North American Investment Grade CDS Index 87.73 bps +1.68%
European Financial Sector CDS Index 74.67 bps +1.68%
Western Europe Sovereign Debt CDS Index 79.67 bps +4.46%
Emerging Market CDS Index 231.70 bps +.87%
2-Year Swap Spread 17.0 bps +2.0 bps
TED Spread 14.0 -1 bp
Economic Gauges:
3-Month T-Bill Yield .15% +1 bp
Yield Curve 282.0 bps +1 bp
China Import Iron Ore Spot $155.0/Metric Tonne +.91%
Citi US Economic Surprise Index +33.80 -2.1 points
10-Year TIPS Spread 2.26% +4 bps
Overseas Futures:
Nikkei Futures: Indicating +41 open in Japan
DAX Futures: Indicating +5 open in Germany
Portfolio:
Slightly Lower: On losses in my Retail and Tech long positions
Disclosed Trades: None
Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bearish as stocks move to session lows into the final hour. On the positive side, Oil Service, Gold, Energy and Airline stocks are especially strong, rising .5%+. (XLF) is outperforming today. The 10-year yield is pulling back -3 bps on the ADP report. On the negative side, Education, Retail, Homebuilding, Hospital, I-Bank, Networking, Defense, Internet and Oil Tanker shares are falling .75%+ on the day. The S&P GSCI Ag Spot Index is falling another -3.44% today and has plunged -19.2% since January 6th, which is a red flag for other commodities. The Citi Asia Economic Surprise Index is falling -17.4% today to +43.70, which is below its 200-day moving average for the first time during this recovery. The US sovereign cds is rising +10.0% to 38.50 bps and the Greece sovereign cds continues to move back up, rising another +2.1%. I suspect we could see further equity weakness tomorrow morning. I expect US stocks to trade mixed-to-lower into the close from current levels on profit-taking, more shorting, tax hike fears and rising sovereign debt angst.
Fed's Fisher Says U.S. Can't Ignore Effect of Deficit on Yields. Federal Reserve Bank of Dallas President Richard Fisher said the U.S. can’t ignore the effect of the growing federal deficit on Treasury yields and the outlook of investors. “Even under the most optimistic of scenarios, large deficits will be run for as far as the eye can see,” Fisher said in the text of a speech today in Tucson, Arizona. “The markets, fearing the consequences of runaway deficit financing, have bid up longer-term nominal rates, resulting in a yield curve that is now historically steep.” Still, “we cannot turn a blind eye to the effect that growing government indebtedness has on investors’ confidence and Treasury yields,” said the bank president, 61, who has led the Dallas Fed since 2005 and doesn’t vote on the Federal Open Market Committee again until 2011. The Fed shouldn’t step in to buy Treasuries just to hold longer-term rates down, which would create the perception that policy makers are “monetizing the debt,” he said. “The good news is that we are beginning to see some rays of sunshine emerge from the leftover clouds of the frightful storm we have just experienced,” Fisher said. Even so, “the skies are far from clear,” with too many unemployed workers and a “precarious” housing situation, he said. The budget deficit reached a record $1.4 trillion for the fiscal year that ended Sept. 30 amid falling tax revenue from the recession, a bailout of the banking and auto industries, and the $787 billion economic stimulus package. The Obama administration in February projected the shortfall would widen to $1.6 trillion this year.
Britain's soaring interest bill is forecast to exceed 10% of revenue in four years, the most since Margaret thatcher was prime minister, an analysis of Treasury documents by the Institute for Fiscal Studies shows. Moody's Investors Service said this month that Aaa-rated sovereigns with financing costs at 10% or more of revenue exceed the bounds of "debt affordability." The IFS says Treasury figures indicate the ratio will reach 10.6% by March 2015. The projections underline the pressure on whichever party wins this year's election to reduce the budget deficit.
G-8 Has 'Serious Doubts' About Iran Nuclear Program. Group of Eight foreign ministers said actions by Iran have deepened “serious doubts” about the peaceful nature of the country’s nuclear program, and they are prepared to take “strong steps” to show resolve on the issue. The G-8 foreign ministers, in a statement released today following a meeting in Gatineau, Quebec, urged Iran “in the strongest possible terms” to cooperate fully with relevant resolutions of the United Nations Security Council and the International Atomic Energy Agency. “Ministers agreed to remain open to dialogue, and also reaffirmed the need to take appropriate and strong steps to demonstrate international resolve to uphold the international nuclear non-proliferation regime and persuade Iran to build greater international confidence in the peaceful nature of its nuclear program,” according to the statement. The statement fell short of calling for sanctions against Iran.
China May Shun US Treasuries, Sending Yields to 4.5%, SocGen Says. China may curb purchases of U.S. Treasuries this year as its first trade deficit in 17 years leaves it with fewer dollars to invest, causing yields to climb, according to Societe Generale SA. Maguire’s call clashes with the view of JPMorgan Chase & Co. and Barclays Capital analysts, who say it’s too early to conclude that China will run a sustained trade deficit. The debate highlights the potential vulnerability of U.S. borrowing costs to any shift in trade patterns for China, the biggest foreign holder of American government debt.
Ford(F) Said to Plan Hybrid Lincoln to Bolster Last Luxury Line. Ford Motor Co. plans to expand the Lincoln luxury line by adding a hybrid model based on its top- selling Fusion sedan, two people familiar with the matter said. The hybrid Lincoln MKZ will be unveiled tomorrow at the New York auto show, said the people, who asked not to be identified because Dearborn, Michigan-based Ford hasn’t announced the details.
Chavez Cash Crunch Looms on Oil, Morgan Stanley Says. Venezuela’s government may face a cash crunch as early as this year as oil production slumps amid stable prices, Morgan Stanley said today in a report. The country, which depends on crude for 94 percent of export revenue, has seen output plunge to 2.2 million barrels a day from 3.7 million in 1997, according to Morgan Stanley. Venezuela now faces the risk that oil prices won’t rise enough in coming years to offset declines in production, forcing it to use savings to fund spending, the report said. “Venezuela may be hard pressed to avoid its day of reckoning,” analysts Giuliana Pardelli and Daniel Volberg said. “If we assume that oil prices remain in the $80-$85 per barrel range, such a level is likely to be insufficient to offset the decline in production.” Investors bet that oil prices will stay close to $90 a barrel through 2015, according to data compiled by Bloomberg. Venezuela’s international reserves fell to a 10-month low March 29 after the central bank transferred $5 billion to President Hugo Chavez’s off-budget development fund. Cash is also being used up as investors pull out of the country and a drop in manufacturing increases reliance on imports bought with dollars, Morgan Stanley said.
Obama's Health Beast Squashes State Experiments: Amity Shlaes. State attorneys general are filing lawsuits seeking to prove President Barack Obama’s health-care plan is unconstitutional. The litigation takes the spotlight away from something else about the states that matters. It is that states can be laboratories where the country experiments to ascertain which mix of taxes, incentives and public administration works best when it comes to health care. Obamacare threatens such experiments by superseding them. In doing so, the new federal program deprives the country not only of the experiments themselves but also of evidence that might cast doubt on the promises of the new legislation. In few states is the change as dramatic as in Indiana.
Wall Street Journal:
Year's First CMBS Deal Arrives. The first commercial-mortgage-bond deal of the year is expected to be marketed to investors this week, according to sources familiar with the transaction. The offer is seen as a sign of investors' willingness to tolerate risk, despite the deteriorating fundamentals of commercial real estate, as long as a deal is accompanied by adequate protection and conservative underwriting. Royal Bank of Scotland Group, through its real-estate advisory business, will offer a $500 million security backed by existing loans that were refinanced and underwritten to stricter guidelines, the sources said.
Trader's 'Nice Little Kiss' Tests Reach of Regulators. A series of phone calls between a Deutsche Bank AG bond salesman and a hedge-fund trader has landed the two men at the center of a courtroom test of how far federal regulators can go in pursuing insider trading.
BP(BP) Begins Big Push to Revive Iraq's Oil. BP PLC Tuesday awarded $500 million in contracts to drill wells in Iraq's giant Rumaila oil field, the first step in a mammoth initiative by foreign oil companies to revive the country's energy industry. If successful, the effort at Rumaila and several other fields near Basra could be one of the largest expansions of crude-oil production ever achieved anywhere. Increased Iraq production could be the difference between a well-supplied global market with oil steadily trading below today's $82 a barrel and a tight oil market with triple-digit prices, struggling to meet rising Asian demand. "It could change the map of oil," says Paolo Scaroni, chief executive of Italy's Eni SpA, which is preparing to begin work on the giant Zubair field. The new drilling contracts are the beginning of a long effort by a dozen of the world's largest oil companies to revive Iraq's decrepit oil infrastructure and turn it into a rival of Saudi Arabia for world's biggest crude exporter, industry officials say. Iraqi officials say they plan to add 10 million barrels a day of oil production capacity by 2017. Iraq has an estimated 115 billion barrels of crude-oil reserves. At current prices, that is valued at $9.5 trillion. The bottom line is that the lure of working in Iraq—with its plentiful oil—is too great for most big oil companies to ignore. "It makes commercial sense for us to increase production as quickly as we can," said Toby Odone, a BP spokesman. BP and the South Oil Co. let contracts to drill 49 wells to Weatherford International Ltd.; a partnership between Schlumberger Ltd. and the state-run Iraqi Drilling Co.; and China's Daqing Oil Field Company Ltd., said Abdul Mahdy al-Ameedi, a senior official in the oil ministry. He said BP plans to increase production at Rumaila from 1.07 million barrels a day to 1.23 million barrels within 12 months. These contracts are the first of what is expected to be a wave of oil-field-service related work let by BP, Exxon, Royal Dutch Shell PLC, Eni, Lukoil OAO and China National Petroleum Corp. over the next few months. The companies have been awarded contracts to increase production at separate fields. Energy analysts at Sanford C. Bernstein recently wrote that developing seven major Iraq fields, including Rumaila and Zubair, would require $102 billion in investment. The development of so many enormous projects—most clustered within 50 miles of each other—will create an enormous demand for workers, engineers and drilling rigs. It will also require the construction of a giant infrastructure build out, including roads, ports, oil export facilities and water plants. Even a few million barrels a day of crude oil production capacity could have an enormous impact. The growth of Iraqi oil production and exports will play a "decisive role in shaping global oil markets," says Fatih Birol, chief economist of the Paris-based International Energy Agency, a watchdog for industrialized nations.
Russia Boosts Security as Capital Mourns. Prime Minister Vladimir Putin vowed to "drag out of the sewer" those behind twin bombings that killed 39 people Monday in Moscow's subway, as officials pledged to stiffen penalties for terrorists and tighten security.
BusinessWeek.com:
U.K. Climate Science 'Damaged' by Leaked E-Mails, Lawmakers Say. Britain’s global warming scientists damaged their reputation by “unacceptable” withholding of data in response to freedom of information requests, said a panel of lawmakers who probed the so-called climategate scandal. Parliament’s Science and Technology Committee said the University of East Anglia’s “culture of non-disclosure” in relation to its climate research may have broken freedom of information laws by failing to publish data sought by critics of global warming theory. “What was reprehensible is that this area of science is of such global importance economically and politically that there was not a culture of releasing all the data and methodology as a matter of course,” panel Chairman Phil Willis said in London before the report was released today. “That is how things should be in the future.” The e-mails from the university’s Climatic Research Unit allowed global warming skeptics, including U.S. Senator James Inhofe, a Republican from Oklahoma, to question data making the case that humans are causing worldwide increases in the temperature. “The disclosure of CRU e-mails has damaged the reputation of U.K. climate science and, as views on global warming have become polarized, any deviation from the highest scientific standards will be pounced on,” the committee wrote. The lawmakers also said that because a general election is due by June, they didn’t have enough time to hold an in-depth enquiry. They cleared Phil Jones, head of the school’s Climatic Research Unit, of wrongdoing, saying he acted “in line with common practice,” in not publishing all his methods and computer codes. Jones stepped aside from his post in December pending completion of an investigation. In one e-mail, he wrote of deleting files rather than handing data to skeptics. The lawmakers cleared Jones of dishonesty in one of the most widely-cited e-mails, in which he discussed a “trick” to hide the decline in one temperature record. Graham Stringer, one of the four members of the panel who attended the hearings and a lawmaker from the ruling Labour Party, voted against that conclusion. He argued that not enough evidence had been heard. The school said it welcomed the lawmakers’ “largely positive” report.
Because Companies Said Obamacare Will Hit Them, Henry Waxman Is Launching A War On Accounting. Accounting basics: when a company experiences what accountants call "a material adverse impact" on its expected future earnings, and those changes affect an item that is already on the balance sheet, the company is required to record the negative impact--"to take the charge against earnings"--as soon as it knows that the change is reasonably likely to occur. This makes good accounting sense. The asset on the balance sheet is now less valuable, so you should record a charge. Otherwise, you'd be misleading investors. Obviously, Waxman is incensed because this seems to put the lie to the promise that if you like your current plan, nothing will change. But this was never true. Medicare Advantage beneficiaries are basically going to see their generous benefits slashed, retiree drug benefits suddenly cost more and may now be discontinued, and ultimately, more than a few employers will almost certainly find it cheaper to shut down their plans. If Congress didn't want those things to happen, it should have passed a different law. If Congress thinks that it made the right tradeoffs--or at least, justifiable choices--then our Congressmen should step up and accept responsibility for what they've done. At the very least, I think we can ask that they refrain from trying to force companies to join them in denying reality by threatening congressional investigation of any company who dares to notify investors that this thing is going to cost them money.
Chicago Tribune:
Taking a Hatchet to Moderate Government. Go ahead, attack promoters of moderate government. Paint them as flakes, kooks and goons. Call them unhinged and unglued. Toxic, mean-spirited, shrill and dangerous. othing would please us more than your persisting in mislabeling or misunderstanding — the effect is the same — what angers the majority of Americans. Convince yourself that dissenters to your engorgement of government are doing it because they are racists and bigots. Don't give anyone credit for objecting to where you're leading the country because your path is misdirected. Please, please, continue your crusade to alienate more and more honest and worried Americans who see great danger in the extreme expansion that government has undergone in the last few years. You've already done a great job of dividing the country, but don't stop now. Seventy-eight percent, including 82 percent of independents, think government spending is out of control. Eighty-one percent are fed up with the growing deficit and 73 percent with government spending. Sure, deride the poll because it came from Fox News; ignore the clarity of American anger.
Politico:
Now the Real Healthcare Fight Begins. Many liberals are euphoric about Congress passing health care reform. When President Barack Obama signed the most ambitious social legislation since President Lyndon B. Johnson's Great Society, the tide seemed to have turned for the Democrats. But this is not the end of the political struggle. Just the start of a new chapter. While outright repeal of health care reform — as many conservatives demand — seems unlikely, there is no guarantee this reform will stick. Future Congresses could erode or undercut the law. For there is a long history of major social legislation coming under attack post-enactment. New legislation, whether misunderstood or poorly designed, often can take several years to gain solid public support. Political sustainability is not automatic. One of the Democrats’ most embarrassing moments involved the Medicare Catastrophic Coverage Act of 1988, which Congress repealed 16 months after adoption. The reform was the biggest expansion of Medicare since its creation in 1965. It earned some of the same praise we hear today for Obama's health care reform.
Reuters:
CME(CME) Working With Fannie, Freddie on Swaps. CME Group Inc. is working with mortgage lending giants Fannie Mae (FNM) and Freddie Mac (FRE) to design a clearing facility for the $414 trillion global market for interest-rate swaps. "We have been working with them to help structure our cleared interest rate swap offering," CME CEO Craig Donohue said on Tuesday at the Reuters Global Exchanges and Trading Summit in New York. Fannie Mae and Freddie Mac, which were seized by the U.S. government in September 2008, will start moving their swaps to centralized clearing within months, their regulator said earlier in March. Their combined $3 trillion portfolio makes them the biggest swaps holders in the U.S. "That's a big opportunity for us," said Donohue said, who added the exchange operator is also working with a broad range of other market participants.
Financial Times:
Climate for Flotations Continues to Improve. International equity issuance in the first quarter rose to the highest level in two years as the market for stock market flotations continued to thaw and investor and corporate sentiment was soothed by improving economic data. While deals in the US raised the largest amount globally ($27.4bn), a series of big deals from Asia reiterated the region’s recent prominence in both initial public offerings and secondary issuance. Chinese exchanges led the way for initial public offerings. Shenzhen stock market listings raised $6.7bn while Shanghai came in second for the quarter, raising $6bn, meaning China won a 47 per cent market share of the global IPO market.
Chosun Ilbo:
U.S. and South Korean intelligence officials have detected the return of North Korean submarines near the site where a South Korean naval ship sank last week. The submarines had moved elsewhere before the incident and are now back at their usual location close to where the 1,200-ton Cheonan sank, citing a South Korean intelligence official.
Yonhap News Agency:
Pentagon Remains Cautious on S. Korean Warship's Sinking. The United States Tuesday remained cautious about the cause of the sinking of a South Korean warship in waters near North Korea last week. "I don't think there's a way to determine that at this point, given that the boat in question, I think, is submerged," Geoff Morrell, Pentagon spokesman, told reporters. "I think they have some more work to do to determine that."
Evening Recommendations Citigroup:
Reiterated Sell on (LRCX), target $27.
Reiterated Buy on (AAPL), target $300. Our checks suggest that iPhone will become available on Verizon's(VZ) network in either 4CQ10 or 1CQ11. Assuming we are correct about a Verizon iPhone during this time period, our CY11 iPhone unit estimates of 40M seems conservative. In fact, our CY11 estimate is below the current CY10 iPhone build plan. Net, net, we see potential for FY11 earnings estimates to move meaningfully higher.
Night Trading
Asian indices are -.25% to +.25% on average.
Asia Ex-Japan Investment Grade CDS Index 96.5 +.5 basis point.
The ADP Employment Change for March is estimated at +40K versus -20K in February.
9:45 AM EST
Chicago Purchasing Manager for March is estimated to fall to 61.0 versus a reading of 62.6 in February.
10:00 AM EST
Factory Orders for February are estimated to rise +.5% versus a +1.7% gain in January.
10:30 AM EST
Bloomberg consensus estimates call for a weekly crude oil inventory build of +2,500,000 barrels versus a +7,245,000 barrel increase the prior week. Gasoline inventories are expected to fall by -1,850,000 barrels versus a -2,715,000 barrel decline the prior week. Distillate supplies are estimated to fall by -1,375,000 barrels versus a -2,422,000 barrel decline the prior week. Finally, Refinery Utilization is expected to rise +.2% versus a +.56% gain the prior week.
Upcoming Splits
None of note
Other Potential Market Movers
The Fed's Lockhart speaking, Fed's Duke speaking, weekly MBA mortgage applications report, Bloomberg FCI Monthly and the NAPM-Milwaukee report could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by financial and commodity shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.
North American Investment Grade CDS Index 86.28 bps +.27%
European Financial Sector CDS Index 73.09 bps -.95%
Western Europe Sovereign Debt CDS Index 76.10 bps +2.48%
Emerging Market CDS Index 226.41 bps -3.0%
2-Year Swap Spread 15.0 bps -1.0 bp
TED Spread 15.0 -2 bps
Economic Gauges:
3-Month T-Bill Yield .14% +2 bps
Yield Curve 281.0 bps -2 bps
China Import Iron Ore Spot $153.60/Metric Tonne +1.39%
Citi US Economic Surprise Index +35.90 +1.4 points
10-Year TIPS Spread 2.22% -1 bp
Overseas Futures:
Nikkei Futures: Indicating +43 open in Japan
DAX Futures: Indicating +21 open in Germany
Portfolio:
Slightly Higher: On gains in my Retail, Medical and Tech long positions
Disclosed Trades: Added slightly to (GOOG) long, took profits in another long
Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as stocks move slightly higher after the bears again failed to gain meaningful traction this morning despite rising sovereign debt angst. On the positive side, HMO, Wireless, Semi, Software, Internet, Oil Service and Alt Energy stocks are especially strong, rising .5%+. The 10-year TIPS spread is slightly lower and the 10-year yield is stable again today. US scrap steel prices have surged another 15.4% over the last five days. Weekly retail sales rose +3.6% this week versus a +3.4% gain the prior week and up from a +1.8% increase during the last week of February. On the negative side, Airline, Homebuilding, Disk Drive, Gold and Coal shares are falling .75%+ on the day. (XLF) is underperforming again and hovering just off session lows. The Greece sovereign debt cds is surging another +4.3% today, which is beginning to pressure the euro again. We could see some early morning weakness tomorrow on a sell-the-news reaction to the ADP jobs report and quarter-end profit-taking. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering and less economic fear.
Greece Leads Rise in Sovereign Credit Risk as Bonds Struggle. Greece led a rise in the cost of credit-default swaps on sovereign debt as a poor reception for the country’s new bonds triggered concern that Europe’s most indebted nations could struggle to fund their budget deficits. Contracts on Greek government debt climbed 20 basis points to 335.5 in London, the highest in more than a week, according to CMA DataVision. Swaps on Spain, Portugal, Italy and Ireland also climbed and the Markit iTraxx SovX Western Europe Index of contracts on 15 governments rose 3.5 basis points to 82, the widest level in a month. Greece’s new 5 billion euros ($6.7 billion) of seven-year bonds fell after the European country with the biggest budget deficit failed to offer investors a premium over existing debt. Bondholders are concerned the country may struggle to borrow the 30 billion euros it needs, part of the more than 2 trillion euros that countries in the region have to raise this year. “The Greek debt crisis is far from over,” said Tim Brunne, a credit strategist at UniCredit SpA in Munich. “The fundamental problems are still the same.” Contracts on Spain increased 3.5 basis points to 114, Portugal widened 6 basis points to 141 and Italy gained 4 basis points to 113. Ireland widened 4 basis point to 138.
Downtown New York Towers Empty as Best Market Falters. Downtown Manhattan, where demand for office space began to surge three years after the 9/11 terrorist attacks, is about to lose its spot as the best- performing U.S. market. Vacancies may exceed 14 percent of the area’s 87 million square feet by late 2011, empty space that’s equivalent to four Empire State Buildings and the highest rate since 1997, according to property broker Cushman & Wakefield Inc. That doesn’t include the 4.4 million square feet of offices in two towers now under construction at the World Trade Center site. Those are scheduled for completion in 2013. “The amount of space that’s potentially going to come to the market will increase availabilities and put pressure on pricing,” said Kenneth McCarthy, Cushman’s head of New York- area research. “It will be quite awhile before it can be absorbed.”
Fed's Evans Says Jobless May Exceed 9% at Year-End. Federal Reserve Bank of Chicago President Charles Evans said the U.S. jobless rate may remain higher than 9 percent at the end of this year, underscoring the potential need to keep interest rates low into 2011. The unemployment rate may be “nine and a quarter” at the end of 2010, and higher than 7 percent at the end of 2011, Evans said in an interview with Bloomberg Television today in Hong Kong. A government report this week may show the rate was 9.7 percent in March, according to the median forecast in a Bloomberg News survey.
Prime Brokerages Should Give Clients Daily Reports. Prime Brokerages Should Give Clients Daily Reports. Investment firms must give hedge- fund clients daily reports on how their money is being held and if it has been reinvested, a U.K. regulator said in proposals responding to the collapse of Lehman Brothers Holdings Inc. Around 35 U.K. prime brokerages will be able to invest a maximum of 20 percent of client deposits in their group’s bank accounts and will have to give clients daily updates on whether their money has been re-used as collateral for loans, under the proposals published today by the Financial Services Authority.
Ireland's 'Worst Fears Surpassed' as Banks Need $42.7 Billion. Ireland’s banks may need at least 31.8 billion euros ($42.7 billion) in new capital after a real- estate slump left them crippled by mounting bad loans. The fundraising requirement was announced after the National Asset Management Agency, the country’s so-called bad bank, said it will apply an average discount of 47 percent on the first block of loans it is taking over from lenders and the country’s financial regulator set new capital targets. The discount compares with the government’s initial 30 percent estimate. “Our worst fears have been surpassed,” Finance Minister Brian Lenihan said in the parliament in Dublin today. “The detailed information that has emerged from the banks in the course of the process is truly shocking.”
Wall Street Journal:
Best Buy(BBY) Announces First U.K. Store. U.S.-based Best Buy Co., the world's biggest consumer-electronics company, said Monday it will open its first U.K. store in May--a move that ups competition in the retailing of computers, home-entertainment and audio systems. The 50,000-square-foot flagship megastore in Thurrock, East London, will be the first of five so-called big-box stores Best Buy plans open in the U.K. this year.
Hedge Fund Group Spent $1.1 Million Lobbying in 4Q. A trade group representing hedge funds spent nearly $1.1 million in the fourth quarter lobbying federal officials on proposed financial regulations, including a measure that would require hedge funds to register with the Securities and Exchange Commission. The $1.08 million that the Managed Funds Association spent on lobbying in the latest quarter was about double the $520,000 it spent in the period a year earlier. The group's lobbying total for the latest quarter also tops the $910,000 it spent the previous quarter.
The Tax Attack on America. We are facing an across-the-board tax-hike assault from federal, state, and local sources. This, despite a precarious outlook of a return to long-term economic prosperity after an especially deep and painful recession.
Business Insider:
Goldman(GS): CDS Traders Getting Aggressive On U.S. Banks. Goldman's Equity, Credit, and Options Market Monitor, part of their cross-product research platform argues that the fixed income market, via credit default swaps, is pushing a bullish case for U.S. financial stocks. Thus they're part of the recent excitement over U.S. banks from Wall St.:
Your Health Insurer's Next Move: Tell You To Take A Hike To A Mexican Hospital. The Medical Tourism Association predicts increased use of international treatment among insurers, as expanded coverage pushes up costs. "Companies could not bear the cost of health insurance as it is, and they certainly won't be able to once cost skyrockets," said association CEO John Edelheit. Indeed, major insurers like Aetna have already launched medical tourism pilot programs, so they can cover you while also saving a buck.
OPEC Dying To Convince The World It Can Still Maintain $80 Oil. OPEC member states' compliance with production quota's has fallen to a dismal 54%, something Secretary-General Abdalla El-Badri isn't too happy with. At the same time, its traditional power structure with Saudi Arabia as undisputed production king is under attack by the rise of Iraqi oil production potential. Now, to make matters even more uncertain for the cartel, the non-OPEC world is increasing its production relatively quickly as well. According to OPEC's latest March report, even though their production levels remain well below mid-2008 levels, total world supply is already back up there. (shown below) Thus non-members are becoming more significant, Iraq wants to let loose production, and even many OPEC members aren't even listening to the quotas from central command.
Electronic Arts(ERTS) Reboots. The video game stock has been a laggard – but fund managers and analysts say it will bounce back soon.
Lloyd's List:
Shanghai Slowdown Sees Profits Drop. CHINA’s largest port operator, Shanghai International Port (Group), succumbed to an 18.6% decrease in net profit last year to Yuan3.7bn ($553m) from Yuan4.7bn in 2008, as a result of substantial declines in container throughput.
UN Climate Change Group to Debate Levy on Shipping. SHIPPING could face a further challenge regarding its contribution to climate change as the UN-sponsored Advisory Group on Climate Change Financing holds its first meeting in London tomorrow, co-chaired by British Prime Minister Gordon Brown and his Ethiopian counterpart Meles Zenawi.
Rasmussen Reports:
National Sales Tax Still Unpopular. A new Rasmussen Reports national telephone survey finds that 37% of voters nationwide favor a national sales tax if the money is used to pay for health care for all Americans, but 51% oppose that idea. These findings are unchanged from December. Take health care out of the equation, however, and opposition to a national sales tax on all goods and services is higher. Only 22% favor a national sales tax as a way for the government to raise more money, while 60% are opposed.
Health Care Law Too Costly, Most Say. Nearly two-thirds of Americans say the health care overhaul signed into law last week costs too much and expands the government's role in health care too far, a USA TODAY/Gallup Poll finds, underscoring an uphill selling job ahead for President Obama and congressional Democrats. Those surveyed are inclined to fear that the massive legislation will increase their costs and hurt the quality of health care their families receive. The risk for them is that continued opposition will fuel calls for repeal and dog Democrats in November's congressional elections. The bill was enacted without a single Republican vote. Obama's approval rating was 47%-50% — the first time his disapproval rating has hit 50%. In the survey:
Reuters:
Majority of Germans Against Aid for Greece - Poll. More than two-thirds of Germans oppose their country's participation in any EU aid package for debt-ridden Greece, a poll taken just before last week's euro zone agreement on a last-resort financial safety net showed. The Forsa survey for Stern magazine, conducted on March 24 and 25 and released on Tuesday, highlighted the risks for Chancellor Angela Merkel if a rescue becomes necessary. Some 68 percent of Germans said they were against aid and only 28 percent thought Berlin should help Greece.
Consensus for Financial Regulations Fading: IMF. An international drive to impose new regulations in the wake of the financial crisis is fading and global cooperation is diminishing, the managing director of the International Monetary Fund said on Tuesday. Dominique Strauss-Kahn said world powers had worked well during the height of the crisis in 2008 and 2009, but as the immediate danger passed so did the will to re-write cross border regulations." One of the lessons of the crisis is that facing global challenges we need to have global answers," Strauss-Kahn told the Romanian parliament during a flying visit to Bucharest." This lesson is about to be lost," he said.
Gold Slips, Market Eyes Currencies. Gold slipped in afternoon trade on Tuesday, coming under pressure after the euro surrendered earlier gains against the dollar on worries about euro zone fiscal health. The dollar rose against the euro on renewed worries about the ability of Greece and other euro zone countries to fund their deficits. " Activity is mostly to do with the dollar, there is a lot of concern about the euro zone," said Andrey Kryuchenkov, analyst at VTB capital. "However, we still anticipate fairly anemic retail demand for the remainder of the year." "Clearly, a pullback in prices tempted some retail investors to return to the market, which was also reflected in improved sales of gold coins, VTB Capital said. "However, we still anticipate fairly anemic retail demand for the remainder of the year."
Economist Johnson Urges Breakup of Big Banks. America's big banks must be broken up and their risk-taking curtailed or the world's richest economy will face another massive financial crisis, former IMF chief economist Simon Johnson says in a new book. In "13 Bankers, The Wall Street Takeover and the Next Financial Meltdown," published on Tuesday, Johnson and his co-author James Kwak describe Wall Street as an oligarchy holding the country hostage to its risk-taking. "The crisis exacerbated the problem by allowing the largest banks to get bigger at precisely the moment that the government should have been doing everything in its power to make them smaller," Johnson told Reuters in an interview."The process of saving them ... has allowed them to build themselves up so that their balance sheets are now bigger than they were before the crisis. That doesn't make any sense, the too big to fail problem has become worse."The notion certain banks are too big to fail is the central perception lawmakers in Washington must overcome if they are to undertake meaningful reform, said Johnson, who believes reforms now before Congress will not address systemic problems.Specifically, he says the six biggest banks -- Citigroup (C.N), JP Morgan Chase (JPM.N), Morgan Stanley (MS.N), Goldman Sachs (GS.N), Wells Fargo (WFC.N) and Bank of America (BAC.N) -- should all be cut down to size, Johnson says."We should make them all smaller and safer so that if somebody does fail ... we can let them go through some sort of bankruptcy," he said.
Financial Times:
China Invited to Join IEA as Oil Demand Shifts. The head of the International Energy Agency, the developed world’s energy watchdog, has called for China to join the agency and warned that the institution risked losing relevance as energy demand shifted eastward away from its current members. Nobuo Tanaka, executive director of the IEA, told the Financial Times: “Our relevance is under question because half of the energy consumption already is in non-Organisation of Economic Cooperation and Development countries. And for oil it is soon coming that the majority of consumption is happening in non-OECD countries.”
Handelsblatt:
The U.S. will likely widen corruption investigations into European companies, citing Aaron Marcu, a NY-based partner with Freshfields Bruckhaus Deringer. U.S. authorities are investigating 111 cases under the Foreign Corrupt Practices Act, a record level.
Die Zeit:
White House economic adviser Lawrence Summers said inflation isn't a threat to the U.S. because the economy is growing below its capacity and many people are without a job, citing an interview. That's curbing wage and price pressures, Summers said. Generous liquidity provisions at the height of the financial crisis would only lead to inflation "if we were to see excessive credit supply," he said. However, "the money the government spends or supplies as loans doesn't even balance out the sum of what's disappearing in the deleveraging of companies and people."
DigiTimes:
TSMC, UMC Set to Raise Prices, Sources Say. Taiwan Semiconductor Manufacturing Company (TSMC) plans to raise its prices by 2-6%, whereas United Microelectronics Corporation (UMC) is also mulling a 1-2% price hike, according to industry sources. The price increases may occur in the second quarter of 2010 at the earliest.
