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May 21 16:32 | London:
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May 22 5:32
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US Market Update TRADETHENEWS.COM STAFF
European optimism flourishes; US data takes a backseat
DJIA +1.75% Nasdaq +2.25% S&P 500 +1.9%
Economic Data
- (IN) India Q1 Current Account Balance: -$21.7B v -$19.6Be
- (IN) India Forex Reserves w/e Jun 22nd: $288.6B v $289.4B prior
- (PL) Poland Jun NBP Inflation Expectations: 3.7% v 4.0%e
- (PL) Poland Q1 Current Account: -€4.3B v -€3.6B
- (ZA) South Africa May Budget Balance (ZAR): -21.3B v -26.4B prior; Trade Balance (ZAR): -8.9B v -6.7Be
- (US) Jun NAPM-Milwaukee: 60.2 v 55.2e
- (CL) Chile Central Bank Meeting Minutes
- (CA) Canada Apr Gross Domestic Product M/M: 0.3% v 0.2%e; Y/Y: 2.0% v 1.8%e
- (CA) Canada May Industrial Product Price M/M: 0.0% v 0.0%e; Raw Materials Price Index M/M: -1.0% v -2.0%e
- (US) May Personal Income: 0.2% v 0.2%e; Personal Spending: 0.0% v 0.0%e
- (US) May PCE Deflator M/M: -0.2% v -0.2%e; Y/Y: 1.5% v 1.5%e
- (US) May PCE Core M/M: 0.1% v 0.2%e; Y/Y: 1.8% v 1.8%e
- (CL) Chile May Manufacturing Index: 2.8% v 1.8%e
- (CL) Chile May Unemployment Rate: 6.7% v 6.7%e
- (CL) Chile May Total Copper Production: 458.6K v 445.4K prior
- (CL) Chile May Retail Sales Y/Y: 5.6% v 6.7%e
- (BR) Brazil May Primary Budget Balance (BRL): 2.7B v 5.0Be; Nominal Budget Balance: -16.0B v -3.0B; Net Debt to GDP Ratio: 35.0% v 34.9%e
- (US) Jun Chicago Purchasing Manager: 52.9 v 52.3e
- (US) Jun Final University of Michigan Confidence: 73.2 v 74.1e
Fixed Income:
- (UK) DMO sold total £3.5B in 1-month, 3-month and 6-month Bills
- US stock markets gapped up on the open after European leaders agreed in general terms to a long term plan for tighter budgetary and political union. More importantly though Investors appear willing to pile on risk trades upon the news that the EU will eventually allow direct recapitalizations of banks. Additionally, countries not currently involved in bailout programs (Spain & Italy) will have the ability to access funds, and also any ESM loans made to Spanish banks will not have seniority. This notion of a potential break in cycle of ever higher borrowing rates across Europe really goosed sentiment, and even some backtracking by German Chancellor Merkel had little effect after she reminded everyone the ESM bank recapitalization plan would need unanimous approval and aid from the EFSF/ESM will always have certain conditions. The final June and second quarter trading day has seen European peripheral bonds spreads plunge and stocks soar. The US dollar is lower while commodity markets have received a strong bid across the board. Crude oil has surged nearly 6% on the day to trade back above $82 while gold has rallied more than 3% on its way back towards $1600.
- The US data calendar was a bit heavy today but it has clearly taken a back seat to Europe. May personal income and spending data generally meet expectations and the savings rate fell back below 4%. It was a bit of a mixed picture for the US consumer though as the final June University of Michigan confidence registered its lowest reading since December. June Chicago PMI narrowly beat expectations and the employment sub index was the highest in several months. New orders decreased slightly while the prices paid component reached the lowest levels since late 2009.
- Signs that the woes in Europe and a slowdown in Asia are starting to affect US multinational corporations are emerging. Nike shares plunged more than 10% after Q4 results were shy of consensus expectations. More worrisome management noted that headwinds include increased currency pressures and slower Chinese growth which has led to inventories being a bit higher than desired in Europe and China. Gross margins are expected to continue contracting before bottoming in the first quarter. Also the CFO of Ford indicated international losses will triple in Q2 due to weaker European sales. Analysts have subsequently come out and slashed estimates and the stock prices has declined almost 5%.
- Anheuser-Busch finally confirmed the purchase of the remaining stake in Groupo Modelo shares. The cash offer worth $9.15/share or $20.1B represented roughly at 30% premium brings the estimated total enterprise value north of $32B. The transaction is expected to close during Q1 2013 and financing has been fully committed. The company has added $14B of additional bank facilities to existing liquidity through a new facility agreement which provides for an $8B three-year term facility and a $6B term facility with a maximum maturity of two years from the funding date. AB InBev now has total liquidity, between cash and long-term committed facilities, in excess of $24B.
- The risk on sentiment continued into the NY morning as US traders reviewed the results from the EU Summit. The EUR/USD approached the 1.27 handle. Cautious comments from Italy's PM Monti that his country might miss its projected 2013 Deficit to GDP target brought some reality that Europe needed a long way to go to resolve its crisis and tempered some of the euphoria. Dealers noted that 1.2730 area could be tough resistance in the EUR/USD
Looking Ahead
- (RU) Russia Q1 Final Current Account: No est v $42.3B prelim
- (DE) Germany Lower House planned vote on Fiscal Pact (expected late afternoon local time)
- (CO) Colombia Central Bank Interest Rate Decision: Expected to leave the Overnight Lending Rate unchanged at 5.25%
- 11:00 (DE) German Chancellor Merkel on Parliamentary vote for ESM ratification
- 12:00 (FR) France President Hollande
- 12:00 (CO) Colombia May Urban Unemployment Rate: 11.0%e v 11.4% prior
- 15:00 (AR) Argentina May Construction Activity M/M: No est v -5.9% prior; Y/Y: No est v -7.6% prior
- 15:30 (MX) Mexico May YTD Budget Balance: No est v -41.4B prior
Weekend data
Saturday
- 21:00 (CN) China Jun Manufacturing PMI: No est v 50.4 prior
Speakers/Events:
Sat
- (MX) Mexico Presidential and Congressional Elections
Economic Data
- (IN) India Q1 Current Account Balance: -$21.7B v -$19.6Be
- (IN) India Forex Reserves w/e Jun 22nd: $288.6B v $289.4B prior
- (PL) Poland Jun NBP Inflation Expectations: 3.7% v 4.0%e
- (PL) Poland Q1 Current Account: -€4.3B v -€3.6B
- (ZA) South Africa May Budget Balance (ZAR): -21.3B v -26.4B prior; Trade Balance (ZAR): -8.9B v -6.7Be
- (US) Jun NAPM-Milwaukee: 60.2 v 55.2e
- (CL) Chile Central Bank Meeting Minutes
- (CA) Canada Apr Gross Domestic Product M/M: 0.3% v 0.2%e; Y/Y: 2.0% v 1.8%e
- (CA) Canada May Industrial Product Price M/M: 0.0% v 0.0%e; Raw Materials Price Index M/M: -1.0% v -2.0%e
- (US) May Personal Income: 0.2% v 0.2%e; Personal Spending: 0.0% v 0.0%e
- (US) May PCE Deflator M/M: -0.2% v -0.2%e; Y/Y: 1.5% v 1.5%e
- (US) May PCE Core M/M: 0.1% v 0.2%e; Y/Y: 1.8% v 1.8%e
- (CL) Chile May Manufacturing Index: 2.8% v 1.8%e
- (CL) Chile May Unemployment Rate: 6.7% v 6.7%e
- (CL) Chile May Total Copper Production: 458.6K v 445.4K prior
- (CL) Chile May Retail Sales Y/Y: 5.6% v 6.7%e
- (BR) Brazil May Primary Budget Balance (BRL): 2.7B v 5.0Be; Nominal Budget Balance: -16.0B v -3.0B; Net Debt to GDP Ratio: 35.0% v 34.9%e
- (US) Jun Chicago Purchasing Manager: 52.9 v 52.3e
- (US) Jun Final University of Michigan Confidence: 73.2 v 74.1e
Fixed Income:
- (UK) DMO sold total £3.5B in 1-month, 3-month and 6-month Bills
- US stock markets gapped up on the open after European leaders agreed in general terms to a long term plan for tighter budgetary and political union. More importantly though Investors appear willing to pile on risk trades upon the news that the EU will eventually allow direct recapitalizations of banks. Additionally, countries not currently involved in bailout programs (Spain & Italy) will have the ability to access funds, and also any ESM loans made to Spanish banks will not have seniority. This notion of a potential break in cycle of ever higher borrowing rates across Europe really goosed sentiment, and even some backtracking by German Chancellor Merkel had little effect after she reminded everyone the ESM bank recapitalization plan would need unanimous approval and aid from the EFSF/ESM will always have certain conditions. The final June and second quarter trading day has seen European peripheral bonds spreads plunge and stocks soar. The US dollar is lower while commodity markets have received a strong bid across the board. Crude oil has surged nearly 6% on the day to trade back above $82 while gold has rallied more than 3% on its way back towards $1600.
- The US data calendar was a bit heavy today but it has clearly taken a back seat to Europe. May personal income and spending data generally meet expectations and the savings rate fell back below 4%. It was a bit of a mixed picture for the US consumer though as the final June University of Michigan confidence registered its lowest reading since December. June Chicago PMI narrowly beat expectations and the employment sub index was the highest in several months. New orders decreased slightly while the prices paid component reached the lowest levels since late 2009.
- Signs that the woes in Europe and a slowdown in Asia are starting to affect US multinational corporations are emerging. Nike shares plunged more than 10% after Q4 results were shy of consensus expectations. More worrisome management noted that headwinds include increased currency pressures and slower Chinese growth which has led to inventories being a bit higher than desired in Europe and China. Gross margins are expected to continue contracting before bottoming in the first quarter. Also the CFO of Ford indicated international losses will triple in Q2 due to weaker European sales. Analysts have subsequently come out and slashed estimates and the stock prices has declined almost 5%.
- Anheuser-Busch finally confirmed the purchase of the remaining stake in Groupo Modelo shares. The cash offer worth $9.15/share or $20.1B represented roughly at 30% premium brings the estimated total enterprise value north of $32B. The transaction is expected to close during Q1 2013 and financing has been fully committed. The company has added $14B of additional bank facilities to existing liquidity through a new facility agreement which provides for an $8B three-year term facility and a $6B term facility with a maximum maturity of two years from the funding date. AB InBev now has total liquidity, between cash and long-term committed facilities, in excess of $24B.
- The risk on sentiment continued into the NY morning as US traders reviewed the results from the EU Summit. The EUR/USD approached the 1.27 handle. Cautious comments from Italy's PM Monti that his country might miss its projected 2013 Deficit to GDP target brought some reality that Europe needed a long way to go to resolve its crisis and tempered some of the euphoria. Dealers noted that 1.2730 area could be tough resistance in the EUR/USD
Looking Ahead
- (RU) Russia Q1 Final Current Account: No est v $42.3B prelim
- (DE) Germany Lower House planned vote on Fiscal Pact (expected late afternoon local time)
- (CO) Colombia Central Bank Interest Rate Decision: Expected to leave the Overnight Lending Rate unchanged at 5.25%
- 11:00 (DE) German Chancellor Merkel on Parliamentary vote for ESM ratification
- 12:00 (FR) France President Hollande
- 12:00 (CO) Colombia May Urban Unemployment Rate: 11.0%e v 11.4% prior
- 15:00 (AR) Argentina May Construction Activity M/M: No est v -5.9% prior; Y/Y: No est v -7.6% prior
- 15:30 (MX) Mexico May YTD Budget Balance: No est v -41.4B prior
Weekend data
Saturday
- 21:00 (CN) China Jun Manufacturing PMI: No est v 50.4 prior
Speakers/Events:
Sat
- (MX) Mexico Presidential and Congressional Elections
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