Wednesday, April 03, 2013

Today's Headlines

Bloomberg: 
  • German March Car Sales Drop 17% on Europe Economy Concern. German new car sales fell the most in almost 2 1/2 years last month as renewed skepticism over the handling of the sovereign-debt crisis in Europe discouraged consumers from making large purchases. Registrations in March dropped 17 percent from a year earlier to 281,184 autos, the German Federal Motor Vehicle Office, or KBA, said today in a statement. The drop was the biggest since October 2010, a spokeswoman for the Flensburg- based KBA said in an e-mail. First-quarter sales fell 13 percent to 673,957 vehicles. German unemployment rose while business confidence and an index in consumers’ willingness to buy fell in March as a botched bank bailout in Cyprus increased concerns the euro region’s recovery will falter.
  • Merkel’s Italian Holiday Fans Europe’s North-South Crisis Flames. German Chancellor Angela Merkel’s vacation in Italy threatened to inflame Europe’s north-south tensions after she was snapped in a bathing suit by paparazzi and challenged by a regional leader to heed the economic woes around her. Merkel’s deputy spokesman, Georg Streiter, had to respond to reporters’ questions in Berlin today about whether the chancellor had witnessed “anti-German” sentiment during her sojourn on the island of Ischia, and if she had felt insulted by the video message made by the Campania region governor. Saying she felt “very comfortable” on Ischia, Streiter made it clear Merkel was unhappy about being photographed without her consent.
  • European Stocks Fall as U.S. Payroll Data Miss Estimates. European stocks declined the most in five weeks, paring yesterday’s biggest rally for the region’s benchmark index in almost a month, as U.S. manufacturing activity fell faster than estimated, and companies in the world’s largest economy added fewer workers than forecast. Vodafone Group Plc (VOD) retreated 3.1 percent after Verizon Communications Inc. denied it’s considering a bid for the U.K. company. Kazakhmys Plc fell to its lowest price in four years as metal prices retreated. Rexel (RXL) SA increased 1.9 percent in Paris after Goldman Sachs Group Inc. recommended buying the shares. The benchmark Stoxx Europe 600 Index (SXXP) retreated 0.9 percent to 294.8 at the close of trading after climbing 1.3 percent yesterday on better-than-estimated U.S. factory orders data. 
  • Ruble Tumbles Most in 14 Weeks as Europe Woes Stoke Outflows. Net capital outflow totaled $25.8 billion in the first quarter as the crisis deepened in the euro region, Russia’s biggest trading partner. Finance Minister Anton Siluanov said the government may start buying foreign currency on the open market in the second half of the year to fill its Reserve Fund.
  • China Flags Risks of Weakening Yen. China said a falling yen may cause Asian neighbors to weaken their currencies and intensify trade disputes, reiterating concerns as the Bank of Japan (8301) prepares to increase stimulus under new Governor Haruhiko Kuroda. “A weakening yen may cause a beggar-thy-neighbor effect,” as economies compete in electronics, automobiles and industrial products, China’s foreign-exchange regulator said today in its annual report on international payments. “If other Asian economies follow Japan’s suit, trade disputes and policy competition may intensify to hinder regional cooperation and economic integration.” 
  • China Turns Graveyard From Goldmine Hurting Ship Makers: Freight. For shipbuilders such as STX Group, China was once a goldmine. Now it’s a graveyard. China’s lower appetite for commodities undermined the group’s plan to sell its shipping line, wiping out a combined $435 million of investor wealth at the South Korea-based conglomerate’s three main companies this week. That also threatens the group’s ability to repay $1.2 billion of debt by the end of the year.
  • U.S. Company Add 158,000 Workers to Payrolls, ADP Says. Companies added fewer workers than projected in March, held back by limited hiring in construction, according to a private report based on payrolls. The 158,000 increase in employment was the smallest since October and followed a revised 237,000 gain the prior month, figures from the Roseland, New Jersey-based ADP Research Institute showed today. The median forecast of 39 economists surveyed by Bloomberg called for a 200,000 advance. Payrolls at construction companies stagnated last month as the boost from rebuilding efforts following superstorm Sandy faded, Zandi said. Concern over the impact of changes in health- care law may have also curbed hiring at companies with around 50 employees, he said.
  • Slowing Service Industries Point to Cooler U.S. Growth: Economy. Service industries expanded in March at the slowest pace in seven months and companies added fewer workers than forecast, indicating the U.S. economy is starting to cool. The Institute for Supply Management said its non- manufacturing gauge declined to 54.4 from a one-year high of 56. The index was in line with its average over the past year. Private employment rose 158,000 last month, the smallest gain since October, according to the ADP Research Institute. 
  • Commodities Fall as Oil Drops on U.S. Inventories Report. Commodities fell to the lowest level in almost a month as crude dropped after data showed U.S. oil stockpiles climbed to a 22-year high. The Standard & Poor’s GSCI Index of 24 raw materials declined as much as 1.7 percent to 640.62. “Fundamentals have been bearish for crude,” said Bill Baruch, a senior market strategist at Iitrader.com in Chicago. “We have some economic reports that are pretty disappointing.” West Texas Intermediate oil for May delivery declined $1.94, or 2 percent, to $95.25 a barrel at 1:12 p.m. on the New York Mercantile Exchange. The contract fell as low as $94.87.
  • Yen Climbs on Speculation BOJ Will Disappoint; Sterling Advances. The yen climbed versus all of its 16 most-traded peers amid speculation a decision tomorrow by the Bank of Japan (8301) will signal its monetary-easing efforts will fall short of its goals and fail to reignite inflation. The dollar weakened against the euro as a gauge of U.S. service industries dropped more than forecast.
  • Bullard Favors Slowing QE in $10-$15 Billion Increments. Federal Reserve Bank of St. Louis President James Bullard said he favors reducing the central bank’s monthly asset purchases by $10 billion to $15 billion increments in response to changes in the economy. “I would be very comfortable moving in small amounts -- $10 or $15 billion at a time,” Bullard said on Bloomberg Radio’s “Hays Advantage” with Kathleen Hays. “We are getting much closer.
MarketWatch:
  • Fed's Williams: May start tapering QE this summer. The Federal Reserve could start tapering its $85 billion -a-month asset purchase plan by the summer, said John Williams, president of the Federal Reserve Bank of San Francisco on Wednesday. The central bank has said it would continue the purchase program until it sees substantial improvement in the labor market. "Assuming my economic forecast holds true, I expect we will meet the test for substantial improvement in the outlook for the labor market by this summer," Williams said. "If that happens we could start tapering our purchases then. If all goes as hoped, we could end the purchase program sometime late this year," he added.
CNBC: 
  • Why China's Economy Might Topple. Over the next decade, China's growth will slow, probably sharply. That is not the view of malevolent outsiders. It is the view of the Chinese government. The question is whether it will do so smoothly or abruptly. On the answer depends not only China's own future, but also that of much of the world. 
Zero Hedge: 
Business Insider:  
Reuters:  
 AFP:
  • US missile shield sent to Guam after N. Korea threat. The United States is to deploy a THAAD missile defense battery to defend its bases on the Pacific island of Guam, the Pentagon said Wednesday following threats from North Korea. The news that the ground-based system would be in place in the coming weeks came after two Aegis anti-missile destroyers were sent to the western Pacific to intercept any North Korean strike against US or allied targets.
Financial Times: 
  • Bundesbank launches Deutsche(DB) probe. The Bundesbank has launched an investigation into claims that Deutsche Bank hid billions of dollars of losses on credit derivatives during the financial crisis, according to people familiar with the situation. Investigators from Germany’s central bank are scheduled to fly to New York next week as part of an inquiry into allegations that misvaluing credit derivatives allowed Deutsche to hide up to $12bn in losses, helping it avoid a government bailout.
Handelsblatt:
  • Euro-Skeptic Says Germany Rushing Cyprus Vote. German FDP lawmaker Frank Schaeffler wants Bundestag President Norbert Lammert to ensure proper involvement of Germany's lower house in approving aid for Cyprus, citing letter to Lammert. Schaeffler says German law stipulates bailout must be approved in two-stage procedure, while Schaeuble has said it's legally possible to go through both stages in one plenary sitting. That view violates "wording and spirit of the parliamentary involvement" in Germany, Schaeffler said in the letter.

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