US Market Update: Strong US Data Lifts Stocks After Two-Day Pause



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Article content US Market Update: Strong US Data Lifts Stocks After Two-Day Pause

24.06.2014 17:39 Tuesday
***Economic Data***
- (ZA) South Africa Q1 Non-Farm Payrolls Q/Q: 0.1% v 0.4% prior; Y/Y: 0.5% v 0.5% prior
- (IE) Ireland May PPI M/M: 0.1% v 0.5% prior; Y/Y: -3.1% v -2.7% prior
- (TR) Turkey Central Bank (CBRT) cuts its Benchmark Repurchase by 75bps to 8.75%, more than expected
- (TR) Turkey Jun Capacity Utilization: 75.3% v 74.4% prior; Real Sector Confidence: 110.7 v 113.3 prior
- (US) ICSC Chain Store Sales w/e Jun 20th: w/w +2.0%; y/y: +4.1%
- (HU) Hungary Central Bank (NBH) cut its Base Rate by 10bps to 2.30%, as expected
- (US) Redbook Retail Sales w/e Jun 20th: +3.3% y/y, Jun MTD: -1.7% m/m, Jun MTD: +3.4% y/y
- (US) Apr CaseShiller/CS 20 City M/M: 0.19% v 0.80%e; Y/Y: 10.82% v 11.50%e; Home Price Index: 168.71 v 169.09e
- (US) Apr FHFA House Price Index M/M: 0.0% v 0.5%e
- (BE) Belgium Jun Business Confidence: -6.2 v -6.4e
- (MX) Mexico Apr Economic Activity Index Y/Y: 0.5% v 0.5%e
- (CL) Chile May PPI M/M: 1.7% v 0.0% prior
- (ES) Spain May YTD Spain Budget Balance: No est v -€14.17B prior
- (BR) Brazil May Current Account Balance: -$6.64B v -$6.6Be; Foreign Direct Investment (FDI): $5.96B v $5.2Be
- (US) Jun Consumer Confidence Index: 85.2 v 83.5e
- (US) Jun Richmond Fed Manufacturing Index: 3 v 7e
- (US) May New Home Sales: 504K v 439Ke

- US markets have resumed their climb higher after two flattish sessions. As of writing, the DJIA is up 0.15%, the S&P500 is up 0.27% and the Nasdaq is up 0.70%

- The May new home sales data was very strong, with new home sales surging 18.6% from April to an adjusted rate of 504K, the highest level since 2008. Prices are up 7% y/y. Yesterday's May existing home sales were up 5% or so from April. Homebuilders are up again today, rising around 2-3% a piece in the early going. Note that the April S&P/CaseShiller home price index rose much less than expected, following the very strong showing in March.

- Philadelphia Fed President Plosser reiterated his hawkish stance in a speech this morning. Plosser said current policy guidance may be too passive given the continuing economic recovery. With inflation very close to the Fed's 2% target, Plosser warned that he was very uncomfortable with the fed funds rate at the zero bound, although he also the rise in CPI could always pull back and may not continue.

- Dubai's DFM stock index closed down 6.7% today, after being down more than 8% at one point. Shares on the DFM have plunged by almost 27% in seven weeks since May 6th, when the index hit a multi-year peak. One big negative driver has been construction giant Arabtec, with shares down 9.8 after the company confirmed a big round of layoffs. Other factors included big margin calls and the upcoming Ramadan holiday.

- Russia President Putin asked parliament to cancel a resolution sanctioning the use of military force in Ukraine, a move Ukraine President Poroshenko called a positive "practical step" toward bringing peace to eastern Ukraine. Note that there have been several incidents of violence in eastern Ukraine despite the ceasefire, including rebels shooting down a Ukraine helicopter. The MICEX is up 2.2% on the news and the RUB is also strengthening.

- Vertex is leading the Nasdaq much higher this morning thanks to very good results from two Phase III combination trials of Ivancaftor showed strong potential to be used in treating the most common form of cystic fibrosis. The data suggests the FDA could definitely approve the drug as a treatment for cystic fibrosis, and with the fevered merger atmosphere it also makes Vertex that much more attractive for potential suitors. Shares of VRTX are up 40% today.

- Shares of Walgreen are down 2% or so after the firm missed bottom-line expectations in its third quarter. Revenue climbed 6% y/y and met consensus views, while Rx comps were up 6.3%. Walgreen also said Tuesday it is considering the second step in its combination with Alliance Boots, which would involve possibly reincorporating in Switzerland for tax reasons.

***Looking Ahead***

- 11:30 (US) Treasury to sell $25B in 4-week and 52-week Bills
- 13:00 (BR) Brazil May Total Formal Job Creation: 88.0Ke v 105.4K prior
- 13:00 (US) Treasury to sell $30B in 2-Year Notes
- 15:30 (US) Fed's Williams
- 16:30 (US) Weekly API Oil Inventories
- 17:00 (KR) South Korea Jun Consumer Confidence: No est v 105 prior
- (AR) Argentina Jun Consumer Confidence Index: No est v 38.1 prior