EconomyMarch's retail sales data and major bank earnings could set the tone for markets on Tuesday, as traders keep a close watch on the early morning reports. After February's decline of 0.6%, economists are looking for a rebound in store sales, which is expected to have gained 1.1% last month, driven by strong auto sales and higher discretionary spending. JPMorgan (NYSE:JPM) and Wells Fargo (NYSE:WFC) are also scheduled to report this morning, while eyes will be on Johnson & Johnson (NYSE:JNJ) for what the healthcare giant might say about the dollar's impact on foreign sales.
The U.S. ended the month of March with a budget deficit of $53B, up 43% from the same period last year, bringing the current fiscal YTD deficit to $439B at the end of last month. Meanwhile, Fitch has affirmed the U.S.'s long-term default ratings at "AAA," citing the country's "unparalleled" financing flexibility as the issuer of the world's pre-eminent reserve currency and benchmark fixed-income asset. Fitch also expects the U.S. to grow 3% in 2015, before decelerating slightly in 2016.
Greece is preparing to take the dramatic step of declaring a debt default unless it can reach a deal with its international creditors by the end of April, FTreports. "We have come to the end of the road...If the Europeans won't release bailout cash, there is no alternative [to a default]," one government official said. Athens has also decided to withhold €2.5B of payments due to the IMF in May and June if an agreement is not struck.
Cyberattacks and cybercrime against large companies – those with over 2,500 employees - rose 40% globally in 2014, according to Symantec's annual Internet Security Threat study published Tuesday. Attacks on small- and medium-sized companies, which accounted for 60% of targeted attacks, increased 26% and 30%, respectively. Despite the large hacks at Home Depot (NYSE:HD), JPMorgan (JPM), Staples (NASDAQ:SPLS) and Sony (NYSE:SNE), Symantec says the mining industry, which includes oil & gas, was the most-targeted sector last year.
Stocks
Following rumors of a tie-up, Nokia (NYSE:NOK) has confirmed it is in advanced talks to buy Alcatel-Lucent (NYSE:ALU), although it wasn't clear if the parties agreed on a valuation. In a joint statement, the companies said a potential merger would take the form of a public exchange offer by Nokia for the French company. Alcatel-Lucent's market capitalization currently stands at approximately €11B, while Nokia's is about €28B. NOK -8%; ALU +4.1%premarket.
Following rumors of a tie-up, Nokia (NYSE:NOK) has confirmed it is in advanced talks to buy Alcatel-Lucent (NYSE:ALU), although it wasn't clear if the parties agreed on a valuation. In a joint statement, the companies said a potential merger would take the form of a public exchange offer by Nokia for the French company. Alcatel-Lucent's market capitalization currently stands at approximately €11B, while Nokia's is about €28B. NOK -8%; ALU +4.1%premarket.
Holcim and Lafarge have named the candidates for their combined company's board of directors, with each firm receiving seven seats. The 14 members are due to be elected at its extraordinary general meeting on May 8. Last week, Lafarge (OTCPK:LFRGY) and Holcim (OTCPK:HCMLY) chose veteran Lafarge executive Eric Olsen to be chief executive of the new $44B merged company.
Staples CEO Ron Sargent's total compensation grew 15% to $12.4M last year after the office supply retailer's profitability improved despite sagging sales. Shares ended last year 14% higher, helped out by activist Starboard Value's 6% stake in the company and talk of a potential merger with Office Depot (NASDAQ:ODP) in December. Staples' (SPLS) executive compensation program has still come under fire from some proxy advisory firms, which say that changes layered new payments atop an existing compensation plan that paid executives less.
Looking to grab a bigger chunk of the burgeoning healthcare analytics market, IBM (NYSE:IBM) is buying Phytel, a provider of cloud-based patient software, and Explorys, a provider of a massive clinical database. Both companies are being added to a new Watson Health unit based out of Boston. As part of the effort, Big Blue will also launch the Watson Health Cloud, which will partner with Apple (NASDAQ:AAPL) to provide data analytics to the healthcare sector. IBM will also team with Medtronic (NYSE:MDT) and Johnson & Johnson (JNJ) to create health systems and solutions.
Amazon and HarperCollins have reached a new multi-year publishing deal - expected to go into effect this week - that covers both print and digital titles. The agreement calls for HarperCollins (NASDAQ:NWSA) to set the retail prices of its digital books, with incentives for HarperCollins to provide lower prices to consumers. In November, Amazon (NASDAQ:AMZN) ended its brutal battle with Hachette over print and e-books, following a six month stand-off that battered the French-owned publisher’s sales.
Procter & Gamble CEO A.G. Lafley appears to be laying the groundwork to step down as soon as this summer, WSJ reports. The move could bring more uncertainty for P&G (NYSE:PG), though reports suggest the company is setting up for an internal replacement, who's widely expected to be 35-year veteran David Taylor. Lafley, who was CEO from 2000-2009, came out of retirement two years ago with a mandate to revive the company and find a new successor.
eBay has announced the appointment of three new executives as part of a leadership shakeup prior to the planned split of its PayPal unit in the second half of 2015. Home Depot (HD) executive Hal Lawton will join the company as head of eBay (NASDAQ:EBAY) North America, Agilent's (NYSE:A) Marie Oh Huber has been named eBay General Counsel, while Scott Cutler, most recently the head of global listings at the NYSE, has been named president of StubHub.
Petrobras expects to release its long-delayed audited financial results for 2014 as early as next Wednesday, in the wake of a corruption scandal that has extended to the highest levels of Brazil's government. The results, which have been delayed for more than five months, will help the state-controlled oil company avert a default on as much as $54B in bonds. PBR shares haveplunged more than 50% since the scandal gained traction in early October.
Ending a self-imposed three-year freeze on new investments, Toyota (NYSE:TM) will spend $1B to build a new car factory in Mexico and plans to announce the investment on Wednesday, sources told Reuters. The 200K-cars-a-year factory – Toyota's first to build passenger cars in Mexico - is expected to create about 2,400 direct jobs.
United Launch Alliance, a joint venture of Lockheed Martin (NYSE:LMT) and Boeing (NYSE:BA), has unveiled a reusable rocket named "Vulcan" that is slated to take off in 2019 and end U.S. dependence on Russian-built rocket engines. Russian-made RD-180 engines currently power ULA's Atlas rocket, but Congress has banned further imports as part of trade sanctions enacted after Russia invaded Ukraine last year. Vulcan's reusable engines are likely to slash satellite-launch costs and provide a stepping-stone to various commercial space ventures.
Today's Markets:
In Asia, Japan flat at 19909. Hong Kong -1.6% to 27561. China +0.3% to 4136. India +0.6% to 29044.
In Europe, at midday, London +0.1%. Paris -0.4%. Frankfurt -0.4%.
Futures at 6:20: Dow -0.2%. S&P -0.2%. Nasdaq -0.3%. Crude +1% to $52.45. Gold -0.8% to $1189.30.
Ten-year Treasury Yield -1 bps to 1.94%
Today's economic calendar:
7:30 NFIB Small Business Optimism Index
8:30 Producer Price Index
8:30 Retail Sales
8:55 Redbook Chain Store Sales
10:00 Business Inventories
7:30 NFIB Small Business Optimism Index
8:30 Producer Price Index
8:30 Retail Sales
8:55 Redbook Chain Store Sales
10:00 Business Inventories
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