The Day Ahead - April 10th 2013
The Day Ahead - April 10th 2013
The Day Ahead - April 10th 2013
REUTERS NEWS
KEY ECONOMICS EVENTS Mortgage index for w/e 05/04 Refinancing index for w/e 05/04 Federal budget for Mar FOMC minutes March 19-20 meeting
MARKET RECAP
Stocks rose on Tuesday and the Dow reached a record intraday high as blue-chip technology shares gained, while Treasuries fell. Oil and gold gained on currency moves as the dollar fell across the board.
COMING UP
Constellation Brands reports quarterly earnings, one of several
consumer-focused companies posting results. Wall Street is looking for its profit to slip and will no doubt want to hear the company's view on negotiations with U.S. regulators over Anheuser Busch InBev's proposed takeover of Grupo Modelo. As part of that deal, Constellation will take over the Modelo business in the United States, giving the world's largest wine company a big footprint in the beer business. For a related Reuters Insider video, click here
STOCKS DJIA Nasdaq S&P 500 Toronto Russell FTSE Eurofirst Nikkei Hang Seng
Close 14673.23 3237.86 1568.58 12484.05 929.46 6313.21 1165.35 13192.35 21870.34 Yield 1.7468 0.2341 0.6972
Change 59.75 15.61 5.51 139.49 -2.03 36.27 0.56 -0.24 152.29
% Chng 0.41 0.48 0.35 1.13 -0.22 0.58 0.05 0.00 0.70
Yr-high 14716.46 3270.30 1573.66 12904.71 954.00 6533.99 1209.05 13225.62 23944.74
Yr-low 12035.10 2726.68 1266.74 11209.55 729.75 5897.81 1132.73 10398.61 21612.05
Family Dollar's quarterly results will show whether its push to sell
more everyday goods from soda to cigarettes took a big bite out of its profits. Selling more of those goods is a trend for the so-called dollar stores including Family Dollar and larger rival Dollar General. While they boost shoppers' spending and might bring them into the stores more often, items such as cigarettes carry lower margins than much of the other merchandise such as apparel that the stores sell.
Bed Bath and Beyond and Carmax are expected to post imTREASURIES 10-year 2-year 5-year 30-year COMMODITIES May crude $ Spot gold (NY/oz) $ Copper U.S. (front month/lb) $ Reuters/Jefferies CRB Index Price FOREX -1 /32 Euro/Dollar 0 /32 Dollar/Yen 1 /32 Sterling/Dollar Last % Chng 1.3082 98.99 1.5320 1.0159 0.58 -0.36 0.45 -0.05
proved results, while Ruby Tuesdays earnings are seen slipping from the same period one year ago.
2.9331 -15 /32 Dollar/CAD Price 94.04 1585.06 3.4380 291.51 Price 39.35 0.64 13.93 6.95
$ change 0.68 11.97 0.0700 1.81 $ change 12.31 0.16 -1.94 -0.49
% change 0.73 0.76 2.08 0.63 % change 45.53 32.56 -12.22 -6.59
BIG MOVERS
First Solar Suntech Power J.C. Penney Spherix
COMING UP (continued)
At the National Space Symposium in Colorado Springs,
Colorado, top U.S. and international experts gather to discuss military and civilian space and satellite programs, as well as cybersecurity challenges, against the backdrop of significant budget cuts in the United States and Europe. Top speakers include senior officers in charge of U.S. Strategic Command and Air Force Space Command, and senior executives from Boeing, Lockheed Martin, Northrop Grumman, Harris, ITT Exelis and other companies active in military and commercial space missions.
Bank of Montreal hosts its annual general meeting of shareholders in Saskatoon, Saskatchewan. Canada's No. 4 bank will discuss its growth strategies, with particular focus on its U.S. retail bank, which has nearly doubled in size thanks to the 2011 acquisition of Wisconsin lender Marshall & Illsley.
MARKET MONITOR
Stocks advanced on Tuesday, with the Dow closing at a record high on a rally in cyclical shares and as the first impressions of the earnings season were positive. Microsoft shares ranked as the Dow's top percentage gainer, up 3.57 percent. Intel shares shot up 3.13 percent. Analysts said that the market has the momentum to push indexes higher, even with the Dow up about 12 percent and the S&P 500 up about 10 percent for the year. J.C. Penney tumbled 12.22 percent and shares of nutritional company Herbalife fell 3.75 percent. The Dow was up 0.41 percent, the S&P 500 Index was up 0.35 percent and Nasdaq was up 0.48 percent. Prices for longer-dated Treasuries dropped as investors extended a selloff after last week's rally and before debt auctions later in the week, but an undercurrent of worries about the global economy tempered losses. An auction of $32 billion in 3-year debt by the U.S. Treasury proved soft on Tuesday, with a weak bid-to-cover ratio and weak indirect takedown. Benchmark 10year Treasury notes last traded down 1/32 in price for a yield of 1.75 percent. Thirty-year bonds fell 16/32 in price to yield 2.93 percent after the auction. Also, the Federal Reserve bought $1.57 billion in government bonds that mature in Feb. 2037 to Feb. 2043. The dollar edged down from a near four-year high against the yen as traders booked profits on its sharp rally, but the yen's weakening trend remained intact following the Bank of Japan's aggressive monetary easing plan announced last week. "Given the breadth of yen bearishness, any reprieve would likely encourage investors to re-establish short yen positions at more favorable exchange rates," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington, D.C. Dollar fell against the yen 0.34 percent at 99.01 yen. The euro extended gains against the dollar. It last traded at $1.3083, up 0.5 percent on the day. Against the yen, the euro reached a high of 129.97. It last traded at 129.53 yen, up 0.21 percent on the day. Click on the chart for full-size image
Crude oil futures rose, boosted by a weak dollar and Chinese inflation data that eased concerns about tightened money supply. "For WTI prices, the dollars under a lot of pressure, and that's given us a boost throughout the trading day," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut. May crude traded at $94.00, up 0.69 percent, a barrel, having recovered from a $92.86 session low. Gold rose as volatility in the currency market triggered by Japan's aggressive monetary easing plan lifted bullion's appeal as a hedge against inflation and currency fluctuations. Gold is now slowly sinking in to the news that Japan is printing a quick deal of money and liquidity is going to be abundant again, said Axel Merk, chief investment officer of Merk Funds, which oversees $630 million in mutual fund assets. Spot gold was up 0.75 percent at $1,584.90 an ounce. June delivery futures were up 0.76 percent at $1,584.70.
TOP NEWS
U.S. wholesale inventories post largest fall in 1-1/2 years U.S. wholesale inventories recorded their biggest decline in nearly 1-1/2 years in February, prompting some economists to lower their lofty first-quarter growth estimates. The Commerce Department said wholesale inventories fell 0.3 percent, the largest drop since September 2011, after a revised 0.8 percent rise in January. January sales were previously reported to have increased 1.2 percent and economists had expected stock to rise 0.5 percent in February. Meanwhile, confidence among U.S. small businesses fell in March, the latest indication that economic activity lost momentum as the first quarter ended. The National Federation of Independent Business said its optimism index fell 1.3 points to 89.5 last month. The overall tone of the survey was downbeat, with only two components of the index increasing. J.C. Penney board comes under fire for CEO switch The board of J.C. Penney is facing scathing criticism from investors and corporate governance experts after ousting Chief Executive Ron Johnson and replacing him with his own embattled predecessor, Myron Ullman. Hours after the switch was announced on Monday, there was at least one call for the entire board to resign, while others suggested shareholders might vote out current directors at the company's next annual meeting. "It was the wrong thing for the board to do to get rid of Johnson here. With the board firing Johnson now, at this stage in the game, they should tender their own resignation as well," said Brian McGough, managing director and head of the retail group at research firm Hedgeye Risk Management. FBI probes trading as KPMG quits as Herbalife, Skechers auditor In a case that could shake one of the world's largest accounting firms, KPMG said it resigned as auditor of two U.S. companies as the FBI began investigating insider trading allegations involving a former KPMG senior partner. The companies - nutritional products group Herbalife and footwear maker Skechers - said separately that KPMG had quit as their auditor in connection with alleged leaks of nonpublic information. The FBI's Los Angeles office is investigating the matter, according to a source familiar with the situation. Herbalife said in a statement that KPMG's resignation had nothing to do with the company's accounting practices or the integrity of its management - issues called into question by the high-stakes drama between hedge fund titans Bill Ackman and Carl Icahn over the company. Dell's evaluation of buyout bid flawed -shareholder Southeastern Asset Management, the activist investor that owns 8.4 percent of Dell, said the computer maker's evaluation of a $24.4 billion leveraged buyout deal with its founder and buyout firm Silver Lake was flawed. Citing excerpts from Dell's proxy statement, Southeastern said the company did not properly explain why it did not entertain a buyout offer that would allow shareholders to elect whether they wanted to be paid in cash or stock. It urged Dell's special committee to negotiate now "in good faith." Click on the chart for full-size image
Too early to call U.S. in a spring 'swoon' -Fed's Bullard A top Federal Reserve official downplayed the meager March jobs report, arguing he still expects unemployment to tick down to about 7 percent by year's end and suggesting the economy is not entering another spring "swoon." St. Louis Fed President James Bullard pointed to a stronger Europe and more positive U.S. economic data beyond the employment report, which last week showed only 88,000 jobs were created last month in the United States. Separately, Richmond Federal Reserve President Jeffrey Lacker said he was not concerned by a weaker-thanexpected March payroll report, which alarmed markets that the U.S. economy might suffer a 'spring swoon' when it was published last week. MasterCard under EU fire over payment card fees MasterCard is under investigation by the European Union over the level of fees tourists to the EU are charged when using cards to make purchases, which the EU competition regulator said could hamper cross-border trade. The EU watchdog said MasterCard's fees were a concern in view of the growing role of non-cash payments. "Fees charged for payments made by cardholders from non-European countries can be quite high. Actually, these types of fees are generally much higher than those charged within Europe," Commission spokesman Antoine Colombani said. Microsoft, Nokia demand EU action over Google's Android Companies including Microsoft and Nokia have stepped up pressure on EU antitrust regulators to take action against Google, accusing it of blocking competition in mobile telephony. In a complaint made public on Tuesday by their lobbying group FairSearch, Google's rivals accused the company of using Android to divert traffic to its search engine. Judge weighs fairness of Citigroup's $590 mln investor pact A federal judge grilled lawyers for Citigroup and shareholders on Monday over a proposed $590 million settlement of an investor lawsuit over its exposure to toxic mortgage assets, asking if the accord was fair given none of the bank executives named as defendants would contribute money to it. U.S. District Judge Sidney Stein in Manhattan said that Citigroup's current shareholders have been left to pay for the settlement under the current terms of the agreement.
A demonstrator holds up a picture depicting Russian President Vladimir Putin with make-up, during a protest by the gay community in Amsterdam, Netherlands.
ANALYSTS RECOMMENDATIONS
Company Name AMC Networks CBRE Group J.C. Penney Nasdaq OMX Group Qlik Technologies Action Stifel raised price target to $70 from $58 to reflect the continued ratings growth and the inclusion of $175mn of cash from the VOOM proceeds. JMP Securities raised target to $27 from $25, says the companys brand have become increasingly dominant on a global basis, which should continue to lead to a higher level of recurring fees. Baird cut target price to $17 from $20 after the departure of CEO Ron Johnson who lost key support from activist investors and board member. Sandler O'Neill cut price target by $2 to $33 to reflect softer-than-expected trading business and temporary suspension of the companys buyback program. Evercore Partners raised rating to overweight from equal weigh as the tone of business appears to remain solid based on partner feedback, says expectations are more realistic compared to one year back.
MARKET MONITOR
Canada's main stock index recorded its biggest one-day percentage jump in more than four months on Tuesday as positive economic data from China fueled hopes for a global economic recovery and drove gains in the material and energy sectors. The Toronto Stock Exchange's S&P/TSX composite index was up 1.13 percent at 12,484.05. Barrick Gold climbed 1.49 percent and Goldcorp added 3.26 percent, playing the biggest role of any two stocks in leading the market higher. Suncor Energy rose 3.11 percent. The Canadian dollar was down 0.04 percent at $1.0160.
TOP NEWS
Canada housing data suggests soft landing so far Canadian housing starts edged higher in March and building permits were weaker than expected in February, reports released showed, offering some reassurance that Canada's housing sector is simply cooling, not crashing. The seasonally adjusted annualized rate of housing starts was 184,028 units in March, up from 183,207 in February and well above the consensus forecast of analysts in a Reuters poll for 176,500. Meanwhile, data from Statistics Canada showed the value of Canadian building permits rose a weaker-than-expected 1.7 percent in February as a sharp decline in plans for multi-family housing partially offset strength in other projects. Market players had expected a February gain of 4.3 percent. For related graphic, click here Agrium sweeps proxy vote, Jana cries foul Canadian fertilizer company Agrium said its entire slate of directors had been elected to its board, defeating a rival slate nominated by dissident U.S. shareholder Jana Partners. Jana said the vote was tainted and should be investigated. Agrium said the result was "fair and square". Jana said votes cast for some of its five candidates for the 12-member board were revoked after Friday's deadline. Jana's managing partner, Barry Rosenstein, said the hedge fund had had enough votes as of Friday's deadline to elect one or more of its candidates, and that the vote was "tainted". Click on the chart for full-size image
Canada's Porter Airlines to finalize Bombardier plane deal Porter Aviation Holdings is set to announce an order for up to 30 C-Series jets made by Bombardier, the Wall Street Journal reported, citing two people familiar with the deal. Bombardier said in December an airline based in the Americas had signed a letter of intent to buy 12 C-Series aircraft, with options for another 18 narrow-body commercial planes, in a transaction worth up to $2.08 billion. The deal, which is expected to be announced as early as Wednesday, will finalize the letter of intent Porter signed with Bombardier in December, the Journal reported.
Bed Bath & Beyond Fastenal Family Dollar CarMax Constellation Brands
Q4 Q1 Q2 Q4 Q4
The Day Ahead - North American Edition is compiled by Naveen Mutnal, Benny Thomas and Chandrashekhar Modi in Bangalore; Franklin Paul and Meredith Mazzilli in New York. THE DAY AHEAD - North American Edition is produced by Reuters News For questions or comments about this report, email us at: TheDay.Ahead@thomsonreuters.com Or call us at +91 80 4135 5929 Visit the Thomson Reuters Equities Community Site at: http://customers.reuters.com/community/equities/ For more information about our products: http://thomsonreuters.com/products_services Or send us a sales enquiry at: http://thomsonreuters.com/products_services/financial/contactus/ or call us on North America: +1 800 758 5555 2013 Thomson Reuters. All rights reserved. This content is the intellectual property of Thomson Reuters and its affiliates. Any copying, distribution or redistribution of this content is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. Thomson Reuters and its logo are registered trademarks or trademarks of the Thomson Reuters group of companies around the world.