OVERNIGHT MARKETS AND NEWS
March E-mini S&Ps (ESH13 +0.10%) this morning are slightly higher by +0.18% on a +0.35% rally in European stocks sparked by assurances by ECB President Draghi that the ECB is not close to considering a liquidity exit. Chinese stocks rallied sharply by +3.03% today on economic optimism and a rally in property developers on favorable earnings news. Japanese stocks closed +2.71% and Hong Kong closed +1.96%. Commodity prices are slightly higher by +0.08% this morning. April crude oil (CLJ13 -0.10%) is down -0.08%, April gasoline (RBJ13 -0.22%) is down -0.09%, April gold (GCJ13 -0.28%) is down -0.34%, May copper (HGK13 +0.15%) is up +0.21%, grains are trading higher, and livestock and softs are mixed. The dollar index (DXY00 +0.02%) is unchanged while EUR/USD (^EURUSD) is down -0.16% and USD/JPY (^USDJPY) is down -0.08%. June 10-year T-notes (ZNM13 +0.18%) are up 6 ticks.ECB President Draghi today said that while the ECB's balance sheet is shrinking due to the early pay-off of LTRO loans by some banks, the ECB is "far" from considering a liquidity exit.
The Italian bond yield is down 14 bp in the past two days as some optimism has emerged that Italy's political parties may be able to put aside their rivalries and produce a grand coalition.
Japanese Prime Minister Abe last night officially appointed Asian Development Bank President Kuroda as the new BOJ chief, in line with the reports earlier this week.
Japan's Jan industrial production report of +1.0% m/m and -5.1% y/y was weaker than market expectations of +1.5% m/m and -4.9% y/y.
The UK Feb GfK consumer confidence index was unchanged from Jan at -26, which was in line with market expectations.
Japan Jan housing starts rose +5.0% y/y to 863,000 units, which was a weaker outcome than market expectations for a +8.8% increase to 894,000 units.
Germany's Feb unemployment fell by -3,000, which showed a slightly stronger labor market than market expectations of unchanged, although that was offset by the fact that Jan was revised to -14,000 from -16,000. The German Feb unemployment rate was unchanged from Jan's revised level of 6.9% (prelim 6.8%), which showed a little weaker labor market than market expectations for a report of 6.8%.
The Eurozone Jan CPI of -1.0% m/m and +2.0% y/y was in line with market expectations. The Jan core CPI eased to +1.3% y/y from +1.5% y/y in Dec and showed a little weaker inflation than market expectations of +1.5% y/y.
U.S. STOCK PREVIEW
The markets today will be watching the gyrations in the Senate, which is expected to consider both a Democratic and a Republican version of a sequester replacement bill, although neither plan is expected to even advance to an up-or-down vote as Republicans filibuster the Democratic plan. Whatever happens in the Senate will only be for PR purposes since the sequester is now certain to go into effect on Friday. Today's unemployment claims report is expected to show a small -2,000 decline in initial claims and a small -8,000 decline in continuing claims. Today's Q4 GDP is expected to be revised higher to +0.6% from -0.1%, at least saving the U.S. from the negative psychology of having its first negative GDP report since the recession ended in June 2009. Today’s Feb Chicago purchasing managers index is expected to show a decline of -1.6 to 54.0, reversing part of the sharp +5.6 point increase seen in January to a 9-month high of Jan 55.6.There are 8 of the S&P 500 companies that will report earnings today. Notable reports include Kohl's (consensus $1.63), The Gap (0.71), and Salesforce.com (0.40).
March E-mini S&Ps (ESH13 +0.10%) this morning are mildly higher by +2.75 points (+0.18%) on the +0.35% rally in European stocks that was prompted by ECB President Draghi's statement that the ECB is "far" from considering a liquidity exit. The S&P 500 index on Wednesday rallied sharply on another positive housing market report with the +4.5% gain in pending home sales along with continued optimism about Fed Chairman Bernanke’s strong defense of QE3 in his Tue/Wed testimony to Congressional panels. U.S. stocks also received a boost from a sharp +1.61% rally in European stocks on a successful Italian 5 and 10-year bond auction and stronger-than-expected European confidence indexes. Closes: S&P 500 +1.27%, Dow Jones +1.27%, Nasdaq +1.04%.
OVERNIGHT U.S. STOCK MOVERS
- Domino's Pizza (DPZ +1.80%) reported Q4 EPS of 64 cents, above the consensus of 60 cents.
- Molycorp (MCP -0.95%) is down 7% after delaying is Q4 earnings report to consider a charge for goodwill impairment.
- Pall Corp (PLL +1.59%) reported Q2 pro forma EPS of 73 cnets, higher than the consensus of 67 cents.
- Limited (LTD +1.99%) reported Q4 EPS of $1.76, above the consensus of $1.74.
- J.C. Penney (JCP +0.67%) fell 14% in after-hours trading after reporting a Q4 adjusted EPS loss of $1.95 versus the consensus for an 18 cent loss. JC Penny also reported that Q4 same-store sales fell 31.7%.
- Groupon (GRPN +7.75%) plunged 22% in after-hours trading after reporting a Q4 EPS loss of 12 cents versus expectations for a 3 cent profit.
- Babcock & Wilcox (BWC +2.72%) rallied 9% in after-hours trading.
- Nordstrom (JWN +2.61%) rallied 1.3% in after-hours trading after announcing an $800M share repurchase program and increasing its dividend 11% to 30 cents per share.
MARKET COMMENTS
June 10-year T-notes (ZNM13 +0.18%) this morning are up 6 ticks as safe-haven demand continues ahead of Friday's sequester date. June 10-year T-note prices on Wednesday closed slightly lower on reduced safe-haven demand with the sharp 2-day rally in stocks. Closes: TYM3 -3, FVM3 unch.The dollar index (DXY00 +0.02%) this morning is unchanged. EUR/USD (^EURUSD) down -0.0021 (-0.16%). USD/JPY (^USDJPY) is down -0.07 (-0.08%) and has shown little reaction to the official appointment of Mr. Kuroda as the new BOJ chief. The dollar index on Wednesday closed lower on reduced safe-haven demand with the sharp rally in U.S. stocks, while EUR/USD received support from the successful Italian bond auction and the stronger-than-expected Eurozone confidence indexes. Closes: Dollar index -0.27 (-0.33%), EUR/USD +0.0078 (+0.60%), USD/JPY +0.26 (+0.28%).
April WTI crude oil (CLJ13 -0.10%) this morning is down -0.07 (-0.08%) and April gasoline (RBJ13 -0.22%) is down -0.0027 (-0.09%). Crude oil closed slightly higher as U.S. crude oil inventories rose +1.13 mln bbls, less than expectations of +2.5 mln bbls. However, gasoline prices plunged on heavy technical selling and news that the U.S. refinery utilization rate rose sharply by +2.2 points to 85.1%, indicating that refineries are trying to get facilities back on line as soon as possible to capture profitable crack margins. Gasoline inventories fell -1.857 mln bbls, outpacing expectations of -1.5 mln bbls. Closes: CLJ3 +0.13 (+0.14%), RBJ3 -0.0925 (-2.89%).
GLOBAL EVENT CALENDAR02/28/2013
| US | 0830 ET | Weekly initial unemployment claims expected -2,000 to 360,000, previous +20,000 to 362,000. Weekly continuing claims expected -8,000 to 3.140 mln, previous +11,000 to 3.148 mln. |
| 0830 ET | Revised Q4 GDP expected +0.6%, prelim -0.1% q/q annualized. Revised Q4 personal consumption expected unrevised at +2.2% q/q annualized. Final Q4 price index expected unrevised at +0.6% . Final core PCE expected unrevised at +0.9%. | |
| 0830 ET | USDA weekly Export Sales. | |
| 0900 ET | Feb Milwaukee PMI, Jan 51.3. | |
| 0945 ET | Feb Chicago purchasing managers index expected -1.6 to 54.0, Jan +5.6 to 55.6. | |
| 1100 ET | Kansas City Feb manufacturing index, Jan -2. | |
| 2000 ET | Chicago Fed President Charles Evans speaks to the CFA Society of Iowa?s Annual Investment Strategy dinner. | |
| JPN | 0000 ET | Japan Jan housing starts expected +8.8% to 894,000, Dec +10% y/y to 880,000. |
| 0000 ET | Japan Jan construction orders, Dec +4.8% y/y. | |
| 1830 ET | Japan Jan jobless rate, Dec 4.2%. Jan job-to-applicant ratio, Dec 0.82. | |
| 1830 ET | Japan Jan overall household spending, Dec -0.7% y/y. | |
| 1830 ET | Japan Jan national CPI, Dec -0.1% y/y. Jan national CPI ex-fresh food, Dec -0.2% y/y. Jan national CPI ex food & energy, Dec -0.6% y/y. | |
| 1830 ET | Japan Feb Tokyo CPI, Jan -0.6% y/y. Feb Tokyo CPI ex-fresh food, Jan -0.5% y/y. Feb Tokyo CPI ex food & energy, Jan -0.9% y/y. | |
| 1850 ET | Japan Q4 capital spending, Q3 +2.2%. Q4 capital spending excluding software, Q3 +2.4% | |
| CHI | 2000 ET | China Feb manufacturing PMI (National Bureau of Statistics) expected +0.1 to 50.5, -0.2 to Jan 50.4. |
| 2045 ET | China Feb HSBC manufacturing PMI, Feb flash report was released on Sunday. | |
| GER | 0355 ET | German Feb unemployment change expected unchanged, Jan -16,000. Feb unemployment rate expected unch at 6.8%, Jan 6.8%. |
| 0800 ET | German Feb CPI (EU harmonized). | |
| EUR | 0500 ET | Eurozone CPI expected -1.0% m/m and +2.0% y/y, Jan +0.4% m/m and +2.0% y/y. Feb core CPI, Jan +1.5% y/y. |
U.S. STOCK CALENDAR02/28/2013
| Company Name | Symbol | Time | Event Description | Period | EPS Est (US$) |
|---|---|---|---|---|---|
| WPX Energy Inc | WPX | Bef-mkt | Q4 2012 Earnings Release | Q4 2012 | -0.079 |
| Cablevision Systems Corp | CVC | Bef-mkt | Q4 2012 Earnings Release | Q4 2012 | 0.094 |
| Rowan Cos Plc | RDC | Bef-mkt | Q4 2012 Earnings Release | Q4 2012 | 0.479 |
| Iron Mountain Inc | IRM | 6:00 | Q4 2012 Earnings Release | Q4 2012 | 0.253 |
| Kohl's Corp | KSS | 7:00 | Q4 2013 Earnings Release | Q4 2013 | 1.625 |
| ConocoPhillips | COP | 8:30 | Analyst Meeting | Y 2013 | |
| Iron Mountain Inc | IRM | 8:30 | Q4 2012 Earnings Call | Q4 2012 | |
| Duke Energy Corp | DUK | 8:30 | Investor and Analyst Meeting | Y 2013 | |
| Kohl's Corp | KSS | 8:30 | Q4 2013 Earnings Call | Q4 2013 | |
| Pall Corp | PLL | 8:30 | Q2 2013 Earnings Call | Q2 2013 | |
| Progressive Corp/The | PGR | 9:00 | Investor Relations Conferece Call | ||
| Leucadia National Corp | LUK | 9:00 | Extraordinary Shareholders Meeting | Y 2013 | |
| Ltd Brands Inc | LTD | 9:00 | Q4 2013 Earnings Call | Q4 2013 | |
| WPX Energy Inc | WPX | 10:00 | Q4 2012 Earnings Call | Q4 2012 | |
| Cablevision Systems Corp | CVC | 10:00 | Q4 2012 Earnings Call | Q4 2012 | |
| Rowan Cos Plc | RDC | 11:00 | Q4 2012 Earnings Call | Q4 2012 | |
| State Street Corp | STT | 12:30 | Investor & Analyst Meeting | Y 2013 | |
| AmerisourceBergen Corp | ABC | 14:00 | Annual General Meeting | Y 2013 | |
| Gap Inc/The | GPS | 16:00 | Q4 2013 Earnings Release | Q4 2013 | 0.709 |
| Salesforce.com Inc | CRM | 17:00 | Q4 2013 Earnings Call | Q4 2013 | |
| Gap Inc/The | GPS | 17:00 | Q4 2013 Earnings Call | Q4 2013 | |
| Salesforce.com Inc | CRM | Aft-mkt | Q4 2013 Earnings Release | Q4 2013 | 0.397 |
| Integrys Energy Group Inc | TEG | Aft-mkt | Q4 2012 Earnings Release | Q4 2012 | 0.946 |
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