Top Economic News
Puerto Rico has reportedly attracted strong demand for $3B in bonds that the commonwealth is set to sell today at yields of 8.625-8.875%, which are at the bottom end of expectations. The apparent success of the auction comes despite lingering fears that Puerto Rico will restructure its existing debt. However, investors have been attracted by a range of factors, including the high interest rate and Puerto Rico's improved finances.
China is moving to further increase the role of the free market as part of its economic overhaul, saying it will allow the creation of five privately-owned banks on a trial basis. Alibaba Group plans to apply for a bank license in partnership with China Wanxiang Holding. In another measure, the People's Bank of China intends to liberalize deposit rates in one to two years.
As expected, the Bank of Japan has left its key interest rate at 0.1% and maintained its program of expanding the monetary base by ¥60-70T a year. The BOJ upgraded its assessment of industrial output and investment but cut its analysis for exports. The bank's latest policy decision comes ahead of next month's rise in sales tax, which is expected to drag on the economy.
German exports and imports grew at the fastest rate in almost two years in January, with exports rising a better-than-expected 2.2% after dropping 0.9% in December. Imports jumped 4.1% following a fall of 1.4%, causing the trade surplus to slip to €17.2B from €18.3B. "Exporters' business with the eurozone is working better," says Bayern LB's Stefan Kipar. "We expect German economic growth of 1.7% in 2014 (and) it might even be slightly more."
Crimea's parliament has voted to declare independence from Ukraine ahead of a referendum this weekend in which the region's citizens will decide whether to join Russia. The parliamentary ballot highlights the continued stalemate in the crisis.
Top Stock News
GM is set to face Congressional hearings about why the company took almost a decade to recall 1.6M vehicles for defective ignition switches that have been linked to 13 deaths. The House Energy & Commerce Committee, which is holding the hearings, will also probe the role of the National Highway Traffic Safety Administration. GM (NYSE:GM) and the NHTSA are carrying out their own inquiries as well.
Microsoft is carrying out a massive launch of hotly anticipated computer game "Titanfall" today, with the company hoping that the sci-fi combat title will boost sales of the Xbox One, which appear to be lagging behind those of Sony's (NYSE:SNE) PlayStation 4. Microsoft's (NASDAQ:MSFT) strategy is one that worked with "Halo," a sci-fi shooter game that was launched in 2001 and became a blockbuster that fueled sales of the Xbox.
Major oil companies are facing a legal limbo over Black Sea energy prospects because of Crimea's decision to hold a referendum over whether to secede from Ukraine and join Russia. A consortium that includes Exxon (NYSE:XOM) and Shell (RDS.A, RDS.B) planned to invest $735M on drilling two wells off the coast of Crimea, while Eni (NYSE:E) has a license to explore in the region.
Virtu Financial has filed for a Nasdaq IPO, with the high-speed trading firm reportedly hoping to raise $250M at a valuation of up to $3B. Virtu has only suffered one losing trading day in five years, and in 2013, net income more than doubled to $182.2M as revenue climbed 8% to $664.5M. However, Virtu disclosed that the Commodity Futures Trading Commission is investigating some of its trading activity.
Nestle plans to allow shareholders to have a binding vote on board and executive pay as it moves to comply with new Swiss laws. Nestle (OTCPK:NSRGF) will also enable investors to vote directly for the chairman, and it will hold annual elections for directors. The food giant cut the compensation of CEO Paul Bulcke by 6.7% to 9.3M Swiss francs ($10.6M) last year following the company's disappointing performance.
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In Asia, Japan +0.7% to 15224. Hong Kong flat at 22270. China +0.1% to 2001. India -0.5% to 21826.
In Europe, at midday, London -0.3%. Paris -0.3%. Frankfurt +0.2%.
Futures at 6:20: Dow -0.1%. S&P -0.1%. Nasdaq flat. Crude +0.4% to $101.49. Gold +0.5% to $1348.50.
Ten-year Treasury Yield +1 bps to 2.79%.
Today's economic calendar:
7:30 NFIB Small Business Optimism Index
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
10:00 Wholesale Trade
10:00 Job Openings and Labor Turnover Survey
1:00 PM Results of $32B, 3-Year Note Auction
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