09Mar2015 Pre-Market Commentary: McDonald’s Sales Down, And GM In Buyback Mode

Here is the European Market Open from CNN Money

European markets are mixed. The DAX is higher by 0.06%, while the FTSE 100 is leading the CAC 40 lower. They are down 0.48% and 0.41% respectively.

McDonald’s February sales fall more than expected

(Reuters) – McDonald’s Corp’s worldwide sales at established restaurants dropped for the ninth straight month, falling a steeper-than-expected 1.7 percent in February as sales in the United States were hurt by “aggressive competitive activity”.

GM plans $5 billion share buyback, agrees deal to avert proxy fight

DETROIT (Reuters) – General Motors Co. said Monday it would launch a new, $5 billion share buyback, and put forward a more detailed plan for capital allocation that promises investors the potential for further cash returns.

Alcoa to buy titanium supplier RTI as aerospace focus continues

CHICAGO (Reuters) – Metals company Alcoa Inc on Monday it would acquire titanium supplier RTI International Metals Inc as it continues to invest in more profitable products for the aerospace and automotive industries.

Goldman Blames Weather For Stronger Oil Prices, Sees WTI Sliding Back To $40

As we noted over the weekend when we showed a simple contango math calculation by SocGen according to which storage costs imply another 20% drop in Brent prices, now none other than Goldman – which has been oddly bearish on oil over the past few weeks – says that its Brent forecast remains at $40/bbl for two simple reasons: i) the global inventory glut is set to resume and ii) it’s the weather’s fault there has been a slowdown in the crude build-up.

From Goldman’s Damien Courvalin:

Clear skies after a perfect storm?

The global build in crude inventories has stalled: OPEC disruptions have returned, demand has been strong, refining margins are stellar and product markets are backwardated. And while the build in US inventories has surprised to the upside, E&Ps are exhibiting a faster focus on financial discipline than we had expected. Net, the past month has featured a reversal of the late 2014 perfect storm of bearish catalysts: weak demand, low disruptions and profligate spending. And while this reversal is consistent with a rational and efficient market response to the collapse in oil prices, the contribution of weather and the premature rally keep us expecting that prices will remain below the current forward curve in 2015.

Greece’s Hope for Eurozone Aid Shifts Back to Brussels

Finance minister’s remarks about potential referendum stoke criticism as E.U. demands the government demonstrate it is serious about making changes.

Oil drops toward $59 on dollar, stock builds

LONDON (Reuters) – Brent crude oil fell toward $59 a barrel on Monday as the dollar strengthened and a supply glut pushed global oil inventories to record highs.

Frontrunning: March 9

ECB Starts Buying German, Italian Government Bonds Under QE Plan (BBG)

Creditors Reject Greece’s Reform Proposals (BBG)

Is Apple Watch the Timex digital watch of the Internet era? (Reuters)

Tesla shedding jobs in China as sales target missed (Reuters)

Malaysia Airlines says expired battery on MH370 did not hinder search (Reuters)

Gunmen kill more than 12 Islamic State militants in eastern Syria (Reuters)

GM Plans Share Buyback, Averting Proxy Fight (WSJ)

Wisconsin capital marked by third day of protests after police shooting (Reuters)

Hedge Funds Are Losing Faith in Oil Rally While Inventory Swells (BBG)

German expo …

EU aides play down Greek reform plan, no early progress

AMSTERDAM/BRUSSELS (Reuters) – Euro zone officials played down plans submitted by cash-strapped Greece to its international creditors in a bid to secure fresh funds, a day after Athens’ outspoken finance minister irked EU partners by raising the prospect of a referendum.

Futures edge lower, extending recent weakness

NEW YORK (Reuters) – Stock futures were lower on Monday, pointing to a continued downtrend on Wall Street as investors continued to question whether an interest rate increase could come sooner than previously expected.

All eyes on Apple’s Cook as Watch launch expected

SAN FRANCISCO (Reuters) – Apple Inc Chief Executive Officer Tim Cook on Monday is expected to announce details of the first product developed under his leadership, a watch that Apple hopes will transform the market of wearable technology.

Start Of European QE Upstaged By Greek Jitters; Apple Unveils iWatch

Because as everyone knows, the one main problem facing Europe today is not trillions on non-performing loans, rampant unemployment, deflation, the surge of anti-austerity political parties coupled with rising xenophobia, and broad socio-economic instability, but bond yields which are not negative enough, earlier today first Germany, then Italy, then France were all delighted to announced they have commenced buying sovereign bonds in the open market, culminating with the following tweet by the ECB intern moments ago:

ECB and Eurosystem national central banks have, as previously announced, started purchases under the Public Sector Purchase Programme.

— ECB (@ecb) March 9, 2015

The buying promptly led to Bund yields once again sliding lower, and the 10Y was down -5bps to 0.35%, on its way to -0.20%. Italy’s 10-year yield declined three basis points to 1.29 percent. As Bloomberg reports, “The QE purchases are having the expected effect and the market is very positive,” said Michael Leister, a senior rates strategist at Commerzbank AG in Frankfurt. “In the core we’re seeing yields dropping sharply lower led by the ultra-long end so these are very much QE-style moves. Near-term it’s going to stay quite volatile because there are some sellers who did front-run these purchases and now are keen to sell.” Then again, judging by the early reaction in yields, there are more keen buyers and frontrunners than sellers.

Since negative yields across the flat European curve is now just a matter of time, we hope that the millions in record youth unemployed across the continent managed to BTFD in Bunds – this may be all …

Airbus says ALC has firmed up order for 55 aircraft

PARIS (Reuters) – European planemaker Airbus said on Monday that Air Lease Corporation (ALC) had firmed up an order for 55 Airbus aircraft, comprising 25 A330-900neo and 30 A321lR.

Exclusive: China’s international payments system ready, could launch by end-2015 – sources

HONG KONG/BEIJING (Reuters) – China’s long-awaited international payment system to process cross-border yuan transactions is ready, and may be launched as early as September or October, three sources with direct knowledge of the matter told Reuters.

Euro zone sentiment hits seven-and-a-half-year high in March

BERLIN (Reuters) – Sentiment in the euro zone surged to its highest level in 7-1/2 years in March as investors heartened by the European Central Bank’s bond-buying program brushed off concerns about the economic turmoil in Greece.

Fed rate hike expectations hit stocks, dollar holds firm

LONDON (Reuters) – Stocks fell and the dollar held firm on Monday in the wake of forecast-beating U.S. jobs numbers that stoked expectations the Federal Reserve could raise interest rates sooner than previously thought.
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Apple Watch Event: What to Look For

At an event at 1 p.m. Eastern time, Apple is expected to reveal features and prices for its entry into the smartwatch market.

Smartphone Weekly Notes: BlackBerry, Apple, Samsung

The mobile industry had a relatively news-filled week as companies unveiled their latest products at the Mobile World Congress, which took place between March 2 and 5 in Barcelona. While Samsung introduced its latest flagship devices ? the Galaxy S6 and S6 Edge, BlackBerry launched a new mid-range handset and also outlined its hardware plans for the year. Separately, Apple announced that it would be holding a media event on March 9, as it prepares to launch its first wearable device ? the Apple Watch.

Eurogroup’s Dijsselbloem: Greece reform outline ‘far from complete’

AMSTERDAM (Reuters) – A list of reforms proposed by Greece last week to help it win creditor support is “far from complete,” the head of the Eurogroup said.

German exports post biggest drop in five months in January

BERLIN (Reuters) – German exports fell by the largest amount in five months in January, dropping more than forecast and putting a slight damper on the outlook for Europe’s largest economy, though economists said a weak euro and cheap oil would help in the months ahead.

Tesla shedding jobs in China as sales target missed

BEIJING (Reuters) – High-end electric vehicle maker Tesla Motors Inc on Monday said it is cutting jobs in China under a restructuring plan launched earlier this year, after missing a sales target in the world’s biggest car market.

A Black Swan Lands In Southern Austria: The Ripple Effects Of “Mini-Greece Going Off In The Heartland Of Europe”

By far the most notable news of the past week, which has still gone largely unnoticed by the greater investing community whose focus instead was on whether algos would ramp the Nasdaq to 5000, and keep the S&P above 2100, even before Mario Draghi finally began buying bonds that nobody wants to sell, was the “Spectacular Development” In Austria, whereby the “bad bank” of failed Hypo Alpe Adria – the Heta Asset Resolution AG – itself went from good to bad, with its creditors forced into an involuntary “bail-in” following the “discovery” of a $8.5 billion capital hole in its balance sheet primarily related to ongoing deterioration in central and eastern European economies.

This shocking announcement promptly sent the price of Heta bonds crashing as creditors, no longer enjoying the explicit guarantee of the state, scrambled to get out of “northern Europe’s” first Lehman moment.

How to Survive a Bear Market

If this six-year bull run ends, the worst thing is to overreact. Rather, be ready and embrace it.

The Global Dollar Funding Shortage Is Back With A Vengeance And “This Time It’s Different”

The last time the world was sliding into a US dollar shortage as rapidly as it is right now, was following the collapse of Lehman Brothers in 2008. The response by the Fed: the issuance of an unprecedented amount of FX liquidity lines in the form of swaps to foreign Central Banks. The “swapped” amount went from practically zero to a peak of $582 billion on December 10, 2008.