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Reports US

US stock market, economy and companies update (May 30, 2014)

May 30, 2014, Friday, 19:30 GMT | 14:30 EST | 23:00 IST | 01:30 SGT
Contributed by Trade The News

- Today is the final trading session in May although volumes remain pretty low even with month-end flows. The Chicago PMI data helped pull US equities out of negative territory in the first 30 minutes of cash trade, although that effect is wearing off. The yield on the 10-year UST is around yesterday's highs, approximately 2.470% as of writing. The DJIA is down 0.13%, the S&P500 is flat, right below fresh all-time highs, and the Nasdaq is down 0.04%.

- Many observers have commented on the steady deceleration in the VIX in the month of May. As of writing the S&P500 volatility index is approaching last Friday's low of 11.36, which was its lowest reading since March 2013. Note that a break below 11.00 would put the index right where it was at the beginning of 2007, a reading that many consider was one signal of the Minsky Moment that touched off the Great Recession.

- The May Chicago Fed PMI data was very good, hitting its highest level since last October, led by solid move higher in the new order component. However there were some less positive notes in the components. Inflation hawks look with caution upon the sizable acceleration in the prices paid component, to 66.8 from 55.2 prior, while employment actually decelerated. Note that the May ISM Milwaukee was also much stronger than expected.

- In yet another sign inflation is rising, the April PCE index rose to its highest annualized rate since late 2012. The personal consumption expenditure index rose 0.2% in April, as did the core rate that strips out food and energy. The annualized figure was +1.4%, its highest rate since last March.

- In a speech last night, hawkish Fed Governor Ester George said the FOMC should raise rates shortly after bond buying ends in response to improving economic conditions. She believes that maintaining low rates after the recovery is complete would set the stage for more excessive risk taking. George indicated she was open to the possibility of keeping balance sheet large. Today, Fed's Plosser said he was not worried about the poor Q1 GDP figures and believed an economic rebound is possible in Q2, with GDP potentially reaching +3%.

- Shares of Big Lots are up 12% and at one-year highs on a solid EPS beat and increased FY14 guidance. Revenue grew slightly on a y/y basis, confounding expectations for a slight decline. Note that the firm took a sizable charge to wind down its failed Canadian operations. Most of the other discount retail names are in the red.

***Looking Ahead***
- 12:00 (CO) Colombia Apr National Unemployment Rate: No est v 9.7% prior; Urban Unemployment Rate: 10.2%e v 10.5% prior
- 14:00 (US) Fed's Lacker speaks at Stanford
- 15:00 (AR) Argentina Apr Construction Activity M/M: No est v 2.0% prior; Y/Y: No est v -4.2% prior
- 15:30 (MX) Mexico Apr YTD Budget Balance (MXN): -80.2Be v -61.9B prior
- 17:00 (US) Fed's Williams and Plosser speak at Stanford
- (CO) Colombia Central Bank Interest Rate Decision: Expected to raise Overnight Lending Rate by 25bps to 3.75%

***Economic Data***
- (PT) Portugal Apr Industrial Production M/M: 5.4 v -3.2% prior; Y/Y: +4.1 v -0.5% prior
- (PT) Portugal Apr Retail Sales M/M: -1.0 v -2.3% prior; Y/Y: -0.2% v +0.9% prior
- (EU) ECB: 5 banks to repay total €1.8B in 3-Year LTRO Funds vs. €5.5Be
- (IN) India Forex Reserves w/e May 23rd: $312.7B v $315.0B prior
- (IN) India Q1 GDP Y/Y: 4.6% v 4.7%e; Preliminary GDP Annual Estimate: 4.7% v 4.7%e
- (BR) Brazil Q1 GDP Q/Q: 0.2% v 0.2%e; Y/Y: 1.9% v 2.0%e; GDP 4Qtrs Accumulated: 2.5% v 2.4%e
- (PL) Poland Central Bank (NBP) May Inflation Expectations: 0.5% v 0.3%e
- (ZA) South Africa Apr Trade Balance (ZAR): -13.0B v -10.7Be
- (ZA) South Africa Apr Budget Balance (ZAR): -40.1B v -35.0Be
- (US) Apr Personal Income: 0.3% v 0.3%e; Personal Spending: -0.1% v +0.2%e
- (US) Apr PCE Deflator M/M: 0.2% v 0.2%e; Y/Y: 1.6% v 1.6%e
- (US) Apr PCE Core M/M: 0.2% v 0.2%e; Y/Y: 1.4% v 1.4%e
- (CA) Canada Mar GDP M/M: 0.1% v 0.1%e; Y/Y: 2.1% v 2.3%e; Q1 Quarterly GDP Annualized: 1.2% v 1.8%e
- (CA) Canada Apr Industrial Product Price M/M: -0.2% v +0.4%e; Raw Materials Price Index M/M: 0.10.5%e
- (US) May ISM Milwaukee: 63.49 v 52.00e
- (CL) Chile Apr Total Copper Production: 471.3K v 485.6K tons prior
- (US) May Chicago Purchasing Manager: 65.5 v 61.0e
- (US) May Final University of Michigan Confidence: 81.9 v 82.5e