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Reports US

US stock market, economy and companies update (December 19, 2013)

December 18, 2013, Wednesday, 18:47 GMT | 13:47 EST | 23:17 IST | 01:47 SGT
Contributed by Trade The News

- A positive German IFO survey data and good UK jobs numbers helped European indices rally ahead of the US session. US indices are making more modest gains with all attention on the FOMC meeting, with a decision out later this afternoon. As of writing, the DJIA is up 0.24%, the S&P500 is up 0.20% and the Nasdaq is down 0.17%.

- Today is Fed day and analysts are split on whether the FOMC will taper or not. Very roughly speaking, 33% of the Street expect a taper announcement of some kind today, 33% expect a January taper and 33% expect a March taper (there is no meeting in February). Note that beyond tapering, the Fed could possibly make changes to its forward guidance, either a lower threshold for inflation or a lower unemployment rate threshold, or could also cut the interest paid on excess reserves.

- Complementing yesterday's strong NAHB survey, today's November housing starts and building permits report beat expectations. The starts component jumped 202K units to 1.09M, compared to the 889K October figure that was also released this morning (delayed due to shutdown), for the highest monthly print since early 2008. Note that multi-family unit starts soared from 281K in Oct to 354K in Nov, indicating strength in rental demand.

- More corporate guidance for 2014 has dropped this morning. Pharmacy chain CVS is up around 3% after offering an inline 2014 forecast, plus a higher dividend and more stock buybacks. Lennox International is up 3% but off its highs on positive 2014 guidance. Ford is down more than 6% after warning that 2014 pre-tax profits would fall to $7-8B from $8.5B in 2013. Autoparts manufacturer Johnson Controls is down 2% despite solid initial 2014 guidance, following Ford lower.

- Electronics manufacturer Jabil Circuit is down more than 21% as of writing, after the company's troubling first quarter report. Jabil warned that its Q2 results would be well below consensus and also said it would sell its aftermarket services business for $725M, although it was unclear if the weak guidance was due to this divestiture or not.

- On the M&A front, Valassis Communications agreed to be acquired by Ron Perelman's Harland Clarke Holdings Corp for $34.04/shr in cash, a 20% premium to the prior closing price, in a total deal valued around $1.84B.

***Looking Ahead***
- 11:30 (US) Treasury to sell $35B in 5-Year Notes
- 14:00 (US) FOMC Interest Rate Decision
- 14:00 (US) Fed releases Summary of Economic Projections
- 14:30 (US) Fed Chairman Bernanke post rate decision press conference in Washington
- 16:45 (NZ) New Zealand Q3 GDP Q/Q: 1.1%e v 0.2% prior; Y/Y: 3.4%e v 2.5% prior

***Economic Data***
- (IL) Israel Q3 Current Account Balance: -$0.4B v $1.5B prior
- (UK) Dec CBI Industrial Reported Sales: +34 v +10e
- (PT) Portugal Nov PPI M/M: -0.3 v -0.4% prior; Y/Y: -0.9 v -1.2% prior
- (US) MBA Mortgage Applications w/e Dec 13th: -5.5% v +1.0% prior
- (BR) Brazil Nov Current Account Balance: -$5.2B v -$4.7Be; FDI: $8.0B v $5.0Be
- (PL) Poland Nov Sold Industrial Output M/M: -6.2% v -7.2%e; Y/Y: 2.9% v 1.7%e
- (PL) Poland Nov PPI M/M: -0.3% v -0.1%e; Y/Y: -1.5% v -1.1%e
- (BR) Brazil Dec CNI Industrial Confidence: 54.3 v 54.5 prior
- (US) Nov Housing Starts: 1.091M v 954Ke; Building Permits: 1.007M v 990Ke
- (CA) Canada Oct Wholesale Trade Sales M/M: 1.4% v 0.3%e
- (MX) Mexico Q3 Aggregate Supply & Demand: 1.5% v 2.0%e
- (BE) Belgium Dec Consumer Confidence Index: -5 v -6 prior
- (BE) Belgium Oct Trade Balance: +€197.4M v -€31M prior
- (US) DOE Crude: -2.94M v -2.5Me; Gasoline: +1.34M v +2Me; Distillates: -2.11M v +0.5Me