Japan Reactor Fires, Temblors Hamper Rescuers, Meltdown Battle. Japan was hit by a 5.7-magnitude aftershock and a second fire at the stricken Fukushima nuclear plant as the government struggled to overcome the aftermath of the nation’s strongest earthquake on record. The temblor hit at 5:43 a.m. 139 kilometers from Tokyo, according to the U.S. Geological Survey, while a 6.1-magnitude quake struck southwest of the capital last night. Tokyo Electric Power Co., the operator of the Fukushima Daiichi nuclear plant 210 kilometers (130 miles) north of Tokyo, said the fire was spotted by a worker around 5:45 a.m. local time. The company later said it was no longer visible. Officials were also battling to cool three damaged reactors at the same plant.
Japan Stocks Climb for First Time in Five Days After Selloff. Japanese stocks rose for the first time in five days on speculation a selloff that drove valuations to a 28-month low was excessive even as the country battles to prevent a nuclear disaster after its strongest earthquake. Toyota Motor Corp., the world’s largest carmaker, surged 8.5 percent. Mizuho Financial Group Inc., Japan’s third-biggest bank, surged 7.7 percent. Tokyo Electric Power Co., Asia’s biggest power generator, was set to tumble by the daily limit after the company said today a new fire broke out at a reactor following an earthquake on March 11. The Nikkei 225 (NKY) Stock Average rose 4.9 percent to 9,022.31 as of 10:58 a.m. in Tokyo. The gauge plunged 11 percent yesterday as record trading volume on the main section of the Tokyo Stock Exchange drove the average price of shares in the Nikkei to 14.7 times estimated profit, the lowest level since November 2008.
The cost of insuring Japanese government debt with credit-default swaps pared a decline after white smoke or steam was seen rising from a nuclear reactor. Five-year swaps on Japan traded 10 basis points lower at 110 basis points as of 11:23 am in Tokyo after earlier dropping to 105 basis points, according to Citigroup Inc.
Portugal's Long-Term Bond Ratings Cut to A3 From A1 by Moody's. Portugal’s long-term debt rating was cut two steps by Moody’s Investors Service, which cited a weaker growth outlook, risks to the government’s deficit- reduction plans and a possible need to recapitalize its banks. The rating was downgraded to A3, four steps from so-called junk status, according to an e-mailed statement from Moody’s yesterday, with the outlook on the grade “negative.” The euro slipped after the announcement, to $1.3982 per euro at 10:54 a.m. in Tokyo from $1.3998 yesterday. Portugal is trying to rein in the euro region’s fourth- biggest budget deficit and avoid the bailouts that Greece and Ireland needed. With the economy forecast to contract this year, the government is raising taxes and carrying out the deepest spending cuts in more than three decades, aiming to convince investors it can curb its debt. The negative outlook is justified and further cuts appear likely,” said Win Thin, senior currency strategists with strategist at Brown Brothers Harriman, in a research note after the Moody’s downgrade. “Portugal clearly will remain in the market spotlight as its 10-year yield remained above 7 percent for the 28th straight day on Tuesday.”
Qaddafi Forces Near Benghazi as Rebel Says World 'Failed Us'. Muammar Qaddafi set his sights on Benghazi as his forces moved into the gateway city of Ajdabiya, 100 miles from the rebel capital, and prospects faded for a NATO-led no-fly zone to hinder their advance. The embattled Libyan dictator, appearing with small group of supporters on state-run television, vowed to fight rebel “rats” and said “we are going to destroy them.” In Benghazi, hundreds of his opponents, watching the broadcast projected on the side of a building, jeered and threw shoes in disrespect, according to a live video feed shown by al-Jazeera. The Libyan army is “coming to secure Benghazi,” state-run television said. Pro-Qaddafi forces attacked on two sides of Ajdabiya using airstrikes and artillery, forcing out-gunned rebels and civilians to flee ahead of troops in tanks and personnel carriers, the Associated Press reported. There were conflicting reports on who controlled the city after nightfall. With rebels on the defensive, the Group of Eight foreign ministers failed to agree yesterday on imposing no-fly zone. The head of the rebels governing council, Mustafa Abdel Jalil, said on al-Arabiya television that the debate over a no-fly zone “doesn’t concern us now” and he called on Libyans to defend their cities. “The international community has failed us,” Ahmed Omar, a rebel army commander, said by phone from Benghazi.
Bahrain Call for Troops Fails to End Protests as Hundreds Hurt. The Saudi Arabian-led military intervention in Bahrain failed to end demonstrations in the island-kingdom as hundreds were injured in clashes with security forces yesterday and two lawmakers resigned in protest. Bahrain declared a three-month state of emergency as a second contingent of forces from Gulf states arrived in the kingdom. Police opened fire on protesters in the village of Sitra, the Bahrain Youth Society for Human Rights said. At least two people were killed and 250 people injured during clashes, Ali Al-Akri, a doctor in the emergency room of the Salmaniya Medical Complex, said in an interview. “This is a very tricky, delicate moment,” David Ottaway, senior scholar at the Washington-based Woodrow Wilson Center said in a telephone interview yesterday. “I wouldn’t be surprised if things get a lot worse.”
Crude Oil Falls to Two-Week Low as Japan Fuel Demand May Drop After Quake. Oil fell to the lowest in two weeks in New York amid concern that the earthquake in Japan may reduce fuel demand in the world’s third-largest crude user. About 1.3 million barrels a day, or 29 percent, of the country’s refining capacity was closed after the country’s largest temblor on record. “The Middle Eastern premium seems to be eroding as we concentrate in an uptick in supply as a result of Japan shutting down refining capacity,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. Crude for April delivery fell as much as 96 cents to $96.22 a barrel in electronic trading on the New York Mercantile Exchange, the lowest intraday price since Feb. 25. It was at $96.23 at 11:28 a.m. Singapore time.
Crude oil may fall to $92 a barrel after declining from a 29-month high, according to a technical analysis by brokerage Auerbach Grayson. Futures are "still working off overbought conditions and a speculative blow-off top," said Richard Ross, a technical analyst with the NY brokerage. Oil may drop to $92.30, where its 50-day moving average meets with previous resistance, according to the analysis.
Chu Says No Need to Suspend New U.S. Nuclear Plant Permits. Energy Secretary Steven Chu said the U.S. doesn’t need to suspend work on new nuclear permits while investigating the crisis in Japan, where officials are struggling with reactors damaged by an earthquake and tsunami. The Nuclear Regulatory Commission review is long enough that revisions can be made to reflect findings from the examination of failures at Tokyo Electric Power Co.’s Daiichi nuclear station, he said. “If you look at the process in which the NRC approves going forward with construction projects and nuclear reactors, it’s a thoughtful process,” Chu told reporters today after appearing before the House Appropriations subcommittee on energy and water development. “It’s a multiyear process and because of its very nature, I think these things can proceed.”
Setback in Reactor Fight. Japan faced new setbacks in its struggle to tame a quake-ravaged nuclear complex, as a fresh fire broke out there early Wednesday and new threats emerged in previously unaffected parts of the plant. Japan's nuclear safety agency said two workers are missing at the stricken plant's No. 4 reactor, the same one where the fire had broken out. It was the second fire there in consecutive days. It appeared to be extinguished, but later in the morning white smoke began billowing from the compound. The circumstances of the workers' disappearance remained unclear. Plant operators said it's impossible to send people to the No. 4 reactor due to radiation levels. Separately, officials at the plant are weighing whether to use a helicopter to dump water into pools where radioactive waste is stored and cooled, in hopes of preventing the waste from igniting and releasing radioactivity. The latest developments suggest that the disaster at the Fukushima Daiichi nuclear power plant is far from tamed. The plant has been emitting radiation for days, at levels that won't cause an immediate health threat beyond the plant property, following severe damage from last week's quake and tsunami.
For Nasdaq's(NDAQ) Greifeld, an NYSE(NYX) Bid Is All but Certain. Nasdaq OMX Inc. Chief Executive Robert Greifeld is determined to mount a counterbid for NYSE Euronext, say people close to him. The market is expecting a new offer. NYSE shares ended Tuesday at $37.02, above the $35-a-share offer from Germany's Deutsche Börse AG. Nasdaq shares dropped 2.1% Tuesday to $25.82. But as the outlines of his approach come into view, it is clear that Mr. Greifeld will face a most difficult journey. At the least, he will have to win five different battles. They include:
Coupons Website Seeks Funds. LivingSocial Inc., a website offering daily coupons, is in active talks with investors to raise around $500 million to help fuel its expansion and keep up with rival Groupon Inc., according to people familiar with the matter.
Banks Probed in Libor Manipulation Case. The London interbank offered rate, set daily in London, is one of the world's most important benchmarks. Now, U.S. investigators are probing whether U.S. and European banks manipulated it.
Netflix(NFLX) in Talks to Begin Original Series. Netflix Inc. is in advanced talks to distribute a forthcoming television series directed by David Fincher and starring Kevin Spacey, said people familiar with the talks. If such a deal were to come to fruition it would add a new competitor to the television industry by increasing the degree to which Netflix competes with premium-cable television channels like Time Warner Inc.'s HBO.
Ohio Governor Poses Steep Cuts to Trim Deficit. Ohio Gov. John Kasich, mirroring the moves of other newly elected Republicans, proposed a two-year budget Tuesday that would close an $8 billion gap by selling prisons, reshaping Medicaid and sharply cutting aid to cities.
CBOE's VIX 'Fear Index' Sees Record Volume. "Today marked the first time in CBOE's history that VIX options volume topped the one-million-contract benchmark in a single trading session, as a reported 1,038,002 contracts changed hands," CBOE said in a statement. The mark passed a previous single-day high of 716,815 contracts traded on December 3, 2009, the exchange operator said.
Earthquake to Cost 3% of Japanese GDP: Barclays. Damage from Friday's earthquake and tsunami in Japan are likely to tally 15 trillion yen ($184.2 billion), or about 3% of the country's gross domestic product, according to an estimate by Barclays Capital. The bank's Tokyo-based economists said regions affected by the quake account for 6% to 7% of the Japanese economy, making the current disaster similar in scope to the 1995 Great Hanshin-Awaji earthquake centered in Kobe. Friday's temblor affected a region with an industrial infrastructure "surprisingly similar" to Hyogo prefecture, the area most affected in the 1995 disaster. Manufacturing makes up about a quarter of both regions, while services account for about one-fifth, and wholesale and retail about one-tenth, Barclays said.
New Front in War Between Companies and Hedge Funds. War is brewing: proxy season is fast approaching, and companies are gearing up for their annual fight against activist hedge funds. Now an opening salvo from the prominent law firm Wachtell Lipton Rosen & Katz could, if successful, tilt the battlefield significantly in companies’ favor. The law firm has asked the Securities and Exchange Commission to amend the takeover rules to limit the ability of hedge funds to quickly acquire positions in companies. Wachtell argues that these changes are necessary to prevent hedge funds from surreptitiously building large positions.
CNN Money:
Debt Leaves No Wiggle Room for Disasters. Earthquakes. Tsunamis. Nuclear crises. Disasters are one reason why Washington should get the government's long-term debt under control. The argument is straightforward, but not often discussed: Already high levels of debt leave the economy even more vulnerable in the wake of unexpected natural and man-made disasters. Markets are looking for some reassurance that the country has a credible plan to reduce U.S. debt over the long run, even if the measures in the plan wouldn't go into effect right away. Until lawmakers produce such a plan, or at least provide a series of stringent budget controls while they work on a plan, Walker said, "we're playing a dangerous game."
American Banker:
Mobile Pay Tests May Boost Google(GOOG) Ads. Google Inc.'s interest in near field communication technology, which it is testing in a payment trial, might be more about advertising than establishing its own payments network. "NFC for Google is a means to really extend their current business practices and bring Internet advertising into the physical world," Nick Holland, a senior analyst with Yankee Group, said. "For Google, the bigger picture would be maybe offering promotions at the point of sale." Holland's observation follows a Bloomberg News report that Google is preparing to launch an NFC trial in San Francisco and New York this summer. The test would call for the Mountain View, Calif., company to pay for and install thousands of contactless readers from VeriFone Systems Inc. at merchant locations.
LA Times:
YouTube Becoming a Strategic Model for Parent Google(GOOG). Once derided as Google's folly, the home of cheesy cat videos and the money-losing stepchild of an otherwise wildly profitable company, YouTube is emerging as a model for the more nimble, faster-paced company Google co-founder Larry Page hopes to foster as he takes the reins as chief executive. That's quite a shift. Though YouTube was a cultural phenomenon when Google Inc. bought it in 2006, it was bleeding money — losing nearly half a billion dollars as recently as 2009, by one estimate. And though YouTube wasn't Google's Siberia, it wasn't exactly a mecca for many ambitious Googlers. But now, YouTube's revenue has grown dramatically. Many Google employees increasingly see it as an attractive place to work, with a less bureaucratic environment that lets them run with their ideas. Page, by all accounts, is looking to inject that same energy into Google, spurring the mother company to innovate more quickly in its rivalry with fast-moving Facebook.
Copper Investing News:
Copper Resilient to Earthquake Aftermath. According to Deutsche Bank (DB), Japan’s copper consumption may drop by as much as 50,000 metric tonnes over three-months, however, this could then be offset by demand of three times this magnitude as reconstruction projects take off, Deutsche Bank added that copper and zinc are most likely to benefit from the reconstruction efforts.
ABC News:
Fukushima: Mark 1 Nuclear Reactor Design Caused GE(GE) Scientist To Quit In Protest. Thirty-five years ago, Dale G. Bridenbaugh and two of his colleagues at General Electric resigned from their jobs after becoming increasingly convinced that the nuclear reactor design they were reviewing -- the Mark 1 -- was so flawed it could lead to a devastating accident.
Commercial Times:
Hon Hai Group's Apple(AAPL) products components are enough for up to four months of production.
Kyodo News:
Pressure in Tokyo Electric Power Co.'s Fukushima Dai-Ichi No. 3 reactor is stable, citing Japan's nuclear safety agency.
Japan's nuclear safety agency ordered workers at Tokyo Electric Power Co.'s Fukushima Dai-Ichi nuclear power plant to evacuate because of high radiation levels.
Housing Starts for February are estimated to fall to 566K versus 596K in January.
Building Permits for February are estimated to rise to 570K versus 562K in January.
The Producer Price Index for February is estimated to rise +.7% versus a +.8% gain in January.
The PPI Ex Food & Energy for February is estimated to rise +.2% versus a +.5% gain in January.
The Current Account Deficit for 4Q is estimated at -$110.0B versus -$127.2B in 3Q.
10:30 am EST
Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,300,000 barrels versus a +2,516,000 barrel gain the prior week. Distillate supplies are estimated to fall by -1,400,000 barrels versus a -3,977,000 barrel decline the prior week. Gasoline supplies are expected to fall by -1,500,000 barrels versus a -5,494,000 barrel decline the prior week. Finally, Refinery Utilization is estimated unch. versus a +1.1% gain the prior week.
Upcoming Splits
(LEA) 2-for-1
Other Potential Market Movers
The Fed's Parkinson speaking, weekly MBA mortgage applications report, CSFB Small-Mid Company Transport Conference, Needham Consumer Lifestyle Conference, UBS Engineering/Construction Conference and the (ARUN) analyst meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and contstruction shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.
North American Investment Grade CDS Index 89.17 +3.0%
European Financial Sector CDS Index 121.58 -.37%
Western Europe Sovereign Debt CDS Index 175.67 bps -2.14%
Emerging Market CDS Index 219.86 +2.81%
2-Year Swap Spread 19.0 -1 bp
TED Spread 22.0 -1 bp
Economic Gauges:
3-Month T-Bill Yield .09% +2 bps
Yield Curve 271.0 -4 bps
China Import Iron Ore Spot $164.70/Metric Tonne -.96%
Citi US Economic Surprise Index +62.60 -.9 point
10-Year TIPS Spread 2.42% -2 bps
Overseas Futures:
Nikkei Futures: Indicating +350 open in Japan
DAX Futures: Indicating -7 open in Germany
Portfolio:
Slighltly Lower: On losses in my Tech and Medical longs
Disclosed Trades: Covered all of my (IWM)/(QQQQ) hedges, some of my (EEM) short and added to my (GOOG) long
Market Exposure: Moved to 100% Net Long
BOTTOM LINE: Today's overall market action is just mildly bearish as the S&P 500 cut losses into the afternoon, despite the Japan disaster, growing Mideast unrest, recent technical damage and emerging market inflation fears. On the positive side, Alt Energy, Homebuilding, REIT, Airline, Road & Rail, Restaurant, HMO, Hospital and Coal shares are holding up very well. Small-caps and cyclicals are outperforming. (IYR)/(XHB) have been relatively firm throughout the day. The UBS-Bloomberg Ag Spot Index is down -5.56%, oil is falling -3.9%, gold is down -2.0% and copper is just -.3% lower. The 10-year yield is declining -3 bps to 3.32%. The Spain sovereign cds is falling -1.02% to 238.19 bps. Another decline in key european cds indices is a large positive. On the negative side, Education, Insurance, Drug, I-Banking, Software and Utility shares are under meaningful pressure, falling more than 1.0%. Tech, in general, is underperforming again. China Iron Ore Spot has declined -14.2% in less than 1 month. The Russia sovereign cds is jumping +4.3% to 137.62 bps and the Japan sovereign cds is soaring +24.97% to 118.83 bps. Moreover, the Saudi sovereign cds is rising +6.12% to 134.39 bps. The Asia Pacific Sovereign CDS Index is rising +5.4% to 125.31 bps. The avg. US price for a gallon of gas is unch. today at $3.56/gallon. It is up .44/gallon in 28 days. For the third day in a row, the major US averages are displaying exceptional resilience in the face of several potentially damaging catalysts, which is a major positive. Given the news out of the Mideast today, rebound in the euro and more positive FOMC commentary, oil trades very poorly. As well, the UBS-Bloomberg Ag Spot Index is breaking down convincingly. Both look poised for further weakness, which could boost the broad US stock averages as global inflation pressures subside. If the Japan nuclear situation stabilizes further or improves meaningfully stocks likely made tradable lows this morning. A significant deterioration in the situation, which the odds don't favor, would likely mean at the very least a test of this morning's lows. One of my longs, (GOOG), is technically oversold and is fundamentally cheap. GOOG is likely a beneficiary of the huge spike in viral videos/news related to the Mideast/Japan. I still see substantial upside in the shares from current levels over the longer-term. I expect US stocks to trade modestly higher into the close from current levels on fund inflows, declining energy/food prices, short-covering, bargain-hunting, buyout speculation, technical buying, a bounce in Nikkei futures and a rebound in the euro.
'Worst Case' Nuclear Disaster in Japan Hangs on Unlikely Events. For TokyoElectric Power Co.’s stricken nuclear reactors to release catastrophic amounts of radioactive material into the atmosphere, a rare chain of events needs to happen. Averting a full-scale meltdown -- which scientists say isn’t likely -- depends on cooling the uranium-containing rods at Fukushima Dai-Ichi’s Reactor No. 2, said S.K. Malhotra, a scientist at India’s Department of Atomic Energy in Mumbai. A worst-case outcome may occur if over-heating in the reactor culminates in the rupture of the steel lining protecting radioactive material. “In the worst scenario, an explosion could occur inside the steel pressure vessel, fuel bundles melt down and the radioactivity is exposed,” Malhotra said in a telephone interview. “I would say there is a 10 percent probability still.”
S&P 500 Has Fallen to 'Very Bullish' Levels, JPMorgan's(JPM) Lee Says. The Standard & Poor’s 500 Index has reached its low for 2011 after falling to 1,261.12 because of the 9-magnitude earthquake in Japan last week, according to JPMorgan Chase & Co. (JPM)’s Thomas Lee. The benchmark for U.S. equities may climb to 1,425 through the end of the year, Lee, chief U.S. equity strategist at the New York-based bank, wrote in a note today. “In a nutshell, we see the sell-off as creating potentially a very bullish opportunity,” Lee said.
Funds Shift From Asia Stocks to North America, HSBC Says. The world’s largest fund managers are shifting away from Asian stocks in the first quarter over inflation concerns in favor of North American equities on an improving economic outlook, said a HSBC Holdings Plc (HSBA) survey. Half of the fund managers have a positive outlook on non- Japan Asian stocks, down from 75 percent in the fourth quarter, according to the quarterly survey. All of the 12 houses, which manage a total of $3.98 trillion of assets, or 16 percent of global funds under management, are bullish about North American equities, up from 25 percent in the fourth quarter. Investors had added capital to funds investing in Asia- Pacific stocks outside of Japan from the first quarter of 2009 until the third quarter of 2010, according to HSBC data. Yet such funds have seen outflows since the fourth quarter as frequent central bank actions heightened concerns about imported inflation and rising interest rates, said Bruno Lee, HSBC’s Hong Kong-based Asia-Pacific head of wealth management. “Fund managers are looking to North American equities because of improving economic conditions, merger and acquisition activities and encouraging company reports,” Lee added. “Fund managers are lukewarm on Asia-Pacific ex-Japan due to concerns over rising inflation in the region and less bullish on Greater China equities as the market takes in the impact of ongoing austerity measures to contain inflation.”
Bahrain Declares a Three-Month State of Emergency as Gulf Soldiers Arrive. Bahrain declared a three-month state of emergency as a second contingent of forces from Gulf states arrived in the kingdom to support its government following persistent protests. King Hamad bin Isa Al Khalifa asked the head of the military to guarantee security, state television said. Police opened fire on protesters in the village of Sitra, killing one, the Bahrain Youth Society for Human Rights said in a statement. Hundreds of people were injured, according to Ali Al-Akri, a doctor at the emergency room of the Salmaniya Medical Complex. He didn’t have details on the kind of injuries sustained. Imposing a state of emergency “probably means they are running out of options,” said Gala Riani, a Middle East analyst at London-based forecaster IHS Global Insight. “If we see more violence against protesters than I suspect it’ll incite further unrest.”
G-8 Fails to Agree on Libya No-Fly Zone, Russia, Germany Opposed. Group of Eight foreign ministers failed to agree on a possible no-fly zone over Libya as rebel fighters were pushed back by Muammar Qaddafi’s forces. Foreign Minister Alain Juppe of France, which along with the U.K. has pressed for more aggressive action against Qaddafi, said he couldn’t persuade Russia to sign on to an aerial blockade as other allies, including Germany, raised objections to military intervention. Juppe hosted a meeting of his G-8 counterparts today in Paris.
Import Prices in U.S. Increase More-Than-Estimated 1.4% on Oil, Food Costs. The cost of goods imported into the U.S. rose more than forecast in February, led by further gains in commodities that companies are struggling to pass along to their customers. The 1.4 percent increase in the import-price index exceeded the 0.9 percent median estimate in a Bloomberg News survey and followed a 1.3 percent rise in January, Labor Department figures showed today in Washington. Prices excluding fuel rose 0.3 percent in February, less than half the 0.7 percent jump a month earlier, today’s Labor Department report showed. The cost of consumer goods was up 0.3 percent from the same month in 2010. Import prices excluding all fuels rose 3.6 percent from February 2010, the biggest gain in more than two years, partly a reflection of food costs. Food costs over the past 12 months posted the biggest gain since records began in 1977. Imported goods are also more expensive because of the weakening dollar. Since reaching a one-year high on June 7 of last year, the dollar has fallen 9 percent against a trade- weighted basket of major currencies.
Manufacturing in NY Area Grew at Faster Pace in March Amid Recovery. Manufacturing in the New York region accelerated in March at the fastest rate in nine months, a sign factories remain at the forefront of the economic expansion. The Federal Reserve Bank of New York’s general economic index rose to 17.5 from 15.4 in February. Economists projected an increase to 16.1, based on the median forecast in a Bloomberg News survey. A measure of factory employment rose to 9.1 from 3.6. The gauge of new orders decreased to 5.8 from 11.8 last month, and a measure of shipments fell to 1.6 from 11.3. An index of prices paid for raw materials increased to 53.3, the highest since August 2008, from 45.8 in February, while prices received increased to 20.8, the highest since September 2008, from 16.9.
Hedge Fund Energy Speculation Highest on Record, CFTC's Bart Chilton Says.Hedge funds and other speculators have increased their positions in energy markets by 64 percent since June 2008 to the highest level on record, according to data released by U.S. Commodity Futures Trading Commissioner Bart Chilton. Speculative positions accounted for more than one million energy futures equivalent contracts as of January, according to the data. Positions in metals and agricultural contracts have increased about 20 percent, Chilton said in a speech. Chilton said the data shows the need for the CFTC, as part of the Dodd-Frank financial overhaul, to curb speculation on raw materials such as oil, natural gas and wheat. “We were given new authority to place limits on speculation as part of the new financial reform law, but we haven’t done that yet and we need to pronto,” he said in a statement before the speech.
Crude Oil Drops as Loss of Demand in Japan Outweighs Middle East Tension. Oil dropped to a two-week low as concern that damage from Japan’s earthquake will curb crude demand outweighed speculation of supply disruptions in the Middle East. Oil fell as much as 4.4 percent as a third explosion and fire struck Tokyo Electric Power Co.’s Fukushima plant.
EU 'Can't Afford' to Delay Short-Selling Rules, Barnier Says. The European Union “can’t afford to delay” proposals to restrict short selling over concerns the measures might harm liquidity in the sovereign-debt market, said Michel Barnier, the region’s financial services commissioner. Barnier and French Finance Minister Christine Lagarde pushed for the rules to limit some short selling after other finance ministers complained the plans gave too much power to new pan-European regulators and might harm the ability of investors to hedge risk using debt issued by countries. Governments in the 27-nation EU and lawmakers in the European Parliament are considering, in particular, measures to restrict so-called naked short selling.
Precious Metals Falls as Some Investors Make Up for Drops in Other Assets. Gold dropped the most in eight weeks in New York as some investors sold the metal to raise cash as commodities and equities slid. Silver plunged and palladium and platinum slipped on concern industrial demand will wane. “It is all related to the situation in Japan and some people might have to sell whatever they can to raise funds,” Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said today by phone. “With carmakers’ plants closed, there is less demand. As long as the situation is uncertain in Japan, the risk is that that the knife may fall further.” Gold futures for April delivery slipped as much as $44.20, or 3.1 percent, to $1,380.70 an ounce, the lowest price since Feb. 17, and were at $1,398.80 at 10:52 a.m. on the Comex in New York. A close at that price would be the biggest retreat since Jan. 14. Silver futures dropped the most since Jan. 20 and palladium and platinum declined to the lowest levels since at least December.
Rice May Extend Decline, Limiting Food Costs, UN's Calpe Says. Rice, the staple for half the world, will probably drop on increased supplies, trailing other grains and curbing record food costs, the United Nations said. Global stockpiles will increase 4.6 percent to 137 million metric tons by the end of this season, the highest level since 2002, Concepcion Calpe, senior economist at the UN Food & Agriculture Organization, said in an interview. Rice may drop 9.3 percent to $12 per 100 pounds in two months, said Jonathan Barratt, managing director at Sydney-based Commodity Broking Services Pty, who correctly predicted last year’s advance to $15. Rice declined 1.1 percent to $13.23 per 100 pounds today as grains tumbled amid a rout in global markets.
Dining Out Is In as Tax Cuts Lift Darden(DRI), Texas Roadhouse(TXRH). Americans are back to eating out at Cheesecake Factory Inc. (CAKE) and Texas Roadhouse Inc. (TXRH), putting the restaurant industry on track for its best showing in more than three years as the recovery broadens. Sales at full-service eateries, where customers pay after a meal rather than before, will rise 0.7 percent in 2011 after adjusting for inflation, the first year-over-year increase since 2007, according to a National Restaurant Association forecast by Malcolm Knapp, a New York-based consultant who has monitored the industry since 1970. Buoyed by savings from payroll-tax cuts and improving job prospects, households are starting to indulge on discretionary items. The pickup may help jump start a restaurant rebound after a record stretch of sales declines and reinforces growing strength in household spending, which accounts for about 70 percent of the economy. “Consumers are finding some retail therapy in things like eating out,” said John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC in Boston. “They may not be ready for that two-week vacation in Europe yet, but they’ll go to a restaurant once every couple of weeks. It’s an affordable luxury.”
Iran Opposes Saudi 'Meddling' in Bahrain After Troop Deployment. Iran’s Foreign Ministry accused Saudi Arabia and other Gulf countries of interfering in Bahrain’s domestic affairs by sending troops to help quell protests by mostly Shiite Muslim opposition groups. “The presence of foreign troops and meddling into Bahrain’s internal affairs will only further complicate the issue,” Foreign Ministry spokesman Ramin Mehmanparast said in a Tehran press conference today.
ECB Rate Increase is Less of a Done Deal as Japan Disaster Aftermath Looms. Investors and economists are paring bets that the European Central Bank will raise interest rates next month as the aftermath of Japan’s biggest earthquake overshadows prospects for the global economy. Money-market futures fell, indicating investors are curbing expectations that the ECB will proceed with lifting borrowing costs after stocks, bond yields and commodities slumped on concern a nuclear disaster is unfolding in Japan. Economists at Nomura International Plc, Lloyds Bank Corporate Markets and Royal Bank of Scotland Group Plc said the ECB may wait to assess the impact on markets and the global economy.
Japan ETF Loss Trails MSCI Index as U.S. Traders See Rebound. Trading in an exchange-traded fund linked to Japanese stocks shows investors expect shares in the world’s third-largest economy to rebound when trading resumes. The iShares MSCI Japan Index Fund tracking 323 securities fell 1.8 percent to $9.87 at 1:15 p.m. in New York after earlier reaching $9.24, its lowest intraday level since July. That compares with the 9.1 percent plunge in the MSCI Japan Index earlier, data compiled by Bloomberg show.
Wall Street Journal:
Japan Officials Make Gains as Nuclear Crisis Sparks Rift. Japanese officials appeared to regain partial control of an earthquake-damaged nuclear complex on Tuesday, even as new worrying signs in previously unaffected parts of the plant plan indicated that the worst may not be over. The apparent shift in the struggle to tame four of the six reactors at the Fukushima Daiichi nuclear complex also exposed a rift Tuesday between the highest levels of Japanese government and the plant operator, Tokyo Electric Power Co., underscoring the confusion and mixed messages over five days that frightened a nation and put a cloud over a planned global expansion of nuclear power. Officials said radiation levels at the Fukushima Daiichi nuclear power plant had dropped significantly after spiking in the wake of an explosion Tuesday morning local time that appeared to have damaged a containment structure, which is designed to keep radiation from leaking out. Authorities continued to pour seawater on the damaged reactor, known as the No. 2 reactor, in an effort to cool it. "We need to see how things will go at the No. 2 unit for a little bit longer before we can call it stable," said Yukio Edano, Japan's chief cabinet secretary.
Total SA in Talks With U.S. to Settle Iran Probe. Total SA said it is in negotiations with the U.S. authorities to settle a probe over allegations that the French energy company paid bribes to Iranian officials to obtain contracts. The Securities and Exchange Commission and the Justice Department have been investigating Total's pursuit of contracts in the early 2000s to develop parts of Iran's South Pars gas field, among the world's largest.
Biggs Says He's Buying Japanese Stocks. After the selloff in Japanese stocks, one big-name investor says now is the time to buy. Barton Biggs, the former chief strategist at Morgan Stanley who now runs $1.4 billion hedge fund Traxis Partners LP, says he's begun to buy up shares in Japan.
MarketWatch:
Online Sales Help Drive Williams-Sonoma's(WSM) Profit. Home-furnishings and kitchen-gadgets retailer Williams-Sonoma Inc. said Tuesday that its fiscal fourth-quarter profit rose a better-than-expected 28%, helped by demand at its namesake chain and Pottery Barn stores as well as online orders. The company said its online sales surged 27% and comparable-store sales climbed 5.2%. Shares of Williams-Sonoma jumped 11%.
CNBC.com:
Fed Maintains Easing Policy, Economy on 'Firmer Footing'. The U.S. Federal Reserve maintained its ultra-loose monetary policy on Tuesday, saying the economy was gaining traction while flagging potential inflation risks from costlier energy and food.
FDIC Too Slow to Sue Officers and Directors at Failed Banks, Critics Say. As the chief undertaker of the Great Recession, the Federal Deposit Insurance Corp. has briskly shuttered 345 failed banks since 2008, at a cost to the government insurance fund of about $76 billion. But the regulator has sued only a handful of officers and directors to recover some of that money, despite a pattern of risky behavior by executives at many failed banks described by the agency’s own watchdog in a recent analysis. To date, the FDIC has sued officers and directors at only five of the 345 banks that have collapsed since 2008, or about 2 percent. The 39 former executives named in the civil lawsuits are fighting the FDIC’s accusations of negligence and mismanagement. And time is running out for the FDIC to file lawsuits in some of the early bank failures because of a three-year statute of limitations.
ChemicalWeek:
Major Chemical Capacities Remain Offline in Japan Following Quake. Many chemical plants remain offstream in Japan following the massive earthquake and tsunami that struck the northeast of the country on March 11. Leading Japanese chemical producers report taking plants offstream as a precautionary measure and as a result of power outages. Reported damage to chemical units is not substantial, however. Most of the temporary shutdowns are in Chiba and Ibaraki prefectures, on the coast to the east of Tokyo.
AppleInsider:
Overwhelming iPad 2 Demand Continues, Apple's(AAPL) Online Orders Now Ship in 4-5 Weeks. Apple on Tuesday was forced again to delay estimated shipping times for new iPad 2 orders, as those who buy must now wait four to five weeks for their order to be sent. Yet another delay comes as stock of the iPad 2 around the U.S. is believed to be entirely sold out at all locations, including Apple's retail stores and partners. Some select Apple stores with new shipments of the iPad 2 are set to open early today, while many other stores await more stock in the face of crushing demand. The latest delay applies to all models of the iPad 2, including Wi-Fi and both 3G models from AT&T and Verizon. It also includes all capacities: 16GB, 32GB and 64GB.
Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Tuesday shows that 20% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-two percent (42%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -22. That is the president’s lowest rating since September (see trends).
Politico:
GOP Rejects EPA's Climate Finding. House Energy and Commerce Committee Republicans don't want Congress to go on record accepting the ideas that global warming is “unequivocal” and humans are likely the cause. Without the votes to stop the committee from passing legislation Tuesday to block the EPA’s climate rules, Democrats on the panel were left to score political points by forcing their colleagues across the aisle to vote on the science underpinning those rules. Ranking member Henry Waxman (D-Calif.) offered a measure stating that Congress accepts the EPA’s finding that “warming of the climate system is unequivocal.” The amendment was defeated on a party-line vote, with 20 Democrats voting in favor, and 31 Republicans opposing the measure.
Supply of Polysilicon Facing Shortage as Japan Implements Power Brownout. With the Japan government implementing power brownout policy on March 14, Japan-based polycrystalline silicon (poly-Si) and silicon wafer makers may be forced to stop their production for one month. Since most of these capacities are supplied to the semiconductor industry and poly-Si capacity in Europe and the US are all booked, the related semiconductor players may soon be out of poly-Si supply, according to industry sources. The power brownout will also disrupt manufacturers outside of northeast Japan, especially upstream material production such as poly-Si, which is a time-intensive process, and ingot production is the same. Japan-based poly-Si supplier M.Setek, located in the Sendai region, mostly produces for the solar sector. Tokuyamoa, Mitsubishi Chemicals, Sumitomo Chemical and Shin-Etsu provide materials for the semiconductor sector. Shin-Etsu reportedly has already halted production, and the other chemical engineering companies should see decreased output. With other international material supplies such as Hemlock, REC, Wacker and MEMC all running at full capacity, companies that rely on Japan-based suppliers for materials will have a difficult time transferring orders. As for wafer production, the power brownout will have the same impact on manufacturing lines. Northeast Japan is an important area for the semiconductor supply chain. Wafer demand within Japan in the near term is expected to decrease, but semiconductor companies outside of Japan could see more business due to order transfers.
