U.S. equity futures are higher this morning as the market tries to build on last week’s move. Stocks were lower overnight as Asia was down sharply. Japan recovered losses but China still finished down almost 2%. There is little for investors to key in on today as earnings season is winding down and the lone major economic reports scheduled to be released today are the Chicago Fed National Activity index and the Dallas Fed Manufacturing Index. Both are relatively minor in scope, but should give some indication as to how the winter weather affected two different parts of the country. Volatility actually expanded during last Friday’s mixed session for equities. The CBOE Volatility Index (VIX) rose into the end of last week but still remains low as investors are not overly concerned about any downside risk at this point. With stocks near all-time highs, any break in the trend could send volatility spiking higher very quickly as complacency is once again present.
Treasuries are little changed with the 10-year yield near 2.73%. A stronger Yen weighed on the Nikkei as it fell sharply. Europe is slightly higher today as the German business climate index has increased to its highest level in 2 1/2 years. Also, the Euro-zone CPI dropped 1.1% on month in January with the fall much sharper than the 0.4% decline that was expected. There is some calm in the Ukraine after the ouster of President Yanukovych as the IMF scrambles to produce a bailout package for the country. The G20 issued a rather benign statement about boosting growth over the weekend. With little on the agenda as far as data and earnings today, the market may be looking ahead to the second part of Fed Chair Yellen's Monetary Policy testimony, which is now slated for Thursday.
Stock Stories:
Netflix (NFLX) –Good/Bad – The internet entertainment leader announced a deal between a service provider for higher streaming speeds. The company and Comcast (CMCSA) will likely create margin leverage headwinds for Netflix over the short-term, but removes a major structural concern for the company. There are expectations for Netflix to make other, similar deals in the U.S. and abroad, which may make the company re-think their pricing model.
