Thursday, April 15, 2010


·         China’s eco data comes in better; GDP higher and CPI lower; keep in mind that Reuters had an article out Wed morning stating that the numbers would beat forecast, so this wasn’t too much of a surprise.  JPMorgan is raising itsChina growth forecast from +10% to 10.8%.  The strong China #s is raising speculation this morning that authorities may take action (i.e. on RRRs, yuan rate, rates, etc).   

·         China also signaled a tougher stance on Housing w/new minimum downpayment rules for first and second home purchases and plans to more than double land supply available for residential property construction this year

·         In Japan, the April Tankan survey continued to improve w/the nonmanufacturing DI showing a solid rise to -14, from -22 in March and -31 in February and the BoJ raised its economic assessment in seven of the country’s nine areas.

·         In India, March inflation rose less than expected, although price increases are still running hot (reading was +9.9% vs. St. +10.25% but still well ahead of the Reserve Bank of India’s 8.5% projection) and speculation of an imminent rate hike remain (DJ).

·         In Europe, focus on Greece with CDS spreads continuing to widen out and debt spreads vs. German bunds hit wides. The next big catalyst for Greece will be the outcome of a planned US$-denominated debt sale, although DJ is reporting today that the country is lowering expectations for this sale and may cancel it if interest doesn’t pickup (in response to this DJ story, Greece says that there is “absolutely no change” to its plans for a US sale). 

·         Foreclosure update – from RealtyTrac - Foreclosure filings were reported on 367,056 properties in March, an increase of nearly 19% M/M; "Foreclosure activity in the first quarter of 2010 followed a very similar pattern to what we saw in the first quarter of 2009: a shallow trough in January and February followed by a substantial spike in March,"

·         Upbeat articles in WSJ and FT; says the Journal – “Evidence mounts of strong recovery”; from the FT – “upbeat signals on US economy”; the London Times also is getting in on the optimism – “Markets soar as America offers hope that the worst is over”    

·         Equity flow data – note out this morning from JPMorgan’s K Worthington - Mutual fund flows released by Simfund - Equity mutual funds generated the largest sales figures since May ’09 and April ’08. It seems like equity investors are finally re-engaging in equity mutual funds. Equity funds generated net sales of $24.3 bn in March vs. net sales of $7.0 bn in February.  Worthington  

·         Bank toxic assets – CNBC says an “alarming” amount of toxic assets remain in banking system; “I think banks are less than 50 percent of the way through recognizing all the loan losses that they need to recognize,” (CNBC)

·         Banks could be force to spin out derivatives units – a proposal by Sen. Blanche Lincoln “would force the nation's largest banks to stop trading nearly all kinds of derivatives -- a move that would dramatically reshape severalcritical markets and deprive the firms of a major source of revenue” (Washington Post) 

·         Rio Tinto gives outlook; stock dips ~1% in London - Rio Tinto has released its Q1 production report. Overall a slightly weak set of figures with production down in all divisions vs Q4.  On outlook - “we are still cautious about short term volatility. The long term outlook remains very strong and we are now ramping up our growth projects with sustained investment in our iron ore business and the start of development of Oyu Tolgoi”.  slightly raised its productionguidance for iron ore; reported a sharper-than-expected 16 percent fall in copper production

·         Roche – the stock trades up ~2% in Europe after releasing Q1 sales figures (off best levels though).  1Q’10 sales (SFr11.94bn) came in 4% above consensus (SFr11.35bn), and 2.5% above JPMCe (SFr11.47bn). 

·         Transports – the TRAN index surged ~2.4% in trading on Wed, in large part thanks to CSX’s earnings release (CSX closed up ~4%).  However, more good news came after the close as UPS issued a massive upsidepreannouncement.  UPS says they saw a "sig acceleration in int'l package and supply chain businesses and improved op margins".  The co now sees EPS at 0.71 (vs. the St 0.58) and they boosted the full year guidance.  LSTR earnings out Wed night also were pos. (per T Wadewitz): “LSTR achieved upside EPS in 1Q driven by strong (and accelerating) load growth and revenue per load that was above our forecast (now positive y/y). Management sounded optimistic on the conference ca

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