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Reports US

US stock market, economy and companies update (September 04, 2014)

September 4, 2014, Thursday, 16:33 GMT | 11:33 EST | 20:03 IST | 22:33 SGT
Contributed by Trade The News

- Super Mario made a bold move to forestall Eurozone deflation this morning, cutting rates and teeing up an asset purchase program. Markets loved the news and European equity indices (with the exception of the FTSE) are up sharply and looking to close at their highs, while sovereign yield curves have steepen notably. As of writing, the DJIA is up 0.37%, the S&P500 is up 0.45% and the Nasdaq is up 0.59%.

- The ECB cut its refinancing rate to 0.05% from 0.15% and its deposit rate to -0.2% from -0.1%. Draghi pronounced that that the ECB was now officially at the lower bound of interest rates and that no more rate cuts were possible. Few details of the new ABS purchase program were disclosed, besides that it would buy covered bonds and MBS, among other assets. The decisions were not unanimous, however Draghi said a "comfortable majority" was in favor of the moves. Interestingly, Draghi continues to insist that there deflation is not yet a reality, only very low inflation. The euro tanked after the decision and through the press conference, with EUR/USD at one-year lows around 1.2968 as of writing. EUR/CHF tested 1.2045, getting as close to the SNB floor as the pair has been since it was established in September 2011.

- In US data, the August ADP jobs survey came in below expectations but still above 200K, supporting consensus views for Friday's non-farm payrolls report. Note that in the weekly jobless claims report, continuing claims fell 64K to a new seven-year low of 2.464 million in the week of August 23.

- Shares of BP have plummeted 4% this morning, pulling the FTSE lower with it, after a US judge ruled that the company was grossly negligent in the 2010 Macondo oil spill. Recall that BP has already agreed to pay $13.7 billion in fines for the Gulf of Mexico spill, but the "gross negligence" finding means BP could face a maximum of $18 billion in additional fines. Transocean and Halliburton were cleared of gross negligence in the case.

- Hovnanian beat expectations in its third quarter results, thanks to a 15% y/y gain in revenue. Home deliveries grew slightly while the backlog gained by double digits. Hovnanian's CEO said the housing industry is still in the early stages of recovery. HOV is up 2.6% today, while TOL continues to sink lower after mixed results yesterday, down another 1.0%.

***Looking Ahead***
- 12:30 (US) Fed's Mester in Pittsburgh
- 17:00 (CO) Colombia Aug PPI M/M: No est v % prior; Y/Y: No est v % prior
- 20:15 (US) Fed's Fisher in Dallas
- 21:00 (US) Fed's Kocherlakota in Helena, Montana

***Economic Data***
- (UK) Bank of England leaves Interest rate and Asset Purchase Target (APT) unchanged at 0.50% and £375B respectively, as expected
- (RU) Russia Gold and Forex Reserve w/e Aug 29th: $465.8B v $466.1B prior
- (ZA) South Africa July Electricity Production Y/Y: -3.1% v -3.1% prior; Electricity Consumption Y/Y: -3.2% v -2.7% prior
- (US) Aug Challenger Job Cuts: - v +46.9K prior; Y/Y: 20.7% v 24.4% prior
- (US) Sept RBC Consumer Outlook Index: 52.4 v 51.5 prior
- (EU) ECB cuts all three key rates by 10bps, not expected
- (RU) Russia Aug CPI M/M: 0.2% v 0.2%e; Y/Y: 7.6% v 7.6%e; CPI YTD: 5.6% v 5.6%e
- (RU) Russia Aug CPI Core M/M: 0.6% v 0.6%e; Y/Y: % v 8.0%e
- (US) Aug ADP Employment Change: +204K v +225Ke
- (US) July Trade Balance: -$40.5B v -$42.4Be
- (US) Q2 Final Nonfarm Productivity: 2.3% v 2.5%e; Unit Labor Costs: -0.1% v 0.5%e
- (US) Initial Jobless Claims: 302K v 300Ke; Continuing Claims: 2.464M v 2.51Me
- (CA) Canada July Int'l Merchandise Trade: C$2.6B v C$1.2Be
- (US) Aug Final Markit Services PMI: 59.6 v 58.5e
- (US) Aug ISM Non-Manufacturing: 59.6 v 57.7e
- (BR) Brazil July CNI Capacity Utilization: 81.0% v 80.1% prior
- (US) Weekly EIA Natural Gas Inventories: +79 bcf vs. +71-75 bcf expected range
- (US) DOE Crude: -0.9M v -1Me; Gasoline: -2.3M v -1.5Me; Distillate: +0.6M v -0.5Me