Nikkei soars as BOJ launches blitzkrieg on deflation. The Nikkei (NKY) surged and the yen (FXY) plummeted after the Bank of Japan defied all expectations in its battle to end deflation. Following its first policy meeting under new Governor Haruhiko Kuroda, the BOJ will change its target when setting policy from the overnight call rate to the monetary base, which the bank aims to double within two years by purchasing ¥60-70T of assets a year. These include government bonds of all maturities and not just short-term debt. The plan is open-ended, and, significantly, was unanimously approved. The dollar was +2.6% vs the yen at the time of writing.
South Korean dollar holdings drop 3.2% from 2011: Bank of Korea. Holdings shifted to gold and Chinese assets, among others. — Read more here »
Eurozone service sector remains in the mire. Eurozone composite PMI dropped to 46.5 in March from 47.9 in February, with the services index slipping to 46.4 from 47.9. "The recession is deepening once again as businesses report that they have become increasingly worried about the region’s debt crisis and political instability," says Markit. France is in deep contraction, and with German growth almost stalled, "the only source of bright light…has once again begun to fade."
Top Stock News
Samsung to open mini-stores in Best Buy. Samsung (SSNLF.PK) plans to copy Apple (AAPL) – not for the first time, some might say – and set up 1,400 mini stores in Best Buy (BBY) outlets across the U.S. by June. The "Samsung Experience Shops" will not only sell the company’s products but also provide customer support. For Best Buy, the move is part of its strategy to fight the phenomenon of showrooming.
Facebook, HTC set to showcase phone. Facebook (FB) is set to unveil a mid-range HTC-made phone today that will run on Android and incorporate deep Facebook functionality. This includes showcasing the social network and its apps on the device’s home screen, a news feed made for mobile, and a new tool that uses members’ networks to help them find information. It’s all part of Facebook’s strategy to make more money from mobile.
Deutsche Bank probed over claims it hid $12B of losses. Germany’s Bundesbank and financial watchdog Bafin are reportedly investigating Deutsche Bank (DB) over allegations by former employees that it hid up to $12B in losses during the financial crisis by incorrectly valuing credit derivatives. Deutsche Bank has denied the claims, with CFO Stefan Krause saying in December that after reporting them to the SEC, the agency had not brought an enforcement action. Despite the latest developments, shares were +1.9% premarket.
RBS faces major lawsuits over £12B cash-call in 2008. A group of 21 claimants, including international investors and pension funds, has sued RBS (RBS) for allegedly misleading investors over its £12B cash call at the height of the financial crisis in April 2008. While the suit could be worth "hundreds of millions of pounds," that’s less than a £4B claim that RBS and four former executives are facing from another group of investors over the fundraising.
Crest offers financing to Clearwire. Disgruntled Clearwire (CLWR) investor Crest Financial is offering Clearwire $240M in convertible debt financing as an alternative to the $80M a month that it’s receiving from Sprint (S). Crest, which considers Sprint’s $2.97-a-share deal to acquire Clearwire insufficient, argues that its funds would leave Clearwire with enough capital to build 2,000 4G LTE cell sites and handle this year’s interest payments. Clearwire closed at $3.28 yesterday, 10% above Sprint’s bid.
Apple removes app from Chinese store due to "illegal" content. Apple (AAPL) appears to have further kowtowed to Chinese sensibilities by removing an app from its online store in China that provides access to books by author Wang Lixiong, whose works are mostly banned in the country. Apple would only say that the app included "content that is illegal in China." The move comes days after CEO Tim Cook apologized for Apple’s treatment of Chinese consumers following sustained media criticism.
Top Economic & Other News
BOE leaves rates unchanged; service sector expands. The Bank of England has left its monetary policy unchanged, with its benchmark rate remaining at 0.5% and its QE program dormant. The decision came after data showed that U.K. services PMI rose to its highest in seven months, increasing to 52.4 in March from 51.8 in February and beating consensus. With the improvement offsetting contractions in manufacturing and construction, the data points to GDP growth of 0.1% in Q1 and the avoidance of a triple-digit recession.
French 10-year bond yields drop to record low in auction. France has sold €2B of 10-year bonds at a record low yield of 1.94%, down from 2.1% in a previous sale. The drop comes despite the economy being ensconced in a slump – with composite and services PMI data today being the latest indication of France’s woes – and despite the government being mired in a tax scandal.
Dementia costs greater than cancer and heart disease. The cost of caring for people with dementia is $157-215B a year and could double by 2040, a study from RAND Corp. estimates. The cost of dementia treatment is $109B – above the $102B spent on heart disease and the $77B on cancer – with the other dementia expenses going towards long-term day-to-day care. Companies that develop drugs for Alzheimer’s disease and other conditions include Pfizer (PFE), Eli Lilly (LLY), Johnson & Johnson (JNJ) and Merck (MRK).
Over half of states join Libor probe. The number of states that have joined an investigation into Libor manipulation by banks has grown to 30 in recent months, with Arizona, Delaware, Iowa and Maryland reportedly joining the likes of New York and Connecticut. The states appear to be sanguine about a judge’s recent decision to dismiss private antitrust claims against 16 banks, as the ruling differentiated between enforcement actions and private lawsuits.
In Asia, Japan +2.2% to 12635. Hong Kong, China closed. India -1.6% to 18510.
In Europe, at midday, London flat. Paris +0.9%. Frankfurt +0.6%.
Futures at 7:00: Dow +0.4%. S&P +0.4%. Nasdaq +0.4%. Crude flat at $94.46. Gold -0.6% to $1544.30.
Today’s economic calendar:
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
9:45 Bloomberg Consumer Comfort Index
10:30 EIA Natural Gas Inventory
12:30 PM Fed’s George: Economic Outlook
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
Notable earnings after today’s close: XRTX
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