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Swiss Franc Goes Off Euro - Ahead of Wall Street

Mark Vickery

Thursday, January 15, 2015

This is Mark Vickery covering for Sheraz Mian, who will be out of the office until next Tuesday.

So far, early Q4 2014 earnings season is being eclipsed by bigger headlines elsewhere. This morning, the Swiss National Bank has made the surprise decision to remove its long-standing exchange rate of 1.20 Swiss francs to 1 euro. Analysts consider this move strategically placed ahead of next week’s expected QE policy from the European Central Bank (ECB).

This jolt to the Eurozone markets sent Swiss stocks falling 11 percent, and has skewed futures in U.S. markets as well. Previously, expectations were for a positive open Thursday morning, but now futures have dipped back into the red.

Jobless Claims for the first full week of January leaped above 300K for the first time in awhile to 316K — an increase of 19,000 claims from last week. Obviously the energy sector was hit hard, down 6.6%, but claims also grew in services and residential markets as well. Continuing claims have now risen to a 4-month high.

We saw a positive read from the Empire State Manufacturing Survey this morning, up a higher-than-expected 9.95 percent. The previous month’s -3.65 percent read was revised upward to -1.23 percent. Count this as a glimmer of good news amid the clouds elsewhere.

The Producer Price Index (PPI) also performed slightly better than expected: -0.3 percent was up a tenth of 1 percent from the consensus. Minus food and energy — though these are admittedly even bigger factors than normal these days — the total swings to +0.3 percent. The PPI from last month was left unrevised. Year over year, PPI is up 1.1 percent — 2.1 percent subtracting energy.

Bank of America (BAC) released Q4 earnings that, like JPMorgan (JPM) before the bell yesterday, were lackluster. Profits were down 11 percent, citing the sluggish global economy and a downturn in trading and mortgage businesses. CEO Brian Moynihan still found room to cite “tremendous opportunities ahead,” but BAC shares are down 1.8 percent in the pre-market.

Finally, Target Corp. (TGT) has announced it is discontinuing its beleaguered and unprofitable Canadian operations. This has given TGT stock a boost in early morning trading: Target shares are up 7 percent from Wednesday afternoon’s close, and are now up to 52-week highs.

Mark Vickery
Senior Editor

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