The markets are flashing red ahead of today's jobs report, as traders expect strong numbers in March to put a Fed rate hike back on the table. Nonfarm payrolls likely increased 205K last month, with the unemployment rate holding steady at an eight-year low of 4.9% amid tepid wage gains. Apart from the big announcement, there is a bunch of other economic data on tap: Auto Sales, PMI/ISM Manufacturing Index, Consumer Sentiment, Construction Spending and the Baker-Hughes Rig Count.
Any legislative changes to the Fed should not be based on an "emotional" response to the financial crisis or recession and, if necessary, they should be limited to making the U.S. central bank more effective, NY Fed President William Dudley warned at the Virginia Military Institute. The speech referenced the so-called "Audit the Fed" bill and the "FORM Act" proposed in Congress last year. Audit the Fed failed to pass the Senate, while the FORM Act passed the House.
Activity in China's vast factory sector unexpectedly expanded in March, adding to hopes that downward pressure on the world's second-largest economy is easing. The official Purchasing Managers' Index climbed to 50.2, up from 49 in February, while the Caixin manufacturing PMI rose to 49.7, marking the first increase from the previous month in a year. That should be of some comfort to Fed Chair Janet Yellen, who this week cited the global risks emanating from China as one reason to be cautious on raising U.S. interest rates.
A gloomy Tankan survey from the BOJ overnight sapped risk appetite and sent Japanese shares into a tailspin. The corporate survey saw big manufacturers' business sentiment at its lowest in nearly three years, and it's expected to worsen in the coming quarter. Markit's Flash Manufacturing PMI, which came in at 49.1, didn't do any better to help lift sentiment. The data further pressures Prime Minister Shinzo Abe and the central bank to do more to shore up the stuttering economy. Nikkei -3.6%.
In line with a recent U.N. Security Council decision, the European Union has expanded its sanctions against North Korea as a result of the nation's missile tests. The new penalties include additional export and import bans, inspections on all cargo to and from the country, and banning of flights and port calls carrying prohibited items. The EU will also put in place additional financial sanctions, such as asset freezes and the closure of branches, subsidiaries and representative offices of North Korean banks.
Prices for factory goods in the euro area dropped the most since 2009 in March, in a sign that weak inflationary pressures may be cutting into companies' ability to charge more even as manufacturing expands. Markit's PMI for the eurozone increased to 51.6 from 51.2 the previous month, despite consumer prices falling 0.1% from a year earlier. While the reading is higher than the initial estimate of 51.4, it still caps the weakest quarter in a year and underscores the challenge facing the ECB to stoke inflation.
Meanwhile, net bookings for Brussels plummeted more than 130% following last week's deadly bombings that killed more than 30 people and left hundreds injured. Tom Jenkins, CEO at European Tour Operators Association, says the drop isn't surprising considering the Brussels airport was closed following the attacks. "What's interesting is that we're also seeing a decline in booking for Paris and for London, and the decline is concentrated in those zones."
The European Union plans to start implementing a heavily criticized deal for asylum seekers on Monday by transferring the first of some 500 migrants back to Turkey. Under the accord, EU countries have pledged to take one screened refugee directly from Turkish soil for each Syrian refugee returned to Ankara. Turkey will also receive nearly $7B and other concessions to help it stem the migrant tide and cope with the 2.7M Syrians currently living in the country.
The Obama administration is preparing to give Iran limited access to the greenback as part of looser sanctions on the Islamic Republic, according to congressional staff members and a former American official briefed on the plans. The move comes amid rising Iranian criticism that the landmark nuclear agreement reached last year hasn't provided the country with sufficient economic benefits. Most major international trade, particularly in oil and gas, is conducted in U.S. dollars.
California and New York have become the first states to lift the minimum wage to $15 an hour, propelling a pay target that once focused on major urban areas into every corner of the economy. The push by two of the nation's most populous states widens the debate about the benefits and risks of elevated minimum wages during an election season marked by concerns about income inequality and the government's role in shaping wages.
Worldwide share issues slumped to a seven-year low in the first quarter of the year as market volatility claimed the hopes of companies seeking to list their stock. The value of total share sales, including secondary issues as well as flotations, more than halved to $106.6B, the lowest since the immediate aftermath of the global financial crisis. How about deal making? Although equities wavered, and financing was virtually shut down, companies across the globe managed to conduct $682.3B worth of transactions during Q1 (about 14% above the period's average volume over the past two decades). The number of deals - 8,491 during the quarter - was about 1.6% less than the mean.
Anbang Insurance Group has walked away from its planned offer for Starwood Hotels (HOT), after teaming up with private equity firms Primavera Capital and J.C. Flowers for a $14B deal. The reason? According to Reuters, the Chinese insurer's consortium was not interested in a protracted bidding war. The surprise move clears the way for rival suitor Marriott (NYSE:MAR) to buy the Sheraton and Westin hotels operator. HOT -4.4%; MAR -5.9% premarket.
It looks like March Madness fantasy sports paydays have really come to an end. Leading operators DraftKings (Private:DRAFT) and FanDuel (Private:DUEL) are suspending collegiate level contests indefinitely as part of a deal with the NCAA. "High school and youth" games will also be part of the ban. The decision comes as the industry fights legal battles in several states to get legislation passed, clarifying fantasy sports' legality.
Tesla has formally unveiled its Model 3 after landing 115K orders for the EV in 24 hours. Features of the base Model 3 (which will sell for $35K) include a 0-60 mph acceleration time of less than six seconds, EPA-rated range of 215 miles, supercharging, autopilot hardware, and the ability to seat five adults comfortably. In case you were wondering, Elon Musk noted that a 7-foot surf board will fit inside the sedan. TSLA +6.2% premarket.
Automakers have replaced only one-quarter of the estimated 29M defective Takata (OTCPK:TKTDY) air bags in the U.S., with some companies lagging far behind others in terms of completed repairs. As of March 11, the NHTSA said carmakers had replaced more than 7.5M faulty inflators, which can explode and send metal shards into vehicle occupants. The ruptures have been blamed for nine deaths and more than 100 injuries nationwide.
Lockheed Martin and the Pentagon missed their end-of-March target for reaching agreement on $15B in new F-35 fighter jets, but they should complete work on the contracts within weeks. "We're closer now than we were at the beginning of the month," sources told Reuters. "It's not an impasse. They're down to the nitty gritty." Pratt & Whitney (NYSE:UTX) reached an agreement with the Pentagon in early January about two separate contracts to build 167 engines for Lockheed's (NYSE:LMT) new fighter jet.
Amazon is in talks with BMW (BAMXY), Daimler (OTCPK:DDAIY) and Audi (OTCPK:AUDVF) about taking a stake in their high-definition digital mapping company HERE. Last August, the consortium of German automakers agreed to pay €2.5B ($2.8B) to buy Nokia's mapping business as part of plans to develop self-driving vehicles. They need to ensure, however, that maps can cope with live updates on traffic and road conditions collected from thousands of cars. That's likely where Amazon's (NASDAQ:AMZN) cloud computing services comes into the picture.
While the rates of obesity have leveled off in some countries where it's already a public health concern, other places are seeing their obesity rates increase, propping up the global average. "Over the past four decades, we have transitioned from a world in which underweight prevalence was more than double that of obesity, to one in which more people are obese than underweight," according to a study published in The Lancet. By 2025, one-fifth of adults around the world are forecast to be obese, including 40% of adults in the U.S. Related tickers: PLNT, FIT, WTW, NUTR, NTRI, HLF, VVUS, ARNA, GNC, MED, NATR, OREX, LTM, FINL
A government report has found that the Edison blood-testing devices of Theranos (THER) failed to meet the company's own standards for accuracy on a range of tests. The full report, reviewed by the WSJ, shows the first outside look at Theranos' own performance records for its proprietary testing devices. On Monday, a study from Mount Sinai Hospital found that Theranos' test results were highly abnormal compared to competitors.
Unloading more of its financial assets, General Electric (NYSE:GE) has agreed to sell the core business of its Polish lender BPH to local rival Alior Bank for 1.225 billion zlotys ($329M). The deal is part of GE's plans to sell around $200B worth of businesses worldwide, which the company expects to complete by the end of the year, and follows the conglomerate's request to the FSOB yesterday regarding the removal of its SIFI designation.
Lawsuit roundup: Qualcomm (NASDAQ:QCOM) has agreed to pay $7.5M to settle Chinese "princeling" charges, a term used in Asia that refers to hiring young relatives of key executives or political figures. A U.S. judge has dismissed Standard Chartered (OTCPK:SCBFF) from a class action accusing 16 banks of harming investors by rigging prices in the $5.3T-a-day forex market. UBER CEO Travis Kalanick failed to win the removal of an antitrust suit accusing him of scheming to drive up prices for passengers. Lastly, the FCC has ruled that Netflix (NASDAQ:NFLX) did not violate any regulations when it "throttled" the picture quality for AT&T (NYSE:T) and Verizon (NYSE:VZ) wireless customers.
Marvell Technology sank 5% after the bell yesterday, when the company announced it would miss its 10-K filing deadline for the 2016 fiscal year. The business cited changes in an internal accounting investigation as the reason for a delay. Marvell (NASDAQ:MRVL) also expects its fiscal 2016 results to be lower than previously forecast.
More problems at SunEdison... The struggling solar company has received a subpoena from the DOJ seeking details related to its failed deal to buy Vivint Solar (NYSE:VSLR) and transactions with its two publicly listed units, TerraForm Power (NASDAQ:TERP) and TerraForm Global (NASDAQ:GLBL). The government is also seeking information related to a former non-executive employee. SunEdison (SUNE) intends to cooperate with the DOJ's inquiry and SEC investigation.
Yahoo is losing its senior vice president who oversees talent acquisition and development, marking yet another key executive departure after a string of exits last year. Sandy Gould, a former recruiting executive at Disney (NYSE:DIS), is leaving after three years at the Internet company. Meanwhile, Yahoo (NASDAQ:YHOO) CEO Marissa Mayer is pushing ahead with a difficult turnaround effort that's included slashing total staffing by about 15%, amid growing scrutiny from investors.
The FBI is testing a method used to crack the San Bernardino shooter's iPhone (NASDAQ:AAPL) to see how many other versions of the device it could access, but it could take officials many more months to decide what to do with their newfound ability. While the FBI hasn't disclosed the technique or what it found on the phone, the move is likely to escalate the broader debate between Washington and Silicon Valley over encryption, privacy, and security.
In Asia, Japan -3.6% to 16164. Hong Kong -1.3% to 20499. China +0.2% to 3009. India -0.3% to 25270.
In Europe, at midday, London -1.4%. Paris -2.1%. Frankfurt -2%.
Futures at 6:20, Dow -0.3%. S&P -0.4%. Nasdaq -0.5%. Crude -2.2% to $37.51. Gold -0.2% to $1233.10.
Ten-year Treasury Yield flat at 1.79%
Companies reporting earnings today