Greece Elections Shake Up Europe

Economic Data

- (TR) Turkey Jan Real Sector Confidence (Seasonally Adj): 106.8 v 108.8 prior; Real Sector Confidence NSA: 103.2 v 101.2 prior
- (TR) Turkey Jan Capacity Utilization: 73.7 v 74.6% prior
- (RU) Russia Dec Industrial Production Y/Y: 3.9% v 0.8%e
- (IL) Israel Central Bank left Base Rate unchanged at 0.25%, as expected
- (MX) Mexico Nov Retail Sales M/M: 0.8% v -0.1% prior; Y/Y: 1.2% v 3.7%e
- (US) Jan Dallas Fed Manufacturing Activity: -4.4 v 3.2e

US equity markets are under a bit of pressure this morning as the S&P500 continues to back off its January intraday high seen on Friday. Talk about Syriza's big win in Sunday's Greek parliamentary elections and the storm bearing down on the US East Coast are dominating headlines this morning. As of writing, the DJIA is down 0.16%, the S&P500 is flat and the Nasdaq is down 0.10%.

The events in Greece are under the microscope this morning. European finance ministers have reiterated their non-committal stances regarding Syriza's demands for renegotiation, but the consensus seems to be that the EU is open to extension of debt terms and easing reform requirements. The unanswered question is what Syriza will finally ask for. Note that the Independent Greece coalition party, while more conservative than left-wing Syriza, is just as uncompromising in its demands for renegotiation. EUR/USD bottomed out around 1.1100 post-election and has moved back up to around 1.1260 as of writing.

OPEC Secretary General El-Badri tried to call a bottom in oil this morning. El-Badri also said he was open to discussions with non-OPEC members to balance oil supply, warning that markets are oversupplied by 1.5 million bpd. He also said some OPEC upstream projects are being cancelled and that oil prices could rise to $200/bbl in three or four years if investment levels do not keep up. Front-month WTI added a buck on the remarks, rising to around $46, but the gains have been dribbling away mid-morning.

The looming blizzard on the east coast is dominating headlines this morning. As of writing, nearly 1,800 flights have been canceled nationwide and another 1,600 already have been canceled for Tuesday. Airline stocks are mostly up on the day, outperforming broader markets, thanks to lower oil prices.

In earnings, homebuilder DR Horton is up more than 6% after beating expectations and offering a very strong outlook for FY15. Norfolk Southern has regained earlier losses on a mixed fourth quarter. W.W. Grainer is at its lows after missing earnings expectations and cutting its full-year outlook. Note that earlier there were press reports that IBM was looking to lay off up to 25% of its workforce; IBM has denied the rumor.

Packaging giant Rock-Tenn and MeadWestvaco have agreed to merge, after fund Starboard Value pressured MeadWestvaco to create shareholder value. Shareholders in MeadWestvaco will receive 0.78 of a share in the new entity, giving them 50.1% of the new company and Rock-Tenn stockholders owning the remainder.

Looking Ahead

- 16:00 (KR) South Korea Jan Consumer Confidence: No est v 102 prior
- 20:30 (CN) China Dec Industrial Profits Y/Y: No est v -4.2% prior
- 22:30 (HK) Hong Kong to sell 3-month, 6-month and 12-month Bills
- 23:00 (TH) Thailand Dec Customs Trade Balance: +0.1Be v -$0.1B prior