Today’s Top Stories
· European leaders continue to posture re Greece with 1) ECB’s Trichet suggesting that Greece could receive loans from its euro-zone partners under certain conditions (in WSJ), 2) Greek Finance Minister Papaconstantinou saying he wants a “European” solution to Greece’s debt crisis (seemingly backing away from signals it may seek out IMF assistance), 3) Germany's foreign minister rejecting a charge by Greece's deputy prime minister that Berlin is reluctant to help Athens because its exporters and banks are profiting from a debt crisis that has hit the euro (Reuters) at the same time that 4) the ECB signals some concession on Greek debt (namely that it may continue accepting it as collateral in its liquidity ops, even if it gets downgraded further – FT); 5) European Union President Herman Van Rompuy is seeking to strike an agreement on an aid mechanism for Greece before the start of an EU summit this week (Bloomberg)
· Also in Europe, Spanish Finance Minister Elena Salgado reached an agreement on cost-savings measures with the finance chiefs of Spain's regional governments (WSJ), an example of the type of agreements that are raising concern that strict austerity measures in Europe threatens a double dip recession in the region and are leading some (on Bloomberg) to say the ECB may be slower than previously expected to withdraw monetary stimulus.
· China - a lot of focus on FX with yuan forwards inching higher (although off their highs) following conciliatory remarks from Chinese Premier Wen Jiabao that China did not want "trade and currency wars" with the United States. Wen added that China's trade surplus has been narrowing in recent months and turned into an US$8 billion trade deficit in the first third of March (recall Commerce Minister Chen Deming said Sunday that China may post a trade deficit for all of March).
· Japan’s government to face large fund shortage in ‘11/’12 according to a report in the Nikkei - Japan's government may need to issue more bonds or drop some spending plans as it faces a shortage of up to 7 trillion yen ($78 billion) in funds in the year to March 2012. Reuters
· Governments around the world are on a “charm offensive” w/the largest SWFs (sovereign wealth funds) to help insure there is a ready market for all the debt being dumped on the market this year. FT
· Airline update - February ATA RASM, released Monday night, was negatively impacted by weather (as indicated by carrier disclosures in recent weeks). Additionally, updated guidance from AMR was slightly disappointing, suggesting a Q1 loss wider than consensus (J Baker)
· AOS - announced that it expects to significantly exceed analysts' first quarter earnings estimates. The company projects its first quarter results will be between $.95 and $1.00 per share (the St is at 0.68). The company increased its full-year earnings forecast to $3.20 and $3.40 per share (the St is at 3.145). "Both of our business segments are experiencing higher sales volumes than we originally expected," commented Chairman and Chief Executive Officer Paul W. Jones. "In addition, the results of our extensive cost reduction efforts and continuing strength in water heater sales in China will benefit the first quarter."
· SP500 technicals - Next resistance rests at the 1177 Jan-Feb Head and Shoulders bottom obj, and 1182 Feb channel high.
· Tech update - a lot of memory headlines overnight. Toshiba said it would start construction on an additional flash memory facility at its central plant in Japan (it had put this plant on hold during the financial crisis). On the DRAM side of things, MU joined Samsung and Powerchip in saying it had no intention of ramping up capacity in '10 (which should be positive for pricing). DRAM Exchange has a pos. report out on the DRAM industry, saying it is headed for a three year period of profitability (starting in '10). ISSI issued an upside profits preannouncement last night. Away from memory, Acer is bullish on H2 demand trends due to stronger corporate spending outlook. Re PALM, Electronista is reporting that Verizon sales staff will stop actively promoting the Palm Pre Plus at its retail locations before the end of March, according to a Verizon source speaking with the Examiner. There are a couple major earnings to watch tonight in tech land w/ADBE and JBL.
· Credit Update – from E Beinstein - The positive market reaction to the healthcare legislation is a reminder of the value investors place on certainty. There are two large uncertainties overhanging large Bank credit at the moment: 1) the provisions of Financial reform legislation and its chance of implementation, and 2) potential downgrades from the rating agencies of large banks if Financial reform is enacted. S&P and Moody’s have both published reports outlining their arguments for potential downgrades if financial reform passes.
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