10 Things You Need To Know Before the Opening Bell

10 Things Before Opening Bell

March 28, 2014

Good morning! Here's what you need to know.

Wal-Mart suing Visa. The retail giant is accusing the credit-card behemoth of violating antitrust statutes by setting uncompetitive swipe fees. Wal-Mart is seeking $5 billion in claims. Visa shares were down 1% this pre-market.

Hilsenrath. WSJ's Jon Hilsenrath says the Fed has begun pondering what a rate increase would look like when the time comes to raise them. "When the Fed first raises the rate, it will have several choices," he writes. "It could first firm the rate at the upper end of that range, 0.25%, and proceed later to lifting it higher. Alternatively, it could go straight to a higher level of 0.5%. Or it could lift the fed funds rate from a range of zero to 0.25% to a range of 0.25% to 0.5%."

Amazon denies TV report. Amazon is denying a report from Greg Bensinger at The Wall Street Journal reports that it is planning to release a free video-streaming service. In an email to Variety, Amazon spokesperson Sally Fouts said, “We’re often experimenting with new things, but we have no plans to offer a free streaming-media service."

Spanish deflation and the Euro. Spain has officially entered deflationary territory as consumer prices contracted 0.2% YOY in March. As a result, the Euro is getting crushed on expectations the ECB will move aggressively to counteract the development.

Record UK trade deficit. The UK's current account deficit now totals $71 billion, or 5.4% of GDP, said to be a record. "However, relatively little of this is due to deteriorating net trade," the FT says. "Most of the decline stems from falling income from UK assets overseas, compared with income from foreign-owned assets in the UK." Services and consumer spending are continuing to drive the UK economic recovery. Services activity kicked up 3.2% YOY.

Markets. Stocks were mostly higher across the world, led by Hong Kong's Hang Seng and Germany's Deutsche Boerse, both at 1%. U.S. futuers are higher. Gold is up slightly. Lumber contracts were up 3%.

Blackberry earnings. Blackberry turned a Q4 adjusted loss of $0.08, beating expectations for a loss of $0.57. Revenues of $976 million just missed expectations. Shares were up 4% pre-market.

Personal income. At 8:30 a.m. we get personal income and outlays for February. Income and spending are both expected to have increased 0.3%. Core PCE is expected to be up 0.1%.

Consumer confidence. The University of Michigan will release its consumer confidence survey for March just before 10 a.m.. Consensus is for an increase of 0.6 to 80.5.

FT: Banks hit back at Fed stress tests. Wall Street is complaining that the process is highly untransparent. “It’s not a game,” said one executive at a bank which passed the test. “If they want to strengthen the system they should say beforehand where they don’t agree with the way you measure or forecast.” And an official at Citi, whose capital plan the Fed flunked, said “every year the Fed has to pick on someone and this year it was us – it seems because of our global complexity”.

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Below is a Q&A with Jeff Johnson, chief science officer at Schneider Electric and Bryce Anderson, senior ag meteorologist at DTN/The Progressive Farmer, a company of Schneider Electric.

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BUSINESS INSIDER: How will this spring's weather compare with last year's?

JEFF JOHNSON: Spring of 2013 was colder than normal east of the Rockies, while western areas were mild. That trend is playing out again so far, with the cool pattern likely continuing through April and possibly May. South central and southeast parts of the U.S. have a better chance of trending closer to, or slightly above, normal for the latter part of spring.

The milder pattern for the western U.S. should remain intact again this spring. Last year it was quite dry in the West, but recent trends suggest more precipitation will occur in northern California through the northwest U.S. this spring. Unfortunately not enough to end the drought, but beneficial rains will occur. It was quite wet in the Midwest and Great Lakes area in 2013. This spring also looks wet for this region as well as the Northeast.

BI: What should farmers be paying attention to?

BRYCE ANDERSON: Farmers and ranchers across the U.S. will have several macro-scale weather trends to manage through during this 2014 season. The lingering effect of a very cold winter, along with continued occurrences of rain and some snow, are hindering the warming of soils for spring field work in the Midwest. Planting of row crops -- corn and soybeans -- is likely to have a late start this season as a result. This late start does not appear to be as extreme as what we saw in 2013, but this will certainly not be an early-planting season; thus, midsummer temperatures will be eyed closely for their impact on conditions for corn pollination.

In the southern Plains, drought conditions are in effect for the fourth consecutive year. Wheat and pastures are in critical need of precipitation, but the likelihood of a complete turnaround to a beneficial rainfall trend is very low through this spring into early summer. Wheat markets have built in a “risk premium” as a result. The lack of rain is hindering the re-stocking of cow herds in the region after ranchers were forced to sell some of their herds during the worst of the drought in 2011 due to a lack of feed. Similar conditions are in effect across the southwestern U.S. and Far West where considerations are being given to switching crop plans and emphasizing crops that use less water.

BI: What will the lasting damage to California be from this drought? What crops will have been most impacted?

BA: The drought in California is causing much consternation on the part of agriculture to successfully deal with such an extensive loss of water resources. As we have seen in the southern Plains, cattle herds are being culled due to reduced feed supplies and the extremely high prices of feed that is available. The re-building of these herds could take the rest of this decade to accomplish.

Another effect the entire U.S. economy may already feel is in the form of highly expensive produce due to reduced production in California. Growers are deciding whether to irrigate trees versus field crops. In many cases, growers will choose to keep tree crops watered due to the extensive amount of time they take to replenish. However, that strategy will take water away from melons and vegetables. If next winter offers as little precipitation in the Far West as it did this year, this situation may last more than one season.

BI: What can be done to prepare for the extreme weather you're forecasting?

JJ: Much like last year, snow threats will linger into spring across the northern U.S. While these spring snows tend to melt off quickly, they may still require snow removal and delay produce travel. Chilly weather will be slow to depart the north central and northeast areas of the U.S. This will extend the heating season, adding to the cost. The area at greatest risk of seeing periods of extreme heat later in the spring extends from the Southwest into Texas.

Similar to last year, a near to slightly above active severe weather season will likely evolve. Cool temperatures in the northern areas will delay the northward progression of severe weather, but the Central and Southern Plains into the Mid-Mississippi Valley will be active. Significant storm outbreaks will be possible in this region – widespread severe storms and tornadoes with a few of the stronger events. Much like last year, 2014 has started out slow in terms of severe weather due to the cool pattern. Vigilance needs to be maintained as severe weather can develop quickly this time of the year. Flooding will be an elevated threat in the Upper Midwest, Great Lakes region and northern New England into mid-spring. Delayed snow melt combined with above normal spring rainfall will also increase the risk of river flooding for those areas.

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