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US Market Update TRADETHENEWS.COM STAFF
US high court upholds constitutionality of Obama care; Banks under pressure as EU summit begins
DJIA -1.16% S&P500 -1.11% NASDAQ -1.5%
Economic Data
- (IS) Israeli May Unemployment Rate: 7.1% v 6.8% prior
- (IE) Ireland May Retail Sales Volume M/M: -0.1% v -0.8% prior; Y/Y: -2.1% v -1.8% prior
(CZ) Czech Central Bank cut the Repo Rate by 25bps to 0.50%, as expected
- (BR) Brazil Jun FGV Inflation IGP-M M/M: 0.7% v 0.6%e; Y/Y: 5.1% v 5.1%e
- (US) Q1 Final GDP Q/Q Annualized: 1.9% v 1.9%e; Personal Consumption: 2.5% v 2.7%e
- (US) Q1 Final GDP Price Index: 2.0% v 1.7%e; Core PCE Q/Q: 2.3% v 2.1%e
- (US) Initial Jobless Claims: 386K v 385Ke; Continuing Claims: 3.296M v 3.280Me
- (US) Weekly EIA Natural Gas Inventory: +57 bcf vs. +49 bcf to +54 bcf expected range
- US equity markets were under some pressure on the open as weakness in European banks persists. Eyes were squarely focused on Europe as the summit commenced but expectations remain low that anything meaningful will be announced that could quickly stem the tide of rising borrowing costs. Immediately though, focus shifted back to the states when the US Supreme court ruled that the mandate at the center of President Obama's healthcare overhaul is constitutional. The decision was somewhat surprising and markets have continued to move lower since the release, as the initial read suggests the complexity and uncertainty created could weigh on markets for some time. Stocks and commodity markets are lower across the board with gold prices down 1.5% while US Treasury markets are seeing a bid into today's 7-year note auction.
- Specifically the Supreme court ruled that the insurance mandate is constitutional as a tax but not as a penalty. The court also ruled to limit Medicaid expansion but did not invalidate it. The situation remains fluid with Republicans continuing to call for the laws repeal and major health care insurance industry groups saying that major provisions (premium tax) in the healthcare reform law will have unintended consequences including cost increases as a result of today's decision. President Obama has scheduled a press conference during the noon hour. Medicaid providers, hospital, and testing/laboratory are all seeing an initial move up on the news while large HMO and medical device names are generally under pressure
- Banks on both sides of the Atlantic are seeing stiff headwinds today. Citigroup cuts estimates for a large swathe of US banks, while a New York Times report suggested the JP Morgan trading loss could reach as high as $9B. In the UK concerns swirled following Barclays historic Libor probe settlement with the CFTC. Speculation that the BCS CEO could step down and a potential criminal probe have led to declines of more than 10%. The EU has indicated their investigation into Euribor and Libor is ongoing weighing on other names.
- Payroll, human resource, and benefits outsourcing solutions provider Paychex, often viewed as a good thermometer for taking the temperature of the employment landscape has given back 3% following their disappointing Q4 results and outlook. PAYX said they now see FY13 total services revenue increasing 5-6% compared to prior guidance of +7-9%.
- The price action in FX during the early NY morning was very choppy as press reports commented on the alleged German stance on Eurobonds heading into he 2-day EU Leader Summit. Misconstrued reports that Germany was willing to go far as needed to move towards fiscal union as the process was irreversible and willing to negotiate on Euro bonds helped to stem risk aversion. However, Germany was quite blunt in its defense of its long held view that had not changed its position on Euro bonds that if joint liability for euro zone debt was wanted, then Europe needed tighter fiscal controls. All eyes now await the draft communique leaks and press conference after the European markets close
Looking Ahead
- 11:15 (EU) First working session of EU Leader Summit
- 11:30 (US) Fed's Pianalto speaks in Cleveland
- 12:00 (US) Fed's Fisher speaks in Aspen on the Economy
- 13:00 (UK) BOE member Weale
- 13:00 (PT) Portugal Fin Min
- 13:00 (US) Treasury to sell $29B in 7-Year Notes
- 14:15 (EU) EU Leader Summit working dinner
- 18:00 (EU) EU President Van Rompuy press conference on EU Leader Summit
- 19:01 (UK) Jun GFK Consumer Confidence: -29e v -29 prior
- 19:30 (JP) Japan May Unemployment rate: 4.5%e v 4.6% prior
- 19:30 (JP) Japan May National CPI Ex-food&energy Y/Y: -0.6%e v -0.3% prior
- 19:50 (JP) Japan May Preliminary Industrial Production M/M: -2.8%e v -0.2% prior; Y/Y: 6.6%e v 12.9% prior
Economic Data
- (IS) Israeli May Unemployment Rate: 7.1% v 6.8% prior
- (IE) Ireland May Retail Sales Volume M/M: -0.1% v -0.8% prior; Y/Y: -2.1% v -1.8% prior
(CZ) Czech Central Bank cut the Repo Rate by 25bps to 0.50%, as expected
- (BR) Brazil Jun FGV Inflation IGP-M M/M: 0.7% v 0.6%e; Y/Y: 5.1% v 5.1%e
- (US) Q1 Final GDP Q/Q Annualized: 1.9% v 1.9%e; Personal Consumption: 2.5% v 2.7%e
- (US) Q1 Final GDP Price Index: 2.0% v 1.7%e; Core PCE Q/Q: 2.3% v 2.1%e
- (US) Initial Jobless Claims: 386K v 385Ke; Continuing Claims: 3.296M v 3.280Me
- (US) Weekly EIA Natural Gas Inventory: +57 bcf vs. +49 bcf to +54 bcf expected range
- US equity markets were under some pressure on the open as weakness in European banks persists. Eyes were squarely focused on Europe as the summit commenced but expectations remain low that anything meaningful will be announced that could quickly stem the tide of rising borrowing costs. Immediately though, focus shifted back to the states when the US Supreme court ruled that the mandate at the center of President Obama's healthcare overhaul is constitutional. The decision was somewhat surprising and markets have continued to move lower since the release, as the initial read suggests the complexity and uncertainty created could weigh on markets for some time. Stocks and commodity markets are lower across the board with gold prices down 1.5% while US Treasury markets are seeing a bid into today's 7-year note auction.
- Specifically the Supreme court ruled that the insurance mandate is constitutional as a tax but not as a penalty. The court also ruled to limit Medicaid expansion but did not invalidate it. The situation remains fluid with Republicans continuing to call for the laws repeal and major health care insurance industry groups saying that major provisions (premium tax) in the healthcare reform law will have unintended consequences including cost increases as a result of today's decision. President Obama has scheduled a press conference during the noon hour. Medicaid providers, hospital, and testing/laboratory are all seeing an initial move up on the news while large HMO and medical device names are generally under pressure
- Banks on both sides of the Atlantic are seeing stiff headwinds today. Citigroup cuts estimates for a large swathe of US banks, while a New York Times report suggested the JP Morgan trading loss could reach as high as $9B. In the UK concerns swirled following Barclays historic Libor probe settlement with the CFTC. Speculation that the BCS CEO could step down and a potential criminal probe have led to declines of more than 10%. The EU has indicated their investigation into Euribor and Libor is ongoing weighing on other names.
- Payroll, human resource, and benefits outsourcing solutions provider Paychex, often viewed as a good thermometer for taking the temperature of the employment landscape has given back 3% following their disappointing Q4 results and outlook. PAYX said they now see FY13 total services revenue increasing 5-6% compared to prior guidance of +7-9%.
- The price action in FX during the early NY morning was very choppy as press reports commented on the alleged German stance on Eurobonds heading into he 2-day EU Leader Summit. Misconstrued reports that Germany was willing to go far as needed to move towards fiscal union as the process was irreversible and willing to negotiate on Euro bonds helped to stem risk aversion. However, Germany was quite blunt in its defense of its long held view that had not changed its position on Euro bonds that if joint liability for euro zone debt was wanted, then Europe needed tighter fiscal controls. All eyes now await the draft communique leaks and press conference after the European markets close
Looking Ahead
- 11:15 (EU) First working session of EU Leader Summit
- 11:30 (US) Fed's Pianalto speaks in Cleveland
- 12:00 (US) Fed's Fisher speaks in Aspen on the Economy
- 13:00 (UK) BOE member Weale
- 13:00 (PT) Portugal Fin Min
- 13:00 (US) Treasury to sell $29B in 7-Year Notes
- 14:15 (EU) EU Leader Summit working dinner
- 18:00 (EU) EU President Van Rompuy press conference on EU Leader Summit
- 19:01 (UK) Jun GFK Consumer Confidence: -29e v -29 prior
- 19:30 (JP) Japan May Unemployment rate: 4.5%e v 4.6% prior
- 19:30 (JP) Japan May National CPI Ex-food&energy Y/Y: -0.6%e v -0.3% prior
- 19:50 (JP) Japan May Preliminary Industrial Production M/M: -2.8%e v -0.2% prior; Y/Y: 6.6%e v 12.9% prior
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