>>> Asia Update

Asian Market Update: RBA retains neutral bias, reintroduces discomfort with high AUD; All quiet on Crimea front as rumored ultimatum deadline passes

***Economic Data*** - (AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT 2.50% (AS EXPECTED); Maintains neutral bias - (AU) AUSTRALIA Q4 CURRENT ACCOUNT BALANCE (A$): -10.1B V -10.0BE; NET EXPORTS OF GDP: 0.6% V 0.7%E - (AU) AUSTRALIA JAN BUILDING APPROVALS M/M: 6.8% (1st increase in four months) V 0.5%E; Y/Y: 34.6% V 24.0%E - (AU) Australia ANZ-Roy Morgan Consumer Confidence index in week Mar 2nd: 109.6 v 110.2 prior - (NZ) NEW ZEALAND FEB ANZ COMMODITY PRICE M/M: 0.9% (3-month low) V 1.2% PRIOR; Y/Y: +22.4% - (JP) JAPAN JAN LABOR CASH EARNINGS Y/Y: -0.2% V +0.3%E (1st contraction in three months) - (JP) JAPAN FEB MONETARY BASE Y/Y: 55.7% (multi-year high) V 51.9% PRIOR; MONETARY BASE END OF PERIOD: ¥204.8T V ¥200.9T PRIOR - (KR) SOUTH KOREA FEB CPI M/M: 0.3% V 0.4%E; Y/Y: 1.0% (16th month below 2.5-3.5% target band) V 1.1%E; CORE CPI Y/Y: 1.7% V 1.7% PRIOR - (US) According to e-Forecasting.com, US Feb Leading Index -1.1% v -0.2% prior; Probability of recession rose to 21% from 5% (update)

***Highlights/Observations/Insights*** - With over an hour past the speculated 03:00GMT ultimatum deadline reportedly imposed (and then reportedly denied) by Russian naval forces on Ukraine vessels in the Crimea, no cannons have been fired and no bases are being stormed. Despite the tough rhetoric from Ukraine govt and the unyielding position from the Russia envoy expressed at the UN, both sides are biding their time to secure as much international support as they can and neither is willing to fire the first shot. In the mean time, US remains engaged in tough diplomacy against Moscow - Pentagon has places port visits, various meetings, joint military exercises with Russia on hold, US Trade Rep suspending upcoming bi-lateral trade and investment talks with Russia, while State Sec Kerry travels to Kiev for talks with the new govt. - RBA kept its rates unchanged as widely expected and despite the geopolitical jitters retained a broadly neutral bias. Most notably, RBA brought back the passage suggesting that exchange rate remains high by historical standards and was also a bit more dovish on inflation, deleting expectation for prices to be higher than previously forecast, sending AUD lower across the board. AUD/USD fell over 30pips post RBA below $0.8910. - China's National People's Congress spokeswoman previewed this week's start of the widely anticipated gathering, most notably indicating China will amend budget law and taxation law as it seeks to "improve quality of legislation". Annual targets will be unveiled by the NPC later this week, as early as tomorrow. - Japan labor cash earnings have registered their first contraction in 3 months, supporting sentiment from GPIF's Ito and Abenomics 3rd arrow has been "slow". Despite these headwinds, JPY weakened following comments from BOJ Gov Kuroda who called on investors to continue to pursue carry trade given that Japan real rates are so low. USD/JPY rose above 101.70, up over 30pips from the lows.

***Fixed Income/Commodities/Currencies*** - JGB: (JP) Japan MoF sells ¥2.19T in 0.6% (0.6% prior) 10-yr notes; Avg yield: 0.597% v 0.596% prior; Bid to cover: 3.52x v 3.21x prior - (CN) PBoC to drain CNY35B in 14-day repos, CNY50B in 28-day repos (5th consecutive drain) - USD/CNY: (CN) PBoC sets yuan mid point at 6.1236 v 6.1190 prior setting (weakest Yuan setting since Dec 5th) - SLV: iShares Silver Trust ETF daily holdings fall to 10,168 tonnes from 10,204 tonnes prior

***Speakers/Political/In the Papers*** - (CN) China National People's Congress spokeswoman Fu Ying: China Premier Li Keqiang to hold news conference on Mar 13th; To further open up to domestic and foreign media - news conference - USD/CNY: (CN) PBoC gov Zhou: recent Yuan volatility is normal - Xinhua - (CN) China's Chongqing Province to set up free-trade zone - Chinese press - (CN) According to Shanghai Uwin, new home sales in Feb fell 41% m/m and 23% y/y to 418.7K sqm - lowest in 2 years - Shanghai Daily - (JP) BOJ Gov Kuroda: There is momentum stimulating Yen carry trade; Investors have incentive to pursue carry trade given low Japan interest rates - addressing parliament - (JP) Japan PM Abe: Japan is steadily moving out of deflation - (JP) Japan PM Abe's advisor Takenaka: Jun-Aug quarter will be critical for BoJ judgement on further easing - financial press interview - (JP) Japan Chief Cabinet Sec Suga calls on refrain from force use in Ukraine - (JP) Japan Trade Min Motegi: No change of Japan economic policies on Russia - Kyodo - (JP) Japan Pension Fund (GPIF) reform panel head Ito: 3rd arrow of Abenomics has been "slow and unclear" - financial press/LDP research group meeting - (JP) Japan Center for Economic Research (JCER): Japan's Real Jan GDP estimated at +0.1% m/m; Rising for 4th consecutive month - Nikkei - (NZ) New Zealand Feb new residential listings fall 7% y/y, +31% m/m - Realestate.co.nz

- (UR) Ukraine UN Ambassador: Russia deployed approx 16k troops from Russia territory since Feb 24th - financial press - (UR) According to Ukraine Border Guard, armed men have seized Kerch ferry terminal between Russia and Crimea - financial press

***Equities*** Market Snapshot (as of 04:30 GMT): - Nikkei225 +0.2%, S&P/ASX -0.3%, Kospi -0.4%, Shanghai Composite -0.8%, Hang Seng +0.4%, Mar S&P500 +0.2% at 1,845, Apr gold flat at $1,350, Apr crude oil -0.2% at $104.70/brl

US markets: - VIPS: Reports Q4 $0.43 v $0.40e, R$651M v $579Me; +19.1% afterhours - GWRE: Reports Q2 $0.16 adj v $0.02e, R$83.5M v $77.5Me; +3.2% afterhours - URS: Reports Q4 $0.26 v $0.19e, R$2.66B v $2.72Be; Increases quarterly dividend 4.7% to $0.22 from $0.21; +0.4% afterhours - MCP: Reports Q4 -$0.28 v -$0.29e, R$123.8M v $160Me; -2.3% afterhours - ASNA: Reports Q2 $0.23 v $0.20e, R$1.27B v $1.27Be; -6.2% afterhours - MDR: Reports Q4 -$1.37 v $0.16e, R$517.3M v $825Me; Ichthys subsea field development project "on schedule"; -9.5% afterhours - DISH: Disney, Dish enter into long-term agreement; financial details not disclosed - LMT: US Navy said to order 33 fewer F-35 fighter jets than planned in next 5-yr time due to budgetary pressures; F-35 incurred emergency landing in Japan - financial press

Notable movers by sector: - Consumer Discretionary: Vietnam Manufacturing & Export Processing Holdings 422.HK +6.0% (FY13 results) - Financials: Sinolink Worldwide Holdings 1168.HK -3.0% (profit warning) - Energy: Xinyi Solar 968.HK +15.6% (JPMorgan raises PT); AGL Energy Ltd AGK.AU -2.3% (encounters regulatory opposition on acquisition plans) - Industrials: Chengdu Tianbao Heavy Industry 300362.CN +10.0% (awarded contract); Northeast Electric Development 42.HK -1.2% (FY13 results) - Technology: Hanergy Solar Group 566.HK +5.3% (positive profit alert); Forgame 484.HK +6.1% (acquisitions)

>>> US Close Dow -0,94% S&P-0,74% Nasdaq-0,71%

Closing Market Summary: Stocks Slump as Geopolitical Concerns Weigh

The stock market began the new trading week on a defensive note after tensions between Russia and Ukraine escalated over the weekend. The Dow Jones Industrial Average (-0.9%) paced the decline while the S&P 500 lost 0.8% with all ten sectors ending in the red.  

Over the weekend, Russian troops increased their presence around several key strategic points located in the Crimean peninsula in Southern Ukraine. The troop deployment was authorized by the Russian parliament while Ukrainian authorities described the actions as an ‘invasion.'

Another concerning headline crossed in the late morning when Ukraine's'Defense Minister said that troops in the Crimea have been given an ultimatum to surrender by 22:00 ET or ‘face a storm.' The news knocked the market to fresh lows, but was followed by comments from Russia's Ministry of Defense, claiming no such ultimatum had been presented.

With plenty of uncertainty abound, equities sold off broadly while traditional safe-haven assets received a bid. Treasuries settled on their highs with the benchmark 10-yr yield down five basis points at 2.60% while the Dollar Index (80.08, +0.39) gained 0.5%.

Elsewhere, commodities saw interest with crude oil climbing 2.4% to $105.00/bbl while gold futures settled higher by 2.2% at $1350.40/ozt. In turn, the strength in gold gave a boost to miners, sending the Market Vectors Gold Miners ETF (GDX 26.30, +0.42) higher by 1.6%.

The outperformance of miners helped the materials sector (-0.2%) finish ahead of the broader market. Outside of materials, consumer staples (-0.5%), energy (-0.6%), health care (-0.7%), and telecom services (-0.5%) were able to outperform the S&P 500.

On the downside, the technology sector (-0.9%) spent the entire session behind the remaining nine groups. Strikingly, the largest sector component, Apple (AAPL 527.76, +1.52), eked out a modest gain of 0.3% while other large components like Google (GOOG 1202.69, -12.69), Oracle (ORCL 38.51, -0.60), Microsoft (MSFT 37.78, -0.53), and SAP (SAP 77.74, -2.55) lost between 1.1% and 3.2%.

With stocks under considerable pressure, participants showed significant interest in volatility protection as indicated by the CBOE Volatility Index (VIX 16.29, +2.29), which ended at levels last seen in early February.

Economic data included three reports:

* Construction spending increased 0.1% in January after increasing an upwardly revised 1.4% (from 0.1%) in December. The consensus expected construction spending to decline 0.1%. It is difficult to reconcile the increase in January construction spending and the theory that the recent downturn in economic activity was weather related. If weather was negatively impacting the economy, then construction -- which largely takes place outside -- should have felt the brunt of the negative effects. The fact that construction spending held up relatively well in January, especially considering the huge upward revision to December data, tells us that the weather theory is overblown. 

* In a role reversal, the ISM Manufacturing Index improved in February to 53.2 from 51.3 in January while the consensus expected increase to 51.3. In January, the Federal Reserve regional manufacturing surveys showed stronger manufacturing conditions. Yet, the national ISM Index recorded its biggest one-month fall since October 2008. In February, those same regional manufacturing surveys deteriorated. In a hint of irony, the national index showed sizable growth this month. As the trends clearly show, the national and regional indicators do not serve as a good guide on manufacturing levels. 

* Personal income increased 0.3% in January after being unchanged in December. That was exactly what the consensus expected. Personal spending levels increased 0.4% in January after increasing a downwardly revised 0.1% (from 0.4%) in December. The consensus expected personal spending to increase 0.1%. 

There is no economic data on tomorrow's schedule.

* Nasdaq Composite +2.4% YTD  * Russell 2000 +1.3% YTD  * S&P 500 -0.2% YTD  * Dow Jones Industrial Average -2.5% YTD

>>> HJ Heinz could undertake IPO in coming years - Newswire Round-up

HJ Heinz could undertake IPO in coming years - Newswire Round-up

Warren Buffett, chief executive officer of Berkshire Hathaway, said today on CNBC he intends to hold onto HJ Heinz Co stock, but an initial public offering might take place in a few years, according to a newswire report.

In an interview on CNBC, Buffett said that he and 3G Capital Management would remain equal partners, even if he started to purchase some 3G shares and the distribution of shares were to shift, the Dow Jones article reported. Berkshire Hathaway and 3G Capital Management purchased Heinz in 2013.

In February 2013, an unnamed source told this news service that Buffett’s preferred shares in the company buyout give him the option to tip the company toward a public listing in eight years.


Source Newswire Round-up, CNBC, previously reported intelligence

(BFW) Lorillard Takeout Likely Much Higher than $60/Shr: Wells Fargo

Lorillard Takeout Likely Much Higher than $60/Shr: Wells Fargo
2014-03-03 18:59:39.9 GMT


By Joshua Fineman
     March 3 (Bloomberg) -- Lorillard “fair” takeout price
likely “much higher” than $60/shr Reynolds America is
speculated to bid, as reported by FT Alphaville, Wells Faro
analyst Bonnie Herzog wrote in note.
  * “Question” timing of deal now as RAI would likely want to
    wait for FDA recommendation on menthol, e-cig regulation
    before making a move; not sure how RAI will finance bid
  * Sees more likely scenario British American/RAI form
    strategic partnership to gloablly market/sell e-cigs;
    doesn’t “rule out” BTI taking majority stake in RAI; if
    that were to happen would help finance possible purchase of
    LO
    * NOTE: British American owns 42% of RAI
  * LO remains outperform at Wells Fargo, valuation range $56-
    $58
  * NOTE: FT said RJ Reynolds hires Lazard for possible LO bid



For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>

To contact the reporter on this story:
Joshua Fineman in New York at +1-212-617-8953 or
jfineman@bloomberg.net
To contact the editors responsible for this story:
Joanna Ossinger at +1-212-617-7789 or
jossinger@bloomberg.net
Scott Schnipper

(BFW) French Clients to Sue BNP Paribas Personal Finance: Le Figaro

+------------------------------------------------------------------------------+

French Clients to Sue BNP Paribas Personal Finance: Le Figaro 2014-03-03 16:42:22.96 GMT

By Fabio Benedetti-Valentini March 3 (Bloomberg) -- About 400 French clients are suing BNP Paribas Personal Finance claiming EU40m in damages and interest for misselling mortgages in Swiss francs, Le Figaro reported, citing Charles Constantin-Vallet, lawyer for a group of clients. * Mortgages were sold by BNP’s unit between March 2008 and December 2009: Le Figaro * Swiss franc’s increase vs euro led to 30% increase of reimbursement for borrowers: Le Figaro * “We dispute all the complaints”: Le Figaro reports BNP’s lawyer Ludovic Malgrain as saying

For Related News and Information: First Word scrolling panel: FIRST<GO> First Word newswire: NH BFW<GO>

To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at +33-1-5365-5095 or fabiobv@bloomberg.net

To contact the editors responsible for this story: Frank Connelly at +33-1-5365-5063 or fconnelly@bloomberg.net; Edward Evans at +44-20-3525-3190 or eevans3@bloomberg.net

FT : Bernie Ecclestone prepares for Formula One departure

--> should pave the way for the IPO, some sources mentionned end of 2014 / early 2015 for the IPO...

Bernie Ecclestone prepares for Formula One departure

Bernie Ecclestone is preparing the ground for his eventual departure from Formula One, saying he will not be able to run it full time because of his forthcoming bribery trial in Munich.
In a further sign of the pressure on him, the F1 chief executive also expressed frustration at remarks by a High Court judge in a $140m civil action, which could have a bearing on the Munich trial.

The judge branded Mr Ecclestone an unreliable and untruthful witness and said payments he made to a German banker working on the sale of F1 were a bribe.
The Munich trial, set to begin on April 23, has already forced Mr Ecclestone to stand down from the F1 board.
Despite his stepping down, F1’s leading shareholder, private equity group CVC Capital Partners, remains under pressure to hasten the search for a successor to Mr Ecclestone, who is 83.
CVC is sticking by Mr Ecclestone for the time being. But the Munich trial is starting to weigh heavily on him and his enjoyment of running F1 is thought to be on the wane.
Speaking to the Financial Times, Mr Ecclestone said: “I’ve been spending time on this [civil] case and to spend time on Munich I am not able to give what I normally would do, 24/7, to the business.
“I’ve been looking, over the last few years, for somebody who can join me to assist with what I have to do. I will eventually be in a position, if I decide to retire – or unfortunately become dead – to have someone to step into my shoes.”
The comments are markedly different from the defiant tone he set in January in response to the Munich court announcement that he would have to stand trial, when he said: “Nothing has changed.”
CVC announced at the time that Mr Ecclestone would stay on as F1 chief “on a day-to-day basis”, even though he is expected to attend court two days a week.
Mr Ecclestone had been hoping the outcome of the civil action, brought by German media group Constantin Medien, would start to relieve the legal pressure on him.
Mr Justice Newey dismissed Constantin’s claim that F1 was undervalued when sold to CVC in 2005-06 because of payments by Mr Ecclestone to former BayernLB banker Gerhard Gribkowsky.
But the judge concluded the payments constituted a bribe, and said it was “impossible to regard” the F1 chief executive as a “reliable or truthful witness”.
Mr Ecclestone said: “I was a little disappointed at the judge’s remarks but I understand he was in a difficult position because of the lack of evidence in front of him.”
Potential successors to Mr Ecclestone are in short supply. Christian Horner, the Red Bull team principal who is close to Mr Ecclestone, is being pushed in some quarters.
Any successor needs to have the blessing of F1’s most important team, Ferrari, and its powerful president, Luca di Montezemolo. Mr Ecclestone has said in the past that the role should be divided up between different individuals.

>>> Fed's Williams (dove, FOMC non-voter): Opposes new threshold to replace 6.5%

Fed's Williams (dove, FOMC non-voter): Opposes new threshold to replace 6.5% unemployment, reiterates Fed needed to change its guidance very soon as unemployment has already fallen to 6.6% - FT interview
- New forward guidance should be verbal, be backed up by the Fed economic forecasts.
- Risky to try to distil the complex set of issues about monetary policy, including potential concerns about financial stability, down to one metric.

FT : SF Fed president wants new verbal rate guidance ‘very soon’

The brief heyday of numerical forward guidance on interest rates is ending, as an influential US Federal Reserve official told the Financial Times he opposes a new number to replace its 6.5 per cent unemployment threshold for rate rises.
John Williams, president of the San Francisco Fed and a former research director for chairwoman Janet Yellen, said in an interview that the Fed needed to change its guidance “very soon” as unemployment has already fallen to 6.6 per cent.

But he said the new guidance should be verbal, backed up by the Fed’s economic forecasts. With a number, “we’d have the same problem we have now – everyone would be looking at this one metric, the unemployment rate,” said Mr Williams.
“As we get closer to reaching our goals, I think that the risks of trying to distil the complex set of issues about monetary policy, including potential concerns about financial stability, down to one metric – the cost of that and the potential confusion is just greater than the benefit.”
The remarks by Mr Williams, who is not a voting member of the Fed board this year, reflect a swell of opinion among central bankers that numerical forward guidance is useful when an economy is struggling but could become a straitjacket as it gets closer to full employment.
The Bank of England recently gave verbal guidance about what it will do once unemployment falls below its own threshold of 7 per cent. The Fed may do something similar at Ms Yellen’s first meeting in charge on March 19.
In his own economic forecast, Mr Williams said, the Fed will raise interest rates in the middle of next year with the unemployment rate at about 6 per cent, inflation at 1.5 per cent and “everything moving in the right direction”.
“At that point if we don’t start to adjust monetary policy there’d be a risk of overshooting,” he said. “You don’t wait until you’re at full employment before you start to raise interest rates from zero.”
He noted that the Fed plans to keep rates low for a considerable time after it stops buying assets – so far, it has only tapered purchases from $85bn to $65bn a month – and that provides extra guidance about the earliest moment for a rate rise.
Mr Williams said it would take a “substantial change in the outlook” before he was willing to revisit the Fed’s plan to slow purchases by $10bn at each meeting, and despite some weak data, that has not yet happened. “We haven’t really changed our basic outlook for the economy.”
A lot of the patterns in the recent data are consistent with the patterns of unusually bad winter weather, he said. “So far we’re not taking a lot of signal from the last couple of months, and we tried not to get too enthusiastic about the really strong data in the months before that.”
Mr Williams said that as long as average monthly jobs growth stays well above 100,000 then unemployment will continue to come down. “What would worry you is if you don’t have an explanation for why it’s weaker and you get multiple months below that,” he said.
If inflation does not rise back towards the Fed’s 2 per cent goal, however, or the economy slows to a point where it is not creating enough jobs then Mr Williams would not only support a delay in the taper but “in certain circumstances it could make sense to increase the purchases again”.

>>> Michelin To cut production at factory in Nova Scotia; will take a provision


Michelin To cut production at factory in Nova Scotia; will take a provision of CAD87M
- Given declining demand for small-size car tires in North America, Michelin today announced its plans to reduce production at its Pictou County Nova Scotia car and light truck tire plant over the next 18 months, between now and June 30, 2015.
- Michelin also announces that it will invest CAD 66.5M to strengthen manufacturing resources in its three Canadian plants.
- Michelin is pursuing its operations at the Pictou County site and continuing to invest in Nova Scotia

- To finance the project, the Michelin Group will book a provision of CAD87M in non-recurring expenses in its first-half 2014 accounts.