EconomyOil is flying higher after Saudi Arabia and its Gulf allies started bombing targets in Yemen as the country slides closer toward civil war. Importers say the Saudi attack itself will unlikely disrupt supplies, but the threat of spreading war in the region could likely impact oil flows. The crisis now risks spiraling into a proxy war with Shiite Iran backing the Houthis, and Saudi Arabia and other regional Sunni monarchies supporting Yemeni President Abd-Rabbu Mansour Hadi. Crude futures +4% to $51.16/bbl.
"Now may be a good time to begin normalizing U.S. monetary policy so that it is set appropriately for an improving economy over the next two years," Federal Reserve policymaker James Bullard said on Thursday. The recent decision by the U.S. central bank to remove "patient" from its policy statement makes a return to 'standard' policy making possible, he added. Bullard is not a voting member on the Fed's policy setting committee this year, but does take part in regular policy deliberations.
Greece is optimistic about reaching a deal on economic reforms with its European partners early next week, unblocking urgently needed funding, Economy Minister George Stathakis told Antenna TV. The country's eurozone creditors have hinged the next round of bailout funds on reforms that are to be approved by the bloc's finance ministers. However, in another setback to Greece's government yesterday, the country failed to secure a quick cash payment after eurozone officials told Athens it was not entitled to €1.2B from the European Financial Stability Facility.
Indonesia wants to have a major role in the new $50B Asian Infrastructure Investment Bank, with at least the vice-president's position reserved for the Southeast Asian country. "We are fighting to get a position in the AIIB ... because most likely we will be the biggest client," said Indonesian Finance Minister Bambang Brodjonegoro. At least 35 countries will join the AIIB by the March 31 deadline, the bank's interim chief, Jin Liqun, said on Sunday.
With U.S. law allowing for exchanges of crude on a case-by-case basis with "adjacent countries", Mexico's Pemex expects imminent approval from the U.S. Commerce Department to allow it to swap up to 100K barrels of heavy crude for a similar amount of lighter U.S. oil. Pemex is also hoping the swaps will pave the way for the U.S. to eventually allow direct crude oil exports to Mexico, an exemption it currently allows for Canada.
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Following a similar move by rival Volkswagen (OTCQX:VLKAY), Toyota (NYSE:TM) is shifting half of all the vehicles it makes to new cost-saving platforms by 2020. Under the "Toyota New Global Architecture" initiative, the automaker will reduce development costs by at least 20% by designing more new models with fewer platforms. It also means that compared with 2008, the cost of starting new production lines will fall by 50%, and initial investment required for a new plant will drop by 40%. TM -1.3% premarket.
Following a similar move by rival Volkswagen (OTCQX:VLKAY), Toyota (NYSE:TM) is shifting half of all the vehicles it makes to new cost-saving platforms by 2020. Under the "Toyota New Global Architecture" initiative, the automaker will reduce development costs by at least 20% by designing more new models with fewer platforms. It also means that compared with 2008, the cost of starting new production lines will fall by 50%, and initial investment required for a new plant will drop by 40%. TM -1.3% premarket.
Ford has invested $1B in a new plant in western India that will help it triple its exports from the country. Ford (NYSE:F) is planning to make India an export hub for compact cars such as the EcoSport, and the newly launched compact sedan, Ford Figo Aspire, the first car to be produced at the new facility. The plant will also nearly double the company's installed production capacity in the country to 610K engines and 440K vehicles a year.
Salus Capital Partners, a RadioShack lender, has asked U.S. Bankruptcy Judge Brendan Shannon to intervene in the auction of the electronics retailer, saying its $271M joint bid to liquidate the chain was "materially superior" to that of Standard General. Standard is offering to pay for most of its offer in the form of a "credit bid," or debt forgiveness. The outcome will likely be announced this morning, when Shannon is scheduled to approve the results of RadioShack's (OTCPK:RSHCQ) auction.
The U.K. government sold about £569M ($847M) of shares in Lloyds (NYSE:LYG) today, cutting its stake to 21.9% and adding to the more than £1B of stock sold by the Treasury since December. At its last disposal on March 9, the government lowered its stake to 22.9%, down from a peak of 40% in 2009, when it bailed out the bank during the financial crisis. Lloyds also said it would resume dividend payments last month after reporting its first annual profit in five years.
Royal Bank of Scotland has increased the value of shares it's selling in Citizens Financial (NYSE:CFG) to as much as $3.7B after receiving stronger demand from investors to own a stake in its recently listed U.S. subsidiary. RBS (NYSE:RBS) also aims to carry out another share sale later this year to slash its stake in Citizens below a third. That would allow it to say that it no longer controls the U.S. bank and therefore removes the company’s £60B of risk-weighted assets from its balance sheet.
Deepening the mystery surrounding the Germanwings (OTCQX:DLAKY) flight crash, evidence from a cockpit voice recorder indicates that one pilot left the cockpit before the plane’s descent and was unable to get back in, NYTreports. "The guy outside is knocking lightly on the door and there is no answer," the investigator said. "You can hear he is trying to smash the door down." Lufthansa (Germanwings parent) shares are down 2.7% in Germany.
Marking a new milestone since their December 2013 merger, American Airlines (NASDAQ:AAL) and U.S. Airways expect to receive a single operating certificate from U.S. regulators on April 8. Although the carriers still have to combine their reservation systems, a single certificate will mean the FAA recognizes the airlines as one, and that the majority of their flight, maintenance and dispatch procedures will be identical.
China's Hainan Airlines says it plans to buy 30 Boeing (NYSE:BA) 787 Dreamliner jets, valued at $7.7B, boosting Boeing's 787 program backlog to 855 planes. The order represents the biggest order this year for the jet. Many of the Dreamliners ordered by Hainan are said to come from delivery positions once reserved for United Continental (NYSE:UAL), which is in negotiations with Boeing for some larger 777-300ERs.
Facebook is expanding its Messenger app, announced Mark Zuckerberg at the company's F8 developer conference yesterday, making it into a whole new communication system. Zuck unveiled the Messenger Platform, which allows 3rd-party developers to integrate their apps with Messenger, and disclosed that Messenger MAUs have now topped 600M, up from 500M in November. Other new announcements: support for spherical videos, an embedded video player, a mobile ad exchange platform and other e-commerce tools. FB -1.3%premarket.
Expedia and Orbitz have both received a request for additional information related to the DOJ's antitrust review of Expedia's (NASDAQ:EXPE) planned $1.6B acquisition of Orbitz (NYSE:OWW) that would bring many of the top U.S. travel-booking sites under one roof. The deal, together with Expedia's planned $280M acquisition of partner Travelocity, has sparked fears of limiting competition within the industry.
Not only have brick and mortar banks transgressed numerous U.S. sanctions programs against countries like Iran, Cuba and Sudan, but PayPal (NASDAQ:EBAY) has also just agreed to pay $7.7M to settle similar charges from the U.S. Treasury Department. PayPal did not adequately screen its transactions for U.S. sanctions targets for several years through 2013, resulting in 486 apparent violations of U.S. law, the Treasury said in a statement.
Separately, Schlumberger has agreed to pay $237M for violating U.S. sanctions in Iran and Sudan, capping a six-year investigation by the Justice and Commerce departments. The oil well manufacturing company also agreed to a three-year period of corporate probation, during which it will cease all operations in Iran and Syria. SLB +1.6% premarket.
Today's Markets:
In Asia, Japan -1.4% to 19471. Hong Kong -0.1% to 24497. China +0.6% to 3682. India -2.3% to 27458.
In Europe, at midday, London -1.1%. Paris -1.3%. Frankfurt -1.5%.
Futures at 6:20: Dow -0.9%. S&P -0.9%. Nasdaq -1.2%. Crude +4% to $51.16. Gold +1.1% to $1210.50.
Ten-year Treasury Yield +4 bps to 1.92%
Today's economic calendar:
4:35 Fed's Bullard: U.S. Economy and Monetary Policy
8:30 Initial Jobless Claims
9:00 Fed's Lockhart: U.S. Economy and Monetary Policy
9:45 PMI Services Index Flash
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
1:00 PM Results of $29B, 7-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
4:35 Fed's Bullard: U.S. Economy and Monetary Policy
8:30 Initial Jobless Claims
9:00 Fed's Lockhart: U.S. Economy and Monetary Policy
9:45 PMI Services Index Flash
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
11:00 Kansas City Fed Mfg Survey
1:00 PM Results of $29B, 7-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
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