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US stock market, economy and companies update (March 20, 2013)

Contributed by Trade The News

- In Europe, rumors and hopes of a Cyprus rescue package sent equities higher overnight and helped reverse the risk-off trades of the last two days. In the UK however, the FTSE100 is in the red after Chancellor Osborne's budget offered yet another round of austerity. US markets are following European equities higher, with the DJIA up 0.50%, the S&P500 up 0.61% and the Nasdaq up 0.58%. The FOMC meets today and will provide updated forecasts.

- Despite the market optimism, the situation in Cyprus remains highly volatile. The consensus view is that Europe needs to find a way to restore confidence in Cyprus by this weekend or the banking system and economy could collapse. Plan A has been voted down and Plans B and C (whatever they were) have been dismissed. Meanwhile, the ECB is balking at using the ELA for a bank recap, claiming that Cyprus's banking system is functionally insolvent. The Cyprus finance minister is in Moscow negotiating with the Russians, who have reportedly shown interest in granting a loan in exchange for natural gas assets and/or a naval base, but this route is problematic as well, also for diplomatic reasons. After dropping below 1.2900 and the 200-day moving average during yesterday's session, EUR/USD has retaken 1.2950 overnight on vain hopes a solution was near.

- Sterling initially weakened as UK Chancellor Osborne presented the 2013 budget to parliament. GBP/USD dipped below 1.5075 after Osborne said the new budget would go further on monetary activism and fiscal reform. Translation: more austerity. Sterling recovered after he presented the updated BoE remit that confirmed its 2% CPI target.

- Shares of Fedex are down more than 5% in the early going today after the firm missed Q3 earnings expectations and cut its FY13 guidance. Executives blamed the poor showing on customers shifting from air express to slower but less expensive modes of international shipping. Excess capacity overseas pressured margins.

- Lennar crushed both top- and bottom-line expectations in its first quarter thanks to very strong improvements in its business. The firm disclosed very healthy metrics, including a 13% gain in average sale prices. Shares of LEN are only up 1.5% or so.

- Shares of Adobe rose as much as 5% on a relatively strong Q1 report, although it is giving up gains in mid morning trade. The firm topped expectations and tweaked its full-year view slightly higher.

***Looking Ahead***
- 11:00 (EU) Euro Zone Mar Advanced Consumer Confidence: -23.2e v -23.6 prior
- 11:30 (BR) Brazil Central Bank weekly Currency Flows
- 12:00 (CA) Canada to sell 2 Year Notes
- 14:00 (US) FOMC Interest Rate Decision: expected to leave Interest Rates unchanged at 0.25%
- 12:30 (IE) Ireland PM Kenny
- 14:00 (US) Fed releases Summary of Economic Projections
- 14:00 (BR) Brazil Feb CAGED Formal Job Creation: 95.0Ke v +28.9K prior
- 14:30 (US) Fed Chairman Bernanke holds post rate decision press conference in DC
- 19:50 (JP) Japan Feb Total Merchandise Trade Balance: -¥855.9Be v -¥1.629T prior
- 21:45 (CN) China Mar HSBC Flash Manufacturing PMI: 50.8e v 50.4 prior


***Economic Data***
- (ZA) South Africa Central Bank (SARB) left interest Rates unchanged at 5.00%, as expected
- (US) MBA Mortgage Applications w/e Mar 15th: -7.1% v -4.7% prior
- (RU) Russia Feb Real Retail Sales M/M: -1.8% v -1.0%e; Y/Y: 2.5% v 3.3%e
- (RU) Russia Feb Unemployment Rate: 5.8% v 5.9%e
- (CA) Canada Feb Teranet/National Bank HPI M/M: -0.2% v -0.3% prior; Y/Y: 2.7% v 2.7% prior; House Price Index: 152.7 v 153.0 prior
- (US) Weekly DOE Inventories: Crude: -1.31 v +1Me; Gasoline: -1.48M v -2Me; Distillate: 670K v -1.5Me; Utilization: 83.5% v 81.1%e
- (DE) Germany sold €3.358B in 1.5% 2023 Bunds; Avg Yield 1.36% (lowest since July) v 1.66% prior; Bid-to-cover: 1.63x v 1.25x prior