Low Volatility Continues to Frustrate Bears

By Minyanville Staff  FEB 11, 2013 5:15 PM

Today's financial recap and tomorrow's financial outlook.

 


Today, volatility declined after reaching weekly highs over the past two weeks. The S&P 500 traded in a narrow 3.25 point range with little news to note. Early weakness was highlighted by a sudden 20-point drop in gold futures.

There was no economic data in the US and little economic data overseas. Australian home loan approvals dropped 1.5% month-to-month from a revised-lower 0.7% decline in December 2012. French industrial production fell 0.1% in December, down from 0.5% the month prior.

Two public officials made market-moving statements. Head of the German Bundesbank, Jens Weidmann, said that the euro had not become overvalued and took his normally hawkish stance against further ECB easing. He was also highly critical of global economies continuing their efforts to depress the price of their currencies. The euro momentarily rose 40 pips against the dollar before reverting back to its prior price.

The other market-moving statement came from Fed Vice Chairman Janet Yellen. She stated in her speech that if unemployment and inflation reached the Fed's long-term goals of 6.5% and 2.5%, that it would not mean the Fed would cease its extraordinary measures of stimulus or begin raising rates. While Chairman Bernanke had alluded to such policies, this was the first Fed official to say so explicitly.

After the close, Lions Gate (NYSE:LGF) beat earnings, reporting EPS of $0.27 vs $0.247 estimates and revenues of $743.6 million vs $719.5 million estimates. The stock was up more than 5% post-market after intraday strength.

Tomorrow's Financial Outlook

Tomorrow will be a bit busier on the news and data front. The NFIB will release its index of small business optimism in the US. As consumers have pulled back during January, if businesses pulled back too, this would be a negative sign. Economists estimate that the index rose to 89.0 last month from December's 88.0.

Globally, the UK will release both PPI and CPI data in the morning with consumer inflation data expected to drop in January. Economists expect a 0.5% month-to-month drop in CPI while the annual gauge remains constant at 2.7%.

Earnings will pick up with a larger skew towards tech companies. Avon Products (AVP), Coca-Cola (KO), Fossil (FOSL), Huntsman (HUN), McGraw-Hill (MHP), Clearwire (CLWR), Cliffs Natural Resources (CLF), Buffalo Wild Wings (BWLD), Rackspace (RAX), and Level 3 Communications (LVLT) will report.

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