TradeTheNews.com US Market Update: ECB Denials Cap the Rally, Send Stocks Lower
By TradeTheNews.com -
Mon 20 Aug 2012 10:11:05 CT
***Economic Data***
- (PT) Portugal July Producer Prices M/M: +0.5% v -0.7% prior; Y/Y: 3.0% v 2.7% prior
- (PL) Poland July Sold Industrial Output M/M: -2.3% v -3.0%e; Y/Y: 5.2% v 4.0%e
- (PL) Poland July Producer Prices M/M: -0.2% v 0.2%e; Y/Y: 3.7% v 3.8%e
- (US) July Chicago Fed National Activity Index: -0.13 v -0.34 prior
- (CL) Chile Q2 Current Account: -$2.4B v -$0.9Be
- (CL) Chile Q2 GDP Q/Q: 1.6%e v 1.4% prior; Y/Y: 5.4%e v 5.6% prior
- Europe is right back in the center of the conversation this morning. Over the weekend there were press reports that Spain was preparing to request aid from the euro zone bailout funds, which would presumably trigger ECB bond buying. There were various reports discussing how the ECB would manage a potential bond buying program, with some sources suggesting that the bank would establish maximum spreads between peripheral debt and bunds or yield ceilings. Comments from the German finance ministry and the Bundesbank's monthly report poured cold water on the stories, eliminating the mild risk appetite seen in the first half of the European session. The ECB also commented, saying that bond yield targets had not been discussed and it was absolutely misleading to report on decisions not yet taken. US markets are in the red after the S&P500 closed out its sixth consecutive week of gains on Friday. WTI crude has also traded lower this morning, dropping back towards $95 after topping $96 earlier in the session.
- Aetna said it would buy Coventry Health Care for about $5.7B in cash and stock, or the equivalent of $42.08/shr, which is a 20% premium to Coventry's closing price last Friday. The deal is only the latest move to consolidate large insurers as they position themselves to cope with the demands of Obamacare. Recall that last month Wellpoint agreed to acquire Amerigroup for $4.9B to boost its strength in the Medicaid arena.
- Talks between Best Buy and founder Richard Schulze over taking the company private have broken down after the company said Schulze had rejected its offer to conduct due diligence. Schulze said he was surprised by the Best Buy's abrupt termination of discussions after weekend talks and had expected to conclude an arrangement ahead of the company's earnings announcement on Tuesday. This morning Best Buy also named Hubert Joly new CEO, effective early September.
- Home improvement name Lowes narrowly missed both top- and bottom-line expectations in its Q2 report and lowered its FY12 guidance. Earnings were flat y/y and sales were down slightly y/y. Lowes blamed the poor outcome on its ongoing change in strategy to offer fewer promotions and offer "everyday low prices." In addition, it cited the very warm weather this spring to pulling forward a wide variety of sales. LOW is down more than 4% this morning, while HD is down 1% in line with overall markets.
- EUR/USD tested below the 1.23 handle in early New York trading. The pair gradually moved off its worst levels after the Greek Min Avramopoulos stated that the country would fulfill its pledges to partners but did not address the question of whether more time would be needed for Greece to meet bailout conditions. USD/JPY pair was off its one-month highs of 79.65 with chatter that Japanese exporter orders to sell USD were orders lined up above 80.00 level.
***Looking Ahead***
- 11:00 (US) Fed to purchase $4.25-5.00B in Notes
- 11:30 (US) Treasury to sell combined $60B in 3-Month and 6-Month Bills
- 21:30 (AU) RBA Board August Minutes
View All Market Commentary
- (PT) Portugal July Producer Prices M/M: +0.5% v -0.7% prior; Y/Y: 3.0% v 2.7% prior
- (PL) Poland July Sold Industrial Output M/M: -2.3% v -3.0%e; Y/Y: 5.2% v 4.0%e
- (PL) Poland July Producer Prices M/M: -0.2% v 0.2%e; Y/Y: 3.7% v 3.8%e
- (US) July Chicago Fed National Activity Index: -0.13 v -0.34 prior
- (CL) Chile Q2 Current Account: -$2.4B v -$0.9Be
- (CL) Chile Q2 GDP Q/Q: 1.6%e v 1.4% prior; Y/Y: 5.4%e v 5.6% prior
- Europe is right back in the center of the conversation this morning. Over the weekend there were press reports that Spain was preparing to request aid from the euro zone bailout funds, which would presumably trigger ECB bond buying. There were various reports discussing how the ECB would manage a potential bond buying program, with some sources suggesting that the bank would establish maximum spreads between peripheral debt and bunds or yield ceilings. Comments from the German finance ministry and the Bundesbank's monthly report poured cold water on the stories, eliminating the mild risk appetite seen in the first half of the European session. The ECB also commented, saying that bond yield targets had not been discussed and it was absolutely misleading to report on decisions not yet taken. US markets are in the red after the S&P500 closed out its sixth consecutive week of gains on Friday. WTI crude has also traded lower this morning, dropping back towards $95 after topping $96 earlier in the session.
- Aetna said it would buy Coventry Health Care for about $5.7B in cash and stock, or the equivalent of $42.08/shr, which is a 20% premium to Coventry's closing price last Friday. The deal is only the latest move to consolidate large insurers as they position themselves to cope with the demands of Obamacare. Recall that last month Wellpoint agreed to acquire Amerigroup for $4.9B to boost its strength in the Medicaid arena.
- Talks between Best Buy and founder Richard Schulze over taking the company private have broken down after the company said Schulze had rejected its offer to conduct due diligence. Schulze said he was surprised by the Best Buy's abrupt termination of discussions after weekend talks and had expected to conclude an arrangement ahead of the company's earnings announcement on Tuesday. This morning Best Buy also named Hubert Joly new CEO, effective early September.
- Home improvement name Lowes narrowly missed both top- and bottom-line expectations in its Q2 report and lowered its FY12 guidance. Earnings were flat y/y and sales were down slightly y/y. Lowes blamed the poor outcome on its ongoing change in strategy to offer fewer promotions and offer "everyday low prices." In addition, it cited the very warm weather this spring to pulling forward a wide variety of sales. LOW is down more than 4% this morning, while HD is down 1% in line with overall markets.
- EUR/USD tested below the 1.23 handle in early New York trading. The pair gradually moved off its worst levels after the Greek Min Avramopoulos stated that the country would fulfill its pledges to partners but did not address the question of whether more time would be needed for Greece to meet bailout conditions. USD/JPY pair was off its one-month highs of 79.65 with chatter that Japanese exporter orders to sell USD were orders lined up above 80.00 level.
***Looking Ahead***
- 11:00 (US) Fed to purchase $4.25-5.00B in Notes
- 11:30 (US) Treasury to sell combined $60B in 3-Month and 6-Month Bills
- 21:30 (AU) RBA Board August Minutes
Copyright (c) 2012 Trade The News, Inc.
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Above listed TradeTheNews.com market updates are delayed 5 minutes. To sample the live audio broadcasts, real-time headlines and research on demand in real time, please go to http://www.tradethenews.com/ for your no-obligation FREE trial.
View All Market Commentary
*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.
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