Market Snapshot
Asia: Japan +0.7% to 19765. Hong Kong -0.6% to 27249. China -0.6% to 4377. India +1.4% to 27251.
Europe: London +0.6%. Paris +1.3%. Frankfurt +0.9%.
Futures: Dow +0.3%. S&P +0.3%. Nasdaq +0.3%. Crude +1% to $61.37. Gold +0.1% to $1193.70.
Ten-year Treasury Yield -3 bps to 2.23%
Economic News
8:30 Retail Sales
8:30 Import/Export Prices
10:00 Business Inventories
10:30 Petroleum Inventories
1:00 Results of $24B, 7-Year Note Auction
Key earnings before the open
ACAT, ARMK, CRME, DSX, ELOS, EZCH, IGT, M, MRKT, MTLS, PCP, RL, SHLX, ZAYO, ZBRA
Key earnings after the close
CSCO, CTRP, FENG, FPRX, JACK, JCP, MIDD, NTES, RNDY, SHAK, TGB, VIPS, VOXX, WX
Markets
U.S. stocks look poised to recover from the turmoil in the bond markets, with investors looking ahead to the retail sales report and whether it it’s going to weaken the case for a summer interest-rate hike. The monthly report on retail sales is due at 8:30 a.m. EST and is expected to show growth of 0.1% in April, down from 0.9% in March. Yesterday, fluctuations in the bond market sent stock markets lower in Europe and the U.S. However, bond markets appear to have calmed down on Wednesday, with yields moving in tight ranges early in the day.
For the first time since 2010, all four of the eurozone’s largest economies; Germany, France, Italy and Spain, recorded growth. And for the first time since Q1 of 2011, the currency area grew more rapidly than both the U.S. and U.K. The eurozone economy expanded by 0.4% at the start of the year, marking a pickup from the 0.3% growth recorded in the final quarter of 2014. Although Germany’s economy slowed more than forecast in Q1 due to sluggish foreign trade and domestic demand, France marched higher. German GDP rose 0.3% at the start of the year, missing forecasts for 0.5% growth, while France expanded +0.6%, its fastest pace in nearly two years due to higher consumer spending.
Senate Democrats dealt a blow to President Obama’s push for a pan-Pacific trade pact on Tuesday, blocking a bill that would give fast-track authority for the TPP. While the legislation will likely be sought after again, the latest vote will fan the flames of frustration among the U.S.’s negotiating partners. For months they have been waiting for Washington politics to play out so they can conclude what would be the biggest trade pact since NAFTA.
Oil extended gains overnight after posting its strongest daily rise in weeks in the previous session, supported by bets that U.S. crude stockpiles will fall for a second straight week as production slows. Yesterday, the EIA lowered its 2015 crude production growth estimate, while raising its forecast for U.S. oil demand. The report came after OPEC raised its 2015 forecast of global oil demand to 1.18M barrels per day.
China released a flurry of data today that broadly missed estimates, suggesting that more monetary easing may be needed to spur a pick-up in world’s second largest economy. Industrial output rose 5.9% in April from the year-ago period, accelerating from 5.6% in March, although it missed forecasts for 6% growth. Retail sales and fixed asset investment also missed estimates.
Stocks
After reporting earnings last week, AOL (AOL) CEO Tim Armstrong pointed out how programmatic ads were key to the company’s growth – and now they’re the key to its $4.4B acquisition by a video-focused Verizon (VZ). For Verizon, the timing and focus will be on an upcoming video service that is likely to center around shorter clips rather than long shows (in keeping with their stated target of mobile-viewing millennials) and would combine key assets in the OnCue service it bought from Intel (INTC) and the ad-insertion tech that AOL provides. AOL’s Platforms unit grew revenues 21% to $279.8M.
In the end, the price was just too high: Reuters reports that Cablevision (CVC) will drop its $1 bid for the New York Daily News when second-round bid deadlines arrive next week. A source said that after hundreds of hours of analysis, Cablevision couldn’t justify even the one dollar considering the paper’s poor financial condition. It’s reportedly losing $30M each year with a heavy dependence on newsstand sales.
The New York Times will begin publishing articles directly to Facebook’s (FB) platform today, kicking off one of the high-stakes partnerships that Facebook has been discussing with a variety of media firms. BuzzFeed, NBC News (CMCSA) and National Geographic are also said to be joining the launch.
Philippe Selendy, a lawyer for the FHFA, expects Nomura (NMR) and Royal Bank of Scotland’s (RBS) shoddy MBS conduct before the financial crisis to result in a judgment exceeding $805M. Despite the hefty amount, the two would likely receive the mortgage bonds in exchange, which are estimated to be worth $434M-$479M. A proposed judgment is expected to be filed in court Friday.
Toyota (TM) and Nissan (NSANY) have now added another 6.56M cars to their global recalls, bringing the total amount of Takata (TKTDY) infected vehicles called back since 2008 to 31M. Toyota will fix about 5M more cars, while Nissan will call back 1.56M.
The U.S. Justice Department will likely rip up its agreement not to prosecute UBS (UBS) for rigging benchmark interest rates, taking a new step to hold banks accountable for repeat offenses. The move by the DOJ would be a first for the industry, making good on a March threat that stated banks which have non-prosecution agreements over failures to police transactions for criminal activity could see those deals withdrawn.
Responding to shareholder pressure to improve transparency, Wal-Mart (WMT) said it will start directly disclosing to investors what it spends on lobbying on a state-by-state basis. The step would make Wal-Mart the first constituent of the Dow Jones to itemize state expenditures at that level of detail, drawing attention to spending that in some states reaches hundreds of thousands of dollars.