North American Investment Grade CDS Index 97.32 +.84%
European Financial Sector CDS Index 106.96 +2.75%
Western Europe Sovereign Debt CDS Index 170.08 bps +1.19%
Emerging Market CDS Index 212.54 -2.14%
2-Year Swap Spread 20.0 unch.
TED Spread 22.0 unch.
Economic Gauges:
3-Month T-Bill Yield .09% unch.
Yield Curve 269.0 +1 bp
China Import Iron Ore Spot $165.50/Metric Tonne +.67%
Citi US Economic Surprise Index +57.8 -3.2 points
10-Year TIPS Spread 2.39% unch.
Overseas Futures:
Nikkei Futures: Indicating +41 open in Japan
DAX Futures: Indicating +26 open in Germany
Portfolio:
Higher: On gains in my Biotech, Tech, Retail and Medical longs
Disclosed Trades: Covered all of my (IWM)/(QQQ) 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 reverses morning losses and trades at session highs, despite rising energy prices, US housing worries, growing Mideast unrest, Japan concerns and rising eurozone debt angst. On the positive side, Restaurant, Networking, Disk Drive, Semi and Coal shares are especially strong, rising 1.5%+. Cyclicals are outperforming. Copper is jumping +2.94% and the UBS-Bloomberg Spot Ag Index is dropping -1.26%. On the negative side, Road & Rail, REIT, Insurance, Bank and Oil Tanker shares are under some pressure, falling more than .5%. (IYR)/(XLF) have underperformed throughout the day. The Transports also aren't participating in today's rally. Oil is rising +.64% and lumber is falling -.57%. The avg. US price for a gallon of gas is unch. today at $3.55/gallon. It is up .43/gallon in 36 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 Japan sovereign cds is gaining +4.12% to 103.0 bps, the Saudi sovereign cds is rising +3.56% to 128.16 bps and the Israeli sovereign cdss is rising +3.9% to 153.61 bps. The market's resilience in the face of numerous mounting headwinds remains very impressive. However, volume, leadership and breadth are poor given the extent of the recent rally. The S&P 500 is still right near its 50-day moving average. If the benchmark can break convincingly above this level I will feel more comfortable with additional market exposure. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, economic optimism and bargain-hunting.
NATO Struggles to Define Libya Role as U.S. Prepares Strike. NATO members failed to agree on an expanded role in Libya, as squabbles prevented the U.S. from handing off command of the campaign against leader Muammar Qaddafi. The 28-member bloc has yet to find the formula to balance military needs and political sensitivities in the five-day-old operation. France is resisting overall NATO command to encourage more involvement by Arab countries. “It paints a pretty bad picture of the political dynamics,” Bastian Giegerich, a consulting fellow at the London-based International Institute for Strategic Studies, said in an interview. “Normally the U.S. is the first among equals in NATO, but with the Americans stepping back it makes it more difficult to create consensus.”
Crude Oil Advances in N.Y. as Allies Prepare Additional Libya Airstrikes. Crude climbed to a two-week high as the U.S. and its allies prepared to attack Libyan leader Muammar Qaddafi’s troops and protesters clashed with government forces in Syria, bolstering concern that supply will be disrupted. Oil rose as much as 1.3 percent after U.S. Admiral Samuel Locklear said more strikes will be launched in the “coming hours and days.” Prices advanced 15 percent this year as unrest spread from Tunisia to Egypt, Yemen, Bahrain and Syria. A U.S. government report showed that crude supplies climbed last week as gasoline stockpiles fell to the lowest level this year. Mercantile Exchange. Futures touched $106.34, the highest intraday price for a front-month contract since March 7. Crude oil for May delivery rose 82 cents, or 0.8 percent, to $105.79 a barrel at 12:20 p.m. on the New York Brent crude oil for May settlement increased 21 cents to $115.91 a barrel on the London-based ICE Futures Europe exchange.
U.S. New Home Sales Unexpectedly Fall to Lowest on Record. Purchases of new U.S. homes unexpectedly declined in February to the slowest pace on record and prices dropped to the lowest level since December 2003, adding to evidence the industry is floundering. Sales decreased 16.9 percent to a 250,000 annual pace, figures from the Commerce Department showed today in Washington. Economists surveyed by Bloomberg News projected a gain to a 290,000 rate, according to the median estimate. The median price fell 8.9 percent from the same month in 2010. Sales slumped 57 percent in the Northeast, 28 percent in the Midwest and 15 percent in the West. The South showed a 6.3 percent decrease. The median sales price dropped to $202,100 in February from $221,900 a year earlier, today’s report showed. Last month’s median price was the lowest since $196,000 in December 2003. The share of homes sold for $500,000 or more fell in February, matching January 2009 as the lowest on record. The supply of homes at the current sales rate rose to 8.9 month’s worth from 7.4 months in January. There were 186,000 new houses on the market at the end of February, the same as a month earlier.
Irish Notes, Portuguese Bonds Drop as Debt Crisis Deepens Ahead of Summit. Irish two-year notes slumped, leading the bonds of the region’s most-indebted nations lower, on concern a permanent solution to the fiscal crisis will elude European Union leaders meeting at a summit starting tomorrow. The declines drove the yield on the Irish security to more than 10 percent for the second consecutive day, while the extra yield investors demand to hold the nation’s 10-year bonds instead of German bunds climbed to a record. Portuguese bonds slid as Prime Minister Jose Socrates faces a vote today against his deficit-cutting plan that may spur early elections and the need for an EU bailout. “It’s death by a thousand cuts,” said Charles Diebel, head of market strategy at Lloyds Bank Corporate Markets in London. “We’re waiting for Portugal. There isn’t actually a solution to the problem. Yields remain at unsustainable levels, technically forcing insolvency.” The yield on the two-year Irish note surged 57 basis points to 10.44 percent as of 2:38 p.m. in London, after rising to 10.70 percent. The yield has climbed from 9.09 percent at the end of last week. The 10-year yield advanced 23 basis points to 10.06 percent, widening the spread over bunds by 27 basis points to 685 basis points. It earlier increased to 694 basis points. The Portuguese 10-year yield climbed 11 basis points to 7.61 percent, with the similar-maturity Greek yield up six basis points to 12.57 percent. The Portuguese five-year note yield rose to as much as 8.19 percent, the highest since before the euro was introduced in 1999.
Euro Declines on Debt-Fund Plan Delay, Portugal. The euro slumped against most of its major counterparts as Portugal began debating a budget that may lead the government to fall and European leaders pushed back a decision on funding a regional bailout mechanism. The 17-nation currency fell for a second day against the dollar before a Portuguese vote that may force the nation to an early election and bailout and reports the expansion of the European Union European Financial Stability Facility will not be decided until June.
Tokyo Warns About Water, Japan Bids to Calm Radiation Fears. Tokyo authorities said city tap water may be unsafe for infants while Japan’s government sought to assure people that radiation levels detected in the food chain following a nuclear accident don’t pose a health threat. Radioactive iodine levels taken yesterday at a treatment facility in Katsushika ward were double the recommended limit for babies, a city official said in a televised briefing today. The water would pose a health risk if drunk over the long term, such as a year, he said. Tokyo’s population is estimated to be about 13 million people. Disclosures of rising contamination, coupled with assurances that risks are minimal, underscore the government’s struggle to contain the ripple effects of a magnitude-9 earthquake and tsunami on March 11 that crippled a nuclear facility north of Tokyo.
Fed's Fisher Sees 'Extraordinary Speculative Activity'. Federal Reserve Bank of Dallas President Richard W. Fisher said he sees “extraordinary speculative activity” in the U.S. after the central bank pumped record amounts of stimulus into the economy. “There is an enormous amount of liquidity sloshing around,” the regional bank chief, who votes on monetary policy this year, said in a speech today in Berlin. “There is abundant liquidity in the machine we know as the United States economy.”
Nissan's Ghosn Says 40 Japan Auto Suppliers Still in Difficulty. Nissan Motor Co. Chief Executive Officer Carlos Ghosn said about 40 component suppliers in Japanremain in difficulty after the nation’s record earthquake, complicating automakers’ efforts to restart car production. Electronic components, plastics and rubber are in short supply and will affect Japanese automakers and rivals outside the country, Ghosn, 57, said in a telephone interview. Carmakers are jointly offering stricken component-makers support via Japan’s automobile manufacturers association, he said. “This is serious and it’s still difficult to evaluate,” Ghosn said late yesterday. “You have the earthquake, you have the tsunami, rolling blackouts, and fuel shortages hitting at the same time, and they aren’t only hitting the car manufacturers, but also the suppliers and the dealers.”
Apple(AAPL) Is Said to Consider Expanding AirPlay for Streaming Video. Apple Inc. (AAPL) is weighing an expansion of its AirPlay audio service to include streaming video from an iPhone or iPad to television sets, according to two people familiar with the project. Under the plan, Apple would license its AirPlay software to consumer-electronics makers that could use it in devices for streaming movies, TV shows and other video content, said the people, who asked to remain anonymous because the plans haven’t been made public.
Explosion at Jerusalem Bus Station Kills 1, Hurts 30; Palestinians Blamed. A bomb blast near a bus stop outside Jerusalem’s central station killed one person and injured at least 30. Public Security Minister Yitzhak Aharonovitch said Palestinians were behind the explosion, and that it was caused by a bomb placed in a bag. Interior Minister Eli Yishai linked the blast to the rising number of rocket and mortar attacks on southern Israel from the Gaza Strip and warned that “if the trend continues then, no doubt, we will have to take action.”
Wall Street Journal:
Allies Strike Forces Around Besieged Libyan Cities. Allied forces bombed Libyan government targets involved in the siege of the cities of Misrata and Ajdabiya as NATO warships started patrolling off Libya's coast to enforce the United Nations arms embargo, amid a debate over who would lead the campaign. As the coalition campaign moved into its fifth day, several residents of Misrata, Libya's third-largest city and an important commercial hub, recounted a grim humanitarian situation and atrocities still being committed by Col. Moammar Gadhafi's troops.
IMF Plan Sees Role for Fund in Crises.The International Monetary Fund is working on a proposal to become a more significant lender of dollars, euros and other hard currencies during times of crisis, essentially sharing the role of global lender of last resort with the U.S. Federal Reserve. Under the plan, which has been encouraged by the U.S. and other members of the Group of 20 nations, the IMF would provide short-term foreign-exchange swaps to central banks in developing nations as a way to handle financial shocks that leave those nations short of hard currencies.
Apple's(AAPL) Area 51: The Truth Is Out There. Scheduled to go live sometime this spring, Apple’s 505,000-square-foot North Carolina data center is, according to COO Tim Cook, intended to support iTunes and MobileMe. But we don’t yet know in what capacity, and Cook’s remark, which is at once unambiguous and utterly cryptic, leaves plenty of room for speculation. And theories about the potential capabilities of this new facility abound.
CNBC.com:
Stock Market Is Only Halfway Through Bull Run: Birinyi. The stock market is only about halfway through a bull run that will catapult the Standard & Poor's 500 another 60 percent over the next two to three years, well-known stock analyst Laszlo Birinyi told CNBC.
Syrian Police Just Opened Fire On "Hundreds of Youths". At least 15 people have been killed, according to liberation.fr. Details are scarce out of Syria, as there is limited media coverage of affairs within the country.
Elevated Radioactive Iodine Found in Tokyo Tap Water. Japanese officials said tap water tests in Tokyo found more than twice the limit for radioactive iodine considered safe for infants. Although the level is not an immediate health risk for adults, officials said babies should not be given tap water. Radioactive iodine can cause thyroid cancer, but officials said there was no reason to worry if infants already consumed small amounts. Authorities are not certain, but they suspect that airborne iodine from the Fukushima Daiichi plant drifted over rivers that feed into Tokyo's water system and then came down in rainfall this week.
The U.K.'s MI5 intelligence service warned counterparts in NATO countries of the risk of terrorist attacks following military action in Libya. In a March 18 memo sent to agencies in other NATO countries, MI5 cited wiretaps of Libyans living in the U.K. which included discussions of "actions of support" for leader Muammar Qaddafi. Libyans in one call were quoted as saying, "we should act where we are."
Yomiuri:
Seven nations including Germany and Switzerland moved embassy operations out of Tokyo because of concerns about the Fukushima Dai-Ichi nuclear plant and rolling blackouts.
Japan's Nuclear Safety Commission said nuclear fuel at the No. 1 reactor of Tokyo Electric Power's Fukushima Dai-Ichi nuclear plant may have melted considerably. An official of the regulator said the temperature and pressure inside the reactor is reaching a dangerous point, and authorities are considering releasing steam.
Xinhua:
Carrefour SA will increase wages for its Shanghai workers by 8% under a new agreement reached through collective bargaining, citing labor-union officials.
China Business News:
China may face an "arduous" task in controlling consumer prices at 4% this year, citing Zhang Yansheng, a researcher with the National Development and Reform Commission. Imported inflation pressures are rising, he said.
Allies Target Qaddafi Ground Forces, Debate Command Structure. The U.S.-led alliance is preparing to direct more attacks against leader Muammar Qaddafi’s ground forces as the U.S. and its partners try to resolve disputes over who will take over command. The initial wave of allied airstrikes, concentrated on Libya’s air defenses, have not ended attacks on civilians by Qaddafi’s fighters, said U.S. Admiral Samuel Locklear, the tactical commander for the allied attacks on Libya. The alliance now is “considering all options” for using air power to protect civilians in battleground cities of Misrata, Ajdabiya and Zawiyah, said Locklear, who spoke to reporters at the Pentagon via telephone from his command ship in the Mediterranean Sea. In Brussels, members of the North Atlantic Treaty Organization held a second day of inconclusive talks about whether it or some ad-hoc grouping will take command of military operation initially headed by the U.S. There are division within NATO and also a need to include Arab participants in the leadership. President Barack Obama spoke with both U.K. Prime Minister David Cameron and French President Nicolas Sarkozy yesterday to try to resolve the issues, according to statements from their offices. “This command-and-control business is complicated, and we haven’t done something like this kind of on-the-fly before,” U.S. Defense Secretary Robert Gates told reporters in Moscow yesterday.
Oil Near Two-Week High in New York on Libyan Conflict, Middle east Turmoil. Oil traded near a two-week high in New York amid concern that continued conflict in Libya threatens to prolong supply disruptions and that escalating turmoil may curtail Middle East shipments. May futures climbed 1.8 percent yesterday as U.S. Admiral Samuel Locklear said further strikes will be launched against ground forces of Libyan leader Muammar Qaddafi in the “coming hours and days.” Prices have advanced 15 percent this year as turmoil that toppled the leaders of Tunisia and Egypt spread to Yemen, Bahrain and Syria. “Events in the Middle East and North Africa are the main game in the crude oil market and are the thing to watch in terms of the direction of the oil price,” Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, told Susan Li on Bloomberg Television’s “First Up.”
Nuclear Cleanup Faces Power Test as Quakes Rattle Fukushima. Early morning earthquakes rattled Japan’s crippled nuclear plant as engineers restored lighting at a control room and endeavored to connect power cables needed to cool the reactors. Four quakes of 5-magnitude or greater struck eastern Honshu, Japan, within an hour starting at 7:12 a.m. local time, according to the U.S. Geological Survey website. There was no impact on the Fukushima Dai-Ichi plant itself, the Japan Nuclear and Industrial Safety Agency said in a statement. Restoring power is key to ending the crisis at four unstable reactors that have leaked radiation into the ocean and forced the government to evacuate thousands of local residents. Plant operator Tokyo Electric Power Co. has been battling to prevent a meltdown at the plant after losing electricity that helps circulate cooling water to the units following the March 11 temblor and tsunami. Lights are on in the control room at the No. 3 reactor and there is some lighting working at No. 4, the company said today. Reactors No. 5 and 6 are already supplied with electricity. “They’ve made considerable progress bringing equipment to the plant and restoring power,” David Lochbaum, director of nuclear safety at the Cambridge, Massachusetts-based Union of Concerned Scientists, said on a conference call with reporters. “But they’re not out of the woods yet. They are working with razor-thin margins.”
Euro Drops for Second Day Ahead of EU Summit on Debt, Portugal Budget Vote. The euro declined for a second day against the dollar on concern European Union leaders meeting this week will struggle to find a permanent solution to the region’s fiscal crisis. The single currency weakened versus 13 of its 16 major counterparts on speculation Portugal’s parliament will collapse today as the parliament votes on budget cuts that have divided lawmakers. The pound climbed for a third day against the euro before the Bank of England releases minutes of this month’s policy meeting. “European countries will have to restructure their finances, causing demand to weaken in their economies,” said Daisuke Karakama, a market economist in Tokyo at Mizuho Corporate Bank Ltd., Japan’s second-largest publicly traded lender. “This weighs on the euro.” The euro fell to $1.4168 as of 9:49 a.m. in Tokyo from $1.4196 in New York yesterday, when it weakened 0.2 percent. European Union leaders are discussing ways to work out a solution to the region’s credit woes in time for a March 24-25 summit. “There seem to be market worries that Portugal may not approve fiscal austerity measures,” said Yuji Saito, director of the foreign-exchange department at Credit Agricole Corporate and Investment Bank in Tokyo. “This could lead to euro weakness.”
Bank of Spain Underestimates Funding Gap Faced by Lenders, Idealista Says. Spanish lenders face a capital shortfall that’s “substantially” higher than an estimate by the Bank of Spain because they haven’t accounted for all of their real-estate losses, according to Jesus Encinar, founder and chief executive officer of Idealista.com. As much as 15.2 billion euros ($21 billion) is needed by Spanish banks to meet new capital requirements, the central bank said on March 10. Encinar, 40, said the eventual shortfall may be between 80 billion euros and 100 billion euros. A spokesman for the Bank of Spain declined to comment on his estimate. “Property portfolios are still mostly valued at prices dating from the boom, rather than current values,” Encinar said during an interview at his office in Madrid. Home prices in some parts of Spain have dropped about 40 percent since the market’s peak in 2007, according to his 10-year-old company, the country’s largest property website. Savings banks alone have taken on land worth 23 billion euros after borrowers defaulted on their loans, according to data from the Bank of Spain. Land prices have fallen as much as 80 percent in the past four years and the valuations used by lenders are “pure fantasy,” Encinar said. Moody’s Investors Service cut its credit rating for Spain to Aa2 before the Bank of Spain’s announcement. Lenders may need as much as 50 billion euros to comply with the new balance-sheet rules, the ratings company said. Silvio Peruzzo, an economist at Royal Bank of Scotland Group Plc (RBS) in London, estimates the shortfall is about 52 billion euros. Banks and other financial-services companies advertise homes at prices that are as much as 12 percent higher than privately owned properties, according to Idealista. In return, they offer better mortgage terms, Encinar said. In some cases, banks only grant mortgages for homes that they own. “We tried to inform the banks about the market value of their properties, but they won’t reduce prices because it would affect the data that the banks are giving to the Bank of Spain,” he said. An increase in interest rates would make the situation even worse for lenders, he said. This could lead to more foreclosed homes that banks will have to take onto their balance sheets on top of the “second wave” of property and land assets handed over by developers that can no longer refinance debt. Spanish homeowners are particularly vulnerable to rate rises because 97 percent of outstanding mortgages have variable interest rates, according to the Spanish Mortgage Association. “If the banks, the government and the Bank of Spain were more realistic, they would help to restore confidence,” Encinar said. “Until then, all we can do is plaster over the problem.”
U.S. Halts Imports of Milk, Produce From Four Japan Prefectures. Milk and fresh produce from four regions of Japan closest to radiation leaks from a damaged nuclear power plant will be barred from the U.S. as regulators step up safeguards against potential food contamination. The products from the Fukushima, Ibaraki, Tochigi and Gunma prefectures in Japan are affected by the Import Alert issued yesterday by the Food and Drug Administration. Food believed to be from these areas will be detained at the U.S. border unless the importer can verify the products came from other regions of Japan, the FDA said in an e-mailed statement yesterday. The agency has assured U.S. consumers it was taking action such as using radiation tests to protect against food contaminated from Tokyo Electric Power Co.’s Fukushima Dai-Ichi nuclear plant, which has leaked radiation into vegetables and seawater.
Japan's taxpayer, not the nuclear industry, will cover most of the cleanup cost from the worst accident since Chernobyl, a financial rescue that may spur moves by other nations to make companies assume more liability. Tokyo Electric Power Co., in its 13th day fighting to avert a meltdown at its Fukushima plant 135 miles north of Tokyo, at most is required to cover third-party damages of $2.1 billion under Japanese law. Should the government declare the magnitude-9 earthquake and tsunami that flooded its reactors an "exceptional" act of God, the utility may be off the hook in paying compensation that may be demanded by injured workers, farmers and shareholders.
Fukushima Engineer Says He Covered Up Flaw at Shut Reactor. One of the reactors in the crippled Fukushima nuclear plant may have been relying on flawed steel to hold the radiation in its core, according to an engineer who helped build its containment vessel four decades ago.
Adobe Systems(ADBE) Forecast Misses Estimates as Japanese Sales Slow After Quake. Adobe Systems Inc. (ADBE), the largest maker of graphic-design software, forecast second-quarter profit that fell short of analysts’ estimates as the earthquake and tsunami in Japan cut into sales. Profit excluding some costs will be 47 cents to 54 cents a share in the current quarter, Adobe said today in a statement. That compared with the 56-cent average of analysts’ projections compiled by Bloomberg. Revenue will be $970 million to $1.02 billion, Adobe said. Analysts estimated sales of $1.04 billion.
Fed's Fisher Says Companies Want to Raise Prices, WSJ Reports. Federal Reserve Bank of Dallas President Richard W. Fisher said each of the roughly 50 business executives he speaks with on a regular basis is looking to price goods or services “more aggressively” as costs rise, according to the Wall Street Journal. “That concerns me,” he said in an interview with the newspaper today in Frankfurt. “You’re beginning to hear numbers in the 3 percent-plus level.” The regional bank chief said he personally surveys about 50 businesses, more than most of his colleagues at the Fed, and that the position on prices is “without exception, in every sector in every size, whether they’re public or private.” “We have to use a term that the great hockey player Wayne Gretzky used: we have to skate ahead of the puck,” Fisher said.
Wall Street Journal:
In Tripoli, Fear and Despair Mount. Four days into foreign strikes against Col. Moammar Gadhafi's military, some residents of Libya's largest city expressed fear and a weary exasperation, with some venturing to say their leader must go. "The regime must be bad if it brought us to this stage," said one Tripoli resident, Mohammed, referring to the airstrikes. "If we have gotten this far, then there is no going back."
Banks Hit for Credit Union Ills. Federal regulators are blaming Wall Street's biggest firms for the collapse of five institutions at the heart of the nation's credit-union industry and are seeking to recoup tens of billions of dollars in losses on securities that doomed the five.
Public Pension-Fund Squeeze. It Is Actuaries vs. Local Governments Over Return Rates; 'We Cannot Afford This'.
UAW Sets New Tactic to Organize at Foreign Car Makers. The United Auto Workers outlined a new push to recruit U.S. workers at one or more foreign auto makers and will bolster the effort by training and sending activists abroad to organize rallies and protests in support of the union campaign. On Tuesday, UAW leaders meeting here described plans to reach out to foreign unions and consumers in what would be their first major campaign since failed efforts in the last decade at Nissan Motor Co. and auto-parts supplier Denso Corp.
ObamaCare and Carey's Heart. My daughter probably wouldn't have survived in a system where bureaucrats stifle innovation and ration care. Today is the first anniversary of the greatest single assault on our freedom in my lifetime: the signing of ObamaCare. As we consider what this law may do to our country, I can't help but reflect on a medical miracle made possible by the American health-care system. It's one that holds special meaning for me.
Clair McCaskill Has A Plane Problem, And It Could Hurt The Dems. U.S. Sen. Claire McCaskill's (D-MO) airplane trouble don't seem to be going away and Dems are justifiably nervous the scandal could ruin any chance they have at holding on to the Show Me State seat in 2012. Just how bad is the "Air Claire" problem? Here's a recap:
As Buffett Talks Down Japanese Devastation, His Munich Re Announces Massive Loss, Forecast Miss Due to Earthquake. If one was merely listening to the Octogenarian of Omaha this morning on CNBC, one could easily have left the latest cheerleading attempt by the man who has made both an art and a science of frontrunning the government's rescues of the most incompetent and insolvent organizations in America (and later writing oped's both thanking and criticizing Uncle Sam for doing everything possible to transfer as much taxpayer money into Warren's right pocket just before the hypocrisy medication kicks in) to hypnotize the lemmings into believing all is fine in Japan.
New York Times:
Goldman(GS) Chief Expected to Testify at Galleon Trial. The government said late Tuesday that it intended to call Lloyd C. Blankfein, the chief executive of Goldman Sachs, as a witness in the insider-trading trial of Raj Rajaratnam, the Galleon Group hedge fund manager.
California Governor Jerry Brown Considering Initiative on Taxes. Gov. Jerry Brown is considering a November ballot initiative to extend tax increases and may announce it as early as this week, bypassing Republican opposition in the Legislature, a source said.
Detroit Free Press:
Census 2010: Detroit Population Plummets 25% to 713,777, Lowest Since 1910. Detroit’s population plunged 25% in the past decade to 713,777, the lowest count since 1910, four years before Henry Ford offered $5 a day to autoworkers, sparking a boom that quadrupled Detroit’s size in the first half of the 20th Century. Census figures released to the Free Press by a government source who asked not to be identified because the data has not been released publicly yet, show the city lost, on average, one resident every 22 minutes between 2001 and 2010. The data also show that Wayne County’s population fell almost 12% to 1,820,584. Oakland County grew almost 1% to 1,202,362, while Macomb grew the most, a 6.7% increase to 840,978. Macomb is now more populous than Detroit for the first time. Detroit’s political clout in the state also stands at a level not seen since 1880. Just 7.1% of Michiganders live in Detroit now, down from a peak of 32.4% in 1930. Detroit, once America’s fourth most populous city, will fall below Midwestern neighbors like Columbus, Ohio and Indianapolis, Ind. as well as southern cities like Jacksonville, Fla., Charlotte, N.C., and Austin and Fort Worth, Texas. Fueled by the implosion of the domestic auto industry, the Motor City’s 238,270-resident decline helped make Michigan the only state to experience a net population loss since 2000. Overall, the state’s population fell by about 54,000 people, a 0.6% decline at a time when the nation’s population grew about 9.7%.
Politico:
Barack Obama: Libyan Air Campaign Could Last. President Barack Obama acknowledged Tuesday that the joint military operation under way in Libya to protect civilians could continue as long Col. Muammar Qadhafi remains in control in Tripoli.
USA Today:
Damage to Japan's Economy May Be Worse Than Thought. Japan’s earthquake, tsunami and nuclear crisis could deliver a bigger blow to that nation’s economy and U.S. manufacturers than originally estimated, some economists say, due to extended disruptions to Japan’s power grid and factory supply chains. Some large U.S. electronics makers likely will shut down due to the temporary loss of components from Japanese suppliers, says Paul Martyn, vice president of consulting firm BravoSolution. Unlike steel or auto parts, electronics are tightly linked, and makers can’t easily shift to new suppliers, he says. IHS Global Insight expects this week to raise its estimate of the disaster’s toll on Japan’s economy. Simona Mocuta, who heads IHS’ Asia Pacific group, says the firm’s estimate of the decline in Japan’s economic output this year could widen to 0.5% from 0.2% because of rolling blackouts that could extend into summer. Japan’s growth could hit a low of 0.4% in the second quarter, based on the median forecast of nine economists in a Bloomberg News survey. But Julian Jessop of Capital Economics predicts Japan’s economy will shrink by 2% in the first quarter and 4% in the second. “We suspect the consensus is giving far too little weight to the blow to confidence and activity from the nuclear crisis,” he says.
Federal Reserve Official: 'We've Done a Bit Too Much' QE. Richard Fisher, who heads the Dallas branch of the Fed, said that the world's biggest economy is no longer in need of further stimulus and the real question is when to begin tightening monetary policy. To embark on a third round of quantitative easing (QE) would "only prolong the injustice inflicted" on savers through inflation, Mr Fisher said. Mr Fisher, who become a voting member of the Fed's rate-setting committee this year, said in a speech in Frankfurt that "there's lots of liquidity sloshing around the US financial system. We are seeing signs of all the intoxication that typically takes place when we have the ambrosia of cheap and readily available capital."
Nikkei:
Tokyo's power supply may fall 25%, or 15 million kilowatts, short of demand this summer.
Kyodo News:
Japanese Prime Minister Naoto Kan asked Ibaraki Prefecture Governor Masaru Hashimoto to halt shipments of milk and parsley from the region.
The temperature in the lower part of a pressure vessel of the No.1 reactor at Tokyo Electric Power Co.'s Fukushima Dai-Ichi nuclear plant was 399 degrees Celsius as of midnight on March 23, citing Japan's Nuclear and Industrial Safety Agency. That's higher than the reactor's normal operating temperature.
Japan's government ordered six more prefectures to perform radiation checks of agricultural products, citing the nation's health ministry. Prefectural authorities of Miyagi, Yamagata, Saitama, Chiba, Niigata and Nagano were told to do the checks.
Dong-A Ilbo:
The U.S. has turned down North Korea's proposal for bilateral talks, citing a diplomat. North Korea has asked the U.S. on at least two occasions since late last year to hold talks in Geneva.
China Daily:
Ads Promoting Wealthy Good, Lifestyles Banned. Advertisements that promote products as luxurious or "high-end" have been banned in a move experts say is designed to protect social harmony. The clean up means commercials posted or aired in public can no longer include words like "supreme", "royal", "luxury" or "high class", all of which frequently appear in Chinese promotions for real estate developments, vehicles and wines. According to a March 17 press release issued by the Beijing Administration for Industry and Commerce, officials will target advertisements that "promote hedonism" or "the worship of foreign-made products". Peking University sociologist Xia Xueluan agrees with the move. He told METRO: "We need to regulate the use of such words and catchphrases, as they can have an adverse impact on the whole society." He said many advertisements promote the belief that "wealth is dignity" and can even upset low-income residents. Wang Yong, who works at a State-owned company in Beijing, said that when he was looking for a new apartment, he noticed many real estate promotions used words like "royal" and "luxury". The legislation also targets the "abuse of idioms" in commercials, which is a recent phenomenon, said Mu Haifeng, the city's deputy director of advertisement management.
Oriental Morning Post:
Standard Chartered Plc, Citibank and some other overseas banks in China have stopped giving home equity loans to individuals because of year-end limits on loans to 75% of deposits. Other lending restrictions are also affecting the ability of foreign banks to extend loans.
21st Century Business Herald:
Some Chinese provinces have lowered their economic growth targets for the next five years after the central government called for more obtainable targets.
Financial News:
Deputy Chinese central bank governor Du Jinfju said maintaining stable prices is a priority for the nation's economic policy.
Haaretz:
Syria Security Forces Kill 6 in Attack on Daraa Mosque, Witnesses Say. Among victims is a doctor from a prominent Daraa family who arrived at the protest hub to help victims of the attack. Syrian forces killed at least six people on Wednesday in an attack on the Omari mosque in the southern city of Daraa, site of six days of unprecedented protests challenging Baath Party rule, residents said.
Evening Recommendations Citigroup:
Reiterated Buy on (GT), boosted estimates, raised target to $21.
Night Trading
Asian equity indices are -.25% to +.75% on average.
Asia Ex-Japan Investment Grade CDS Index 117.0 +2.0 basis points.
New Home Sales for February are estimated to rise to 290K versus 284K in January.
10:30 am EST
Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,500,000 barrels versus a +1,745,000 barrel gain the prior week. Distillate supplies are expected to fall by -1,500,000 barrels versus a -2,601,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -2,000,000 barrels versus a -4,174,000 barrel decline the prior week. Finally, Refinery Utilization is expected to rise by +.4% versus a +1.4% gain the prior week.
Upcoming Splits
None of note
Other Potential Market Movers
The Fed's Bernanke speaking, weekly MBA mortgage applications report, (COP) analyst meeting, (AMAT) analyst meeting, (SRE) analyst conference and the (CAT) analyst meeting could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by real estate and industrial 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 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.
