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War Warnings in Ukraine Spook Investors


End of Day Roundup 03/13: Today's financial recap and tomorrow's financial outlook.

China's year-to-date growth in industrial production, retail sales, and capital investment were all reported well below expectations. Industrial production rose 8.6% as of February versus a year ago, worse than the 9.5% expected. Due to the drop-off in industrial exports that was shown in last Friday's trade data, this miss was not entirely unexpected. The Shanghai Composite (SHA:0001) rose 1.07% in its session overnight thanks to speculation that the People's Bank of China would cut its reserve ratio requirement to ease financial conditions in the country.

Additional information came to light today that China's banking regulator, the China Banking and Regulatory Commission, was pushing banks to recognize loans that were linked to derivative products and debt financings along with other more traditional loans. In addition (and more troubling), Chinese banks were reportedly cutting loans to steel, cement, aluminum, and shipbuilding firms by up to 20%. This comes at an inopportune time considering the recent liquidation of loans backed by copper and iron ore.

The main story that drove US equities today was the news from Ukraine's acting president that he sees a real risk of war with Russia and that it is ready to invade the Ukraine. This caused investors to seek safety in US Treasuries and sell global equities. The 10-year note dropped as much as 12 basis points during the session, closing down the day down eight basis points at 2.645%. From its morning high, the S&P 500 (INDEXSP:.INX) lost 35 points, touching an intraday low of 1842, before closing down -1.17% at 1846.34.

February advance retail sales rose 0.3% from the month prior, slightly better than the +0.2% expected. "Core" sales -- removing autos, gas, and building materials -- also rose 0.3% in the month. Additionally, January retail sales growth rate was down to -0.6% month-over-month after an initial estimate of -0.4%. Initial jobless claims fell to 315,000 in the past week from 323,000 in the week prior.

Leading Internet retailer (NASDAQ:AMZN) announced that it was raising the price of its Prime delivery and Instant Video service to $99 from $79. The company hinted at the move in the past, and Wall Street was pleased with the news, sending the stock as high as $383.11 before it was pulled down with the rest of the tech sector.

Tomorrow's Financial Outlook

Tomorrow features two economic data releases: the February producer price index and advance estimate of March University of Michigan/Reuters consumer confidence index. For consumer confidence, economists are expecting the index to rise very slightly to 82.0 from 81.6 in the month prior. For producer prices, the expectation is for prices to rise 1.2% in February from a year ago.

Overnight, the Bank of Japan will release the minutes of its February 17-18 meeting. Also in Japan, the final estimate of January industrial production will be released. Lastly, the final figures for Germany's February consumer price index will be released tomorrow morning at 4:00 a.m. EDT.

Cooper Tire & Rubber (NYSE:CTB) is the only major US company scheduled to report tomorrow morning.

Twitter: @Minyanville

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