Economy
China's exports surprisingly tumbled in March while import shipments fell at their sharpest rate since the global financial crisis, setting a poor precursor to the country's closely-watched Q1 GDP figure due on Wednesday. According to official data, Chinese exports plunged 15% and imports fell 12.7% last month in dollar terms as weak demand and the impact of the lunar new year weighed heavily on Chinese factories. The soft trade figures sent Chinese shares higher, with the Shanghai Composite closing up 2.2%, as investors bet on more stimulus from Beijing.
Despite a denial by Greece's finance ministry, tensions between Greece and its creditors took another turn for the worse over the weekend, following a report that eurozone officials were "shocked" at Greece's failure to outline detailed structural reforms at last week's talks in Brussels. On Friday, Greece was given six working days by eurozone creditors to come up with reform plans in order to prepare for the April 24th Eurogroup meeting that will decide if €7.2B in financial aid will be disbursed. The bickering is adding to the pressure on the euro - down 0.8% at $1.0523.
Raising new concerns over the damaging side effects of the ECB's landmark QE program, many analysts now think it is only a matter of time before Germany's benchmark 10-year government borrowing costs drop below zero for the first time. Yields on the Bunds fell to just 0.15% today, compared with 0.54% at the start of the year, as the ECB entered the second month of its €1T bond-buying program. Although not part of the eurozone, Switzerland became the first government in history last week to sell benchmark 10-year debt at negative interest rates, raising even more worries about distortions in the global financial markets.
As the U.S. job market improves, the risk is receding that an unexpected setback could derail the recovery once the Federal Reserve raises interest rates, San Francisco Fed President John Williams told Reuters in an interview late on Friday. "So even if the economy got some bad shocks, really you are probably just talking about flattening that path out a bit, or maybe raising rates more slowly," said Williams, who this year is one of 10 voting members of the Fed's policy panel.
China has rejected Taiwan's bid to become a founding member of the Asia Infrastructure Investment Bank under the name "Chinese Taipei," but said the island would be welcome to apply again as an ordinary member in the future. The two have been tied up over an "appropriate name" under which Taiwan can join the bank. Although China views Taiwan as a renegade province, it allows it to participate in the Asian Development Bank under the name "Taipei, China."
Stocks
Qualcomm is now under pressure from activist investor Jana Partners to consider a breakup and other options to boost its sagging stock price. According to a quarterly letter reviewed by the WSJ, Jana is asking Qualcomm (NASDAQ:QCOM) to consider spinning off its chip unit from its patent-licensing business, cut costs, accelerate stock buybacks and make changes to its executive-pay structure. Over the last year, Qualcomm shares have dropped over 11%.
Qualcomm is now under pressure from activist investor Jana Partners to consider a breakup and other options to boost its sagging stock price. According to a quarterly letter reviewed by the WSJ, Jana is asking Qualcomm (NASDAQ:QCOM) to consider spinning off its chip unit from its patent-licensing business, cut costs, accelerate stock buybacks and make changes to its executive-pay structure. Over the last year, Qualcomm shares have dropped over 11%.
The European Commission will decide "very soon" whether to issue antitrust charges against Google (GOOG, GOOGL), its digital commissioner said on Sunday, following five years of investigating whether the Internet giant abused its dominance of the European search-engine market. Former competition commissioner, Joaquin Almunia, sought three times to reach a voluntary settlement with Google, although each one of those attempts failed. Current commissioner, Margrethe Vestager, departs on her first trip to Washington on Wednesday to participate in two antitrust conferences.
The U.S. war for wireless subscribers is bringing Sprint (NYSE:S) to offer a hand-delivery cellphone program, which will begin its rollout to current customers in the Kansas City area and expand to new customers across the U.S. The firm declined to say how much it was spending on the program, which will deliver new phones and upgrades using 5,000 Sprint branded cars driven by company contractors. On Friday, Sprint began rebranding about 1,400 RadioShack (OTCPK:RSHCQ) stores as part of an effort to double the footprint of its retail locations.
"There have been no such talks," declared Julius Baer (OTCPK:JBAXY) CEO Boris Collardi when asked whether the bank held discussions with larger rival Credit Suisse (NYSE:CS) about merging. Talk in Swiss banking circles has long linked Credit Suisse to Julius Baer, which has $297.2B in assets and is the fourth-largest private bank in Switzerland. Baer shares hit an all-time high last week on the buyout rumor.
U.S. consumer stocks have been flying off the shelves, as tumbling oil prices boost Americans' spending power, but some investors are beginning to suffer from sticker shock. Consumer discretionary stocks in the S&P 500 haverisen 18.8% in the last six months, outpacing the 10.3% gain in the broader S&P 500, and the segment recently displaced healthcare as the most widely owned sector among stock pickers, according to Bank of America Merrill Lynch. The rally still has some analysts and portfolio managers worried due to elevated valuations and increasing oil prices over the last month are also raising concerns.
After Friday's 10.8% moonshot, General Electric (NYSE:GE) sells for 16x 2015 estimated earnings, writes Avi Salzman in Barron's, a pretty rich multiple considering the company's industrial businesses have boosted operating earnings by an average 1.4% annually for the last four years. "Here's the problem: The assets they have deployed in the finance unit were generating a lot of earnings...as they sell those down, they have to replace them with industrial earnings or share buybacks. There's going to be a period of time where earnings will be stagnant...the Street will get bored waiting."
Looking to expand its package delivery network, UPS (NYSE:UPS) is planning to invest €1B in Europe, German magazine Wirtschaftswoche reports. The news follows FedEx's (NYSE:FDX) €4.4B offer last week for Dutch package-delivery company TNT Express (OTCPK:TNTEY). UPS tried to acquire TNT in 2013, but the EU ruled out the €7B bid due to antitrust concerns.
Today's Markets:
In Asia, Japan flat at 19905. Hong Kong +2.7% to 28016. China +2.2% to 4121. India +0.6% to 29044.
In Europe, at midday, London -0.5%. Paris flat. Frankfurt flat.
Futures at 6:20: Dow -0.1%. S&P -0.1%. Nasdaq -0.1%. Crude +1.5% to $52.40. Gold -0.5% to $1198.70.
Ten-year Treasury Yield -1 bps to 1.95%
Notable earnings before today's open: CBSH
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