Asia: Japan flat at 19905. Hong Kong +2.7% to 28016. China +2.2% to 4121. India +0.6% to 29044.
Europe: London -0.5%. Paris flat. Frankfurt flat.
Futures: Dow -0.1%. S&P -0.1%. Nasdaq -0.1%. Crude +1.5% to $52.40. Gold -0.5% to $1198.70.
Ten-year Treasury Yield -1 bps to 1.95%
2:00 PM Federal Budget
Key earnings before the open
Key earnings before the open
LAYN, OZRK, PBY, TPLM
Wall Street appears set to start the week on wobbly footing, with stock futures easing back slightly this morning as investors sized up disastrous Chinese trade data and readied for a big week of earnings, chiefly from the important financial sector.
China’s exports surprisingly tumbled in March while import shipments fell at their sharpest rate since the global financial crisis, setting a poor precursor to the country’s closely-watched Q1 GDP figure due on Wednesday. According to official data, Chinese exports plunged 15% and imports fell 12.7% last month in dollar terms as weak demand and the impact of the lunar new year weighed heavily on Chinese factories. The soft trade figures conversely sent Chinese shares higher though, as investors bet on more stimulus from Beijing.
Tensions between Greece and its creditors took another turn for the worse over the weekend, following a report that eurozone officials were “shocked” at Greece’s failure to outline detailed structural reforms at last week’s talks in Brussels. On Friday, Greece was given six working days by eurozone creditors to come up with reform plans in order to prepare for the April 24th Eurogroup meeting that will decide if €7.2B in financial aid will be disbursed.
Raising new concerns over the damaging side effects of the ECB’s landmark QE program, many analysts now think it is only a matter of time before Germany’s benchmark 10-year government borrowing costs drop below zero for the first time. Yields on the Bunds fell to just 0.15% today, compared with 0.54% at the start of the year, as the ECB entered the second month of its €1T bond-buying program. Although not part of the eurozone, Switzerland became the first government in history last week to sell benchmark 10-year debt at negative interest rates, raising even more worries about distortions in the global financial markets.
As the U.S. job market improves, the risk is receding that an unexpected setback could derail the recovery once the Federal Reserve raises interest rates, San Francisco Fed President John Williams noted in an interview late on Friday. “So even if the economy got some bad shocks, really you are probably just talking about flattening that path out a bit, or maybe raising rates more slowly,” said Williams, who this year is one of 10 voting members of the Fed’s policy panel.
China has rejected Taiwan’s bid to become a founding member of the Asia Infrastructure Investment Bank under the name “Chinese Taipei,” but said the island would be welcome to apply again as an ordinary member in the future. The two have been tied up over an “appropriate name” under which Taiwan can join the bank. Although China views Taiwan as a renegade province, it allows it to participate in the Asian Development Bank under the name “Taipei, China.”
Qualcomm (QCOM) is under pressure from activist investor Jana Partners to consider a breakup and other options to boost its sagging stock price. According to a quarterly letter, Jana is asking Qualcomm to consider spinning off its chip unit from its patent-licensing business, cut costs, accelerate stock buybacks and make changes to its executive-pay structure. Over the last year, Qualcomm shares have dropped over 11%.
The European Commission will decide “very soon” whether to issue antitrust charges against Google (GOOG, GOOGL), following five years of investigating whether the Internet giant abused its dominance of the European search-engine market. Former competition commissioner, Joaquin Almunia, has sought three times to reach a voluntary settlement with Google, but each one of those attempts failed.
After Friday’s 10.8% moonshot, General Electric (GE) sells for 16x 2015 estimated earnings, writes Avi Salzman in Barron’s, a pretty rich multiple considering the company’s industrial businesses have boosted operating earnings by an average 1.4% annually for the last four years. “Here’s the problem: The assets they have deployed in the finance unit were generating a lot of earnings…as they sell those down, they have to replace them with industrial earnings or share buybacks. There’s going to be a period of time where earnings will be stagnant…the Street will get bored waiting.”
Looking to expand its package delivery network, UPS (UPS) is planning to invest €1B in Europe, German magazine Wirtschaftswoche reports. The news follows FedEx’s (FDX) €4.4B offer last week for Dutch package-delivery company TNT Express (TNTEY). UPS tried to acquire TNT in 2013, but the EU ruled out the €7B bid due to antitrust concerns.