Overnight economic data out of Europe showed European growth slowing more than was expected. Eurozone GDP fell 0.2% in the first quarter, up from a -0.6% decline in the fourth quarter of 2012, but worse than the -0.1% estimate. Growth in France returned to a quarterly contraction, falling to a 0.2% contraction.
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In US economic data this morning, the New York regional manufacturing survey fell to a reading of 1.43, lower than the 4.00 estimate and down from 3.05 last month. Annual producer prices rose 0.6%, which was below the 0.8% estimate and down from 1.1% the month prior. Recently, manufacturers have expressed optimism that the falling prices may be a reason to increase production and restock low inventories. Net asset flows in the US rose $2.1 billion in March. The two largest holders of US Treasuries, Japan and China, were net sellers of $1.9 billion. Lastly, the NAHB Housing Market Index of homebuilders and real estate agent confidence turned up after falling the last three months. The index rose to 44 from 41 last month after falling from a peak of 47. Last year the index saw a reading of 28 and peaked at 72 in 2005.
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US equities dipped into the red in very early trading, but shot up in the late morning and ended in positive territory. The defensive utilities, telecom, and consumer staples were the leading sectors, though, and they were all up more than 0.75%. Treasuries, however, stopped the flush that has been occurring since April's nonfarm payrolls report, and the 10-year yield was down 4 basis points to 1.935%
The dollar was generally higher as the euro struggled and finished at 1.2882, down 38 pips vs the dollar. Commodities were generally weaker, coinciding with the higher dollar. Although oil was down as much as $1 on a weaker oil inventories report, it ignited near noon to close near unchanged.
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Tesla (TSLA) filed to sell 2.7 million shares (about $229.5 million at today's closing price) and $450 million in convertible debt to pay down existing debt. Additionally, CEO Elon Musk will acquire $100 million of the new equity shares, which provides a positive backing for the deal. Tesla's stock has risen 150.49% this year, and it has recently gone parabolic as consumer reviews for the company's electric cars have turned more favorable.
Tomorrow's Financial Outlook
Tomorrow will be another robust day for economic data in the US. Consumer inflation prices will be released in the morning along with housing starts and building permits. Consumer price inflation is expected to decline to an annual rate of 1.4%, down from 1.5% the month prior. Housing starts are expected to decline to an annual rate of 980,000 in April, down from 1.036 million the month prior. Building permits are expected to increase to 941,000 from 907,000 on increased housing activity. The Philadelphia regional manufacturing survey will also be released. Philadelphia's region is one of the more significant surveys and is expected to continue to remain expansionary at a reading of 2.8, up from 1.3 in April.
Global economic data will be lighter with Japan releasing industrial production data and the eurozone releasing consumer price inflation data. Eurozone inflation is expected to remain unchanged from the initial 1.2% annualized reading, and core inflation is also expected to remain unchanged at 1.0%.