Evening Headlines
Bloomberg:
- Bersani Preaches Spread-the-Wealth Before Italian Vote. Pier
Luigi Bersani is traveling from Palermo to Naples with a
spread-the-wealth message to fend off populist rival Beppe Grillo in two
poor regions pollsters say are vital to gaining control of Italy’s
Senate. With outright victory at stake in the Feb. 24-25 parliamentary
election, Bersani, 61, is set to appear in Naples, capital of the
southern region of Campania, after speaking to thousands in Sicily’s
biggest city yesterday. He has covered the length of the Italian
peninsula this week to rally voters in the three must-win regions of
Lombardy, Sicily and Campania. Victory in Campania and Sicily, two of
Italy’s poorest regions, is in doubt as former comic Grillo’s
anti-austerity message resonates with recession-scarred voters. Bersani
drew cheers from flag-waving supporters in Palermo’s Piazza Verdi when
he said he’d push to get more out of the wealthy. Still, his base of
union supporters may not be enough to stop Grillo from carrying Sicily.
Victory by Grillo in Sicily is “a concrete possibility,” said Roberto
D’Alimonte, a professor at Rome’s Luiss University
who does political analysis for Sole 24 Ore, Italy’s leading
business newspaper.
- China Stocks Fall Most in 8 Months on Property, Commodity Risk.
China’s stocks fell, sending the benchmark index to its biggest loss in
eight months, after the government told local authorities to curb real
estate speculation and commodity shares tumbled. Anhui Conch Cement
Co. (600585), the nation’s biggest producer of the building material,
slumped 5.5 percent on concern over real estate restrictions that
include home-price control targets and the expansion of a property tax.
China Construction Bank Corp. (601939), the largest mortgage lender,
slid the most since June. Jiangxi Copper Co. and PetroChina Co. led
declines for metal and energy stocks after minutes from the Federal
Reserve’s last meeting
showed debate over further stimulus action. The Shanghai Composite
Index (SHCOMP) retreated 2.7 percent to 2,331.61 at the 11:30 a.m.
break, heading for the biggest drop since June 4. The CSI 300 Index
(SHSZ300) dropped 3.3 percent to 2,614.86,
the most since November 2011.
- PBOC Switch to Drain Cash Turns Citigroup Bearish.
The People’s Bank of China’s first draining of cash since June, seeking
to damp a property-market revival, is prompting Citigroup Inc. (C) to
predict one-year yields will rise faster than longer-term rates. “The PBOC regards the current liquidity conditions as
overly loose,” said Weisheng He, a strategist in Shanghai at
Citigroup. “Going into April, I expect the bond curve to bear-
flatten,” he said, predicting the one-year yield will rise to 3
percent this year from 2.70 percent yesterday. The outlook for a flattening yield curve reflects the risks
that excessive lending may fuel inflation in the world’s second-
largest economy and lead to a property-market bubble.
- China Aluminum Stockpiles Seen at Record, Swelling Global Glut.
Aluminum inventories in China’s main trading regions are estimated to
have climbed to a record as supply growth outpaces demand in the largest
user and producer, adding to a global glut of the lightweight metal.
Reserves expanded to 1.119 million metric tons from 750,000 tons a year
ago, according to a survey of warehouses in four cities by data provider
SMM Information & Technology Co. Stockpiles in six hubs including
Shanghai increased to 1.156 million tons, according to Li Xun, an
analyst at Myyouse.com, researcher Mysteel.com’s sister website, citing
their survey. The estimates add to signs that surging supplies from
new capacity in China’s northwest are not being absorbed, and may weigh
on aluminum, which has declined 6.7 percent in London in the past year.
Global production will outpace demand by 1.82 million tons this year
from 1.49 million tons in 2012, Barclays Plc said on Feb. 15, advising
investors to bet on lower prices
of the metal used to make autos, appliances and packaging. “I have no
doubt that the inventories will expand
further,” Wang Chunhui, a Shanghai-based analyst at SMM, said
in a telephone interview on Feb. 19. “Maybe it can exceed 1.2
million tons this year.”
- Rebar Futures Fall for Second Day on China Property Curbs. Steel reinforcement-bar futures in
Shanghai fell for a second day as the Chinese government moved
to curb property speculation, reducing demand for the building material. Rebar
for delivery in October fell by as much as 2.1 percent to 4,082 yuan
($653) a metric ton on the Shanghai Futures Exchange, before trading at
4,093 yuan at 10:02 a.m. local time. The contract has dropped 4.3
percent this week as
investors returned to the market after the Lunar New Year
holiday.
- Copper Slides to Seven-Week Low as Metals Fall on China Concern.
Copper slumped to a seven-week low
and nickel tumbled to the lowest level in 12 weeks after China moved to
curb property speculation and Federal Reserve minutes showed a debate
over the stimulus. Aluminum, lead, zinc, and tin
also declined. Copper for delivery in three months lost as much as 0.8
percent to $7,900 a metric ton on the London Metal Exchange, the
lowest since Dec. 31, before trading at $7,935 at 10:11 a.m.
Shanghai time. Nickel dropped as much as 1.9 percent to $16,840
a ton, the lowest since Nov. 28.
Chinese Premier Wen Jiabao called on local authorities to
“decisively” curb real estate speculation and take steps to
rein in the property market after data showed prices surged the
most in two years last month.
- Commodities Tumble on Speculation Hedge Fund Selling Positions.
“You have a sort of mini perfect storm hitting commodities
today,” Dave Lutz, the head of exchange-traded fund trading and strategy
at Stifel Nicolaus & Co. in Baltimore, said in a telephone
interview. “There’s market chatter that a fund is
blowing up, gold has fallen below $1,600, and oil storage tanks
in Cushing are near all-time records.”
- Asset Freezes Among Steps Obama Urged to Take on Cyber Thieves. President Barack Obama must take
tougher actions than those specified so far to deter cyber
attacks on vital computer networks, including freezing
offenders’ assets or denying them entry into the U.S.,
cybersecurity experts said. Obama’s administration yesterday pledged to share more
intelligence with companies about nations involved in economic
espionage and methods used to steal corporate information, and
to study the need for stronger U.S. laws against trade-secret
theft.
- VeriFone(PAY) Plunges After Profit Forecast Trails Estimates. VeriFone
Systems Inc. tumbled as much as 35 percent after the maker of
credit-card terminals forecast second-quarter profit that missed
analysts’ estimates, amid weak economic conditions in Europe. The shares
plunged as low as $20.81 in extended trading, after earlier falling 3.5
percent to $31.89 at the close in New York. Earnings excluding some
items will be 45 cents to 50 cents a share in the quarter ending in
April, San Jose, California- based VeriFone said in a statement.
Analysts on average had predicted profit of 80 cents a share,
according to data compiled by Bloomberg. VeriFone also announced
preliminary first-quarter adjusted profit of 47 cents to 50 cents a
share, less than the company’s prior projection of as much as 73 cents.
Beyond Europe, VeriFone said it experienced lower than anticipated
sales from customers in Brazil, and also had an increase in deferred
revenue from clients in Africa and the Middle East.
Wall Street Journal:
- Fed Split Over How Long To Keep Cash Spigot Open. Federal Reserve officials, uneasy with potential risks springing from
the central bank's low-interest-rate policies, are split over an early
retreat from the experimental programs created to revive the U.S.
economy. Minutes released Wednesday from the
Fed's January policy meeting show officials concerned that the
current
easy-money policies could lead to excessive risk-taking and instability
in financial markets. The Fed is buying $85 billion in mortgage and U.S.
Treasury securities a month to drive down long-term rates and has
promised to keep short-term rates near zero until unemployment improves.
Some said the Fed might have to taper its controversial bond buying
before the job market fully recovers, according to the January minutes.
The Fed has previously allowed bond buying programs to end in this
recovery and then restarted them. It will review the programs at its
next meeting, March 19-20, setting the stage for another high-stakes
debate.
- European Banks Move to Boost Health Gauge. Big European banks are boosting a key gauge of their financial health
through largely cosmetic maneuvering, even as regulators in some
countries try to crack down on the practice. Banks are recalculating the risks in their loan portfolios and
trading books in flattering ways, a move that has the effect of raising
their ratio of capital to "risk-weighted" assets—a metric that investors
and regulators use to assess banks' abilities to absorb unexpected
losses. While such maneuvering has been going on for years, analysts say it
appears to be accelerating at some major European banks, which are under
pressure to raise their capital ratios as new regulations known as
Basel III start phasing in this year.
- Google(GOOG) Developing Touchscreen Devices Using Chrome Operating System. Google Inc. has developed the first touchscreen laptops powered by its Chrome operating system to be sold later this year, according to people familiar with the matter, as the Internet giant tries to go toe-to-toe with Microsoft Corp.'s Windows operating system. Interestingly, the new Chrome devices also would compete with devices powered by Google's other operating system, called Android, which took the smartphone and tablet market by
storm in recent years, propelling Google as a force in mobile-device
software.
- GE(GE) Sues Whirlpool(WHR) on Cartel. General Electric Co. has sued rival Whirlpool Corp. and two European
suppliers, saying the companies ran a price-fixing cartel that caused GE
to overpay for parts for its refrigerators. GE alleges that it
was hurt by an international conspiracy to set prices at
"supra-competitive levels," to decrease manufacturing capacity and to
limit product availability by a group of global manufacturers of
refrigerator compressors. Compressors create cold air that keeps food
fresh or frozen in refrigerators.
- U.S. Ups Ante for Spying on Firms. China, Others Are Threatened With New Penalties. The White House threatened China and other countries with trade and
diplomatic action over corporate espionage as it cataloged more than a
dozen cases of cyberattacks and commercial thefts at some of the U.S.'s
biggest companies.
- Companies Seek to Avoid China New Year Hangover. For the world's manufacturers, post-holiday no-shows are an increasingly
frustrating part of China's tightening labor market. The trend reflects
rising expectations among China's workers, who are seeking out higher
pay even as they show less inclination to work in factories. Many
workers use the break to look for new jobs or start families.
- ObamaCare's 'Baby Elephant'. John Kasich says Valerie Jarrett promised, and other Medicaid tales. On Wednesday Florida Republican Rick Scott became the latest GOP
Governor to volunteer to shoulder some responsibility for ObamaCare,
which has liberal sages gloating about a resistance-is-futile shift in
the GOP. The media don't want to discuss the substance, only the
politics, so allow us to report how the flippers are justifying their
flips.
CNBC:
Zero Hedge:
Business Insider:
Washington Post:
- Japan’s Prime Minister Shinzo Abe: Chinese need for conflict is ‘deeply ingrained’. China has a “deeply ingrained” need to spar with Japan and other Asian neighbors over territory, because the ruling Communist Party uses the disputes to maintain strong domestic support,
Japanese Prime Minister Shinzo Abe said in an interview. Clashes with
neighbors, notably Japan, play to popular opinion, Abe said, given a
Chinese education system that emphasizes patriotism and “anti-Japanese
sentiment.” Abe’s theory on the entrenched motivation behind China’s
recent naval aggression helps explain why he has spent more effort
trying to counter the Chinese than make peace with them: He thinks the fierce dispute with China over an island chain in the East China Sea isn’t going away anytime soon.
NY Times:
- White House Tactic for C.I.A. Bid Holds Back Drone Memos.
The White House is refusing to share fully with Congress the legal
opinions that justify targeted killings, while maneuvering to make sure
its stance does not do anything to endanger the confirmation of John O.
Brennan as C.I.A. director.
4-traders:
- Ineffective Communication Hurts Brazil's Credibility -Moody's. Brazil's government is reaching for more flexibility in its fiscal and
monetary policies, but it hasn't been able to communicate effectively
with the market, causing confusion and hurting credibility, according to
Moody's Investors Service Vice President Mauro Leos.
Reuters:
- Cheesecake(CAKE) Factory's profit misses Street, shares down. Restaurant chain The Cheesecake Factory
Inc forecast a current-quarter profit largely below
analysts' estimates after reporting weaker-than-expected results
for the last quarter, sending its shares down more than 3
percent after the bell.
- Fluor(FLR) revenue short of estimates, has loss on ruling.
Engineering company Fluor Corp on Wednesday reported
slower-than-expected revenue growth and a quarterly loss due to a $265
million charge for the Greater Gabbard wind project off the coast of
Britain. Shares of Fluor, the largest publicly traded U.S. engineering
company, dropped 2 percent in after-hours trading
following a 3 percent slide in the regular session on the New
York Stock Exchange.
Financial Times:
- Fed doubtful on open-ended QE3 policy. The
US Federal Reserve is cooling on open-ended asset purchases as
officials grow nervous about the dangers of a bigger balance sheet.
According to the minutes of its January meeting, released on Wednesday,
“many” officials are concerned about the costs and risks of further
asset purchases, as the Fed buys securities at a
pace of $85bn a month. The
minutes suggest that QE3 – as the Fed’s third round of quantitative
easing is known – could end earlier than previously thought and is no
longer a truly open-ended programme. The Fed’s balance sheet has reached
$3.078tn and could exceed $4tn if QE3 continues for the rest of the
year.
Eastday.com:
Evening Recommendations
Night Trading
- Asian equity indices are -2.25% to -1.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 108.25 -.25 basis point.
- Asia Pacific Sovereign CDS Index 82.5 -.5 basis point.
- NASDAQ 100 futures -.09%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- The Consumer Price Index for January is estimated to rise +.1% versus unch. in December.
- The CPI Ex Food & Energy for January is estimated to rise +.2% versus a +.1% gain in December.
- Initial Jobless Claims are estimated to rise to 355K versus 341K the prior week.
- Continuing Claims are estimated to rise to 3150K versus 3114K prior.
8:58 am EST
- The Preliminary Markit US PMI for February is estimated to fall to 55.5 versus 55.8 in January.
10:00 am EST
- Philly Fed for February is estimated to rise to 1.1 versus -5.8 in January.
- Existing Home Sales for January are estimated to fall to 4.9M versus 4.94M in December.
11:00 am EST
- Bloomberg
consensus estimates call for a weekly crude oil inventory build of
+2,000,000 barrels versus a +560,000 barrel gain the prior week.
Gasoline supplies are estimated to fall by -900,000 barrels versus a
-803,000 barrel decline the prior week. Distillate inventories are
estimated to fall by -1,800,000 barrels versus a -3,677,000 barrel
decline the prior week. Finally, Refinery Utilization is estimated to
fall by -.4% versus a -.4% decline the prior week.
Upcoming Splits
Other Potential Market Movers
- The Fed's Fisher speaking, Fed's Bullard speaking, Fed's Williams speaking, Eurozone manufacturing & services PMI data, Spain 10Y
bond auction, China home price data, Bloomberg Economic Expectations
Index for February, weekly Bloomberg Consumer Comfort Index, weekly EIA
natural gas inventory report, 4Q Mortgage Delinquencies report and the 4Q Mortgage Foreclosures report could also impact trading today.
BOTTOM LINE: Asian indices are lower, weighed down by financial and commodity shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.
Today's Market Take:
Broad Market Tone:
- Advance/Decline Line: Substantially Lower
- Sector Performance: Every Sector Declining
- Market Leading Stocks: Underperforming
Equity Investor Angst:
- ISE Sentiment Index 83.0 -16.16%
- Total Put/Call 1.13 +14.14%
Credit Investor Angst:
- North American Investment Grade CDS Index 87.59 +2.57%
- European Financial Sector CDS Index 142.37 -.31%
- Western Europe Sovereign Debt CDS Index 99.0 -.77%
- Emerging Market CDS Index 235.06 +1.92%
- 2-Year Swap Spread 15.50 +.5 bp
- TED Spread 17.25 -1.5 bps
- 3-Month EUR/USD Cross-Currency Basis Swap -17.0 +.5 bp
Economic Gauges:
- 3-Month T-Bill Yield .12% +2 bps
- China Import Iron Ore Spot $158.90/Metric Tonne +.57%
- Citi US Economic Surprise Index -3.70 -1.2 points
- 10-Year TIPS Spread 2.55 -2 bps
Overseas Futures:
- Nikkei Futures: Indicating -38 open in Japan
- DAX Futures: Indicating +3 open in Germany
Portfolio:
- Slightly Lower: On losses in my tech/retail/medical sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges, added to my equity-specific hedges
- Market Exposure: Moved to 25% Net Long
Bloomberg:
- Merkel Says Euro Has ‘Long Way’ to Go Before Crisis Is Overcome.German
Chancellor Angela Merkel said the euro area has a “long way” ahead
before it overcomes the three-year-old debt crisis even though measures
to boost competitiveness and cut debt are bearing fruit. “We’ve achieved
much but still have a lot of work ahead of us,” Merkel told Germany’s
Straubinger Tagblatt/Landshuter Zeitung in an interview. The euro
bailout funds, the fiscal pact governing debt reduction and an agreement
on mapping out joint
banking supervision are all moving forward, Merkel said. “It’s moving
ahead step by step,” Merkel said. It’s now
“high time” to achieve what the founders of the single
currency didn’t and move states toward improving competitiveness
and structural reform, Merkel told the southern German
newspapers.
- French Workers Who Talk for 3 Hours Don’t Cut It, Titan Says.
Titan International Inc. Chairman Maurice Taylor has got French backs
up with his comments that the country’s workers earn high wages and work
short hours. In a letter to French Industry Minister Arnaud
Montebourg declining to reconsider buying a tire plant in the country,
he wrote that France can keep its “so-called workers.” Taylor, who ran
for the Republican presidential nomination in the 1996, laid out why his
company walked away and won’t reexamine buying a plant that Goodyear
Tire & Rubber Co., the largest U.S. tire- maker, is closing
in France. “I
have visited the factory several times,” Taylor wrote. “The French
workforce gets paid high wages but works only three hours. They get one
hour for breaks and lunch, talk for three and work for three. I told the
French union workers this to their faces. They told me that’s the
French way!”
- Spain Said to Impose Yield Ceiling on Bond Sales by Regions. Spain is limiting the amount of
interest its 17 semi-autonomous regions can pay to borrow,
shutting many out of debt markets, as it seeks to repair the
nation’s finances, two people familiar with the matter said. The government wants administrations to pay yields no more
than 100 basis points above sovereign securities when they sell
bonds, said the people, who asked not to be identified before
the policy is announced. Catalonia, the nation’s biggest region,
pays 314 basis more than government debt on its 1 billion euros
($1.3 billion) of 4.95 percent bonds due 2020.
- China Orders More Cities to Restrict Housing Purchases.
Chinese Premier Wen Jiabao called on local authorities to “decisively”
curb real estate speculation and take steps to rein in the property
market after data showed prices surged the most in two years last month.
Cities that have had “excessively fast” price gains should promptly
impose home-purchase restrictions if they’ve not done so already, China
said in a statement released yesterday after a State Council meeting
headed by Wen. Provincial capitals and municipalities reporting
directly to the central government should also publish annual price
control targets to keep new- home costs “basically stable,” according to
the statement. Shares of Chinese developers listed in Shanghai fell the
most in more than six months on Feb. 19 on concerns the
government would impose new restrictions to cool the real estate
market after prices rebounded.
- Currency Rhetoric Heats Up With New Zealand Joining Warnings. New Zealand’s central bank governor said he’s ready to intervene in
foreign-exchange markets, adding to comments by officials from South
Korea to South America warning their currencies are too strong, even as
Group-of-20 nations say they’ll refrain from competitive devaluation. “There
seems to be a sense that the gloves are off in terms of central-bank
action in currency markets,” said Mitul Kotecha, global head of
foreign-exchange strategy at Credit Agricole SA in Hong Kong.
- Einhorn Adds Short Bets as Markets Rally Amid Economic Slump. Hedge-fund manager David Einhorn reduced bets that stocks will rise as equities climbed to a five-year high while U.S. economic growth halted. "As the market continues to advance, even as the economy doesn't, we tend to become less enthusiastic," Einhorn said on a conference call today held by his Greenlight Capital RE Ltd. reinsurer. "We took some gains in our long portfolio and added to our shorts." Einhorn
said long positions exceeded short wagers by 29 percentage points as of
Jan. 31, down from 39 percentage points at the start of the year.
- Apple(AAPL) Falls After IPhone Builder Foxconn Halts Hiring. Apple Inc.’s shares declined after Foxconn Technology Group, the manufacturer of products including
the iPhone, froze hiring across China.
- Toll Brothers(TOL) Falls as Homebuilder’s Earnings Miss Estimates. Toll
Brothers Inc., the largest U.S. luxury-home builder, fell the most in
eight months after reporting fiscal first-quarter earnings and revenue
that trailed
analyst estimates.
- World Powers to Make New Offer to Iran, Diplomat Says. The five United Nations Security
Council permanent members and Germany will make a new offer to
Iran to resolve the dispute about its nuclear program in talks
next week, a Western diplomat said.
- JPMorgan(JPM) Said to Seek First Sale of Mortgage Bonds Since Crisis. JPMorgan Chase & Co. is seeking to
sell securities tied to new U.S. home loans without government
backing in its first offering since the financial crisis that
the debt helped trigger. The deal may close this month, according to a person
familiar with the discussions. Servicers of the underlying loans
may include the New York-based lender, First Republic Bank and
Johnson Bank, said the person, who asked not to be identified
because terms aren’t set.
- Copper Falls to Four-Week Low as China Orders Limits on Housing. Copper fell to a four-week low in
New York as China, the world’s biggest consumer, moved to cool
property purchases and as inventories expanded.
Wall Street Journal:
- Fed Officials Feared Easy Money Could Rattle Markets. Federal Reserve officials expressed growing unease with the central
bank's easy-money policies at its latest policy meeting and some
suggested the Fed might need to pull them back before the job market is
fully back to normal. Minutes released Wednesday of the Fed's Jan. 29-30 policy meeting
showed that officials worried the central bank's easy-money policies
could lead to instability in financial markets and might be hard to pull
back in the future. The Fed plans to evaluate how the programs are
doing at its next meeting March 19 and 20. Several officials said that the Fed should be prepared to vary the
pace of its asset purchases, depending on how the economy performs and
its analysis of the costs and benefits of the program, according to the
minutes. Some Fed officials suggested the Fed may need to alter its stated
course to continue the bond-buying programs until the job market
improves "substantially," a threshold it hasn't defined.
- J.P. Morgan(JPM) Faces Calls to Split CEO, Chairman Roles. Investors
that control more than 16 million shares are calling for J.P. Morgan
Chase JPM -1.01% & Co. to split the chairman and chief executive
posts held since 2006 by James Dimon, citing concerns over a trading
fiasco that saddled the company with more than $6 billion in losses.
MarketWatch:
CNBC:
Zero Hedge:
Business Insider:
Reuters:
- India to miss 2012/13 export target: Anand Sharma.
- Mortgage applications fell last week as rates rose: MBA. Applications for U.S. home mortgages fell for a second straight week as
both refinancing and loan requests for new mortgages eased last week, an
industry group said on Wednesday. The Mortgage
Bankers Association said its seasonally adjusted index of mortgage
application activity, which includes both refinancing and home purchase
demand, was 1.7 percent lower in the week ended February 15. The MBA's seasonally adjusted
index of refinancing applications fell 1.6 percent, while the gauge of
loan requests for home purchases, a leading indicator of home sales,
dropped 1.7 percent.
- Asia steel output growth offsets fall in EU, U.S. in Jan. Stronger
steel output in top producer China and in Asia as a whole, offset falls
in Europe, the United States and most other producing regions in
January, data from an industry body showed on Wednesday. Global crude
steel production rose 0.8 percent to 125 million tonnes in January from
the same month a year earlier, data from the World Steel Association
showed. Output in China, which is also the top consumer of the
alloy, rose 4.6 percent in January to 59.3 million tonnes, while
Asia as a whole posted a 4 percent increase to 82.3 million
tonnes.
Telegraph:
- Losing our AAA rating could mean bank collapse and deflation. Like a condemned man, the British government awaits the sentence. It’s ceased
to be a question of whether we’ll lose our AAA rating, but when.
- Bulgaria succumbs to euro deflation curse. Another euro-pegged government defending an overvalued exchange rate
bites the dust, a reminder that the underlying economic and social
disaster across the Europe’s Arc of Depression is still getting worse. Bulgarian prime minister Boiko Borisov resigned this morning after days of mass protests against austerity across the country.
Radiocor:
- S&P
Sees Risk Italian Reforms May Slow After Vote. Italy's uncertain
election outcome means the nation's economic overhaul risks losing steam
after the Feb. 24-25 vote, citing a report by S&P. S&P said a
lack of economic growth is the main credit risk for Italy.
Xinhua:
- Wen Says China to Curb Property Speculation. Chinese Premier Wen
Jiabao said the country should be "determined" in curbing property
speculation and "strictly" implement home purchase limits, citing Wen
speaking at a State Council meeting. Wen also said China will expand
property tax trials.
- China May Ban Barbecues in Densely Populated Urban Areas.
Proposed restrictions are aimed at combating air pollution, citing draft
technical guideline issued by the Ministry of Environmental Protection.
Style Underperformer:
Sector Underperformers:
- 1) Homebuilders -3.40% 2) Gold & Silver -3.31% 3) Coal -3.02%
Stocks Falling on Unusual Volume:
- TOL, HNR, NFX, SWC, LEAP, CLF, SNFCA, WIN, AEG, LCC, COT, CLMT, OMX, FOR, PVR, BJRI, POST, OC, LAD, TSS, RAIL, DIN, GRMN, FNGN, IPHS, SODA, KALU, CEF, SPLS, TEX, RRGB, CF, COF, MON, AMWD, CDE, NEM, MKTX, EXAS and LIFE
Stocks With Unusual Put Option Activity:
- 1) HL 2) XLB 3) HAL 4) CREE 5) TOL
Stocks With Most Negative News Mentions:
- 1) DECK 2) RIG 3) FB 4) GE 5) JPM
Charts:
Style Outperformer:
Sector Outperformers:
- 1) Tobacco +.39% 2) Utilities +.19% 3) Biotech +.17%
Stocks Rising on Unusual Volume:
- NTSP, JOY, LZB, SINA, TXRH, CLH, MDRX and JCP
Stocks With Unusual Call Option Activity:
- 1) HL 2) FST 3) ODP 4) CDE 5) VRTX
Stocks With Most Positive News Mentions:
- 1) ADSK 2) DELL 3) MAR 4) CAT 5) MGM
Charts:
Evening Headlines
Bloomberg:
- Spanish Banks to Face Continued Funding Challenges, Moody’s Says. Spanish banks will still face
funding and liquidity pressures in coming months even though
some were able tap bond markets earlier this year, Moody’s Investors Service said.
“We still consider that liquidity and funding will continue to constrain
banks’ credit profiles over the coming months,” Pepa Mori, a Moody’s
senior analyst and author of a report on Spanish banks published today,
said in a statement. “While recognizing the decline in the system’s
overall financing requirements, Spanish banks continue to display
wholesale funding reliance at a time when accessibility to long-
term wholesale markets, while improving, has not normalized.”
- Greeks Hold First General Strike as Samaras Implements Austerity. Greek
labor unions are holding their
first general strike this year as Prime Minister Antonis Samaras’s
coalition government implements a new round of austerity measures amid
record unemployment. Schools, ferries, trains and government services
will be shut today with protests planned in central Athens by the
country’s public and private-sector trade unions. Greek civil
aviation workers will hold an eight-hour walkout that is set to cause
delays and cancellations at the country’s airports. “We are fighting for
measures to halt unemployment, for jobs for all, to protect our
democratic and workers’s rights,” the Greek General Confederation of
Labor, the country’s largest private-sector union, said in an e-mailed
statement.
- China’s Foreign Direct Investment Declines for Eighth Month. China’s
foreign direct investment
fell for an eighth month in January, a sign that the recovery in the
world’s second-largest economy has yet to revive confidence among
overseas companies. Inbound investment dropped 7.3 percent from a year
earlier
to $9.27 billion, the Ministry of Commerce said in a statement
today in Beijing.
- China Army May Be Behind Web Attacks, Security Firm Says. China’s army may be behind a
computer-hacking group that has attacked at least 141 companies
worldwide since 2006, according to a report by a U.S. security
firm. The attacks, mainly directed at U.S. companies, were
carried out by a group that is “likely government sponsored”
and is similar “in its mission, capabilities, and resources” to a unit
of the People’s Liberation Army, Mandiant Corp. said in a report today.
- China’s Financial Companies Drop for Fifth Day. Chinese financial stocks headed for their steepest five-day drop in more than two years. “Chinese stocks are in a period of correction,” said Wu
Kan, a Shanghai-based fund manager at Dazhong Insurance Co.,
which oversees $285 million. “Drugmakers are a beneficiary in
such times because they’re seen as a defensive stock, while news
about tightening measures for property would hurt earnings for
banks as housing loans may fall.” The CSI 300 Financials Index sank 1.5 percent, heading for
its biggest five-day retreat since November 2010.
- Australian Retail, Office Prices Fall as Rents Decline, NAB Says. Australian retail and office
property prices fell in the three months to Dec. 31 as rents
declined, a private survey showed. Retail property capital values dropped 1.4 percent in the
last quarter of 2012, while industrial property values slipped
1.2 percent and offices weakened 0.6 percent, according to a
National Australia Bank Ltd. survey released today. Rents eased
in all markets in the period, led by a 2.1 percent decline in
retail, NAB said.
- Detroit May Get State Manager as Fiscal Emergency Shown. A
fiscal emergency grips Detroit,
according to a report that opens a path to a state takeover of General
Motors Co.’s home town, citing deficits that have stymied city officials
after a $326.6 million gap last year. “It doesn’t have to be adversarial,” state Treasurer Andy Dillon said yesterday at a news briefing about the report,
produced by a six-member review team that included Dillon.
“Detroit is fixable and brighter days are ahead.”
- Herbalife(HLF) Fourth-Quarter Profit Tops Analysts’ Estimates.
Herbalife Ltd., the nutrition company at the center of a battle between
hedge-fund managers Bill Ackman and Carl Icahn, posted fourth-quarter
profit that
topped analysts’ estimates and raised its earnings forecast for
this year as sales rose in Asia.
- BofA(BAC) Raises Moynihan’s Compensation 71% to $12 Million in 2012. Bank
of America Corp. boosted Chief Executive Officer Brian T. Moynihan’s
2012 compensation by more than 70 percent to about $12 million and
agreed to increase his base salary for this year. Moynihan
received $11.1 million in stock grants for 2012, almost doubling the
amount he got the previous year, according to a regulatory filing
yesterday. For 2013, the bank increased his base salary to $1.5 million,
compared with $950,000 for each of the previous three years, according
to a person briefed on the matter.
Wall Street Journal:
- Rhetoric Turns Harsh as Budget Cuts Loom. With less than two weeks to go before the latest fiscal face-off,
rhetoric heated up Tuesday as the political parties exchanged fire over
whom to blame if looming spending cuts take effect. With Congress in recess this week, Republican and Democratic leaders
sent lawmakers home armed with fact sheets about the $85 billion in
across-the-board federal spending cuts due to start March 1, and talking
points on how to blame the other side. Meantime, the White House and
lawmakers are making no progress toward forging a compromise to avoid
the reductions, which are known in Washington as the sequester.
- Business Loans Flood the Market. Banks Put Their Liquidity to Work, but Added Competition Puts Pressure on Rates and Elevates Risk.
Carl DelPrete, chief executive of suburban New York
supermarket chain Uncle Giuseppe's Inc., couldn't be happier with the
current lending environment. To fund a recent expansion, he got bids
from three banks and calls the terms on the $14 million loan "the best
we're ever going to see in our lifetime." The episode reflects a renewed
willingness by some banks to lend cheaply and on flexible terms. But with banks not far removed from persistent criticism that they
were slow to make business loans that would kick-start an economic
recovery, a new concern is emerging: Is the pendulum swinging too far
the other way?
- Hearings Possible on 'Whale' Loss. A Senate panel probing J.P. Morgan Chase & Co.'s "London whale"
trading losses is wrapping up its report and considering calling
witnesses, including the bank's chief, James Dimon, for public hearings,
according to people familiar with the investigation. The Senate
hearings, which follow months of private interviews with top bank
officials, would likely focus on how much top J.P. Morgan officials knew
about mounting losses sustained by its massive bets on complex
derivative instruments. Public hearings into the trades could prove embarrassing for J.P. Morgan and Mr. Dimon.
- Drone Makers Take Aim at U.S. Market. American firms that make drones are aiming their sights on the U.S.
market as the next frontier for the controversial technology. With a declining defense budget expected to limit spending on the
vehicles, used primarily to monitor and target combatants on foreign
battlefields, manufacturers are seeking opportunities on the domestic
front, where universities, police departments and border patrol
agencies—as well as commercial enterprises— could use unmanned aircraft,
known as drones.
- U.S., China Ties Tested in Cyberspace. Ties between China and the U.S., strained by military rivalries and
maritime disputes, may face an even greater test from the newest front
in global conflict: cyberspace.
U.S. military and homeland security
officials quietly have long blamed the Chinese military for the most
egregious assaults on U.S. computer networks. Continued hacking and data
theft, however, are being met by an increasing willingness by
Washington to publicly point the finger at Beijing. Experts say the subtle but significant shift in how the U.S. approaches
the face-off carries significant implications for the next steps of
U.S.-Chinese diplomacy as the Obama administration sets about engaging a
revamped government in Beijing with its second-term national-security
lineup.
- Weak Growth Strikes a Blow to French Deficit Goals.
The French government on Tuesday said it won't be able to lower its
budget deficit to 3% of annual output this year because of weak growth,
dropping a key economic pledge by President François Hollande and
raising the pressure on the euro zone's second-largest economy to show
it can restore its public finances. Mr. Hollande's government had staked its credibility on the
commitment to lower the deficit to 3% of gross domestic product in 2013,
and introduced tax increases to bolster public coffers when economic
growth was insufficient to ensure the target was met.
- John Boehner: The President Is Raging Against a Budget Crisis He Created. Obama invented the 'sequester' in the summer of 2011 to avoid facing up to America's spending problem. A week from now, a dramatic new federal policy is set to go into effect
that threatens U.S. national security, thousands of jobs and more. In a
bit of irony, President Obama stood Tuesday with first responders who
could lose their jobs if the policy goes into effect. Most Americans are
just hearing about this Washington creation for the first time: the
sequester. What they might not realize from Mr. Obama's statements is
that it is a product of the president's own failed leadership.
MarketWatch.com:
- China waiting for a crisis: Andy Xie. Government must cut spending or wake up to a messy reckoning. Bank loans and money supply rose sharply in
January. The timing of the Spring Festival may have distorted the data.
Still, there are signs that many local governments with new leaders want
to try an old trick, pushing fixed-asset investment (FAI) to create
gross domestic product and fiscal revenue. This would turn bank loans
into GDP and fiscal revenue. Local governments are already heavily in debt. Pushing FAI would keep
them liquid through new loans. It is essentially a pyramid scheme and
can go on as long as the banks are willing and able to lend. But
constraints have appeared.
CNBC:
- BHP(BHP) Names New CEO as Profit Slumps. Global miner
BHP Billiton appointed the head of its non-ferrous business as its new
chief executive on Wednesday to replace Marius Kloppers, as it reported
an expected 43 percent drop in half-year profit. Andrew Mackenzie,
56, who joined BHP from rival Rio Tinto in 2008, will move into the top
job in May, taking the reins at a time when the company is battling to
protect margins by cutting costs amid
weaker commodity prices. The announcement came as BHP reported its
profit before one-off items tumbled to $5.68 billion for July-December
2012 from $10 billion a year earlier and took $3 billion in writedowns
on its aluminium and nickel businesses.
Zero Hedge:
Business Insider:
NY Times:
- Slide at Dell(DELL) Continues as Earnings and Sales Fall.
Dell reported another quarter of declining sales and profits on
Tuesday, deepening a downturn that has disenchanted its shareholders and
culminated in the slumping personal computer maker’s recent decision to
go private in a $24.4 billion deal.
Seeking Alpha:
Reuters:
- Joe Biden's tip for self-defense: Get a shotgun. Biden, who is spearheading a push for
President Barack Obama's gun control proposals, dispensed this
off-the-cuff tip for protecting life and property during an online
question-and-answer session on Facebook on Tuesday. The
vice president has not one but two shotguns that he says he keeps in a
locked cabinet at his house in his home state of Delaware, and he has
given his wife, Jill, explicit instructions on how to deal with any
would-be intruder.
- Nabors(NBR) revenue hit by spending cuts, demand recovery slows. Nabors Industries Ltd, the owner
of the world's largest onshore-drilling-rig fleet, reported a 44
percent jump in profit, but revenue fell as its major customers
curtailed spending amid the worst slowdown in gas-directed
drilling in more than a decade.
- Michael Kors(KORS) to sell big part of stake as shares soar. Fashion designer Michael Kors
is planning to sell a big chunk of his stake in his namesake
fashion house at a time when the company's shares are at an
all-time high. Kors will sell 3 million of his Michael Kors Holdings Inc
shares as part of a secondary offering of 25 million
shares the company announced in a regulatory filing on Tuesday.
Kors' ownership in the company will fall to about 4.8 million
shares, or 2.4 percent down from 3.9 percent after the sale.
- Sina(SINA) reports Q4 ad sales at lower end of forecasts. Sina Corp's quarterly advertising revenue grew 7 percent but came in towards the lower end of its own forecasts, as advertisers spent cautiously toward
the end of 2012 and new "Weibo" advertising products drew muted
sales.
Financial Times:
- China’s foreign oil output surges. China
is on track to produce enough crude oil outside its borders to rival
Opec members such as Kuwait and the United Arab Emirates, after its
state-owned oil companies spent a record $35bn buying foreign rivals
last year.
Telegraph:
The Times:
Shanghai Securities News:
- The
Beijing municipal government will hold meeting Thursday with developers
to discuss the property market and possible tightening policies, citing
a person from the local housing commission. Tightening may include
raising stamp duties and other taxes on transactions, according to the
report.
Evening Recommendations
Night Trading
- Asian equity indices are -.25% to +.75% on average.
- Asia Ex-Japan Investment Grade CDS Index 108.5 -2.0 basis points.
- Asia Pacific Sovereign CDS Index 83.0 -1.5 basis points.
- NASDAQ 100 futures +.19%.
Morning Preview Links
Earnings of Note
Company/Estimate
Economic Releases
8:30 am EST
- Housing Starts for January are estimated to fall to 920K versus 954K in December.
- Building Permits for January are estimated to rise to 920K versus 903K in December.
- The Producer Price Index for January is estimated to rise +.3% versus a -.3% decline in December.
- The PPI Ex Food & Energy for January is estimated to rise +.2% versus a +.1% gain in December.
2:00 pm EST
- Fed Minutes from Jan 29-30 FOMC meeting.
Upcoming Splits
Other Potential Market Movers
- The Germany inflation data, BoE minutes, weekly retail sales reports, weekly MBA mortgage applications report, Barclays Industrial Conference and the (TGI) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology 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 50% net long heading into the day.
