Ukraine Conflict Fears Squelch Risk Appetite

Economic Data

- (UK) Apr CBI Industrial Reported Sales: 30 v 17e
- (IE) Ireland Mar PPI M/M: -0.6% v -0.2%e; Y/Y: -3.1% v -1.7% prior
- (RU) Russia Gold and Forex Reserve w/e Apr 18th: $482.0B v $477.7B prior
- (TR) Turkey Central Bank (CBRT) left all Key Rates unchanged (as expected); Maintained Benchmark Repurchase Rate unchanged at 10.00%; maintained Overnight Lending Rate unchanged at 12.00%; maintained Overnight Borrowing Rate unchanged at 8.00%
- (TR) Turkey Apr Real Sector Confidence: 112.7 v 108.6 prior
- (TR) Turkey Apr Capacity Utilization: 74.4% v 73.1% prior
- (CL) Chile Mar PPI M/M: -2.9% v -0.3% prior
- (US) Mar Durable Goods Orders: 2.6% v 2.0%e; Durables Ex Transportation: 2.0% v 0.6%e; Capital Goods Orders Non-defense/Ex-Aircraft: 2.2% v 1.5%e; Capital Goods Shipments Non-defense/Ex-Aircraft: 1.0% v 1.0%e; Ex Defense: 1.8% v 1.7% prior
- (US) Initial Jobless Claims: 329K v 315Ke; Continuing Claims: 2.680M v 2.75Me prior
- (US) Weekly EIA Natural Gas Inventories: +49 bcf vs. +40-44 bcf expected range

- Risk was on in the premarket as European markets rose to their highest levels since early March and the S&P500 futures inched back toward the recent intraday highs seen on Tuesday around 1885, helped along by the very good durable goods data. Alarming rumors about Ukraine knocked down equities just after the open of cash trading, although US indices are back in positive territory as of writing. The DJIA is up 0.11%, the S&P500 is up 0.08% and the Nasdaq is up 0.60%.

- The Ukraine situation has rapidly decayed this morning as Kiev resumed its "anti-terrorist" operation in eastern Ukraine and Russia President Putin calls the moves use force against citizens that is clearly a crime and will have consequences. Russia stepped up military operations on the border and a rumor made the rounds after the open that Putin would hold an "emergency press conference" imminently, raising real fears that open Russian intervention was about to begin. After falling to ten-week lows around $1270 in the premarket, spot gold spiked back toward the $1300 level as equities lost ground. The 10-year UST is around 2.690%, its lowest level in the last three days.

- FX markets continued to be locked within tight ranges. The USD found a bit of strength following better durable goods data. Euro failed to get above key resistance of 1.3870 area despite some decent German IFO data.

- Shares of tech names rallied hard yesterday in post-market trading after Apple beat expectations and announced a 7-for-1 stock split, and Facebook widely beat expectations and disclosed sizable y/y gains in advertising revenue. Shares of AAPL were up as much as 8.5% and FB was up 5% in the premarket but FB sank into the red and AAPL was moving slightly lower. TXN is off its morning highs, while ZNGA has given p a 5% premarket gain to trade as low as -5%. Shares of Ingraham Micro sank even further in cash trading and are down 14% as of writing.

- Aetna gained as much as 5% in the premarket and nudged up to 7% at its best in cash trading. The insurance giant beat earnings and revenue expectations and also hiked its 2014 guidance. Premiums, fees and medical membership were all up by good amounts on a y/y basis. Executives said individual rate increases in 2015 would be in the range of low single digits to double digit percentages.

- Shares of UPS are holding up despite the firm's disappointing first quarter results. The firm failed to meet consensus EPS and revenue targets, and profit fell more than 12% y/y as the winter weather disruptions weighed on results. Nevertheless, shipping volumes saw continued growth, with US average daily shipments +4.2% and international daily volume +7.9%. UPS is about flat on the day.

- Caterpillar met revenue expectations but widely topped EPS estimates and raised its FY14 earnings guidance. In the firm's outlook for the year, it sees construction segment revenue gains much better than its initial view, even as resource industries sales are looking worse. Executives made positive comments about the China business, despite ongoing uncertainty in the country. Shares of CAT are up 3%. GM's profits were devastated by the big recall charges, down nearly 90% y/y, while revenue crept up nearly 2% y/y. GM remains up 2% or so.

- Share of JetBlue and United Continental are under pressure this morning after tepid first quarter results, plus higher oil prices and Russia/Ukraine uncertainty. Southwest is the best of the bunch, with its business looking healthier in the quarter. United's loss was one-third greater than the year-ago period thanks to the bad weather, while traffic and capacity declined slightly. JetBlue's earnings widely missed expectations. JBLU and UAL were down as much as 6% before flying higher mid-morning, while LUV is up 1%

- Medical devices name Zimmer Holdings has reached a $13.4 billion deal to acquire orthopedic products company Biomet Inc. Biomet was taken private for $11.4 billion in 2007 by a private equity consortium when the medical device market was particularly strong on demand from an aging population for the artificial hips and knees that Biomet makes. Shares of ZMH are up 14%.

- Pharma names Celgene and Eli Lilly are both down about 3% a piece this morning. Celgene's numbers were not bad, with adjusted EPS beating expectations and revenues up 19% y/y. It also maintained its full-year outlook. Lilly's revenue narrowly missed revenue targets and lowered elements of its full-year outlook. The company was hurt by plunging sales of Cymbalta, which is now facing generic competition.

Looking Ahead

- 11:00 (US) Apr Kansas City Fed Manufacturing Activity: 8e v 10 prior
- 11:00 (US) Treasury 2-year FRN-note announcement
- 11:00 (US) Fed to purchase $0.45-0.70B in Notes
- 11:00 (BR) Brazil to sell 2015, 2016 and 2018 Bills
- 12:15 (PT) ECB's Constancio (Portugal) in Madrid
- 13:00 (US) Treasury to sell $29B in 7-Year Notes
- 17:00 (KR) South Korea Apr Consumer Confidence: No est v 108 prior
- 19:30 (JP) Japan Mar National CPI Y/Y: 1.6%e v 1.5% prior; CPI Ex Fresh Food Y/Y: 1.4%e v 1.3% prior; CPI Ex Food & Energy Y/Y: 0.7%e v 0.8% prior
- 19:30 (JP) Japan Apr Tokyo CPI Y/Y: 3.0%e v 1.3% prior