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Pre-Market Primer: Futures Point to Rally's End

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The UK is in danger of a triple-dip recession.

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Investors are shying away from stocks after a seven-day rally that brought post-crisis highs.

After a yet another record high yesterday, Dow (INDEXDJX:.DJI) futures fell 0.20% to 14,352. Futures on the S&P 500 (INDEXSP:.INX) sank 0.21% to 1,547.30 and Nasdaq (INDEXNASDAQ:.IXIC) futures declined 0.29% to 2,797.50.

With no major economic data releases today, politics might take center stage for US investors. This morning, Congressman Paul Ryan will introduce his budget proposal, which will seek to balance the budget through $4.6 trillion in spending cuts. Mary Jo White and Richard Cordray, prospective candidates to lead the Securities and Exchange Commission and Consumer Financial Protection Bureau, respectively, will face confirmation hearings in the Senate.

Today, Germany confirmed that inflation rose at the slowest rate in over two years in February. Consumer prices rose 1.5% on a yearly basis, down from 1.7% in January. Inflation would have been 1.1% if not for increased food and energy prices. Modest inflation numbers like this could make a rate cut from the European Central Bank more likely. Bundesbank head and ECB member Jens Weidmann said today that inflation risk is also declining.

Sterling declined today as UK factory orders unexpectedly fell 1.5% in January. Economists expected the indicator to stay flat. Industrial output also fell 1.2%, missing estimates of a 0.1% increase. These indicators raise the possibility that the economy shrinks again this quarter, officially putting the country in a recession. The data release proved positive for British stocks which rose on the hopes that more stimulus spending could be around the corner.

Italy's political uncertainty is costing the country more in borrowing costs. At an auction today, Italy paid an average yield of 1.28% on 7.75 billion euros of one-year debt, the highest rate since December 2012. Spain's borrowing cost fell today. It sold 5.8 billion euros of one-year bonds for an average yield of 1.363%, down from 1.548% at a similar sale last month.

BlackBerry (NASDAQ:BBRY) shares extended yesterday's 14% gain in pre-market trading. The stock spiked after the head of China's Lenovo (PINK:LNVGY) said that he would consider acquiring the Canadian company. The new BlackBerry Z10 smartphone goes on sale in the US next week.

In a vote of confidence for Boeing (NYSE:BA), Ireland-based Ryanair (NASDAQ:RYAAY) placed an $18 billion order with the American aerospace company. The company will buy 200 jets to update its fleet.

Yum Brands (NYSE:YUM) shares rose this morning after reporting that China sales fell by less than expected. The parent of KFC, Pizza Hut, and Taco Bell saw same-store-sales fall 20% in China as the country investigates the company's chicken quality. Previously, the company forecast a 25% drop in sales.

Costco (NASDAQ:COST) net profit rose 39% in its fiscal second quarter. Revenue rose 8% to $24.34 billion. The wholesale outlet added members over the quarter, boosting membership fees 15% to $528 million.

Disclosure: Minyanville has a business relationship with BlackBerry.

Twitter: @vincent_trivett
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
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