Tag: news

First it was all a joke. A media sideshow. A publicity stunt that no one really understood the purpose of.

Donald Trump was actually going to run for President. His campaign slogan: “Make America Great Again.” It was laughable.

Soon after the billionaire announced his candidacy, his nascent bid for the White House took on a more serious tone, but not because anyone was taking him more seriously. Rather, because his comments about Mexican immigrants were so inflammatory that it was difficult to dismiss them with derisive humor.

From that point on, it was all downhill for the GOP establishment. Trump racked up popular support, defying every law of conventional politics along the way.

Each and every time analysts and pundits doubted him, he prevailed and that unlikely momentum carried right over into the caucuses and primaries and now, after Super Tuesday 3, Trump has effectively knocked out every Republican challenger except Ted Cruz (let’s face it, Kasich isn’t going to get the nod).

Still, all commentators and political “experts” want to talk about is a contested Republican convention in Cleveland. While that’s certainly an interesting outcome to consider as it forces us to look back at political history to understand the precedent and what that precedent might mean come July, it’s as if no one has learned anything from the past nine months.

That is, the assumption should probably be that Trump is going to lock up the nomination before the convention, not that they’ll be some kind of historic bid to rob him in four months. The media – both liberal and conservative – act as though it’s virtually impossible for him to make it to 1,237 delegates. We’re talking about a guy here who no one thought would even register in terms of poll numbers and now he’s the overwhelming favorite.

All of this is not to say that we – or anyone else for that matter – should necessarily believe that a Trump nomination is a good thing for the GOP let alone for America, but it is to say that all of the talk about a contested convention may be wishful thinking.

As this simple graphic from The NY Times shows, if Trump simply maintains his current level of support, he’s “almost certain” to secure the nomination:

(click here for interactive version)

“After Tuesday’s contests, no other candidate retains a real chance of capturing the delegates required to win the nomination outright. Mr. Rubio dropped out, Gov. John Kasich of Ohio is too far behind, and Senator Ted Cruz of Texas would need to win the vast majority of the remaining delegates — a near impossibility,” The Times writes.

“Crunching the latest numbers, Donald Trump needs to win 54% of the remaining delegates to obtain a majority [and] that’s doable, but not necessarily a slam dunk,” NBC adds, before noting that “Trump won 60% of the available delegates from the March 15 contests.”

Trump currently leads Cruz by 261 delegates

• Trump 683 (47% of all delegates won)
• Cruz 422 (29%)
• Rubio 172 (12%)
• Kasich 143 (10%)

Trump needs to win 54% of the remaining delegates to hit the 1237 magic number

 

Cruz needs to win 80% of the remaining delegates to hit the 1237 magic number

 

Kasich needs to win 107% of the remaining delegates to hit the 1237 magic number

As Trump himself pointed out in his victory speech in Florida, the fewer candidates, the better his chances to win. Or, as NBC concludes, Trump won 60% of the delegates on March 15, “and that was with four candidates in the GOP field; now [that] there are three you could argue that the map only gets better for Trump.”

Yes, you certainly could.

via Zero Hedge http://ift.tt/1R2SWxZ Tyler Durden

This morning the WSJ leads with an article that summarizes the prevailing market confusion at the moment, namely that global currencies are soaring, “defying central bankers” despite a flurry of easing around the globe in the past month, all of which have been undone by one Fed dot plot which cut the number of rate hikes forecast by Yellen & Co., from 4 to 2. To wit: “efforts by many of the world’s central banks to weaken their currencies are failing, raising concerns about whether policy makers are losing the ability to wield control over financial markets.“

Despite the Bank of Japan ’s efforts to push down its currency and jump-start the economy with negative interest rates, the yen is up 8% this year and is at its strongest level against the dollar since October 2014. European central bankers are having similar problems containing the strength of the euro and other currencies.

 

The European Central Bank has struggled with its efforts to weaken the euro, which gained 0.8% against the dollar on Thursday. Last week, the ECB cut interest rates further into negative territory, yet the currency is up 4.2% this year.

 

Even some central banks with less actively traded currencies are having a hard time guiding markets. Norway’s central bank on Thursday cut its main interest rate to a record low of 0.5%, and a bank governor said he wouldn’t rule out negative rates, in which central banks charge big lenders to hold deposits. The Norwegian krone gained more than 1% against the dollar and was up against the euro.

The WSJ then briefly touches on what we have been warning about since 2009: “These difficulties are a reminder that the long stretch of exceptionally low rates in response to the 2008 financial crisis has created market distortions that may be difficult for central bankers to contain” and concludes that “this disconnect could produce more volatility in financial markets. Even if investors can predict what actions central banks are likely to take, they are having a hard time predicting how markets will react, potentially sparking a pullback from riskier assets, such as emerging markets or commodities.”

In other words, nobody has a clue what is going on, but at least whatever the “central bank accord” agreed upon during the G-20 meeting, it has pushed stocks 10% higher from the February 11 lows. For now.

 

Which is to be expected: after all not even central banks have any idea what they are doing as the full relent by the “no longer data dependent” Fed showed on Wednesday, when Yellen decided to chicken out from the tightening cycle even though the PCE deflator of 1.7% is will above her year end target, while unemployment is at the low end of the Fed’s long-term forecasts.

In sum: “There is a rising concern that central banks are testing the limits of their policies,” said Brian Daingerfield, a currency strategist at RBS Securities. “Each time you take a tool out of the tool kit, it gets closer to being empty.”

But the best summary of just how confusing it all is comes from BofA’s Athanasios Vamvakidis who writes the following:

If FX is the messenger, the message is not clear

 

The FX market is confusing this year. More easing by the BoJ, the RBNZ, the Riksbank, the ECB and the Norges Bank, led to stronger currencies, despite delivering more than markets had expected in all cases. The market seems to be taking recent monetary policy easing as evidence that central banks are reaching their limits, as their forward guidance has sent mixed signals. We disagree in the case of the ECB, but are more sympathetic in the cases of the BoJ and the Scandies. A surprisingly dovish Fed this week added to the confusion, by ignoring the latest improvement in US data and better global market conditions. The market moves would be consistent with EM central bank interventions, as the time zone analysis in our quant section would suggest.

Vamvakidis’ take home:

However, we do not believe that this is sustainable. In our view, the more counterintuitive the market moves, the sharper the correction during the inevitable reality check.

That, however, should be no problem: once we get the reality check, central banks will unleash even more liquidity surreality, undoing what is now an 8 year overdue mean reversion, and forcing global central planners even more all in on their attempt to “reflate or bust.” And reflate they will, one way or another. After all, it was just one month ago when monetary paradrops and banning cash were the dominant topics in the financial media.

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

• Dow’s Freakish Bounce Makes Investors Whole, Can’t Erase Doubts (BBG)
• R.I.P. Dollar Rally as Dovish Fed Spurs Worst Slump Since 2011 (BBG)
• Global Currencies Soar, Defying Central Bankers (WSJ)
• Oil hits 2016 high above $42 on production and demand outlook (Reuters)
• The U.S. Is Exporting Its Oil Everywhere (BBG)
• Hillary Clinton’s Allies Launch Plan to Undercut Donald Trump Now (WSJ)
• Sanders calls notion he should quit Democratic race ‘absurd’ (Reuters)
• Turns Out a ‘Lie’ Lurked Beneath the Bookends of the BRICS (BBG)
• Valeant Jitters Infect Specialty Drug Sector (WSJ)
• Subprime auto loans come under scrutiny (FT)
• ECB Urges Italy Banks Planning M&A to Target Strong Capital (BBG)
• Senators say they might confirm Obama’s high court pick after election (Reuters)
• Aubrey McClendon Left His Biggest Backer With Billions to Lose (BBG)
• BlueCrest Money Manager John McNiff Said to Leave Hedge Fund (BBG)
• Toshiba says it may write down nuclear business, U.S. units probed (Reuters)
• Defiant North Korea fires ballistic missile into sea (Reuters)
• Ex-Porsche Executives Acquitted of Market Manipulation in Volkswagen Bid (WSJ)
• U.S. sees new Chinese activity around South China Sea shoal (Reuters)

 

Overnight Media Digest

WSJ

– Efforts by many of the world’s central banks to weaken their currencies are failing, raising concerns about whether policy makers are losing the ability to wield control over financial markets. This was the case again in Japan on Thursday, when the dollar fell 1.1 percent against yen. (http://on.wsj.com/1Ua8DpS)

– TransCanada Corp, the company behind the controversial Keystone XL oil pipeline project, agreed to buy Columbia Pipeline Group Inc for $10.2 billion. (http://on.wsj.com/1Ua8Idi)

– Lear Corp, one of the world’s biggest auto suppliers is pressing the United Auto Workers to agree to lower wages in exchange for relocating jobs from Mexico back to Detroit. (http://on.wsj.com/1Ua8K4W)

– WiseTech Global Ltd, a software company launched out of a Sydney basement in the 1990s, said it had lodged a prospectus with the Australia’s securities regulator for an initial public offering that could see it list with a market value of more than 1 billion Australian dollars ($765.50 million) after raising A$100 million-A$220 million. (http://on.wsj.com/1Ua8NNW)

– JPMorgan Chase & Co said its board authorized the repurchase of an additional $1.88 billion of the New York bank’s stock through the end of the second quarter. (http://on.wsj.com/1UaaJWR)

– Since announcing plans to sell a minority stake in its Paramount Pictures studio three weeks ago, Viacom Inc said it has received interest from three dozen companies, even as Paramount is experiencing a particularly weak quarter at the box office. (http://on.wsj.com/1UaaMC5)

 

FT

* SNP will not match Osborne’s tax cut for higher earners. (http://bit.ly/1RpGOmz)

* Disgraced former FIFA president Blatter paid $3.7 mln salary. (http://bit.ly/1RpGR1E)

* Google to sell robot maker Boston Dynamics. (http://bit.ly/1RpHict)

Overview

* Scottish National Party leader Nicole Sturgeon has said Scotland will not match British Finance Minister George Osborne’s tax cut for higher earners.

* Soccer’s ruling body, FIFA, said it paid disgraced former president Sepp Blatter 3.63 million Swiss francs ($3.75 million)last year, publishing his salary for the first time under new governance regulations.

* Alphabet Inc, the new holding company for Google, has put Boston Dynamics, part of its robotics division, up for sale.

 

NYT

– A Citigroup report on 20 nations said pension obligations, much of them unfunded, amounted to nearly twice the countries’ total national debt. (http://nyti.ms/1R2bBtV)

– After failing to obtain approval for its Keystone XL oil sands pipeline, TransCanada Corp said on Thursday that it would buy the Columbia Pipeline Group for $10.2 billion. (http://nyti.ms/1R2ccM2)

– Abengoa SA’s global ambitions are now the source of its troubles as it tries to avoid what would be the largest bankruptcy in Spanish corporate history. (http://nyti.ms/1R2bzlF)

– Gustavo Martinez, the chief executive of the advertising agency J. Walter Thompson, who was accused last week of racist and sexist behavior in a lawsuit that raised questions about the culture of Madison Avenue, has resigned. (http://nyti.ms/1R2bFKc)

 

Canada

THE GLOBE AND MAIL

** TransCanada Corp is buying Houston-based Columbia Pipeline Group Inc for $10.2 billion in cash to give it a major position in a massive shale gas region in the U.S. Northeast, where it has faced a competitive threat.(http://bit.ly/1Rptmio)

** Suncor Energy Inc is shedding more staff to prepare for lean times in the oil industry to last longer, even as crude prices climb above $40 a barrel for the first time in three-and-a-half months. (http://bit.ly/1Mr6bmA)

** The Liberal government’s decision to quietly allow an exemption for seasonal temporary foreign workers is prompting calls from other sectors of the economy that also want restrictions lifted on access to foreign low-skilled labour.(http://bit.ly/1S7LznV)

NATIONAL POST

** Quebec plans to begin rolling back healthcare taxes while avoiding a deficit for a second year in a row, a rare feat among Canadian provinces struggling with slumping commodity prices and bloated balance sheets. (http://bit.ly/1pxZT09)

** The co-founders of Gluskin Sheff + Associates Inc are locked in an ugly legal battle with the company, claiming it owes them a staggering $185 million in post-retirement entitlements. (http://bit.ly/1Rp1ZFs)

Britain

The Times

Andrew Witty is to step down as chief executive of GlaxoSmithKline next year after more than three decades at one of Britain’s biggest companies. (http://thetim.es/1TRXklJ)

Rio Tinto CEO Sam Walsh will retire in July and will be succeeded by the company’s copper and coal division head, Jean-Sébastien Jacques.(http://thetim.es/1Mc1kuT)

The Guardian

Investors expect Sainsbury’s to offer as much as 1.5 billion pounds for Argos on Friday, as the supermarket considers trumping a rival South African bid for the catalogue shop ahead of a 5 p.m. deadline. (http://bit.ly/1Z6sfKy)

The French government has promised a financial bailout for cash-strapped energy group EDF so that it can proceed with the 18 billion pounds plan to build the first nuclear reactors in Britain for 20 years. (http://bit.ly/1VfEnsC)

The Telegraph

The Bank of England has warned that a vote on the UK’s membership in the European Union poses risks to economic growth, in a move that sees the central bank become increasingly active in the political debate. (http://bit.ly/1UjcW1D)

The Guardian will cut 250 jobs as it seeks to staunch heavy losses, raising the threat of its first-ever compulsory redundancies. (http://bit.ly/1RRG2PM)

Sky News

Phoenix, the ‘zombie’ life insurance group, is preparing to launch a takeover bid for Deutsche Bank AG’s British insurance unit, Abbey Life, that would accelerate industry consolidation amid sweeping regulatory changes. (http://bit.ly/22nMgBR)

BT Group is to hire Simon Lowth as its new finance chief, handing the former BG executive a rapid return to the top ranks of British business following the oil company’s takeover. (http://bit.ly/1R0Wzo9)

The Independent

Coca-Cola has said the British government’s plan to introduce a tax on sugar will not reduce obesity and was the wrong way to address the issue. (http://ind.pn/1Mb5X8s)

Austerity is to be extended into the next decade in Chancellor George Osborne’s 2016 budget, according to analysis by the Institute for Fiscal Studies. (http://ind.pn/1U9O7G1)

via Zero Hedge http://ift.tt/1MriFL0 Tyler Durden

As of this moment, the DXY dollar index currently just above 95, is lower than where it was a year ago, but that does not stop companies from using it as an excuse for continuing earnings weakness.  Case in point, Tiffany & Co (which once used to be a bellwether for the luxury consumer and the overall market, but lately not so much) which moments ago reported Q4 earnings of $1.46, beating consensus expectations of $1.40, on inline revenues of $1.21bn, 6% lower than a year ago, as sales in the US, Asia Pacific and Europe all declined in the mid-single digits, offset by a 9% rebound in Japan; comparable store sales declined 5%.

This is what the company said: “We faced various challenges during the year that negatively affected our financial results, especially related to the strong U.S. dollar.” The company further said that “worldwide sales growth of only 2% on a constant-exchange-rate basis, or down 3% as reported, along with the lack of earnings growth, did not meet the forecasts we had communicated at the start of the year;” the good news is that since the company preserved “gross margin, and strong free cash flow” it was still able to return cash to shareholders through another dividend increase and share repurchases.

Mostly repurchases, which in 2015 were conducted at an average price of $78/share or about 10% higher than the current stock price:

The Company spent $220 million in the full year (at an average cost of $78 per share), including $104 million in the fourth quarter (at an average cost of $73 per share) to repurchase shares of its Common Stock. On January 21, 2016, the Company’s Board of Directors approved a new stock repurchase program, authorizing the repurchase of up to $500 million of the Company’s Common Stock; this new program immediately replaced the Company’s previously-existing program that had authorized the repurchase of up to $300 million of its Common Stock, and which had $59 million remaining available for repurchases at the time of termination. At January 31, 2016, $494 million remained available for repurchases under the new program that expires on January 31, 2019.

In other words, expect even more buybacks.

But the biggest surprise was in the guidance, where TIF lowered guidance for Q1, and now sees EPS down 15-20%, nearly three times worse than the consensus estimate of -7%.

The company also issued Q2 guidance of down 5-10%, and expects growth to resume in the second half.  Finally, TIF issues downside guidance for FY17, sees EPS unchangd to down mid single digits from $3.83 vs. $3.88 Capital IQ Consensus; it also sees FY17 revs equal to last year’s $4.10 bln) vs. $4.15 bln Capital IQ Consensus. Basically more deteriorating earnings all around, offset by the company removing the number of outstanding shares.  Form the release:

Management currently forecasts that full year earnings per diluted share in 2016 will range from unchanged to a mid-single-digit decline compared with 2015’s $3.83 per diluted share. Based on sales trends in the current quarter-to-date and an assumption of gradual improvement over the course of the year, management expects that earnings per diluted share in the first quarter may decline by 15-20%, followed by a 5-10% decline in the second quarter and a resumption of growth in the second half. This annual forecast is based on the following assumptions, which are approximate and may or may not prove valid: (i) worldwide net sales on a constant-exchange-rate basis increasing by a low-single-digit percentage, but approximately equal to the prior year when translated into U.S. dollars; (ii) increasing worldwide gross retail square footage by 2%, net through 11 openings, 6 relocations and 9 closings; (iii) operating margin below the prior year’s 19.7% (excluding the prior year’s charges) due to an expected increase in gross margin but with SG&A expense growth (despite some benefit from lower pension costs) exceeding sales growth; (iv) interest and other expenses, net unchanged from 2015; (v) an effective income tax rate slightly lower than the prior year; (vi) net inventories unchanged from the prior year; (vii) capital expenditures of $260 million; and (viii) free cash flow of at least $400 million.

In other words, TIF just did what Caterpillar did yesterday when it cut guidance; however just like yesterday we expect TIF to unleash some buybacks today to offset this “fundamental weakness” and the stock will surely close higher.

via Zero Hedge http://ift.tt/1RSV8Vk Tyler Durden

It was just last week when we observed and reported a highly amusing example of what excessive central bank meddling hath wrought in DM government bond markets.

Last Tuesday, yields on JGB 10s hit an all-time low of negative 10bps and yields on the 30Y plunged 21bps (the biggest percentage drop ever), as the post-NIRP curve crush continued unabated.

Then, overnight (literally), the entire dynamic shifted when the bid-to-cover in the BOJ’s POMO hit 3.58 from 2.93 the previous week, as sellers abounded. The rush to unload to Kuroda tripped the Osaka circuit breaker as JGB futures dropped 0.6%.

As Bloomberg’s Richard Breslow put it, “buying panic yesterday to front-run today’s QE buying led to panic selling today into BOJ bids 22 bps through Monday’s close. Oh, and did I mention, ahead of an auction tomorrow. The take-away is mayhem, not analysis.”

Yes, “mayhem.” Or “sheer absurdity,” brought on by monetary policy at the Keynesian brink. But most certainly not “analysis.”

Well just a little over a week later, the very same dynamic that sent yields up 8bps and sent the 10Y sliding, happened again overnight – only in reverse. This time around, nobody wanted to sell to the BOJ as the POMO bid-to-cover was just 1.53.

So with the selling impulse the lowest on record, yields of course plunged on what BofA’s Shuichi Ohsaki called “panic buying,” with the 10Y sinking more than 8bps through the (negative) depo rate to an all-time low of -0.135%. 20Y yields also hit record lows at 29bps. 

Meanwhile, BoJ minutes showed that everyone at the NIRP meeting who agreed to go negative said rates can be cut more if necessary.

And it’s a good thing, because with the yield curve inverted and 10Y yields now below overnight rates, the market is screaming recession.

via Zero Hedge http://ift.tt/1TTtj5g Tyler Durden

It may be option expiration day (always leading to abnormal market activity) but it remains all about the weak dollar, which after crashing in the two days after the Fed’s surprisingly dovish statement has put both the ECB and the BOJ in the very awkward position that shortly after both banks have drastically eased, the Euro and the Yen are now trading stronger relative to the dollar versus prior.

As DB puts it, “the US Dollar has tumbled in a fairly impressive fashion since the FOMC on Wednesday with the Dollar spot index now down the most over a two-day period since 2009” which naturally hurts those countries who have been rushing to debase their own currencies against the USD.

For now this is felt most acutely in Japan, where the Nikkei continues to tumble, tracking every move in the USDJPY. “There’s concern for exporters,” said Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co. “If the yen’s trading around 114 to the dollar, then companies will expect profits next fiscal year, but when it’s 110, most exporters will post losses.” Worse, after last night’s record plunge in the 10Y JGB yield (more shortly), the Japanese curve is now inverted and the BOJ will have to cut rates at least once more in the immediate future, in the process also forcing additional Yen weakness.

Europe will soon realize the same, because as Bloomberg writes, ECB bond buying backstop or no, following a 12% rebound since a low last month, the Stoxx Europe 600 Index is trading near its highest valuation of the year even as analysts keep slashing profit estimates for European companies. which is odd considering the same is taking place in the US and the strong dollar is blamed.

The flipside, of course, is that the weak dollar has provided a relief trade for commodities, and has pushed crude back up over $40/barrell (a price above which US shale production will soon return), and sending commodity metals to multi month highs. The combination of the weak dollar and higher commodities have pushed up the beaten down energy sector, although it remains to be seen if this will translate into actual earnings gains. The Fed “has provided a strong boost for commodities,” said Niv Dagan, executive director at Peak Asset Management LLC in Melbourne. “The fact that U.S. interest rates won’t rise any time soon – and we’ve seen the ECB announce additional stimulus and the Bank of Japan moving to negative interest rates – does provide that additional confidence to the market.”

The MSCI Asia Pacific excluding Japan Index is back to where it was in December, having rebounded 15 percent since hitting a four-year low in January. U.S. crude retreated, after soaring 11 percent in the last two days, and copper traded near a four-month high. South Korea’s won posted its biggest two-day gain since 2010 versus the dollar and the yen traded near a 16-month high. Ten-year bond yields sank to all-time lows in Japan and Taiwan.

In short, for now the “central bank accord” profiled yesterday is working, to give the impression that inflation is returning when really all the CBs have done is agree to weaken the dollar for the time being so as to not offset each other’s currency devaluation efforst.

Elsewhere, Chinese stocks jumped another 1.7%, bringing its weekly gain to 5.2% and closing just shy of 3,000 after data showed the Chinese housing bubble is accelerating, with prices increasing in the most cities since March 2014.

Market Wrap

• S&P 500 futures up 0.2% to 2035
• Stoxx 600 up 0.2% to 341
• FTSE 100 up 0.3% to 6221
• DAX up 0.3% to 9917
• German 10Yr yield down 3bps to 0.21%
• Italian 10Yr yield down 3bps to 1.24%
• Spanish 10Yr yield down 2bps to 1.41%
• S&P GSCI Index down 0.3% to 336.8
• MSCI Asia Pacific up 0.1% to 129
• Nikkei 225 down 1.2% to 16725
• Hang Seng up 0.8% to 20672
• Shanghai Composite up 1.7% to 2955
• S&P/ASX 200 up 0.3% to 5183
• US 10-yr yield down 3bps to 1.87%
• Dollar Index up 0.28% to 95.03
• WTI Crude futures down 0.2% to $40.11
• Brent Futures down 0.5% to $41.34
• Gold spot down 0.2% to $1,255
• Silver spot up 0.7% to $16.02

Top Global News

• TransCanada Locks in Growth With $10.2 Billion Pipeline Deal: Will pay $25.50 a share, representing a 10.9% premium to Columbia’s closing price on March 16, will also assume ~$2.8b of debt; will fund the purchase with proceeds from asset sales and a C$4.2b offering of new shares; is its biggest-ever deal
• TransCanada Bought a Power Plant Only to Sell It Six Weeks Later
• Adobe Beats Estimates as Demand Surges for Cloud Services: 1Q adj. EPS 66c, est. 61c; 1Q rev. $1.38b, est. $1.34b.
• Pearson Moves to Reassure Staff That Valeant Isn’t Going Broke: CEO Mike Pearson took a step to reassure his employees on Wed., saying in a memo to workers that the co. won’t go bankrupt, apologizing for recent turmoil, shrs down 51% Tues.
• Ackman’s Horror Week Gets Worse as Valeant Fall Threatens Rating: Standard & Poor’s warned it might cut Pershing Square’s credit rating to the cusp of junk-bond status
• Apple Prepares to Unveil Smaller IPhone With Narrower Ambitions: Analysts see Apple selling 15 million lower-end devices a year
• Apple Embraced by Bond Buyers While Others Left Out in the Cold
• JPMorgan Boosts Buyback by $1.88 Billion With Fed’s Blessing: Would be on top of the $6.4b in buybacks approved by regulators in last year’s capital plan
• CFTC Brought in to Police Murky Market for Biofuel Credits: Refiners spent at least $1b on ethanol credits in 2015
• Fed That Can’t Go It Alone Pulls Carpet From Under Bond Yields: Treasury 10-year yields see biggest weekly drop since Jan. 29; shallower rate path consistent with global backdrop: Barclays
• Dow’s Freakish Bounce Makes Investors Whole, Can’t Erase Doubts: Crude rally, patient Fed boost benchmark by 12% since Feb. 11
• Lockheed’s GPS Satellites Face New Delays Over a Cracked Part: Flawed capacitors from Harris Corp. may add 3 months to delays
• Viacom Gets Interest From 3 Dozen Cos. on Paramount Stake: WSJ: Players “include some Asian interests,” WSJ cites CEO Philippe Dauman in an interview.
• Facebook, Twitter in Race to Win Right to Stream Live TV: NYP: Facebook, Twitter approached programmers about a deal for rights to stream conventional TV programming: New York Post
• Orix Said to Plan $1b on Acquisitions Via U.S. PE Firm: Reuters: Plans to spend $1b over 3-5 yrs on acquisitions via a private equity firm it has set up in the U.S., Reuters reports
• Twitter to Shut TweetDeck for Windows on April 15: VentureBeat

Looking at regional markets, we as usual start in Asia where stocks traded mostly higher following a strong US lead where DJIA and S&P 500 closed in positive territory YTD after continued USD weakness boosted the commodity complex.

ASX 200 (+0.3%) coat-tailed on the commodity advance in which iron ore gained around 5% and WTI rose above USD 40/bbl to its highest since Dec. Nikkei 225 (-1.25%) underperformed after JPY continued to strengthen against USD to the detriment of local exporter competitiveness.

The Shanghai Composite Index advanced 1.7 percent and was up 5.2 percent
for the week, its best performance in four months. New-home prices
gained in 47 Chinese cities in February, compared with 38 in January,
according to a government report; also helping was the PBoC which upped its liquidity injections as not a day passes any more with some central bank engaging in drastic asset price reflating easing.

Hong Kong’s Hang Seng Index
rose to a two-month high. Tencent Holdings Ltd. jumped as much as 4.5
percent as investment in social networking and games helped Asia’s
biggest Internet company post a better-than-expected 45 percent jump in
quarterly sales.

10yr JGBs traded higher amid the risk-averse sentiment seen in Japanese stocks, with firm bids seen in afternoon trade after strong results from the BoJ’s JPY 1.26tr1 JGB purchasing operations which saw 10yr and 20yr yields decline to new record lows, while the BoJ were also said to purchase government debt under repo agreements for the 1st time in 5 years.

BoJ minutes from January 28th-29th policy meeting stated that negative rates were desirable to reach price goal and that underlying inflation trend is steadily progressing. BoJ minutes also stated that negative rates are to permit additional easing in 3 dimensions and that BoJ offered 2 options which were to expand QQE or adopt QQE with negative rates.

Asian Top News

• Yuan Strengthens After PBOC Raises Fixing by Most Since November: Dollar declines to 5-mo. low following Fed comments
• China Overseas Land Profit Advances 22% as Property Values Rise: Profit attributable to shareholders rose to HK$33.3b ($4.3b) last year, from HK$27.2b in 2014
• Emerging-Market Stocks Near Bull Market After Fed Turns Dovish: Rally will probably last for next 3 mos., CBA’s Ji says
• BOJ Minutes Show No Talk of More QQE Before Adopting Minus Rate: BOJ voted 5-4 on rate, one opponent of policy is leaving board
• Default Jitters Calm for Indian Lenders on $12 Billion Boost: RBI allowed banks to treat some balance sheet items as equity
• Leissner’s Work With Indonesia Financier Drew Goldman Scrutiny: Bank ended work on Newmont copper deal after in- house review
• Indonesia Group Seeks $1 Billion for Newmont Copper Asset: Financing would include $750m loan, rest in mezzanine

In Europe, equities have kicked off the final session of the week in a tentative fashion, with major indices relatively flat amid light news flow . In terms of a sector breakdown, energy names are once again among the underperformers, with the commodity complex coming under modest pressure as WTI futures reside around the USD 40/bbl level. Bunds have continued their move higher this morning, on track to end the week over a point higher, with today’s price action bolstered by dovish rhetoric from ECB’s Praet and Draghi.

European Top News

• UBS Bonus Pool Surges 14%, as Other Lenders Cut Compensation: Bonus pool swelled to CHF3.5b from CHF3.06b; CEO Ermotti received bonus of 11.5 million francs, up 37%
• Praet Says ECB Rates Can Still Fall If Shocks Worsen Outlook: Central bank’s chief economist says recovery remains fragile
• Generali Fourth-Quarter Profit Rises on Higher Operating Income: Net income rose to EU304m from EU81m million yr earlier
• Former Porsche Executives Acquitted in Stuttgart Trial: Former Porsche CEO Wendelin Wiedeking and ex-CFO Holger Haerter were acquitted of charges they manipulated shares of Volkswagen in 2008 in a failed bid to buy the carmaker
• Sunrise Gains After Germany’s Freenet Takes Stake in Carrier: Gained as much as 9.8% after Freenet agreed to buy a 23.8% stake
• EDF Said to Plan Approval of Hinkley Point Nuclear Plant by May: Still plans to make the final decision to go ahead with an GBP18b nuclear power plant in the U.K. before its AGM in May
• trategists Now See Virtually No Europe Stock Gains in 2016: Newest forecasts see weakest year since 2011 for region

In FX, it has so far been a very quiet session in Europe this morning, but with some notable volatility — against the USD — a welcome period of consolidation playing through across the board. The USD index has attempted a modest recovery of sorts, regaining some ground against GBP, where Cable has dipped back into the low 1.4400’s after the rejection of 1.4500. EUR/USD has drifted down into the mid 1.1200’s, but the commodity currencies have conceded lesser ground as risk sentiment has stabilised again.

In this respect, we have seen some basing out in spot and cross JPY rates also, but USD/JPY especially, is looking fragile above 111.00, though a move back to 112.00 would settle nerves . Little on the data slate until North American comes in; Michigan sentiment in the US and CPI in Canada are stand out, while Fed speakers Dudley, Rosengren and Bullard all make an appearance later today. NOK towards the better levels seen in the wake of the rate cut yesterday, but CHF trade very tight after the SNB provided the familiar rhetoric.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, gained 0.2 percent following a two-day slide of more than 2 percent that drove it to an eight-month low. The Fed cited weaker global growth and turmoil in financial markets for its decision to reduce the number of interest-rate increases forecast for 2016.

In commodities, WTI prices have started to consolidated around the USD 40/bbl after reaching highs of USD 40.55/bbl, and Brent has also slightly fallen of its recent highs and currently resides at USD 41.17/bbl. In addition to the dollar’s decline, crude was supported this week by data showing U.S. output fell to the lowest level since November 2014 as well as a planned freeze on production by countries including Saudi Arabia and Russia.

Gold prices have started to retrace after recent strengthening following the FOMC with the 1250.00/oz level firmly in its sights. Copper prices have erased recent gains after a recent rally over the last week and Iron Ore prices increase slightly on the session after continued improvement in the Chinese property sector. The Bloomberg Commodity Index held near a three-month high.

Bulletin Headline Summary from RanSquawk and Bloomberg

• European equities have started the session off on a tentative footing with newsflow and data very much on the quiet side after what has been another busy week in the market
• The USD index has attempted a modest recovery of sorts, regaining some ground against GBP, where Cable has dipped back into the low 1.4400’s after the rejection of 1.4500
• Looking ahead, highlight Include Canadian CPI, US U. of Mich. Sentiment, Fed’s Dudley, Bullard and Rosengren
• Treasuries higher in overnight trading, global equity markets mixed and oil drops; today’s economic calendar brings U. of Michigan Sentiment and three Fed speakers.
• Policy makers across the world are acting in ways that suggest there may have been more to last month’s Group of 20 meeting in Shanghai than mere platitudes about promoting global economic growth. That’s led some analysts to conclude that there is indeed a secret Shanghai Accord
• European Union leaders risked a showdown with Turkey over efforts to create a legal migration route to end the chaotic crossings of the Aegean Sea, as pressure from countries including Cyprus led the EU to retreat from earlier sweeteners
• UBS, which cut its securities unit to focus on wealth management, raised its bonus pool by 14% in 2015, to 3.5 billion francs ($3.6 billion) from 3.06 billion francs, leaving it the only major European lender to award bankers with higher compensation
• The ECB still has room to cut interest rates should the euro area’s economic recovery falter, Executive Board member Peter Praet said
• Deutsche Boerse AG and London Stock Exchange Group Plc want to create a European trading champion. They just don’t want regulators to think it’s too big to fail
• Investors at home and abroad can’t get enough 10-year Japanese government bonds, driving the yield to an unprecedented minus 0.135%
• The yuan headed for the biggest two-day gain in a month after China’s central bank raised its reference rate by the most since November following a decline in the dollar. The PBOC boosted its fixing by 0.51% to 6.4628 against the greenback
• $10.775b IG corporates priced yesterday; weekly volume $30.385b, March $116.805b, YTD $411.055b
• No HY priced yesterday, MTD 13 deals for $7.315b, YTD 38 deals for $22.165b
• BofAML Corporate Master Index OAS 2bp lower yesterday at +178, -32bp MTD, +0bp YTD; T1Y range 221/129
• BofAML High Yield Master II OAS 12bp lower yesterday at +682, -53bp MTD, -12bp YTD; T1Y range 887/438
• Sovereign 10Y bond yields lower; European, Asian equity markets mixed; U.S. equity- index futures rise. WTI crude oil, copper, gold fall

US Event Calendar

• 10:00am: U. of Mich. Sentiment, March P, est. 92.2 (prior 91.7)
  • Current Conditions, March P, est. 106.8 (prior 106.8)
  • Expectations, March P est. 82.5 (prior 81.9)
  • 1 Yr Inflation, March P (prior 2.5%)
  • 5-10 Yr Inflation, Mar P (prior 2.5)

Central Banks

• 9:00am: Fed’s Dudley speaks in New York
• 11:00am: Fed’s Rosengren speaks in New York
• 2:30pm: Fed’s Bullard speaks in Frankfurt

DB’s Jim Reid concludes the overnight wrap

Twenty-four hours on and there’s been little stopping the positive sentiment feeding its way through risk assets. With a dovish Fed to thank for that, yesterday saw the Dow (+0.90%) close in positive territory (+0.32%) for the first time in 2016. As a reminder it was down as much as -10% on the year during the February lows. The S&P 500 (+0.66%) had also joined the positive YTD club briefly but just failed to hold onto the stronger earlier gains by the end of play, while it was another strong session for US credit with CDX IG closing 2bps tighter. European equity markets were a little softer (the firmer Euro to blame) but, and playing catch-up, European credit markets were in rally mode with iTraxx Main and Crossover 6bps and 16bps tighter respectively.

Meanwhile the US Dollar has tumbled in a fairly impressive fashion since the FOMC on Wednesday with the Dollar spot index now down the most over a two-day period since 2009. It is emerging market currencies which have been the biggest beneficiaries of that, while yesterday also marked a landmark day for Oil as we saw WTI (+4.52%) close above $40/bbl for the first time in 2016. It’s now up a fairly remarkable +54% from the intraday lows of last month.

Doing little to hurt matters was further evidence of an improving US manufacturing sector yesterday. Indeed, on the back of a much better than expected improvement in the NY Fed empire manufacturing survey earlier this week, yesterday’s Philly Fed manufacturing survey showed the headline business conditions index rising an impressive 15.2pts to 12.4 (vs. -1.5 expected) and the best print since February last year. The details of the survey were encouraging also with new orders in particular a standout with the monthly increase the most since 2005, while shipments and employment also improved. All-in-all the data is certainly an encouraging sign for hopes of further improvement in this month’s ISM manufacturing reading which we’ll get two weeks today.

So in the past 8 days we’ve seen the ECB, BoJ and Fed meetings come and go and we can add the BoE, SNB and Norges Bank to that list after their respective policy meetings yesterday. Of the latter three the only change was a 25bps cut from the Norges Bank (as expected) to a record low 0.5% with plenty of signs that the Bank may be prepared to ease further later in the year. Despite only two of those six central banks actually having loosened policy, there’s no doubt that it’s been a decidedly dovish period. In the Fed’s case we’ve seen expectations for tightening scaled back, while the remainder appear to either be on hold in the near term or weighing the prospects for potential future easing later in the year. It’s worth taking a look at what the above action/lack of action has done for asset prices lately. Covering the period in the moments prior to the ECB last Thursday up to last night’s closing prices, the biggest impact has been in credit markets which is unsurprising given the news of potential corporate-bond buying from the ECB. In Europe we’ve seen Main and Crossover tighten 16bps and 53bps respectively, while US cash credit spreads have also performed very well with IG and HY 11bps and 75bps tighter respectively. Interestingly European equities are virtually unchanged with the Stoxx 600 -0.1% in that time. The S&P 500 is +2.6% however, driven by the last two days of gains. The USD index is 2.7% weaker, while the Euro (+3.0%) has failed to stick to the immediate post-ECB weakening script. Oil has rallied a robust +5.2%, Gold is +0.7% while moves in sovereign bond markets are perhaps most interesting. That’s more due to the lack of change in yields in the time period than anything substantial with 10y Treasuries just 2bps higher in yield, 10y Bund yields 1bp higher and 10y BTP yields (as a proxy for peripherals) 10bps lower. Clearly the volatility in between for all assets has to be acknowledged however.

Glancing at our screens this morning, bourses in Asia are closing the week on a high note generally and following much of the lead again from Wall Street last night. There are gains for the Hang Seng (+0.62%), Shanghai Comp (+1.88%), Kospi (+0.18%) and ASX (+0.33%), although bourses in Japan are weaker again have been weighed down by an appreciating Yen. The Nikkei is currently -1.28%. The other notable news this morning is out of China where the PBoC has strengthened the Yuan fix by the most since November (+0.51%) following those moves in the US Dollar yesterday. Elsewhere, Oil is continuing to hold those big gains, while credit markets in Australia and Asia are a couple of basis points tighter. The lone data has come out of China where property prices have continued to firm in February, gaining in 47 cities compared to 38 cities in January.

Moving on. With regards to the remainder of yesterday’s data, initial jobless claims printed at 265k for last week (vs. 268k expected) which was up a modest 7k on the prior week. There was further labour market data in the form of JOLTS job openings covering the month of January which came in slightly ahead of consensus at 5.54m (vs. 5.50m expected). Both the hiring and quits rates were reported as declining. Finally the Conference Board’s leading index was up a less than expected +0.1% mom in February (vs. +0.2% expected). Meanwhile in Europe the only data of note was the final revision to the February CPI report for the Euro area which was confirmed at -0.2% yoy at the headline, but revised up one-tenth at the core to +0.8% yoy.

Over at the BoE, as expected we saw no change in policy after a unanimous confirmation vote of 9-0. The bulk of the minutes showed little in the way of new information with domestic consumption reported as being robust and that the near term outlook for inflation was little changed since the inflation report last month. More interesting were the comments around the upcoming June Brexit referendum. The minutes made mention to there appearing to be ‘increased uncertainty surrounding the forthcoming referendum’ and that ‘uncertainty is likely to have been a significant driver of the decline in sterling’. The minutes also noted that ‘it may also delay some spending decisions and depress growth of aggregate demand in the near term’.

Looking at the day ahead now and what is a slightly lighter calendar relative to that of recent days. This morning in Europe the only data of note are the February PPI data for Germany and Q4 wage data out of France. In the US this afternoon the lone release will be the first read of this month’s University of Michigan consumer sentiment survey, where current consensus is for no change to current conditions but a modest pickup in expectations. Today will also see the first Fedspeak post FOMC so it’ll be worth keeping an eye on the individual comments from Dudley (due 1pm GMT), Rosengren (due 3pm GMT) and Bullard (due 7pm GMT).

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