Nasdaq and Tech See Steep Losses, Easing of Tensions in Ukraine

Economic Data

- (IE) Ireland Mar Industrial Production M/M: 5.5 v 5.1% prior; Y/Y: 10.2% v 2.8% prior
- (PL) Poland Central Bank (NBP) leaves Base Rate unchanged at 2.50%, as expected
- (US) MBA Mortgage Applications w/e May 2nd: +5.3% v -5.9% prior
- (CZ) Czech Central Bank left Repurchase Rate unchanged at 0.05% and maintained its floor in EUR/CZK cross near 27 level
- (BR) Brazil Apr FGV Inflation IGP-DI M/M: 0.5% v 0.6%e
- (BR) Brazil Mar Industrial Production M/M: -0.5% v -2.4%e; Y/Y: -0.9% v -3.0%e
- (PL) Poland Apr Official Reserves: $102.5B v 102.8B prior
- (US) Q1 Preliminary Nonfarm Productivity: -1.7% v -1.2%e; Unit Labor Costs: 4.2% v 2.8%e
- (CA) Canada Mar Building Permits M/M: -3.0% v +4.0%e
- (CL) Chile Apr Trade Balance: $1.0B v $1.1Be; Total Exports: $6.7B v $7.3B prior; Total Imports: $5.7B v $5.6B prior
- (CL) Chile Apr Copper Exports: $3.1B v $3.6B prior
- (CL) Chile Mar Real Wage M/M: 0.0% v -0.2% prior; Y/Y: 2.2% v 2.5% prior
- (MX) Mexico Mar Leading Indicators M/M: -0.04 v -0.05 prior
- (MX) Mexico Vehicle Production: K v 277.3K prior; Vehicle Domestic sales: K v 85.7K prior; Vehicle Exports: K v 230.8K prior
- (US) DOE Crude: -1.78M v +1Me; Gasoline: -1.61M v 0Me; Distillate: -450K v +1Me

- US equity markets are recovering from steep losses this morning, with the S&P500 and DJIA back to positive territory. However, the Nasdaq is still deep in the red, as various tech firms see very steep losses. The small-cap Russell 2000 closed below its 200-day moving average on Tuesday for the first time since November 2012 and this morning briefly saw YTD lows before recovering some losses. As of writing, the DJIA is up 0.2%, the S&P500 is flat and the Nasdaq is down 1.15%

- There appears to be a real desire to de-escalate the Ukraine crisis among the Russian leadership, although how long this might last is very questionable. After meeting with the OSCE chairman to consult on a roadmap for calming tensions, Russia President Putin called for postponement of May 11th independence referendum in south and east Ukraine and said that Ukraine's planning presidential election on May 25th is a move in the right direction. Moscow's MICEX exchange rallied more than 3% on the news.

- Fed Chair Yellen is testifying before Congress's Joint Economic Committee this morning, and will move on to Senate testimony this morning. There was nothing very new in her prepared remarks, although some say her comment that the recent flattening in the housing market may last longer than expected could be spooking some participants. In Q&A, Yellen has studiously avoided reiterating her call for interest rate hikes to begin about six months after the end of the taper under repeated questions on this very point from members.

- Alibaba filed for its US IPO last night. Officially the filing was for $1.0 billion, but nearly everybody expects this figure to rise to $15-20 billion eventually. Most observers expect the massive offering will begin pulling money away from other high-growth tech names. Alibaba did not indicate a Nasdaq or NYSE listing. Note that Yahoo owns 23% of the firm, and it plans to sell about 40% of its stake in the offering, which could generate in excess of $10 billion and more than double Yahoo's cash stockpile. Shares of YHOO are down more than 6% this morning after the filing.

- AOL missed earnings estimates and net profits dropped sharply y/y in its first quarter results due to pre-tax restructuring charges while revenue was more or less in line. Metrics were fine, with advertising up 16% y/y. AOL is getting clobbered above and beyond other tech names even given problems with its report, with shares down 16%. Note that recent casual gaming IPO King Digital met expectations on modest y/y growth, however shares are down nearly 10%.

- Whole Foods dropped as much as 22% after missing top- and bottom-line expectations and lowering its FY14 guidance for the third consecutive quarter in its second-quarter report out last night. Multiple analysts cut ratings and price targets on the name overnight, highlighting the firm's continuing guidance cuts.

- Shares of Mondelez are up 7% after it agreed to spin off its coffee operations into a joint venture with D.E. Master Blenders. This leaves the company, comprising Pepsi's snack food assets, to concentrate increasingly on its snack assets. Mondelez will receive $5 billion in cash and a 49 percent interest in the jv, Jacobs Douwe Egberts.

Looking Ahead

- 12:00 (CA) Canada to sell 5-Year Bonds
- 13:00 (US) Treasury to sell $24B in 10-Year Notes
- 13:30 (UK) BOE's Haldan in York
- 15:00 (US) Mar Consumer Credit: $15.5Be v $16.5B prior
- 21:30 (AU) Australia Apr Employment Change: +8.8Ke v +18.1K prior; Unemployment Rate: 5.9%e v 5.8% prior