- US Market Recap
- Combination of positive outlook by US financials, better-than-expected retail sales, and big pharmaceutical M&A led the
- DOW up 54 points (+0.8%) to 7,224 (+9.1% WTD; -17.7% YTD)
- S&P 500 up 6 points (+0.8%) to 757 (+10.8%; -16.2% YTD)
- NASDAQ up 5 points (+0.4%) to 1,432 (+10.7%; -9.2% YTD)
- Seven of the 10 S&P 500 sectors posted gains:
- Out-performers:
- Health Care (+3.3%): Merck (+12.7%), Johnson & Johnson (+3.4%), Pfizer (+3.76%), Schering-Plough (+8.5%)
- Consumer Staples (+1.8%): Proctor & Gamble (+2.6%), Philip Morris (+4.0%), Altria (+2.3%), Coca-Cola (+0.9%)
- Utilities (+1.4%): Dominion Resources (+3.0%), Exelon (+1.6%), Public Service Enterprise Group (+3.5%)
- Laggards:
- Energy (-0.7%): ConocoPhillips (-2.6%), Occidental Petroleum (-3.1%), Chevron (-0.8%), XTO Energy (-4.7%)
- Industrials (-0.5%): United Technologies (-2.9%), Emerson Electronics (-2.2%), Raytheon (-2.9%)
- Info. Technology (-0.1%): Microsoft (-2.1%), EMC (-2.6%), Adobe (-3.9%)
- Policies:
- US Treasury Secretary Tim Geithner will provide details of his plan to help banks clean up the non-performing assets that are clogging the financial system (S&P 500 slumped -4.9% on 10 Feb after the secretary outlined plans without an explanation of how they work); the program has 3 main elements:
- Injecting fresh government capital into some of the country’s biggest financial institutions;
- Establishing a public-private partnership to handle as much as USD1T of banks’ bade assets;
- Starting a credit facility with the Federal Reserve of as much as USD1T to promote lending to consumers and businesses.
- Finance chiefs from G-20 pledged a “sustained effort” to end the worldwide recession, setting aside transatlantic differences over more fiscal stimulus (
- Shareholders should be exposed by the “maximum possible” to losses or risks prior to a government intervening;
- Flexibility when judging which assets can be aided and it should be clear how they are valued;
- Credit rating companies, hedge funds, and credit derivatives markets will be subjected to greater oversight;
- Companies that receive help should run according to business principles and agree to impose conditions on executive compensation.
- Governments should provided only temporary assistance and spell out exit strategies.
- The Obama administration plans to use USD375m to expand federal guarantees and lower fees on small business loans to try to revive the flow of credit; the money will come from the USD787b economic stimulus plan Congress passes last month.
- Economic data for the this week:
- Mar (projected)
- 16 Mar (Mon): Feb industrial production, capacity utilization
- 17 Mar (Tue): Feb PPI & core PPI (MOM and YOY), housing starts, building permits
- 18 Mar (Wed): Feb CPI & core CPI (MOM and YOY), current account balance
- 19 Mar (Thu): FOMC rate decision, weekly jobless (initial and continuing) claims, leading indicator
- Light earnings schedule, mostly in the consumer and IT space:
- 17 Mar (Tue): Darden Restaurants, Factset Research System, Guess, Adobe
- 18 Mar (Wed): General Mills, FedEx, Oracle
- 19 Mar (Thu): Nike, Discover Financial Services, Palm
2) European Update
- Roche says will be debt free by 2012/2013
- Banco Popular announces offer for Banco Italease at EUR 1.5/share.
- Société Générale and Deutsche Bank were among the largest recipients of AIG money.
- UBS will change its board at the next AGM. Bertarelli will leave and could be replaced by Michel Demare.
- Anheuser Bush Inbev sold Labatt for an undisclosed amount to KPS Capital Partners.
- Deutsche Telekom said the planned merger of the fixed-network and the mobile phone divisions will lead to greater cuts than initially expected.
- Barclays seeks USD 7bn from sale of Ishares unit.
- OPEC keeps production quotas unchanged. Next meeting will be at the end of May.
- Turkish Central Bank is likely to cut benchmark rate to record low.
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