EconomyThe Nikkei retreated from a 15-year high after briefly breaking above 20K overnight. Local traders said persistent demand for stocks through systemic futures buying is causing the most recent surge, which has the index higher by nearly 15% so far this year. "Markets globally are more central bank policy-driven than ever, which has sent stock valuations to sky-high levels," says a wealth manager, and Japanese stocks have the added appeal of better value versus other developed markets. The Nikkei closed the session lower by 0.15% to 19,908.
Central banks cut their euro holdings by the most on record last year to help mitigate losses ahead of the ECB's QE. The euro (NYSEARCA:FXE) now accounts for just 22% of global reserves, down from 28% before the EU's debt crisis five years ago, according to the IMF. "As a reserve currency, the euro is falling apart," says SocGen's Daniel Fermon. The numbers may be music to Mario Draghi's ears - a cheaper currency is theoretically a more competitive one - but Mizuho suggests the euro's slipping popularity suggests a more lasting loss of confidence in the EU economy.
IDC estimated PC sales were weak in Q1, with shipments falling 6.7% from a year ago compared to a 2.4% decline in Q4, and 1.7% slides in Q3 and Q2. IDC also reported price pressure, meaning the fall in revenue could be even greater. Gartner - which estimated a 5.2% decline in shipments in Q1 - thinks sales of "mobile PCs" (notebooks, convertibles, and Windows tablets) rose, while desktop sales fell sharply. "PC replacements will be driven by thin and light notebooks with tablet functionality."
Stocks
Continuing its effort to be less a financial company and more an industrial one, General Electric (NYSE:GE) is near a deal to sell $26B of its $30B in real estate holdings, reports the WSJ. The potential buyers of the portfolio - which includes office buildings, shopping malls, and other commercial property globally - are reportedly Blackstone (NYSE:BX) and Wells Fargo (NYSE:WFC). While CEO Jeff Immelt has been scaling down GE Capital since the financial crisis, the finance arm still has $500B in assets, putting the maker of advanced aircraft engines, power turbines, and medical devices in the position of also being the country's 7th largest bank, a strategy investors haven't rewarded since the financial crisis. GE's near-3% gain yesterday after the news hit was its largest one-day advance since October 2013.
Continuing its effort to be less a financial company and more an industrial one, General Electric (NYSE:GE) is near a deal to sell $26B of its $30B in real estate holdings, reports the WSJ. The potential buyers of the portfolio - which includes office buildings, shopping malls, and other commercial property globally - are reportedly Blackstone (NYSE:BX) and Wells Fargo (NYSE:WFC). While CEO Jeff Immelt has been scaling down GE Capital since the financial crisis, the finance arm still has $500B in assets, putting the maker of advanced aircraft engines, power turbines, and medical devices in the position of also being the country's 7th largest bank, a strategy investors haven't rewarded since the financial crisis. GE's near-3% gain yesterday after the news hit was its largest one-day advance since October 2013.
California's Public Utilities Commission voted unanimously to levy $1.6B in penalties against PG&E (NYSE:PCG) for alleged violations involving the deadly natural gas pipeline explosion that rocked San Bruno in 2010. Of the $1.6B, $850M is earmarked for gas pipeline safety improvements, $400M will be rebated to the utility's gas customers, and $300M will go directly to California state coffers.
Hoping to put his stamp on AIG by modernizing the company, CEO Peter Hancock brought on Michael Brady as chief technology officer. Brady was most recently head of infrastructure at Kaiser Permanente. “Mike’s first priority will be to focus on immediate improvements to our performance, making sure that our employees’ work experience is as productive and free of technological obstacles as possible,” says CIO Phil Fasano, who also used to work at Kaiser before Hancock brought him to AIG.
The FAA boosted oversight of United Continental Holdings two months ago, reports the WSJ, citing risks from repeated violations of mandatory pilot qualification and scheduling requirements. A Feb. 6 letter from a high-ranking FAA official to United's (NYSE:UAL) top safety officer called for a thorough overhaul of parts of the airline's process for qualifying crew members. The regulator's action followed a January safety warning from UAL to its pilots after four recent and separate "safety events and near misses." The FAA letter didn't involve those incidents, but instead focused on areas like pilot records and crew-member qualifications.
Today's Markets:
In Asia, Japan -0.15% to 19908. Hong Kong +1.2% to 28835. China +1.9%to 4034. India -0.2% to 28836.
In Europe, at midday, London +0.4%. Paris +0.4%. Frankfurt +1.1%.
Futures at 6:20: Dow -0.1%. S&P -0.1%. Nasdaq -0.1%. Crude -1.0% to $50.30. Gold +0.75% to $1202.60.
Ten-year Treasury Yield flat at 1.96%.
In Asia, Japan -0.15% to 19908. Hong Kong +1.2% to 28835. China +1.9%to 4034. India -0.2% to 28836.
In Europe, at midday, London +0.4%. Paris +0.4%. Frankfurt +1.1%.
Futures at 6:20: Dow -0.1%. S&P -0.1%. Nasdaq -0.1%. Crude -1.0% to $50.30. Gold +0.75% to $1202.60.
Ten-year Treasury Yield flat at 1.96%.
Today's economic calendar:
8:00 Fed's Lacker: U.S. Economic Outlook
8:30 Import/Export Prices
2:00 PM Treasury Budget
Notable earnings before today's open: DCO
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