capital, a London research firm that tracks money flows.
CNBC:
- Why Are Japanese Still Dumping Foreign Bonds? There are great expectations that Japanese companies flooded with liquidity will pour some of it into foreign bond markets, but latest capital flow data published on Thursday tell a different story. Japanese institutions were net sellers of foreign bonds for a sixth straight week, selling 862.6 billion yen ($8.7 billion) in overseas debt for the week ended April 20, according to weekly data from the Ministry of Finance, more than double the net 331.9 billion in the previous week.
Business Insider:
LA Times:
- Multiple explosions, fires reported on barges near Mobile, Ala. Three people were hurt in multiple explosions aboard two fuel barges in the Mobile River in Alabama on Wednesday night, according to the Mobile Fire Department. The department said the three victims were taken to a hospital. The Coast Guard said they had been burned, and their conditions were unknown. The fire department said the barges experienced four blasts, with the first reported about 9 p.m. The incident occurred in the vicinity of the Carnival Triumph, the cruise ship that lost power in the Gulf of Mexico and later broke loose of its moorings at a Mobile shipyard.
- Lawmakers, aides may get Obamacare exemption. Congressional leaders in both parties are engaged in high-level, confidential talks about exempting lawmakers and Capitol Hill aides from the insurance exchanges they are mandated to join as part of President Barack Obama’s health care overhaul, sources in both parties said. The talks — which involve Senate Majority Leader Harry Reid (D-Nev.), House Speaker John Boehner (R-Ohio), the Obama administration and other top lawmakers — are extraordinarily sensitive, with both sides acutely aware of the potential for political fallout from giving carve-outs from the hugely controversial law to 535 lawmakers and thousands of their aides. Discussions have stretched out for months, sources said. A source close to the talks says: “Everyone has to hold hands on this and jump, or nothing is going to get done.” Yet if Capitol Hill leaders move forward with the plan, they risk being dubbed hypocrites by their political rivals and the American public. By removing themselves from a key Obamacare component, lawmakers and aides would be held to a different standard than the people who put them in office.
- South Korea warns of 'grave measure' if North Korea rejects talks on shuttered factory. South Korea on Thursday warned of an unspecified "grave measure" if North Korea rejects a call for talks on a jointly run factory park that has been closed for nearly a month. In a televised briefing with reporters, Unification Ministry spokesman Kim Hyung-suk refused to describe what Seoul would do if Pyongyang doesn't respond by a deadline Friday to a demand for formal working-level talks on the industrial complex just over the heavily armed border in the North Korean town of Kaesong. But Seoul may be signaling it will pull out its remaining workers from the factory across the border in Kaesong. That could lead to the end of a complex considered the last remaining symbol of inter-Korean cooperation.
- GM(GM) sees April U.S. new-car sales rising at similar rate to March. General Motors Co Chief Executive Dan Akerson said he sees the U.S. auto industry's new-vehicle sales in April rising at a similar rate as the previous month, when they increased 3.4 percent. Akerson said he was especially worried about weak consumer confidence. Worries about a possible slowdown in the U.S. economy were underlined on Wednesday after orders in March for long-lasting manufactured goods recorded their biggest drop in seven months. The Commerce Department said U.S. durable goods orders slumped 5.7 percent as demand fell across the board for these goods -- items from toasters to aircraft that are meant to last three years or more. The decline followed a 4.3 percent increase in February and was double what economists had expected. Akerson also said that Europe, where the U.S. automaker does not expect to return to profitability before 2015, remains weak. He pointed to the loss reported on Wednesday in that region by U.S. rival Ford Motor Co.
- Qualcomm's(QCOM) earnings outlook points to competition in Asia. Leading mobile chipmaker Qualcomm forecast earnings below expectations on Wednesday as competition in smartphones intensifies and shifts toward Asia, and its stock fell sharply. San Diego-based Qualcomm is benefiting from strong demand for smartphones and a shift by network operators worldwide to a high-speed wireless technology known as long-term evolution (LTE), where the chipmaker is ahead of rivals. But the market potential is attracting growing competition from smaller rivals eager to expand their mobile presence in Asia and other developing regions.
- Western Digital(WDC) forecasts strong revenue on internet storage demand. Hard disk drive maker Western Digital Corp forecast current-quarter revenue largely above analysts' expectations as higher demand for internet storage more than offsets the effects of a fall in personal computer sales.
- JPMorgan(JPM) under pressure in Basel spat. Leading European companies have accused JPMorgan Chase and other US banks of putting their own interests ahead of their clients in a spat over tough new bank capital rules for derivatives sold privately off exchanges.
- Europe’s ills cannot be healed by monetary innovation alone. Governments and companies must introduce structural reforms, says Yves Mersch. The eurozone faces a triple problem: stretched states, fragile banks and shrinking economies. If addressed properly, we can make a virtuous cycle that will help with all three. If managed poorly, however, they could descend into a vicious cycle. Governments and banks are now linked. States that had to recapitalise impaired domestic banks have taken on extra debt. Conversely, sound banks have been affected by the weakness of their home governments. The effect has been to lower the credit ratings of both banks and sovereigns. Combined with the need to deleverage and the freezing of money markets, there is now less international lending through financial markets and the flow of credit is hampered.
- ECB monetary policy in "challenging situation" amid inflation differentials across euro area and ECB used unconventional steps to curtail monetary conditions drifting apart, ECB Executive Board member Benoit Coeure is quoted as saying. Euro area countries need to pursue structural reforms, improve guidance. Case of Cyprus has shown that taxpayers won't have to pay for mistakes made by banks, he said. "Bail in" rescue is "right and important" concept that is internationally accepted.
- Farmers in Japan's Fukushima will begin trial farming in 10 restricted zones affected by the 2011 earthqake, tsunami and nuclear disasters, citing the prefecture's horticultural bureau.
- None of note
- Asian equity indices are -.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 111.50 +.5 basis point.
- Asia Pacific Sovereign CDS Index 90.0 +.75 basis point.
- FTSE-100 futures +.04%.
- S&P 500 futures +.08%.
- NASDAQ 100 futures +.15%.
Earnings of Note
Company/Estimate
- (SWY)/.35
- (DOW)/.61
- (PH)/1.67
- (SWK)/.96
- (CELG)/1.35
- (ESI)/1.26
- (BIIB)/1.63
- (HOG)/.99
- (BSX)/.09
- (LLL)/1.93
- (COP)/1.42
- (TWC)/1.37
- (PHM)/.15
- (HSY)/1.04
- (OXY)/1.54
- (LEA)/1.10
- (XOM)/2.04
- (RCL)/.19
- (DO)/1.16
- (PTEN)/.36
- (CRI)/.69
- (LUV)/.02
- (BG)/.91
- (ALXN)/.60
- (ABC)/.88
- (RTN)/1.28
- (MO)/.53
- (CL)/1.32
- (ZMH)/1.40
- (MMM)/1.65
- (BMY)/.41
- (UPS)/1.00
- (CBG)/.17
- (ALTR)/.33
- (KLAC)/.85
- (EMN)/1.57
- (SBUX)/.48
- (IGT)/.29
- (AMZN)/.10
- (WYNN)/1.55
- (CB)/1.74
- (CERN)/.63
- (EXPE)/.23
- (DECK)/-.10
8:30 am EST
- Initial Jobless Claims are estimated to fall to 350K versus 352K the prior week.
- Continuing Claims are estimated to fall to 3060K versus 3068K prior.
- The Kansas City Fed Manufacturing Activity Index for April is estimated to rise to -1.0 versus -5.0 in March.
- None of note
- The Spanish Unemployment report, UK gdp report, 7Y T-Note auction, Japanese CPI, weekly EIA natural gas inventory report and the weekly Bloomberg Consumer Comfort Index could also impact trading today.
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