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U.S Market Update

Mon, Aug 24 2009, 15:22 GMT

TradeTheNews.com

- Momentum from the latter end of last week's steady upward moves in equities is continuing this morning in the absence of major corporate news or economic data. Positive rhetoric from global economists at the annual Jackson Hole retreat over the weekend is also supporting equities. Perma-bear Noriel Roubini warned of the strong possibility of a double-dip recession in an FT op-ed piece, maintaining his prior position that the global economy will bottom out in the second half of 2009; while the Fed's Bullard in comments over the weekend cast doubt on the potential for a double dip recession. PIMCO's McCulley added to his recent comments about the "new normal" in the US, noting that in the longer term unemployment may settle around the 6% level due to positions that may not be transferable after the recovery settles in. Front-month NYMEX crude is trading in a narrow band around the $74 handle.

- In equity news, financials continue to move higher in early trading, led by Citigroup, which popped above the $5 mark for the first time since January mid morning. The WSJ's "Heard on the Street" column is overall positive on the firm, citing its stronger tangible common equity level coming out of the recent preferred-for-common stock exchange. Shares of Citi are up nearly 5% on the day, while other leading financials are up in the low single digits. Note that Freddie and Fannie are up 45% and 20% respectively, extending the big gains in the name seen from last week. In other news, Warner Chilcott confirmed that it would acquire PG's pharmaceutical unit for $3.1B. PG sees the sale adding $1.4B (or around $0.44/shr) to earnings after tax, followed by EPS dilution in the range of $0.10 to $0.12 per share in fiscal year 2010. Shares of WCRX are up 30% on the news, while PG is more or less flat on the day.

- In currencies, the greenback has seen strength from the European morning slip away as commodities maintain their steady tone despite cautious comments from the Chinese government earlier today. Overall, currencies continue to take their lead from equity markets. EUR/USD is little changed from its opening levels seen in Tokyo around the 1.4330 area. USD/CHF is holding above Friday's lows of 1.0550. Sterling is bucking the trend as fiscal concerns continue to dog the pound. GBP/USD trades at the 1.6420 area and off by 70+ pips from its Asian opening levels. The commodity-related currencies are firmer with CAD getting an added boost from better-than-expected retail sales data for the month of June.

Published on  Mon, Aug 24 2009, 15:22 GMT