Ukraine Chaos and Chinese PMI Data Restrain Global Markets

Economic Data

- (ZA) South Africa Q1 Unemployment Rate: 25.2% v 24.1% prior
- (CL) Chile Mar Economic Activity M/M: -0.2% v +0.2%e; Y/Y: 2.8% v 3.0%e
- (SG) Singapore Apr Purchasing Managers Index: 51.1 v 51.1e; Electronics Sector: 50.4 v 51.9e
- (US) Apr Final Markit US Services PMI: 55.0 v 54.5e; Composite PMI: 55.6 v 54.9 prelim
- (US) Apr ISM Non-Manufacturing: 55.2 v 54.0e

- Global equity markets got off on the wrong foot this week, as the fourth consecutive contraction in Chinese HSBC manufacturing data and worsening conditions in Ukraine drove investors into the arms of safe assets. Note that the benchmark 10-year yield was below 2.600% earlier this morning, but has widened out a bit as of writing. US equities have recovered from their early declines, with the DJIA down 0.10%, the S&P500 up 0.03% and the Nasdaq down 0.07%.

- The April ISM services activity index rose to 55.2, its fastest pace of expansion in eight months. The subindex of business activity climbed to 60.9 in April from 53.4 in March, while orders jumped to an eight-month high of 58.2.

- Target CEO Gregg Steinhafel has become the latest victim of online crime. Target said Steinhafel would step down immediately and be replaced on an interim basis by CFO John Mulligan. Many observers praised Steinhafel for the level of openness Target displayed in coping with the massive 2013 holiday season data breach, however the size of the crisis would have been hard for any executive to escape from unscathed. Shares of TGT are down 3%.

- Pfizer missed revenue expectations as sales in its first quarter fell 15% y/y. The company continues to suffer from generic Lipitor competitors. Income declined y/y for both Pfizer's newer medicines and its older, mostly off-patent drugs. Management reiterated their proposal for Astrazeneca is fair and will remain disciplined as they work through the process trying to reach a deal. PFE is down 2%.

- Shares of BE Aerospace are among the big movers this morning after the company disclosed yesterday afternoon that it would be exploring strategic alternatives, including a possible sale of the company or a spin-off of units. Shares of BEAV are up more than 20%.

- Food processing name Tyson beat top- and bottom-line estimates in its second quarter report, doubled its its profits, raised its FY revenue guidance and dramatically improved margins. However, shares of Tyson are down more than 8% this morning as investors ignore all the good news and hone in on the firm's industry guidance for overall domestic protein production (chicken, beef, pork and turkey) to decrease approximately 1% y/y and feed costs would rise again.

- Shares of Auction house Sotheby's are bucking the downtrend today and gaining more than 2% after Third Point chief Dan Loeb announced he had reached an agreement with management on long-debated board appointments. Sotheby's expanded its board to include Loeb and two lieutenants who will also be added to the company's slate of director nominees for election at the 2014 annual meeting.

Looking Ahead

- 11:30 (US) Treasury to sell combined $48B in 3-Month and 6-Month Bills
- 12:00 (EU) ECB's Mersch (Luxembourg)
- 17:00 (CO) Colombia Apr PPI M/M: No est v 1.7% prior; Y/Y: No est v 2.6% prior
- 20:00 (CO) Colombia Apr CPI M/M: 0.3%e v 0.4% prior; Y/Y: 2.6%e v 2.5% prior
- 21:30 (AU) Australia Mar Trade Balance: A$1.0Be v A$1.2B prior
- 00:30 (Tues) (AU) RBA Interest Rate Decision: Expected to leave Cash Rate Target unchanged at 2.50%