US Equities in Neutral After Two Days of Gains

Economic Data

- (MX) Mexico Banamex Survey of Economists
- (UK) Aug CBI Industrial Trends Total Orders: 11 v 4e
- (US) MBA Mortgage Applications w/e Aug 15th: +1.4% v -2.7% prior
- (PL) Poland July Sold Industrial Output M/M: 2.3% v 1.7%e; Y/Y: 2.0% v 1.8%e
- (PL) Poland July PPI M/M: 0.0% v 0.1%e; Y/Y: -2.0% v -1.8%e
- (BR) Brazil Aug IBGE Inflation IPCA-15 M/M: 0.1% v 0.2%e; Y/Y: 6.5% v 6.5%e
- (CA) Canada Jun Wholesale Trade Sales M/M: 0.6% v 0.4%e
- (US) DOE Crude: -4.47M v -1Me; Gasoline: +0.59M v -1.5Me; Distillate: -0.96M v -1Me

- US futures were trading lower after two days of solid gains before the open, depressed in part by European equity weakness. Markets await the minutes of the July FOMC meeting for some clarity on exit positioning. As of writing, the DJIA id up 0.14%, the S&P500 is flat and the Nasdaq is down slightly.

- The dollar strengthened further in the Asia and European sessions, with EUR/USD touching 1.3275 and GBP/USD nearly reaching 1.6600 in the US premarket this morning. Both pairs bounced a little higher as US equities moved higher before and just after the open of trading. The 10-year UST is back above 2.40% but moves higher have been pretty choppy.

- There is plenty of deal chatter making the rounds this morning. Shares of SFLY popped 2.5% on reports that PE firms are looking to bid for the company, with offers valued as high as $2B. This comes after reports last month that the company hired advisors for a possible sale. Multiple smaller semi names are surging on reports that Infineon was near to closing on a deal to acquire a US microchip maker in a deal valued around ?$2 billion. Fairchild has been ruled out, after shares rose 3%.

- In other deal news, CNBC's Faber threw cold water on reports out yesterday that Allergan had approached Salix Pharmaceuticals or Jazz about a possible merger to fend off Valeant's advances. Faber said sources told him any potential deal could be months away, perhaps in December. Salix was up more than 14% on the story yesterday and JAZZ had gained a few percentage points. SLXP is down 4% today, but JAZZ is holding up.

- Retail names have been volatile after reporting second quarter results this morning. Target was in the red in the premarket after cutting its FY14 guidance and reporting disappointing sales comps. However TGT is back in positive territory as of writing. Home improvement name Lowes lost 3% after cutting its FY14 revenue and SSS guidance, although its other metrics were in line. Positive sentiment on the conference call has taken LOW almost back to unchanged. Staples reported slightly better than expected results for the first time in a year and saw modest share gains. However, cautious comments on the conference call sent SPLS down 3%.

Looking Ahead

- 11:30 (BR) Brazil Weekly Currency Flows
- 12:00 (CA) Canada to sell 30-Year Real-Return Bonds
- 13:00 - (BR) Socialists Party leadership to meet in Brasilia on Silva candidacy to formally replace Campos (following his death)
- 14:00 (US) Fed Minutes from July 29-30 FOMC Meeting
- 15:00 (AR) Argentina Jun Economic Activity Index M/M: No est v 0.5% prior; Y/Y: -0.2%e v -0.2% prior
- 21:35 (JP) Japan Aug Preliminary Manufacturing PMI: No est v 50.5 prior
- 21:45 (CN) China Aug Preliminary HSBC Manufacturing PMI: 51.5e v 51.7 prior