Wednesday, July 10, 2013

Transcription

1 On Tap 7:00 a.m. 07/05 MBA Weekly Mortgage Applications Survey Market Composite Index (previous 555.5), Cur Chg (previous -11.7%), Purchase Index (S.A.) (previous 208.2), Cur Chg (previous -3.1%), Refinance Index (previous ), Cur Chg (previous -15.6%) 10:00 a.m. May Monthly Wholesale Trade Inventories (expected +0.3%) 10:30 a.m. 07/05 EIA Weekly Petroleum Status Report Crude Oil Stocks (previous M), (Net Change) (previous M), Gasoline Stocks (previous M), (Net Change) (previous -1.72M), Distillate Stocks (previous M), (Net Change) (previous -2.42M), Refinery Usage (previous 92.2%), Total Products Supplied (previous 20.39M), (Net Change) (previous +1.43M) 2:00 p.m. Federal Open Market Committee meeting minutes and economic forecast 4:10 p.m. Ben Bernanke speech on 100 years of the Federal Reserve Wyoming Admission Day OECD Skills Beyond School: Review of United States of America launch U.S.-China Strategic and Economic Dialogue SNAPSHOT Stock futures edge lower; dollar drifts lower; Treasury yields unchanged; ICE Aug Brent up 52c at $108.32, Nymex Aug crude up $1.17 at $104.70; gold 0.4% higher at $1, Watch for: Wholesale Inventories; FOMC minutes, Ben Bernanke speech; updates from Family Dollar Stores, Chevron, Yum Brands OPENING CALL Stock futures were a few points lower Wednesday as investors awaited the latest word from the Federal Reserve, with minutes from its latest policy-setting meeting and a speech from Chairman Ben Bernanke on tap. With little else of note scheduled for release during the day it really is all going to hang around that news from the Fed..in summary however sentiment remains upbeat and the bulls are very much in control, said Mike McCudden, head of derivatives at Interactive Investor. The Dow has added around 750 points in the last couple of weeks and we re fast edging back towards those all time highs, so in the event those FOMC minutes are construed as dovish then it could certainly make for an interesting close to the session. European stocks edged lower as investors digested S&P s downgrade of Italy s sovereign credit rating and weak trade data from China. Around 0427 ET, the Euro Stoxx 50 was down 0.5% at EQUITIES Restoration Hardware (RH) insiders detailed plans to sell about $926.2 million in stock, following a more than doubling in the housewares retailer s share price since mid-april. The company s shares have rallied over the past three months as Restoration Hardware has raised financial targets for the year and reported surging revenue. Amid the gains, stockholders led by private-equity firm Catterton Partners sold a slug of the equity in May, further reducing their stake after the company went public in November. In the latest offering, Catterton Partners and other holders plan to sell 12 million shares in the company, excluding additional shares that may be offered to underwriters. Restoration Hardware s stock closed at $77.18 Tuesday, valuing the deal at $926.2 million. Thomas Mottola, a director, has indicated interest in buying $7 million worth of stock in the offering, according to a regulatory filing. The deal is slated to price late Thursday. Moody s placed its rating on Duke Energy (DUK) on review for a possible upgrade, citing the resolution of several uncertainties that had faced the giant utility company over the past year.

2 Recent Analyst Ratings Actions Alliant Techsystems Inc Raised to Sector Perform From Underperform by RBC Fortinet Raised to Buy From Hold by Jefferies Hewlett-Packard Raised to Buy From Hold by Brean Capital Moody s currently rates Duke Energy two levels above investment grade at Baa2. The ratings firm noted Duke s positive developments include commercial operation of the Edwardsport Integrated Gasification Combined Cycle plant in Indiana, rate settlements at both of its North Carolina utilities, a regulatory agreement in North Carolina on outstanding issues associated with the management changes made following its merger with Progress Energy and the clarification of succession plans with the appointment of the company s chief financial officer to be its CEO. FOREX The dollar drifted lower against major currencies, as investors awaited further insight on the Fed s time frame for slowing the pace of its monetary stimulus. The ICE dollar index, which measures the U.S. unit against six other major currencies, fell to from On Tuesday, the index hit its highest level since June The dollar index has gained roughly 1.6% this month, buoyed in part by expectations that the U.S. Federal Reserve will pull back on bond purchases if improvement in the economy meets the central banks expectations. The WSJ Dollar Index, which measures the currency against a slightly wider basket than the ICE dollar index, slipped to from At 0515 ET, EUR/USD was at , USD/JPY was at 99.90, AUD/USD was at and GBP/USD was at BONDS Treasury yields were little changed in Europe as traders prepared themselves for a $21 billion sale of 10-year notes later in the session. Tuesday s 3-year auction found strong demand with above-average bid/cover of 3.35 and indirect bidders taking 35.6%, the highest share since September, according to Commerzbank. Later in the session the FOMC minutes may shed some light on the ongoing tapering discussions while Ben Bernanke will speak afterwards on economic policy. At 0428 ET, the September Treasury contract was unchanged at and the 10-year cash yielded 2.63%, just under 1% more than 10-year German Bunds. Euro zone peripheral bond yields were generally flat, with Italy and Spain slightly elevated after the S&P downgrade of Italy.

3 COMMODITIES U.S. crude-oil prices shot higher in early London trading, adding to gains made in Asia. Nymex crude rose sharply in early Asian hours after American Petroleum Institute data showed that crude oil stocks dropped by 9 million barrels, much more than an expected fall of 3 million barrels. Later Wednesday the U.S. Department of Energy will release its own weekly oil data. Recently, front-month August WTI crude traded on the New York Mercantile Exchange was up $1.17 a barrel, or 1.1%, at $ a barrel, having earlier hit an intraday high of $ a barrel. The front-month August Brent contract on London s ICE futures exchange was up 52 cents at $ a barrel. Gold edged a touch higher in quiet European trade. Unrest in Egypt has pushed up oil prices and indirectly inflation expectations, likely lifting inflation hedge gold, said ABN AMRO. So gold prices may have received support from safe haven point of view but more likely it was driven by inflation expectations, analysts at the bank said, noting a dovish ECB last week and higher-than-expected China inflation data for June have added to this. Going forward we expect oil prices to ease again and this will take the wind out of inflation expectations unless inflation data in the U.S. start to surprise on the upside, which we believe is unlikely, it said. At 0403 ET, spot gold was 0.4% higher at $1,253.94/oz. Other Top Stories Of The Day China Trade Data Show Weakness China posted a surprise drop in exports in June amid slack global demand, revealing further weakness in a driver of growth for the world s second-largest economy. 32 min ago IMF Cuts Global Growth Outlook The IMF cut its global growth outlook for this year and next, saying the prospect of the U.S. Federal Reserve unwinding its easy money policies is aggravating an emerging-markets slowdown

4 EU Wants Authority To Close Banks The European Commission will propose itself as the single authority for winding down banks in the euro zone, a step that will set the European Union s executive on a collision course with Germany. IMF View Hits Emerging Markets Investor fears that the end of easy money is at hand are ricocheting around the globe. In the latest fallout, the International Monetary Fund trimmed its global-growth forecast. Italian Short-Term Funding Costs Up After S&P Downgrade Italy s 12-month funding costs rose at a debt auction following a one-notch downgrade by S&P that is also likely to test the country s long-term bond sale due Thursday. Aussie Dollar Hits 6-Day High Ahead of Fed The Australian dollar rose to a six-day high in thin and volatile trade, as investors awaited comments by the Fed chairman. Australian Consumers Stay Cautious Australian consumer confidence stayed well below levels recorded at the start of the year, a sign the central bank may need to do more to stoke the rest of the economy as a mining boom cools. Swiss Exporters: Third-Quarter Demand for Goods Picking Up Demand for Swiss goods is picking up again in the third quarter and sentiment amongst the Alpine country s exporters is at its most optimistic in two years, according to data published Wednesday.

5 ECBs Noyer: S&P Italy Downgrade Underlines Priorities for Whole Euro Zone European Central Bank Governing Council Member Christian Noyer said Wednesday Standard & Poor s Ratings Services downgrade of Italy s sovereign credit rating underlines the need for the whole of the euro zone to complete its banking union project and accelerate changes to the structure of different economies. Banks Face Debt-Collection Curbs A federal consumer watchdog is cracking down on U.S. banks that mislead consumers when trying to get debts repaid, ramping up efforts to target an area of abuse that has emerged in the wake of the financial crisis. Barbara Kollmeyer and Carla Mozee of MarketWatch contributed to the briefing. Today In Canada Earnings scheduled DragonWave (DRWI) 1Q; analysts expect a loss of 29 cents a share Velan (VLN.T) 1Q; analysts expect breakeven results Economic indicators (all times EDT) none Stocks to watch BlackBerry (BBRY) CEO Thorsten Heins told shareholders the smartphone company is still in the early phases of its transition Leon s (LNF.T) said it and its The Brick division have been named as defendants in a lawsuit filed by Canadian competition authorities Calendar items (all times EDT) none