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KEY ECONOMICS EVENTS Real GDP qq SA for Q4-F -- Final sales -- Implicit deflator -- Core PCE price -- PCE Price Index Corporate profits for Q4 Initial claims for w/e 03/23 -- 4 week average Chicago PMI for Mar ECRI Weekly Index for w/e 03/22 Recommended early close for bond market 0945/1345 1030/1430 0830/1230 0830/1230
MARKET RECAP
Stocks declined, while Treasuries jumped on euro zone worries. The euro fell to its lowest level in four months. Gold rose, snapping a three-day losing streak, and oil edged higher.
COMING UP
BlackBerry releases its first results since launching its Z10 smartphone, its last-ditch attempt to claw back market share from rivals like Apple. Analysts don't expect the company to return to profit yet, but will watch carefully for forecasts about sales of the new device, and for news on whether companies are introducing the software that will allow their users to switch to the new touch-screen device. For
STOCKS DJIA Nasdaq S&P 500 Toronto Russell FTSE Eurofirst Nikkei Hang Seng
Close 14526.32 3256.52 1562.91 12699.58 950.25 6387.56 1184.06 12493.79 22464.82 Yield 0.2500 0.7354
Change -33.33 4.04 -0.86 -6.80 0.43 -11.81 -4.51 22.17 153.74
% Chng -0.23 0.12 -0.05 -0.05 0.05 -0.18 -0.38 0.18 0.69
Yr-high 14563.80 3263.63 1564.91 12904.71 954.00 6533.99 1209.05 12650.26 23944.74
Yr-low 12035.10 2726.68 1266.74 11209.55 729.75 5897.81 1132.73 10398.61 21975.90
EBay holds its first investor day since 2011, and CEO John Donahoe and other executives are expected to lay out the e-commerce company's vision and guidance through 2015. Expectations are high because Donahoe has promised a lot and has beaten expectations since launching a turnaround of the company at the 2009 investor day.
The Commerce Department releases a third estimate of fourthquarter gross domestic product. The final reading for the quarter is expected to show growth picked up more than initially reported, rising at an annualized 0.5 percent, up from the previous reading of 0.1 percent. That is just a bit faster than previously thought but new claims for jobless aid last week, to be released by the Labor Department, likely held close to five-year lows in a sign of the recovery's new-found vigor.
TREASURIES 10-year 2-year 5-year 30-year COMMODITIES May crude $ Spot gold (NY/oz) $
Last % Chng 1.2772 94.43 1.5129 1.0164 -0.68 0.02 -0.20 0.06
3.0903 33 /32 Dollar/CAD Price 96.51 1604.99 3.4495 298.69 Price 18.46 0.41 2.47 39.20
Fertilizer producer Mosaic reports quarterly earnings that are expected to rise from one year ago. Mosaic's potash shipments are expected to rebound after a soft second quarter, with China and India resuming purchases.
$ change 0.17 6.40 0.0160 1.46 $ change -2.97 -0.03 0.27 3.03
% change 0.18 0.40 0.47 0.49 % change -13.86 -7.48 12.27 8.38
BIG MOVERS
Cliffs Natural Resources Suntech Power Frontline AOL
Accenture, the outsourcing and consulting company, posts quarterly results. Its forecast for the quarter fell short of investor expectations in December, as clients continued to defer discretionary spending in Europe. While analysts expect an industry-wide rebound in discretionary spending and consulting revenue, a good show by rivals such as Cognizant and TCS in the quarter in outsourcing, particularly from Europe, bodes well for Accenture.
COMING UP (continued)
Winnebago, the largest U.S. motor home maker, is likely to
report a higher second-quarter profit helped by strong demand for its motor homes as the market for recreational vehicles continues to improve. A steadily increasing backlog as well as rising attendance at RV shows points to demand staying strong through the quarter. Jetblue and other airlines along with leaders in manufacturing and aviation are also expected to attend the event.
Panasonic's president, Kazuhiro Tsuga, unveils his first restructuring plan for the company, which has been racking up losses. The latest boss of the sprawling electronics conglomerate is expected to provide targets and give some details of plans to sell or close businesses that fail to achieve a 5 percent operating margin within three years.
MARKET MONITOR
The Dow and the S&P 500 ended slightly lower on Wednesday after early losses spurred by worries about the possible implications of Cyprus's bailout for other euro zone lenders. The PHLX Europe sector index declined 1.08 percent. Cliffs Natural Resources shares lost 13.8 percent. Boeing was down 0.47 percent. JPMorgan Chase fell 1.75 percent. BlackBerry shares were up 0.75 percent. The Dow dropped 0.23 percent, the S&P 500 Index shed 0.05 percent and the Nasdaq rose 0.12 percent. Fears about the euro zone sent benchmark 10-year Treasuries yields to more than three-week lows and helped them break below technical support as investors fretted over further bank restructurings and Italy's soft bond auction. Bonds rallied even as the Treasury sold $35 billion in new five-year notes to solid demand. Treasuries rallied after the auction, trailing German government bonds, and U.S. debt extended gains after 10-year yields broke below support around 1.89 to 1.90 percent, where a number of investors had stop-loss orders to exit short positions. "It got under 1.90 percent and a bunch of stops got hit," said Ira Jersey, an interest rate strategist at Credit Suisse. Ten-year Treasuries were last up 19/32 in price to yield 1.85 percent. The 30-year bond rose 1 point, yielding 3.1 percent. The Treasury will sell $29 billion in seven-year notes on Thursday, the final sale of the week. The euro skidded to its lowest level against the dollar in over four months, weighed by a weak Italian bond auction and concerns that Cyprus' recent rescue deal could serve as an archetype for future bailouts in the region. The euro last traded at $1.2771, down 0.69 percent and over 3 percent this year. The euro's drop below support at its 200-day moving average of $1.2881 on Tuesday left it vulnerable to more losses toward its mid-November low of $1.2661, traders said. The euro last traded down 0.72 percent at 120.56 yen. The dollar last traded at 94.40 yen, down 0.01 percent. Click on the chart for full-size image
Gold rose, snapping a three-day losing streak, as renewed euro zone worries and hopes the Federal Reserve will continue its loose monetary policy triggered bullion buying. "While March seems to have been a month for moderation of economic activity, our view remains one of improving global growth. We believe these recent trends are likely to reverse, leading to modest weakness in gold," said Robert Haworth, senior investment strategist at U.S. Bank Wealth Management. Spot gold rose 0.40 percent to $1,604.94 an ounce and April gold futures settled up 0.58 percent at $1,605, with trading volume about 20 percent above its 250-day average. Crude prices rose in choppy trading as U.S. heating oil rallied on falling distillate inventories, while rising crude oil stockpiles in the United States and the stronger dollar limited gains. The Energy Information Administration said that U.S. crude inventories rose 3.26 million barrels, above the forecast an increase of 700,000 barrels in a Reuters survey of analysts. May crude was up 0.18 percent at $96.51 a barrel.
TOP NEWS
Cyprus to limit cash, credit-card use abroad Cyprus is set to restrict the flow of cash from the island and may curb the use of Cypriot credit cards abroad as it tries to avert a run on its banks after agreeing a tough rescue package with international lenders. A Greek newspaper published details of what officials told Reuters was as yet only a draft government decree to restrict outward payments to documented imports and limit how much people could take abroad in banknotes or spend on credit cards. Athens newspaper Kathimerini, citing the government decree, said measures would remain in force for seven days after the banks reopen. Cypriots wanting to send money overseas would have to prove that the transactions meet strict rules laid out by the authorities. The decree allows businesses to pay for imports if they provide officials with the necessary documentation. Lean inventories hold back U.S. pending home sales Contracts to buy previously owned U.S. homes fell in February, held back by a shortage of properties, but there is little to suggest that the housing market's recovery is stalling. The National Association of Realtors said its Pending Home Sales Index, based on contracts signed last month, slipped 0.4 percent to 104.8. Still, contracts last month remained at the second highest level in nearly three years. Economists polled by Reuters had expected signed contracts, which become sales after a month or two, to dip 0.2 percent. The Realtors group blamed the pullback on a shortage of homes for sale. Demand for loans to buy a home rose last week after two straight weeks of declines, a separate report showed. The Mortgage Bankers Association said its gauge of loan requests for home purchases, a leading indicator of home sales, increased 6.7 percent. Boeing 787 faces new risk: limits on extended range As Boeing works to regain permission for its 787 Dreamliner to resume flights, the company faces what could be a costly new challenge: a temporary ban on some of the long-distance, transocean journeys that the jet was intended to fly. Aviation experts and government officials say the Federal Aviation Administration may shorten the permitted flying time of the 787 on certain routes when it approves a revamped battery system. "If the FAA approves (only) over-land operations it would be a very damaging blow to the 787 program," said Scott Hamilton, an aviation analyst with Leeham Co. "Depending on how long that restriction remains in place, it would completely undermine the business case for the airplane, which was to be able to do these long, thin intercontinental routes" over water, he said. GM turns to 'right-sized' redesign of Cadillac CTS sedan General Motors is turning to a redesigned, longer CTS midsized sedan to make its Cadillac luxury brand more competitive against German rivals. "This third generation of CTS is really the harbinger for our global aspirations and where we're headed overall," said Don Butler, vice president of marketing for Cadillac. "Our big thing that we're driving for is cultural relevance," he added. "We still have a big challenge to be thought of and spoken of in the same breath as BMW and Mercedes." However, analysts said the Cadillac brand still trailed its German competitors. Separately, GM is laying the groundwork for 10 percent margins over the next several years through "a fairly significant improvement" in both revenue and cost structure, GM North American Chief Financial Officer Chuck Stevens said.
PIC OF THE DAY
Farmer Donald O'Reilly searches for sheep or lambs trapped in a snow drift near weakened animals that had just been rescued, in the Aughafatten area of County Antrim, Northern Ireland.
Fed's Evans: likely to need to maintain bond buys to end of year The Federal Reserve would do best to keep buying assets at its current $85-billion-a-month pace until the jobs market is on firmer ground, a point that probably won't be reached until the end of the year, a top Fed official said. Cutting back sooner on bond purchases, as some top Fed officials have advocated, could undercut what has so far been a successful program, Chicago Fed President Charles Evans said. However, Minneapolis Fed Bank chief Narayana Kocherlakota repeated his view that the best way to boost the economy was to lower the Fed's jobless rate threshold on interest rate guidance to 5.5 percent. Earlier Boston Federal Reserve President Eric Rosengren said asset purchases had clearly helped ease U.S. unemployment, as he strongly played down talk of asset bubbles. J.C. Penney revives 'mark-up to mark-down' tactic to boost sales J.C. Penney said it had resumed a marketing strategy of raising prices and then discounting them on its own brands in a move to protect profit margins and win back the bargain-conscious shoppers it lost last year. The U.S. retailer began changing the price tags on merchandise earlier this month and should be done in the next few weeks, spokeswoman Daphne Avila said in a statement emailed to Reuters on Tuesday. Under the strategy, an Arizona crewneck T-shirt that had an "everyday" price of $5 now has a $6 pricetag to allow Penney more room to offer a markdown and arrive at the same price, the spokeswoman added. Popularity helps buffer Apple from Chinese state-media attacks Chinese Internet users are crying foul over the perceived unfair treatment doled out to Apple by state-run media which has actively criticised the smartphone maker for the past two weeks over its warranty policy. CCTV accused Apple of having discriminatory after-sales service in China compared to the rest of the world. CCTV's flagship evening news programme upped the war of words, citing the national quality watchdog as saying Apple would be punished it did not alter its policy on only offering oneyear warranties for MacBook Air computers.
ANALYSTS RECOMMENDATIONS
Company Name AOL Cliffs Natural Goldman Sachs Action Barclays raised rating to overweight from equal weight, sees significant upside to operating earnings estimates as the company returns to modest revenue growth and continues to streamline its cost structure. Credit Suisse cut target to $10 from $30, says there are structural changes in the companys key Great Lakes market that will compromise its pricing power and erode the earnings of the iron ore business. Susquehanna raised target price to $170 from $165 to reflect better than expected investment banking and investing and lending business. UBS raised target price to $53 from $48 on slightly higher international margin forecasts. JP Morgan resumed coverage with neutral rating, expects an organic growth of 3 percent in 2013, which compares to an outlook of 1-4 percent.
Halliburton Ingersoll-Rand
MARKET MONITOR
Canada's main stock index was little changed on Wednesday, with declines in bank stocks partly offset by a jump in gold miners, as weak economic data from the euro zone and worries about the Cyprus bailout were a drag on investor sentiment. The Toronto Stock Exchange's S&P/TSX composite index was down 0.05 percent at 12,699.58. Royal Bank of Canada gave back 1.25 percent and Toronto-Dominion Bank fell 0.86 percent. Shares of Agrium were down 0.72 percent. The Canadian dollar was up 0.06 percent at $1.0164.
TOP NEWS
Canada inflation jumps, rate change still seen far off Canada's annual inflation rate jumped more than expected in February, but analysts said the spike was unlikely to pressure the Bank of Canada to raise interest rates any time soon. The year-on-year rate rose to 1.2 percent from a three-year-low of 0.5 percent in January on higher gas and auto prices, Statistics Canada said. The central bank has said it expects to raise interest rates one day, despite still-low year-on-year inflation. But the time frame for a possible rate hike has kept stretching out as domestic and global economies have stumbled. Agrium battle heats up, advisory firms differ The battle for Agrium Inc's future is heating up ahead of an April 9 vote after the two most influential proxy advisory firms disagreed on the candidates shareholders should back in the election of Agrium's board of directors. Institutional Shareholder Services recommends clients back two of the five nominees proposed by dissident investor Jana Partners, putting it at odds with a Glass Lewis endorsement of all 12 of Agrium's board nominees. ISS endorses Jana nominees Barry Rosenstein and David Bullock. AGF profit drops in 1st quarter, but outlook bright The fund manager AGF Management said its profit dipped in the first quarter compared with a year earlier, but improvement is expected as investors return to equities and the U.S. economy climbs out of the doldrums. Net income from continuing operations fell 9.8 percent to C$15.6 million in the first quarter, from C$17.3 million a year earlier. Assets under management slumped 17.9 percent to C$39.3 billion in the quarter. But earnings per share were higher than expected at 17 Canadian cents. Analysts' forecast was 14 Canadian cents a share. Click on the chart for full-size image
Niko in talks to sell non-core assets for $157 mln, shares jump The oil and natural gas producer Niko Resources said it was in advanced talks to sell some non-core assets for $157 million, nearly three weeks after receiving "significant" offers for them. The company, known for its operations in India, said it is working towards signing definitive agreements with two separate buyers by April 30. "Niko's balance sheet is under some pressure. They need to complete these asset sales and it looks they are making good progress toward that," said Nathan Piper of RBC Capital Markets.
Q2 Q4 Q3
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.