North American Investment Grade CDS Index 96.51 +.77%
European Financial Sector CDS Index 103.97 +2.40%
Western Europe Sovereign Debt CDS Index 168.08 bps +2.13%
Emerging Market CDS Index 213.70 -3.50%
2-Year Swap Spread 20.0 unch.
TED Spread 22.0 -2 bps
Economic Gauges:
3-Month T-Bill Yield .09% +2 bps
Yield Curve 268.0 -1 bp
China Import Iron Ore Spot $164.40/Metric Tonne +.37%
Citi US Economic Surprise Index +61.0 -.6 point
10-Year TIPS Spread 2.39% -6 bps
Overseas Futures:
Nikkei Futures: Indicating -108 open in Japan
DAX Futures: Indicating +20 open in Germany
Portfolio:
Slightly Higher: On gains in my Biotech/Medical longs and ETF hedges
Disclosed Trades: None
Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bearish as the S&P 500 trades just slightly lower, despite rising energy prices, growing Mideast unrest, Japan concerns and rising eurozone debt angst. On the positive side, Education, Drug, Telecom, Computer Serivice, Steel, Oil Tanker, Coal and Utility shares are higher on the day. Copper is gaining +.62%. The Japan sovereign cds is falling another -7.07% to 98.92 bps, which is a major positive. On the negative side, Airline, Road & Rail, Gaming, Retail, REIT, Networking, Disk Drive and Semi shares are under meaningful pressure, falling more than 1.0%. Small-caps and cyclicals are relatively weak. (IYR) has underperformed throughout the day. Tech is also underperforming again. Oil is rising +2.02% and lumber is falling -3.09%. The avg. US price for a gallon of gas is unch. today at $3.55/gallon. It is up .43/gallon in 35 days. The Portugal sovereign cds is climbing +2.63% to 531.55 bps, the Greece sovereign cds is surging +3.3% to 993.43 bps and the Ireland sovereign cds is gaining +5.11% to 616.17 bps. The Citi Eurozone Economic Surprise Index is falling again to -12.80 today and is now at the lowest since March 23rd of last year. The Portugal and Ireland credit default swaps are very close to breaking out technically. The US dollar continues to trade poorly, however I suspect a reversal higher is in the offing over the coming days. The Networking subsector of tech, which had been a market leader, remains heavy. The market's resilience in the face of numerous mounting headwinds remains very impressive. The S&P 500 is still right near its 50-day moving average. If the benchmark can break convincingly above this level I will further add market exposure. I expect US stocks to trade mixed-to-lower into the close from current levels on growing Mideast unrest, rising energy prices, rising eurozone debt angst, Japan concerns, more shorting, profit-taking and technical selling.
Irish, Portuguese Bonds Sink on Debt Concern; Euro Falls. Irish notes slid, leading bonds of Europe’s most indebted nations lower, and the euro fell on concern Europe is struggling to fix its government-finance crisis. Irish 2-year note yields surged 63 basis points to 9.87 percent and rose as high as 10.18 percent, the most since 2003. Yields on similar-maturity Portuguese and Greek debt climbed at least 18 basis points. The slump in Irish notes came after EU finance chiefs settled yesterday on how to enable a permanent rescue fund to lend 500 billion euros ($712 billion) as of 2013, while remaining divided over how to get the current stopgap fund to its full capacity. The Portuguese government forecast that the economy will contract this year as investment declines and it cuts spending to narrow the budget deficit. “The problems in the periphery have not lessened,” Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York, said in a note to clients. “ The real immediate focus is on Portugal. The government’s new austerity measures will be debated tomorrow.” Ten-year Portuguese yields jumped 13 basis points to 7.50 percent, after retreating for two straight days, and the spread above benchmark German bund yields widened 10 basis points to 4.23 percentage points. Portugal’s government may collapse tomorrow as the country’s parliament votes on a plan for fiscal austerity measures, JPMorgan Chase & Co. economist Nicola Mai said in a note e-mailed to investors. Credit-default swaps protecting Irish government debt rose 40.1 basis points to 628.8 basis points, according to data provider CMA, and the yield on the 10-year note surged 24 basis points to 9.84 percent. Europe’s efforts to tackle its sovereign debt crisis aren’t persuading money managers to buy bonds from the region’s most indebted nations. Work toward a solution to the region’s credit woes is scheduled to culminate at a March 24-25 summit of European leaders.
U.S. Says Libyan Campaign to Ease as No-Fly Zone Secured. U.S. Defense Secretary Robert Gates said the intensity of the military campaign in Libya will ease soon after allied forces imposed a no-fly zone on Muammar Qaddafi’s regime, enabling rebels to push out of their eastern Benghazi stronghold. The fighting “should recede in the next few days,” Gates said at a press conference in Moscow today. Opposition fighters advanced on the central gateway city of Ajdabiya, which is held by loyalist troops, according to the Associated Press. Qaddafi’s army units continued to shell the western, rebel-held city of Misrata for a second day, residents said.
Crude Oil Futures Increase as Japan Reconstruction May Bolster Fuel Demand. Crude rose on speculation Japanese rebuilding efforts will bolster fuel consumption and as unrest spread in the Middle East and North Africa. Crude oil for April delivery increased $1.55, or 1.5 percent, to $103.88 a barrel at 12:38 p.m. on the New York Mercantile Exchange. April futures expire today. The more-active May oil contract advanced $1.33, or 1.3 percent, to $104.42. Brent oil for May settlement rose 83 cents, or 0.7 percent, to $115.79 a barrel on the London-based ICE Futures Europe exchange.
U.S. Facing Loss of Key Ally Against Al-Qaeda Group in Yemen. President Barack Obama is on the verge of losing a key ally in the fight against al-Qaeda, as Yemeni President Ali Abdullah Saleh attempted today to set conditions for quitting in the face of a popular uprising and defections among his ruling elite. “It’s clear at this point that Saleh will have to step down,” Barbara Bodine, a former U.S. ambassador to Yemen, said in an interview yesterday. With the “mounting numbers of senior people in his administration resigning, we know it’s over. The terms of his departure, I think, are still being negotiated.” The March 18 killing of at least 46 protesters allegedly by police and pro-regime gunmen -- which drew condemnation from Obama and Secretary of State Hillary Clinton and prompted the defection of key military, tribal and government officials -- may well be the tipping point.
Sony(SNE) Shuts More Plants in Japan, Toyota(TM) Extends Halts as Recession Looms. Sony Corp. (6758) shut five more plants and Toyota Motor Corp. (7203) extended production halts, 11 days after an earthquake and tsunami that’s bringing scores of Japanese factories to a standstill and threatening to spark a recession. Sony, Japan’s biggest exporter of consumer electronics, today suspended some work at five plants in the central and southern regions until March 31 because of trouble getting supplies after power outages, the Tokyo-based company said in a statement. Toyota, the world’s biggest carmaker, said all domestic car-assembly will be stopped until March 26, while Honda Motor Co. also extended closures. The moves come as Morgan Stanley estimated that damage to the earthquake-stricken northeast, including disruptions to power and distribution systems, may cause the world’s third- largest economy to shrink in the second quarter at an annualized rate of 6 percent to 12 percent. A recession is “almost certain,” according to Mizuho Securities Co. “Companies’ production and people’s consumption will be stuck in an abnormal state at least for the next six months,” said Naoki Iizuka, a senior economist at Mizuho Financial Group Inc. (8411) in Tokyo. “The electricity shortage will continue to hamper economic activity.”
Hynix Semiconductor, the world's second-largest maker of computer-memory chips, said it is increasing orders for silicon wafers to preempt any possible shortage of the material following Japan's March 11 earthquake. Hynix has asked its suppliers to increase shipments of the components, Park Hyun, a spokesman for the Ichon, South-Korea-based company said. The semiconductor industry faces possible shortages of silicon after the March 11 earthquake and tsunami in Japan caused suspension of 25% of the global production of the material key to making chips, IHS iSuppli said.
Walgreen(WAG) Declines as Profit Margin Falls Short of Expectations. Walgreen Co. (WAG), the largest U.S. drugstore chain, dropped the most since October 2008 in New York trading after profit margins failed to improve as some analysts anticipated. The shares fell $3.38, or 8.1 percent, to $38.59 at 9:52 a.m. in New York Stock Exchange composite trading, after earlier dropping as much as 8.4 percent.
State and Local Tax to Rise to Keep Services, GAO's Offutt Says. States and localities will likely raise taxes to maintain health-care services, said the chief economist at the U.S. Government Accountability Office. The difference between what states and localities spend and what they take in will grow to about 2 percent of gross domestic product over the next 40 to 50 years without changes in spending and revenue policies, said Susan Offutt, whose department evaluates government activities for Congress. The growth will be driven by an increase in spending on health care, including Medicaid and payments to retirees, she said. “The nature of the fiscal problem is so daunting that to think about achieving reasonable debt-to-GDP ratios without tax increases of some kind is difficult,” she said today at the State and Municipal Finance Briefing hosted by Bloomberg Link in New York. Some 44 states face a collective budget gap of $112 billion for fiscal 2012, according to the Washington-based Center on Budget and Policy Priorities. Without spending and tax changes, the cumulative gap is likely to grow and states may have problems making payments, Offutt said.
The U.S. spent at least $168 million hitting Libya's air defense systems with Raytheon Co. Tomahawk cruise missiles and North African nation, according to data compiled by Bloomberg.
Rise in Officer Fatalities Called 'Unacceptable' by Holder. U.S. attorneys will meet with law enforcement officials around the country to devise ways to reduce an increasing and “unacceptable” number of fatal attacks on officers, Attorney General Eric Holder said. Holder made the comments at a meeting today with police officials at the Justice Department in Washington. Holder described the gathering as a “listening session” on officer safety. Following a two-year decline, law enforcement fatalities in 2010 increased to 162, from 117 the year before, according to preliminary data from the National Law Enforcement Officers Memorial Fund in Washington. There have been 49 deaths this year, up from 41 during the same period last year.
Wall Street Journal:
Portugal Prime Minister May Step Down After Austerity Vote.The future of Portuguese Prime Minister Jose Socrates is in doubt, as rising political tensions over a fresh austerity drive may spark his resignation on Wednesday. Such a move could make it even more likely that the government would become the third in the euro zone to seek financial help from the European Union and the International Monetary Fund. Legislators will vote Wednesday on a series of new austerity measures that the government unveiled earlier this month. The main opposition parties plan to vote against those measures.
CAUGHT ON TAPE: Former SEIU Official Reveals Secret Plan to Destroy JPMorgan(JPM), Crash the Stock Market, And Redistribute Wealth in America. A former official of one of the country's most-powerful unions, SEIU, has a secret plan to "destabilize" the country. The plan is designed to destroy JP Morgan, nuke the stock market, and weaken Wall Street's grip on power, thus creating the conditions necessary for a redistribution of wealth and a change in government. The former SEIU official, Stephen Lerner, spoke in a closed session at a Pace University forum last weekend. The Blaze procured what appears to be a tape of Lerner's remarks.
U.S. Fighter Jet Crashes in Libya; Crew Members Safe. The F-15E Strike Eagle crashed in northeast Libya after experiencing 'equipment malfunction,' a U.S. statement says. One crew member is rescued by an American search team and the other by Libyan rebels.
Detroit Free Press:
General Motors(GM) Halts Some Production at N.Y. Plant. General Motors Co. is halting some production at its Buffalo, N.Y., engine plant because of a slowdown in parts from Japan. GM is also temporarily laying off 59 of the 623 workers at the Tonawanda Engine Plant. The workers make engines for a GM pickup factory in Shreveport, La., that is closed this week because of a shortage of parts from Japan. GM has also laid off 800 workers in Shreveport.
Verizon Wireless CEO Says No Interest in Sprint Deal.The chief executive of Verizon Wireless said he has no interest in buying Sprint Nextel Corp (S.N) even as the company stands to lose its top position in the U.S. wireless market because of a merger between AT&T Inc (T.N) and T-Mobile USA. Verizon Wireless CEO Daniel Mead also said he would not oppose AT&T's plans to buy Deutsche Telekom's (DTEGn.DE) T-Mobile USA for $39 billion. The CEO said the company did not want to be distracted from its goal of being the most profitable U.S. wireless operator.
Fed Officials See U.S. Recovery Taking Hold. The U.S. recovery is gaining traction, two top Federal Reserve officials said on Tuesday, though they differed on the risks of inflation in the U.S. economy. Cleveland Fed President Sandra Pianalto said she expects the U.S. recovery to continue at a moderate pace, with rising commodity and energy prices only temporarily putting pressure on broader consumer prices.
Kyodo News:
Radioactive iodine was found in the tap water of five areas in Japan's Fukushima prefecture, citing the nation's health ministry. The ministry said infants should not drink the water.
Japan's health ministry detected radioactive material beyond legal limits in raw milk from Ibaraki prefecture, and broccoli and mustard spinach from Fukushima prefecture.
Allies' Control of Libyan Airspace Puts Qaddafi's Forces at Risk. Allied forces are expanding their air campaign over Libya in an effort to thwart Muammar Qaddafi’s fighters and enable rebels to control cities, such as opposition capital of Benghazi, that had been under attack by troops loyal to the regime.
Yen Near Two-Week Low Versus Euro as Nuclear Crisis Eases, Stocks Advance. The yen was within 0.4 percent of a two-week low against the euro as Asian stocks rose and progress by Japan in restoring a crippled nuclear plant’s cooling systems reduced demand for the currency as a refuge. The euro was 0.1 percent from the strongest in four months against the dollar on speculation European Central Bank officials will reiterate this week their willingness to raise interest rates next month. The yen erased earlier losses against the greenback on concern Japanese investors are repatriating overseas assets. South Korea’s won rose on bets policy makers will allow the currency to strengthen to temper inflation. “The markets appear to be taking the view that the situation at the nuclear plant is stabilizing,” said Akira Hoshino, Tokyo-based chief manager of foreign-exchange trading at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s largest lender by market value. “Risk aversion may ease, which would likely be negative for the yen.” The yen traded at 115.14 per euro as of 12:08 p.m. in Tokyo from 115.26 in New York yesterday, after falling to 115.57 on March 18, the weakest since March 4. Japan’s currency was at 80.96 per dollar from 81.03, after earlier dropping 0.3 percent. The euro bought $1.4223 from $1.4226, after climbing to $1.4240 yesterday, the strongest since Nov. 5. The MSCI Asia Pacific Index of shares rose 1.6 percent and the Nikkei 225 (NKY) Stock Average surged 2.9 percent, as Japanese trading resumed after a holiday yesterday.
Nuclear Plant's Fuel Rods Damaged, Leaking Into Sea. Tokyo Electric Power Co. said fuel rods at its Fukushima Dai-Ichi power plant have been damaged, releasing five kinds of radioactive material and contaminating seawater nearby. The acknowledgements from the utility indicate poisons emanating from the plant may be spreading through the air and sea, raising concern over the safety of seafood from the coast of northeastern Japan and agriculture in the region. The decay of radioactive fuel rods, composed of uranium and plutonium, was suspected by company officials five days after the March 11 magnitude-9 earthquake and tsunami off the main island of Honshu.
Japan Economy V-Shaped Rebound Hangs on End to Blackouts. Japan is likely to see a rebound in the second half of this year after a blow that will be determined by the magnitude of electricity disruptions caused by the earthquake and tsunami, a survey of economists showed. Banks are split on whether the nation will slip into a recession, with Mizuho Securities Co. saying that’s “almost certain,” and Barclays Capital not seeing a single quarter of contraction. Annualized growth will trough at 0.4 percent in the second quarter, the median forecasts of nine economists surveyed by Bloomberg News show. “The hits to the electricity supply and extent of the hits to the supply chain are making it harder to analyze,” said Michael Buchanan, chief Asia-Pacific economist at Goldman Sachs Group Inc. in Hong Kong, who previously worked at the International Monetary Fund. The longer it takes to restore electricity, the bigger the damage, he said.
Obesity Lap Bands May Cause More Complications Than Weight Loss. Almost half of patients undergoing gastric banding for obesity needed to have the device removed, often because of erosion, according to a study that found the treatment caused more complications than weight loss.
Libyan Rebel Council Sets Up Oil Company to Replace Qaddafi's. Libyan rebels in Benghazi said they have created a new national oil company to replace the corporation controlled by leader Muammar Qaddafi and whose assets were frozen by the United Nations Security Council. The Transitional National Council released a statement announcing the decision taken in a March 19 meeting to establish the “Libyan Oil Company as supervisory authority on oil production and policies in the country, based temporarily in Benghazi, and the appointment of an interim director general” of the company. The Council also said it “designated the Central Bank of Benghazi as a monetary authority competent in monetary policies in Libya and the appointment of a governor to the Central Bank of Libya, with a temporary headquarters in Benghazi.”
Wells Fargo(WFC) CEO Stumpf Says U.S. Limit on Debit-Card Fees 'Make No Sense'. Wells Fargo & Co. (WFC) Chief Executive Officer John Stumpf said limits on fees charged to merchants for debit-card transactions “make no sense” and distort free- market economics. “What’s next?” Stumpf, 57, wrote in his annual letter to shareholders of the San Francisco-based bank. “Will the government require car dealers to sell a new vehicle for $5,000 or grocers a gallon of milk for 50 cents?”
Bristol-Myers(BMY) skin Cancer Drug Extends Survival in Trial. An experimental skin cancer drug being developed by Bristol-Myers Squibb Co. (BMY) boosted the survival of patients with advanced melanoma when combined with chemotherapy. A final-stage trial required for regulatory approval found that melanoma patients receiving Bristol-Myers’s drug ipilimumab and chemotherapy lived longer than patients who got chemotherapy alone, the New York-based company said in a statement today.
KNOC Buys Texas Shale Stake From Anadarko(APC) for $1.55 Billion. Korea National Oil Corp. agreed to buy a stake in a Texas shale-oil block from Anadarko Petroleum Corp. for $1.55 billion, the second-largest purchase of U.S. oil and natural-gas fields this year, as Asian companies increase access to U.S. reserves.
China Operations More Profitable as Climate Worsens, Amcham Says. More U.S. businesses in China said they were profitable last year even as they became increasingly pessimistic about the Chinese government’s commitment to improving market access, the American Chamber of Commerce in China said today. 24 percent of respondents said China’s economic reforms had done nothing to improve the environment for U.S. businesses in the country, up from 9 percent who said the same in the previous poll. The disconnect between performance and perception comes as U.S. companies, including Google Inc. (GOOG), say the Chinese government is making it increasingly difficult to do business in the world’s second-biggest economy.
Wall Street Journal:
Allies Spar but Renew Airstrikes on Libya. The U.S. and its allies worked to expand the protective shield in the skies over Libya on Monday, while political skirmishing broke out over who would take command of the continuing international operation.
Arab Regimes Under Siege. A contingent of Yemen's key military commanders defected to the political opposition Monday, the most significant challenge yet to the ability of the country's president, a U.S. ally against al Qaeda, to hold on to power. The development followed a bloody weekend crackdown on pro-democracy protesters that left dozens dead, as other countries in the region tipped toward instability. In Syria, residents of a town south of the capital demonstrated against the government for a fourth straight day, undeterred by protester deaths and the authoritarian regime's threats of crackdown.
At Plant, Repair is Painstaking Task. Tokyo Electric Power Co. continued to report progress in restoring order at the Fukushima Daiichi nuclear reactors, but finishing the job is turning out to be a painstaking process plagued by damaged equipment and unexpected incidents. Smoke rose from two of the plant's six reactors Monday, forcing workers to retreat temporarily. The cause of the smoke wasn't immediately clear. Radioactivity returned to previous levels after a brief rise, officials said. "We aren't out of the crisis situation yet, but we are seeing a light at the end," said Prime Minister Naoto Kan.
U.S. Banks Oppose Tighter Money Rules. Even as governments freeze assets tied to regimes in Libya, Egypt and Tunisia, U.S. banks are resisting efforts to tighten international rules to prevent the flow of money from corrupt politicians. U.S. banks are pushing back against a proposal by the FATF that would require financial institutions to identify the person who ultimately benefits from an account. The proposal would toughen the existing standards, which call on banks to take reasonable measures to identify the beneficial owner of an account. The strengthened requirements would force banks to "identify and take reasonable measures to verify the identity" of an individual who controls the account. While some countries such as Switzerland, already require that banks know the individual, U.S. banks generally allow accounts to be opened in the name of a trust, without mandated disclosure of the beneficiary. While the group includes banking-industry associations from around the world, people familiar with the matter said most of the opposition comes from U.S. banks, especially those with large trust operations.
China's Shrinking Labor Pool Creating 'Spoilt' Workers. "Mama Mia," the GM of an Italian company lamented to me over lunch in Shanghai, "The corruption I can deal with, but human resource issues are driving me insane. Workers are too short-term focused – 50 percent leave within two months no matter how much money and training we give."
Warnings Signs Over Crony Capitalism in India. India and Russia are accustomed to being bracketed together as two of the world’s most promising high growth markets. But is there more to it than just being adjacent initials in the fabled BRICs acronym? Foreign investors are not alone in worrying this might be the case. Even as the country becomes one of the great economic growth stories of the 21st century, significant members of the Indian elite fear it may be following Russia in developing a kind of crony capitalism dominated by powerful insiders. A slew of recent corruption scandals – notably in telecommunications – has nourished anxieties that the combination of fantastic wealth creation and weak governance threatens to undermine India’s long-term success.
Business Insider:
Shep Smith: Welcome to America's THIRD War. Shep Smith gave one of (what is quickly becoming his trademark) fiery asides today. This one was inspired by Adam Mullen's revelation on Meet the Press this Sunday that even if the Coalition is successful in its goal there is a possibility Qaddafi could stay in power in Libya. That was too much for Shep:
As BOJ Injects Fresh ¥2 Trillion, Radiation Measured 20 km Away From Fukushima Is 1,600 Times Normal. While Japanese futures briefly flirted with another advance, they subsequently dropped by 1% to 9,450, even despite the BOJ's latest injection of 2 trillion yen, which if it continues at this rate will surpass 100 trillion yen in injections within two weeks: an unprecedented feat, even by the Federal Reserve's standards. Of particular note weighing on the markets has been the news from Kyodo that, in confirmation of our fears that zones "Under Survey" are nothing but hotbeds of unprecedented radiation, reported radiation levels are 1,600 times higher than normal 20 kilometers from the power plant. Recall that the first evacuation radius was just 10 km. Assuming a power rate of declining fall out strength, means that the radiation within the 20 km diameter circle centered on Fukushina is currently hundreds of thousands to millions of time higher than normal.
A Not-So-Happy Birthday for Obamacare. One year after the passage of the final version of ObamaCare, it's destabilizing insurance markets and government budgets in ways both foreseen and unexpected.
Did Obama Lose Congress on Libya? President Barack Obama is facing growing anger from lawmakers who believe he overstepped his authority by launching missile strikes into Libya without first seeking the consent of Congress. The criticism is from all directions: from moderates, like Sens. Jim Webb (D-Va.) and Dick Lugar (R-Ind.); from those on the far left and right, like Reps. Dennis Kucinich (D-Ohio) and Ron Paul (R-Texas), who believe the president acted outside the Constitution; and from the establishment on both sides, including House Democratic Caucus Chairman John Larson of Connecticut and Republican Rep. Candice Miller of Michigan, a self-described “hawk.”
Reuters:
Sony(SNE) Says Supply-Chain Woes to Affect 5 More Plants. Sony said on Tuesday shortages of parts and materials would force it to reduce or suspend production at five additional plants in Japan following the catastrophic earthquake this month. The plants, mostly in central and southern Japan, make products from digital cameras and video cameras to televisions and microphones, the company said in a statement. A sixth plant in Chiba, north of Tokyo, was set to resume production on Tuesday, but it could be interrupted by the rolling blackouts that are affecting some areas supplied by Tokyo Electric Power (TEPCO).
California Cap-And-Trade Plan Faces Setback. California did not adequately consider alternatives to its plan to create a cap-and-trade market for carbon emissions, a judge ruled on Monday, throwing a wrench into the most aggressive U.S. effort to combat climate change. The state's regulator on climate change matters, the Air Resources Board (ARB), will need to consider other possibilities to meet state environmental law, San Francisco Superior Court Judge Ernest Goldsmith wrote in an opinion. In particular he said that the state had not made a thorough examination of putting a tax on carbon.
The Chinese government will include local government debt in its national budget, Finance Minister Xie Xuren said. The Asian nation will establish a risk warning system for local government debt, Xie said.
Financial Times:
Rift Over Command of Libya Campaign. French attempts to sidestep Nato at the outset of military operations against Libya have divided the international coalition enforcing a no-fly zone over the country, western diplomats said. The French moves, which western diplomats said included launching the first attack on Libya without fully informing its allies, angered US and UK officials and are hampering efforts to transfer command of the operation to Nato, officials said. Relations grew so tense on Monday that French and German ambassadors to Nato walked out of a meeting of the North Atlantic Council, the alliance’s decision-making body, after Anders Fogh Rasmussen, secretary-general, criticised Paris for impeding Nato involvement and Germany for not actively participating.
Sky News:
Arab Bankers Association Chief Executive Officer George Kanaan said in an interview the turmoil in the Middle East and North Africa has created an environment of "great uncertainty" in which banks can no longer "function properly." The political unrest in Bahrain will end the country's aspirations of becoming a regional financial center, and its hopes "are no difficult to achieve," Kanaan said.
Jornal de Negocios:
The Portuguese government forecasts the country's gross domestic product will contract .9% this year, citing the stability and growth program handed in to parliament today.
Commercial Times:
Apple Inc.(AAPL) sent procurement staff to Taiwan after the earthquake in Japan to secure component supply for for the second quarter.
Tokyo Electric Power Co. can't say when it can resume spraying water and restoring power at its crippled Fukushima Dai-Ichi nuclear plant because of steam and smoke coming from the reactors, citing the utility.
The crisis at the Fukushima nuclear plant is not necessarily improving, citing Japan's Trade Minister Banri Kaieda.
Seafood caught near Japan's crippled Fukushima Dai-Ichi nuclear plant hasn't entered the food supply, citing the Fukushima prefectural government.
People's Daily:
Sustainable economic growth in China is being hurt by weakening "momentum" from investment and exports and "slow progress" in raising personal incomes, Zhang Monan, an economic researcher at the State Information Center, wrote today.
China Business News:
Procter & Gamble Co. and Unilever raised prices for detergents in China by as much as 10%, citing dealers.
Evening Recommendations Citigroup:
Reiterated Buy on (DV), raised target to $64.
Night Trading
Asian equity indices are -.25% to +.75% on average.
Asia Ex-Japan Investment Grade CDS Index 115.0 -1.0 basis point.
Asia Pacific Sovereign CDS Index 117.0 -.5 basis point.
The January House Price Index is estimated to fall -.2% versus a -.3% decline in December.
Upcoming Splits
None of note
Other Potential Market Movers
The Fed's Fisher speaking, Fed's Pianalto speaking, Richmond Fed Manufacturing Index for March, weekly retail sales reports, Sidoti Emerging Growth Forum, CTIA Wireless, JPMorgan Aviation/Transportation/Defense Conference, (FLO) analyst day, (UNFI) investor day, (GT) investor meeting and the (PCL) analyst meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and automaker shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.
North American Investment Grade CDS Index 95.77 +10.50%
European Financial Sector CDS Index 99.75 -2.84%
Western Europe Sovereign Debt CDS Index 164.58 bps -1.05%
Emerging Market CDS Index 214.26 -.83%
2-Year Swap Spread 20.0 -1 bp
TED Spread 24.0 -1 bp
Economic Gauges:
3-Month T-Bill Yield .07% +1 bp
Yield Curve 269.0 +1 bp
China Import Iron Ore Spot $163.80/Metric Tonne -.55%
Citi US Economic Surprise Index +61.60 -1.7 points
10-Year TIPS Spread 2.45% +1 bp
Overseas Futures:
Nikkei Futures: Indicating +350 open in Japan
DAX Futures: Indicating +15 open in Germany
Portfolio:
Higher: On gains in my Biotech, Tech, Retail and Medical longs
Disclosed Trades: Covered all of my (IWM)/(QQQQ) hedges and then added them back
Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades meaningfully higher, despite rising energy prices, growing Mideast unrest, Japan concerns and weak US housing data. On the positive side, Road & Rail, Education, Gaming, Construction, Disk Drive, Semi, Oil Service and Energy shares are especially strong, rising more than 2.0%. Tech shares, which have lagged badly of late, are outperforming. Cyclicals and small-caps are outperforming again. The Japan sovereign cds is falling -2.19% to 106.44 bps. On the negative side, Bank shares are down on the day. (XLF) has underperformed badly throughout the day. Copper is falling -1.19%, gold is jumping +.69% and oil is rising +.35%. China Iron Ore Spot has declined -14.1% in a little more than 1 month. The avg. US price for a gallon of gas is +.01/gallon today to $3.55/gallon. It is up .43/gallon in 34 days. The Portugal sovereign cds is climbing +3.49% to 517.11 bps. The Citi Eurozone Economic Surprise Index is falling to -11.40 today and is now at the lowest since March 23rd of last year. As well, the Asia Pacific Sovereign CDS Index is climbing +2.68% to 120.82 bps. India's Sensex finished -.22% lower overnight. As well, Brazil's Bovespa, which is at a key technical juncture, gave back an +800 point morning gain to finish at session lows, down -.23%. I still suspect that global growth is slowing more than economists perceive right now and that this is not factored into most stocks. However, the market's resilience in the face of numerous mounting headwinds is very impressive. The S&P 500 is right at its 50-day moving average after a low-volume rally. If the benchmark can break convincingly above this level I will add back market exposure. I expect US stocks to trade mixed-to-lower into the close from current levels on growing Mideast unrest, rising energy prices, US housing worries, Japan concerns, more shorting, profit-taking and technical selling.
