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Reports US

US stock market, economy and companies update (April 28, 2014)

April 28, 2014, Monday, 16:01 GMT | 11:01 EST | 19:31 IST | 22:01 SGT
Contributed by Trade The News

- Markets remain in positive territory this morning and trading volumes are back to normal, however sentiment is mixed with the fresh Ukraine sanctions and the Bank of America brouhaha offsetting the deal news and good US economic data. Tech names continue to get hammered, with NFLX and AMZN both down about 4% this morning, with funds partially flowing into AAPL which is up 4%. Note that the DJIA is just more than 100 points off of all-time highs. As of writing, the DJIA is up 0.57%, the S&P500 is up 0.54% and the Nasdaq is flat.

- The pending home sales data saw its first positive m/m reading in nine months in March, widely beating expectations. Data out last week showed that existing home sales fell to their lowest levels in more than 1.5 years, but today's report suggests the downward trend has probably run its course. Separately, the April Dallas Fed manufacturing survey widely beat expectations and rose to its best level in six months thanks to a very strong new orders component.

- The US has imposed new sanctions on Russia for its actions in Ukraine. Seven individuals and 17 Russia companies that have links to President Putin have been sanctioned, and the EU is expected to announce expanded sanctions as well. The US promised more sanctions if Russian intervention continues. Note that the CEO of Rosneft was among the sanctioned individuals. The Russian government responded saying new sanctions would not go unanswered.

- EUR/USD tested above the 1.3870 area overnight for two-week highs. Some dealers suggested that Russia might be behind the buying of euros following threats from a government proposal to reduce USD-denominated assets. Eonia is above the ECB penalty rate. ECB's Noyer came out with more verbal intervention about the inflation impact of a strong currency. GBP/USD hit a fresh four-year highs above 1.6843. Note that traders are focused on the preliminary April Eurozone CPI data due out Wednesday. If data fails to improve, the ECB faces overwhelming pressure to take more incremental monetary policy actions.

- Bank of America disclosed that it would have to reduce its capital ratios after discovering an incorrect adjustment in the treatment of structured notes assumed in its acquisition of Merrill Lynch in 2009. Due to the error, its CCAR submissions to the Fed would have to be redone and it would suspend its dividend increase and stock buyback for the time being. Shares of BAC fell as much as 5% in the early going but is only down 4% or so as of writing.

- There was more pharmaceutical industry deal activity this weekend, following the massive mergers and asset swaps announced last week. There were unconfirmed reports that Pfizer was trying to restart deal talks with AstraZeneca, prompting a release from the latter company. AstraZeneca confirmed that Pfizer offered £46.61/shr to acquire the company back in January, valuing it around $100 billion. Astra said Pfizer reiterated the offer last week, but the board again rejected the deal as it undervalued the company. Forest Laboratories said it would buy Furiex Pharmaceuticals for $1.5 billion to get access to its gastrointestinal disease treatments. Forest remains in a pending acquisition by Actavis PLC for $25 billion that is expected to close by the middle of 2014.

***Looking Ahead***
- 11:00 (US) Fed to purchase $1.75-2.25B in Notes
- 11:30 (US) Treasury to sell $48B in 3-Month and 6-Month Bills
- 13:30 (BR) Brazil Mar Total Federal Debt (BRL): No est v 2.067T prior
- 17:00 (CO) Colombia Feb Trade Balance: -$72.5Me v +$157.4M prior; Total Imports: $4.8Be v $4.8B prior
- (BR) Brazil Apr CNI Consumer Confidence: No est v 108.8 prior

***Economic Data***
- (IE) Ireland Mar Retail Sales Volume M/M: +1.7% v -1.2%e; Y/Y: 8.9% v 5.2% prior
- (BR) Brazil Mar Tax Collections (BRL): 86.6B v 87.0Be
- (IL) Israel Central Bank leaves Base Rate unchanged at 0.75%, as expected
- (MX) Mexico Mar Preliminary Trade Balance: $1.0B v $1.6Be
- (US) Mar Pending Home Sales M/M: +3.4% v +0.7%e; Y/Y: -7.4% v -10.2%e
- (US) Apr Dallas Fed Manufacturing Activity: 11.7 v 6.0e