Crude Volatility Undercuts Equities Again

Economic Data

- (BR) Brazil Economic Activity Index (Monthly GDP) M/M: -0.3% v +0.2%e; Y/Y: -1.2% v -0.4%e
- (UK) Dec CBI Industrial Trends Total Orders: +5 v +3e; Selling Prices: +7 v -3e
- (PL) Poland Oct Current Account Balance: -€0.4B v -€0.4Be; Trade Balance: €0.0B v €0.3Be
- (PL) Poland CPI M/M: -0.2% v -0.1%e; Y/Y: -0.6% v -0.5%e
- (US) Dec Empire Manufacturing: -3.60 v +12.00e (first negative reading since Jan 2013)
- (PL) Poland Nov Budget Balance Performance YTD: 52.1% v 57.3% prior; Budget Balance Level YTD: -24.8B v -27.3B prior
- (BE) Belgium Oct Trade Balance: €0.1 v -€1.1B prior
- (CA) Canada Nov Existing Home Sales M/M: 0.0% v 0.7% prior
- (US) Nov Industrial Production M/M: 1.3% v 0.7%e; Capacity Utilization: 80.1% v 79.4%e; Manufacturing Production: 1.1% v 0.7%e
- (US) Dec NAHB Housing Market Index: 57 v 59e

The absence of bad news out of Europe and the brief bounce back in crude prices helped keep European indices in the black and boost US futures. But US and European stock indices have followed crude lower. As of writing, the DJIA is off 0.54%, the S&P500 is down 0.35% and the Nasdaq is down 0.86%.

The December New York Fed manufacturing survey slid to its lowest since January 2013, very widely missing expectations. This is the first regional Fed factory report released for the month of December. New orders plunged to -1.97 from +9.14 and shipments dropped to -0.22 from +11.83. Note that the Federal Reserve's November industrial production reading was much better than expected, with capacity utilization rising to its highest level since March 2008.

Crude oil prices saw a short-lived reversal in the Asia and Europe sessions, with WTI retaking $58.50. The bounce did not last and the front-month WTI contract is presently back below $57. Note that one factor taking some downside pressure off crude are reports that Libya's production has dropped significantly thanks to the nation's budding civil war. The Russian Ruble continues to crumble under the weight of falling oil prices, with USD/RUB popping above 60 for the first time ever.

Several M&A stories are sending selected shares higher. Riverbed Technology agreed to be acquired by Thoma Bravo for $21/shr in cash, a 12% premium, in a deal valued around $3.6 billion. Recall that earlier this year, the company rejected a $3.08 billion buyout offer from Elliott Management, saying it undervalued the company. Shares of Talisman Energy are gaining for a second consecutive session on a bidding contest for the firm between Spain's Repsol and the Canada Pension Plan Investment Board. A potential deal is being discussed around C$6-8/share. 

Looking Ahead

- 14:00 (AR) Argentina Nov National Urban CPI M/M: 1.1%e v 1.2% prior
- 14:00 (AR) Argentina Nov Wholesale Price Index M/M: No est v 1.2% prior; Y/Y: No est v 29.3% prior
- 16:00 (CO) Colombia Oct Retail Sales Y/Y: 8.0%e v 8.7% prior
- 16:00 (CO) Colombia Oct Industrial Production Y/Y: 0.4%e v 1.3% prior