Wednesday, April 10, 2013

Today's Headlines

  • Italy’s Debt to Rise to Record in 2013 as Recession Lingers. Italy’s debt will reach a postwar record this year as the recession-hit country borrows to contribute to bailouts and pay arrears to suppliers. The public debt will rise to 130.4 percent of gross domestic product in 2013 from 127 percent last year, Prime Minister Mario Monti’s office said in a statement after his Cabinet reviewed its budget plan. The budget deficit will drop to 2.9 percent of GDP this year, putting Italy within the European Union’s 3 percent limit. “Many are suggesting we change strategy in the management of public finance,” Monti said at a press conference in Rome. “Discipline in public finances needs to be maintained in the years to come. Only if Italy stays out of the procedure for excessive deficit will it be able undertake actions needed for the country, like the recent payment of public administration debts.”
  • Slovenia, Spain Warned of Excessive Economy Imbalances by EU. The European Commission warned of “excessive” risks to the economic health of Slovenia and Spain, calling on both governments to take urgent action to stem the spread of the euro crisis. Slovenian banks are likely to need fresh capital injections as over-indebted corporate borrowers struggle to pay back loans amid a double-dip recession, the Brussels-based commission said. It said Spain is encumbered by public and private debt. 
  • European Stocks Rally Most in Month as Bank Shares Rise. European stocks gained the most in a month, with the Stoxx Europe 600 Index posting its longest winning streak since January, as banks advanced and a report showed Chinese imports beat forecasts in March. BNP Paribas SA, Frances’s largest lender, and Banco Santander SA, Spain’s biggest, led a gauge of European banking shares to their largest advance in almost five months. SMA Solar Technology AG (S92), Germany’s biggest solar-energy company, and Wacker Chemie AG (WCH) added at least 5.8 percent. Gerresheimer AG rose 2.5 percent after reporting first-quarter revenue that beat analysts’ projections.
  • Kuroda Says BOJ Has Taken All Possible Monetary Actions for Now. Haruhiko Kuroda said the unprecedented stimulus announced by the Bank of Japan (8301) at his first meeting as governor last week is enough to achieve a 2 percent inflation goal. The central bank has taken all “necessary” and “possible” measures, Kuroda told reporters in Tokyo yesterday. While officials will change policy as needed, he doesn’t expect adjustments each month, he said. The BOJ chief reiterated a pledge to do what’s needed to meet the target in two years. 
  • FOMC Minutes: Several Members Saw QE Ending by Year-End. Several Federal Reserve (FDTR) officials said the central bank should begin tapering its quantitative easing program later this year and stop it by year end, minutes of their March meeting showed. The Federal Open Market Committee members “thought that if the outlook for labor market conditions improved as anticipated, it would probably be appropriate to slow purchases later in the year and to stop them by year-end,” according to the record of the March 19-20 FOMC meeting released today in Washington ahead of the regularly scheduled 2 p.m. time.
  • OPEC Trims Oil Demand Growth Forecast; March Output Drops. OPEC trimmed its estimate for global oil demand growth after the group’s crude production dropped last month. Worldwide oil consumption will rise this year by 800,000 barrels a day, or 0.9 percent, revised down from 840,000 last month, the Organization of Petroleum Exporting Countries said in its Monthly Oil Market Report today. Demand will rise to 89.66 million barrels a day in 2013 versus 88.87 million last year, OPEC estimated. The group’s output fell in March as Nigeria, Iran and Kuwait pumped less.
  • Goldman(GS) Cuts Gold Price Forecast as Cycle Turns. The turn in the gold price cycle is accelerating after a 12-year rally as the recovery in the U.S. economy gains momentum, according to Goldman Sachs Group Inc., which reduced forecasts for the metal through 2014. The bank cut its three-month target to $1,530 an ounce from $1,615 and lowered the six- and 12-month predictions to $1,490 and $1,390 from $1,600 and $1,550. Goldman recommended closing a long Comex gold position initiated on Oct. 11, 2010 for a potential gain of $219 an ounce, analysts Damien Courvalin and Jeffrey Currie wrote in a report today. 
  • Obama Doubles Estimate to $4 Billion for Health Exchanges. The state health exchanges that are central to the U.S. Affordable Care Act are costing the federal government more than twice its initial budget to complete. The Obama administration expects to have spent $4.4 billion in fiscal 2012 and 2013 on grants to states that are building new marketplaces to sell subsidized health insurance, according to budget proposals released today for 2014. A year ago, the administration had anticipated spending about $2 billion.
 Fox News:
Zero Hedge:
Business Insider: 
  • European banks face EU1.2t long-term funding gap as regulators implement stricter liquidity rules, citing a study by consultants McKinsey & Co. McKinsey says many banks can't fulfill requirements as they can't increase deposits quickly enough and demand for unsecured debt has fallen.

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