Global Markets Shrug Off Italy, Return to the Rally

Economic Data

- (US) MBA Mortgage Applications w/e Feb 22nd: -3.8% v -1.7% prior
- (BR) Brazil Jan Nominal Budget Balance (BRL): 7.6B v 25.2Be; Primary Budget Balance: 30.3B v 22.5Be
- (US) Jan Durable Goods Orders: -5.2% v -4.6%e; Durables Ex Transportation: +1.9% v 0.2%e; Capital Goods Orders Non-defense Ex Aircraft: +6.3% v 0.0%e
- (US) Jan Pending Home Sales M/M: +4.5% v +1.8%e; Y/Y: +10.4% v 8.2%e
- (BR) Brazil Central Bank weekly currency flows
- (US) Weekly DOE U.S. Crude Oil Inventories: Crude: +1.13M v +2.5Me; Gasoline: -1.86M v -1.0Me; Distillate: +560K v -1.5Me; Utilization: 85.1% v 82.9% prior

- US equities are shrugging off the situation in Italy this morning and heading higher. There is little evidence that Congress and the president will be able to avoid the sequester, although some say the better data is a factor this morning. The DJIA is up % and the S&P500 is up %.

- The January durable goods orders data were mixed, as usual. The big headline decline was misleading, as the core non-defense, ex-aircraft figure was a very good +6.3% figure, blowing out expectations for a flat reading. The December data were revised lower.

- Equity trading in Europe was volatile this morning but the big slide seems to be over for the moment, with the DAX, CAC and FTSE looking to close at or near their highs. In Italy, the jockeying for position in Rome has begun, as Berlusconi's coalition tries and fails to lure Bersani's junior partners to their side. Meanwhile, Beppe Grillo said his Five Star movement wouldn't support any government.

- Fed Chairman Bernanke is before the House this morning for his semi-annual Congressional testimony. In his opening statement and responses to Q&A, Bernanke hewed close to his prior comments.

- Target lost ground in the premarket after the retailer's Q4 results fell on a y/y basis, although on an adjusted per-share basis they topped expectations. Sales gained y/y, in line with expectations, and the firm's guidance was decent. Shares of TGT are regaining lost ground but remain down 1.5%.

- TJX is up 1.5% after modestly topping expectations, although the firm's FY13 outlook was a bit soft.

- According to blog reports, Coach is exploring a potential sale of the company. Management would not comment officially about the reports, and it seems the reports could have been sparked by the departure of a key mid-level executive.

- Shares of Accretive Health are down more than 26% this morning after the firm postponed its Q4 earnings release due to revenue recognition issues.

- Shares of CommonWealth REIT gained more than 40% yesterday after holder Corvex and Related said they would pay $25/shr or more to acquire the REIT, a 58% premium to the prior closing price (they also called on the company to call off a "dilutive" equity offering). This morning shares of CWH are dropping after management said it would go ahead with the offering.

Looking Ahead

- 13:00 (US) Treasury to sell $29B in 7-Year Notes
- 14:00 (AR) Argentina Jan Supermarket Sales Y/Y: No est v 14.1% prior
- 16:30 (US) Fed's Fisher speaks on Economy and Monetary Policy in New York
- 18:50 (JP) Japan Jan Preliminary Industrial Production M/M: 1.5%e v 2.4% prior; Y/Y: -4.8%e v 7.9% prior