US Market Update – 3/15/10

US Market Update
Dow -50 S&P -7.8 NASDAQ -20
***Economic Data***
- (CL) Chile Feb Copper Exports: $2.7B v $3.4B prior
- (CA) Canada Jan New Motor Vehicle Sales: 0.0% v 0.0%e
- (US) Mar Empire Manufacturing: 22.9 v 22.0e
- (US) Jan Net Long Term TIC Flows: $19.1 v $47.5B; Total Net TIC Flows: -$33.4B v $53.6B prior
- (PD) Poland Feb CPI M/M: 0.2% v 0.4%e; Y/Y: 2.9% v 3.0%e
- (US) Feb Industrial Production: 0.1% v 0.0%e; Capacity Utilization: 72.7% v 72.6%e
- (PD) Poland Feb Budget Level (PLN): v -4.8B prior; Budget Level YTD: v -4.8B prior
- (BE) Belgium Dec Trade Balance: -€1.3B v €0.1B prior

- US equities traded off in the premarket this morning on follow-through weakness from both Asia and Europe. This morning’s in-line US economic data have not provided little impetus for equity indices to push back into positive territory. A report on sovereign debt from Moody’s stated that triple-A rated governments don’t face an immediate threat to their ratings, although it warned that deficits are “most stretched” in Britain and the US. Financials have been under some pressure on reports out mid morning that the Volcker Rule barring proprietary trading at banks will be included in Senator Dodd’s financial reform bill. Tomorrow’s FOMC decision lurks in the background – nobody expects any change in rates, and traders will be looking for more indications of the Fed’s tightening strategy, especially in light of the expiration of MBS purchases this month. Front-month crude is off nearly $2 and headed for the $78 handle ahead of Wednesday’s OPEC meeting in Vienna. March gold is up a hair, around $1,105. Treasury prices are marginally lower in what has been a narrow range ahead of the FOMC meeting. The 10-year yield is drifted up to 3.72% while the Dec fed fund future still fully prices in a 25 bp rate hike by year’s end.

- It’s Merger Monday, and several notible deals are moving stocks. Phillips-Van Heusen said it would acquire Tommy Hilfiger from buyout shop Apax Partners in a cash-and-stock deal valued at about $3B. PVH expects the deal to be accretive in both 2010 and 2011. The combined company’s revenue will total about $4.6B and allow PVH to introduce its brands in international markets. Tommy Hilfiger will remain in his role as principal designer for the brand. PVH is up 10%. Dominion Resources is selling its natural gas and oil exploration and production business, including 491,000 acres in the key Marcellus shale gas area, to Consol Energy for $3.5B in cash. The deal would double Consol’s gas resources. D is around even, while CNX is down 8%. Sport Supply group agreed to be acquired by private equity firm by ONCAP Management Partners for $13.55/shr, only a hair above Friday’s closing price (market cap as of Friday’s close was around $170M). Shares of RBI are flat. BJ Services and Baker Hughes commented on the status of their pending merger, noting that the DoJ has raised some concerns about the deal. Finally, OSI Pharmaceuticals rejected Astellas’ unsolicited tender offer for $52/shr cash, stating that the offer substantially undervalues OSI.

- Drug news is moving pharma names. Boston Scientific spike downwards early in the premarket after a Bernstein note made the rounds claiming that the FDA had suspended sales of one of the firm’s implantable defibrillators. BSX later confirmed the note, stating that the suspension stems from manufacturing process changes were not submitted for approval to the FDA and warning the issue could have a material impact on its Q1 guidance. BSX was down as much as 18% before the open, although shares have regained some of these losses in the first hours of trade. The FDA requested more information from MannKind Corp on AFREZZA in a Complete Response Letter. MNKD opened down 15%, but traded up to around -5% in the early going. Mylan withdrew its marketing application for cancer medication Docetaxel (generic Taxotere) due to negative FDA findings.

- In currency trading, the greenback maintained a slightly positive tone as the New York session began on lingering concerns that any potential financial aid package for Greece would not be enough to ease overall sovereign debt concerns within the euro zone. EUR/USD has been hovering around the 1.37 handle throughout the morning. Dealers added that option-related flows also subdued volatility in the session. Sterling is off its worst level but remains vulnerable to the whipsaw effects from another round of deadlocked polls ahead of the pending June election.

***Looking Ahead***
- 12:30 (IS) Israel Feb Consumer Prices M/M: -0.4%e v -0.7% prior; Y/Y: 3.5%e v 3.8% prior
- 13:00 (US) Mar NAHB Housing Market Index

Written by Trade the News

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