Tuesday, April 20, 2010

Today’s Top Stories #GREECE $GS

·         Greece Update - Greece sells 13-week paper....bid/cover strong, but yield very high - Greece sold 1.95 billion euros ($2.6 billion) of 13-week bills to yield 3.65 percent (up from 1.67 percent in a previous Jan 19 sale) (Reuters/Bloomberg).  Greece says the sale helps its May borrowing needs, which is now under EU10B.  Greece says its Q1 budget deficit fefll 39% to EU4.3B (this is better than its target of 30% reduction)  The IMF/EU mission talks are expected to kick-off later today or early Wed.

·         Greece – IMF will discuss a debt restructuring w/Greece - The IMF is expected to raise the question of debt restructuring at imminent meetings with the Greek finance ministry, according to one person with knowledge of the agenda. It is not likely to be a detailed discussion "just a pointed reminder of the debt forecast"…Greece finance ministers have not officially addressed the possibility of a debt restructuring, although some kind of "liability management", such as extending maturities (swapping short-dated bonds for longer-dated ones), is expected – FT (note that Greece's finance minister says that there is no plan to restructure the country's debt).   
·         Europe - On the Economic front, the German ZEW for April came in better than expected (53 vs. 45), S&P trimmed its 2010 GDP forecast for Italy (to +0.5% from +0.7%), Greece's unemployment rate rose to 11.3% in Jan from 10.2% in Dec. and UK March Inflation Accelerated More Than Forecast(+3.4% vs. St. +3.1%).
·         The Icelandic volcanic eruption has strengthened and the ash cloud is "spreading south and east" toward the U.K, the National Air Traffic Services said.  However, in the UK planes from Edinburgh, Aberdeen, Glasgow and Newcastle airports were given permission to take off from 7am.  Some airspace in England is expected to reopen from 1pm, although the main London airports remain closed for the forseeable future; The European Union said on Tuesday there had been slow progress in opening up European airspace; Italy says its air space has completely reopened (London Telegraph).
·         China - Chinese equities were flattish after yesterday's ~5% sell-off as regulators continued to tighten real-estate regulations (i.e. China ordered developers not to take deposits for sales of uncompleted apartments without proper approval), Reuters reports that the U.S. Commerce Department could decide this week whether to launch a groundbreaking investigation into charges China is subsidizing exports of an aluminum product by undervaluing its currency and (per Bloomberg) Yuan forwards strengthened on speculation the G20 will call on China to allow its currency to strengthen at a meeting this week in Washington.
·         India - In India, stocks traded up small after the RBI tightened policy rates 25bp and raised the cash reserve ratio by the same amount (in line w/market consensus).
·         AIG may pursue legal action against Goldman over Abacus-type deals per the FT
·         SEC vote on whether to pursue Goldman case was split along party lines, the 5-member panel voted 3-2, w/the two Republicans against pursuing action.  Such a split is a relatively unusual development that shows the agency wasn't fully behind one of its most recent major decisions.  WSJ 
·         GS – Goldman faces legal action in the UK - The U.K. Financial Services Authority said it would start a formal enforcement investigation into Goldman Sachs International in relation to recent SEC allegations.  Bloomberg 
·         GS – Goldman's board met on Mon and remains fully behind Blankfein according to the WSJ.
·         GS – the NYT says the SEC has a tough case to prove - Several experts on securities law said fraud cases like this one, which focuses on context rather than content, are generally more difficult to win (NYT) 
·         Big hearing today @ 11amET – B Frank's House Financial Services Committee holding a hearing on Lehman.  However, several prominent people will speak, inc. SEC's Schapiro (her first appearance publicly since the Goldman action) along w/Bernanke (he released prepared remarks yesterday and prob. won't have much to say on the monetary policy front; keep in mind there is an FOMC meeting next week) and Geithner.
·         Tech earnings – big highlight of the night was IBM.  EPS beat, although GMs fell light and services bookings were below some St forecasts.  IBM mgmt nudged up its '10 guidance, although not by much and didn't really surprise the St.  The stock fell a few % after hrs on Mon as tech expectations have become heightened in the wake of INTC last week.  Very busy week of tech earnings (tonight we get ALTR, AAPL, YHOO, VMW, STX, JNPR, others).
·         Basic Industry earnings – in transports, HTLD revenue was modestly better than expected; EPS .01 ahead; mgmt commentary upbeat, although inline.  Demand in the truckload market has clearly picked up with a significant improvement in March and strength continuing into April.  WERN's 1Q10 was in line with our forecast but slightly below Consensus (Wadewitz); in packaging, PKG posted an In-Line 1Q; 2Q Guidance Below Expectations (Hueston

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