US stock market, economy and companies update (January 09, 2014)
January 9, 2014, Thursday, 16:49 GMT | 12:49 EST | 22:19 IST | 00:49 SGT
- US equities gained ground in the premarket after incoming Fed Chair Yellen gave her first big interview after her confirmation, saying she was "hopeful" 2014 US economic growth would accelerate to 3% or more. This positive tone has not lasted into cash trading, as terrible performance in the retail sector weighs broadly on indices, with the DJIA down 0.41%, the S&P500 down 0.25% and the Nasdaq down 0.50%.
- Both the BOE and the ECB left interest rates unchanged in policy decisions this morning. In his post-rate decision press conference, Draghi shared even more dovish rhetoric in his continuing quest to force down money market rates and prevent more deterioration in the inflation outlook. EUR/USD moved lower as the press conference wore on but downside momentum was limited with no material changes in policy on tap. All in all, dealers seemed a bit perplexed that the euro did not sell off more. The BOE did not issue a statement after its decision today, although earlier there had been some speculation that Carney would amend forward guidance by changing the unemployment benchmark to 6.5% from 7.0%
- The two-year spreads between the US and Germany are now over 20bps. The last time the spread was at that level the EUR/USD was in the mid 1.33 handle. Dealers believe that if Friday's December US non-farm payrolls come in above 200K, EUR/USD could see more downside momentum thanks to the increasing divergence between the US and Europe.
- The US retail sector is bleeding this morning after firms reported dismal December comp store sales and slashed guidance, helped along by a couple of weak quarterly reports. Most comp sales reports missed expectations and sank into negative territory, with executives widely citing intense competition for sales, unenthusiastic consumers and tough comparisons to a year ago.
- American Eagle Outfitters cut its fourth quarter guidance to the lower end of its prior range and disclosed that its comps in the quarter sank 7%. Executives warned traffic and sales through Christmas week were on the low end of expectations and the retail environment was highly promotional, echoing a common refrain in the retail sector. Contrary to many other retail names today, AEO is up 2%. Note that shares of close competitor Aeropostale are up more than 7% on reports out of RBC Capital that the company will not be attending a conference next week, raising all sorts of speculation.
- Bed, Bath and Beyond missed top- and bottom-line expectations in its third quarter report, and also cut its FY13 outlook, as Q3 comps dropped sharply on a sequential basis. The firm's fourth quarter guidance was quite weak, and analysts have piled on this morning. BBBY is down more than 12%.
- Discount shop Family Dollar is missed first quarter earnings expectations by a bit on a 2.8% decline in comp sales. The firm's second quarter guidance was dismal. Executives warned comps for December decreased about 3% thanks to lapping very strong comps from a year ago. Executives also cited a challenged consumer and an intensified promotional environment. FDO is down 6.7%.
- Macy's is one of the few retail winners. Shares are up 7.7% after the firm reaffirmed its FY13 outlook, although the company's initial FY14 EPS guidance fell short of expectations. The firm's holiday season comps were up 4.3%, versus last year's 3.6%. Macy's launched a new cost-cutting initiative, including a 1.4% reduction of the overall workforce, a corporate restructuring and store closings.
- Shares of YRC Worldwide are down 19% after the Teamsters Union indicated that an ongoing vote on a proposed contract extension may be defeated. The Teamsters said the final results of the count would be released later today.
- BoE and ECB leave rates unchanged, ultra-dovish Draghi weakens the EUR
- US jobless claims right in line
- Chinese December inflation data hit 7-month lows
- 13:00 (US) Treasury to sell $13B in 30-Year Bonds Reopening
- 13:30 (US) Fed's George
- 18:00 (PE) Peru Central Bank Interest Rate Decision: Expected to leave Reference Rate unchanged at 4.00%
- 19:01 (UK) Dec BRC Sales Like-For-Like Y/Y: No est v 0.6% prior
- 20:00 (US) Fed's Kocherlakota
- 21:00 (CN) China Dec Trade Balance: $32.2Be v $33.8B prior; Exports Y/Y: 5.0%e v 12.7% prior; Imports Y/Y: 5.0%e v 5.3% prior
- (RU) Russia Dec Final CPI M/M: 0.5% v 0.5% prelim; Y/Y: 6.5% v 6.5% prelim; CPI YTD: 6.5% v 6.5% prelim
- (RU) Russia Dec Core CPI M/M: 0.4% v 0.5%e; Y/Y: % v 5.7%e
- (DE) Germany Nov Industrial Production M/M: 1.9%% v 1.5%e; Y/Y: 3.5% v 3.0%e
- (ZA) South Africa Nov Manufacturing Production M/M: 0.3% v 6.9% prior; Y/Y: 0.3% v 0.3%e
- (RU) Russia Gold and Forex Reserve w/e Jan 3rd: $511.6B v $508.5B prior
- (PT) Portugal Nov Trade Balance: -€0.6B v -€1.1B prior
- (UK) Bank of England Bank (BOE) left both Interest Rate and Asset Purchase Target (APT) unchanged at 0.50% and £375B respectively; as expected
- (US) Jan RBC Consumer Outlook Index: 51.5 v 49.7 prior
- (US) Dec Challenger Job Cuts: 30.6K v 49.7K prior; Y/Y: -5.9% v -20.6% prior
- (EU) ECB left its key rates unchanged (as expected). Main Refi Rate unchanged at 0.25%; Deposit Facility Rate unchanged at 0.00%; Marginal Lending Facility unchanged at 0.75%
- (CA) Canada Dec Housing States: 189.7K v 190.0Ke
- (US) Initial Jobless Claims: 330K v 335Ke; Continuing Claims: 2.865M v 2.85Me
- (CA) Canada Nov Building Permits M/M: -6.7% v -2.7%e
- (CA) Canada Nov New Housing Price Index M/M: 0.0% v 0.1%e; Y/Y: 1.4% v 1.5% prior
- (MX) Mexico Dec CPI M/M: 0.6% v 0.5%e; Y/Y: 4.0% v 3.9%e; CPI Core M/M: 0.3% v 0.3%e