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Reports US

US stock market, economy and companies update (October 11, 2012)

October 11, 2012, Thursday, 18:19 GMT | 13:19 EST | 21:49 IST | 00:19 SGT
Contributed by Trade The News


- Equities are rallying this morning after four down sessions. At first glance the weekly claims data were remarkably strong, as the initial claims fell to their lowest level since February 2008. However the numbers were skewed by the absence of numbers from one of the larger states, according to the BLS - one analyst suggested that the missing numbers could be from California given the size of the decline. Expect a big revision with next week's numbers. The August US trade report was not encouraging, as both non-oil imports and exports posted substantial declines in gross terms. Most of the increase in the deficit was accounted for by a greater-than-expected $1.6 billion increase in petroleum imports and an unexpected drop in petroleum exports. In Europe, S&P downgraded Spain's sovereign rating to just above junk, while Greece's unemployment rate climbed to more than a quarter of the workforce in July and the nation's biggest company, Coca Cola Hellenic, said it would move to Switzerland with a London listing. With the dollar weak and risk on, WTI crude is climbing, popping back above $92 after some overnight softness.

- Nikkei News set off a headline frenzy this morning after it reported that Softbank was looking to acquire 66% of Sprint for 1.0T ($12.8B) and could spend over 2T (approx $25.6B) on the entire stake, for around a 70% premium to Sprint's prior close. CNBC's David Faber piled on, claiming that Softbank's main interest in talks with Sprint is Clearwire and its spectrum resources. Faber claimed that Softbank is actually negotiating to acquire 75% of Sprint, with a deal likely within the next two weeks. Bank of America published a note asserting that by its calculations, the details imply a $9.50/shr offer for Sprint, or an 88% premium to yesterday's close. Of course the PCS merger drama is part of this picture: Deutsche Telekom's T-Mobile USA unit has an agreement in hand to merge with pre-paid mobile firm MetroPCS - Sprint has been said to be evaluating a counter-bid for T-Mobile USA. The Softbank offer will play into possible analysis of Sprint's potential offer, allowing it to make a better proposition for T-Mobile. Shares of Sprint are up more than 13%, while shares of CLWR are up 34%. Shares of PCS are down 5%.

- In earnings news, shares of Fastenal are at highs of the session up more than 8% after a more-or-less in-line Q3 report. Grocery chain Safeway is down 4% but off its worst levels. Note that Safeway's top line slightly missed expectations and declined on a y/y basis, while gross margins slipped. Winnebago missed top- and bottom-line expectations while margins declined, although profits were up y/y and shares of WGO are up nearly 3%.

- Continuing risk appetite continued into the US session weakened the USD and JPY. The yen tumbled after the disclosure of the Softbank/Sprint chatter as US traders were coming to their desks, analysts said the yen move was due to potential M&A flows. USD/JPY moved from 77.96 to test above the 78.57 before strengthening slightly.

***Looking Ahead***
- (US) US Budget Statement
- 11:00 (US) Weekly DOE Crude Oil Inventories
- 11:00 (US) Fed to buy $$0.75-1.25B in bonds
- 11:15 (US) Fed's Raskin speaks on panel in France
- 12:00 (IC) Iceland Sept International Reserves (ISK): No est v 786B prior
- 12:30 (US) Fed's Plosser speaks on Economy in Pennsylvania
- 13:00 (EU) Italy PM Monti at Friends of Europe Dinner in Brussels
- 13:00 (US) Treasury to sell $13B in 30-Year Bonds Reopening
- 17:00 (US) Fed's Bullard
- 19:00 (PE) Peru Central Bank Interest Rate Decision: Expected to leave the Reference Rate unchanged at 4.25%
- (US) US Vice Presidential Debate
- (JP) IMF, World Bank Group Annual meetings
- (JP) G7 finance ministers and central bank chiefs meeting in Tokyo


***Economic Data***
- (BR) Brazil Aug Retail Sales M/M: 0.2% v 0.0%e; Y/Y: 10.1% v 9.1%e; Broad Retail Sales Y/Y: 15.7% v 14.5%e
- (US) Sept Import Price Index M/M: 1.1% v 0.7%e; Y/Y: -0.6% v -1.3%e
- (US) Aug Trade Balance: -$44.2B v -$44.0Be
- (US) Initial Jobless Claims: 339K v 370Ke; Continuing Claims: 3.273M v 3.275Me
- (CA) Canada Aug New Housing Price Index M/M: 0.2% v 0.1%e; Y/Y: 2.4% v 2.3%e
- (CA) Canada Aug Int'l Merchandise Trade: -$C1.3B v -$1.9Be