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May 18 12:28 | London:
May 18 17:28 | Tokyo:
May 19 1:28
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US Market Update TRADETHENEWS.COM STAFF
Equities steady following Moody's Bank Downgrades
DJIA +61 S&P500 +5 NASDAQ +16
Economic Data
- (IN) India Forex Reserves w/e Jun 15th: $289.4B v $287.4B prior
- (CA) Canada May Consumer Price Index M/M: -0.1% v +0.1%e; Y/Y: 1.2% v 1.5%e; CPI Index: 122.100 v 122.122 prior
- (CA) Canada May CPI Core M/M: 0.2% v 0.3%e; Y/Y: 1.8% v 1.9%e
- (CA) Canada May CPI Seasonally ad M/M: -0.2% v -0.2%e; Core CPI Seasonally adj M/M: 0.2% v 0.2%e
- (BE) Belgium Jun Business Confidence: -13.2 v -12.0e; lowest reading since Oct 2009
- (MX) Mexico May Unemployment Rate: 4.8% v 4.8%e
- (BR) Brazil May Current Account: -$3.5B v -$3.3Be; Foreign Direct Investment (FDI): $3.7B v $3.0Be
- US equities are making modest gains this morning following yesterday's big losses. The S&P500 saw its second worst decline of the year with a 2.2% loss on Thursday, forced lower by poor US data and anticipation of the Moody's bank downgrades. After the close Moody's knocked down ratings on 15 banks in the US and the UK, and analysts are talking up a storm about the moves this morning. While many have called the move backward looking, it will have a large impact on certain bank's funding costs. In Europe, Italian PM Monti hosted German Chancellor Merkel, French President Hollande and Spanish PM Rajoy to discuss the crisis and lay the groundwork for next week's EU Leader Summit. No concrete measures were announced and the event served mostly to once again highlight the divide between Merkel and her European partners. The more consequential European news came from the ECB, which loosened its collateral rules but reducing the rating threshold for certain asset-backed securities and widened pool of eligible instruments. By loosening the rules, the ECB acknowledges the reality that it has to accept lower-quality paper moving forward. WTI crude continues its slide, dipping briefly below $78 before ticking back above $79.
- Major US banking names were a bit higher in the first hour of trading this morning following yesterday's big losses ahead of the expected downgrade action by Moody's. However prices are slipping back toward unchanged mid morning. Recall that Moody's gave the highest ratings to HSBC, Royal Bank of Canada and JPMorgan, which it said had stronger buffers than peers. Morgan Stanley only got hit by a two-notch downgrade, and shares of it and JPMorgan are holding better than their peers. Citi and BoA are unchanged on the day, after Moody's questioned their capital buffers and risk management.
- Shares of Carnival are down 4% or so this morning after earnings. The firm widely outperformed expectations on a non-GAAP basis, however on a GAAP basis they were an order of magnitude lower on a y/y basis, while revenue was soft. The firm blamed fuel prices and also asserted that bookings have been stable in the wake of the Costa Concordia disaster. Ryder is down more than 11% after lowering its Q2 and FY12 forecasts. Ryder said that it is seeing reduce commercial rental demand and some softness in pricing.
- The FX market remained pinned in a tight range as the informal EU meeting began in Rome. The euro had been at the upper end of its session range after the ECB announced changes to collateral rules, reduces rating threshold for certain asset-backed securities and widened eligible instruments. However the trade reversed quickly and EUR/USD was back at one week lows around 1.2530 by mid morning. Dealers were talking about whether Greece might exit the euro today - the euro cup that is, where Greece and Germany face off in a football match later today.
Looking Ahead
- 11:00 (US) Fed to purchase $1.50-2.25B in Notes
- 13:00 (US) Fed's Pianalto
- 14:00 (PT) Portugal Year-to-Date Budget Report
- 15:00 (AR) Argentina May Industrial Production M/M: -1.1%e v -0.5% prior; Y/Y: No est v -1.4% prior
- 15:00 (AR) Argentina Q1 Current Account: +$504Me v -$356M prior
Saturday
18:00 (CH) Bank of International Settlements (BIS) holds Global Central Bank Meeting
Economic Data
- (IN) India Forex Reserves w/e Jun 15th: $289.4B v $287.4B prior
- (CA) Canada May Consumer Price Index M/M: -0.1% v +0.1%e; Y/Y: 1.2% v 1.5%e; CPI Index: 122.100 v 122.122 prior
- (CA) Canada May CPI Core M/M: 0.2% v 0.3%e; Y/Y: 1.8% v 1.9%e
- (CA) Canada May CPI Seasonally ad M/M: -0.2% v -0.2%e; Core CPI Seasonally adj M/M: 0.2% v 0.2%e
- (BE) Belgium Jun Business Confidence: -13.2 v -12.0e; lowest reading since Oct 2009
- (MX) Mexico May Unemployment Rate: 4.8% v 4.8%e
- (BR) Brazil May Current Account: -$3.5B v -$3.3Be; Foreign Direct Investment (FDI): $3.7B v $3.0Be
- US equities are making modest gains this morning following yesterday's big losses. The S&P500 saw its second worst decline of the year with a 2.2% loss on Thursday, forced lower by poor US data and anticipation of the Moody's bank downgrades. After the close Moody's knocked down ratings on 15 banks in the US and the UK, and analysts are talking up a storm about the moves this morning. While many have called the move backward looking, it will have a large impact on certain bank's funding costs. In Europe, Italian PM Monti hosted German Chancellor Merkel, French President Hollande and Spanish PM Rajoy to discuss the crisis and lay the groundwork for next week's EU Leader Summit. No concrete measures were announced and the event served mostly to once again highlight the divide between Merkel and her European partners. The more consequential European news came from the ECB, which loosened its collateral rules but reducing the rating threshold for certain asset-backed securities and widened pool of eligible instruments. By loosening the rules, the ECB acknowledges the reality that it has to accept lower-quality paper moving forward. WTI crude continues its slide, dipping briefly below $78 before ticking back above $79.
- Major US banking names were a bit higher in the first hour of trading this morning following yesterday's big losses ahead of the expected downgrade action by Moody's. However prices are slipping back toward unchanged mid morning. Recall that Moody's gave the highest ratings to HSBC, Royal Bank of Canada and JPMorgan, which it said had stronger buffers than peers. Morgan Stanley only got hit by a two-notch downgrade, and shares of it and JPMorgan are holding better than their peers. Citi and BoA are unchanged on the day, after Moody's questioned their capital buffers and risk management.
- Shares of Carnival are down 4% or so this morning after earnings. The firm widely outperformed expectations on a non-GAAP basis, however on a GAAP basis they were an order of magnitude lower on a y/y basis, while revenue was soft. The firm blamed fuel prices and also asserted that bookings have been stable in the wake of the Costa Concordia disaster. Ryder is down more than 11% after lowering its Q2 and FY12 forecasts. Ryder said that it is seeing reduce commercial rental demand and some softness in pricing.
- The FX market remained pinned in a tight range as the informal EU meeting began in Rome. The euro had been at the upper end of its session range after the ECB announced changes to collateral rules, reduces rating threshold for certain asset-backed securities and widened eligible instruments. However the trade reversed quickly and EUR/USD was back at one week lows around 1.2530 by mid morning. Dealers were talking about whether Greece might exit the euro today - the euro cup that is, where Greece and Germany face off in a football match later today.
Looking Ahead
- 11:00 (US) Fed to purchase $1.50-2.25B in Notes
- 13:00 (US) Fed's Pianalto
- 14:00 (PT) Portugal Year-to-Date Budget Report
- 15:00 (AR) Argentina May Industrial Production M/M: -1.1%e v -0.5% prior; Y/Y: No est v -1.4% prior
- 15:00 (AR) Argentina Q1 Current Account: +$504Me v -$356M prior
Saturday
18:00 (CH) Bank of International Settlements (BIS) holds Global Central Bank Meeting
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