- US Market Recap
- Markets ended on decidedly positive note after the Fed’s decision to aggressively buy Treasuries and mortgage bonds:
- DOW up 91 points (+1.2%) to 7,487 (-14.7% YTD)
- S&P 500 up 16 points (+2.1%) to 794 (-12.1% YTD)
- NASDAQ up 29 points (+2.0%) to 1,491 (-5.4% YTD)
- Nine out of the ten sectors of S&P 500 were up, with Consumer Staples being the only sector that was down
- Policies:
- The Federal Reserve opened a new front in its battle to bring down borrowing costs after the FOMC voted to keep maintain fed funds rate at 0.25% BUT expand the Fed’s balance sheet up to USD1.15 trillion. This would include a pledge to buy as much as USD300b of Treasuries and step up purchases of bonds backed by government controlled mortgage companies.
- President Obama said he has “complete confidence” in Treasury Secretary Geithner, and the furor over bonuses paid by AIG shows the urgent need to overhaul financial market rules; Florida Republican Representative Connie Mack drew first blood after calling Geithner “a disaster” and should resign or be fired.
- The US House of Representatives plans a vote today (Thu) on a measure to impose a 90% tax on executive bonuses paid by AIG and other companies getting more than USD5b in federal bailout funds; the House Majority Leader expects it to pass in overwhelmingly bipartisan fashion.
- China’s top negotiator on climate change, Xie Zhenhua (Vice Chairman of NDRC), said a US proposal to impose duties on imports from countries that do not limit their carbon emissions was “an excuse to impose trade restrictions”; bonuses and to reduce the systemic risks to the US financial system.
- Others:
- Consumer Discretionary:
- McDonald’s Corp, the world’s largest restaurant company, is serving its McCafe line of coffees in about 60% of its US locations and is on schedule to start a national advertising campaign mid-year; more than 8,000 of its 13,900 US outlets have the offerings, up from more than 7,000 in Jan.
- Starbucks Corp plans to expand marketing to shore up the company’s position as a coffe authority as it faces competition in the US from McDonald’s Corp and Dunkin’ Donuts Inc.; the world’s largest coffee-shop operator is rolling out new expresso machines in 4,000 cafes, and is “well on track” to cut USD500m in spending to generate over USD500m in free cash flow this year.
- Health Care:
- Pfizer is talking with US regulators about whether it must divest some animal-health products to get government approval for its planned acquisition of rival drug-maker Wyeth; Sanofi-Aventis said last week it wanted to expand its animal unit, while Eli Lilly has also express interest in Pfizer’s animal business.
- Info. Technology:
- IBM is in talks to buy Sun Microsystems for at least USD6.5b (or USD10-11/share) to dominate the computer server market; Sun counts General Electric and General Motors among its customers, with servers accounting for almost half its total sales. Purchasing Sun would give IBM a boost in blade servers and help fend off Hewlett-Packard and new comer Cisco Systems, which entered the server market this week.
- Economic data – CPI slightly ahead of est., not still not a major concern yet:
- Feb CPI of +0.4% (MOM) and +0.2% (YOY), vs. est. of +0.3% and 0.0%.
- Feb core CPI of +0.2% (MOM) and +1.8% (YOY), vs. est. of +0.1% and +1.7%.
- 4Q current account balance of USD132.8b, vs. est. of USD137.1b.
- 19 Mar (Thu): FOMC rate decision, weekly jobless (initial and continuing) claims, leading indicator
2) European News
· Arcelor Mittal confirms it’s considering halting operations at two coal mines in
· BAA may face breakup as regulator orders sale of three airports in two years.
· Delhaize acquires 4 supermarkets in
· Swiss watch exportation for February is down 22% to CHF 955m.
· UBS will buy back outstanding lower tier2 debt for up to EUR 1bn, using available cash.
· BASF is seeking acquisitions of construction chemicals companies in Asia Pacific to tap a growing market.
· Sanofi won a
· RBS is planning to sell its
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