Greece Fears Spark Risk Aversion

Economic Data

- (IL) Israel Q4 Final GDP Annualized: 7.0% v 6.8% prelim
- (PL) Poland Mar CPI Core M/M: 0.1% v 0.2%e; Y/Y: 0.2% v 0.3%e
- (RU) Russia Gold and Forex Reserve w/e Apr 10th: $354.1B v $355.3B prior
- (US) Mar Housing Starts: 926K v 1.040Me; Building Permits: 1.039M v 1.081Me
- (US) Initial Jobless Claims: 294K v 280Ke; Continuing Claims: 2.268M v 2.32Me
- (US) Apr Philadelphia Fed Business Outlook: 7.5 v 6.0e
- (US) Weekly EIA Natural Gas Inventories: +63 bcf v +50 to +54 bcf

Spiking Greek government debt yields and CDS prices reflected renewed fears of a sovereign default by Greece and forced European equity indices lower this morning. Risk aversion sentiment carried through to US futures, while the mixed Philly Fed data didn't help. As of writing, the DJIA is flat, the S&P500 is down 0.07% and the Nasdaq is down 0.05%.

The headline April Philadelphia Fed regional factory survey was stronger than expected and better than the March reading. But like yesterday's weak Empire State survey, the new orders component was disappointing - falling more than three points to a borderline level of 0.7. The survey stated that indicators for activity and new orders both suggest expansion, but at a very modest pace. Taken together, the first two regional factory surveys suggest that manufacturing growth will remain subdued in April, reflecting export market headwinds.

Fed Vice Chairman Stanley Fischer talked to CNBC this morning said the first quarter was seeing a softer economic rebound, which was in line with the recent pattern, with improvements expected in the second quarter. Fischer said there are more signs that wage pressures are rising. The 10-year yield is actually up on the session, rising more than two basis points to around 1.912% after yesterday's significant tightening.

Crude pushed out to fresh YTD highs during yesterday's session, with WTI topping out around $56.70. The front-month WTI contract is a bit lower today at $55.70. Brent is just shy of the fresh high around $63. OPEC's monthly report out earlier today showed March production by the cartel of 30.79M bpd, +810K bpd driven by Saudi Arabia, Libya, Iraq. Saudi production grew to 10.29M bpd from 9.64M in February. One report highlighted that the OPEC numbers showed Saudi production grew by about half of what Saudi's official figures indicated, raising some eyebrows.

Goldman Sachs had a huge quarter, beating analysts' expectations across the board. Revenues rose to a four-year high and the firm's investment banking net revenues saw their best quarter since 2007. Book value per share increased $5.38 to $168.39, the largest quarterly increase in over five years. Citigroup had a very good quarter, soundly beating earnings expectations on 16% growth in quarterly profit. However, revenue missed and declined slightly y/y.

Shares of Netflix are up 15% after beating expectations for net customer additions, both at home and abroad. A host of analysts upgraded the name and lavished praise on the firm's expansion, even as its earnings and revenue remained unspectacular. SanDisk is off 7% after reporting a y/y decline in first quarter revenue.

Two IPOs are garnering a lot of attention this morning. Party City opened up 21% after pricing at $17/shr. Etsy priced its offering at the high end of its anticipated range, $16 per share, valuing the online marketplace at $1.78 billion. As of writing, shares of ETSY are up 100% since pricing.

Looking Ahead

- 13:00 (US) Fed's Lockhart (Voter, Dove) on economic outlook
- 13:00 (US) Fed's Mester (non voter, hawk) speaks at Forecasters Club of New York
- 13:30 (US) Fed's Rosengren (non-voter, Dove) in London
- 15:00 (US) Fed Vice Chair Fischer participating on inflation panel at IMF in Washington
- 15:00 (UK) Opposition Party Leaders' Election Debate on BBC
- 17:00 (CL) Chile Central Bank (Bcch) Interest Rate Decision: Expected to leave Overnight Rate Target
Unchanged at 3.00%