Monday, May 10, 2010

Catalysts to Watch; Corporate Events Calendar; Economics Calendar – Daily View

  • There will be a bunch of important earnings releases to watch - CSCO comes Wed night and not only will kick off the Apr-end reporting season, but will also be a major data point for the tech sector (NVDA is another Apr-end company and they come Thurs night).  Also on earnings, DIS reports after the close on Tues and there are a handful of retailers (M Wed, KSS Thurs, and JCP Fri) to watch.  On the economics front, the focus next week will be outside the US with the BoE meeting on Monday, ECB Monthly Report on Thursday and China eco figures out Monday (Trade Balance Monday morning and PPI/CPI/Retail Sales/IP Monday night). In the US we’ll get retail sales, weekly jobless claims and IP at the end of the week. In Europe we’ll also get UK Apr. NISER GDP estimate and Eurozone Q1 GDP estimate. Outside US/Europe, in addition to the China #s, we’ll also get the BoJ’s recent meeting’s minutes, Australia Business Confidence and New Zealand Retail sales.  In Washington, watch for more progress on the Dodd regulatory overhaul bill (Majority Leader Reid has said he wants to finish consideration of the bill by the end of this week) and Obama could unveil his selection to replace Stevens on the Supreme Court.  There is a hearing in the House on Tues re the stock market crash of last Thurs. The SEC will meet on Monday as Chairman Shapiro has called the heads of U.S. exchanges to the SEC to look for solutions to the disparate trade rules across markets. 

Corporate Events Calendar

· Mon Mar 10: earnings before the open (GSI, KDE, HXN, SSP, BR, WPI, ENER, NNI, CDE, DISH, SHO, GEOY, TSN, WPI). Earnings after the close (PCLN, ARIA, ACAD, FLR, PAAS, NUAN, NFP, LYV, MR, DENN, CHINA, WRC, WG, MBI, LDK, LM, CCO, AGO).  Analyst meetings (DNB).  Sales (MCD). 

· Tues Mar 11: earnings before the open (SolarWorld, Q-Cells, InterContinental Hotels, Hitachi, Trend Micro, TM, Natixis, Dexia, Unicredit, JASO, VSR, TWTC, NICE, CVLT, K+S).  Earnings after the close (DIS, RICK, TGIC, OPNT, ERTS, GIVN).  analyst meetings (Volvo, KMT, PBI, CE, WMB, MRK, JKHY, INTC, SCHW, FAF)

· Wed Mar 12: earnings before the open (M, ING, Vallourec, ThyssenKrupp, DT, Nissan).  earnings after the close (DRYS, WFMI, SUPX, CSCO, VRTU, SLW, JACK, AUTH).  Analyst meetings (HUN, CTXS). 

· Thurs Mar 13: earnings before the open (TEF, PONE, WEN, THI, TK, SNE, Sainsbury, KSS, Alibaba, URBN).  Earnings after the close (JWN, BBI, NVDA, CA).  Analyst meetings (IRBT, WFC). 

· Fri Mar 14: earnings before the open (JCP).  analyst meetings (ISIL)

Economics Calendar – Daily View

· Monday, May 10th: US (n/a); Eurozone (German Wholesale Price Index, Trade Balance, Sentix Investor Confidence, BoE Interest Rate Decision, RICS House Price Balance); Other (China – Trade Balance, PPI, CPI, Retail Sales, IP, Japan Meeting Minutes, Australia NAB Business Confidence, Canada Housing Starts).

· Tuesday, May 11th: US (Wholesale Inventories, IBD/TIPP Economic Optimism; ABC Consumer Confidence); Eurozone (UK NIESR GDP estimates, German CPI, UK IP, UK Manufacturing Production); Other (Swiss SECO Consumer Confidence).

· Wednesday, May 12th: US (Trade Balance, MBA Mortgage Applications, Monthly Budget Statement); Eurozone (German GDP, UK Jobless Claims/Unemployment rate, Eurozone GDP); Other (Canada Merchandise Trade Balance, New Zealand Manufacturing Index, Japan Trade Balance).

· Thursday, May 13th: US (Jobless Claims); Eurozone (ECB Monthly Reports); Other (Australia Unemployment Report, New Zealand Retail Sales).

· Friday, May 14th: US (Retail Sales, IP, Capacity Utilization, U. of Michigan Confidence, Business Inventories); Eurozone (UK Visible Trade Balance); Other (Canada Manufacturing).

Europe Debt Crisis – Substantial Action Unveiled Sun Night

· There were a series of announcements out of Europe and the US Fed Sunday night that will most likely exceed the expectations of investors heading into the weekend on Friday. There are three pieces of the plan – a EU720B plan from European governments, substantial promises from the ECB, and the re-opening of FX swap lines.  The ECB made a dramatic u-turn and said it would participate in euro area public and private debt markets (recall that Trichet said last Thurs that the ECB hadn’t even considered this option at its last meeting).  The EU720B promise from the various European governments will probably take some time to flesh out and there are still some details to be answered, but the ECB debt purchases could commence at any time and is probably the most unexpected component of the Sun night announcement.


1 – EU720B Stabilization Fund:

· The EU720B plan consists of government-backed loan guarantees and bilateral loans worth up to €440bn provided by eurozone members; a further €60bn supported by all EU members through expansion of an existing balance of payments facility; and up to €220bn provided by the IMF (per the FT). 

· Elena Salgado, Spain's finance minister, said that the €440 billion would be available over three years, and would need approval from contributing governments. She said a new "special purpose vehicle" would be created to make these loans (WSJ)

· Germany’s Merkel said her cabinet would sign off on the Sun night package during a special meeting on Tues (DJ)


2 - ECB takes several actions:

· To conduct interventions in the euro area public and private debt securities markets (Securities Markets Program) to ensure depth and liquidity in those market segments which are dysfunctional.  The scope of the interventions will be determined by the Governing Council.  In order to sterilize the impact of the above interventions, specific operations will be conducted to re-absorb the liquidity injected through the Securities Markets Program. This will ensure that the monetary policy stance will not be affected.

· In order to sterilize the impact of the above interventions, specific operations will be conducted to re-absorb the liquidity injected through the Securities Markets Program. This will ensure that the monetary policy stance will not be affected.

· To conduct a 6-month LTRO with full allotment on 12 May 2010, at a rate which will be fixed at the average minimum bid rate of the main refinancing operations (MROs) over the life of this operation.

· JPMorgan comments (D Mackie) – trying to make sense of the ECB “sterilization” comment - In our view, the most sensible way of interpreting the statement about sterilisation is that it is about the medium term. The ECB will conduct outright purchases and the acquired debt instruments may remain on their balance sheet until maturity. But, as conditions return to normal, we will move back to the situation where excess reserves in the system are determined by the central bank, rather than the banks. In this sense, the impact of outright purchases will be sterilised, in order to "ensure that the monetary policy stance will not be affected".    **********************

3 - Swap lines re-established:

· FX swap lines re-established between the Fed and other central banks, inc. the ECB – “In response to the re-emergence of strains in U.S. dollar short-term funding markets in Europe, the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank are announcing the re-establishment of temporary U.S. dollar liquidity swap facilities”.  The BOJ board decided Monday to temporarily reestablish a U.S. dollar swap agreement with the Federal Reserve and restart dollar-fund provision operations.

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