Stocks recalibrate after US Corporations reset 2015 expectations

Economic Data

- (BR) Brazil Dec Total Outstanding Loans (BRL): 3.022T v 2.963T prior; M/M: 2.0% v 1.3% prior; Private Banks Lending (BRL): 1.402T v 1.377T prior; Personal Loan Default Rate: 6.5 v 6.6% prior
- (US) Goldman Economist: Chain Store Sales w/e Jan 23rd w/w: -0.6%; y/y: 2.6%
- (HU) Hungary Central Bank (NBH) left its Base Rate unchanged at 2.10%, as expected
- (US) Dec Durable Goods Orders: -3.4% v +0.3%e; Durables Ex Transportation: -0.8% v +0.6%e; Capital Goods Orders (Non-defense/ex-aircraft): -0.6% v +0.9%e; Capital Goods Shipments (Non-defense/ex-aircraft): -0.2% v +1.0%e; Durables Ex-Defense: -0.6% v -1.4% prior
- (US) Redbook Retail Sales w/e Jan 23rd: 3.2% y/y, Jan MTD: +3.3% m/m; Jan MTD: -3.6% y/y
- (US) S&P/CaseShiller 20 City M/M: 0.74% v 0.60%e; Y/Y: 4.31% v 4.30%e; HPI NSA: 172.94 v 172.96e
- (MX) Mexico Dec Trade Balance: $0.2B v $0.7Be
- (MX) Mexico Nov Economic Activity Index (Monthly GDP) Y/Y: 2.0% v 2.3%e
- (EU) Weekly ECB Forex Reserves: €243.4B v €241.7B prior
- (US) Jan Preliminary Markit Services PMI: 54.0 v 53.8e; Composite PMI: 54.2 v 53.5 prior
- (US) Dec New Home Sales: 481K v 450Ke
- (US) Jan Consumer Confidence Index: 102.9 v 95.5e (highest since Aug 2007)
- (US) Jan Richmond Fed Manufacturing Index: 6 v 5e

- US equity trading got off to a particularly rough start today. Disappointing US data and some concerning US corporate updates delivered the major blow. The US Dollar has reversed its recent strengthening trend and is giving ground across the globe, while US Treasury markets remain a safe haven which has pressured the 10-year yield back down towards 1.75%. Expectations for US Fed rate liftoff continue to get pushed back by many as disappointing growth in Europe and Asia, negative corporate effects of the stronger US Dollar, and sharply lower commodity prices give the FOMC the room to remain "patient". Doubleline's Gundlach warned a rate rise could even lead to deflation in the US while Morgan Stanley said they wouldn't expect a hike before March 2016.

- The tone was set in Asia when China reported Dec Industrial production -8% which was down twice as much as it was in Nov. US Dec durable goods figures only added to growing growth jitters when they were lower across the board and handily missed expectations. The prior month's numbers were also revised lower and into negative territory for all segments as well.

- The largest anchor to investor sentiment today though was high profile US earnings reports. All 30 of the Dow components are in the red. Microsoft has slid 10% largely on declining expectations for 2015. A stronger US Dollar and declining sales outlook in China were the major culprits and a theme would resurface repeatedly in corporate commentary. Though commercial cloud revenue continued to grow more than 100% that growth was lower q/q. Caterpillar has lost 7+% after dramatically lowering already low expectations. Headwinds from lower energy and commodity prices piggy backed lower Chinese growth and a stronger dollar resulting in a FY15 rev outlook that was 10% below analysts' consensus. Procter & Gamble missed quarterly expectations and guided FY15 sales largely due to a 5% hit related to currency.

- US multinationals are seeing a small modicum of relief in FX markets today. The Euro in particular as gained momentum to the upside that commenced early yesterday after briefly hitting a fresh 11-year low below 1.11. Talk of potential SNB intervention early in the session helped sentiment overall then disappointing US data and corporate commentary had the EUR/USD back above 1.14 briefly. That pair has regained pretty much all the declines seen post the ECB's QE announcement on the 22nd. The Russian Ruble has even bounced some 2+% while the Dollar index is done just under 1%. Gold prices have tacked on 1% and are drifting back up towards $1300.

Looking Ahead

All times listed for economic events are denominated in Eastern Standard Time (Add 5 hours for GMT equivalent)
- 12:00 (FR) France Dec Net Change in Jobseekers: +15.5Ke v +27.4K prior; Total Jobseekers: 3.504Me v 3.488M prior
- 14:45 (CA) Bank of Canada (BOC) Dep Gov Wilkins
- 16:30 (US) Weekly API Oil Inventories
- 19:30 (AU) Australia Q4 CPI Q/Q: 0.3%e v 0.5% prior; Y/Y: 1.8%e v 2.3% prior