US stock market, economy and companies update (January 21, 2014)
January 21, 2014, Tuesday, 16:46 GMT | 12:46 EST | 22:16 IST | 00:46 SGT
- US equity markets struggled and then failed to maintain very modest gains in early cash trading this morning. As of writing, the three leading indices have all dipped into the red, led lower by a sudden and perplexing decline in the DJIA after 11:00ET. As of writing, the DJIA is down 0.68%, the S&P500 is down 0.20% and the Nasdaq is flat.
- The ECB failed to fully sterilize its bond purchases under the SMP program this morning for first time ever in a non-holiday market. In the week of January 16th, the ECB said it saw excess liquidity at €131B, the lowest level since Dec 2011. Some analysts note that this could increase the likelihood that future SMP operations could fail. EUR/USD has been pretty sluggish, pivoting around 1.3550.
- The Turkish Central bank resisted heavy market pressure to defend a tumbling lira and fight inflation in fear of dampening economic growth ahead of elections this year. The Lira hit fresh record lows against both USD and EUR following the unchanged rate decision. Commodity currencies failed to gain any support from China's injection of liquidity, and the USD/CAD is at five-year highs above 1.10 level.
- In its biannual WEO report, the IMF said the global economic recovery is strengthening as countries move away from austerity budgets and financial systems heal. The IMF increased its estimate for world growth this year slightly to 3.7% from 3.6% prior, compared to the 3.0% rate seen in 2013, although it also warned that the global growth rebound remains "weak and uneven." It boosted both China and US GDP forecasts slightly.
- Shares in Dow Chemical are up +5% or so after gaining nearly 7% in premarket action after activist investor Dan Loeb's Third Point Management disclosed a $1.3 billion (approximately 2.5%) stake in the company. Third Point is calling for Dow to spin off its petrochemicals business and pushing for a significant share buyback.
- DJIA components Johnson & Johnson, Travelers and Verizon are down 1.5-2.0% each this morning. Travelers topped expectations and more than tripled its Q4 profit y/y, while catastrophe costs were way down. J&J's profits were up by a very healthy 19% y/y in its Q4, beating expectations, although its initial FY14 outlook was a bit shy of estimates. Verizon more narrowly beat expectations, but like its peers earnings and revenue were way up y/y. Verizon's net adds were less than half the year-ago figure, but operating and service margins were up significantly.
- Delta reported decent Q4 results, with earnings and revenue up a bit more than expected on solid y/y growth. Across the industry airlines have seen a few quarters of adding ASMs, but Delta's results show that restraint has prevailed and profitability has been preserved. DAL is up nearly 4%, with the other major airlines up 1-2% a piece.
- 11:30 (US) Treasury to sell $54B in in 3-Month and 6-Month Bills
- 13:00 (BR) Brazil Dec Total Formal Job Creation: -473Ke v 47.5K prior
- 19:30 (AU) Australia Q4 CPI Q/Q: 0.5%e v 1.2% prior; Y/Y: 2.4%e v 2.2% prior
- (JP) BOJ Interest Rate Decision on Wed: Expected to maintain current policy
- After the Shanghai Composite fell to five-month lows on Monday and one-week repo rates topped 6.5%, the PBoC injected funds via OMOs for the first time in 2014
- WEO boosts world growth forecast slightly
- Hilsenrath forecasts FOMC will taper by $10B again at its meeting next week
- (UK) Jan CBI Industrial Trends Total Orders: -2 v +10e; Selling Prices: 20 v 12e; Business Optimism: 21 v 25e
- (TR) Turkey Central Bank (TCMB) left all three key rates unchanged; as expected
- (HU) Hungary Central Bank Rate (NBH) cut Base rate by 15bps to 2.85%; more than expected
- (PL) Poland Dec Sold Industrial Output M/M: -9.7% v -6.3%e; Y/Y: 6.6% v 10.4%e
- (PL) Poland Dec PPI M/M: 0.0% v -0.2%e; Y/Y: -0.9% v -1.1%e
- (CA) Canada Nov Wholesale Trade Sales M/M: 0.0% v 0.3%e; Manufacturing Sales M/M: 1.0% v 0.3%e