Bloomberg:
- North Korea Warns U.S. It’s Authorized Nuclear Attack. North Korea escalated its threats against the U.S, saying a law ratified this week authorizes the military to use a “cutting-edge smaller, lighter and diversified nuclear strike.” Kim Jong Un’s regime, which hasn’t demonstrated it is capable of putting a nuclear device on a ballistic missile, didn’t specify what kind of weapon would be used in a statement by a military spokesman in the state-run Korean Central News Agency early today. In response to recent North Korean threats, the Pentagon yesterday said it will deploy a missile defense system to Guam in coming weeks as a “precautionary move.”
- Asian Stocks Drop With Metals Before BOJ Decision as Won Weakens. Asian stocks fell to a five-week low and metals declined as the Bank of Japan (8301) concludes a two-day policy meeting, while Australia’s dollar rose. South Korean shares and the won dropped as North Korean tensions escalated. The MSCI Asia Pacific Index lost 0.9 percent at 12:20 p.m. in Tokyo. Japan’s Nikkei 225 Stock Average fell 1.7 percent and South Korea’s Kospi index slumped 1.6 percent.
- Draghi Considers Plan B as Sentiment Dims After Cyprus Fumble. European Central Bank President Mario Draghi is under pressure to reveal Plan B. A botched attempt to rescue Cyprus last month sent bank shares tumbling across the euro area and rattled confidence in policy makers’ ability to tame the sovereign debt crisis. With doubts growing about Draghi’s forecast for a second-half economic recovery, he’s considering his options. They range from an interest-rate cut to a new round of long-term loans to banks, to a plan to encourage lending to companies, three officials with knowledge of the deliberations said. They stressed that such action may not be announced today. “They have to start thinking about a plan for unconventional measures if the recovery does not materialize,” said Martin van Vliet, senior euro-area economist at ING Bank NV in Amsterdam. “It may be too early for them to do that this month, but I’d expect Draghi to acknowledge that the economy is not improving and the chances of a surprise are bigger than they were.”
- RBS Rides Euro's Decline as Most Accurate Forecaster: Currencies. Royal Bank of Scotland Plc was most-accurate foreign-exchange forecaster in the first quarter after predicting Europe's bond-buying plan would fail to boost the euro as the region's economy wilted. The firm sees the 17-nation currency declining 7.4% over the rest of 2013.
- Hollande Economic Push Threatened by Minister Account Disclosure. President Francois Hollande’s effort to ask the French to tighten their belts was dealt a blow this week after the minister he’d charged with fighting tax evasion admitted to a secret overseas bank account. Jerome Cahuzac, who resigned as Hollande’s budget minister two weeks ago, said on April 2 that he was caught in a “spiral of lies” about the 600,000 euros ($770,000) he held in an offshore account for years. In a rare, unscheduled television appearance yesterday, Hollande said Cahuzac lied to him and the French parliament and that his actions were “unforgivable.”
- Fiat Turns to Germany as Italy Sales Seen Worst Since ’66. The bottom was already falling out of the Italian auto market. Then the political turmoil hit. After an inconclusive election more than five weeks ago sent weak demand spiraling further downward, sales in 2013 could drop as much as 21 percent to 1.11 million cars, the lowest since 1966, said Gian Primo Quagliano, head of automotive researcher CSP in Bologna. The plummeting deliveries are upending Italy’s auto industry and will hit Turin-based Fiat SpA (F) especially hard. Hundreds of dealerships are closing and factories are running at half capacity. To offset the woe in Italy, which accounts for 56 percent of its European deliveries, Fiat is seeking to boost sales in Germany by offering steeper discounts than any other automaker there. Now, even German demand is weakening: Results released yesterday showed that, in March, deliveries tumbled 17 percent, the biggest monthly drop since October 2010, limiting options for Fiat and other European carmakers to offset declines elsewhere.
- Schwab(SCHW) Says China to Tighten After Brazil Raises Rates. Faster inflation will prompt Brazil to be the first emerging market to raise interest rates before the end of this year and lead China to also tighten monetary policy, according to Charles Schwab Corp.’s Michelle Gibley. “Inflation is stubbornly high in some of the larger countries, Brazil in particular,” Gibley, director of international research at San Francisco-based Charles Schwab (SCHW), which has $2.04 trillion in assets, said in a phone interview. “There’s potential they could be the first to start tightening. In China, we’re also seeing the central bank somewhat concerned about inflation. The next move is probably more likely to be tightening than an easing move.” Brazilian inflation accelerated to 6.31 percent in February, putting the annual rate above the midpoint of the central bank’s target for a 30th month. Quickening inflation may spur the central bank to raise the 7.25 percent Selic rate as early as this year, Gibley said.
- Iron Ore Bear Market Looms as Supply Swamps Demand: Commodities. Iron ore is heading toward its first surplus in at least a decade as output expands and Chinese steel mills, the biggest buyers, boost production at the slowest pace in five years. Seaborne supply will advance 9.1 percent and demand 8.3 percent in 2013, led by exporters from Perth-based Fortescue Metals Group Ltd. (FMG) to Vale SA (VALE5), Morgan Stanley forecasts. A surplus will emerge in 2014 and keep widening until at least 2018, the bank predicts. Prices will slump as much as 34 percent to $90 a ton by the end of December, according to the median of seven analyst estimates compiled by Bloomberg. Exports of the biggest seaborne cargo after oil are surging the most since 2010 after prices jumped as much as sevenfold in the past nine years. Goldman Sachs Group Inc. expects China’s imports to climb 4 percent in 2013, the least in three years. Its steel output will expand 2.6 percent as the nation’s economy grows at the second-slowest pace in the past decade, according to estimates from Morgan Stanley and economists surveyed by Bloomberg.
- Copper Declines to Eight-Month Low After U.S. Data Disappoints. Copper slumped for a fifth day to the lowest level in eight months as worse-than-estimated U.S. economic data spurred concern that growth is slowing in the world’s second-biggest user amid increasing stockpiles. The contract for three-month delivery slid as much as 0.4 percent to $7,356.25 a metric ton on the London Metal Exchange, the lowest price since Aug. 3, and traded at $7,370 by 10:22 a.m. in Tokyo.
- Rubber Slumps to Four-Month Low on Strong Yen, Demand Concerns. Rubber dropped the most in two weeks as the Japanese currency strengthened to near a one-month high, cutting the appetite for yen-based commodities. The contract for delivery in September slumped as much as 3.5 percent to 252.5 yen a kilogram ($2,716 a metric ton), the lowest since Nov. 19 for a most-active contract on the Tokyo Commodity Exchange, and was at 252.8 yen at 11:12 a.m. Futures have fallen 16 percent this year and passed the threshold into a bear market on April 1.
- Cohn Says Banks Other Than Goldman, JPMorgan Retrenching. Goldman Sachs Group Inc. and JPMorgan Chase & Co. are among the only top banks in the world that aren’t reducing capacity, Goldman Sachs President Gary Cohn said. “You’re seeing big international banks, outside of ourselves and JPMorgan, really taking a pretty substantial step back from the markets, and we hadn’t seen that in the entire history of banking,” Cohn, 52, told journalists today at Goldman Sachs’s office in Sao Paulo.
- Lululemon(LULU) Product Chief to Step Down After Pants Recall. Lululemon Athletica Inc., the yoga- wear maker that last month recalled shipments of women’s pants for being too sheer, said Chief Product Officer Sheree Waterson is stepping down. Waterson, who had been with the company since 2008, will leave on April 15, the Vancouver-based company said today in a statement. The company said in a separate release that it was restructuring its internal product organization.
- Big Banks’ Success Could Spell Their Doom. Is Washington likely to break up the country’s biggest banks? No, not right now. But perhaps soon.
- U.S. Dials Back on Korean Show of Force. Administration 'Playbook' Outlined Publicized Exercises, but Officials Change Course Over Worries of North's Response. After a high-visibility display of military power aimed at deterring North Korean provocations, the White House is dialing back the aggressive posture amid fears that it could inadvertently trigger an even deeper crisis, according to U.S. officials. The U.S. is putting a pause to what several officials described as a step-by-step plan the Obama administration approved earlier this year, dubbed "the playbook," that laid out the sequence and publicity plans for U.S. shows of force during annual war games with South Korea. The playbook included well-publicized flights in recent weeks near North Korea by nuclear-capable B-52 and stealth B-2 bombers, as well as advanced F-22 warplanes.
- Big Investors Rethink Rosy Outlook on Euro-Zone Debt. Several large institutional investors are starting to question the European Central Bank's ability to stay true to its pledge last July to "do whatever it takes" to support the euro zone. With the ECB set to meet Thursday, investors have started to dial back their positions in euro-zone debt amid concerns that the region's problems aren't abating. Italy remains in political limbo and its financial industry is suffering, while Cyprus last month became the fourth nation in the region to receive a bailout. The ECB's reassurances have muffled fears over a breakup of the euro zone, but the unresolved issues could eventually require more action from the central bank. Investors complain the ECB has lagged behind the Federal Reserve and the Bank of Japan in making economic stimulus moves.
- Doubts Cast on Chinese Exports. A discrepancy between China's export data and Hong Kong import numbers is raising doubts about what appeared to be booming overseas demand for Chinese goods, amid uncertainty about the strength of the recovery in the world's second-largest economy. Some exporters, trade agents and economists said the export numbers were likely to be inaccurate because of false reporting by exporters and local governments. They point in particular to mismatching trade figures with Hong Kong, the first destination for many mainland Chinese goods. In the three months through February, mainland customs reported $94.9 billion in exports to Hong Kong, but Hong Kong customs reported only $58.7 billion in imports from the mainland. The discrepancy during the period was greater than at any other time in recent years. China's export growth for February could have been overstated by around seven percentage points, based on an analysis of data discrepancies, Louis Kuijs, China economist at RBS, estimated.
- Audit says Katrina aid may have been misspent. Federal investigators said Wednesday that as much as $700 million in federal aid intended to help some 24,000 Louisiana families elevate their homes after Hurricanes Katrina and Rita in 2005 may have been misspent. A report by the Housing and Urban Development Department's inspector general said some homeowners who got grants of up to $30,000 used the money for something else, and that others didn't provide sufficient documents to state officials to show that the work was done. "The state did not have conclusive evidence" that $698.5 million in disaster recovery aid was used to elevate homes, the auditors wrote.
- Tip on Policy Shift Jolted Health Shares. Alerted by a private message about a potential coming change in government health-care policy, certain investors earlier this week sparked a frenzy of trading in some of the industry's largest companies. The last-minute action, which drove the shares sharply higher before the close of trading, is throwing a spotlight on the controversial "political intelligence" industry, the subject of a report due Thursday by the investigative arm of Congress.
- Roy Altman: Judges For Lax Border Security. The Ninth Circuit ignores 127 years of precedent allowing U.S. agents to search those trying to enter the country.
- Dow Transports Fall Hard—A Sign Market Rally Could Be Cracking. The sharp selloff in the Dow Transportation index this week is causing some strategists to wonder if the market may finally see its long-awaited pullback.
Business Insider:
Reuters:
- Maverick Capital partner Michael Pausic to launch own firm. Maverick Capital's Michael Pausic, who oversees media and telecommunications investments at the $9 billion hedge fund, will be starting his own hedge fund, two people familiar with the matter said. Pausic, who joined Maverick in 1997, four years after Lee Ainslie founded the firm in 1993, has wanted to branch out beyond media and telecommunications for some time and will receive a significant investment from Maverick's partners to launch his own firm, one of the two people familiar with the matter said.
- Yen's persistent weakness against dollar may be near an end. Expectations the Bank of Japan will unleash sweeping new stimulus measures to dig the country out of decades of deflation has crushed the yen, but its darkest days may be over.
- Compuware(CPWR) estimates fourth quarter results below Street. Business software maker Compuware Corp estimated fourth-quarter results way below analysts estimates, citing delays in closing several deals. The company estimated adjusted earnings of 5 cents to 6 cents per share on revenue of $237 million to $241 million in the quarter ended Mar. 31. Analysts on average were expecting adjusted earnings of 15 cents per share on revenue of $272.8 million, according to Thomson Reuters I/B/E/S. "A large number of deals we had anticipated closing in Q4 were pushed into the new fiscal year, significantly impacting our results," Compuware CEO Bob Paul said.
- North Korea again blocks access to industry zone, Southerners remain. North Korea barred entry to a joint industrial complex it shares with the South for a second day on Thursday, Seoul's Unification Ministry said, and demanded extended notice of when hundreds of South Korean workers planned to leave. The state's KCNA news agency again threatened complete closure of the zone, a lucrative money-spinner for impoverished Pyongyang, if South Korea kept up what the agency termed its insults against the North's government.
- Fed member hints at summer slowing of QE3. A leading dove at the Federal Reserve said it could start tapering off its QE3 programme of quantitative easing this summer, in a sign of how debate at the US central bank has shifted on the issue. John Williams, president of the San Francisco Fed, led the push for more asset purchases in the summer of 2012 and his willingness to consider slowing the rate of buying suggests the central bank is nearing its goal.
- China May Delay Japan, South Korea Meeting on Island Dispute. China asks to postpone meeting scheduled for May 25-26 in Seoul amid territorial dispute over islands known as Senkaku in Japanese, Diaoyu in Chinese.
- North Korea Moving Missile to East Side of Country. Missile may be capable of reaching continental United States, citing officials in Japan, US and South Korea. North Korea may be preparing to launch missile.
- DPRK announces to resort to counteractions against United States. The Democratic People's Republic of Korea (DPRK) on Thursday said it would "take powerful practical military counteractions" against the United States following the latter's provocative actions in the past days, reported KCNA, the DPRK's official news agency. KCNA on Thursday ran the full text of a statement issued by the spokesman for DPRK's General Staff of the Korean People's Army ( KPA) in charge of all operations, which said the KPA Supreme Command had approved the decision. "Days and months have passed on this land amid the constant danger of war but never had the whole Korean Peninsula been exposed to such danger of a nuclear war as today," said the statement, pledging that the DPRK's army and people "are all out" to defend the sovereignty of DPRK and to "prevent a nuclear war of the U.S."
- None of note
- Asian equity indices are -1.5% to -.50% on average.
- Asia Ex-Japan Investment Grade CDS Index 122.0 +3.0 basis points.
- Asia Pacific Sovereign CDS Index 98.5 +1.75 basis points.
- FTSE-100 futures -.35%.
- S&P 500 futures +.04%.
- NASDAQ 100 futures +.05%.
Earnings of Note
Company/Estimate
- (AH)/.09
- (ISCA)/.36
- (RPM)/.06
- (WDFC)/.56
8:30 am EST
- Initial Jobless Claims are estimated to fall to 353K versus 357K the prior week.
- Continuing Claims are estimated at 3050K versus 3050K prior.
- None of note
- The ECB's Draghi speaking, Fed's Yellen speaking, Fed's George speaking, Fed's Bernanke speaking, Fed's Evans speaking, Fed's Lockhart speaking, 10Y Spanish auction, Eurozone Services PMI, Eurozone inflation data, ECB rate decision, BoE rate decision, BoJ rate decision, Challenger Job Cuts for March, RBC Consumer Outlook Index for April, weekly Bloomberg Consumer Comfort Index, (FB) mobile event and the weekly EIA natural gas inventory report could also impact trading today.
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