Futures are slightly higher this morning (+25bps) ahead of this afternoon’s FOMC announcement. In economic news, Import Prices were -0.3% for February (vs. -0.2% expected), which is down from the revised +1.3% for January. Year-over-year, Import Prices came in at +11.2% vs. the +11.3% estimate. Housing Starts were largely in-line, at 575k vs. the 570k expectation, but lower than the prior 611k for January. Building Permits for February were also in-line, at 612k vs. the 601k estimate. Month-over-month, Building Permits are down only 1.6%, which is favorable versus the -3.4% estimate and January’s -4.7%. In corporate news, the WSJ reports that Wal-Mart will double the locations (to 1,500) that offer financial services. Additionally, the WSJ reports that MSFT may be the ultimate beneficiary if GOOG retracts from China Greece ’s lifeline appears to be taking shape out of a two-day European finance ministers meeting in Brussels
European finance ministers laid the groundwork for a financial lifeline to debt-stricken Greece Greece Brussels
In political news, the Senate’s HealthCare bill is expected for vote before the House some time this week. Further, the WSJ’s “Heard on the Street” column – along with most political pundits – is lukewarm on Senator Dodd’s Financial Regulation proposal. Most agree that it is watered-down legislation that portends very little impact. According to Bloomberg news, “Senate Banking Committee Chairman Christopher Dodd’s plan for the biggest Wall Street regulatory overhaul since the 1930s drops provisions he sought in November and dilutes others as he seeks bipartisan support.” BTIG’s Mike O’Rourke made an interesting comment – thoroughly glimpsing the forest through the trees – in his note last night:
Today was Chris Dodd’s big day. The Connecticut Senator unveiled the ‘‘Restoring American Financial Stability Act of 2010’’. The casual observer has to wonder whether Dodd’s literal solo appearance at the podium is any indication of the likely success of this measure, at least in its current form. One thing legislators are not known for is being camera shy, so it was interesting to see a politically popular piece of legislation unveiled by Dodd alone.
Volumes remain light overall – the NASDAQ was 20% below the 50-day average yesterday, and the NYSE was 10% lower. Note that Tim Geithner will testify before the House budget committee starting at 10am today, and both Bernanke and Volcker will testify there tomorrow. A large part of my goal here is to provide access to commentary from “the street,” rather than prating on myself. In that spirit, I think this paragraph from the Barclay’s desk sums things up nicely this morning:
Fed day is always boring, expect light volumes. The focus of today’s 2:15pm release will be any change in language from current conditions "warrant exceptionally low levels of federal funds rate for an extended period." We have a glimmer of hope for excitement at 8:30am with Starts & Permits but I doubt it. Asian markets were down 28 bps overnight but somehow European equities rallied 80 bps on an emergency European loan packed easing concerns around a potential Greece
Regarding the specifics of the FOMC’s wording, KBWI had the following commentary this morning:
Quiet research note today ahead of the Fed decision…..we are in the camp that the FED will remove some of its accommodative language in the release as we believe it is likely that it will remove or modify the "extended period" language from its post-meeting statement which, we think, would be another step in removing the extraordinary measures put in place for the financial crisis-----If correct this will obviously be a fairly negative data point for financials in general as it would most likely mark an inflection point in Interest Rate policy and therefore underlying Bank’s profitability – while the bullish in the crowd would certainly spin this that is another indication that the worst is behind us & it’s time to buy them all……but if the language is removed or changed to a less dovish tone, this would definitely cause a knee-jerk higher in the Asset Sensitive plays – AMTD, BK, CFR, CMA, CME, DFS, FII, FULT, ICE, MF, MTB, NTRS, OXPS, PVTB, SCHW, SF, SIVB & TRAD – and a move lower in the MBS REITs – AGNC, ANH, CIM, CMO, HTS, IVR, MFA, NLY, RWT & WAC
BCAP ups CLX. WEFA cuts PSYS. WSJ positive NKE ahead of tomorrow’s earnings. WYN downgrade at GSCO. LTD announces dividend and buyback. ALXN added to Conviction Buy list at GSCO. ATHN higher on earnings. PIPR cuts CAKE, EAT. BMOC cuts CBI. GSCO ups CVH, ONXX, PRXL. DB reits net income estimates. FPO, GEL, GLP announce secondary. MCHP raises guidance. MPEL upgrade at CSFB. RDS/A announces increase to production. UBSS ups SBUX. PIPR ups SONC. SQNM misses by 5c. GSCO cuts UAM.
S&P 500 PreMarket 8:30am (last/% change prior close/volume):
AES CORP 11.94 +3.2 % 4411
WYNDHAM WORLDWID 24.00 -3.03% 540
LTD BRANDS INC 24.35 +2.7 % 53317
STARBUCKS CORP 25.03 +2.5 % 47155
ANHEUSER-SPN ADR 51.06 +2.14% 3127
MICROCHIP TECH 28.43 +2.12% 2700
AK STEEL HLDG 23.48 +2.0 % 16225
Today’s Trivia: What fish is most poisonous to humans?
Yesterday's Answer: The year after a school wins the NCAA basketball tournament, applications rise 75% on average!
Jami Rubin, Matthew Borsch, and our Healthcare team are making changes to our Healthcare conviction list as we seek to increase our exposure to higher beta and smaller cap names. In addition, we are reducing our exposure to managed care as our Washington DC
| NAME | ANALYST | | ACTION | TO | FROM |
| | Rubin | ▲ | UPGRADE | NEUTRAL | CONVICTION SELL |
| ONYX PHARMACEUTICALS INC. (ONXX) | Li | ▲ | UPGRADE | BUY | NEUTRAL |
| PAREXEL INTERNATIONAL CORP. (PRXL) | Jones | ▲ | UPGRADE | BUY | NEUTRAL |
| | Roman | ▼ | DOWNGRADE | CONVICTION SELL | NEUTRAL |
| UNIVERSAL AMERICAN CORP (UAM) | Miller | ▼ | DOWNGRADE | CONVICTION SELL | NEUTRAL |
| ALEXION PHARMACEUTICALS INC (ALXN) | Li | ▲ | ADD TO CL | CONVICTION BUY | BUY |
| ICON PLC (ICLR) | Jones | ▲ | ADD TO CL | CONVICTION BUY | BUY |
| KIMBERLY-CLARK CORP (KMB) | Sawyer | ▼ | ADD TO CL | CONVICTION SELL | SELL |
| ST. JUDE MEDICAL INC. (STJ) | Roman | ▲ | REMOVE FROM CL | SELL | CONVICTION SELL |
| TEVA PHARMACEUTICALS (TEVA) | Stanicky | ▼ | REMOVE FROM CL | BUY | CONVICTION BUY |
| UNITED HEALTH GROUP (UNH) | Borsch | ▼ | REMOVE FROM CL | BUY | CONVICTION BUY |
| DOMTAR CORPORATION (UFS) | Skidmore | ▲ | ADDING TO CL | CONVICTION BUY | BUY |
| WYNDHAM WORLDWIDE CORP (WYN) | | ▼ | DOWNGRADE | NEUTRAL | BUY |
| BRISTOW GROUP INC. (BRS) | Dayen | - | INITIATE | NEUTRAL | - |
