Mixed Earnings, Greece Jitters Constrain Equities

Economic Data

- (IL) Israel Mar Trade Balance: -$1.0B v -$0.3B prior
- (US) Goldman Economist: Chain Store Sales w/e Apr 17th w/w: -0.1%; y/y: +3.3%
- (HU) Hungary Central Bank (NBH) cut Base Rate by 15bps to 1.80% (as expected)
- (CA) Canada Feb Wholesale Trade Sales M/M: -0.4% v +0.5%e
- (US) Redbook Retail Sales w/e Apr 17th: +0.8% y/y, Apr MTD: +0.1%; Apr YTD: +1.0%
- (EU) Weekly ECB Forex Reserves: €272.3B v €273.3B prior

US and European equity indices have given up some or all of their earlier gains as another round of nerves regarding Greece keeps risk appetite subdued. As of writing, the DJIA is down 0.42%, the S&P500 is flat and the Nasdaq is up 0.37%.

Bonds are giving up earlier gains after another round of Greece jitters during the European session. Overnight there were reports that the ECB was studying curbs on Greek bank support via the ELA amid growing opposition to use of the facility to prop up Greece financial sector. Comments by European officials dispelled any hope that resolution would arrive at Friday's Europgroup meeting. The 10-year bund sank as low as 0.062% before rising back above 0.100% during the US session, while the US 10-year yield dipped below 0.1.870% earlier. Peripheral EU yields remain lower. EUR/USD sank to three-day lows around 1.0670 before heading back toward 1.0770 after the open of US cash trading.

Markets are digesting some poor earnings from major firms this morning. Travelers is down more than 2.5% after only just meeting expectations and reporting big y/y declines in ROE. DuPont is also down more than 2.5% after revenue contracted 9% and missed expectations. IBM saw its 12th straight quarter of revenue contraction, exacerbated by lower hardware sales and the strength of the dollar. IBM is down 1% presently. Verizon beat expectations on the bottom line, but net subscriber wireless adds fell and revenue missed expectations. VZ bottomed out at -1.5% but is heading higher. Lockheed and UTX both missed on revenue, although Lockheed also slightly increased its FY guidance. Harley is off 8.4% after cutting its shipment guidance for the year.

After weeks of rumors, Teva launched its $40.1 billion offer for rival Mylan. The cash-and-stock bid is valued at $82/shr, a 48.3% premium compared to Mylan's stock price on March 10, the last trading before speculation of a link-up between the two companies. The contest won't likely be a friendly one: just last week, Mylan said a merger with Teva would be unlikely to win antitrust approval because of "significant overlap" among the two businesses. Back on April 8th, Mylan offered to acquire Perrigo for $205/share in cash and stock, valuing it at about $30B, in a move widely considered to be a Teva takeover defense.

General Electric is shopping more of its finance operations: according to press reports, GE is looking to sell its $74 billion commercial-lending unit, with potential buyers including Blackstone, Mitsubishi UFJ, Wells Fargo and Apollo Global Management. Talks are at an early stage and GE believes it can sell most of the assets by the end of 2015, an aim that dovetails with its announcements on April 10th. The company is in the process of divesting itself of around $200 billion in financial assets.

Looking Ahead

- 15:00 (AR) Argentina Mar Trade Balance: $50Me v $53M prior
- 16:00 (CA) Canada Fin Min Oliver presents budget
- 16:30 (US) Weekly API Oil Inventories
- 19:50 (JP) Japan Mar Trade Balance: ¥44.6Be v -¥425.0B prior; Trade Balance Adjusted: -¥0.4Te v -¥0.6T prior; Exports Y/Y: 8.5%e v 2.5% prior (revised from 2.4%); Imports Y/Y: -12.6%e v -3.6% prior
- 20:30 (TW) Taiwan Mar Unemployment Rate: 3.7%e v 3.7% prior
- 21:30 (AU) Australia Q1 CPI Q/Q: 0.1%e v 0.2% prior; Y/Y: 1.3%e v 1.7% prior
- (CO) Colombia Mar Retail Confidence: No est v 21.4 prior; Industrial Confidence: No est v 7.3 prior