TradeTheNews.com US Market Update

Dow -29 S&P -2 NASDAQ +4
***Economic data***
- (TR) Turkey Central leaves the Benchmark Repo Rate unchanged at 5.75%; as expected
- (RU) Russia Dec Industrial Production Y/Y: 2.5% v 3.4%e
- (RU) Russia Dec Unemployment Rate: 6.1% v 6.6%e
- (BR) Brazil Dec Current Account: -$6.0B V -$5.2B; Foreign Direct Investment (FDI): $6.7B v $5.0Be
- (US) ICSC/GS weekly chain store sales w/e Jan 21st: -1.4% w/w; +2.8% y/y
- (HU) Hungary Central Bank leaves Base Rate unchanged 7.00%; Not expected
- (CA) Canada Nov Retail Sales M/M: 0.3% v 0.2%e; Retail Sales Less Autos M/M: 0.3% v 0.2%e
- (US) Redbook Retail Sales w/e Jan 21st: +2.5% y/y; Jan MTD: -1.6% v Dec
- (BE) Belgium Jan Business Confidence: -9.5 v -10.0e
- (MX) Mexico Nov Global Economic Indicator: 3.8% v 3.6%e
- (US) Jan Richmond Fed Manufacturing Index: 12.0 v 6.0e

Fixed Income:
- (EU) ECB drained €219.0B vs. €219.0B targeted in 7-Day Term Deposits
- (UK) BOE buys £1.7B in 2038-2060 Gilts in reverse auction; bid-to-cover: 1.25x v 2.43x prior
- European equity markets were pressured by questions on the viability of Greece's ongoing negotiations with its private creditors, which has also kept US indices in the red for most of the US session. Greek Finance Minister Venizelos was said to have receive 'green light' from the Eurogroup to close the deal with private creditors, although reports suggest that it may be a few days before that happens, adding to uncertainty. Also this morning, the IMF confirmed its lower 2012 global GDP forecast (+3.3% v 4.0% prior), warning that the European situation could derail the global economic recovery. Earnings out of major US blue chip firms were mixed, keeping a lid on sentiment. Oil prices are lower pushing March WTI below $99. US Treasury markets saw some early buying but yields have moved up on the day as equities have pared losses into the European close.
- Dow components Johnson & Johnson, McDonalds, Travellers and Verizon reported mixed results this morning. All four firms more or less met expectations, although investors are selling on risk aversion. JNJ's initial FY12 guidance was lower than expected, thanks in part to greater FX impact. McDonalds reported strong comps for its Q4, and very strong comps for the month of December. Travellers Q4 revenue was much better than expected, thanks to the company's policy of "selectively but actively" increasing prices. The company noted that renewal price gains in commercial accounts reached +8%, the highest level since the end of 2003. Verizon's metrics were good, with most data trending in the right direction, including slightly higher wireless net subscriber gains and falling churn. Shares of JNJ are in the black, while MCD and VZ are down 2% and TRV is down more than 3%.
- Regional banks KeyCorp and Regions Financial had mixed Q4 reports. Regions had a net loss on a non-cash goodwill charge from the sale of its Morgan Keegan brokerage subsidiary to Raymond James. On an operating basis, the bank beat expectations, although revenue was much weaker than expected. Key saw lower profits and revenue on a y/y basis, although executives said that the bank saw its third consecutive quarter of growth in its commercial, financial and agricultural loan portfolio. RF and KEY are back in the black after some earlier softness.
- Yesterday tech names Texas Instruments, STMicro and Western Digital reported results. TXN missed expectations thanks to various charges associated with the National Semi acquisition and factory closures. The firm's Q1 profit guidance was also well short of consensus expectations due to charges. TXN's CFO offered positive comments about the business, noting that the company saw a resumption of demand across a broad range of products in the quarter and estimates that the bottom of the inventory correction cycle was likely in Q4 or at the latest in Q1. STMicro's results were in line. ST believes its bookings have bottomed, although it remains concerned about the macro-economic uncertainty. WDC crushed expectations thanks to huge improvements in margins as its recovery from the Thai floods accelerates. WDC is up 6%, TXN is more or less flat on the day, and STM is down nearly 5%.
- The greenback maintained a firm tone throughout the New York session, hitting a January high in the USD/JPY pair above 77.75 level. EUR/USD pair tested below 1.2960 after having made a brief run above 1.30 in the European session. Note that early in the US morning, S&P's Chambers commented that Greece would likely be downgraded to selective default (in line with its mid-2011 comments on the topic).
***Looking Ahead***
- (AR) Argentina Jan Consumer Confidence: No est v 52.6 prior
- 11:00 (US) Fed to purchase $4.25-5.00B in Notes
- 11:15 (CH) SNB's Danthine makes speech in Zurich
- 11:30 (US) Treasury to sell 4-Week Bills
- 13:00 (US) Treasury to sell $35.0B in 2-Year Notes
- 13:00 (DE) ECB member Weidmann
- 13:15 (EU) ECB's Mersch speaking in Luxembourg
- 14:00 (AR) Argentina Dec Industrial Production M/M: No est v 1.8% prior; Y/Y: 1.6%e v 4.0% prior
- 14:00 (AR) Argentina Dec Shop Center Sales Y/Y: No est v 20.6% prior
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