THE DAY AHEAD

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For Monday, April 22, 2013

MARKET RECAP
Strength in most tech shares helped Wall Street rebound on Friday even as IBM tumbled, while Treasuries weakened as investors sought riskier assets. The yen fell across the board after industrialized nations said they supported Japan's quantitative easing program. Oil rose and gold bounced above the key $1,400 mark.
STOCKS DJIA Nasdaq S&P 500 Toronto Russell FTSE Eurofirst Nikkei Hang Seng Close 14547.51 3206.06 1555.25 12065.55 912.50 6286.59 1153.19 13316.48 22013.57 Yield 1.7032 0.2338 0.7032 Change 10.37 39.69 13.64 69.21 10.99 42.92 5.81 96.41 501.05 % Chng 0.07 1.25 0.88 0.58 1.22 0.69 0.51 0.73 2.33 Yr-high 14887.50 3306.95 1597.35 12904.71 954.00 6533.99 1209.05 13568.25 23944.74 Yr-low 12035.10 2726.68 1266.74 11209.55 729.75 5897.81 1132.73 10398.61 21423.25

COMING UP - NEXT WEEK

Apple earnings on Tuesday kick off the busiest week for quarterly
reports in the quarter. The iPhone maker continues to mull what to do with $117 billion in cash, a bankroll that its investors want more of. Other companies expected to report results include Netflix, Caterpillar and Texas Instruments. (See "What to Watch on Monday"). For a related Reuters Insider video, click here.

U.S. stock markets look to get back into an uptrend after a poor
week that saw disappointing results from blue-chip companies. With the G20 raising only mild concerns about the massive stimulus effort from the Bank of Japan and the discussions from EU officials about liquidity reduction, recent trends toward the dollar and away from the yen should remain in place. Treasuries remain near the lower end of their yield range but the recent meltdown in inflation-protected securities is perhaps a signal that bond yields won't rise all that much given the recent run of weak figures and declines in commodity prices.

On Thursday, the world's largest publicly traded oil company

Exxon Mobil and smaller U.S. rival ConocoPhillips report firstquarter results that each are likely to have benefited from a rebound in North American and European natural gas prices. Rival Chevron reports results on Friday.

TREASURIES 10-year 2-year 5-year 30-year COMMODITIES May crude $ Spot gold (NY/oz) $

Price FOREX -5 /32 Euro/Dollar 0 /32 Dollar/Yen -1 /32 Sterling/Dollar

Last % Chng 1.3054 99.55 1.5235 1.0258 0.03 1.45 -0.29 0.00

It's a light week for economic figures, with the main focus on the
first reading on first-quarter gross domestic product due on Friday. The U.S. economy is expected to have grown at a 3 percent annualized rate in the first three months of the year, rebounding from the paltry 0.4 percent pace seen in the fourth quarter. Still, analysts do not expect that rate of growth to be sustained into the rest of the year, with recent data already suggesting the economy cooled heading into the second quarter.

2.8817 -13 /32 Dollar/CAD Price 87.89 1400.86 3.1515 283.69 Price 85.60 47.10 31.27 56.17 6.06 190.00 17.49

$ change 0.16 10.11 -0.0530 0.29 $ change 32.73 4.87 2.07 3.38 -0.69 -17.15 -1.51

% change 0.18 0.73 -1.65 0.10 % change 61.91 11.53 7.09 6.40 -10.22 -8.28 -7.95

Copper U.S. (front month/lb) $ Reuters/Jefferies CRB Index

A report on durable goods is likely to add to that evidence and is

seen declining in March after a strong jump the month before. Investors will also get more data on the housing sector, with reports on existing and new home sales due at the start of the week. Sales of both are expected to have risen in March, a fresh sign the recovery in the sector is on track.

BIG MOVERS
Vertex Pharmaceuticals Celanese Alkermes Plc Capital One Financial Rambus International Business Machine Walter Energy

DuPont posts quarterly results on Tuesday, its first since settling a

multibillion-dollar lawsuit with rival Monsanto that eased shareholder concerns about the company's agricultural unit.

AT&T post results on Tuesday and the focus will be on wireless

margins and subscriber numbers.

For The Day Ahead - Canada, click here

THE DAY AHEAD

For April 22, 2013

COMING UP - NEXT WEEK (continued)

Ford Motor is expected to report earnings Wednesday. The
second-largest U.S. automaker lost market share in Europe during the quarter, which has sparked questions about whether Ford will have to ratchet down its expectations for the region. The company expects to lose $2 billion in Europe this year. pany's next generations of drugs are faring well in clinical trials.

When Amazon reports first-quarter results on Thursday, Wall

Street will be looking for signs that a recent deceleration in unit growth is not a long-term trend. Analysts and investors also hope that recent profitability gains, from lower shipping and fulfillment costs and the growth of higher-margin businesses, will continue.

Boeing posts results on Wednesday as well. For all of the

attention focused on Boeing's 787 battery, the problems are not expected to reduce the company's earnings by a large factor, since the costs are relatively small and can be spread out through special accounting.

Outgoing Bank of Canada Governor Mark Carney and top

deputy Tiff Macklem, widely seen as a potential successor, appear before Canadian parliamentary committees in Ottawa on Tuesday and Wednesday. The central bankers are likely to reiterate their reasons for maintaining a mild tightening bias even as the economy slows and Group of Seven peers focus on boosting growth. Canadian retail data out on Tuesday is expected to show the pace of sales growth slowed in February, reinforcing the view Canadian interest rates are unlikely to increase for a long time.

United Parcel Service is expected to post strong results on

Thursday. UPS, the second-biggest courier company after FedEx, is coming off a particularly difficult year, when customers cut back on air courier use.

Herbalife, the nutritional products company at the heart of a

battle between hedge fund titans Bill Ackman and Carl Icahn, will host its annual meeting of shareholders on Thursday. At the meeting Icahn's two board nominees will stand for election to the company's board.

Corporate Canada looks set to post lackluster quarterly results when some of its biggest companies start reporting next week. Wireless and cable provider Rogers Communications Inc and Canadian National Railway are among the first to report on Monday. Companies in the Toronto Stock Exchange's benchmark S&P/TSX composite index are expected to show only a 0.2 percent rise in earnings from a year earlier, according to Thomson Reuters StarMine SmartEstimates. But strategists say lowered expectations and the Canadian market's recent drop to a five-month low may set the stage for nearterm share price gains, as any earnings beats or optimistic outlooks are more likely to provide a boost.

Bristol-Myers Squibb, hurt by cheaper generic forms of its

Plavix blood clot preventer and Avapro blood pressure medicine, is expected to report sharply lower first-quarter sales and earnings. But shares of the U.S. drugmaker have jumped almost 25 percent this year on enthusiasm over strong sales of its newer drugs for melanoma, diabetes and rheumatoid arthritis. Investors will want reassurance on Thursday that the newer drugs will continue to grow sharply and that the com-

COMING UP - MONDAY
Halliburton, the world's second-largest oilfield services company, managed to top expectations last quarter thanks to its growing reach into international markets, and will hope to repeat the trick in its first-quarter results as the U.S. drilling market shows tentative signs of improvement. By comparison, rivals Schlumberger and Baker Hughes both recently posted results that topped profit expectations.

In its quarterly report Texas Instruments should give an update on the state of chip demand and whether improvements it was seeing mid-way though the quarter continued through the end of March. Since the company is winding down its wireless business the focus will be on its analog and embedded chips.

Shareholders in Latin America's biggest phone company,

America Movil, will vote on dividend proposals and raising the company's stock buyback fund, among other topics. The world's richest man, Carlos Slim, and his family control voting on the company's shares, so analysts expect the company will proceed with dividend payments and a hike in its buyback fund.

Netflix shares skyrocketed 70 percent this year, with most of

the gains coming just after the company reported a surprise profit for the last three months of 2012 as it added more subscribers than the company or Wall Street projected. Now, the subscription video service will reveal if it kept the momentum going in the first quarter. Analysts on average expect the company to report a profit of 20 cents a share, reversing a loss of 8 cents a share a year earlier when it began investing in new markets.

Quarterly results are expected from Canadian National Railway, the country's largest rail carrier, whose operations were hit by severe winter weather in the first quarter, slowing trains and hurting profitability. Rail industry data indicate a big jump in carloads hauling petroleum and chemicals along with intermodal containers in the quarter, offset by declining coal and grain volumes.

Look for results from Caterpillar, the world's largest maker of

construction and mining equipment, which warned in January that weak commodity prices were prompting miners to push back orders. The question now is whether orders from the booming energy sector and the rebounding home-building industry will offset those declines and allow the Peoria-based company to meet its 2013 earnings forecast of $7 to $9 a share on sales of $60 billion to $68 billion.

Citigroup CFO John Gerspach and Treasurer Eric Aboaf

are scheduled to hold a conference call with bond investors to provide additional detail on the company's assets and liabilities at the end of the first quarter. Such fixed-income calls are being held more often by the biggest U.S. banks, which are getting more questions about their balance sheets.

THE DAY AHEAD

For April 22, 2013

COMING UP - MONDAY (continued)

Business technology maker BMC Software is expected to
receive final takeover bids on Monday, with potential buyers pared down to two private equity groups.

German union Verdi has called on thousands of Lufthansa

workers to go on strike on Monday to increase the pressure on management in pay negotiations. Lufthansa has said it was considering legal action as the strike would likely cost the flagship carrier tens of millions of euros.

MARKET MONITOR
Stocks rose on Friday as earnings from Google and other companies boosted technology shares, but it wasn't enough to prevent the S&P 500 from suffering its worst week since November. The S&P 500's close below the 50-day moving average on Thursday indicates the medium-term uptrend in the market could be in peril. The last time the index closed consecutive days under its 50-day average came in early December. Still, the S&P remains up nearly 9 percent for the year, and the pullback could give investors a chance to reevaluate their bets, said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut. Less than stellar earnings reports from McDonald's and General Electric also weighed on the blue chips. But some marquee tech names bolstered the broader market and drove the Nasdaq up, a day after strong results from Google and Microsoft. A more than 8 percent decline in International Business Machines led the Dow. GE shares fell 4.06 percent. McDonald's stock lost 1.95 percent. Dell shed 3.94 percent after Blackstone Group said it has ended its pursuit of the company. The Dow gained 0.07 percent, the S&P 500 gained 0.88 percent and the Nasdaq rose 1.25 percent. For the week, the Dow and the S&P 500 each fell 2.1 percent and the Nasdaq lost 2.7 percent. It was the largest weekly percentage decline of the year for all three indexes. Prices for Treasuries slipped after a two-day rally left yields near four-month lows, with investors turning to riskier assets on news that major industrialized nations supported Japan's massive stimulus program. Also helping riskier assets were reassurance from Japan's finance minister that other industrialized nations accepted that Japan's $1.4 trillion stimulus plan was designed to buoy a stagnating economy and thus was in line with a previous G20 agreement. Prices for benchmark 10-year notes fell 5/32 to yield 1.70 percent. Thirty-year bonds fell 12/32 in price to yield 2.88 percent. The dollar extended its gains on the yen after Japanese officials in Washington said the global community understands its monetary policy is directed at domestic issues rather than currency manipulation. The greenback was trading at 99.53 yen, up 1.43 percent. The euro also rallied against the yen, rising to 129.94 yen, up 1.43 percent. Japan's Finance Minister Taro Aso and Click on the chart for full-size image

Bank of Japan Governor Haruhiko Kuroda said the international community has understood its aggressive monetary easing policies are domestic focused and it remains committed to the Group of 20's communique reiterating a refrain from competitive devaluation. Against the dollar, the euro rose 0.05 percent to $1.3056. Crude prices gained modestly and recovered some ground after declining in the previous sessions. Oil prices were technically oversold so we are seeing some buyers coming in but they are not great volumes," said Rob Montefusco, an oil broker at Sucden Financial in London. "There is nothing to suggest we can go up on a sustained basis - we were just overdone on the downside." May crude rose 0.17 percent to $87.88 a barrel. Gold rose on physical buying, failing to hold onto earlier sharp gains, as bullion posted heavy losses for a second consecutive week on investor liquidation driven by months of disappointment over its performance. Analysts said more weakness could be on the cards, including further outflows from exchange-traded funds due to nagging worries about central bank sales and the possibility of economic recovery, which would reduce the need for further monetary stimulus. Spot gold rose 0.72 percent to $1,400.80 an ounce.

THE DAY AHEAD

For April 22, 2013

TOP NEWS
Blackstone ends pursuit of Dell Blackstone Group LP has ended its pursuit of Dell, easing the way for founder Michael Dell and his private equity partner Silver Lake to go ahead with a $24.4 billion deal to acquire the world's No. 3 PC maker. Blackstone pulled out just a month after it launched a challenge to the billionaire's attempt to take Dell private. In a letter published by a Dell board committee, Blackstone cited an unprecedented 14 percent drop in industry PC sales in the first quarter of 2013 and a lower earnings forecast by Dell among the reasons for its withdrawal. Carl Icahn's chances of a successful rival offer are viewed by analysts and investors as slimmer than Blackstone's, yet the deal with Silver Lake still faces significant opposition from some Dell shareholders, including Southeastern Asset Management, the activist investor that owns 8.4 percent of the company. GE trims profit outlook on Europe weakness; stock slumps General Electric Co warned of slowing profit growth in its industrial businesses due to weakness in Europe and sliding turbine sales, unnerving Wall Street and pushing its stock down in morning trading. Of concern to Wall Street: GE will try to boost earnings by slashing $1 billion in costs this year, rather than relying primarily on sales growth. GE said it earned $3.53 billion, or 34 cents per share, in the first quarter, compared with $3.03 billion, or 29 cents per share, a year earlier. Excluding one-time items, profit was 35 cents per share, matching analysts' average forecast. Revenue rose slightly to $35 billion, surpassing the $34.51 billion analysts had expected. GE sold its remaining 49 percent stake in NBC Universal in February and then announced it would use cash from the sale to fund $18 billion in buybacks and dividend payouts this year. The $18 billion figure includes $10 billion of shares the company plans to buy back and GE's dividend, which the company hiked in December by 12 percent to 19 cents per share quarterly. G20 agrees not to set hard targets on debt reduction Finance leaders of the G20 economies said they agreed they did not need to set hard targets for reducing national debt levels, and said they would be watching for negative effects from massive monetary stimulus efforts, such as Japan. Russian Finance Minister Anton Siluanov said at a news conference that finance officials from the Group of 20 nations believed overall debt reduction was more important than specific figures. In a communique released after a two-day meeting, the G20 said it would be "mindful" of possible side effects of extended periods of monetary stimulus. Central banks have flooded their economies with cheap funds to try to boost borrowing and spending but that has raised concerns about excessive capital flight, particularly to developing nations. Siluanov said the G20 agreed that greater monitoring of the side effects of Japan's $1.4 trillion program announced earlier this year was needed. In a separate report, Fed Board Governor Jeremy Stein said regulators should keep an "open mind" about making banks pay up front for access to central bank liquidity as part of new rules to ensure that big firms can withstand severe financial stress. U.S., beer giant InBev settle dispute over Modelo buy The U.S. Justice Department and Anheuser-Busch InBev have agreed to conditions that will allow the beer giant to expand its stake in Mexico's Grupo Modelo, according to court documents and company statements. The department had filed a lawsuit on Jan. 31 aimed at stopping AB InBev from buying the 50 percent of Modelo it does not already own for $20.1 billion. The agreeClick on the chart for full-size image

ment looks like a victory for AB InBev, which knew early on that the Justice Department would balk at allowing it to expand its already significant U.S. presence. Instead, AB InBev's goal in doing the deal was to expand the sales of Corona and other Modelo brand beers outside the U.S. The deal requires AB InBev to sell the Piedras Negras brewery in Mexico that makes Corona and other Modelo brand beers for the U.S. market. It also requires the purchaser, Constellation Brands, to expand the brewery so that it can make at least 20 million hectoliters of beer by Dec. 31, 2016. The other big winner is Constellation, which has been mostly a U.S. wine giant until now. Baker sees U.S. drilling pickup; Schlumberger cautious Signs of improvement in the depressed North American drilling market and steady growth elsewhere helped oilfield services companies Schlumberger Ltd and Baker Hughes beat Wall Street's profit expectations. Sector leader Schlumberger posted earnings above analysts' estimates for the sixth straight quarter, lifted by strong and consistent growth in countries including Saudi Arabia, Iraq, China and Australia. Third-ranked Baker Hughes' profit also topped estimates, and the company forecast a modest increase in U.S. rig counts for 2013. Schlumberger's first-quarter net income fell 3 percent to $1.26 billion, or 94 cents per share. Excluding items, it was $1.01 per share, while revenue rose to $10.67 billion. As for Baker Hughes, its first-quarter net income fell to $267 million, or 60 cents per share, from $379 million, or 86 cents per share. For a related graphic on the story, click here. McDonald's sees no restaurant rebound in April Almost a year after taking over at McDonald's Corp, CEO Don Thompson is still looking for the right recipe to expand restaurant sales, which are being pinched by the weak global economy and stronger competition from revived rivals. The fast-food chain dashed hopes that its restaurant sales would accelerate this spring, warning that global sales at established restaurants would be slightly lower in April. McDonald's reported a firstquarter profit that fell short of Wall Street expectations as global comparable sales fell 1 percent - slightly less than the 1.1 percent decline that was estimated. Net income inched up 0.3 percent to $1.27 billion, or $1.26 per share. Analysts, on average, were looking for $1.27 per share. First-quarter revenue rose 0.9 percent to nearly $6.61 billion, higher than the $6.59 billion estimated by analysts.

THE DAY AHEAD

For April 22, 2013

TOP NEWS (continued)

FAA approves Boeing Dreamliner battery system design U.S. regulators approved a revamped battery system for Boeings 787 Dreamliner, a crucial step in returning the high-tech jet to service after it was grounded in January because the plane's lithium-ion batteries overheated. The Federal Aviation Administration said it had approved a package of detailed design changes, a move that allows Boeing to issue a service bulletin and make repairs to the fleet of 50 planes owned by eight airlines around the world. Other global regulators also must approve Boeing's new design but were expected to act quickly once the FAA gave its blessing. The FAA said that next week it will tell airlines what changes to make and will publish a directive that "will allow the 787 to return to service with the battery system modifications." Court backs AIG bid for new venue in $10 bln BofA case American International Group Inc won a legal victory over where its $10 billion mortgage fraud lawsuit against Bank of America Corp should be heard, a two-year-old case that has largely been on hold because of the dispute over venue. The 2nd U.S. Circuit Court of Appeals on Friday agreed with AIG that the case belongs in state court, not federal court as Bank of America preferred. It threw out an October 2011 lower court ruling that had denied AIG's bid to move the case back to the New York state court where it had begun two months earlier. Writing for a three-judge appeals court panel, U.S. Circuit Judge Pierre Leval rejected Bank of America's argument that the case belonged in federal court under the Edge Act, a 1919 law governing international banking. Kimberly-Clark benefits from rival's problems, severe flu Kimberly-Clark posted a bigger-than-expected jump in firstquarter earnings and raised its forecast for the year as the maker of Kleenex tissues got a boost from a severe flu season and a toilet paper rival's supply problems. Kimberly-Clark said it expected to post 2013 earnings per share of $5.60 to $5.75, excluding items, versus its prior target of $5.50 to $5.65. The analysts' average forecast is $5.59 per share. Excluding items such as restructuring costs, the company earned $1.48 per share, well ahead of the analysts' average forecast of $1.34 per share. Sales rose 1.5 percent to $5.32 billion, topping the analysts' forecast of $5.28 billion.
PIC OF THE DAY

A law enforcement bomb technician is helped to put on his protective suit, before he set off a controlled detonation of a suspicious object during a search for a suspect in the Boston Marathon bombing, in Watertown, Massachusetts.

Cost cuts help Honeywell beat slow economy Honeywell International posted a bigger-than-expected rise in quarterly profit on cost cuts and raised the lower end of its 2013 earnings forecast, putting its stock on pace for its biggest singleday rise in nine months. The company reported a 17 percent rise in profit as cost cuts more than made up for flat revenue. While sales in Europe and the United States remain subdued, Honeywell expects its business in China to pick up after a weak start to the year. The company said it expected to earn at least $4.80 per share in 2013, above its prior forecast of at least $4.75. It maintained the top end of its forecast at $4.95 per share. Net income for the first-quarter rose to $966 million, or $1.21 per share, in the quarter from $823 million, or $1.04 per share, a year earlier. Revenue was flat at $9.33 billion.

ANALYSTS RECOMMENDATIONS
Company Name Google IBM Microsoft Symantec Verizon Communications Action Needham raised price target to $900 from $850 after the company reported better-than-expected first-quarter results, expects continued strength in Google standalone driven by improved mobile monetization. JP Morgan cut target price to $196 from $198 after the company reported disappointing first-quarter results, citing slowdown in software and mainframe business. Evercore raised target price to $32 from $30 following third-quarter results, expects Microsoft to remain a safe haven in a tough environment. JP Morgan raised price target to $30 from $27 on valuation saying that Symantec will increasingly integrate its products and additionally provide for the integration of third party products. Nomura raised price target to $55 from $49, pointing the companys first-quarter results demonstrate the benefit of investing in best-in-class networks.

THE DAY AHEAD - CANADA

COMING UP
Canadian National Railway is scheduled to report its firstquarter results. In January, the company said it expected earnings per share growth in the high single digits in 2013, on a percentage basis, a big slowdown from a 16 percent jump last year. Analysts expect a profit of C$1.24 per share, compared to a profit of C$1.75 a share in the year-ago quarter.

For April 22, 2013

MARKET MONITOR
Canada's main stock index climbed on Friday, as improved investor sentiment and a rise in some commodity prices fueled gains in financial and material shares, offsetting a decline in energy companies. Suncor Energy led the decliners, with a 0.71 percent retreat. Enbridge was off 0.45 percent. Barrick Gold shares climbed 1.14 percent. "Investor sentiment isn't buoyant, but it isn't defeatist either," said Fred Ketchen, director of equity trading at ScotiaMcLeod, adding that investors were bargain-hunting gold shares after the selloff. "We're going to have to live with a gold price that continues to flounder." The Toronto Stock Exchange's S&P/TSX composite index was trading up 0.58 at 12,065.55. Investor attention is turning to the Group of 20 meeting where policy makers are debating monetary policies and debt levels around the world. The Canadian dollar was up 0.04 percent 1.0262.

BIG MOVERS Alamos Gold Jean Coutu Group Centerra Gold Transcontinental

Price 11.85 16.65 3.65 12.01

C$ 0.69 0.64 -0.17 -0.50

% Change 6.18 4.00 -4.45 -4.00

TOP NEWS
Drop in gasoline prices help keep Canada inflation benign Canada's annual inflation rate in March slowed to 1.0 percent from 1.2 percent in February, further underlining how little pressure there is on the Bank of Canada to raise rates any time soon. The main reason for the drop in the annual rate was lower gas prices, Statistics Canada said. The March rate was slightly less than the 1.1 percent predicted by economists. The Bank of Canada - which has kept its overnight lending rate at a near record low since September 2010 - this week said it did not expect inflation to hit its 2 percent target until mid-2015. The central bank is not expected to raise rates until the second half of 2014. Separately, Canadian wholesale trade unexpectedly remained flat in February from January, held back by lower sales of machinery, equipment and supplies. Barrick faces heat from top Canadian pension funds A group of Canada's largest pension funds said it will vote against Barrick Gold Corp's planned signing bonus for the man tipped as its next chairman and against the election of the gold miner's compensation committee. In the latest blow to the world's largest gold producer, the funds said the award of an $11.9 million bonus payment to Co-Chairman John Thornton was "unprecedented" in Canada. The group of funds comprises Canada Pension Plan Investment Board, the Ontario Teachers' Click on the chart for full-size image

Pension Plan and Caisse de dpt et placement du Qubec, as well as Alberta Investment Management Corp; British Columbia Investment Management Corp; Hermes Equity Ownership Services; Ontario Municipal Employees Retirement System; and Public Sector Pension Investment Board.

THE DAY AHEAD

For April 22, 2013

ANALYSIS AND INSIGHT

COLUMN - Americas relative rise By Ian Bremmer Since midway through George W. Bushs tenure, theres been a steady hum from the pundit class that Americas best days are behind it. An overreaching foreign policy, rising public debt, and a growing wave of outsourced jobs means that America will soon lose its status as the worlds preeminent power. America was quickly on its way to becoming Rome. But the American Decline is now over (if it ever really began in the first place). Compared with other major powers, Americas future is looking brighter than before the financial crisis. The U.S. dollar remains remarkably attractive relative to other currencies. This resilience extends to American companies. In a March report, Goldman Sachs found that foreign investors owned a larger percentage of the U.S. equity market than at any time in the 68-year history of the study. The housing market is picking up, and dependence on foreign energy is falling. Gridlock remains the order of the day in Washington, and Congress still has record-low approval ratings. But there are policy bright spots. Congress and the administration are not standing in the way of Americas energy revolution. The Keystone XL pipeline will likely be approved. The pipeline, along with the Obama administrations emphasis on energy independence, helps strengthen the domestic economy. On trade, the administration has managed to convince Japan to join Trans-Pacific Partnership talks. Should the trade consortium of countries ranging from the United States and Chile to Canada and Mexico to Singapore and Vietnam get off the ground, it will liberalize trade between members that represent nearly 40 percent of global GDP and boost American trade and manufacturing. Then there is the nascent transatlantic equivalent that Obama mentioned in this years State of the Union. The third major policy positive: the forward movement in Washington on immigration reform. If that effort is successful, it could entice millions of illegal immigrants to pay U.S. taxes for the first time and it could provide the labor force, skilled and unskilled, that many companies desperately need to ensure growth. A recent study by the Center for American Progress found that immigration reform could inject more than a trillion dollars into the U.S. economy. So at a time when recession-riddled Europe is muddling through, and major developing economies like China have huge looming question marks, the United States is looking pretty good from the top down. Now for the bad news: Things dont look as good from the bottom up, because an empowered minority at the top of American society will reap most of the benefits of this resurgence. The number of Americans who have participated in the rebound is smaller than in the past. Corporate profits remain high, but so does unemployment. According to a new study by a pair of economists at Northeastern University, those unemployed for more than six months have an especially tough time returning to the workforce. Its not easy for a country with such disparities to maintain prosperity and domestic tranquility, but there is no guarantee that the benefits of even an extended rebound will narrow the growing wealth gap. Americas decline is a myth. The United States relative position in the world is improving, and Washington wont stand in the way. Some of the gains we see will improve the U.S. standard of living at every level: Cheaper energy means less pressure at the pump, and a comprehensive immigration reform bill could empower many yet-to-be Americans who deserve a voice. But for still-jobless and underemployed Americans, its the recovery thats a fiction. Welcome to Americas relative rise: Wall Street is back. Main Street? Maybe not. (This column is based on a transcribed interview with Bremmer. Ian Bremmer is the president of Eurasia Group, the leading global political risk research and consulting firm. ) Gold slide flashes warning signs for global economy By Ryan Vlastelica and Richard Leong The plunge in the gold price in the past week may have raised a big red flag over the global economy. Some top investors say the gold sell-off, and the broader declines in oil and metals prices, reflect the failure of the Federal Reserve and other central banks to create robust demand even as they inject massive amounts of money into the world financial system. The slide, which took gold to its biggest one-day loss ever in dollar terms on Monday, unnerved investors who saw billions of dollars in gains wiped out in a few days, and it may portend declines in other asset prices ahead. That may have begun this week with several days of big stock price drops. Some see the move in gold as a possible flashpoint for a broader economic and markets shock comparable to the collapse of hedge fund Long-Term Capital Management in 1998 and even the financial crisis a decade later. Both events were preceded by sharp drops in gold. The gold and commodities weakness is "signaling concerns about global growth, said Mohamed El-Erian, the co-chief investment officer of PIMCO, which oversees $2 trillion in assets. Commodities have been sending the signal on growth for a while, and now even louder." And after the stampede out of gold earlier this week, investors on Thursday dumped their holdings of U.S. inflation bonds after a lousy auction. This kind of debt is seen as a way to protect against any rise in the inflation rate that might materialize in a more buoyant economy. The post-crisis run-up in gold prices resulted in part from speculation triggered by the massive amounts of cash created by aggressive monetary policy. It had been thought that the massive creation of credit would support a "re-inflation" of the world economy - but the recent pullback in gold, oil and copper - the latter two assets linked closely with global industrial growth - suggests that this may just not be happening. The recent rush into the safety of U.S. Treasuries - which has pushed yields close to four-month lows - is another sign that the global economy is far from humming. Treasuries are often seen as a shelter when the economy is weak or unstable. The PIMCO Total Return Fund, which holds $289 billion in assets and overseen by Bill Gross, increased its exposure to Treasuries and Treasury-related securities to 33 percent in March from 28 percent the previous month. Gross said on Twitter on Wednesday that gold has started a levered market sell-off. Buy Treasuries. Some are even talking about the possibility the United States could head back into recession, though this is a minority view. "It's not noise. There are fundamental consequences," said Komal SriKumar, president of Sri-Kumar Global Strategies and and a portfolio manager of the TCW Comprehensive Asset Allocation Strategy fund. The International Monetary Fund on Tuesday dialed back its forecast on global economic growth in 2013 to 3.3 percent from its earlier projection of 3.5 percent. That is little changed from the 3.2 percent in 2012. Concerns about slowing growth are also resonating within the Federal Reserve. Several Fed officials expressed worry about disinflation, including the more centrist James Bullard, St. Louis Fed president, who said on Wednesday that "if inflation continues to go down, I would be willing to increase the pace" of stimulus. "The stars are lining up" for a significant dip in U.S. growth in the second half of the year, possibly even a double-dip recession by

THE DAY AHEAD

For April 22, 2013

ANALYSIS AND INSIGHT (continued)

2014, Sri-Kumar said. It all raises questions about the effectiveness of the huge cash stimulus pumped into the world economy by the Fed, the Bank of Japan, and other major central banks. With governments strapped for cash, the central banks have taken on a lot of the burden of getting the world economy back on a growth path after the devastation inflicted by the financial crisis. If the impact of those measures, such as the Fed buying massive amounts of government and mortgage debt, starts to show diminishing returns it could be a huge concern for investors in any riskier assets. GOLD LOSING SHINE The downdraft in gold prices coincided with mounting evidence of a slowing of the rate of price increases. On Tuesday, the U.S. Labor Department said U.S. consumer prices have increased by 1.5 percent over the past 12 months, the slowest rate of increase since July 2012. Bank of America-Merrill Lynch recently warned that gold - which was trading at $1,392 an ounce late on Thursday - could fall to $1,200 before stabilizing, citing "fears of disinflation combined with news of potential central bank gold selling." The sell-off in gold, together with weak economic data, knocked investors' long-term inflation expectations to their lowest levels since late last summer. The yield gap between 10-year Treasury Inflation-Protected Securities and regular 10-year Treasury notes - used to gauge investors' outlook on inflation - 2.27 percentage points on Thursday, the lowest since early September prior to the Fed's announcement of its third round of large-scale bond purchases, known as QE3. This 10-year inflation "break-even" rate, which the Fed monitors, was as high as 2.61 points in late January. Meanwhile, three-month copper futures are down 12 percent this year, falling below $7,000 per tonne on the London Metal Exchange for the first time since October 2011. Copper's importance as a use in industrial and housing applications - from autos to water pipes - has made it a key barometer of demand. Some, however, believe the dramatic wind-down of the severe inflation of assets in the previous decade remains incomplete making the declines in gold and other metals less disconcerting. "Because the global economy is on the downside of a global credit bubble, it seems unreasonable to expect abnormal inflation," said Richard Bernstein, a long-time strategist who heads his own namesake investment advisory firm in New York. In addition, gold has arguably been in line for a correction. Its price had risen for 12 straight years, and had gained 52 percent in the last three years, the kind of gains seen notably in technology stocks in the late 1990s. "Even at these levels, gold is still not attractive. The odds favor the bull market being over," said Jim McDonald, chief investment strategist at Chicago-based Northern Trust Global Investments, which in early March told clients to stop allocating a position to gold. As the outlook on inflation has diminished, investors have cut back on their gold exposure. U.S. funds that invest in precious metals suffered a record oneweek outflow of $2.7 billion in the week ended April 17, according to Lipper, a unit of Thomson Reuters, of which $2.2 billion came from the SPDRs Gold Shares ETF. The GLD is one of the largest exchange-traded funds with $50.8 billion in assets, but it has seen its assets dwindle by one-third since October 2012, Lipper said. The stampede out of gold has tapered off, and it has pulled back more than 5 percent from a two-year low of $1,321 an ounce hit earlier this week, leading to some hopes the declines are the result of a much-needed correction in the metal. Still, investors are very wary of another plunge. If we see this kind of liquidation again, the equity market will follow. Then well have a real problem, said Frank Cholly, Jr., senior commodities broker at R.J. OBrien and Associates in Chicago.

KEY RESULTS vs. THOMSON REUTERS I/B/E/S ESTIMATES

Company Name Quarter EPS Estimates Year Ago Rev Estimates (mln)

Ameriprise Financial Caterpillar Halliburton Company Hasbro Netflix Texas Instruments Zions Bancorp

Q1 Q1 Q1 Q1 Q1 Q1 Q1

$1.57 $1.40 $0.57 $0.04 $0.18 $0.30 $0.39

$1.45 $2.37 $0.89 $0.04 $0.08 $0.32 $0.14

$2,722 $13,705 $6,880 $639 $1,017 $2,852 $553

** Includes companies on S&P 500 index. Estimates may be updated or revised.

THE DAY AHEAD

For April 22, 2013

ON THE RADAR
ECON INDICATOR TUE: ICSC/GS Report ww for w/e 04/20 Redbook mm for w/e 04/20 Markit manufacturing PMI for Apr-Flash FHFA home price mm for Feb New Home Sales for Mar Rich Fed manufacturing for Apr Richmond manufacturing shipments Richmond Services revenue WED: Mortgage Index for w/e 04/19 Refinancing Index Durable Goods for Mar Ex-Transportation Ex-Defense Non-Defense ex-air Building Permits for Mar-Rev THU: Initial Claims for w/e 04/20 4 Week Average Continuing Claims for w/e 04/13 K.C. Fed Comp Index for Apr FRI: Real GDP qq SAAR for Q1-Adv Final sales Implicit Deflator Core PCE Price PCE Price Index Reuters/UMich for Apr-Fin Current Conditions Expectations ECRI Weekly Index for w/e 04/19 ET/GMT 0745/1145 0855/1255 0858/1258 0900/1300 1000/1400 1000/1400 1000/1400 1000/1400 0700/1100 0700/1100 0830/1230 0830/1230 0830/1230 0830/1230 TIME:TBA 0830/1230 0830/1230 0830/1230 1100/1500 0830/1230 0830/1230 0830/1230 0830/1230 0830/1230 0955/1355 0955/1355 0955/1355 1030/1430 REUTERS POLL --54.0 -0.420 mln ------2.8 pct 0.5 pct -0.5 pct -351,000 -3.060 -3.0 pct 2.3 pct 1.3 pct 1.2 pct 1.0 pct 73.0 85.0 64.6 -PRIOR -1.1 pct -2.7 pct 54.6 0.6 pct 0.411 mln 3 8 4 866.1 4,685.1 5.6 pct -0.7 pct 4.4 pct -3.2 pct 0.902 mln 352,000 361,250 3.068 mln -5 0.4 pct 1.9 pct 1.0 pct 1.0 pct 1.6 pct 72.3 84.8 64.2 130.6 Economic Cycle Research Institute Reuters/University of Michigan. Part of the Surveys of Consumers Bureau of Economic Analysis (Department of Commerce) Census Bureau Labor Department Census Bureau (Department of Commerce) Mortgage Bankers Association U.S. Bureau of the Census, U.S. Commerce Department and the Federal Reserve Bank of Richmond SOURCE International Council of Shopping Centers/Goldman Sachs Redbook Research

The Day Ahead - North American Edition is compiled by Karan Khemani, Benny Thomas and Chandrashekhar Modi in Bangalore; Franklin Paul and Meredith Mazzilli in New York. THE DAY AHEAD - North American Edition is produced by Reuters News For questions or comments about this report, email us at: TheDay.Ahead@thomsonreuters.com Or call us at +91 80 4135 5929 Visit the Thomson Reuters Equities Community Site at: http://customers.reuters.com/community/equities/ For more information about our products: http://thomsonreuters.com/products_services Or send us a sales enquiry at: http://thomsonreuters.com/products_services/financial/contactus/ or call us on North America: +1 800 758 5555 2013 Thomson Reuters. All rights reserved. This content is the intellectual property of Thomson Reuters and its affiliates. Any copying, distribution or redistribution of this content is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. Thomson Reuters and its logo are registered trademarks or trademarks of the Thomson Reuters group of companies around the world.