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Trader Talk: An Analysis of the Markets this Morning

Good morning,

Markets are called lower this morning.

European stock-index futures declined and Asian stocks fell, led by the biggest plunge in Japan’s Topix index in five months. Federal Reserve board members Charles Plosser and Richard Fisher are scheduled to speak today after Atlanta Fed President Dennis Lockhart yesterday backed reductions in bond buying in the U.S., where retail sales data are due today. European industrial output figures will also be released. Japan’s current-account deficit widened to a record, underscoring challenges for Prime Minister Shinzo Abe as he tries to drive a sustained economic rebound.

JP Morgan and Wells Fargo report results today

J.P. Morgan and Wells Fargo kick off bank earnings season bright and early Tuesday morning. Analysts expect J.P. Morgan to post a drop in both earnings and profits compared to the fourth quarter of 2012. Wells Fargo is expected to see an uptick in profits despite a dip in revenues.

For J.P. Morgan, analysts are predicting fourth quarter earnings of $5.2 billion, or $1.35 per share, on revenues of $23.7 billion. J.P. Morgan earned $5.7 billion, or $1.39 per share, on $24.4 billion in revenues.

At Wells Fargo, analysts are estimating fourth quarter earnings of $5.3 billion, 98 cents per share, on revenues of $20.7 billion. Last year, the bank reported net income of $5.1 billion, or 91 cents per share, on $21.9 billion in revenues.

Shares of both banks have spiked dramatically in the past year. J.P. Morgan’s stock has gained 27% in the past year and is hovering around all-time highs. Shares of Wells Fargo have jumped 33.5% in the past year.

WHAT TO WATCH:

• ECB Candidate Lautenschlaeger Backs Euro Bank-Failure Authority

• Stimulus Can’t Drag Finland Out of Crisis: Prime Minister

• Spain Says CAM Savings Bank Rescue Cost May Reach $21 Billion

• Banks in Denmark Face Tougher Credit Rules to Tackle Record Debt

• Rabobank Ex-Traders Charged by U.S. With Yen Libor Rigging

• EDF Sells 100-Year Bonds in Biggest U.S. Corporate Issue of 2014

• McKesson Fails to Gain Stakeholder Support for Celesio Bid

• Volvo Returned to Operating Profit in 2013, CEO Says: Reuters

• Chrysler Says Jeep to Reach 1 Million Sales Worldwide by 2015

• BMW Targets Record 2014 Sales as German Luxury Rivals Take Aim

• Lamborghini Plans to Introduce SUV in 2017: CEO Winkelmann

• Maserati ‘On Pace’ to Boost Sales to 50,000 in 2015: CEO

• Sacyr Says It Will Finish Panama Canal Work After Halt Threat

• Actelion Says Opsumit Has Strong Demand Since U.S. Introduction

• Jeronimo Martins 2013 rev. EU11.83b vs est. EU11.87b

EARNINGS All times CET, estimates where available:

• ASOS (ASC LN) 8am, 1Q sales/trading

• Balfour Beatty (BBY LN) 8am, 4Q sales/trading

• Barratt (BDEV LN) 8am, 2Q sales/trading

• Casino (CO FP) post-mkt, FY sales EU49b

• Countrywide (CWD LN) 8am, 4Q sales/trading

• Geberit (GEBN VX) 8am, FY sales CHF2.29b

• IG Group Holdings (IGG LN) 8am, 1H

• Lindt & Spruengli (LISN SW) 7am, FY sales CHF2.86b

• Michael Page (MPI LN) 8am, 4Q sales/trading

• Sika (SIK VX) 2013 sales CHF5.14b; est. CHF$5.09b

Good day and happy trading!

Kristian Camenzuli

The Calamatta Cuschieri Traders Blog is available daily on CC WebTrader. Other market coverage including coverage of the International Bond Markets is also available.

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