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

Contributed by Trade The News

- US equities were a bit higher overnight thanks to strength from financials and a glimmer of positivity seen in the US retail sales data. The S&P500 flatlined after the first hour of trading and dipped into the red, although markets headed a bit higher after that. US retail sales advanced for the third consecutive month in September, although analysts continue to see the rate of growth as anemic. This was hardly enough to overcome the pessimism generated by the third consecutive month of contraction seen in the Empire Manufacturing data, although the -6.16 figure was an improvement from September's -10.4 number. WTI crude dipped sharply in the wake of the Empire data, with the front-month contract losing more than $2 to dip below $90 before ticking a bit higher.

- On an operating basis, Citigroup significantly topped expectations in its Q3 report. But including the $4.7B write-down of the value of the stake in Morgan Stanley Smith Barney brokerage joint venture sold to MS in September, the firm earned a measly $0.15 a share. Investors were enthusiastic about solid growth in profits in the bank's commercial and investment banking branches, and good increases in retail banking revenues. Share of Citi were up as much as 4% in the first hour of trading, however they are a bit off their highs. WFC is in the red this morning following an analyst downgrade.

- Microsoft rolled out its big new online music initiative this morning, Xbox Music. Xbox Music will offer free, ad-supported songs for computer and tablet users, however it charges users for mobile phone and Xbox consoles, at a rate of $9.99 a month. Analysts are scratching their heads, wondering how Xbox's $9.99 per month for mobile access will compete with Pandora's free streaming music service. Note that there have been recent reports that Apple is putting together its own mobile streaming music service. Shares of Pandora are down 3.5% this morning.

- Early this morning Japan's Softbank announced that it had reached a deal to buy 70% of Sprint Nextel for $20B. Only $12.1B would be paid to shareholders of Sprint: Softbank said that as part of the deal, it will buy $3.1B of bonds convertible into Sprint stock at $5.25 a share, while about 55% of existing Sprint shares would be exchanged for $7.30/shr in cash, with the transactions to be completed by mid-2013. The deal would unite two firms that are the third biggest mobile carriers in their respective markets, and also would be the largest ever foreign acquisition by a Japanese company. The deal was given a green light by the boards of both companies. It still needs approval from Sprint shareholders and US regulators. Shares of Clearwire surged further on the news, as investors presume that a buyout will be a natural consequence of the Sprint/Softbank deal. CLWR is up 20%. In other deal news, there were reports making the rounds in the press that Amazon was mulling a plan to buy the Texas Instruments' mobile chip unit, allowing it to make chips for its Kindle models in house.

- EUR/USD again failed to move above the 1.30 level while USD/JPY faced some technical resistance just below the 78.90 area. In the eurozone, Greece and the Troika are still struggling to reach a deal ahead of the Oct 18th EU Leader summit.

***Looking Ahead***
- 11:00 (US) Fed to buy$4.25-5.25B in notes
- 11:30 (US) Treasury to sell combined $60B in 3-Month and 6-Month Bills
- 12:30 (IS) Israel Sept Consumer Prices M/M: 0.5%e v 1.0% prior; Y/Y: 2.6%e v 1.9% prior
- 12:30 (DE) German Chancellor Merkel attends CDU Regional Conference
- 12:45 (US) Fed's Lacker speaks on U.S. Economy in Virginia
- 13:00 (PT) Portugal to present its 2013 budget
- 13:10 (US) Fed's Bullard speaks on U.S. Economy in St. Louis
- 15:05 (CA) Bank of Canada Governor Carney Speaks in British Columbia.

***Economic Data***
- (PL) Poland Sept CPI M/M: 0.1% V 0.3%e; Y/Y: 3.8% V 4.0%e
- (PL) Poland Aug Current Account: -€0.6B v -€1.1B; Trade Balance: -€48M v -€450Me prior; Exports: €12.0B v €12.1Be; Imports: €12.1B v €12.6Be
- (RU) Russia Sept Industrial Production Y/Y: 2.0% v 2.3%e
- (RU) Russia Sept Producer Prices M/M: 2.0% v 2.1%e; Y/Y: 8.7%e v 6.6% prior
- (US) Oct Empire Manufacturing:-6.16 v -4.00e
- (US) Sept Advance Retail Sales: 1.1% v 0.8%e; Retail Sales Less Autos: 1.1% v 0.6%e; Retail Sales Ex Auto & Gas: 0.9% v 0.4%e
- (BE) Belgium Aug Trade Balance: -€0.3B v +€0.6B prior
- (CA) Sept Existing Home Sales M/M: +2.5% v -5.0%e
- (PL) Sept YTD Budget Performance: 60.4% v 65.5% prior
- (US) Aug Business Inventories: 0.6% v 0.5%e