EurAnalysis

2. Asian stocks today closed mostly lower with Japan down -0.40%, China -0.37%, Australia -0.36%, South Korea -0.71%, India +0.48%. Asian stocks weakened after Feb China exports grew at a slower-than-estimated pace, which overshadowed a rebound in Jan Japan machinery orders and better-than-expected U.S. jobs data. Feb China exports rose +18.4% y/y, weaker than expectations of +31.1% y/y as China posted a trade deficit in Feb of -$31.48 billion, larger than expectations of -$5.35 billion and the widest in 22 years. Chinese rail and train builders also closed lower after a 1,000 foot section of an unopened high-speed railway collapsed in central China's Hubei province following heavy rains. Japanese stocks finished lower despite a larger-than-expected increase in Jan Japan machine orders which rose +3.4% m/m and +5.7% y/y, stronger than expectations of +2.3% m/m and +4.4% y/y.

Wall Street Breakfast: Must Know News


Monday, March 12, 2012 7:44:31 AM
Asahi Kasei buys Zoll Medical. Japan's Asahi Kasei Corp. agreed to buy Zoll Medical Corp. (ZOLL) for $2.21B, or $93/share, a 24% premium over Zoll's Friday closing price. Asahi Kasei, Japan’s leading diversified chemical manufacturer, sees emerging demand for healthcare as a strategic sector for the company in the future.
Youku, Tudou merge. Youku.com (YOKU) will merge with Tudou Holdings (TUDO) in an all-stock swap, creating a major online video provider. Of the combined entity, which will be named Youku Tudou Inc., Youku holders will get 71.5% and Tudou holders get 28.5%. Premarket: YOKU -4.8%, TUDO +127.4% (7:00 ET).
India adjusts cotton policy, again. India continues to flip-flop on cotton, saying today it will now prohibit fresh cotton exports and permit only quantities already registered but not shipped. The trade ministry unexpectedly banned all cotton exports on March 5, then lifted the restriction on Sunday. Muted reaction from cotton futures, +0.3% (6:30 ET).
Improvements expected in bank stress tests. The Fed will release the results this week of its latest stress tests, which are expected to show broadly improved balance sheets at most banks. If banks fall short, they could be required to raise billions in new capital, while positive results could translate to dividend increases and stock buybacks.
BIS: EU regulators added to instability. Calls by European regulators for banks to boost their capital buffers on an expedited timetable created more instability, not less, according to a report (.pdf) out this morning from the Bank for International Settlements. The move exacerbated concerns about the health of the eurozone’s financial sector and sparked fears of a lending squeeze and asset fire sales.
U.K. banks face legal action. All the major U.K. banks, including HSBC (HBC), Barclays (BCS), Lloyds (LYG) and RBS (RBS), are facing legal action that could result in billions of pounds of damage payments, according to a report in The Sunday Telegraph, with small and medium-sized businesses claiming the banks profited at their expense by pushing them to buy complex interest rate derivatives.
Pepsi beefs up management. Pepsi (PEP) is deepening its management line-up as it tries to get a potential successor in place for CEO Indra Nooyi. Sources say the company will appoint today former Wal-Mart exec Brian Cornell to head the company's largest and most profitable unit, and longtime Pepsi exec John Compton to the new position of president.
PBOC sees room to ease loan curbs. PBOC Governor Zhou Xiaochuan says the bank has room to ease lending curbs and adjust the reserve ratio to support economic growth, but that any changes would be gradual. He also believes the yuan is near fair value and that it's too early to say whether the February trade gap is the start of a trend. Zhou's comments come after weekend data showed the weakest loan growth since 2005.
Glencore eyes Viterra. Glencore (GLCNF.PK) has reportedly made a £3.5B ($5.5B) offer for Canadian grain handler Viterra (VTRAF.PK). Viterra issued a statement on Friday that it had received expressions of interest from third parties, but declined to identify the companies.
JetBlue thinks Irish. JetBlue (JBLU) has put out feelers with Aer Lingus' management about possibly purchasing a stake in the Irish airliner, according to a report in the Irish Times. The Irish government is considering selling its 25% stake, which is valued at around €115M ($150M), and the tie-up could make sense as the two airlines operate similar business models but don’t compete head-to-head on any routes.
Pre-order iPads sell out. Apple (AAPL) said this weekend it has already sold out the supply of new iPads set aside for pre-order, and will push back their ship date to Friday, which is the official launch date. Apple had previously told customers they would receive their pre-ordered iPads the same day the tablet goes on sale in stores.
Data raises Japan hopes. Japan's core machinery orders rose 3.4% in January from the previous month, much faster than the +1.6% expected, adding to hopes that Japan's economy may gather some momentum this year.
Friday's failure. New City Bank in Chicago becomes the 13th U.S. bank failure in 2012 and the second to fail in Illinois this year. The bank was closed by Illinois regulators but the FDIC was unable to find another bank to take over operations so it will mail insured depositors their checks directly. At the end of 2011, the bank had $71M in assets and $72M in deposits.
Today's Markets:
In Asia, Japan -0.4% to 9890. Hong Kong +0.2% to 21134. China -0.2% to 2435. India flat at 17588.
In Europe, at midday, London -0.1%. Paris -0.1%. Frankfurt +0.2%.
Futures at 7:00: Dow flat. S&P -0.1%. Nasdaq -0.1%. Crude -0.9% to $106.47. Gold -0.3% to $1706.30.

Monday's economic calendar:
1:00 PM Results of $32B, 3-Year Note Auction
2:00 PM Treasury Budget