HAPPY ST. PATRICK'S DAY!


After two hard days of selling in the US stock market and buying of treasuries, this morning the equity markets are starting better while the bond and mortgage markets are declining in price. Market volatility continues and will continue for a week or two at least. Not much new out of Japan on the efforts to cool reactors, there are reports that electric power to the plants is proceeding but so far haven't gotten it done. In the meantime videos showing helicopters dropping water on the cooling polls has not shown any decline in radiation readings. Not better, but no worse either.


G-7 finance chiefs will hold talks on financial markets and Japan’s economy tomorrow, after the earthquake triggered a selloff in global stocks and drove the nation’s currency to a post World War II high.


Economic data today; weekly jobless claims were expected down 10K to 385K, as reported claims fell 16K to 385K after last week's claims were revised to 401K from 397K so right on target. Continuing claims fell to 3.71 mil frm 3.79 mil last week, the lowest continuing claims since Sept 2008. Also at 8:30 Feb CPI, the overall up 0.5% with the core (ex food and energy) up 0.2% also in line with forecasts. Yr/yr CPI +2.1%, ex food and energy +1.1%. Both reports had no market reaction. Economic data now is secondary to the Japan problems.


At 9:15 Feb industrial production expected up 0.6% was reported down 0.1%; Jan revised to +0.3% frm -0.1%. Feb capacity utilization increased to 76.3% frm 76.1% in Jan. No reaction to the two data points.


The DJIA opened +140 at 9:30; the 10 yr at 9:30 -13/32 3.25% +4 bp and mortgage prices -8/32 (.25 bp).


At 10:00 the Mar Philadelphia Fed business index was expected at 28.0 frm 35.9 in Feb; the index jumped to 43.4. The new orders component increased to 40.3 frm 23.7, prices pd 63.8 frm 67.2 and employment at 18.2 frm 23.6. Overall a solid report that generated a little additional bounce in the stock market; prior to the data the DJIA that opened +140 had fallen back to +112, the bounce took it back to +122 and added a little additional selling in bonds and mortgage markets.


The U.S. Department of the Treasury announced that today six financial institutions have repurchased Troubled Asset Relief Program (TARP) Capital Purchase Program (CPP) investments, delivering a total of $475 million in proceeds for taxpayers. With today’s transactions, the programs within TARP that provide direct financial support to banks are continuing to near profitability. Through repayments, dividends, interest and other income, taxpayers have now recovered more than 99% (approximately $244B) of the approximately $245B in total funds disbursed for TARP investments in banks. Treasury currently estimates that bank programs within TARP will ultimately provide a lifetime profit of nearly $20B to taxpayers.


Although the stock market opened stronger and the bond market a little lower in price, the day may be marked with continued volatility. As long as those reactors in Japan are not cooled and the threat of radiation spreading is not eliminated nothing has changed as far as safety moves and selling of stocks. That said, since last Thursday the DJIA has lost 600 points so a bounce today would not be abnormal as investors consider the longer term implications for the economy as Japan's economy will decline in the aftermath of earthquakes and tsunami.