EARLY US LANDSCAPE****

·         US Stock Futures flat to up…mixed over last few hours

·         Greek and Dubai spreads continue to tighten….Dubai shares rise.  following  last week's oversubscribed bond auctions by Greece and Spain

·         Credit-Default Swaps Fall to Six-Week low

·         Sarkozy Says Europe Ready to Aid Greece as Papandreou Heads to Obama Talks..but Moody's cites potential downgrade of Portugal's sovereign rating

·         Emerging-market stocks rose to a six-week high, currencies  of commodity-producing nations strengthened and oil and metals  advanced

·         Europe stocks slightly firmer at 7am et….Opened  positive territory, strong sentiment from Asia, the Euro and basic resource sectors rolled over into 5:00EST

·         Asian Stocks Rise to Six-Week High on U.S. Jobs Data, Sarkozy soothing words on Greece…

·         China’s Shanghai Compo advanced 0.7 percent

o   the governor of the central bank said the nation should be careful in easing policies to stimulate growth - BBG

·         Credit default  protection in  Asian bonds to the lowest in  seven weeks

·         FX:    Arguably the most important weekend news was made at a Saturday press conference by Chinese officials on the sidelines of the National People’s Congress (NPC) annual session. PBOC Governor Zhou said that the yuan (re)peg to the US dollar instituted in July 2008 was a "special measure" adopted in unusual circumstances. "This is a part of our package of policies for dealing with the global financial crisis," he explained. "These kinds of policies sooner or later will be withdrawn."  Uwe Parpart

·         FX:   euro advanced to a two-week high against  the yen overnight

·         pledge by French President Nicolas Sarkozy to support Greece boosted confidence in the global recovery.

·         FX:  Net Euro Speculative Short Positions Decline Marginally From Record, Yen Longs Surge – ZH on FTCT report

·         FX:   -- Yuan forwards strengthened to a one- month high as economists forecast a report this week will show consumer prices climbed the most in 16 months in February,

·         Copper up 1%

·         Crude up 55c - Oil Increases to Two-Month High Above $82 on Economic Optimism

o   Commodities are strong, although WTI is off highs at US$81.96

·         Crude:  Iran’s OPEC Governer Says $100 a Barrel Is Good Oil Price

·         Good demand for UK sovereigns:  The Bank of England's 3 year USD denominated bonds for reserves management are attracting good interest with orders said to be in excess of $2B and guidance tightened from +5bps over swaps to flat - TTN

·         Rates:  Treasuries fall, pushing 10-year yields to the highest level in almost two weeks

·         Rates:  Bear steepener trade on late last week:  2y rates rose 4bp but 10y (& 30y) rose 8bp each.

·         Rates:   Bond prices declined as investors prepared for this  week's auctions of $74 billion in government notes and bonds. The new supply includes $40 billion in three-year notes, $21 billion in 10-year notes and $13 billion in 30-year bonds. Both the 10-year and 30-year Treasury auctions are additional sales from last month's offerings.

·         New worry??:  Short-Term Rates Edging Up - WSJ

o   Short-term funding rates are creeping up, raising concerns that financing conditions could be tightening.

o   The increases, however, aren't seen as the beginning of another such spike,

o   given that market stress gauges remain calm.

o   On Friday, overnight repo rates on most Treasurys, which typically track the federal-funds rate, were around 0.20%, the upper end of the zero to 0.25% target for the funds rate. Earlier this year, repo rates were closer to zero and even negative.

·         Yen Libor Falls to Lowest Since 2006, Widening Dollar Premium

o   Yen borrowing costs between banks in London declined to the lowest in more than three years, widening the gap to higher dollar rates

·         Data

o   New Zealand manufacturing  sales increased the most in more than seven years during the  fourth quarter

o   Japan January current account, trade balance top estimates on strength in exports;

o    Japan posted a current-account surplus in  January as exports climbed for a second month

o   German industrial production rose 0.6% in January, a lower reading than analysts estimated

·         China big news:  China plans to nullify all guarantees local governments have provided for loans taken by their financing vehicles as concerns about credit risks on such debt surges.  Bloomberg

·         China big news:    PBOC Zhou Opens Possible Shift On FX Policy – DJ

§  Firmest hint yet it may make FX policy change, even as no timetable set

·         EU big news:  German Backs Creation Of "European Monetary Fund" – FT

·         US Deficit, Debt To Exceed Obama Forecasts: CBO – AFP

·         US Restates Its Backing For Fannie, Freddie - WSJ

o   The U.S. Treasury reiterated its commitment to protecting holders of debt in mortgage-finance giants Fannie Mae and Freddie Mac on Friday after comments from an influential lawmaker suggested that the companies' bonds mightn't be fully backed.

·         Banks caution:  ‘On the Edge’ Banks Facing Writedowns After FDIC Loan Auctions – BBG:  A Federal Deposit Insurance Corp. plan to auction more than $1 billion in assets seized from failed banks next month, including a loan to build a W Hotel in Atlanta, may trigger writedowns that weaken lenders nationwide

·         Banks:  Regulators shutter four banks Friday and are unable to find a buyer for two of the failed institutions.   - thestreet

·         Big bank oversight to stay with Fed – FT

·         M&A:  MetLife set to buy AIG's Alico unit – Reuters

·         M&A:  Royal Dutch Shell (RDSB LN, +0.2%). Shell and Petrochina lauch a A$3.3bn for Australian Oil exploration company Arrow Energy (AOE AU).

·         Resource shares were amongst the leading gainers as commodity prices moved higher helped by a weaker US dollar and after BHP Billiton (BLT.LN) said it had reached terms for most of its hard coking coal volumes for 2010

·         Billiton (BLT LN, +0.9%). Succeeded in pricing it's coking coal on a quarterly basis with Japans steelmakers agreeing to a 55% hike in price for 2Q.

·         Inflation:  Iron ore price could almost double by April – telegraph

·         Pharma names Roche  (after walking away from a study) and AstraZeneca [AZN.UK] (following disappointing study results) were consistent leaders to the downside of trading.  TTN

·         Media:  ABC returns to Cablevision, but talks go on – AP

·         Media:   Walt Disney  (DIS) movie "Alice in Wonderland"

o   Disney discovered an opening weekend in "Wonderland" the likes of which had never been seen before, taking in an eye-popping $210.3 million around the world in its debut

·         NY Democrat Massa To Resign From Congress Monday (dems under pressure)  –WP

·         Health-Care Bill:      Obama will try to rally public support with road trips to the Philadelphia area today and St. Louis on March 10

·         Health-Care Bill:      push to move bill by Mid March before  Obama overseas trip

·         Health-Care Bill:  Undecided Dems Weight Cost, Impact Of Health-Care Bill – WSJ

o   On Sunday, two Democrats who hold swing votes said they were focusing on how much money the overhaul would actually save, both for employers and insured workers, and for the federal government

o   Rep. John Adler (D., N.J.), Rep. Jason Altmire (D., Pa.), cited

·         Senate Democrats will continue to press ahead with their jobs agenda this week, with plans to advance a package of popular extensions for unemployment benefits and Medicaid payouts to states

·         Iraq has pulled off a largely successful national election. Violence led to the deaths of 36 individuals, a figure that is well below potential worst case scenarios.

·         Iran under pressure:  Traders cut Iran petrol line

o   Big traders have quietly ended sales to the Islamic Republic in a clear sign that the threat of sanctions and Washington’s behind-the-scenes efforts to convince companies not to sell to Tehran are paying off

o   http://link.ft.com/r/2SRI11/M9R6L5/NNT7T/YHCE3U/M9SQR1/JY/h

o

·         This week is busy with company news and wall street conferences :

o   Votes uncertain as healthcare endgame looms

o   Up to 4 IPOs on the docket this seek

o   Consumers in Coming Week

§  Tuesday also brings the Johnson Redbook Retail Sales index for the week ended Feb. 27. On Friday, the Census Bureau issues its retail sales report for February and the University of Michigan releases its preliminary March reading on consumer sentiment.

§  MCD: McDonald's posts February sales for stores open at least a year Monday

§  Heavy on consumer earnings this week:  JCG, MW, DKS, K, AEO, ARO, ANN, HOTT

o   Many investor meetings this week: incl:  PSE&G, United Technologies, World Fuel Services, Jarden, Texas Instruments, Novellus, Chevron and Foot Locker

o   Chevron, Exxon To Unveil 2010 Spending, Production Outlook -  annual analyst meetings in New York this wek (per DJ)

o   Tech busy:

§  Apple Inc. (AAPL) will begin taking online orders for its iPad Friday

§  ADI:  Analog Devices to host analyst meeting to be held on March 11 at 7:30 am.

§  NSM reports Thursday

§  Texas Instruments gives an update this week

o   Thursday Fed’s Flow of Funds report for the fourth quarter

o   Munis:  California sells about $2 billion of bonds Thursday

§  JPMorgan and Morgan Stanley are co-running the books next week for a selling team of 30 broker-dealer firms

§  http://www.bondbuyer.com/issues/119_292/california_general_obligation_deal-1009145-1.html

o   China's February trade figures are due on Wednesday, and economists polled by Reuters are looking for a nearly 39 percent year-over-year jump

o   Thursday: China is expected to report a raft of economic data, with numbers on inflation and sales showing the economy powering along

o   Rates:  This week we turn our attention to the $74 Bln of supply.

o   Among the significant conferences this week are the Raymond James Institutional Investors Conference from Sunday through Wednesday in Orlando, Fla.; Cowen Healthcare Conference from Monday through Thursday in Boston; Credit Suisse Group Global Media and Communications Conference from Monday through Wednesday in Palm Beach, Fla.; Jefferies Global Technology Conference from Monday through Wednesday in New York; JPMorgan Aviation, Transportation & Defense Conference on Tuesday and Wednesday in New York; Bank of America Merrill Lynch Consumer Conference on Wednesday and Thursday in New York; and Citi Financial Services Conference on Thursday in New York.  DJ

 

·         Earnings Monday:

o   Companies reporting after the close: HRB

 

·         Sovereign Risk stories :

o   Moody's cites potential downgrade of Portugal sovereign rating

§  Moody's says the recent weakening in Portugal's sovereign credit fundamentals, which is reflected in the negative outlook on the Aa2 government debt rating, and the challenges ahead for the domestic economy raise questions about the potential impact these developments may have on the credit profiles of Portuguese banks

o   EU:  German Backs Creation Of "European Monetary Fund" - FT

§  In light of Greece's financial problems, the German government favors the idea of setting up a European Monetary Fund, German Finance Minister Wolfgang Schaeuble says in Welt am Sonntag Sunday.

§  http://www.ft.com/cms/s/0/fa9877f0-2a26-11df-b940-00144feabdc0.html?ftcamp=rss

o   EU PLANS EUROPEAN MONETARY FUND-TYPE PROPOSAL BY END OF JUNE

o   Volcker  on EU:  Former Federal Reserve Chairman Paul Volcker said European officials are lucky that the € region’s first major crisis was sparked by one of its smaller members and he’s confident the currency will survive.   BBG

o   Greece:    Prime Minister George Papandreou finished his much anticipated meeting with German Chancellor Angela Merkel on Friday before speaking with French President Nicolas Sarkozy on Sunday, March 7.

o   Greece:    Prime Minister George Papandreou meets with President Obama in Washington on March 9.

o   Greece:     JPMorgan Says Buy Greek Bonds After Austerity Package, Debt Sale - BBG

§  JPMorgan Chase & Co. recommended buying five-year Greek government bonds and selling equivalent- maturity German securities, betting the yield premium, or spread, investors demand to hold Greek debt may halve to 175 basis points.

o   Greece:      Provopoulos Says Greek Bond Spreads Will Decline, FTD

§   Greek government won’t need outside financial support now that it’s announced a series of deficit-cutting steps, central bank head George Provopoulos

§  Provopoulos said he’s confident Greece will be able to refinance debt coming due in April and May

o   Sarkozy: Greece, France, Germany Will Take On Speculators

o   Greece    France Sarkozy: Working On Contingency Support Plan For Greece

o   Greece    French President Nicolas Sarkozy Sunday said a number of European Union countries were preparing a support package for Greece, even though he doesn't believe the Greek government will need financial help.

o   Greece    Greece will face its biggest challenge in April and May, when more than EUR20 billion of debt comes due for repayment. So far, Greece has raised EUR13.6 billion.

§  Greek PM: Greece's Current Borrowing Rate Not Viable For Econ

§  Greek PM: Certain Now EU Has Political Will To Support Greece

§  Greek PM: Don't Want To Apply For IMF Support

§  Greek PM:Want To Pay Similar Interest Rate To Euro-Zone Members

§  Greeks Divided Over Recent Austerity Measures – Polls

o   Greeks ban hedge funds in bond sale

§  Greece ordered its bankers to exclude hedge funds from a bond offering this week in an effort to punish the speculators it blames for destabilising its debt markets.

§  http://www.ft.com/cms/s/0/7c3a5c06-2897-11df-a0b1-00144feabdc0.html?ftcamp=rss

o   Portugal gov't OKs austerity plan, details next week Reuter

§  Portugal's Socialist government approved guidelines of a long-term budget austerity plan on Saturday, but will release details sought by markets demanding commitment to deficit and debt cuts, only next week.

o   Portugal austerity plan has no wage cuts, tax hikes:

§  http://www.reuters.com/article/idUSTRE6251K720100307?feedType=RSS&feedName=businessNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FbusinessNews+%28News+%2F+US+%2F+Business+News%29&utm_content=Google+Reader

o   Iceland: Under Pressure For Better Deal After Icesave "No" Vote - AFP

§  Iceland was under pressure Sunday to negotiate better terms after a referendum resoundingly rejected a deal to pay the U.K. and The Netherlands billions for losses in the Icesave bank collapse

§  With 93.5% of voters rejecting the deal Saturday according to near-final results, Iceland's left-wing government has to radically rethink the Icesave compensation agreement, observers said

o   Iceland:  Icelanders’ rejection of a foreign depositor bill complicates the prospect of a settlement and may leave the government unable to resolve a dispute with the U.K.and the Dutch for another year, Moody’s Investors Service said.

o   Iceland:   Iceland’s political stability may be under pressure and the government coalition may be “fraying a bit” after voters rejected a U.K. and Dutch depositor bill, Moody’s

o   Dubai:  debt deal expected this week: Reuters

§   Troubled conglomerate Dubai World expects to put its debt plan to creditors as early as this week but the final proposal is being delayed by efforts to accurately value developer Nakheel's assets, bankers said on Sunday

o   Dubai World debt proposals expected – FT

§  The troubled conglomerate is expected to approach lenders for the first time this week with a suggested proposal for restructuring $22bn of its debts, but some people fear a split among creditors

§  http://link.ft.com/r/2SRI11/M9R6L5/NNT7T/YHCE3U/ZBGH6G/JY/h

o   Dubai:   Dubai World, the state-owned holding company in talks to renegotiate about $26 billion of debt, will ask banks for permission to delay loan repayments when it presents a plan to creditors this month - BBG

o   Dubai:  Dubai shares erased losses after three bankers said Dubai World, the state-owned holding company seeking to renegotiate terms on about $26 billion of debt, will ask banks to roll over loans for years when it presents a restructuring proposal to creditors this month.  BBG

o   Bulgaria, the European Union member boasting the bloc's  smallest budget deficit, risks seeing its banks sucked under by  the fiscal sins of neighboring Greece, Fitch Ratings and  Capital Economics Ltd. Warned

 

 

·         China stories over the weekend -  China's annual parliament meeting ongoing

o   China leadership may have understated its 2010 GDP growth and inflation forecasts at 8% and 3% respectively, with risks of authorities exiting accommodation too soon -  London Times

o   China big news:  China plans to nullify all guarantees local governments have provided for loans taken by their financing vehicles as concerns about credit risks on such debt surges.  Bloomberg

§  The Ministry of Finance will also ban all future guarantees by local governments and legislatures in rules that may be issued as soon as this month, Yan Qingmin, head of the banking regulator’s Shanghai branch, said in an interview.

o   China big news:    PBOC Zhou Opens Possible Shift On FX Policy – DJ

§  Firmest hint yet it may make FX policy change, even as no timetable set

o   The China SE Shang Property Index, which measures 34 developers traded up in Shanghai, on a report that a government document didn’t mention a property tax.  BBG

o   China foreign minister says U.S. ties "disrupted" – Reuters

o    

o   China:    A global recovery “isn’t solid,” Zhou Xiaochuan, the governor of the People’s Bank of China, said at a March 6 press briefing in Beijing. “We must be very cautious about the timing of normalizing the policies.”  BBG

o   China  FX:    China central bank governor says US dollar still reigns supreme

§  speaking at a news conference on the sidelines of China's annual parliament, Mr Zhou expressed a much more conservative view about the international currency order, emphasising that a healthy US dollar was vital to the workings of the global economy.

§  http://www.businessspectator.com.au/bs.nsf/Article/UPDATE-1-Dollar-still-reigns-supreme--China-cbank--3AA3W?opendocument&src=rss

o   China  FX:   China wants yuan in SDR in 2015

§  china is pushing for the yuan to be added to the basket of currencies that comprise the IMF's special drawing rights, aiming for its inclusion in 2015, Japanese daily Sankei Shimbun said on Saturday

§  http://www.reuters.com/article/idUSTRE6250LC20100306?feedType=RSS&feedName=businessNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FbusinessNews+%28News+%2F+US+%2F+Business+News%29&utm_content=Google+Reader

o   China  FX, change in sentiment:  PBOC's Zhou: China To Eventually Move Away From Current Exchange-Rate Policies – WSJ

§  Central bank Gov. Zhou Xiaochuan said China will eventually move away from its current exchange-rate policies, which he described as a temporary response to the global financial crisis, but downplayed the idea that a move could come in the near future.

§  Zhou's comments Saturday at a press conference were the most direct suggestion to date by a Chinese official that the yuan's current de-facto peg to the dollar will not be maintained indefinitely.

§   Previously, government officials have stressed currency stability without much qualification, and rejected foreign pressure to allow the yuan to strengthen.

§  http://www.telegraph.co.uk/finance/7386391/China-ready-to-end-dollar-peg.html

o   PBoC Vice Gov Su Ning commented that China's inflation outlook was the key factor in its interest rate decisions. Su urged banks to carry out stress tests in order to ensure their credit quality and that the amount of non-performing loans was decreasing - TTN

o   PBOC: Global FX Policies Should Be Discussed Under G20 Framework

o   PBOC Vice-Gov: One-Off Yuan Revaluation Can't Solve Trade Issue

o   PBOC: To Strengthen Coordination, Cooperation With Other Central Banks

o   China Minister: US Limiting China Exports Also Unfair To US Manufacturers

o   China Minister: US Can't Both Limit China Exports, Criticize Yuan Policy

o   China NDRC: "Not A Penny" In CNY4T Stimulus Program Has Entered Property Market

o   China Says Ready To Move Past Tensions With US - AFP

§  China Sunday blamed the U.S. for causing "serious disturbances" in their relationship but also called for the two Pacific powers to work together to get ties back on track

§  Foreign Minister Yang Jiechi reiterated China's criticism of U.S. arms sales to Taiwan and President Barack Obama's meeting last month with the Dalai Lama but appeared to leave the door open for the two sides to mend fences.

§   "The United States should properly handle the relevant sensitive issues and work with the Chinese side to return the China-U.S. relationship to a track of stable development," Yang told reporters.

o   China Says No Request Yet From Google For Talks - AFP

§  China said Saturday it had not received any request for talks from Google (GOOG), as the Internet giant insists it remains firm in its plan to end censorship on search results in the communist state.

o   China's $300 billion sovereign-wealth fund.  CIC Executive: Paper Profit By End-2009 Over $10 Bln - DJ

§  China Investment Corp.'s unrealized earnings by the end of last year exceeded $10 billion, said Jesse Wang, executive vice president of China's $300 billion sovereign-wealth fund.

o   China will cool lending by canceling loan guarantees, official says

§  China's next big move to tighten lending will be an across-the-board nullification of loan guarantees that were made by local governments, said Yan Qingmin, head of the Shanghai branch of the China Banking Regulatory Commission. The Ministry of Finance will also prohibit future loan guarantees by local governments and legislatures, he said. "By striking the fear of God into lenders, regulators hope to get them to turn off the tap," said Patrick Chovanec, a professor at Tsinghua University. Bloomberg (08 Mar.)

TODAY’S BIG STORIES

·         Equity Wrap:

o   Stocks climbed back into the black for 2010

o   The S&P 500 closed higher for six straight days to log its third gain in four weeks, adding 34, or 3.1%, to 1139

o   Wrapped up the week on a high note when we typically see a selloff in the last hour of trading going into the weekend – indexes were higher across the board for the week, smaller than expected loss of jobs gave investors the confidence they needed going into the weekend and had them holding and adding onto positions. Volume was average, but buyers were a bit more relaxed than they have been over the past week and had some room on px in order to get the shares in their pockets. Internally here we saw a mix of players across the board adding on, saw some guys paring back during the second part of the day to take some profits. Buy and sell names here were pretty much even, the breadth of the market had 5 ¼ advancing issues for every 1 declining. We pulled through the 1126 resistance and closed at the 1139 resistance. We hit more resistance at 1150 and again @ 1166 if we continue to go higher. This was definitely a melt-up but not to be denied. We saw  a  little of everything again but the prudent long term guys were better for sale, had  size for sale AMAT APA MUR  AVT  RN KO WTW  so across the board and there was  buying as well but it really did feel like a melt up

o   (Billy Clark)

·         Treasury’s Wrap:

o   Treasury market opened up in New York under some pressure as participants squared away position ahead of today's extremely uncertain payrolls number. The selling continue in the market after the stronger than expected report, US only lost 36K jobs in February, expectations for a loss of 60K with many whisper even higher after the snowstorms of the northeast; the unemployment rate stayed unchanged at 9.7% after a .1% uptick was expected. At first the selling was led by the short- intermediate sectors on this report but soon after long end came under severe pressure as setups occurred ahead of next weeks auctions. Treasuries quieted down in the late morning, grinding higher for the remainder of the session. At 3PM Treasuries were lower across the curve with yields ~5-8 bps higher,  the long end was the worst performing sector of the day.

o   This week we turn our attention to the $74Bln of supply. We look for these auctions to all be well received by end users but look for more of a concession to occur  ahead of the 10s and 30s.

o   Cantor Primary Dealer desk

·         high yield Wrap: CDX HY 13 jumped 1 1/9 point Friday – ended week up 2 points!

o   3 deals priced Friday..to close out a better-than $3.5 billion week in the junk primary. (PN)

o   new deals from Avis Budget Group Inc., Zayo Group, LLC/Zayo Capital, Inc. and Holly Energy Partners LP/Finance Corp.

o   As has been the case with most of the new issues which priced during the past week, traders mostly saw the new bonds firmer when they hit the aftermarket. (PN)

·         Convertibles wrap:  Priceline.com  newly priced 1.25% convertibles traded up to 101 out of the chute on Friday after the issue priced at the midpoint of talk late Thursday.

·         Investment grade Wrap:  CDX IG 13 tighter by 4bp fri.  EXPECT BUSY WEEK THIS UPCOMING WEEK IN NEW BOND SALES (PN)

o   Markit CDX North America  Investment-Grade Index  dropped 6 basis points last week to 85.4 basis  points, the lowest since Jan. 20

o   Mixed volumes in IG Friday as spreads tightened 5-10bps with bank/finance the best performing sector. 

o   The new GS 5.375 20 (A1/A) are going out +180-176 after coming +190 Monday and going out +187-185 thur night. 

o    All of the recent deals (away from PSD) continue to grind in (NOMURA, RSG, BAX,…), DOW 19s are back through +200 (recent tights +180, recent wides +235), and more real money buyers were coming in today with the treasury back up.  We continue to go back and forth on SIEGR 26s and traded some CCE 26s as we remain buyers of that part of the curve.

o   The confusion, for lack of a better word, out of Barney Frank today did not have an effect to speak of on IG spreads.  Kevin Griffin and Mark Mothner put out commentaries intra-day on the effects on the MBS and agency markets.

o   Michael Salemo

·         Stock caution as fund cash falls:  Fastest Cash Depletion Since 1991 – BBG

o   Equity mutual funds are burning through cash at the fastest rate in 18 years, leaving them with the smallest reserves since 2007 in a sign that gains for stocks may slow

o    Cash dropped to 3.6 percent of assets from 5.7 percent in January 2009, leaving managers with $172 billion in the quickest decrease since 1991, Investment Company Institute data show.

o   The last time stock managers held such a small proportion was September 2007, a month before the S&P 500 began a 57 percent drop

·         Money flows:  Mutual fund investors poured an estimated $1.4 billion daily into U.S. equity funds on the first four days of March.  Such heavy buying often coincides with short-term market tops.   Trimtabs

·         Money flows:   Inflows into Non-U.S. Bonds Remain Heavy.  Foreign Bond Funds We Track Daily Get 2.2% of Assets in Past Two Weeks, Biggest Inflow of Any Major Type of Bond Fund.  Trimtabs

·         Credit markets:  Santander deal heralds growing confidence

o   What bankers have nicknamed the “brain damage premium” is slowly disappearing in the securitisation markets, potentially opening up a source of funding for banks that could help ease tight lending conditions.

o   The belief comes after a £1.4bn deal for Santander became the first since the crisis without a “put” option, or redemption guarantee, indicating greater investor confidence.

o   http://www.ft.com/cms/s/0/ba755d3a-2a28-11df-b940-00144feabdc0.html

·         Credit markets:  With bank credit frozen, small U.S. businesses starting to turn to microlenders

o   But tightened underwriting standards have pushed many consumers out of the traditional banking system and sent them hunting for alternatives. In a survey of 16 microlenders by Opportunity Finance, a network of financial groups, 81 percent reported that applications for those small-dollar loans increased during the fourth quarter compared with the previous year.

o   "We're seeing a lot of demand from formerly banked businesses that are now looking to us to meet their needs," said Mark Pinsky, chief executive of Opportunity Finance.

o   http://www.washingtonpost.com/wp-dyn/content/article/2010/03/07/AR2010030702518.html

·         Jobs:   Christina Romer, President Barack Obama’s chief economist, told Bloomberg Television that it’s “very realistic” to expect employment growth in the U.S. in the next few months.

·         Jobs: Wary Companies Rely On Temporary Workers - WSJ

o   The ranks of temporary workers continue to grow, but with employers fretting about the strength of the upturn, there are few signs many temps will soon make the jump to permanent positions.

·         Jobs:  States in U.S. to Cut More Workers to Offset Revenue Decline:  BBG

o   State and local governments are likely to keep cutting jobs  even as the broader labor market shows signs of emerging from  the worst slump since World War II, economists said

·         Jobs:  GE plans to ramp up its college hiring efforts this year. "We have decided to double our on-campus hiring in the 2010 recruitment cycle versus the previous year," GE CEO Jeff Immelt said in his annual letter to shareholders released Friday.

·         CBO  cautions:   US Deficit, Debt To Exceed Obama Forecasts: CBO - AFP

o   The United States will chalk up a wider budget deficit and higher national debt than projected by U.S. President Barack Obama over the next decade, new estimates by Congress showed Friday

o   Obama has underestimated the government budget deficit for the 2011-2020 period by $1.2 trillion and the public debt by $1.8 trillion

o   Under Obama's latest budget projections, the cumulative deficit over the decade would be $8.532 trillion, or 4.5% of gross domestic product, the nation's economic output.

o   But the CBO estimated Friday the deficit would snowball to $9.761 trillion or 5.2% of GDP

·         NABE cautions:   Long-Term U.S. Budget Gap Threat to Borrowing, Economists Say (BBG)

o   Annual budget deficits in excess of $1 trillion will, over time, hamper the U.S.’s ability to borrow, and more government stimulus isn’t needed, a survey by the National Association for Business Economics showed.

o   Budget shortfalls and rising debt relative to gross domestic product will become a bigger problem as entitlement payments grow, according to the poll taken Feb. 4 to Feb. 22.

o   Eighty percent of economists surveyed said a growing deficit will result in higher borrowing costs for the nation

o   “The running of large budget deficits and the fiscal stimulus are a natural consequence of a deep recession, but this is definitely a concern in the intermediate and long run,” said Lynn Reaser, president of NABE and chief economist for Point Loma Nazarene University. “It means higher interest rates that will slow potential growth.”

·         Is Shanghai Property the Next Dubai?

o   Stories of rapidly inflating property prices, loose credit and off-plan speculation sound only too familiar to veterans of the Dubai real estate crash, and yet this is what we hear from Shanghai these days. How long before the Chinese property bubble bursts?

o   http://seekingalpha.com/article/192436-is-shanghai-property-the-next-dubai?source=feed

·         Fed watch:  Big bank oversight to stay with Fed

o   Banks with more than $100bn of assets will be overseen by the US Federal Reserve in a regulatory reform plan that represents a partial victory for the central bank after months of attacks in Congress

o   http://link.ft.com/r/2SRI11/M9R6L5/NNT7T/YHCE3U/PRFJNX/JY/h

·         Fed watch: Christina Romer To Remain At White House, Not Joining Fed – DJ

o   Christina Romer, one of U.S. President Barack Obama's top economic advisers, said Friday she won't be taking a job at the Federal Reserve Board but will stay at the White House.

o   Vice Chairman Donald Kohn said this week he would step down from the Fed board in June, leaving three vacancies on the seven-member body, giving U.S. President Barack Obama the chance to reshape the Fed. Romer was one of the names floated as a possible successor following Kohn's announcement.

·         Japan exit strategy,  stimulus:  Japan's Finance Minister Kan warned that despite the string of improving economic data, it is still too soon to end fiscal stimulus support or to be optimistic about the economy – BBG

·         Korea  exit strategy  Ahead of this week's Bank of Korea meeting, Yoon said it was too early to raise rates, with asset prices and inflation pressures staying subdue – TTN

·         credit default swaps   Merkel criticizes speculators profiting from Greek crisis

o   German Chancellor Angela Merkel demanded additional control on the derivatives market, saying speculators are exploiting credit default swaps to profit from Greece's debt crisis. "We must succeed at putting a stop to the speculator's game with sovereign states," she said after a meeting with Greek Prime Minister George Papandreou. The Times (London) (06 Mar.)

·         ECB's Trichet Fears Systemic Instability Is Underestimated - DJ

o   The systemic instability associated with the dramatic increase in the use of derivative instruments on financial markets may be underestimated, ECB President Jean-Claude Trichet said Saturday in Berlin

o    "What I fear is that we are underestimating systemic instability that is associated with those structural transformations," Trichet said, referring to the growth of speculative trading practices, such as derivatives and credit default swaps, over the past decade.

·         Deflation  Stephen King: Deflation... the next big surprise?

o   The UK is unusual today because, unlike many other countries, inflation is a little too high

o   http://www.independent.co.uk/news/business/comment/stephen-king/stephen-king-deflation-the-next-big-surprise-1917933.html

·         IMF’s Inflation Proposal Is ‘Nonsense,’ Volcker Tells FAZ

o   A proposal by International Monetary Fund economists that monetary-policy makers increase inflation targets is “nonsense,” former Federal Reserve head Paul Volcker told the Frankfurter Allgemeine Zeitung.

o    While inflation is a distant threat, policy makers must keep an eye on the risks and act when required,

·         UK:  BCC: UK Recovery Will Be Fragile, High Risk Of Relapse (DJ)

o   The U.K.'s economic recovery will be fragile, with below average growth over the next two years, and the risks of a relapse are high, the British Chambers of Commerce said Sunday

o   Gross domestic product will grow 1.0% this year and 2.1% in 2011, after plunging 5.0% in 2009, the business group said in an economic report ahead of the government's budget expected later this month.

·         UK:   London's 'billion dollar club' of hedge funds shrinks by 15pc

o   London's share of the hedge fund "billion dollar club" has dropped by more than 15pc since last year, despite the sector's recovery in recent months.

o   http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/privateequity/7392467/Londons-billion-dollar-club-of-hedge-funds-shrinks-by-15pc.html

·         UK:   U.K. Set to Become One of The Most Expensive for Tax, WSJ Says

o   Britain will become one of the most expensive financial centers in terms of income tax when a new 50 percent rate is introduced next month, the Wall Street Journal reported, citing a study by KPMG.

·         Africa IMF Chief Lauds African Economies, ups forecast

o   Africa's economic engines are emerging quickly from a global recession, powering better-than-expected growth for the bulk of the continent, said the International Monetary Fund's managing director.

o   Dominique Strauss-Kahn predicted growth for sub-Saharan Africa will hit 4.5% this year. That estimate topped an earlier IMF projection of 4% growth for the region

o   http://online.wsj.com/article/SB10001424052748704706304575107642759660932.html?mod=rss_whats_news_us&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wsj%2Fxml%2Frss%2F3_7011+%28WSJ.com%3A+What%27s+News+US%29&utm_content=Google+Reader

·         Protectionism: Brazil to Impose Higher Tariffs on 50 U.S. Products, FT Reports

o   Brazil will publish today a list of 50 U.S. products on which it will impose higher tariffs, as part of a long-running confrontation over cotton subsidies

o   Last year, Brazil won a ruling by the World Trade Organization against the U.S. after arguing that its cotton producers had suffered unfairly from illegal subsidies to U.S. cotton farmers

 

·         US politics: 

o   health-care overhaul:   Democrats Voice Health Bill Doubts

§  Some House Democrats wavering over whether to back a health-care overhaul questioned whether it would effectively curb the country's health costs, highlighting a difficult issue that the White House and congressional leaders must address in the final negotiations on the measure.

§  http://online.wsj.com/article/SB10001424052748704706304575107752217143056.html?mod=rss_whats_news_us&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wsj%2Fxml%2Frss%2F3_7011+%28WSJ.com%3A+What%27s+News+US%29&utm_content=Google+Reader

o   health-care overhaul:     Abortion could be health bill deal breaker in House

§  Read more: http://www.politico.com/news/stories/0310/34007.html#ixzz0hWjUbO2O

o   health-care overhaul:    Votes uncertain as healthcare endgame looms

§  http://www.reuters.com/article/idUSTRE61O4NV20100307?type=politicsNews%3FfeedType%3DRSS&feedName=politicsNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Reuters%2FPoliticsNews+%28News+%2F+US+%2F+Politics+News%29&utm_content=Google+Reader

o   Jobs Bill: Senate Democrats will continue to press ahead with their jobs agenda this week, with plans to advance a package of popular extensions for unemployment benefits and Medicaid payouts to states

§  No votes are scheduled for Monday, but Senators will return Tuesday to vote to end debate on the measure and vote on its final passage

§  http://www.rollcall.com/news/43915-1.html?CMP=OTC-RSS

o   financial reform:  Key vacancies give Obama a chance to steer financial reform

§  President Obama has the chance during his first term to appoint leaders for each of the federal agencies that oversee banks, an important opportunity to reshape the government's approach to regulation even as the White House struggles to push structural reforms through the Senate.

§  opportunity comes in August, when John C. Dugan reaches the end of his term as comptroller of the currency, the chief regulator for most of the nation's largest banks.

§   

§  In addition, the Senate is moving toward legislation that would authorize the president to appoint a new regulator devoted to protecting consumers from abuse by lenders

§  http://www.washingtonpost.com/wp-dyn/content/article/2010/03/07/AR2010030702703.html

o   US Energy Secy: US Needs Climate Bill This Year – DJ

§  U.S. Energy Secretary Steven Chu said Friday the Obama administration wants to establish federal climate-change policy this year and is talking with lawmakers about a wide range of options for rules that would limit greenhouse-gas emissions

§  "We've got to get it done this year," Chu said, speaking at a Wall Street Journal conference in Santa Barbara, Calif.

o   Obama to push White House vision for NASA in April (Reuters)

§   U.S. President Barack Obama will outline his administration's vision for space agency NASA and an eventual trip to Mars during a conference in Florida in April, the White House said on Sunday.

o   Democrats' ethical lapses could threaten hold on power

§  Congressional Democrats reclaimed control of Congress in 2006 by pledging to "drain the swamp" after Republican ethics scandals rocked Capitol Hill. Now, a series of controversies involving Democratic members has robbed the party of its claim to hold the higher moral ground -- and could threaten its hold on power in this fall's elections.

§  http://www.washingtonpost.com/wp-dyn/content/article/2010/03/05/AR2010030504434.html

o   Unrest in Democratic Party plays out in Emanuel controversy

§   White House chief of staff Rahm Emanuel has become a reluctant central figure in the battle between liberals and centrists in the Democratic Party. Read more

o   Romney: No decision on 2012 presidential run until after midterms – The Hill

·         Munis caution:   Treasuries Supplanting Munis as Brown Brothers Says Two-Year Notes Ascend - BBG

o    Municipal bond investors are piling into Treasuries as  state and local government finances worsen and the yield  advantage for tax-exempt securities evaporates. Local  government bonds due in three years with AAA ratings yielded 66  percent of similar maturity Treasuries last month, about the  lowest level since Bloomberg began compiling the data in 2001

o   If the ratio moves closer to 60 percent, investors in the 38.3  percent federal tax bracket would lose all the benefits of  sheltering income that comes from municipal debt

·         Munis:   California Treasurer Bill Lockyer’s bid to sell $2 billion of bonds this week, his first issue since November, may benefit from a falling risk premium after lawmakers at his urging passed a bill to prevent the most- populous U.S. state from running out of cash. BBG

·         Munis:  The Swaps That Swallowed Your Town

o   Across our very own country, municipalities, school districts, sewer systems and other tax-exempt debt issuers are ensnared in the derivatives mess.

o   http://www.cnbc.com//id/35749178

·         GOOG attacks may be even worse

o   Recent cyber attacks disclosed by Google Inc. could have been considerably more widespread than previously believed, security researchers familiar with the investigation said.

o   http://online.wsj.com/article/SB10001424052748704625004575090111817090670.html?mod=googlenews_wsj

 

COMPANY NEWS WITH MACRO IMPLICATIONS

 

 

·         GE:  GE CEO Jeff Immelt  annual letter to shareholders released Friday.

·         Petrofac Trading higher post results

·         CHRW C.H. Robinson is a way to play rising global trade says Barron's

 

 

·         Money Raising:  approx 4 IPOs expected this week

·         M&A:   Royal Dutch Shell Plc and PetroChina made an offer worth more than A$3.3 billion ($3 billion) to acquire Arrow Energy Ltd., the holder of Australia’s biggest coal-seam gas acreage, triggering a record gain in the shares.  28% premium

·         M&A:  U.K. regulators are investigating whether Kraft Foods Inc. (KFT) misled employees and investors during its battle to take over Cadbury PLC (CBY, CBRY.LN), people familiar with the matter said, as ill-feeling generated by the deal continues to reverberate in Britain. WSJ

·         M&A:  MET/AIG deal anncd as expected

o   MetLife to acquire American Life Insurance Company from AIG for $15.5B

·         M&A:   WSJ says Pfizer raised offer for Ratiopharm to up to $4B

·         M&A:  IUSA infoGROUP to be acquired by CCMP for about $460M reports the WSJ ($8.16)

·         CMBS good news:  Harrah’s to Extend $5.5 Billion CMBS Loan Maturities to 2015 - BBG

o   Harrah’s Entertainment Inc. said lenders agreed to extend $5.5 billion of maturities to 2015, giving the world’s biggest casino company five years to make any material repayments

o   Harrah’s got unanimous consent to push back repayments on loans that had been packaged and sold as commercial mortgage- backed securities, the Las Vegas-based company said in a statement yesterday. Harrah’s can repurchase the loans, which cover six casinos, at a discount under the amendments.

·         Linpac faces sale as lenders flip assets – FT

o   Lenders to Linpac are planning to break up and sell Europe's biggest food packaging group in a sign that banks are seeking to flip assets quickly back into the market after taking them over through debt restructurings

o   http://link.ft.com/r/2SRI11/M9R6L5/NNT7T/YHCE3U/KEQI9D/JY/h

o

·         First Cleared 2013 Carbon Option - BBG

o   Bank of America Merrill Lynch and Credit Suisse Group AG traded the first option linked to December 2013 carbon dioxide futures contract that was cleared on the European Climate Exchange.

·         Vineyard Defaults Surge as Lost Land Values Undermine Napa Wine - BBG

o   In California’s Napa Valley, producer of the most expensive U.S. wines, 2010 may be a vintage year for foreclosures as the industry is squeezed by falling land values and a consumer shift to cheaper brands

o   As many as 10 wineries and vineyards in Napa will change hands in distressed sales or foreclosures this year and next, up from none in 2008, according to Silicon Valley Bank. In a bank survey of vintners, 7 percent called their finances “very weak” or “on life support.”

o    “We have 250 vintner clients saying this downturn is the worst in 20 years,”

 

·         Miners, materials: 

o   Billiton (BLT LN, +0.9%). Succeeded in pricing it's coking coal on a quarterly basis with Japans steelmakers agreeing to a 55% hike in price for 2Q.

o   Inflation:  Iron ore price could almost double by April - telegraph

§  It's time to make hay once again for the global miners - with the outlook for iron ore pricing looking very sunny indeed.

§  http://www.telegraph.co.uk/finance/markets/7392691/Iron-ore-price-could-almost-double-by-April.html

o   Inflation: China facing huge iron ore benchmark hike: Wuhan Steel

§  Chinese steel mills are facing massive difficulties during this year's annual iron ore benchmark talks with big price hikes set to push many of them into the red, the head of China's third biggest steel firm, Wuhan Iron & Steel Group, said.

§  http://www.businessspectator.com.au/bs.nsf/Article/UPDATE-2-China-facing-huge-iron-ore-benchmark-hike-3B8HP?opendocument&src=rss

o   Japan Steel Cos Agree To 55% Increase In Coal Price – DJ

§  Japan's leading steel makers and BHP Billiton have agreed to a 55% increase in the price of coking coal for the April-June quarter

§  marking a major change in the way they negotiate prices.

§  The latest pact means that the major coal buyers in Asia gave in to pressure from the Australian mining giant for a change of contract terms after years of negotiations in which contract prices were set annually.

o   CHINA STEEL MILLS FACE TOUGH IRON-ORE PRICE TALKS - DJ

§  Deng Qilin, the chairman of the China Iron and Steel Association, warned Sunday of a large rise in bulk prices for iron ore this year and said China risks serious social consequences if local steel mills were to pass these costs onto downstream industries.

o   China Iron Ore Contract With BHP Starts January, Maanshan Says - BBG

§  Steelmakers in China, the world’s biggest buyer of iron ore, have signed provisional pricing contracts with BHP Billiton Ltd. that started from Jan. 1, Maanshan Iron & Steel Co. said.

§  “We’re paying them a provisional price that will backdate when a price agreement is reached,” Maanshan Steel Chairman Gu Jian Guo said in an interview in Beijing today, declining to give the pricing level or the length of the contract.

o   China Mills Should Promote Iron-Ore Benchmark: Minister

§  China's steel mills need to promote the iron-ore benchmark pricing system, Industry and Information Technology Minister Li Yizhong said Friday, the Securities Daily reported Saturday

§  Li's remarks come at a time when global iron-ore miners are signaling they no longer support the decades-old benchmark pricing system, which sets a bulk discount rate negotiated annually between miners and their Asian customers. These talks broke down with China last year

o   Vedanta  (VED LN, -0.48%). Exercised their over-allocation option to increase their convertible bond offering $78m to $883m.

 

 

·         Airlines positive:  China Eastern Sees 2010 Passenger Volume Up 20%!! – DJ

o   China Eastern Airlines Corp. (CEA) Chairman Liu Shaoyong said Sunday he expects the company's passenger volume to grow more than 20% in 2010, after the airline carried 44 million passengers in 2009, up 18.3% from the previous year.

·         Airlines positive:   Virgin Blue CEO Sees Signs Business Travel Is Improving - DJ

o   John Borghetti, newly appointed chief executive of airline Virgin Blue Holdings Ltd. (VBA.AU) Sunday said he expects a pick up in corporate air travel as the economy recovers and said there are already signs businesses spend on travel is beginning to turn around from lows hit during the global economic downturn.

 

·         Tech, telco, media :

o   AUO AU Optronics announces preliminary Feb revenue of NT$32.7M, (14.5%) m/m and up 112.4% y/y

o   Walt Disney  (DIS) movie "Alice in Wonderland"

§  Disney discovered an opening weekend in "Wonderland" the likes of which had never been seen before, taking in an eye-popping $210.3 million around the world in its debut

o   WPP. Numerous upgrades on back of numbers out last Friday, however stock trading down 1.5% after strong run

o   Credit Suisse media conference in London

o   Disney returns ABC station to Cablevision - WP

§  ABC returned to the televisions of Cablevision's 3 million New York area subscribers late Sunday, allowing viewers to catch most of the Academy Awards. But the companies didn't say whether they had ended their tense and bitter impasse over how much the cable operator should pay Walt Disney

o   Cablevision Programming Blackout Draws Fire In Washington - DJ

§  Senator John Kerry (D., Mass.)--chairman of the Senate Commerce Subcommittee on Communications, Technology, and the Internet--objected to a blackout of New York's WABC broadcast station on cable systems owned by Cablevision Systems Corp. (CVC) Sunday.

§  The Walt Disney Co. (DIS), owner of ABC Broadcasting and the WABC station, pulled its broadcast signal from Cablevision after it failed to reach an agreement on what the cable provider should pay to air the broadcast station.

§   Kerry, in a press release, said the blackout inflicts "collateral damage" on TV viewers who "have done nothing wrong."

o   Hewlett-Packard(HPQ) downwardly revised its fiscal first-quarter profit following developments in litigation involving Electronic Data Systems, a company H-P acquired in 2008.

o   AAPL, T:  AT&T Won't Carry IPad In Its Stores -AT&T Spokesman – WSJ

o   China Unicom: Will Lower iPhone Prices If Conditions Permit  - DJ

o   BBY:  Panasonic To Tie Up With Best Buy On Sale Of 3-D TVs In US – Kyodo

o   Shares of Solon SE, the German maker of solar panels, jumped as much as 21 percent following a report that the unprofitable company may get state aid guarantees.

o   GOOG:  Top 3 Google Executives To Be Paid $1 Each, No Bonuses For 09

o    

 

 

·         Financials:

 

·         Banks:  Regulators shutter four banks Friday and are unable to find a buyer for two of the failed institutions.

§  http://www.thestreet.com/story/10696897/1/four-banks-fail-depositors-suffer.html?puc=_tscrss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+tsc%2Ffeeds%2Frss%2Flatest-stories+%28TheStreet.com%29&utm_content=Google+Reader

 

·         Banks Fail In Md., Ill, Fla;FDIC Sells Assets Of Two

o   First Citizens Bank, a unit of First Citizens BancShares (FCNCA), agreed buy almost all the assets and assume most of the liabilities of Sun American Bank of Boca Raton, Fla.

·         First Citizens acquires another failed bank

o   North Carolina-based First Citizens Bank purchases its fourth failed bank in the past eight months from federal regulators. MW

 

·         Credit Agricole  (+0.7%) say they are planning a strategic review that may include more projects going forward with Soc Gen and other banks such as BNP. BBG

·         Prudential (+2.4%) say they made an application for a Hong Kong listing before the proposed rights issue and now plan to speed up that process and also have their forex hedging in place for the proposed AIA combination.  BBG

 

·         ‘On the Edge’ Banks Facing Writedowns After FDIC Loan Auctions - BBG

o   A Federal Deposit Insurance Corp. plan to auction more than $1 billion in assets seized from failed banks next month, including a loan to build a W Hotel in Atlanta, may trigger writedowns that weaken lenders nationwide

o   Almost half of the loans were originated by Silverton Bank N.A., whose collapse last May was the biggest in Georgia history. Community banks that joined Silverton in providing $80 million for the 237-room hotel and condominium complex, as well as backing for 39 other projects, could be forced to write down their stakes to reflect sale prices.

o   The auctions may have wider repercussions. Of the $50.4 billion in loans seized from failed banks currently held by the FDIC, 63 percent involve participations by other lenders

·         FNM, FRE:  WSJ(3/6) US Restates Its Backing For Fannie, Freddie

o   The U.S. Treasury reiterated its commitment to protecting holders of debt in mortgage-finance giants Fannie Mae and Freddie Mac on Friday after comments from an influential lawmaker suggested that the companies' bonds mightn't be fully backed.

o   The Treasury was forced to take the unusual step after Rep. Barney Frank (D., Mass.) said holders of the debt shouldn't assume they would be treated the same as investors in U.S. government bonds

·         Bonus tax likely won't repeat as fear emerges about London's position

o   The U.K.'s supertax on bankers' bonuses is expected to yield more than £2.5 billion for the Treasury, but concern that the tax will hurt London's position as a global financial center likely will prevent the levy from being made permanent. "London has to retain its global position, and the key element is that you have to have predictability and proportionality" in taxation as well as regulation, said Rob McIvor, a representative of the Association for Financial Markets in Europe. "What we would like is a commitment not to apply the bonus tax in the future, that it is a one-off." Meanwhile, Junichi Ujiie, chairman of Nomura, said the U.K. needs to avoid such taxes and over-regulation to maintain its reputation and position. Financial Times (tiered subscription model) (04 Mar.) , Financial Times

·         Big bank oversight to stay with Fed - FT

o   Banks with more than $100bn of assets will be overseen by the US Federal Reserve in a regulatory reform plan that represents a partial victory for the central bank after months of attacks in Congress

o   http://link.ft.com/r/2SRI11/M9R6L5/NNT7T/YHCE3U/PRFJNX/JY/h

o

·         Banks:  may need much more capital:  Expect a Fight on Bank Capital – WSJ

o   The fight over bank capital isn't over. And it could yet get messy

o   The sharp rise in financial stocks suggests investors believe big banks are done raising large amounts of fresh capital to strengthen their balance sheets.

o   But international bank regulators, with the blessing of national overseers, are readying rule changes that could further increase the amount of capital banks hold, especially in their trading operations.

o    In recent weeks, Wall Street analysts have started to guess what this extra capital burden could be-- and the numbers are surprisingly large.

·         Banks:   Volcker makes case for bank trading limits

o   Commercial banks will come to resemble hedge funds over time unless new rules are introduced setting limits on proprietary trading, White House economic adviser Paul Volcker said on Saturday.

o   In a speech at the Bellevue presidential palace in Berlin, Volcker made the case for proposals being pushed by the administration of President Barack Obama that would lead to a clamp down on risky bank activities.

o   http://www.cnbc.com//id/35739652

·         Banks:    US senators try to impose a one-off 50pc bonus tax

o   A pair of leading US politicians are attempting to impose a stringent tax on highly paid bankers' bonuses in spite of growing opposition from rivals and lobbyists.

o   http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7393460/US-senators-try-to-impose-a-one-off-50pc-bonus-tax.html

·         FDIC Said to Encourage Pension Funds to Invest in Failed Banks – BBG

o   U.S. regulators are encouraging public pension funds that control more than $2 trillion to inject capital directly into the banking system by buying failed lenders, said people briefed on the matter

o    The Federal Deposit Insurance Corp. is trying to attract pension funds that want to buy stakes or assets of distressed bank-holding companies, according to two of the people. Direct investments may allow public retirement funds to reduce fees for private-equity managers, and the agency to get better prices for distressed assets

·         JPM:  Why Does JPMorgan Trade at Book Value? NYT

o   The shares have been stuck trading around book value, or assets less liabilities, since last summer. Put in perspective, that’s not all bad. They had tumbled to less than half that in the depths of the crisis. But to price the bank now at only a fraction more than breakup value seems overly cautious. Another crisis outperformer, Wells Fargo, by comparison, trades at 1.4 times book

o   http://www.nytimes.com/2010/03/08/business/08views.html?adxnnl=1&ref=todayspaper&adxnnlx=1268046038-q+1+8qFrr9aeMcQT1VnZkw

·         RBS set to pull coverage of small firms

o   The bank plans to recruit new staff to allow it to 'refocus' its equity research on FTSE 250 clients

o   http://www.independent.co.uk/news/business/news/rbs-set-to-pull-coverage-of-small-firms-1917313.html

·         RBS  Royal Bank of Scotland Group Plc, the U.K.’s biggest government-owned lender, said it’s in talks with a Chinese company to form an investment banking joint venture in the world’s fastest-growing major economy.

o    “We are exploring a securities JV which would further enhance our existing platform in China,” said Hui Yukmin, a Hong Kong-based spokeswoman at the bank. She declined to identify the potential partner.

·         RBS Pays GBP10M Deferred Share Bonuses To Top 9 – FT

·         WFC:  Wells Fargo Clarifies Comments On Broker Additions – DJ: Wells Fargo Advisors retreated from an earlier statement Friday that it had plans to hire 10,000 advisers.   The company now says it has the capacity to hire that many advisers, but it declined to comment on how many it actually plans to hire, or when it would do so.

 

·         General Electric Co. Chairman and Chief Executive Jeffrey Immelt passed up a cash bonus for the second straight year

 

 

·         Energy/ Oils

o   Petrofac (PFC LN, +3.26%).'09 figures ahead of estimates.

o   TOTAL (-0.09%) meets with unions today to decide on the fate of its Dunkirk refinery. The group is expected to reassure unions that no other plants in France will be closed, and jobs at Dunkirk will be safeguarded

o   Royal Dutch Shell (RDSB LN, +0.2%). Shell and Petrochina lauch a A$3.3bn for Australian Oil exploration company Arrow Energy (AOE AU).

o   NAT Nordic American Tanker's CEO says expects Q1 of 2010 dividend to be substantially higher than Q4 of 2009

o   Energy:  Energy groups to launch plan for European ‘super-grid’

§  An ambitious plan for an electricity “super-grid” in the North Sea will be launched in London on Monday by a group of 10 leading European companies.

§  Such a super-grid connecting the UK, Germany and Norway is expected to cost €34bn ($46bn).

§  The Friends of the Super-grid group, which includes Siemens and Hochtief of Germany, Areva of France and Prysmian of Italy, said the project would make it possible to develop high volumes of offshore wind power in the North Sea and reduce electricity prices

§  http://www.ft.com/cms/s/0/b686ad54-2a15-11df-b940-00144feabdc0.html?ftcamp=rss

 

·         Healthcare

o   Pharma names Roche  (after walking away from a study) and AstraZeneca [AZN.UK] (following disappointing study results) were consistent leaders to the downside of trading.  TTN

o    AZN LN Astrazeneca re-affirms 2010 final guidance

o   bioMerieux up after reporting

o    GSK LN -1.5% Glaxo - Negative press on Paxil - BBG

§   Netherlands can't sell surplus Swine flu vaccine - looking to return to GSK

§  GSK's US partner Xenoport looking to halve employees and shelve long-term development of new drugs after lead product was turned down

 

 

·         Autos:    Can car dealers make lemonade out of lemons?  WSJ

o   AutoNation (AN) and Penske Automotive Group (PAG) – somewhat pos  article 

·         Autos:   Volkswagen's Audi February worldwide unit sales +20% to about 75,900 -- Bloomberg

·         Autos:  Used-vehicle value index still rising - Automotive News

o   The index stood at 118.1 last month, up from 117.6 in January 2010 and 105.5 in February 2009

o   Manheim chief economist Tom Webb said lower new-car sales and the trade-ins associated with them have helped contain used-vehicle inventories

o   Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100305/RETAIL04/100309914/1400#ixzz0hWk1mZVn

·         Autos:  India's Mahindra to set date for U.S. launch - Automotive News

o   Mahindra and Mahindra, India's largest utility vehicle and tractor maker, hopes to announce in two to three weeks a timeframe for the launch of its pickups in the United States, a top official said on Thursday

·         Autos:   Reuters) - Toyota Motor Corp could freeze new car launches this year if it is not satisfied the accelerator problem that forced a mass recall of its vehicles has been solved, according to the Sunday Telegraph.

·         Autos:    FIAT:   No strategic decision before 21 April – S&P

·         AIR FRANCE-KLM:   February traffic -0.6% y/y

·         BIOMERIEUX up 4%:   2009 core earnings rise 9.5%

·         INTERTEK trades lower post results:    FY numbers ahead of consensus

·         STAGECOACH HDG.:   Profitability remains in line

·         ARCADIS trades lower post results

·         Syngenta (SYNN.VX) says plans to buyback up to 10% of its outstanding shares through Dec 2012.

·         FENNER: Short but up-beat H1 pre-close trading statement. Company expecting fiscal-year first-half earnings to be at the top end of its own expectations following improved trading. Currently up 3%

o   It said these were due to a combination of market share gains, customer de-stocking coming to an end and underlying market improvement.

·         HUVEAUX:  This stock has been dormant for what seems like ages, with no movement or volume. Last week saw a couple of broker buyer come in and clear up overhang and they were tipped in yesterday’s Sunday Times…Takeover rumours are starting to circulate. Currently 1p better (10.5 %).

·         FORTH PORTS: Consortium, Northstream said that they might improve their offer (05/03/10) for the UK ports operator. Shares currently trading up 24% @ 1386 (Closed @ 1117) in anticipation of Improvement.

·         EMBLAZE: Shares currently trading up nearly 7% following announcement of Pretioso as the exclusive distributor in Germany, Austria and Switzerland (DACH) for the company’s proprietary push messaging technology for mobile devices.

·         Wincor Nixdorf AG slumped 4.2 percent to 48.84 euros. The company expects a “double-digit” decline in operating earnings in the current fiscal year because of the global economic crisis, Boersen-Zeitung cited Chief Financial Officer Juergen Wunram as saying in an interview

·         Dentsu Inc., Japan’s largest advertising company, climbed 6 percent to 2,354 yen. The company said revenue in February increased 8.8 percent on a parent company basis.

·         Qisda Corp. jumped 6.8 percent to NT$17.40 in Taipei after it said sales gained 29 percent from a year ago

·         Nestlé Bringing American-Style Diet Plans to Europe

o   Nestlé, the Swiss food goliath, hopes so. It is bringing Jenny Craig, its quintessentially American line of consultant-driven diet programs, to Europe, starting in France on March 9.

o   The product will then move to Britain during the second quarter, followed by other major European markets. Eventually, Nestlé plans to take Jenny Craig to urban centers in emerging markets, including India and China.

o   http://www.nytimes.com/2010/03/08/business/global/08diet.html?partner=rss&emc=rss

·         Real Estate:

o   Lenders face demands to repurchase troubled mortgages

§  Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and other lenders reported a large increase in the volume of troubled loans they bought back last year. Barclays Capital estimated that banks repurchased about $20 billion in such loans, with half of the total written off. "Most investors haven't really focused on this issue and are surprised on how much impact this could have, including on earnings," said Ajay Rajadhyaksha, head of U.S. fixed-income and securitized strategy at Barclays Capital. The Wall Street Journal (08 Mar.)

o   U.S. will pay homeowners to go along with losses on short sales

§  The Obama administration is preparing to take another approach to helping owners of underwater homes avoid foreclosure. The U.S. government will make cash payments to borrowers and lenders to go along with short sales. Homeowners can also qualify for an additional $1,500 to help them move.  The New York Times (free registration) (07 Mar.)

o   Homebuilders:  Bovis Homes Group Plc, the smallest publicly traded U.K. housebuilder by volume, reported a profit for 2009 after land writedowns weren’t repeated and the housing market showed signs of improvement.

o   Real Estate:  This latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration’s most aggressive attempts to grapple with a problem that has defied solutionsNYC real estate industry on the mend?  The Real Deal New York

§  The city's real estate industry added a negligible 700 jobs in January, or 0.6 percent of the sector's workforce, according to an Eastern Consolidated employment report released today. The construction industry lost 2,200 jobs, while employment in the hotel and architecture-engineering sectors was relatively flat, each shedding 100 workers during the month. Anything under 1,000 is considered minimal, said Barbara Byrne Denham, chief economist at Eastern Consolidated

o   Real Estate:  Help for First-Time Buyers

§  Thanks to an infusion of federal support late last year through the economic stimulus package, the State of New York Mortgage Agency, or Sonyma, is now offering 30-year affordable-housing loans at 4.75 percent, down from an average rate of 5.25 to 5.75 percent last year and well below the 5 percent or so being offered by mainstream lenders to their best customers.

§  http://www.nytimes.com/2010/03/07/realestate/07Mort.html?partner=rss&emc=rss

 

 

CRISIS WATCH

·         Pakistan arrests American-born al-Qaeda

o   Pakistani intelligence agents have arrested Adam Gadahn, the American-born spokesman for al-Qaeda, in an operation in the southern city of Karachi, two officers and a government official said Sunday.

o   http://link.email.washingtonpost.com/r/MEPMRJ/SJGBO/OU8VDT/OBI3DR/9DTJ7/KI/t

·         Al-Qaeda Internet Posting Urges More Fort Hood-style Attacks  - AFP

o   Al-Qaeda's U.S. spokesman Adam Gadahn, also known as Azzam the American, called on Muslims in the West on Sunday to carry out more attacks like the deadly shooting at the U.S. base in Fort Hood, Texas.

o   In a 25-minute video-recording posted on the Internet, Gadahn praised the suspect in the Nov. 5 shooting, army psychiatrist Nidal Hasan, as an example for others, U.S. monitoring group SITE Intelligence said.

·         Iran: China wants more diplomacy before Iran sanctions

o   Reuters) - Chinese Foreign Minister Yang Jiechi on Sunday strongly signaled his country's reluctance to back sanctions on Iran over its nuclear programme, but did not shut the door completely to the possibility

·         North Korea Slams US War Games, Vows Nuclear Defense - AFP

o   North Korea said on Sunday it was abandoning efforts toward nuclear disarmament in response to U.S.-South Korean military exercises and would be free to build up its nuclear forces

·         US Pays Billions To Cos That Flaunt Iran Sanctions—NYT

o   The U.S. government has awarded more than $107 billion over the past decade in contract payments, grants and other benefits to American companies while they were doing business in Iran

o   http://www.nytimes.com/2010/03/07/world/middleeast/07sanctions.html?hp

·         Mideast:  Palestinians OK Indirect Peace Talks With Israel – PLO (AFP)

o   The Palestinian leadership agreed Sunday to enter into indirect U.S.-led peace talks with Israel, a senior Palestine Liberation Organization official announced.

·         U.S. special operations forces could help the Somali government, which is preparing an offensive to dislodge Al-Qaeda militants from the capital Mogadishu, the New York Times

·         Thailand Ex-Thai PM Thaksin's Supporters Demonstrate; Larger Protests Expected (AFP) -- Around 3,000 supporters of Thailand's fugitive former Prime Minister Thaksin Shinawatra demonstrated Sunday--ahead of a mass anti-government protest called for next week.

·         Bombers strike as Iraqis vote

o   At least 36 killed as militants seek to undermine general election described as the country’s most pivotal moment since the US-led invasion seven years ago

o   http://link.ft.com/r/2SRI11/M9R6L5/NNT7T/YHCE3U/NSJ9F3/JY/h

o

·         Hundreds feared dead in Nigerian violence

·

o   Ethnic violence returned to Jos when hundreds of villagers were reportedly killed in apparent reprisals following January’s bloodshed – prompting the acting president to place security forces on red alert

o   http://link.ft.com/r/2SRI11/M9R6L5/NNT7T/YHCE3U/JIEY9S/JY/h

o

·         Nigerian Leader Puts Security Forces On Red Alert After Bloody Unrest

·         BlackBerry Checks If Saudi Wants To Control Phone Messages - AFP

o   Makers of the popular BlackBerry smartphones said Saturday they are looking into Saudi press reports that regulators in the conservative Muslim kingdom want to control its popular messenger service.

o   The Saudi Communication and Internet Technology Commission has reportedly contacted Canada's Research in Motion Ltd (RIMM) seeking to have access to and monitor communications by BlackBerry Messenger, known as BBM.

 

OVERSEAS ACTION***

·         Europe flat to down

·         Nikkei +2.09%;

·          Hang Seng +1.97%;

·         Shanghai Comp +0.73%

·         Data:

·         Approval Rating For Japan's Hatoyama Cabinet Hits New Low-Kyodo

o   New Zealand manufacturing  sales increased the most in more than seven years during the  fourth quarter

o   Japan January current account, trade balance top estimates on strength in exports;

·         Bank of France Business sentiment 102 vs consensus 104.

·         Eurozone Mar Sentix Investor Confidence (7.5) vs consensus (8.8).

·         China Construction Bank (939.HK) traded higher after it said it expected its new lending to grow more than 10% this year

·         German industrial production rose 0.6% in January, a lower reading than analysts estimated

·         Switzerland Feb Unemployment Rate: 4.4% v 4.4%e; Unemployment Rate Seasonally Adj:

 

TODAY’S EVENTS  (see this weeks calendar in last section)

 

 

·         Monday March 8:

o   ECB President Jean-Claude Trichet holds a news conference after a meeting of central bankers in Basel

o   National Association for Business Economics conference (3/7-9)

§  Sheila Bair speaks

o   Joe Biden travels to the Middle East

o   Health Care Conference- Cowen (3/8-11)

o   Institutional Investors Conference- Raymond James  (3/7-10)

o   Global Technology Conference- Jefferies (3/8-10)

o   China Investment Conference – Rodman & Renshaw (3/7-9)

o   Consumer Analyst Group of Europe Conference (3/8-10)

o   Consumer Conference- Stifel

o   Global Media and Communications Conference 2010 (3/8-10)

o   Cambridge Energy Research Associates conference

o   AMAT, WFMI shareholder meetings

o   CFO Rising Conference & Expo (3/7-10)

o   TXN mid-Q update

o   UMC monthly sales

o   PSE&G meets with analysts

 

LOOKING AHEAD

 

 

·         Economics

o   Monday March 8:

§  1000 Conference Board Employment Trends Index

·         Earnings       

 

o   Materials

o   Monday March 8: AVD, KMBG, SSL, LXU, SNHY

o   Industrials

o   Monday March 8: FRPT

o   Consumer/Retail/Education

o   Monday March 8: GAIA,

o   Energy

o   Monday March 8: COMV, TLP, YGE, CPE,

o   Financials

o   Monday March 8: SMHG, HRB

o   Tech/Telecom

o   Monday March 8: CAMT, EBIX, UTA, EVOL, MLNK, MVIS, TIVO

o   Healthcare

o   Monday March 8: PARD, ALXA, FLML, MAKO, OGXI, RSCR, VVUS, WX

o   Utilities

o   Monday March 8: DGW

o   Transportation

o   Monday March 8: FREE, CAP

o   Services

Monday March 8:  HF, CASY,  NCMI, SVN, SYX

 

Fed Speak:

·         Tuesday March 9: Chicago Fed's Charles Evans,speaks at NABE

 

INVESTMENT BANKING WRAP

 

M&A

·         MetLife to acquire American Life Insurance company from AIG for $15.5B (just anncd)

·         Arrow Energy Receives A$3.3B Bid From RDS Shell, PTR PetroChina- WSJ

o   Royal Dutch Shell and PetroChina are offering around A$3.26 billion cash for Arrow Energy’s (AOE.AU) Australian operations, the energy producer said Monday, in an effort to secure a bigger foothold in the booming coal seam gas industry in Queensland state

o   Shareholders are being offered A$4.45 a share, representing a 28% premium from Arrow s last traded price Friday of A$3.48 but below a January high of A$4.58. Arrow said shareholders would also get one share in a new entity that would comprise its international business for each existing Arrow share

o   http://online.wsj.com/article/BT-CO-20100307-704298.html?mod=WSJ_World_MIDDLEHeadlinesAsia

o   http://www.bloomberg.com/apps/news?pid=20601087&sid=ahHqPAkJ5o7E&pos=3

o   http://www.reuters.com/article/idUSTRE6270JU20100308

·         Retailers Balking at SPG, GGWPQ Deal- WSJ

o   National retailers are expressing growing concern that mall giant Simon Property Group may gain too much market power if it succeeds in acquiring rival General Growth Properties out of a bankruptcy proceeding.

o   The concern raises the possibility that the deal might face antitrust criticism from retailers and others. The combined entity would own roughly half of the 300 U.S. malls with the highest sales, according to estimates by Green Street Advisors

o   http://online.wsj.com/article/SB10001424052748704869304575103924110334894.html

·         Coal M&A Activity Shows Pickup- WSJ

o   India's Essar Group will acquire U.S. coal producer Trinity Coal for $600 million, giving the global steelmaker direct access to a key raw material that is seen as a recovery in demand

o   The deal is a sign that steelmakers again are shopping for raw materials in a bid to own more pieces of their supply chain. The trend emerged two years ago as the steel industry looked to lessen dependence on large mining companies but fizzled amid the global financial crisis and a deep drop in steel demand

o   The deal also underscores the growing appetite for international deals among Indian companies, including a bid by Reliance Industries for LyondellBasell Industries

o   http://online.wsj.com/article/SB10001424052748704869304575103992604738362.html

·         Australian Coal Miners To Meet On Queensland Rail Plan- Australian Financial review

o   Major coalminers in Australia will meet Monday to agree on an alternative approach to Queensland state's planned privatization of Queensland Rail

o   The coal miners could agree to make a bid to buy Queensland Rail's tracks as well as put forward options for the rolling stocks

o   http://www.investors.com/NewsAndAnalysis/Article.aspx?id=109576952&source=Newsfeed

·         Exane BNP Paribas list of takeover targets- Barron’s

o   QGEN, KPN, Tele2, Autonomy, and Puma are listed

o   Finch sees the acquisition of U.S. lab-supply maker MIL Millipore by Merck KGaA as evidence of rising activity in the health-care sector, and he views QGEN Qiagen as another likely target

o   Finch calls KPN, another Dutch company, a "perennial takeover target." It makes his list largely due to the appeal of its E-Plus unit

o   Finch calls Tele2 an "attractive prospect," owing to its fast-growing, low-cost mobile service in parts of Russia

o   "Our feeling with Autonomy is, essentially, that it has brilliant technology and ... perhaps it is not developing it and gaining acceptance for it as quickly as it deserves." He touts Microsoft (MSFT) as a possible acquirer

o   Puma is widely considered to be a takeover target for French retailer and luxury-goods company PPR (PP.France), which already owns about 70% of its stock

·         FDIC prodding pension funds to invest in failed banks-Bloomberg

o   U.S. regulators are encouraging public pension funds that control more than $2 trillion to inject capital directly into the banking system by buying failed lenders

o   Direct investments may allow public retirement funds to reduce fees for private equity managers and FDIC to get better prices for distressed assets

·         PRU Prudential does not need to sell businesses to finance its bid for AIG’s Asian assets- Telegraph

o   "We do not need to sell the U.K. business or any other business in order to do this transaction," the chairman said

o   McGrath also said Prudential's stock price will likely remain volatile for a while as investors take short positions, "but because of the economic logic of the transaction we don't expect to see significant downside."

·         PRU Prudential CEO To Meet Top 30 Investors Monday, Hopes To Quell Disquiet over AIA- DJ

·         AIG Agrees to Sell Alico Unit to MET Metlife for About $15.5 Billion- BBG

o   MetLife said it has a definitive agreement to acquire one of AIG’s international subsidiaries, American Life Insurance Company, for $15.5 billion. The consideration will consist of $6.8 billion in cash and $8.7 billion in MetLife equity securities, subject to closing adjustments.

·         KFT Kraft Faces Probe on CBY Cadbury- WSJ

o   U.K. regulators are investigating whether Kraft Foods Inc. misled employees and investors during its battle to take over Cadbury PLC, people familiar with the matter said, as ill feeling generated by the deal continues to reverberate in Britain

o   The Panel on Takeovers and Mergers is looking into comments Kraft executives made during the contentious takeover battle about Cadbury's Somerdale candy factory in Keynsham

o   http://online.wsj.com/article/SB10001424052748703915204575104002100336526.html

·         Autos: Geely head says Volvo talks on track; no deal yet   

o   Zhejiang Geely Holding Group had previously indicated it expected to reach a formal deal last month, but company chairman Li Shufu said an official agreement had not been signed yet