Tag: news

Initial jobless claims rose for the first time in 4 weeks – with, oddly, no upward revision of previous data – but beat expectations for the 3rd week in a row. In the prior week the best state was New York, where claims dropped by 17,548 due to “Fewer layoffs in the transportation and warehousing, educational services, and food services industries.” However, the rise in continuing claims – the most in over 2 months – is perhaps the most notable – missing expectations by the most in 8 weeks. This is notable since this week was the survey period for the all-important Non-Farm Payrolls (well less important now given Yellen’s comments).

Initial claims rose from an oddly not-upwardly revised previous week.

 

But continuing claims jumped the most in 2 months…

Charts: Bloomberg

via Zero Hedge http://ift.tt/1hGrZeU Tyler Durden

When we started discussing the upcoming onslaught of corporate defaults in “Minsky Moment” China, now that the bankruptcy seal has been broken, we warned that the worst is about to come.

Well, it’s coming.

Overnight, Hong Kong’s The Standard reported that in addition to the solar, coal and real-estate developer companies that are on everyone’s radar as potential future bankruptcy candidates, one can also add steel makers to the list, with its report that Highsee Group, the largest private steel makers in Shanxi province has defaulted on CNY3 billion of debt, unable to repay its bonds on time.

According to The Standard, “Highsee Group’s 3 billion yuan debt was overdue last week,” the 21st Century Business Herald reported yesterday. “The company is running in red, and has failed to pay workers for months. Many of its furnaces have stopped operating.”

The reason for this most recent collapse: the plunge of domestic steel prices , which have fallen to their lowest level in more than eight years in mid-March as a result of weak demand and a surge in output.

Earlier, Shanxi coal miner Liansheng Resources Group went bankrupt while its loans, which were packaged into a wealth management product distributed by China Construction Bank (0939), are likely to be bailed out. UBS Securities securities analyst Chen Li said it is the peak season for corporate debt dues. Up to 80 percent of the nation’s trusts have obligations to meet within the second quarter, he added.

It remains to be seen if Highsee is bailed out, however now that pretty much any corporation with exposure to the commodity and real estate space that has maturing debt is on the rocks, the PBOC may be better suited just to let the system cleanse itself, even if that means the collapse in both the Chinese stock market, which unlike the US is largely irrelevant (especially since it once again dropped below 2000 while the Hang Seng entered a bear market), but the bigger issue is that the Chinese housing bubble is set to burst both domestically and abroad, as we reported yesterday.

And lest readers are left with the impression that merely operational companies with direct exposure to the deleveraging carnage that is taking place in China – at least until such time as China unleashes another multi-trillion stimulus – are exposed, also overnight financial firm Southchina Futures announced it is terminating it business on “major operation risks.”

From the company’s website:

About South China Futures Brokerage Co. closure announcement

 

As the Company has significant business risks, some of the bank account was frozen Guizhou Court of Justice, in order to protect the legitimate rights and interests of investors, the company passed a resolution to stop the shareholders’ meeting brokerage business futures, now specific announcement is as follows:

 

First, the announcement issued by the date, the South China Futures Brokerage Co., Ltd. (hereinafter referred to as “the South China Futures”) is no longer accepting new customers open positions instructions.

 

Second, within five working days of the date of this announcement, make customers to handle the South China Futures cancellation procedures.

 

Third, the five working days after the publication of the notice, did not apply for cancellation procedures futures customer account funds will be transferred to the unified Huatai Great Wall Futures Co., Ltd. (hereinafter referred to as “Huatai Great Wall Futures”).

 

Fourth, since the date of this announcement within ten working days from customers willing to open an account at Huatai Great Wall Futures, futures and South China Huatai Great Wall Futures will jointly provide customers with convenient handle channel, during the South China Huatai Great Wall Futures futures and customer acceptance , Tel: South Futures, (020) 38791617(020) 38791617 ; Huatai Great Wall Futures, 4006280888.

 

Notice is hereby given.

Dropping like flies now.

We wonder how long until the US stock market, floating in its cloud of manipulated, centrally-planned oblivious innocence, realizes that a China on the verge of all out deflationary recession is not a good thing?

via Zero Hedge http://ift.tt/1ij0Mky Tyler Durden

• Possible debris off Australia a ‘credible lead’ for missing Malaysia jet (Reuters)
• Maldives and Afghanistan: Theories Blossom for Airliner (BBG)
• Ukraine Military Concedes on Crimea as Russia Takes Hold (BBG)
• Asia Stocks Drop on Fed; H-Share Index Enters Bear Market (BBG)
• Scientists say destructive solar blasts narrowly missed Earth in 2012 (Reuters)
• GM’s Ignition Victims Need Help From Bankruptcy Judge (BBG)
• U.S. Alleges Inside Traders Used Spycraft, Ate Evidence (WSJ)
• God Meets Profit in Obama Contraceptive Rule Court Case (BBG)
• Starbucks to Bring Alcohol Sales to Thousands of Stores (BBG)
• Political Deal on EU Banking Union Completed (WSJ)
• China to Accelerate Measures to Stabilize Growth (BBG)
• Carlyle Partners Forced to Bail Out Brazil Real-Estate Developer (BBG)

 

Overnight Media Digest

WSJ

* Markets rattle after Janet Yellen emerged from her first meeting as Federal Reserve chairwoman with some unsettling signals about the central bank’s outlook for short-term interest rates. (http://ift.tt/1d3cuAv)

* The U.S. Justice Department extracted a record $1.2 billion criminal penalty from Toyota Motor Corp for misleading consumers about safety problems. (http://ift.tt/OE6G5j)

* Fedex Corp Chief Executive Fred Smith blamed the lower-than-expected quarterly earnings at a severe winter weather and sloppy shipping practices by e-commerce firms. (http://ift.tt/OE6Ids)

* As environmental restrictions and abundant natural gas reduce coal consumption at home, exports have become more important for U.S. mining companies. U.S. coal shipments outside the country in 2014 are expected to surpass 100 million tons for the third year (http://ift.tt/OE6G5m)

* After pursuing a spinoff of eBay Inc’s PayPal payments unit since January, activist investor Carl Icahn said on Wednesday that he would be satisfied with a 20 percent stake sale of the division to the public. (http://ift.tt/OE6Idu)

* Johnson & Johnson is hiring a chief design officer, a new role that reflects the growing importance that design is playing in the development and marketing of products. In recent times, companies like PepsiCo Inc and Philips Electronics have created the position to win customers and drive sales using appealing designs. (http://ift.tt/1d3cuAC)

* Marketwired, a provider of news releases, signed a deal to stop providing company press releases directly to high-frequency traders. The deal was signed along with New York Attorney General Eric Schneiderman, who has stepped up efforts to crack down on abusive practices by high-frequency firms. (http://ift.tt/1d3csbT)

* U.S. government and Boeing Co experts gave good grades to the design and certification of the company’s 787 Dreamliner, though they recommended improvements to supplier oversight. The report was prepared in the wake of two lithium-battery fires that grounded the Chicago plane maker’s flagship model for several months last year. (http://ift.tt/1d3cuAF)

* Walgreen Co, the nation’s largest pharmacy chain by number of stores, is starting to ask pharmacists to have consultations with patients, not just stay behind the counter. It has remodeled more than 600 of its 8,200 stores nationwide to encourage that new direction. However, a federal agency is probing whether pharmacists working at these remodeled stores are properly safeguarding sensitive patient information. (http://ift.tt/OE6G5p)

 

FT

JPMorgan Chase & Co, America’s largest bank, said it would sell its physical commodities business to Geneva-based trading house Mercuria for $3.5 billion, becoming the latest investment bank to scale back its activities in that sector.

A French court released rogue trader Jerome Kerviel from an unpayable 4.9 billion euro ($6.82 billion) fine given to him for making the risky bets that brought his former employer Societe Generale to the brink of disaster.

BP Plc was one of the most active bidders for exploration and production rights in the Gulf of Mexico, after the U.S. government lifted a ban on it winning new federal contracts last week.

Japan’s largest electronics conglomerate Hitachi plans to make London the headquarters of its global rail business, in a bid to expand in the UK and to make Europe its biggest market.

Starbucks Chief Executive Howard Schultz said the U.S. coffee chain wanted to almost double its market capitalisation to $100 billion, as the company looks to expand its digital business and dominate the $90 billion global tea market.

NYT

* A growing field of technology experts, financial players and entrepreneurs believe that mainland China’s unfavorable regulation of Bitcoin has created an opening for Hong Kong. David Shin, a Hong Kong investment banker, is building a stock exchange for Bitcoin-oriented companies. (http://ift.tt/1d3csbW)

* Toyota’s $1.2 billion deal with the Justice Department over a sudden-acceleration defect that has caused injuries and deaths included an unusual admission of wrongdoing.

(http://ift.tt/1d3csbZ)

* The U.S. Federal Reserve continued to curtail its economic stimulus, but it adjusted its guidance on interest rates, saying they would remain near zero “for a considerable time” after bond purchases ended. (http://ift.tt/1d3cuQV)

* Just days after the United States lifted a ban on new oil and gas leases for BP, the company took full advantage of the opportunity. In an auction held in New Orleans on Wednesday, BP was the high bidder on 24 exploration blocks in the Gulf of Mexico for about $42 million, according to the Interior Department. (http://ift.tt/OE6GlJ)

* JPMorgan Chase announced that it had agreed to sell its physical commodities trading unit to the Mercuria Energy Group, a rapidly growing Swiss trading firm, for $3.5 billion in cash. (http://ift.tt/1d3csc2)

* According to a study prepared by experts from the Federal Aviation Administration and Boeing, federal regulators need to provide more oversight of the far-flung supply networks that build 787 Dreamliner jets and other new planes. (http://ift.tt/OE6ItU)

* Walmart plans to make a pointed, aggressive play for outdoor and garden business this spring for the first time, offering “Black Friday-like prices” on more than 60 items. The sale will begin Friday – spring officially begins Thursday afternoon – and last for about a week. (http://ift.tt/1d3cssg)

 

Canada

THE GLOBE AND MAIL

* Canadian firms with business interests in Russia are urging the administration in Ottawa to re-consider imposing tough sanctions in response to Russia’s annexation of Crimea. Canada and its counterparts in the European Union have warned of tougher measures that restrict import/export and dealing with Russian banks. (http://ift.tt/OE6ItV)

* Janet Yellen rattled investors in her debut as the U.S.’s top central banker, as Wall Street focused on an apparent tilt toward raising interest rates sooner than expected. (http://ift.tt/1d3cuR3)

NATIONAL POST

* Former Canadian finance minister Jim Flaherty, who resigned from his post on Tuesday, could draw as much as $2 million in annual compensation if he were to be appointed on a senior position with one of the banks or large-cap companies, compensation experts say. (http://ift.tt/OE6GlR)

* The British Columbia government says it is prepared to introduce back-to-work legislation as early as Monday to put an end to the ongoing strike by unionized truckers at the Port Metro Vancouver (http://ift.tt/1d3cuR4)

FINANCIAL POST

* Newly-appointed federal natural resources minister Greg Rickford has a tough task ahead. He inherits a grand plan to transform Canada into an ‘energy superpower’ with $650 billion in resource development. (http://ift.tt/OE6Iu0)

 

China

CHINA SECURITIES JOURNAL

– China Securities Regulatory Commision (CSRC) said it would continue to advance the pilot program of property tax in Shanghai and Chongqing, but it had no plans to scale-up the pilot for now, said Liu Kun, vice president of CSRC.

– Net profit in Shanghai Pudong Development Bank reached 40.92 billion yuan ($6.60 billion) in 2013, jumping 19.7 percent from a year earlier.

SHANGHAI DAILY

– Closed-door training centres for young athletes have come under scrutiny following allegations that trainers at a prestigious gymnastics school in central China sexually abused students. Critics of the centres say the closed regimes leave students vulnerable to sexual assault.

CHINA DAILY

– The central government vowed on Wednesday to further push forward with a ban on the construction of new government buildings as part of an ongoing frugality campaign. About 150 officials have been investigated and 55 punished for violations on the ban first issued in July, the government said.

– Officials will be held personally liable for public expenses that are not properly justified and documented, according to a new regulation issued by Beijing’s municipal government.

PEOPLE’S DAILY

– China should keep economic growth within a “reasonable range” and effectively preventing and eliminating possible risks, Chinese Premier Li Keqiang said in the State Council meeting.

 

Britain

The Telegraph

CHATROOM EVIDENCE QUESTIONS BANK OF ENGLAND’S ROLE IN FX PROBE

Regulators are examining evidence relating to a 2012 meeting of currency dealers and Bank of England officials that potentially challenges the central bank’s assertion it had not condoned sharing details of client orders. (http://ift.tt/1nFbQhb)

BP ON COURSE TO WIN FIRST GULF OF MEXICO CONTRACTS IN TWO YEARS

BP is on course to win its first drilling licences in the Gulf of Mexico for almost two years. Of the 31 bids the oil giant has submitted for crude oil and natural gas licences, 24 were the highest, according to Tommy Beaudreau, director of the Interior Department’s Bureau of Ocean Energy Management. (http://ift.tt/1nFbQhd)

The Guardian

CHANCELLOR VOWS TO SCRAP COMPULSORY ANNUITIES IN PENSIONS OVERHAUL

Pensioners will soon be free to do what they like with their retirement savings after Britain’s finance minister promised to scrap compulsory annuities in a bombshell for the pensions industry. The move almost immediately wiped 5 billion pounds ($8.31 billion) off the value of shares in the firms that provide annuities – and provoked fears of a fresh buy-to-let boom as pension pots are used to buy property as a retirement income. (http://ift.tt/1nFbS8U)

The Times

CHEERS, GEORGE: BUSINESS HAILS ‘BIG-TICKET’ BUDGET FOR GROWTH

Britain’s leading industrialists hailed Finance Minister George Osborne’s “Budget for the makers and the doers” as a huge stride towards making manufacturing competitive with Germany and other leading nations. (http://ift.tt/1nFbS8W)

HIGH-PERFORMANCE BENTLEY LEADS WAY IN BRITISH REVIVAL

Production lines in the British automotive industry were buzzing as Bentley Motors, BMW and Alexander Dennis, the coachbuilder, all revealed that they intended to step up output in the country’s manufacturing heartland. (http://ift.tt/1nFbS8Y)

HITACHI TO MOVE TRAIN-BUILDING HQ TO BRITAIN

Hitachi, the Japanese electronics conglomerate, will announce on Thursday that it is moving the headquarters of its train manufacturing business to Britain in a sign of confidence in the country. (http://ift.tt/1nFbS92)

The Independent

CO-OPERATIVE GROUP ANNOUNCES MANAGEMENT OVERHAUL

The Co-operative Group has announced a major management shake-up which will see Acting Chief Executive Richard Pennycook take up the role of chief operating officer once a new chief executive is found. (http://ift.tt/1nFbQhj)

 

 

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Jobless claims for week of March 15 at 8:30–consensus 325K
Existing home sales for February at 10:00–consensus down 0.4% to 4.6M rate
Leading indicators for February at 10:00–consensus up 0.3%
Philadelphia Fed manufacturing survey for March at 10:00–consensus 3.0

ANALYST RESEARCH

Upgrades

American Homes 4 Rent (AMH) upgraded to Buy from Neutral at BofA/Merrill
CEMEX (CX) upgraded to Buy from Neutral at Longbow
CHC Group (HELI) upgraded to Overweight from Neutral at JPMorgan
El Paso Electric (EE) upgraded to Neutral from Sell at Goldman
ING U.S.  (VOYA) upgraded to Buy from Hold at Deutsche Bank
Infinera (INFN) upgraded to Buy from Hold at Stifel
Inphi (IPHI) upgraded to Buy from Hold at Stifel
NRG Energy (NRG) upgraded to Conviction Buy from Neutral at Goldman
On Assignment (ASGN) upgraded to Outperform from Market Perform at Wells Fargo
Tornier (TRNX) upgraded to Outperform from Market Perform at Wells Fargo
Ulta Salon (ULTA) upgraded to Buy from Neutral at Goldman
WEX Inc. (WEX) upgraded to Buy from Neutral at Citigroup

Downgrades

Ameren (AEE) downgraded to Sell from Neutral at Goldman
American Residential (ARPI) downgraded to Underperform from Neutral at BofA/Merrill
Bally Technologies (BYI) downgraded to Sell from Neutral at Goldman
EMC Insurance (EMCI) downgraded to Market Perform from Outperform at Keefe Bruyette
Enbridge Energy Management (EEQ) downgraded to Neutral from Buy at Janney Capital
Enbridge Energy (EEP) downgraded to Neutral from Buy at Janney Capital
J.B. Hunt (JBHT) downgraded to Neutral from Buy at BofA/Merrill
MSC Industrial (MSM) downgraded to Neutral from Buy at UBS
NII Holdings (NIHD) downgraded to Market Perform from Outperform at Wells Fargo
NextEra Energy (NEE) downgraded to Buy from Conviction Buy at Goldman
Resolute Energy (REN) downgraded to Equal Weight from Overweight at Barclays
Signature Bank (SBNY) downgraded to Perform from Outperform at Oppenheimer
Synchronoss (SNCR) downgraded to Outperform from Strong Buy at Raymond James
Under Armour (UA) downgraded to Neutral from Buy at Sterne Agee
Westar Energy (WR) downgraded to Neutral from Buy at Goldman
Williams Partners (WPZ) downgraded to Hold from Buy at Jefferies
Williams (WMB) downgraded to Hold from Buy at Jefferies
Xcel Energy (XEL) downgraded to Sell from Neutral at Goldman

Initiations

Aruba Networks (ARUN) initiated with a Neutral at Macquarie
CalAmp (CAMP) initiated with a Neutral at Macquarie
Charles River Labs (CRL) initiated with a Hold at KeyBanc
comScore (SCOR) initiated with a Buy at Brean Capital
Covance (CVD) initiated with a Buy at KeyBanc
Datawatch (DWCH) initiated with a Buy at B. Riley
Flexion (FLXN) initiated with a Buy at Janney Capital
Gigamon (GIMO) initiated with a Buy at Needham
MicroStrategy (MSTR) initiated with a Neutral at B. Riley
Qlik Technologies (QLIK) initiated with a Neutral at B. Riley
Quintiles (Q) initiated with a Hold at KeyBanc
Recro Pharma (REPH) initiated with a Buy at Brean Capital
Ruckus Wireless (RKUS) initiated with an Outperform at Macquarie
Tableau (DATA) initiated with a Buy at B. Riley
Ubiquiti Networks (UBNT) initiated with an Outperform at Macquarie
ZELTIQ (ZLTQ) initiated with a Buy at Stifel
Ziopharm (ZIOP) initiated with a Buy at Mizuho

COMPANY NEWS

Starbucks (SBUX) said it is partnering with Oprah Winfrey to offer a Teavana-Oprah branded Chai tea
Agenus (AGEN) said GlaxoSmithKline’s (GSK) MAGRIT study did not meet first or second co-primary endpoint
Yahoo (YHOO) introduced Yahoo Games Network, launches new Yahoo Classic Games
eBay (EBAY) said company, PayPal “better together”
Navidea Biopharmaceuticals (NAVB) announced that following meetings with European regulatory authorities reviewing its Lymphoseek Injection, the company believes the course of the review continues to be supportive of its market development plans and outlook for material revenue generation in Europe beginning in 2015
Tilly’s (TLYS) warned that Q1 results will likely be below current analyst estimates
Guess (GES) gave Q1, FY15 profit and sales outlooks that widely missed estimates
Lennar (LEN) CEO said company “well positioned to capitalize on recovering market”

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Lennar (LEN), IHS Inc. (IHS), Clarcor (CLC), Tilly’s (TLYS), Guess (GES)

Companies that missed consensus earnings expectations include:
Franco-Nevada (FNV), ExOne (XONE), Jabil Circuit (JBL), Bacterin (BONE)

Companies that matched consensus earnings expectations include:
Cintas (CTAS), Herman Miller (MLHR)

NEWSPAPERS/WEBSITES

Sony (SNE) venturing into original TV programming for PlayStation, WSJ reports
Alibaba invests $215M in TangoMe, WSJ reports
AG Holder: Toyota (TM) deal ‘not the only time we will use this approach’ (GM), AP reports
Investors should stay away from General Mills (GIS), Barron’s says
Wal-Mart (WMT) making play for outdoor and garden business, NY Times reports
JPMorgan (JPM), HSBC (HBC) planning to bid for $4B Saudi IPO, Bloomberg reports
Hewlett-Packard (HPQ) CEO Whitman says to flesh out 3D printing entry in June, Reuters reports

SYNDICATE

Artisan Partners (APAM) files to sell 41.94M shares of Class A common stock
BreitBurn Energy (BBEP) files to sel $200M common units for limited partners
Cinedigm Digital (CIDM) files to sell comon stock
Hudson Pacific (HPP) files to sell 3.51M common shares for holders
ING U.S. (VOYA) 26.5M share Secondary priced at $35.23
KB Home (KBH) files to sell $125M in common stock
Q2 Holdings (QTWO) 7.76M share IPO priced at $13.00
RadiSys (RSYS) files to sell common stock
Sangamo (SGMO) files to sell $100M in common stock
TOP Ships (TOPS) files to sell $30M common shares

via Zero Hedge http://ift.tt/1hGb1gT Tyler Durden

In the aftermath of yesterday’s key market event, the FOMC’s $10 billion tapering and elimination of QE with “QualG“, not to mention the “dots” and the 6 month period, the USD has been on fire against all key pairs, with the EURUSD sliding below 1.38, a 150 pip move in one day which should at least give Mario Draghi some comfort, but more importantly sending the USDJPY soaring to 102.500 even as US equity futures, and not to mention the Nikkei which tumbled -1.7% to just above 14,000 overnight. Perhaps the biggest take home message for traders from yesterday is that the Yen carry trade correlation to the Emini is now dead.

Of course, the other big news overnight was the plunge in the Yuan, tumbling 0.5%, 6.2286, up 343 pips and crushing countless speculators now that the “max vega” point has been passed. Expect under the radar news about insolvent trading desks over the next few days, as numerous mega levered FX traders, who had bet on continued CNY appreciation are quietly carted out the back door. Elsewhere, gold and other commodities continue to be hit on rising fear the plunging CNY will accelerate the unwind of Chinese Commodity Funding Deals.

With all the focus on the FOMC and China, it seems that the developments in Ukraine and Russia have taken a back seat in the last 24 hours. Nonetheless, there are a few interesting developments including a statement from Russia’s deputy prime minister Ryabkov that Russia could alter its position on Iranian nuclear talks in response to pressure from the EU and US over its annexation of Crimea (AFP). The Ukrainian interim PM maintained overnight that Crimea is Ukrainian territory though this comes after Ukraine’s National Security Council said it would withdraw military forces from Crimea in an attempt to deescalate the situation. Meanwhile, the Ukrainian finance ministry said that it would honour payments on a $3bn loan that it received from Russia in December. President Obama mentioned late yesterday that the US won’t take military action in the Ukraine.

Looking at the day ahead, the focus returns to US data including jobless claims, February existing home sales and the Philly Fed survey. The latter is expected to bounce back from -6.3 in February to +3.2 in March.

Bulletin news summary from Bloomberg

• Treasury benchmark yields holding near yesterday’s highs; yields surged the most this year, led by 2Y-5Y sector, after Yellen said interest rates could rise by the middle of 2015.
• In her first press conference as Fed chair yesterday, Yellen emphasized that dropping a 6.5% unemployment threshold for considering an interest-rate increase “does not indicate any change in the committee’s policy intentions”
• U.S. regulators worried that banks and brokerage firms remain too dependent on risky types of short-term funding are weighing new rules designed to reduce reliance on parts of what is often called the shadow banking system
• China’s yuan slid the most since 2008 in onshore trading after the central bank weakened the currency’s reference rate by 0.18%, matching a March 10 cut that was the biggest since July 2012; Chinese stocks fell, sending the Hang Seng into a bear market
• Investment banks should have known about forex traders using chat rooms that had the potential to rig currency prices, the head of the U.K.’s financial regulator said
• Ukraine said it plans to reinforce its eastern border with Russia and withdraw troops from Crimea, ceding control of the Black Sea peninsula as tensions remained high over Russian moves to annex the breakaway region
• Sovereign yields higher. EU peripheral spreads tighten. Asian equities slide, with Nikkei -1.6%, Shanghai -1.4%. European equity markets, U.S. stock-index futures fall. WTI crude and gold lower, copper falls 1.4%

US Event Calendar

• 8:30am: Initial Jobless Claims, March 15, est. 322k (prior 315k); Continuing Claims, March 8, est. 2.880m (prior 2.955m)
• 9:45am: Bloomberg Economic Expectations, March (prior -3); Bloomberg Consumer Comfort, March 16 (prior -27.6)
• 10:00am: Philadelphia Fed Business Outlook, March., est. 3.2 (prior -6.3)
• 10:00am: Existing Home Sales, Feb., est. 4.60m (prior 4.62m); Existing Home Sales m/m, Feb., est. -0.4% (prior -5.1%)
• 10:00am: Leading Index, Feb., est. 0.2% (prior 0.3%) Central Banks
• 4:00pm: Fed releases Dodd-Frank stress test results
• 1:00pm: U.S. to sell $13b 10Y TIPS in reopening
• 11:00am: POMO Fed to purchase $2.25b-$2.75b in 2021-2024 sector

The full overnight recap from DB’s Jim Reid

You may think the Fed meeting last night was the most important event in the last 24 hours but some might say it was the annual UK budget. In particular there was a 1 penny drop in the price of a pint of beer. So if you’re in London then from now on for every 480 pints you drink you get one free. Anyway this means nothing to me today as I’m currently about to board a flight today to Vienna on the first flight out of Heathrow (6am). I was in bed pretty early last night but not before I had a chance to digest the fairly hawkish FOMC meeting even if Yellen did try to sound a bit more dovish in the conference than the results from the committee’s collective interest rate guidance. We’ll go through the exact details below but it does seem that the Fed are getting more confident in their forecasts and as such are paving the way for earlier interest rates rises. Indeed Yellen did say that the definition of the “considerable time” that may pass between ending QE and the first rate rise could mean “six months or that type of thing”. So the risk is increasing that the Fed may raise rates in little more than 12 months time even if she maybe made that comment off the cuff.

Our positive view on credit in 2014, particularly for H2 has been based on a much slower withdrawal of liquidity than that currently implied by the Fed. As such we have to seriously think about whether to get more defensive on the asset class or whether to agree with the Fed that growth will come back strongly and take the view that this will trump all liquidity concerns. To be fair we did say that H1 would be volatile as expectations about tighter monetary conditions could first intensify. However we felt that by H2, either markets would wobble on this or growth wouldn’t come back as strongly as expected and more benign Fed conditions would subsequently return. However it doesn’t appear like the Fed will turn as easily as we thought. We’ll be publishing an update to our credit view over the next few days so watch this space.

On to the full details of Yellen’s first meeting and press conference. As was broadly expected by markets, the Fed continued with its $10bn/month QE taper and shifted away from its quantitative forward guidance. What was less expected however, was the Fed’s hawkish turn in the form of its upward shift in rate expectations and lack of emphasis on qualitative guidance. In terms of rate expectations, 13 of 16 Fed officials said they expected the Fed to raise rates in 2015, up from 12 of 17 officials in December. 2015 median rate expectations were 1.00%, up from 0.75% previously in December. More significantly, the 2016 median expectations jumped to 2.25% from 1.75% in December. In terms of the revamped forward guidance, the Fed did say that its “assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments”. Based on this assessment the Fed think its “appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends” especially if inflation runs below 2%. As we touched on above, in her press conference, Yellen was asked to define what constituted a “considerable time” period to which she replied around six months. Markets took this to suggest that a first rate hike would occur around March 2015, assuming of course that QE ended in the fall this year. Yellen qualified her assessment of what constituted a considerable period by saying that “it depends on what conditions are like”. Despite all this, Yellen maintained her dovishness with respect to several labour market indicators such as the share of long-term unemployed which she thought was still exceptionally high. In terms of wage inflation, Yellen said wage increases are running at very low levels and right now “it’s certainly not flashing”. Only one FOMC member dissented (Kocherlakota) who said that the revised forward guidance weakens the credibility of the FOMC’s commitment to return inflation to the 2% target.

In terms of the market reaction, the Dec16 Fed Funds contract spiked by around 20bp to 1.82% (up a further few bp overnight). With the removal of quantitative guidance, the front end of the UST curve underperformed and curves bear flattened. The 3year UST yield added 13bp though it did rally a bit from the post-FOMC highs and the 10year part of the curve finished Wednesday 10bp higher at 2.773%. In terms of equities, the S&P 500 traded down to a session low of -1.2% but equities found some support towards the end of Yellen’s press conference and the index managed to claw back some losses to close at -0.61%. Unsurprisingly, the yield sensitive sectors such as  utilities (-1.46%) did poorly, as did gold miners (-3.05%) following the 1.9% drop in the precious metal. There was some focus on the EM side of things, given the sector’s jitteriness of late and we saw a number of higher yielding EMFX bellwethers such as BRL (-0.68%) and MXN (-0.96%) reversed earlier gains against the USD. Local LATAM rates markets also came under pressure as investors favoured USD assets (USD index +0.73%).

This morning we are seeing continued weakness in most risk assets but there has been some divergence which we should highlight, as well as a couple of stories from China worth mentioning. The Nikkei opened around half a percent firmer, as a stronger USD spurred gains in the USDJPY cross. But Japanese equities have given up those gains to trade down on the day (Nikkei -1.0% as we type) dragged lower by the yield-sensitive real estate and banking sectors. The more EM focused indices including the KOSPI (-0.9%) and HSCEI (-1.2%) have recorded losses as well. In China, there are three things worthy of noting overnight. Firstly, Chinese equities (+0.2%) are outperforming today underpinned by news that two domestic listed property developers (Tianjin Tianbao and Join.In Holdings) have received approval by the government to issue more shares. These are the first government share-sale approvals to the property development industry in four years which some are seeing as a shift in official policy towards looser controls on the real estate industry. This could also help to alleviate the funding stresses for some smaller property
developers. The State Council also released a statement yesterday saying that it would accelerate the rollout of measures to expand domestic demand.

Secondly, both the CNH and CNY continue to sell off (both are around 0.3% weaker today against the USD) and the PBoC again has set a weaker CNY fix today (6.1460 vs 6.1351 yesterday) with the renminbi now at 12 month lows. Thirdly, in keeping with the continuing flow of corporate default headlines from China, domestic newswires are reporting on the possible bankruptcy of the largest steelmaker in Shanxi, Highsee Group, which failed to repay bank debt of RMB3bn or around US$480m last week (21st Century Biz Herald).

Meanwhile, gold (+0.3%) and 10yr UST yields (-3bp, 2.74%) have unwound some of their losses from yesterday. With all the focus on the FOMC and China, it seems that the developments in Ukraine and Russia have taken a back seat in the last 24 hours. Nonetheless, there are a few interesting developments including a statement from Russia’s deputy prime minister Ryabkov that Russia could alter its position on Iranian nuclear talks in response to pressure from the EU and US over its annexation of Crimea (AFP). The Ukrainian interim PM maintained overnight that Crimea is Ukrainian territory though this comes after Ukraine’s National Security Council said it would withdraw military forces from Crimea in an attempt to deescalate the situation. Meanwhile, the Ukrainian finance ministry said that it would honour payments on a $3bn loan that it received from Russia in December. President Obama mentioned late yesterday that the US won’t take military action in the Ukraine.

Looking at the day ahead, the focus returns to US data including jobless claims, February existing home sales and the Philly Fed survey. The latter is expected to bounce back from -6.3 in February to +3.2 in March.

via Zero Hedge http://ift.tt/1qYOKl5 Tyler Durden

Submitted by Michael Krieger of Liberty Blitzkrieg blog,

So stop the acting all of you Silicon Valley CEOs. We know you are fully on board with extraordinary violations of your fellow citizens’ civil liberties. We know full well that you have been too cowardly to stand up for the values this country was founded on. We know you and your companies are compromised. Stop pretending, stop bullshitting. You’ve done enough harm.

From The Guardian:

The senior lawyer for the National Security Agency stated unequivocally on Wednesday that US technology companies were fully aware of the surveillance agency’s widespread collection of data, contradicting month of angry denials from the firms.

 

Rajesh De, the NSA general counsel, said all communications content and associated metadata harvested by the NSA under a 2008 surveillance law occurred with the knowledge of the companies – both for the internet collection program known as Prism and for the so-called “upstream” collection of communications moving across the internet.

 

Asked during at a Wednesday hearing of the US government’s institutional privacy watchdog if collection under the law, known as Section 702 or the Fisa Amendments Act, occurred with the “full knowledge and assistance of any company from which information is obtained,” De replied: “Yes.”

 

When the Guardian and the Washington Post broke the Prism story in June, thanks to documents leaked by whistleblower Edward Snowden, nearly all the companies listed as participating in the program – Yahoo, Apple, Google, Microsoft, Facebook and AOL –claimed they did not know about a surveillance practice described as giving NSA vast access to their customers’ data. Some, like Apple, said they had “never heard” the term Prism.

 

The disclosure of Prism resulted in a cataclysm in technology circles, with tech giants launching extensive PR campaigns to reassure their customers of data security and successfully pressing the Obama administration to allow them greater leeway to disclose the volume and type of data requests served to them by the government.

 

The NSA’s Wednesday comments contradicting the tech companies about the firms’ knowledge of Prism risk entrenching tensions with the firms NSA relies on for an effort that Robert Litt, general counsel for the director of national intelligence, told the board was “one of the most valuable collection tools that we have.”

Move along serfs, move along.

Full article here.

via Zero Hedge http://ift.tt/1j9nIlj Tyler Durden

Australian Prime Minister Tony Abbott has some interesting comments in the dreadful disappearance of Malaysia Airlines Flight 370. While addressing parliament today, he stated:

• *AUSTRALIA FINDS POSSIBLE OBJECTS LINKED TO MH370, ABBOTT SAYS
• *OBJECTS FOUND IN SEARCH MAY NOT BE MH370, ABBOTT SAYS
• *ABBOTT SAYS NEW, CREDIBLE INFORMATION IN RELATION TO MH370
• *ABBOTT: AMSA HAS RECEIVED INFO. BASED ON SATELLITE IMAGERY
• *ABBOTT: OBJECTS IN SOUTH INDIAN OCEAN MAY BE RELATED TO SEARCH

There is not much color yet but it appears that 2 objects have been found and the Aussies are diverting more aircraft to search the area.

 

More:

• *ABBOTT: TASK OF LOCATING OBJECTS WILL BE EXTREMELY DIFFICULT
• *ABBOTT: SPOKEN TO MALAYSIA PM NAJIB, INFORMED OF DEVELOPMENTS
• *ABBOTT: 3 MORE AIRCRAFT TO BE DIVERTED TO SEARCH LOCATION

Via AP,

Australia’s prime minister says objects possibly related to the missing Malaysia Airlines flight have been spotted on satellite imagery.

 

Prime Minister Tony Abbott told Parliament in Canberra on Thursday that a Royal Australian Airforce Orion has been diverted to the area to attempt to locate the objects. The Orion is expected to arrive in the area Thursday afternoon. Three additional aircraft are expected to follow for a more intensive search.

Via Bloomberg,

Prime Minister Tony Abbott says Australian search effort in Indian Ocean has new, credible information in relation to missing Malaysian Airline plane.

 

Abbott addresses lawmakers in parliament

 

Australian Maritime Safety Authority has received information based on satellite imagery: Abbott

 

NOTE: AMSA to hold 3:30pm Sydney time briefing

via Zero Hedge http://ift.tt/ODiVik Tyler Durden