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Reports US

US stock market, economy and companies update (July 12, 2013)

July 12, 2013, Friday, 16:51 GMT | 11:51 EST | 20:21 IST | 22:51 SGT
Contributed by Trade The News

- Trading in US equity markets has been choppy this morning as investors digest JPMorgan earnings, the political flare-up in the euro zone and a miss in the University of Michigan confidence data. Note that anticipation of a miss in the Chinese Q2 GDP reading is providing a baseline of risk aversion this morning. As of writing, the DJIA is up 0.23%, the S&P500 is flat and the Nasdaq is up +0.30%.

- The preliminary July U of Michigan confidence survey was a little lower than expected as a three-month low in the expectations component offset the very strong current conditions component. This is the first miss of expectations since December 2012.

- Portugal's government crisis is back in focus this morning. Recall that last week, Portuguese Finance Minister Vitor Gaspar stepped down on collapsing support for his austerity measures and was replaced with Maria Luis Albuquerque, prompting the CDS party coalition member to threaten to pull its support for the government. Negotiations brokered by President Cavaco Silva have continued this week, and though the parties to the talks have repeatedly said a new coalition arrangement is in sight, the Troika delayed its eighth review of Portugal's bailout progress until late August. Yields on 10-year Portugal government debt pushed out to 7.75% this morning, just shy of the recent high of 8% but well below the crisis high of 11%.

- EUR/USD has gapped lower overnight, testing as low as 1.3000 at one point, but has moved higher in the wake of the confidence data. Note that the softness anticipated in the Chinese GDP data next week has pummeled the Aussie, sending AUD/USD to 90 for the first time since mid 2010.

- Gold has leveled out around $1,280 this morning after four days of gains. The yellow metal is on track for its biggest weekly gain in nearly two years as the prospect of an early end to QE monetary stimulus has boosted its appeal as a hedge against inflation.

- JPMorgan and Wells Fargo gave markets their first look at the financial sector's performance in Q2 and the picture was pretty solid. Both firms met expectations, with solid y/y growth in Wells' mortgage originations and JPM's investment banking revenues. At JPM, there was a lot of discussion of the new leverage ratio requirements: on the call, CEO Lake said the bank holding company's leverage ratio was 4.7% and that it would meet the new 5% requirement by early 2015 without a big impact. Shares of WFC are up 2% and JPM is up 0.5%.

- UPS warned that its Q2 earnings would miss consensus expectations thanks to overcapacity in the global air freight market, increasing customer preference for lower-yielding shipping solutions and a slowing US industrial economy. The firm also trimmed its FY13 outlook. UPS is down 6%, while FDX is moving back up after declining 2% on the news.

- Refining names are gaining this morning as Valero bounces back from not especially positive interim update yesterday afternoon. Shares of VLO had fallen up to 4% in post-market trading after the firm warned that higher crude prices in Q2 would impair its refining margins. Buyers looking for a deal stepped right in on the open and have bought VLO and the other refiners, and VLO is up more than 3% in the early going.

***Looking Ahead***
- (US) Fed's Plosser and Bullard speak in Jackson Hole, Wyoming
- (CO) Colombia Monetary Policy Minutes
- 11:00 (US) Fed to purchase $1.25-1.75B in Bonds
- 15:00 (AR) Argentina Jun Consumer Price Index M/M: 0.7%e v 0.7% prior; Y/Y: 10.3%e v 10.3% prior
- 15:00 (AR) Argentina Jun Wholesale Price Index M/M: No est v 1.2% prior; Y/Y: No est v 13.1% prior
- 17:15 (US) Fed's Williams presents a Monetary Policy Paper in Vancouver

***Economic Data***
- (IE) Ireland May Trade Balance (First Estimate): €3.1B v €3.3B prior
- (BR) Brazil May Economic Activity Index M/M: -1.4% v -1.2%e; Y/Y: 2.3% v 2.8%e
- (IN) India Forex Reserves w/e July 5th: $280.2B v $284.6B prior
- (IN) India May Industrial Production Y/Y: -1.6% v +1.4%e
- (IN) India Jun CPI Y/Y: 9.9% v 9.3%e
- (PL) Poland May Current Account: +€574M v -€157Me; Trade Balance: €113M v €62Me; Exports: €12.4B v €12.8Be; Imports: €12.3B v €12.7Be
- (IS) Iceland Jun Unemployment Rate: 3.9% v 4.3% prior
- (PL) Poland Jun M3 Money Supply M/M: 0.6% v 0.2%e
- (US) Jun Producer Price Index M/M: 0.8% v 0.5%e; Y/Y: 2.5% v 2.1%e
- (US) Jun PPI Ex Food & Energy M/M: 0.2% v 0.1%e; Y/Y: 1.7% v 1.6%e
- (MX) Mexico May Industrial Production M/M: 1.4% v 0.9%; Y/Y: 0.5% v 0.6%e ; Manufacturing Production Y/Y: 2.2% v 5.6% prior
- (CA) Canada Jun Teranet/National Bank HPI M/M: 1.0% v 1.1% prior; Y/Y: 1.8% v 2.0% prior; House Price Index: 157.00 v 155.39 prior
- (US) July Preliminary University of Michigan Confidence: 83.9 v 84.7e
- (MX) Mexico Central Bank (Banxico) leaves Overnight Rate unchanged at 4.00%