Market Snapshot
Asia: Japan flat at 19909. Hong Kong -1.6% to 27561. China +0.3% to 4136. India closed.
Europe: London +0.1%. Paris -0.4%. Frankfurt -0.4%.
Futures: Dow -0.2%. S&P -0.2%. Nasdaq -0.3%. Crude +1% to $52.45. Gold -0.8% to $1189.30.
Ten-year Treasury Yield -1 bps to 1.94%
Economic News
8:30 Retail Sales
8:30 Producer Price Index
8:55 Redbook Chain Store Sales
10:00 NFIB Small Business Index
10:00 Business Inventories
Key earnings before the open
FAST, JNJ, JPM, SJR, WFC
Key earnings after the close
CSX, INTC, LLTC
Markets
March’s retail sales data and major bank earnings are due to set the tone for markets this morning, as traders keep a close watch on the early morning reports. After February’s decline of 0.6%, economists are looking for a rebound in store sales, which is expected to have gained 1.1% last month, driven by strong auto sales and higher discretionary spending. JPMorgan (JPM) and Wells Fargo (WFC) are also scheduled to report this morning, while eyes will be on Johnson & Johnson (JNJ) for what the healthcare giant might say about the dollar’s impact on foreign sales.
The U.S. ended the month of March with a budget deficit of $53B, up 43% from the same period last year, bringing the current fiscal YTD deficit to $439B at the end of last month. Meanwhile, Fitch has affirmed the U.S.’s long-term default ratings at “AAA,” citing the country’s “unparalleled” financing flexibility as the issuer of the world’s pre-eminent reserve currency and benchmark fixed-income asset. Fitch also expects the U.S. to grow 3% in 2015, before decelerating slightly in 2016.
Greece is reported to be preparing to take the dramatic step of declaring a debt default unless it can reach a deal with its international creditors by the end of April. “We have come to the end of the road…If the Europeans won’t release bailout cash, there is no alternative [to a default],” one government official said. Athens has also decided to withhold €2.5B of payments due to the IMF in May and June if an agreement is not struck.
Stocks
Shares of Best Buy (BBY) could be active today after the electronics retailer late Monday said its chairman, Hatim Tyabji, will retire on June 9 after just three years in the job.
CSX Corp. (CSX) is expected to report first-quarter earnings of 44 cents a share after the market closes. CSX shares started falling in sympathy after-hours Monday, after Norfolk Southern (NSC) warned on profit due to lighter-than-expected coal shipments.
Cyberattacks and cybercrime against large companies rose 40% globally in 2014, according to Symantec’s annual Internet Security Threat study published Tuesday. Attacks on small- and medium-sized companies, which accounted for 60% of targeted attacks, increased 26% and 30%, respectively. Despite the large hacks at Home Depot (HD), JPMorgan (JPM), Staples (SPLS) and Sony (SNE), Symantec says the mining industry, which includes oil & gas, was the most-targeted sector last year.
eBay (EBAY) has announced the appointment of three new executives as part of a leadership shakeup prior to the planned split of its PayPal unit in the second half of 2015. Home Depot (HD) executive Hal Lawton will join the company as head of eBay North America, Agilent’s (A) Marie Oh Huber has been named eBay General Counsel, while Scott Cutler, most recently the head of global listings at the NYSE, has been named president of StubHub.
Looking to grab a bigger chunk of the burgeoning healthcare analytics market, IBM (IBM) is buying Phytel, a provider of cloud-based patient software, and Explorys, a provider of a massive clinical database. Both companies are being added to a new Watson Health unit based out of Boston. As part of the effort, Big Blue will also launch the Watson Health Cloud, which will partner with Apple (AAPL) to provide data analytics to the healthcare sector. IBM will also team with Medtronic (MDT) and Johnson & Johnson (JNJ) to create health systems and solutions.
Nokia (NOK) has confirmed it is in advanced talks to buy Alcatel-Lucent (ALU), although it wasn’t clear if the parties agreed on a valuation. In a joint statement, the companies said a potential merger would take the form of a public exchange offer by Nokia for the French company. Alcatel-Lucent’s market capitalization currently stands at approximately €11B, while Nokia’s is about €28B.
Staples (SPLS) CEO Ron Sargent’s total compensation grew 15% to $12.4M last year after the office supply retailer’s profitability improved despite sagging sales. Shares ended last year 14% higher, helped out by activist Starboard Value’s 6% stake in the company and talk of a potential merger with Office Depot (ODP) in December. Staples’ executive compensation program has still come under fire from some proxy advisory firms, which say that changes layered new payments atop an existing compensation plan that paid executives less.
Petrobras (PBR) expects to release its long-delayed audited financial results for 2014 as early as next Wednesday, in the wake of a corruption scandal that has extended to the highest levels of Brazil’s government. The results, which have been delayed for more than five months, will help the state-controlled oil company avert a default on as much as $54B in bonds. PBR shares have plunged more than 50% since the scandal gained traction in early October.
Procter & Gamble (PG) CEO A.G. Lafley appears to be laying the groundwork to step down as soon as this summer. Reports suggest the company is setting up for an internal replacement, who’s widely expected to be 35-year veteran David Taylor.
Ending a self-imposed three-year freeze on new investments, Toyota (TM) will spend $1B to build a new car factory in Mexico and plans to announce the investment on Wednesday. The 200K-cars-a-year factory – Toyota’s first to build passenger cars in Mexico – is expected to create about 2,400 direct jobs.
United Launch Alliance, a joint venture of Lockheed Martin (LMT) and Boeing (BA), has unveiled a reusable rocket named “Vulcan” that is slated to take off in 2019 and end U.S. dependence on Russian-built rocket engines. Russian-made RD-180 engines currently power ULA’s Atlas rocket, but Congress has banned further imports as part of trade sanctions enacted after Russia invaded Ukraine last year. Vulcan’s reusable engines are likely to slash satellite-launch costs and provide a stepping-stone to various commercial space ventures.