Retail Sales Excel, but Europe Still Weighs

Stock futures jumped 5 points as March retail sales, up 0.8 percent, came in much stronger than expected. Autos (up 0.9 percent) and building materials (up 3 percent!) were standouts. This again suggests that warmer weather was indeed a factor and that may be pulling gains from April and May.

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China's decision to expand the trading band for the yuan, which would have been a big development in a calmer atmosphere, has been overshadowed by continuing concerns in southern Europe. Though the French and German markets are up, most banks are down, and Spain is down, with Spanish 10-year yields at 6.08 percent, the highest level since December. At $1.30, the euro is at its lowest level since January.

Over the weekend, a deputy minister in the Spanish Economy Ministry came out and said the European Central Bank should begin purchasing Spanish bonds again.

It's clear the ECB is unsure of what, if anything, it should be doing to further support Spain. Executive Board member Benoit Coeure said last week the bank could revive its bond buying program, but Klaas Knot, his Dutch colleague on the board, said yesterday that they were "very far" from doing any more buying.

Politicians are everywhere: The French elections are next weekend.


1) China's announcement that it would expand the trading band for the yuan — allowing it to move within 1 percent on a daily basis above or below the daily official rate, rather than 0.5 percent — was greeted by some China bulls as a sign that the yuan would be allowed to continue to appreciate higher.

But why? This seems more political than economic: The G20 meeting is coming, and the International Monetary Fund is meeting next week. Most this morning dismissed the move as an effort to appease international authorities.

2) Mattel shares drop 4.7 percent pre-market after the toymaker missed first-quarter expectations on the top-line and bottom-line due to prices increases that weighed on sales of its iconic Barbie dolls and Hot Wheel cars. Mattel reported first-quarter earnings per share of $0.06, versus analysts’ $0.07 estimate. Sales slipped 2 percent to $928.4 million, including a percentage point hit due to an unfavorable change in currency exchange rates. The Street expected sales of $989 million. Mattel, which generates half of its revenue outside the U.S., saw international sales jump 7 percent, while North American sales slid 9 percent.

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