China sets conservative GDP goal, to boost spending. China has given itself a GDP growth target of 7.5% for 2013, which would be below last year’s 7.8%. At the opening of the annual National People’s Congress, the finance ministry said it plans to increase the country’s budget deficit to 1.2T yuan ($192.8B), or about 2% of GDP from 1.6% in 2012. Much of the increased spending will go on social programs as China looks to shift the focus of its economy towards the consumer and away from exports and infrastructure.
Fannie, Freddie may merge some operations. The Federal Housing Finance Agency is working on a plan to merge some of the operations of Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) in a new venture that would be separate from the two firms and could lay the groundwork for eventually replacing them. Initially, the venture would consolidate some of the "back-office" operations that Fannie and Freddie duplicate.
GD joins BAE in warning of layoffs due to sequestration. General Dynamics (GD) shipbuilding unit NASSCO has warned over 1,000 workers of indefinite layoffs that may take effect in late April due to the uncertainty caused by the automatic spending cuts that kicked in on Friday. The warning follows one by BAE Systems last week. The reductions will chop the Pentagon’s budget by 7.8%, with all major defense contractors set to be hit.
Top Stock News
Global stocks higher on hopes of continued easing. Wall Street gains yesterday – which look set to continue – helped Chinese shares come back strongly today after they dropped sharply in the previous session, although property stocks still fell on government moves to dampen down the sector. Tokyo continued to rise on expectations of lots of BOJ money printing, while European stocks are enjoying a strong day, also partly on hopes of continued easy monetary policy.
Senate panel spears senior JPM execs over whaling loss. A report from a Senate panel about JPMorgan’s (JPM) London Whaling loss reportedly finds that the problems involved the bank’s senior executives, including former CFO Douglas Braunstein, who is now vice chairman. The report, which is due to be released on March 15, criticizes JPMorgan for building its positions without warning regulators and investors, who themselves don’t escape scrutiny.
Could China be set to regulate Android? A Chinese government white paper has said China is "too dependent on Android," and accused Google (GOOG) of discriminating against some OS developers in the country by delaying code sharing, as well as trying to limit their ability to do business. While the paper made no recommendations, analysts see it as an indication that China could be set to impose regulations on Android.
J.C. Penney drops on report of big block sale. J.C. Penney shares dropped 2% to $16.41 premarket, although that was up from yesterday’s post-market lows, following reports that major investor Vornado Realty Trust (VNO) is offering to sell 10M shares in the beleaguered retailer at $16.40-$16.60 each. That’s below the price at which Vornado bought the stock, with the investment sparking unhappiness among the firm’s own shareholders.
News Corp. aims to launch sports channel in the summer. News Corp. (NWS) reportedly plans to launch a new cable sports network in August just ahead of the college football season. Initially, the network will feature Nascar auto racing, Major League Baseball and soccer as well as college football and basketball. Things will get interesting when Fox Sports 1 – along with new sports networks from NBC (CMCSA) and CBS (CBS) – tries to wrestle key contracts away from ESPN (DIS).
Energy majors eye $4.5B stake in major gas field. Anadarko Petroleum (APC) and Indian billionaire Venugopal Dhoot have reportedly launched an auction to sell a 20% stake in the Rovuma natural gas field off the coast of Mozambique, which is on course to become a major provider of LNG to Asia. Any sale could bring in $4.5B, with potential suitors including PetroChina (PTR), Exxon Mobil (XOM) and Shell (RDS.A).
Toyota poised to overhaul management. Toyota (TM) Vice Chairman Takeshi Uchiyamada, who led the development of the Prius hybrid, is reportedly set to replace Fujio Cho as chairman as part of a management reshuffle that’s aimed at promoting greater flexibility and improving quality. Company President Akio Toyoda also intends to give less-senior managers more responsibility for day-to-day decisions, leaving executive VPs to focus on strategy, and he wants edgier designs.
HD Supply plans IPO. HD Supply is reportedly preparing to carry out an IPO six years after it was bought for $8.5B by three private-equity firms, including Carlyle (CG), from Home Depot (HD), which retained a 12.5% stake. HD Supply is a major distributor of construction, industrial and maintenance supplies, generating nine-month sales of $6B.
White House: Let their cell phones free. White House adviser David Edelman said the Obama Administration supports changing the law so that consumers can unlock their cell phones and tablet computers so they can work on another operator’s network. Mobile users had been allowed to unlock their devices without their carrier’s permission until a recent change in the regulation by the Library of Congress’ Copyright Office.
Top Economic & Other News
Eurozone business activity continues to decline. Eurozone composite output PMI fell to 47.9 in February from 48.6 in January as the contraction in the bloc’s business activity deepened. The service index fell to 47.9 from 48.6. The PMI data in Q1 so far points to eurozone GDP shrinking 0.2% following a drop of 0.6% in Q4, with the divergence between Germany and France "the widest in the 15-year survey history," says Markit.
Eurozone moves towards rescue of Cyprus. Eurozone finance ministers intend to agree on a bailout for Cyprus – which is seen as systemically important to the eurozone despite its small size – by the end of the month, although it’s not clear how the rescue would be financed. Cyprus needs up to €17B, an amount that would lift its debt-GDP ratio to 145%.
In Asia, Japan +0.3% to 11683. Hong Kong +0.1% to 22561. China +2.3% to 2326. India +1.4% to 19143.
In Europe, at midday, London +0.8%. Paris +1.4%. Frankfurt +1.7%.
Futures at 7:00: Dow +0.2%. S&P +0.1%. Nasdaq +0.2%. Crude +0.2% to $90.31. Gold +0.7% to $1582.50.
Today’s economic calendar:
7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
10:00 IBD/TIPP Economic Optimism
10:00 ISM Non-Manufacturing Index
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