Another disappointment in housing.
I said last night in my TraderTalk post that I was getting more concerned about housing, especially following the disappointment of the National Association of Home Builders Market Index. Today, March housing starts disappointed as well, coming in at 654,000 annualized, below expectations of 703,000, lowest since October 2011, led down by lower multifamily starts. Permits came in at 747,000, above expectations.
1) Don't cry for me, Espana: Spanish newspapers like El Pais and El Mundo today are consumed, not with the Spanish debt crisis, but with the grave insult that Argentinian President Cristina Kirchner gave to Spain by daring to expropriate 51 percent of Argentine oil company YPF.
The outrage: YPF is 57 percent owned by Spanish oil giant Repsol. After the expropriation, the ownership of YPF will be 51 percent Argentine government, 26 percent Petersen Group, 17 percent freely floating, and 6 percent Repsol.
Ouch. Of course, the issue now is what they will get (not as much as they want), and whether there is any value in owning a company controlled by the Argentinian government.
Regardless: The issue is uniting Spain against its upstart former colony — Argentina declared independence from Spain in 1816, but you knew that, right? — and providing a pleasant diversion to the weighty problems of the Spanish economy. It's a faux sense of unity, but hey, you'll forgive the Spaniards for their indignation. It's a diversion, but they have a right to be outraged.
2) Speaking of Spain, yields nearly doubled at Spain’s bond auction, which drew decent demand. The Treasury sold 2.09 billion euros of 12-month bills at 2.623 percent, up from 1.418 percent at last month’s sale. Spain sold 1.09 billion euros of 18-month bills at 3.110 percent, compared with 1.711 percent at March’s sale. The bid-to-cover ratio, an indicator of investor demand, was 2.9 on the 12-month bill and 3.8 on the 18-month bill. Ratios above 2.0 are generally strong.
3) Banking stock gains and an upbeat German investor sentiment survey lead European shares higher. The main reading of the ZEW index of analyst and investor confidence rose unexpectedly in April to 23.4, its highest level since June 2010. The euro hit a session high and European stocks extended gains after the indicator increased from March’s 22.3 level and beat analysts’ April forecast of a drop to 20.0.
4) India cuts interest rates for first time in three years, lowering its repo rate (the rate at which a central bank repurchases government securities from the commercial banks) to 8 percent from 8.5 percent. But India, like China, is facing inflation issues, so it's not clear how much room they have to cut more.
5) Goldman Sachs drops slightly pre-market after the bank beat analysts’ expectations on the top-line and bottom-line, and announced it is raising its quarterly dividend. Goldman posted first-quarter earnings per share of $3.92, compared to the Street’s $3.55 view. Better-than-expected earnings were driven by aggressive cost cutting, and strong investment banking and trading revenues. Goldman said it would raise its quarterly dividend to 46 cents per share from 35 cents. Goldman follows trend with other banks Well Fargo and JPMorgan Chase, which fell pre-open after topping earnings expectations.
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