US Market Shakes Off Weak European Growth

By Minyanville Staff  FEB 14, 2013 5:20 PM

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

 


Overnight, two different events pushed overseas markets lower. The Bank of Japan released its monthly rate decision. It made no change in its main interest rate, but the central bank did upgrade its assessment on the Japanese economy, saying conditions had stabilized and stopped weakening. Central bank officials also noted that a USDJPY between 90 and 100 was a normal equilibrium for its 2% inflation target.

The other overseas economic data that moved markets was eurozone GDP from the fourth quarter. The preliminary GDP data showed a 0.6% contraction during the fourth quarter, which was lower than the -0.4% economist estimate and reflected a 0.9% recession during 2012. Notable misses included Germany (-0.6%), France (-0.3%), and Italy (-0.9%).

In the US, weekly initial jobless claims fell more than expected, with last week's claims falling to 341,000 from 368,000 the prior week. Economists had been forecasting a slight drop to 360,000. Continuing claims fell to 3.114 million in the week prior, which was the lowest level since 2007.

Stocks were lower pre-market, but the dip was bought and the bounce held throughout the day, which was a positive note. Treasuries were also strong throughout the day, a notable divergence. The $16 billion 30-year refunding was met with strong demand and bonds continued to rally after its completion.

Berkshire Hathaway (BRK.A) completed a purchase of Heinz (HNZ) for $28 billion today, or $72.50 per share, in cash with private equity firm 3G Capital. This was approximately 19.87% over yesterday's closing price. Berkshire Hathaway shares also rose to a record after the close of the deal.

Tomorrow's Financial Outlook

Tomorrow will be options expiration for monthly stock options, and there will also be a number of other US economic data points. On the schedule is Empire Manufacturing, foreign TIC flows, industrial production, capacity utilization, and the University of Michigan/Reuters consumer confidence statement. Most interesting is the confidence statement as it dropped sharply in January. Recent consumer confidence data has shown a modest improvement.

The overseas schedule is light with only Japanese industrial production and UK retail sales in the US pre-market.

Earnings reports include Kraft Foods (KRFT), TRW Automotive (TRW), VF Corp. (VFC), IPG Photonics (IPGP).

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No positions in stocks mentioned.

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