The MorningSnapshot- 03/29

The MorningSnapshot
March 29, 2012

Morning Commentary
Sentiment is sour this morning with European stocks falling after euro-area March economic confidence fell, and Asian stocks are extending their second day of declines on concern about a slowdown in China; companies on both continents missed earnings estimates today. Not helping matters is the statements from S&P stating that Greece may have to restructure its debt again. Before a U.S. GDP release and jobless claims, S&P 500 futures have reversed early gains and are down -0.32%; the 10yr Treasury is down -2.1bps to 2.178% in early morning trading. Asian stocks are much lower, led down by the Hang Seng Index which closed -1.32%, and the Yen appreciated against all 16 of its peers. The Euro Stoxx 50 is down -1.09% with Germany’s DAX down -1.19% and Italy’s FTSE MIB down -1.31%. The yield on Spanish 10yr bonds are up +11.8bps to 5.402% and its spread to German bunds has widened +11.4bps to 337.1bps. Commodities are lower amid surging oil stockpiles as Western nations discuss tapping emergency reserves. Oil and copper are both down -0.5% on the day.

“I Plead The Fifth!”
MF Global assistant treasurer Edith O’Brien invoked her constitutional right against self-incrimination yesterday during a House Financial Services subcommittee on the firm’s bankruptcy. Former MF Global CEO Jon Corzine identified O’Brien as a person with knowledge of transfers, which may have included customer funds. $1.6B dollars remains the bankruptcy trustee’s estimate for the total shortfall between customer claims and available assets.

Today’s Economic Data Lineup (EST)
8:30am: GDP, 4Q T, est. 3.0% (prior 3.0%)
8:30am: Personal consumption, 4Q T, est. 2.1% (prior 2.1%)
8:30am: Jobless claims, March 24, est. 350k, prior 348k
9:45am: Bloomberg Consumer Comfort, March 25(prior -34.9)
10am: Freddie Mac 30-yr mortgage
10am: Fed’s Braunstein testifies on mobile payments
10:30am: Fed’s Lacker to speak on credit markets in N.C.
10:30am: EIA natural gas
11am: Kansas City Fed Manufacturing, March, est. 13, (prior 13)
12:15pm: Fed’s Lockhart speaks on global economy in Atlanta
12:45pm: Fed’s Bernanke gives lecture at George Washington U. (4 of 4)
1pm: U.S. to sell $29b 7-yr notes
1pm: Fed’s Plosser speaks on economic outlook in Wilmington, DE
6:45pm: Fed’s Lacker speaks to bankers in Charlotte, N.C.

North America

  • A rise in durable goods orders for a fourth month running is an indication manufacturing could remain a source of strength for expansion; orders increased +2.2% in February.
  • U.S. Supreme Court justices gave indication that they may reject the centerpiece of Obama’s health-care plan, the requirement for Americans to obtain insurance. Justices are expected to rule in late June.
  • The SEC is said to review TVIX, the VIX ETN from Credit Suisse that became drastically unhinged from its benchmark.
  • Jefferson County, Alabama, which filed for bankruptcy protection in November, will miss a $15M bond payment due April 2 according to Commissioner David Carrington.
  • Facebook is said to be halting secondary-market share trading by the beginning of April as the social media giant prepares for an IPO.

Europe

  • Euro-area finance chiefs will likely decide at a meeting in Copenhagen tomorrow to run the €500B euro permanent ESM alongside the €200B euros committed by the temporary fund. In addition, they are set to allow the temporary fund’s unused €240B euros to be tapped until mid-2013.
  • German unemployment slipped to 6.7%, a two-decade low, and lower than the median forecast of 36 economists in a Bloomberg News survey.
  • Prime Minister Mariano Rajoy of Spain is experiencing his first strike against labor reforms and austerity policies since he took office three months ago. Strikes are hampering demand and manufacturing across the nation today; Iberia airlines said it canceled 65% of its flights, and national power demand was 16% below that of a typical day.

Asia/Pacific

  • Weaker earnings out of China are consistent with other data that are pointing to a slowdown. Companies ranging from  China’s largest non-life insurer PICC Property and Casualty to Sany Heavy Industry, a builder of heavy construction machinery, have trailed analyst earnings expectations.  
  • Japan’s retail sales rose +3.5% from a year earlier, coming in higher than the median estimate for a +1.4% increase; MoM sales gained +2%. The Nikkei 225 holding above pre-earthquake levels as well as the subsidy for buyers of fuel-efficient cars are driving domestic demand, while a decline in the Yen has helped exporters.
  • Japan’s government will draft a stopgap budget for the first time in 14 years as the nation’s parliament struggles to pass a spending bill before the start of the new fiscal year on April 1.

“Destiny is not a matter of chance, it is a matter of choice; it is not a thing to be waited for, it is a thing to be achieved.”
-William Jennings Bryan
____________________________
Taylor Anderson
Business Analyst
Clearing House

T 312 634 8902
F 312 930 3187
C 312 618 8339

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