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OVERNIGHT MARKETS AND NEWS
June E-mini S&Ps are mildly higher by +0.13% on a +0.77% rally in European stocks and mostly higher Asian stock market closes today. European stocks are being supported today by a successful Spanish bond auction and by optimism that Eurozone leaders will reduce their Germany-led focus on austerity. Japanese stocks today closed +1.16%, Hong Kong closed +0.28%, and China closed +0.27%. Commodity prices are slightly lower by -0.07% on average. April crude oil is down -0.28%, April gasoline is down -0.93%, April gold is down -0.28%, May copper is up +0.20%, and agriculture prices are mixed. The dollar index is mildly higher by +0.18% on carry-over support from yesterday's much stronger than expected u.S. retail sales report of +1.1% m/m (+1.0% ex-autos), while EUR/USD is down -0.0038 (-0.29%). USD/JPY is up +0.27 (+0.28%). June 10-year T-notes are down -5.5 ticks ahead of today's 30-year bond auction.The 2-day EU Summit begins today. Key agenda items include easier austerity measures for countries such as France, Spain and Italy, the bailout of Cyprus, and the centralized bank regulation plan. Eurozone finance ministers meeting on Friday and will mainly focus on the Cyprus bailout, which has become problematic because of perceptions that key Cyprus banks have been involved money laundering for Russian entities.
Spain today successfully sold a batch of bonds with maturities of 13, 27 and 28 years totaling 803 million euros in size. The bond sale was announced just earlier this week. The bid cover ratios were solid at 4.1, 2.4, and 2.0, respectively. The successful sale indicated that there is still enough investor confidence about Spain to maintain access to the longer-term bond market. The Spanish Treasury has now covered about one-third of its planned mid-term and long-term debt issuance for 2013.
Israeli Prime Minister Netanyahu today was able to reach a coalition agreement for a ruling government following the Jan 22 national elections. The new government comes just in time as President Obama will visit Israel next Wednesday. Now that a coalition government has been formed, President Netanyahu may speak more forcefully about Iran again.
China's national legislature named Xi Jinping as China's president, adding that title to his already existing portfolio as head of the ruling communist Party and chairman of the country's military commission. His quick assumption of all three posts was considered rapid and indicated strong support for his leadership.
The Australian dollar rallied 0.8% today after Feb Australian jobs rose by +71,500, the largest increase in nearly 13 years.
The Swiss central bank today vowed to maintain its cap on the Swiss franc to keep the franc from appreciating and hurting Swiss exporters.
Norway's central bank today left its benchmark policy rate unchanged. The Norwegian krone fell as the Norwegian central bank chief said that the bank's key policy rate needs to remain low longer than previously thought.
Japan's final-Jan industrial production was revised lower to +0.3% m/m and -5.8% y/y from the preliminary report of +1.0% m/m and -5.1% y/y. Japan's final-Feb machine tool orders report was left unrevised at -21.5% y/y.
Eurozone Q4 employment fell-0.3% q/q and -0.8% y/y, which was weaker than the Q3 report of -0.1% q/q and -0.6% y/y.
U.S. STOCK PREVIEW
Today’s weekly initial unemployment claims report is expected to show a +10,000 increase to 350,000, more than reversing last week’s decline of -7,000 to 340,000. Meanwhile, continuing claims are expected to show a small decline of -4,000 to 3.090 million, more than reversing last week’s small increase of +3,000 to 3.094 mln. Today’s Feb PPI report is expected to show a large gain of +0.7% m/m after the +0.2% m/m increase in Jan. However, the Feb core PPI is expected to show a modest gain of +0.1% after the +0.2% m/m increase in Jan. Current account balance – Today’s Q4 current account deficit is expected to widen moderately to -$113.0 billion from -$107.5 billion in Q3. There are earnings reports today from Molycorp (consensus -$0.30), Ulta Salon (0.98).Conferences during the remainder of this week include the FIA International Derivatives Conference on Tue-Thu, Barclays Capital Healthcare Conference on Tue-Thu, UBS Global Consumer Conference on Wed-Thu, and Susquehanna Chemical Conference on Thu.
June E-mini S&Ps are mildly higher by +2.00 points (+0.13%) on higher overseas stocks and on carry-over support from yesterday's stronger-than-expected U.S. retail sales report of +1.1% m/m. The S&P 500 index on Wednesday fluctuated on either side of unchanged and finally closed slightly higher as strong U.S. Feb retail sales offset stretched valuations and weak European stocks. The main bullish factor was the increase in U.S. Feb retail sales by +1.1% and +1.0% less autos, stronger than expectations of +0.5% for both retail sales and retail sales less autos. Bearish factors included (1) valuation concerns with the S&P 500 at 15.3 times earnings, a 22-month high, and the Dow at a price-to-earnings ratio of 14.1, a nearly 2-year high, and (2) weakness in European stocks after Eurozone Jan industrial production fell -0.4% m/m, weaker than market expectations of -0.1% m/m. Closes: S&P 500 +0.13%, Dow Jones +0.04%, Nasdaq -0.08%.
OVERNIGHT U.S. STOCK MOVERS
- Dynegy (DYN +0.40%) announced a definitive agreement to acquire Ameren Energy Resources (AEE).
- Kirkland's (KIRK +0.26%) reported Q4 EPS of 82 cents, well above the consensus of 74 cents.
- Amazon.com (AMZN +0.35%) was downgraded to Neutral from Overweight by JPMorgan.
- Barnes & Noble's (BKS -1.35%) bid to have some claims dismissed that it infringed Alcatel-Lucent (ALU -2.70%) patents relating to Internet commerce was rejected by a federal judge.
- Coldwater Creek (CWTR -0.31%) reported a Q4 adjusted EPS loss of -65 cents, better than consensus of -79 cents.
- Men's Wearhouse (MW -0.34%) reported a Q4 EPS loss of -7 cents, wider than consensus of -5 cents.
- Sterne Agee initiated D.R. Horton (DHI +1.65%) with a Buy and named it a "Top Pick" with a target of $29 a share.
- Sterne Agee initiated Beazer Homes (BZH +0.93%) with a with a target price of $21 a share.
- Providence Service (PRSC +0.06%) reported Q4 EPS of 22 cents, lower than consensus of 24 cents.
- Wells Fargo (WFC +0.30%) was initiated with a Market Perform at BMO Capital with a target price of $40 a share.
- Vera Bradley (VRA +0.89%) reported Q4 EPS of 62 cents, better than consensus of 57 cents.
- Hot Topic (HOTT +0.07%) reported Q4 EPS of 29 cents, stronger than consensus of 27 cents.
MARKET COMMENTS
June 10-year T-notes are down 5.5 ticks going into today's sale of 30-year bonds. June 10-year T-note prices on Wednesday closed little changed. T-notes had traded lower after stronger-than-expected U.S. Feb retail sales boosted stocks and reduced safe-haven demand for Treasuries. However, T-note prices recovered in the early afternoon on strong demand for the Treasury's $21 billion 10-year note auction that had a bid-to-cover ratio of 3.19, better than the 12-auction average of 2.96. Closes: TYM3 -0.5, FVM3 -1.0.The dollar index is up +0.15 (+0.18%) while EUR/USD is down -0.0038 (-0.29%). USD/JPY is up +0.27 (+0.28%). The dollar index on Wednesday climbed to a 7-1/4 month high and closed higher as stronger-than-expected U.S. Feb retail sales bolstered the economic outlook and is positive for dollar assets. EUR/USD slid to a 3-month low after a disappointing Italian bond auction and weaker than expected Eurozone Jan industrial production. Closes: Dollar index +0.305 (+0.37%), EUR/USD -0.00729 (-0.56%), USD/JPY +0.035 (+0.04%).
April WTI crude oil is down -0.17 (-0.18%) while April gasoline is down -0.0293 (-0.93%). Crude oil and gasoline prices on Wednesday closed slightly lower. Bearish factors included the bigger-than-expected +2.624 million bbl increase in weekly DOE crude inventories to 384 million bbl, an 8-1/2 month high, (2) the +0.9% w/w increase in U.S. crude output to 7.159 million barrels a day for the week ended March 8, the highest in 20-1/2 years, and (3) the surge in the dollar index to a 7-1/4 month high. Bullish factors included (1) the larger-than-expected -3.57 million bbl draw in weekly DOE gasoline inventories, and (2) the -1.59 million bbl decline in crude inventories to their lowest level of the year at Cushing, Oklahoma, the delivery point for WTI crude futures contracts. Closes: CLJ3 -0.02 (-0.02%), RBJ3 -0.0079 (-0.25%).
GLOBAL EVENT CALENDAR03/14/2013
| US | 0830 ET | Weekly initial unemployment claims expected +10,000 to 350,000, previous -7,000 to 340,000. Weekly continuing claims expected -4,000 to 3.090 mln, previous +3,000 to 3.094 mln. |
| 0830 ET | Feb PPI expected +0.7% m/m and +1.8% y/y, Jan +0.2% m/m and +1.4% y/y. Feb core PPI expected +0.1% m/m and +1.7% y/y, Jan +0.2% m/m and +1.8% y/y. | |
| 0830 ET | Q4 current account balance expected -$113.0 bln, Q3 -$107.5 bln. | |
| 0830 ET | USDA weekly Export Sales. | |
| 0900 ET | Fed Governor Sarah Bloom Raskin delivers welcoming remarks at Neighborworks 35th Anniversary Symposium. | |
| 1100 ET | Treasury announces details of 10-year TIPS auction on March 21. | |
| 1300 ET | Treasury auction of $13 billion in 30-year T-bonds. | |
| 1630 ET | Federal Reserve announces which banks will be able to pay dividends or buy back shares after the March 7 release of bank stress tests. | |
| EUR | n/a | EU 2-day summit begins in Brussels. |
| 0500 ET | ECB publishes monthly report. | |
| 0600 ET | Eurozone Q4 employment, Q3 -0.2% q/q and -0.7% y/y. | |
| JPN | 0000 ET | Tokyo Feb condo sales, Jan -5.4% y/y. |
| 0030 ET | Revised Japan Jan industrial production, previous +1.0% m/m and -5.1% y/y. Revised Jan capacity utilization, previous 2.9%. | |
| 0200 ET | Revised Japan Feb machine tool orders. |
U.S. STOCK CALENDAR03/14/2013
| Company Name | Symbol | Time | Event Description | Period | EPS Est (US$) |
|---|---|---|---|---|---|
| MDU Resources Group Inc | MDU US | 8:30 | Analyst and Investor Meeting | Y 2013 | |
| Onyx Pharmaceuticals Inc | ONXX US | 8:30 | Analyst Day | Y 2013 | |
| ADT Corp/The | ADT US | 8:30 | Annual General Meeting | ||
| Pepco Holdings Inc | POM US | 9:00 | Analyst Conference | Y 2013 | |
| CSX Corp | CSX US | 10:00 | Business Update Call | ||
| ANSYS Inc | ANSS US | 10:00 | Investor Day | Y 2013 | |
| Brocade Communications Systems Inc | BRCD US | 11:00 | Roadshow - Dallas | Y 2013 | |
| United Technologies Corp | UTX US | 13:00 | Analyst Meeting | Y 2013 | |
| Molycorp Inc | MCP US | 16:30 | Q4 2012 Earnings Call | Q4 2012 | |
| Ulta Salon Cosmetics & Fragrance Inc | ULTA US | 17:00 | Q4 2013 Earnings Call | Q4 2013 | |
| Molycorp Inc | MCP US | Aft-mkt | Q4 2012 Earnings Release | Q4 2012 | -0.3 |
| Ulta Salon Cosmetics & Fragrance Inc | ULTA US | Aft-mkt | Q4 2013 Earnings Release | Q4 2013 | 0.979 |
| Charles Schwab Corp/The | SCHW US | February 2013 Sales and Revenue Release | 2013 |
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