Just Another Risk-Off Monday

Economic Data

- (UK) Feb CBI Industrial Reports Sales: 1 v 35e
- (IL) Israel Jan Unemployment Rate: 5.6% v 5.7% prior
- (PT) Portugal Dec Current Account: +€0.1B v -€0.2B prior
- (TR) Turkey Feb Real Sector Confidence: 104.3 v 106.8 prior
- (TR) Turkey Feb Capacity Utilization: 72.8% v 73.7% prior
- (US) Jan Chicago Fed National Activity Index: +0.13 v +0.05e
- (IL) Israel Central Bank (BOI) cuts Base Rate by 15bps to 0.10%, not expected
- (MX) Mexico Dec Retail Sales M/M: -0.9% v +0.8% prior; Y/Y: 2.4% v 2.3%e
- (US) Jan Existing Home Sales: 4.82M v 4.95Me
- (US) Feb Dallas Fed Manufacturing Activity: -11.2 v -4.0e

US equities have moved lower this morning and the UST 10-year yield has come in nearly four basis points in a cautious atmosphere. Greece remains a live issue and participants are positioning ahead of Fed Chair Yellen's Humphrey-Hawkins monetary policy report to Congress this week. As of writing, the DJIA is off 0.26%, the S&P500 is down 0.17% and the Nasdaq is down 0.18%.

The Greeks have bought themselves another four months to reached a final deal with their European partners, but the crisis is by no means over. The compromise may cause Syriza major political problems at home, and it remains unclear just what sort of concessions Athens has offered for this latest can-kicking exercise. The Greeks need to disclose the measures they intend to take later today, and the Troika needs to sign off on them.

After last week's somewhat ambiguous FOMC meeting minutes, anticipation is high ahead of Yellen's speech tomorrow. It's clear that the employment conditions necessary for rate hikes have been in place for some time, but inflation continues to lag the 2.0% target. Yellen is expected to rationalize the shortfall express confidence that evidence of rising inflation will materialize later this year.

January existing home sales fell to 4.82 million units from 5.1 million units in December. This is the slackest pace of existing home sales since April 2014, although despite the somewhat weak showing this rate is 3.2% higher y/y. Total inventory comprises a 4.7-month supply, up from 4.4 months in December. Shares of major homebuilders are still in the red, but off their worst levels.

Crude futures were testing the lower end of the pricing range seen over the course of February heading into the US session, with WTI dipping as low as $48.60. The Baker Hughes weekly US total rig count dropped to 1,310, although the rate of decline was notably more moderate. In addition, the USW refinery strike entered its fourth week after negotiations were halted again last Friday, and has spread to refineries processing 20% of US gasoline demand, suggesting crude inventories are going to get even bigger in upcoming reports.

After earnings reports, auto parts name American Axle is down more than 3% after the firm's EPS widely missed expectations on weak margins and non-cash pension charges. Plane leasing firm AerCap Holdings is up a few percent on decent fourth-quarter results, including a big beat on net income. Cooper Tire gained a few percent in the premarket after disclosing mixed fourth quarter results then tanked in cash trading and is now down 8.4%.

Valeant Pharmaceuticals has nabbed a hot biotech name, as it recovers from the loss of Allergan. On Sunday Valeant reached a deal to acquire gastrointestinal drug firm Salix Pharmaceuticals in an all-cash deal valued at about $10 billion. The companies said the deal had an enterprise value of $14.5 billion, which would include Salix's debt and any cash on hand. Valeant will pay around $158/shr. Shares of Valeant are up nearly 14% on the news, as well as a very solid fourth quarter earnings report.

Looking Ahead

- 12:00 (BR) Brazil Feb CNI Industrial Confidence: No est v 44.4 prior
- 20:00 (PH) Philippines Dec Trade Balance: No est v $0.3B prior