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KEY ECONOMICS EVENTS Empire State Index for Apr Net capital inflows for Feb Foreign buy,T-bonds for Feb NAHB Index for Apr ET/GMT 0830/1230 0900/1300 0900/1300 1000/1400
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MARKET RECAP
Stocks fell on Friday as financial shares dragged after weak bank earnings, while Treasuries rallied on disappointing retail and consumer data. The dollar fell from a fouryear peak against the yen. Oil fell and gold closed lower after trading below the key $1,500 mark.
STOCKS DJIA Nasdaq S&P 500 Toronto Russell FTSE Eurofirst Nikkei Hang Seng Close 14865.06 3294.95 1588.86 12337.59 942.88 6384.39 1182.10 13485.14 22089.05 Yield 0.2300 0.6938 Change -0.08 -5.21 -4.51 -143.78 -4.17 -31.75 -10.77 -64.02 -12.22 % Chng 0.00 -0.16 -0.28 -1.15 -0.44 -0.49 -0.90 -0.47 -0.06 Yr-high 14887.50 3306.95 1597.35 12904.71 954.00 6533.99 1209.05 13549.16 23944.74 Yr-low 12035.10 2726.68 1266.74 11209.55 729.75 5897.81 1132.73 10398.61 21612.05
With recent data suggesting the pace of economic growth is starting to soften, investors are expected to zero in on two reports during the week on regional manufacturing. The pace of factory activity in New York state is seen slowing in April, while growth is expected to edge up from low levels in the U.S. mid-Atlantic. The reports are among the first signs of how the sector fared this month, while a separate report on industrial production for March is expected to show output slowed at the end of the first quarter. Consumer prices are seen flattening in March after rising the month before, leaving the Federal Reserve plenty of room to pursue its massive stimulus program. In addition, data on the housing market is expected to show the sector continued to gain strength, with homebuilder sentiment seen improving and groundbreaking to build new homes rising.
TREASURIES 10-year 2-year 5-year 30-year COMMODITIES May crude $ Spot gold (NY/oz) $
Last % Chng 1.3101 98.60 1.5347 1.0138 -0.01 -1.07 -0.23 0.36
2.9192 50 /32 Dollar/CAD Price 90.97 1486.56 3.3370 287.72 Price 0.74 16.06 22.62 3.93 2.07 13.47 86.66 2.31
$ change -2.54 -74.18 -0.0910 -2.73 $ change -0.14 -1.72 -2.11 -0.36 0.27 1.51 7.83 0.19
% change -2.72 -4.75 -2.65 -0.94 % change -15.52 -9.67 -8.53 -8.37 15.00 12.63 9.93 8.96
BIG MOVERS
Suntech Power ImmunoGen Barrick Gold MannKind Dex One Bankrate Ashland Rite Aid
Also on Tuesday, U.S. District Judge Lewis Kaplan in Manhattan federal court holds a mini-trial over several issues linked to the international litigation about alleged pollution of the Amazon rainforest by the former Texaco, which Chevron later bought. This resulted in a $19 billion judgment against Chevron in Ecuador in favor of residents of the Lago Agrio region. Chevron says the judgment was procured by fraud. The Lago Agrio residents have sought to have the judgment enforced in the United States and other countries.
The Bank of Canada is expected to hold its benchmark interest rate steady at 1 percent at a policy announcement on Wednesday, so investors will focus on the possible toning down or elimination of hawkish language that has differentiated it from Group of Seven peers. The central banks quarterly Monetary Policy Report, released the same day, is expected to chop growth forecasts following a string of weak data. Canadian inflation data out Friday is expected to reinforce that price pressures are low and there is little need to tighten policy.
Bank of America, the second-largest U.S. bank, reports firstquarter earnings on Wednesday, and investors will be looking for signs that the bank is growing revenue and loans as it looks to put mortgage-related losses in the past. Also look for results that day from Mattel, Bank of New York Mellon, Abbott, Quest Diagnostics and American Express. For a related Reuters Insider video, click here
COMING UP - MONDAY
Citigroup is scheduled to release results of its first full quarter
under CEO Mike Corbat. mine whether Oracle broke its contract with the computing giant and, if so, the amount of damages due.
American Express CEO Kenneth Chenault speaks at Economic Club of Washington, DC on the state of the economy and future drivers of job creation.
MARKET MONITOR
Stocks closed lower on Friday, retreating from the previous session's record levels as financials dropped, though major indexes notched strong gains for the week. Shares of Wells Fargo dropped 0.80 percent and JPMorgan was off 0.61 percent. M&T Bank's shares shed 4.46 percent and Hudson City Bancorp slumped 5.47 percent. Newmont Mining fell 5.90 percent The Dow was unchanged, The S&P 500 Index was down 0.28 percent and Nasdaq was down 0.16 percent. For the week, Dow was up 2.1 percent, S&P 500 gained 2.3 percent and Nasdaq rose 2.8 percent. The government debt market rallied as data showing a surprise decline in consumer spending in March darkened investors' view on the U.S. economy which might still need generous support from the Federal Reserve. "The recent data have turned out weaker-than-expected. This was reinforced by today's retail sales figures," said Jeff Given, portfolio manager at Manulife Asset Management. "Treasuries will remain fairly well bid with also what's going on in Japan," he said. The benchmark 10year note last traded up 21/32 in price to yield 1.72 percent. The 30-year bond last traded up 1-19/32 in price to yield 2.92 percent. The dollar plummeted from a four-year peak against the yen after dismal data on U.S. retail sales last month reinforced expectations the Federal Reserve will continue buying bonds to support the U.S. economy. The dollar last traded at 98.63 yen, 1.04 percent down. The euro last traded at 129.23 yen, down 1.01 percent. Click on the chart for full-size image
Oil prices pared losses in afternoon trading after earlier falling more than $2 a barrel, as concerns about the strength of the world economy triggered heavy selling in commodities. "There's an underlying anxiety in the crude market about demand growth going forward into the second half of the year," said Andy Lebow, vice president at Jefferies Bache in New York. May crude was last trading 2.71 percent down at $90.98 a barrel. Gold fell below $1,500 per ounce, a drop of more than 20 percent from its record 2011 highs, putting it in bear market territory for the first time since last May. Spot gold was last trading at $1,487.20 an ounce, down 4.71 percent. June gold futures fell 4.89 percent to trade at $1,488.20 an ounce. "We've broken the key support level (around $1,535-$1,5340 per ounce). That's 20 percent below the $1,923 Comex all-time peak, so we're now into a bear market," Societe Generale analyst Robin Bhar said.
TOP NEWS
U.S. retail sales point to flagging economic momentum U.S. retail sales contracted in March for the second time in three months and consumer confidence tumbled in April, a sign tax hikes early this year stole momentum from the economy. Sales fell 0.4 percent in March, missing analysts' expectations for a flat reading, Commerce Department data showed. A separate report suggested the government's belt tightening was damaging consumer sentiment. The Thomson Reuters/University of Michigan's preliminary reading on the overall index of consumer sentiment fell to 72.3 in April, the lowest since July 2012 and below economists' forecasts. Another report showed wholesale prices fell sharply in March due to lower gasoline costs. Producer prices fell 0.6 percent in March, their biggest drop in 10 months, as gasoline prices tumbled, the Labor Department said. Economists polled by Reuters had expected prices to fall only 0.2 percent. JPMorgan's main businesses lukewarm in first quarter JPMorgan Chase posted higher first-quarter profit as it spent much less money on mortgage-related litigation, but most of its major businesses turned in tepid performances, and the bank's overall revenue declined. Profit in its consumer banking segment fell 12 percent to $2.6 billion, and ignoring accounting adjustments, its corporate and investment banking profit dropped 2 percent to $2.5 billion. Its overall net income rose to $6.53 billion, or $1.59 a share, from $4.92 billion, or $1.19 a share, a year earlier. Total revenue fell 3.6 percent to $25.12 billion. Results for both periods included special items. The bank's litigation expenses were close to nil in the first quarter of 2013 versus about $2.5 billion in last year's first quarter. For a related graphic, click here Wells Fargo profit beats, but mortgage business slows Wells Fargo reported a higher-than-expected 23 percent rise in first-quarter profit, but its mortgage business showed further signs of slowing and net interest margins continued to shrink. The bank made $109 billion in home loans during the quarter, down from $129 billion in the same quarter a year ago and less than the $125 billion in loans extended in the fourth quarter. Wells Fargo said net income rose to $4.93 billion, or 92 cents per share, in the quarter, from $4.02 billion, or 75 cents per share, a year earlier. Analysts on average had expected earnings of 88 cents per share. Total revenue fell slightly to $21.3 billion, missing the average analyst estimate of $21.59 billion. Drugmaker Eli Lilly to cut 1,000 U.S. sales jobs Eli Lilly plans to lay off about 1,000 domestic sales representatives, or 30 percent of its U.S. sales force, as it faces new generic competition for its top drugs, a person familiar with the matter said. The cuts include both full-time and contract sales employees. At the same time, the company plans to add 300 people to its diabetes sales force, the source said. Lilly confirmed in a statement that it is restructuring its sales force to adapt to changes including the expiration of two patents, and said it would expand its diabetes sales force. U.S. Fed anti-money-laundering concerns to delay M&THudson deal M&T Bank's proposed purchase of Hudson City Bancorp will probably take more time to close than previously expected because of U.S. regulatory concerns over anti-money-laundering procedures, the banks said. M&T has hired an outside consultant to help it address the concerns raised by regulators at the U.S. Federal Reserve, it said in a statement. It did not immediately identify the consultant. Click on the chart for full-size image
Judge declines to expand J.C. Penney block over Martha Stewart A New York judge gave J.C. Penney the go-ahead to sell home goods designed by Martha Stewart under a "JCP Everyday" label, pending the outcome of an ongoing trial. Justice Jeffrey Oing, who last year blocked J.C. Penney from selling the goods under a Martha Stewart label, refused the request of Macy's to expand the block. A lawyer for Macy's said it would appeal the ruling. Oing said he could not ignore the economic reality of the harm that an adverse ruling would have caused J.C. Penney "even if it is the result of their own acts." He said, "J.C. Penney has been a given a proverbial bye in this case." Rosengren defends US Fed's dual mandate, policy accommodation A top Federal Reserve official defended the U.S. central bank's dual mandate of full employment and price stability, and pointed to economic trends that suggest an even more accommodative policy stance might have been needed since the Great Recession. Boston Fed President Eric Rosengren argued the Fed's inflation record over the past 15-20 years has been as good as or better than central banks in Europe that have only a single price-stability mandate. Rosengren however said there remains "strong rationale for continuing our highly accommodative monetary policy," and he predicted inflation will remain "well below" the 2-percent target over the next two years, paving the way for more easing. Talks progress on sale of Calik's ATV to Time Warner Turkey's Calik Holding has made progress in talks to sell its ATV television unit to Time Warner and a final decision could be made by the end of April, two sources close to the matter told Reuters. Dubai-based Abraaj Capital is also interested in Calik's media assets, the sources said. Rupert Murdoch's News Corp had been eyeing ATV but dropped out of the race last year, other people said at the time. "There are positive developments regarding Time Warner Group but the process is not yet completed. It should become clear at the end of April whether the sale will happen or not," said one source.
Italy's volcanic Mount Etna spews lava during an eruption on the southern Italian island of Sicily
ANALYSTS RECOMMENDATIONS
Company Name Apple Harris Corp Home Depot Noble Corp Yahoo Action RBC cut target price to $550 from $600, says the company saw weaker demand in March coupled with a mix of headwinds, cites June-quarter outlook may disappoint on lower-than-expected iPhone sales. JP Morgan cut target price to $39 from $45 after the company reduced its full-year outlook and disclosed a restructuring plan. Jefferies raised rating to buy from hold, says the company might post better than expected first-quarter comparable store sales citing bullish sales despite cool weather. RBC cut target price to $40 from $41 citing unpaid downtime that continues to impact near term estimates. JP Morgan raised target price to $26 from $22 ahead of the companys first-quarter earnings release, says positive on Yahoo based on improving engagement trends, potential search upside, and higher implied valuation for Alibaba Group.
MARKET MONITOR
Toronto's main stock index fell more than 1 percent on Friday, as weak U.S. economic data dulled hopes for Canada's export sector, while a sharp drop in gold prices pulled the materials sector to its lowest level in nearly four years. The Toronto Stock Exchange's S&P/TSX composite index was down 1.15 percent at 12,337.59. Barrick Gold was down 8.24 percent, Kinross Gold shed 7.24 percent and Centerra Gold fell 6.83 percent. The Canadian dollar was up 0.38 percent at $1.0140.
TOP NEWS
BlackBerry to ask regulators to probe report on returns BlackBerry plans to ask securities regulators in Canada and the United States to probe what it said is a "false and misleading" report that consumer return rates for its new Z10 smartphone have been high. The company went on the offensive after the report from little known Boston-based research and investment firm Detwiler Fenton sent its stock tumbling on Thursday. BlackBerry said return rates for its flagship Z10 devices have been at, or below, its forecasts and in line with industry norms. "To suggest otherwise is either a gross misreading of the data or a willful manipulation," CEO Thorsten Heins said in a statement. "Such a conclusion is absolutely without basis and BlackBerry will not leave it unchallenged." Shaw Communications profit up 2 pct, expects modest 2013 revenue growth Shaw Communications posted a 2 percent rise in secondquarter profit and said it expects a modest growth in revenue for the year. Shaw said net income rose to C$182 million, or 38 Canadian cents per share, from C$178 million, or 38 Canadian cents per share, a year earlier. Revenue at the Calgary-based company rose 2 percent to C$1.25 billion. The company also said it expects consolidated free cash flow of about C$550 million in 2013. Dollarama shares hit record high after results, dividend hike Shares of Dollarama hit a record high after the dollar-store operator reported a stronger-than-expected jump in profit and sales and raised its dividend by 27 percent. Helped by the sale of more items priced above C$1.00, net income increased to C$77.1 million, or C$1.04 a share, in the fourth quarter, from C$63.6 million, or 84 Canadian cents, a year earlier. Sales climbed 20 percent to C$561.9 million, with products priced at more than C$1.00 making up 56 percent of sales. Analysts had expected earnings of C$1.02 a share on sales of C$546.3 million. For the full year, sales at stores open for at least a year rose 6.5 percent with a 2.1 percent increase in the number of customer transactions. Canada's newest wireless players seek buyers Canada's three newest wireless operators have put themselves up for sale, with Mobilicity already in talks to sell out to Telus, the Globe and Mail newspaper reported, citing unnamed sources. The newspaper said Public Mobile, another privately held company that entered the country's wireless industry after a 2008 auction, had hired investment bankers to find a buyer. The trio of smaller players have mostly used aggressive pricing of unlimited talk-and-text plans to challenge the established operators, with limited success. Walter Energy board nominees win backing from Glass Lewis Coal miner Walter Energy said well-known proxy advisory firm Glass Lewis has recommended that its shareholders back its entire list of board nominees, over those put forward by activist investor Audley Capital. The endorsement is a boost for Walter, which has been locked in a battle with the British hedge fund for two months. Audley is aiming to replace half of Walter's board at its April 25 annual meeting.
Citigroup
Q1
$1.17
$1.11
$20,171
ON THE RADAR
ECON INDICATOR TUE: ICSC/GS report ww for w/e 04/13 CPI mm for Mar CPI yy for Mar CPI ExFood/Energy mm for Mar CPI ExFood/Energy yy for Mar CPI Index level nsa for Mar Real earnings for Mar Housing starts for Mar Building permits for Mar Redbook mm w/e for 04/13 Industrial output mm for Mar Capacity utilization for Mar Manufacturing output mm for Mar Cleveland Fed CPI for Mar WED: Mortgage Index for w/e 04/12 Refinancing Index for w/e 04/12 Fed's Beige Book THU: Initial claims for w/e 04/13 4 Week average for w/e 04/13 Continuing claims for w/e 04/06 Leading indicators for Mar Philly Fed business for Apr SEMI Book/Bill for Mar FRI: ECRI Weekly Index for w/e 04/12 ET/GMT 0745/1145 0830/1230 0830/1230 0830/1230 0830/1230 0830/1230 0830/1230 0830/1230 0830/1230 0855/1255 0915/1315 0915/1315 0915/1315 1130/1530 0700/1100 0700/1100 1400/1800 0830/1230 0830/1230 0830/1230 1000/1400 1000/1400 1800/2200 1030/1430 REUTERS POLL -0.0 pct 1.6 pct 0.2 pct 2.0 pct 232.99 0.1 pct 0.930 mln 0.940 mln -0.2 pct 78.4 pct 0.1 pct ----350,000 -3.080 mln 0.1 pct 3.0 --PRIOR 0.7 pct 0.7 pct 2.0 pct 0.2 pct 2.0 pct 232.166 -0.2 pct 0.917 mln 0.939 mln 0.7 pct 0.8 pct 78.3 pct 0.6 pct 0.2 pct 826.1 4453.9 -346,000 358,000 3.079 mln 0.5 pct 2.0 1.10 130.1 Semiconductor Equipment & Materials International Economic Cycle Research Institute Conference Board Federal Reserve Board of Governors Labor Department Federal Reserve Bank of Cleveland Mortgage Bankers Association Redbook Research Federal Reserve Board Census Bureau SOURCE International Council of Shopping Centers/Goldman Sachs Bureau of Labor Statistics
The Day Ahead - North American Edition is compiled by Karan Khemani, 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.