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US stock market, economy and companies update (June 15, 2012)

Contributed by Trade The News

- US equity markets are floating upwards this morning along with most European indices following the BoE's easing announcement last night and associated talk of coordinated G20 action if Greek elections go badly on Sunday. But behind the modest gains in equities are three very cautious US economic data reports. The preliminary University of Michigan consumer sentiment index missed expectations and fell lower on a m/m basis (recall that the May reading was the highest reading since 2007), as fears of the slowdown begin showing up in the data. This comes after Wednesday's weak retail sales report. The June Empire Manufacturing index tumbled sharply from the decent May reading, nearly reaching the flatline, while the overall May Industrial production report was in the red again. Front-month WTI crude is pretty much flat following yesterday's tepid OPEC decision, with the vague commitment to rein overproduction even as they maintain the ceiling unchanged at 30M bpd.

- Microsoft scheduled a "surprise" event for next Monday, where it promised a "major" announcement. Tech blogs, citing sources, said that the company is expected to unveil its own tablet computer offering. The tablet-centric Windows 8 operating system will be launched this fall, but this effort is said to be a device designed, built and sold all by Microsoft, which would represent a big departure from the firm's traditional approach. Note that this morning Fitch warned that Nokia is running out of time, given the problems highlighted in its profit warning yesterday, and multiple analysts downgraded the name. Nokia is Microsoft's key partner in the smartphone and mobile device space. Shares of MSFT are up 2%, while US ADRs of NOK are up a bit after yesterday's big slide.

- Shares of AAR Corp are down 5% or so this morning after offering a very soft initial look at the company's FY13 guidance, plus an unimpressive preliminary forecast for its Q4. The firm said that while sales growth in its corporate sector were alright, government and defense sales would fall on a y/y basis and remain flat into the next FY. There were reports overnight that American Airlines was looking to remain an independent company as it emerges from bankruptcy and fend off any acquisitions. In late May there were reports that TPG Capital and US Airways were mulling a joint bid for the company. Shares of LCC are down 4% or so this morning on the news. Shares of Navistar are up nearly 8% after Icahn rival MHR, founded by Mark Rachesky, disclosed a 13.6% stake in the firm, making it the largest individual holder. Icahn's stake in Navistar is 11.9%.

- EUR/USD failed to sustain gains above the pivotal 1.2630 level during the NY morning ahead of the Sunday election in Greece. Risk appetite maintained a cautious tone. Fitch trimmed its 2012 and 2013 global GDP growth forecasts to 2.2% and 2.8% respectively. Italy PM Monti confirmed that its govt has approved a robust package of economic growth measures with various planned asset sales

***Looking Ahead***
- (MX) G20 Summit of Finance Ministers
- (PE) Peru Central Bank Quarterly Inflation Report
- (PE) Peru Apr Economic Activity Index Y/Y: No est v 5.6% prior
- (PE) Peru May Unemployment Rate: No est v 8.1% prior
- 11:00 (US) Fed to purchase $1.00-1.50B in Notes
- 11:00 EU President Van Rompuy to host conference call with European leaders a head of the summit
- 15:00 (AR) Argentina Apr Economic Activity Index M/M: No est v 0.5% prior; Y/Y: No est v 4.0% prior
- 15:00 (AR) Argentina Q1 GDP 4.8%e v 7.3% prior

***Weekend***
- (MX) Pre G-20 Meeting in Los Cabos, Baja California
- (EG) Egypt Presidential Election Runoff
- (FR) France holds second round of Legislative Election
- (GR) Greece holds new elections

***Economic Data***
- (BR) Brazil Jun FGV Inflation IGP-10 M/M: 0.7% v 0.8%e
- (IS) Israel May Consumer Prices M/M: 0.0% v 0.3%e; Y/Y: 1.6% v 2.0%e
- (IN) India Forex Reserves w/e Jun 9th: $287.4B v $285.9B prior
- (BR) Brazil Apr Economic Activity Index M/M: 0.2% v 0.2%e; Y/Y: 0.0% v 0.1%e
- (BE) Belgium May YTD Budget Balance: -€7.2B v -€5.5B prior
- (PL) Poland Apr Current Account: -€573M v -€920Me; Trade Balance: -€419M v -€730Me; Exports: €11.6B v €12.0Be; Imports: €12.0B v €12.7Be
- (CA) Canada Apr Manufacturing Sales M/M:-0.8% v +0.2%e
- (US) June Empire Manufacturing: 2.29 v 13.00e
- (US) Apr Total Net TIC Flows: -$20.5B v -$48.6B prior; Net Long-term TIC Flows: $25.6B v $45.0Be
- (PL) Poland May YTD Budget Level (PLN): 27.0B v -24.8B prior; Budget Performance YTD: 77.2% v 70.9% prior
- (BE) Belgium Apr Trade Balance: -€45.7M v +€149.1M prior
- (US) May Industrial Production: -0.1% v +0.1%e; Capacity Utilization: 79.0% v 79.2%e; Manufacturing Production: -0.4% v -0.1%e
- (US) Jun Preliminary University of Michigan Confidence: 74.1 v 77.5e