10 Things You Need To Know Before The Opening Bell

10 Things Before Opening Bell

March 25, 2014

China bank panic. Customers at a small bank north of Shanghai rushed to withdraw their funds after rumors spread about its solvency. "The case highlights the urgency of plans to implement a deposit insurance system to protect investors' deposits in case of bank insolvency, given that Chinese are growing increasingly nervous about the impact that slowing economic growth will have on the viability of financial institutions," Reuters said.

Bond fraud? The SEC is investigating whether a spate of new, complicated bond deals are creating new opportunities for fraud, the Wall Street Journal's Jean Eaglesham and Katy Burne report. "SEC investigators are now homing in on a postcrisis resurgence in a similar type of deal called a collateralized loan obligation, or CLO. This is an investment based on pools of loans that financial firms make to companies with lower credit ratings that are sliced up, packaged and sold to deep-pocketed investors."

Box IPO. The "Dropbox for businesses" cloud storage company filed for an IPO. The firm says it had annual revenues of $124 million. In December the company was reported to be worth $2 billion.

UK inflation falls. Prices hit grew at the slowest rate since 2009, mainly due to a decline in gas prices. Headline yearly inflation last month slipped to 1.7% from 1.9% in January, broadly in line with analyst expectations but below the BOE's target of 2%. But home prices jumped most since 2010.

Busy day in housing data. First up at 9 a.m. are both FHFA and Case-Shiller home prices. Growth in both are expected to have slowed a bit to 0.6% versus 0.8% prior. At 10 a.m. we get new home sales, also expected to have come down a bit, to 445,000 from 468,000.

Consumer confidence. Expectations are for a slight uptick to 78.5 from 78.1 prior. The data hits at 10 a.m.

Richmond Fed. Finally at 10 a.m. we also get the Richmond Fed's latest survey of business activity, expected to have improved to 4 from -6.

Markets. Asian stocks fell, while European stocks climbed. U.S. futures were up.

Earnings. Walgreen's and Carnival Cruise Lines report this morning.

Obama to end NSA bulk data collection. In the wake of a meeting with tech honchos including Mark Zuckerberg, President Obama is calling for the winding down of the NSA's bulk data collection program. "The bulk records would stay in the hands of phone companies, which would not be required to retain the data for any longer than they normally would," the New York Times' Charlie Savage reports. "And the N.S.A. could obtain specific records only with permission from a judge, using a new kind of court order."

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Below is a Q&A with Gennadiy Goldberg, U.S. strategist at TD Securities.

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BUSINESS INSIDER: What is the most exciting trade out there right now, in your opinion?

GENNADIY GOLDBERG: The most interesting theme right now is the US recovery story – increasingly firmer US data following a period of weather-influenced weakness should give way to stronger Q2 growth – prompting markets to further reassess their stance on the US economy and the Fed. Underperformance in the Treasury curve belly is the most interesting play to take advantage of shifting expectations, with markets re-pricing for an earlier liftoff. This makes selling 5s on the 2s5s30s curve a particularly opportune trade, taking advantage of belly re-pricing while maintaining positive carry dynamics.

BI: Which developments in global financial markets, if any, would you flag as most concerning for risk appetite?

GG: Both the situation in Crimea and the Chinese growth story remain most concerning at the moment. Both should have relatively benign consequences on longer-term market trends, however, contributing to only short-term spurts of volatility. There has been great reluctance by the global community to implement meaningful sanctions on Russia in the wake of the Crimean annexation, and the Chinese growth story has increasingly contributed to less market volatility as the focus remains on the US recovery.

BI: Eurodollar shorts got a nice payoff on their record-large positions from yesterday's FOMC meeting. How do you think positioning will evolve between now and the next meeting?

GG: I think Eurodollar shorts will remain in vogue after the market’s significant re-pricing late last week. I would expect some profit taking following the move, but short positions are likely to continue building as the US recovery story gains further traction and data momentum begins to swing in a firmer direction.

BI: With the March FOMC meeting out of the way, what pieces of new information (e.g. economic data releases, price action in a given market over the next few days/weeks, etc.) do you think have the biggest potential to alter your outlook?

GG: With the Fed largely discounting recent economic slowing on the basis of weather, the data recovery story will come into full focus. We expect market direction to be driven largely by the evolution of 2014 growth projections, with a recovering outlook likely driving both stocks and Treasury yields higher.

BI: What do you perceive to be the most misunderstood trend or event in or characteristic of today's markets?

GG: In my opinion, the most underemphasized trend in global recovery story of late has been the importance of the US recovery. While concerns about EM and Chinese growth have dominated investor focus earlier this year, markets should remain more cognizant of the US growth story. Most global outlooks hinge on US growth leading the way higher this year, giving the US recovery added importance in the global growth puzzle.

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