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Paltry April Retail Sales Report Headlines a Sleepy Day


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

A Wall Street Journal article noted this morning that the Bundesbank approved of the ECB taking significant stimulus measures to avoid deflationary pressures in the eurozone. The article stated that the central bank could lower its deposit rate into the negative, make a small cut in its main lending rate, conduct small-scale purchases of asset-backed securities, or make long-term loans with a maximum fixed rate. The article noted that the Bundesbank did not condone the use of large-scale asset purchases of corporate and private debt because yields across Europe are already too low, and that such purchases would only create financial stability risks.

China's April industrial production, retail sales, and fixed-asset investment were all inline or below expectations. Retail sales rose 11.9% from a year ago, worse than the 12.9% expected gain. However, the government said that investors shouldn't overanalyze the data, which included a 30% decline in jewelry sales from a year ago.

It was a sleepy day in US markets as the S&P 500 (INDEXSP:.INX) traded in a tight 0.30% range during the session. The benchmark index reached a new intraday high, topping 1,900 for the first time, and Europe was along for the ride as well. Six of 10 basic S&P sectors were in the positive today. Telecom lagged due to news that AT&T (NYSE:T) was making a firm $50 billion bid for DirecTV (NASDAQ:DTV) and was down 1.5%. Verizon (NYSE:VZ) was down in sympathy. Energy and consumer staples stocks were today's top performers.

Retail sales only rose 0.1% in April from the prior month, worse than the 0.4% expected gain. Core sales excluding auto and gas sales declined by 0.1%. However, March's sales were revised up by 0.4%, which negates much of the shortfall in April. Some economists noted the date differential in the Easter holiday this year compared to last, but apparel sales remained strong, which suggested otherwise. US Treasuries rallied by as much as four basis points following the report and showed no signs of breaking.

Tomorrow's Financial Outlook

The only economic report scheduled for tomorrow is the April producer price index of final demand. Prices are expected to rise 1.7% from a year ago after rising 1.4% in the month prior, reflecting recent increases in commodity prices. Core prices excluding food and energy are forecast to stay at a constant annual rate of 1.7%.

The UK will release its three-month average employment change tomorrow morning for March. The average unemployment rate is expected to edge down to 6.8% from 6.9% in the month prior. German and French consumer price indexes for April are also scheduled to be reported.

Only nine major US companies are scheduled to report earnings tomorrow. The notable reports are Deere (NYSE:DE), Macy's (NYSE:M), Plug Power (NASDAQ:PLUG), Agilent (NYSE:A), and Cisco (NASDAQ:CSCO).

Twitter: @Minyanville

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