Weak Durable Goods Data, Momentum Stocks Weigh on Equities

Economic Data

- (US) MBA Mortgage Applications w/e Mar 20th: +9.5% v -3.9% prior
- (BR) Brazil Mar FGV Consumer Confidence: 82.9 v 85.4 prior
- (IE) Ireland Feb Property Prices M/M: -0.4% v -1.4% prior; Y/Y: 14.9% v 15.5% prior
- (US) Feb Durable Goods Orders: -1.4% v +0.2%e; Durables Ex Transportation: -0.4% v +0.2%e; Capital Goods Orders (Non-defense/Ex-aircraft): -1.4%% v 0.3%e; Capital Goods Shipments (Non-defense/Ex-aircraft): 0.2% v 0.3%e; Durables Ex-Defense: -1.0% v +3.0% prior
- (TR) Turkey Mar Real Sector Confidence (Seasonally Adj): 100.9 v 104.6e; Real Sector Confidence NSA (Unadj): 103.5 v 103.8e
- (TR) Turkey Mar Capacity Utilization: 72.4% v 72.5%e
- (US) DOE Crude: +8.17M v +5.5Me; Gasoline: -2.01M v -2Me; Distillate: -0.03M v -0.5Me

European indices are looking to close at their lows as tensions between the EU and Greece worsen, while in the US the poor February durable goods report steepening the risk-off tone. The 10-year UST yield dropped as low 1.865% earlier on the risk-off tone. Biotech names are seeing broad declines, dragging the Nasdaq lower. As of writing, the DJIA is down 0.87%, the S&P500 is down 0.18% and the Nasdaq is down 1.40%.

Analysts are pointing at today's sizable unexpected decline in durable goods orders as evidence the global slowdown is starting to show up in US data. Durables and capital goods orders were all down more than 1%, while the surprising gains in the January report were revised lower. Orders for non-military capital goods (ex-aircraft), a proxy for future business investment, saw their sixth consecutive decline, the longest stretch of decreases since mid-2012. EUR/USD regained foothold above 1.10 following disappointing US Durable Goods data, and dealers noted that EUR buy stops were building above 1.1040 area.

Today's weekly DoE report saw the eleventh straight build in oil inventories, with the amount once again widely beating expectations. Last night's API report saw a smaller increase in inventories, down quite a bit from last week's number. Beyond inventories, chaos deepened in Yemen, and there were reports that Saudi Arabia was moving military forces to the border with Yemen. The Saudis said the move was merely defensive, refuting talk that it was mulling a possible intervention in the conflict. Brent saw steady gains through the Asia and European sessions, rising from $54.80 to as high as $56.20, but the inventory report knocked the contract back to $55.50 or so. WTI crude is around $47.75, and is well contained within yesterday's ranges.

Kraft Foods and H.J. Heinz are merging in a giant deal that will create the world's fifth largest food and beverage company. Under the terms of the deal, Heinz will return to the public market with a 51% ownership of a new company with $28 billion a year in revenue. Current Kraft holders will own 49%. Kraft's shareholders will receive stock and a special cash dividend of $16.50 per share, financed by a $10 billion investment from Brazil private equity firm 3G Capital and Warren Buffet's Berkshire Hathaway, the two firms that own Heinz. Recall that in 2013, 3G and Berkshire bought Heinz for $23 billion and took the company private. In other news, Lexmark reached a deal to acquire Kofax for $11/shr in cash or about $1B, giving the printer firm a stronger position in enterprise software.

Shares of Lumber Liquidators are up 10% this morning after the Consumer Product Safety Commission updated the public on its investigation into allegations about the high toxicity of the company's flooring products. The CPSC said its investigations will take months to complete, however the somewhat dovish tone, and the fact that the toxicity levels are in violation of California's much stricter regulations (not the CPSC's) is hurting the big short positions.

Looking Ahead

- 13:00 (FR) France Feb Net Change in Jobseekers: +10.0Ke v -19.1K prior; Total Jobseekers: 3.491Me v 3.482M prior
- 13:00 (US) Treasury to sell $26B in 5-Year Notes
- 15:00 (AR) Argentina Feb Trade Balance: $92Me v $73M prior
- 17:00 (KR) South Korea Mar Consumer Confidence: No est v 103.0 prior