THE DAY AHEAD

REUTERS NEWS
KEY ECONOMICS EVENTS 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 ET/GMT 0700/1100 0700/1100 0830/1230 0830/1230 0830/1230 0830/1230 TIME:TBA

North American Edition

REUTERS POLL ---2.8 pct 0.5 pct -2.3 pct 0.4 pct -PRIOR 866.1 4,685.1 5.6 pct -0.7 pct 4.4 pct -3.2 pct 0.902 mln Census Bureau SOURCE

For Wednesday, April 24, 2013

Mortgage Bankers Association

Census Bureau (Department of Commerce)

MARKET RECAP
Stocks climbed on Tuesday as strong corporate earnings boosted sentiment, while longer-dated Treasuries fell. The euro fell across the board on weak German data. Gold tumbled on physically-backed gold ETF outflows and crude edged up.
STOCKS DJIA Nasdaq S&P 500 Toronto Russell FTSE Eurofirst Nikkei Hang Seng Close 14719.30 3269.33 1578.73 12100.19 929.29 6406.12 1183.03 13529.65 21806.61 Yield 1.7048 0.2297 0.6984 Change 152.13 35.78 16.23 9.51 14.49 125.50 28.03 -38.72 -237.76 % Chng 1.04 1.11 1.04 0.08 1.58 2.00 2.43 -0.29 -1.08 Yr-high 14887.50 3306.95 1597.35 12904.71 954.00 6533.99 1209.05 13611.58 23944.74 Yr-low 12035.10 2726.68 1266.74 11209.55 729.75 5897.81 1132.73 10398.61 21423.25

COMING UP
The parade of quarterly earnings reports continues, led by a wave
of automotive and manufacturing companies including Ford. The company is expected to post a slight decline in quarterly earnings per share after the secondlargest 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. In a recent interview with Reuters, Ford's head of European operations said a gradual improvement in the area was unlikely "for a while." The company expects to lose $2 billion in Europe this year.

Boeing's quarterly results may put the first firm cost on the 787
Dreamliner debacle. For all of the attention focused on Boeing's 787 battery, the problems are not expected to hit the company's earnings much. Investors are looking beyond the one-time cost for fixing the battery to see whether Boeing can keep plane production humming. Separately, its the second day of hearings by the National Transportation Safety Board on Boeing 787 battery design. For a related Reuters Insider video, click here

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

Price FOREX -3 /32 Euro/Dollar 0 /32 Dollar/Yen -1 /32 Sterling/Dollar

Last % Chng 1.2999 99.46 1.5240 1.0260 -0.51 0.26 -0.34 0.08

Results are due from Procter & Gamble, the world's largest
household products maker, which has been trying to reinvigorate itself under the leadership of CEO Bob McDonald. While products such as Tide Pods have boosted U.S. sales, P&G still needs to figure out the formula for getting products such as Pantene shampoo to stand out among a host of similar competitors. Meanwhile, P&G continues to focus on growing its business in markets such as Brazil and India.

2.8961 -12 /32 Dollar/CAD Price 89.37 1414.50 3.0940 281.50 Price 216.99 62.44 1.08 53.35

$ change 0.18 -10.64 -0.0380 -1.81 $ change 42.62 7.32 -0.08 -3.92

% change 0.20 -0.75 -1.21 -0.64 % change 24.44 13.28 -6.90 -6.84

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

Mercedes-Benz parent Daimler is expected to report a sharp drop

in earnings after profits plunged at both its passenger car and its commercial truck business. The company warned that after a weaker-than-expected first quarter, it will likely have to reassess its full-year targets, which called for operating profit from ongoing business to be in the magnitude of last year's 8.1 billion euros (itself a decline from 2011's 9.0 billion). Daimler is significantly lagging its peers BMW and Volkswagen.

BIG MOVERS
Netflix Inc Illumina Inc Cell Therapeutics Ryder System

Whirlpool Investors will get a better read of commodity costs and

global demand for big-ticket items like appliances when Whirlpool reports its quarterly results. Cost controls will likely help the world's largest appliance maker offset lackluster sales in the first quarter.

For The Day Ahead - Canada, click here

THE DAY AHEAD

For April 24, 2013

COMING UP (continued)
Credit Suisse investors widely expect a healthy first quarter
from the Swiss bank on bumper investment banking results. Credit Suisse, the first of the big European banks to report the quarter, will be closely watched for how sustainable profits from securities trading are as rival UBS cuts back on this area in favor of focusing almost exclusively on private banking. Credit Suisse is expected to give specifics on how it wants to meet tougher Swiss rules on riskier investment banking activities such as shutting a correlation trading desk and scaling back commodities and derivatives activities.

Thermo Fisher Scientific, fresh from agreeing to buy genetic

sequencing company Life Technologies for more than $13 billion, is expected to report higher first-quarter profit but investors will be eager to hear from management about integration plans for the company's biggest acquisition as well as whether it will adjust its full-year forecast after the first quarter under U.S. government sequestration.

Barrick Gold, which has been hammered in recent weeks by

a string of bad news, reports quarterly earnings. Investor attention will be squarely focused on comment from the company regarding its embattled Pascua-Lama project, on the border between Chile and Argentina. Construction on the Chilean side of the massive gold project was halted this month after a local court ordered the suspension to weigh indigenous communities' claims that the project destroys glaciers and harms their water supply.

Nasdaq OMX Group reports its first-quarter results, which are

expected to be slightly above a year earlier. Nasdaq management will likely give an update on its acquisition strategy and its plans for recently acquired units.

When Sprint reports quarterly earnings, the focus will likely be

on merger discussions in its earnings call as the company is still seeking regulatory approval of the sale of 70 percent of its shares to SoftBank and shareholder approval of its plan to buy out the rest of Clearwire it does not own.

LG Electronics, the world's No. 2 TV manufacturer, will report

sharply lower quarterly profit as its TV business continues to struggle due to intensifying competition from Japanese peers such as Sony and Panasonic. Increased marketing spending to boost shipment may have hit earnings, offsetting a strong recovery in its handset business, which is set to show a record shipment on solid sales of high-end models.

EMC, the world's biggest data storage equipment company,

reports. It faces some storage spending questions this quarter, though it should be better than IT spending. But EMC remains the clear leader as the market tries to understand the longterm fallout of changing data center dynamics.

Nintendo, the creator of Super Mario, will likely report a second straight annual loss after sales of its Wii U, successor to the 100-million-unit selling Wii, faltered as it faces competition from Smartphone and tablet PCs, which are eating into the traditional gaming market. The company may, however, get a boost from the weakening of the Japanese currency, which will boost the yen value of overseas sales that account for three quarters of its overall revenue.

U.S. drugmaker Eli Lilly is expected to report double-digit

earnings growth on higher sales of its Cymbalta antidepressant, Alimta drug for lung cancer and Cialis impotence treatment. A much lower tax rate in the quarter is also expected to boost results for the Indianapolis company, whose sales and earnings fell in 2011 and 2012 due to generic competition for its one-time $5 billion-a-year Zyprexa schizophrenia drug. Although full-year 2013 earnings are expected to grow sharply, a sharp downturn is seen in 2014, when other Lilly drugs confront cheaper generics.

Fallen social gaming star Zynga is due to report first-quarter

earnings and give investors an update on how the performance of its aging Web games has held up amid a months-long exodus in users. CEO Mark Pincus has stabilized the company's stock in recent months with severe cost-cutting measures while promising new sources of revenue from real-money gambling. With the launch this month of the first real-money casino games in the UK, investors will be keen to hear about the company's outlook for that market segment.

Novartis, the Swiss drugmaker, reports first-quarter results

and core profit and sales are expected to rise slightly as delays to generic versions of blood pressure drug Diovan soften the blow of last autumn's patent loss. With 2013 expected to be a turning point, the focus will be on whether it has managed to put its consumer health problems to bed as well as sales of its newest products such as cancer drug Afinitor.

Other companies expected to report include General Dynamics, Rockwell, Northrop Grumman, Corning, Xilinx, Aflac, Cheesecake Factory, and Qualcomm.

First-quarter results from WellPoint, which sells insurance as

Anthem Blue Cross Blue Shield and other brands, are expected to be a bit higher than in the same period one year ago. WellPoint, which in the first quarter named a new CEO who had been a hospital executive, has been trying to win back investors after disappointment over how its previous top executive managed the company's finances in the face of the challenges that the Affordable Care Act has placed on insurers. Its report follows that of competitor UnitedHealth last week, which gave a worried outlook about the private Medicare business, one of the insurance industry's consistent growth drivers during healthcare reform.

The Commerce Department issues a report on durable goods

orders for March. Orders are expected to have fallen after a strong gain the month before, another sign that the economy likely cooled heading into the second quarter.

Shareholders of General Electric, the world's biggest maker

of jet engines and electric turbines, meet in New Orleans for their annual meeting where they will decide whether to split the roles of chairman and chief executive, end stock options and bonuses, and impose term limits on board members.

Hess, which is under pressure from hedge fund Elliott Management for poor returns and weak governance, releases its first-quarter earnings and update investors on its efforts to focus on exploration and production by shedding its retail and energy trading businesses.

Anheuser-Busch InBev hosts its annual shareholder meeting

in Brussels.

THE DAY AHEAD

For April 24, 2013

MARKET MONITOR
Stocks climbed on Tuesday in a broad rally, recovering from sharp declines sparked by a "bogus" Associated Press tweet about explosions at the White House. Among the day's biggest gainers, Netflix shares jumped 24.44 percent and Coach went up 9.80 percent. Travelers Cos helped propel the Dow higher, jumping 2.09 percent. Analysts see earnings growth of 2.1 percent this quarter, up from expectations of 1.5 percent at the start of the month. The Dow was up 1.04 percent, the S&P 500 Index was up 1.04 percent and the Nasdaq was up 1.11 percent. Longer-dated Treasuries fell after surging briefly on a fake Twitter message from a hacked Associated Press account claiming explosions at the White House. "We are bouncing off the lows of the year in yields, but the concern about a spring swoon is very much alive," said Guy LeBas, chief fixed income strategist with Janney Montgomery Scott. Benchmark 10-year Treasury notes were down 3/32, yielding 1.70 percent. The 30year bond was down 12/32 to yield 2.89 percent. The euro dropped to a two-week low against the dollar as weak German data raised concerns about the health of the euro zone economy and revived speculation that the European Central Bank could cut interest rates. The euro was last trading 0.51 percent lower on the day at $1.2999. Ken Dickson, investment director at Standard Life Investments in Edinburgh, said the single currency should be significantly lower. Standard has had a short euro position for some time. "A rate between $1.10 and $1.20 is reasonable over the next three or four quarters." The euro fell 0.29 percent to 129.26 yen. The dollar last traded up 0.26 percent at 99.46 yen. Click on the chart for full-size image

Crude edged down after weaker-than-expected manufacturing data from China and Germany darkened the outlook for fuel demand. June crude was down 0.20 percent at $89.37 a barrel. Gold fell as a stronger dollar put pressure on prices and as the outflow from the world's biggest gold exchange-traded fund accelerated and accentuated an investor shift towards equities and other assets. "What we saw in the past few sessions was a lot of physical buying in the form of coins and bars but the ETF numbers are heavily down and we don't necessarily see a resurgence in demand from the ETF side any time soon," SP Angel analyst Carole Ferguson said. Spot gold fell 0.73 percent to trade at $1,414.70 an ounce. June delivery futures were down 0.52 percent to $1,413.80 an ounce.

THE DAY AHEAD

For April 24, 2013

TOP NEWS
Factory data a new sign of slowing U.S. economic growth U.S. factory activity expanded at its slowest pace in six months in April, the latest sign that economic growth continued to lose momentum early in the second quarter, though the recovery has not been derailed. Financial data firm Markit said its "flash," or preliminary, factory purchasing managers' index fell to 52.0 this month from 54.6 in March as output, employment and new orders pulled back. The Richmond Federal Reserve Bank said its gauge of factory activity in the central Atlantic region dropped into negative territory this month, pulled down by weak shipments and new orders. A separate report from the Commerce Department showed new home sales increased 1.5 percent to a seasonally adjusted annual rate of 417,000 units last month. Another report, from the Federal Housing Finance Administration, showed prices for houses financed with mortgages that have been sold to or guaranteed by Fannie Mae and Freddie Mac rose 0.7 percent in February after advancing 0.6 percent in January. Goodrich deal helps United Tech offset U.S. defense cuts Diversified U.S. manufacturer United Technologies reported a better-than-expected profit as its purchase of aircraft components maker Goodrich helped offset U.S. defense cuts and weakness across Europe. United Tech said sequestration could dent 2013 profit by 10 cents per share in the worst-case scenario, and could affect 2014 results. It posted first-quarter profit of $1.27 billion, or $1.39 per share, compared with $330 million, or $1.31 per share, in the year-earlier period. The year-before figures included a one-time charge for discontinued operations. Analysts expected first-quarter earnings of $1.30 per share. Revenue rose 16 percent to $14.39 billion, but missed the $14.94 billion estimate from Wall Street. United Tech stood by its forecast for 2013 earnings of $5.85 to $6.15 per share and 2013 revenue of $64 billion to $65 billion. DuPont profit doubles as drought boosts farm sales Chemicals maker DuPont's quarterly profit more than doubled as the worst dry spell in decades encouraged U.S. farmers to buy its drought-hardy seeds and crop-protection products to boost yields. Excluding one-time items, DuPont earned $1.56 per share in the first-quarter above the Wall Street estimates of $1.52 per share. The company's net income for the quarter, which included the beginning of the North American spring planting season, jumped to $3.35 billion, or $3.58 per share, in the first quarter, from $1.49 billion, or $1.58 per share, a year earlier. Net sales rose marginally to $10.4 billion on higher prices for seeds and crop protection products and demand in North America and Latin America. Travelers to continue with price hikes, shares touch lifehigh U.S. insurer Travelers Cos said it would look to raise rates across all its businesses to counter perennially low interest rates and uncertain weather conditions. Net profit rose 11 percent to $896 million, or $2.33 per share, in the first quarter, from $806 million, or $2.02 per share, a year earlier. On an operating basis, Travelers earned $2.31 per share. Analysts on average were expecting the company to earn $2.02 per share. The insurer also raised its quarterly dividend to 50 cents per share from 46 cents per share. Pre-tax catastrophe losses, net of reinsurance, were $99 million in the quarter, down from $168 million in the year-earlier quarter. Net investment income, on a pre-tax basis, fell about 10 percent to $670 million, mainly due to low interest rates. Click on the chart for full-size image

Lockheed profit beats view; budget cuts hit sales outlook Lockheed Martin reported a better-than-expected 14.8 percent rise in per-share earnings but warned that full-year revenue was likely to come in at the low end of earlier guidance due to U.S. budget cuts. Lockheed said revenue for the full year would be at the low end of the $44.5 billion to $46 billion range forecast in January, with the additional budget cuts seen reducing net sales by about $825 million. Helped by a lower tax expenses, firstquarter net profit rose to $761 million, or $2.33 per share, from $668 million, or $2.03 a share, a year earlier. Revenue dropped 2 percent to $11.1 billion. Analysts had expected earnings of $2.04 per share on revenue of $10.3 billion. Sales in its biggest division, aeronautics, dropped 14 percent, mainly due to lower deliveries of F-16 fighter jets, while sales in the missiles and fire control division rose 13 percent. Delta posts profit, sees U.S. budget cuts hurting April Delta Air Lines reported a higher-than-expected first-quarter profit as revenue rose. The carrier forecast a positive operating margin for the current quarter but added that federal budget cuts and lighter demand from leisure travelers were expected to hurt a key revenue measure in April. Its net income was $7 million, or 1 cent a share, for the first quarter, compared with $124 million, or 15 cents a share, a year earlier. Excluding items, profit came to 10 cents a share, compared with 6 cents expected by analysts on average. Though operating revenue rose 1 percent to $8.5 billion, expenses rose 3 percent, with costs for salaries rising 8 percent. Interest expense and amortization also hurt profit. Xerox focuses on services as printer business declines Printer and copier maker Xerox forecast current-quarter earnings below estimates as it accelerates efforts to transform itself into a technology services provider. Xerox said it expects flattish revenue for the full year, compared with previous expectations of up to a 2 percent growth, it said. For the second quarter, Xerox forecast earnings, excluding items, of 23 cents to 25 cents per share. Analysts on average were expecting 26 cents per share. The company had forecast the same EPS range for the first quarter but reported higher adjusted earnings of 27 cents per share due to a benefit of 2 cents after reducing its reserve for recent litigation. It beat analyst estimate of 24 cents. Revenue in the first quarter fell 3 percent to $5.36 billion, below analyst expectations of $5.5 billion.

THE DAY AHEAD

For April 24, 2013

TOP NEWS (continued)

Coach sales beat Street as North America regains momentum Leather goods retailer Coach reported higher-than-expected quarterly sales after expanding into clothing and shoes to compete with emerging rivals. Overall, the company's revenue rose 7 percent to $1.19 billion in the third quarter, beating the average analyst forecast of $1.18 billion. Net income rose to $239 million, or 84 cents per share, for the quarter ended March 30 from $225 million, or 77 cents per share, a year earlier. Analysts on average had expected the company to report per-share earnings of 80 cents. Coach also said it would raise its annual dividend by 13 percent to $1.35 per share. US Airways profit beats Street; load factor rises US Airways Group reported a higher-than-expected quarterly profit as it flew fuller planes and boosted revenue. The carrier said first-quarter net income was $44 million, or 26 cents a share, compared with $48 million, or 28 cents a share, a year earlier. Excluding one-time items, profit came to 31 cents a share, topping analysts' average forecast of 28 cents. Operating revenue rose 3.5 percent to $3.4 billion. Passenger revenue per available seat mile was up 1.3 percent. Load factor was 81.7 percent in the quarter for US Air and its regional carriers, compared with 79.3 percent a year earlier. Johnson Controls posts profit, reaffirms 2013 outlook Johnson Controls posted a profit that met Wall Street's expectations and the largest U.S. auto-parts maker reaffirmed its fullyear outlook. Its net income fell 61 percent to $148 million, or 21 cents a share, in its fiscal second quarter, compared with $379
PIC OF THE DAY

A rubber glove being used as a marker bobs in the water after flooding in Fox Lake, Illinois.

million, or 55 cents a share, in the year-earlier quarter. Excluding one-time items, the company earned 42 cents a share, in line with what analysts expected. Revenue slipped 1 percent to $10.43 billion, just below the $10.48 billion analysts had expected. The company also reaffirmed its profit outlook for the full -year, saying it expects to earn in the range of $2.60 to $2.70 a share. Analysts were expecting $2.59.

ANALYSTS RECOMMENDATIONS
Company Name Caterpillar Illumina Lennar Netflix Texas Instruments Action JP Morgan raised rating to overweight from neutral saying that most of the downside risk has been priced into the stock at this point, and that risk/reward favors owning the stock. Credit Suisse raised target to $72 from $59 as the company delivered an impressive first-quarter and is positioned for upside given the time taken for synergies to match between Life and Thermo Fischer. Barclays raised rating to overweight from equal weight citing strength of Lennars home building fundamentals as well as its ability to diversify into adjacent profit streams. JP Morgan raised price target to $254 from $205 after the company reported a second straight quarter of strong results, says the company is back on track. Deutsche Bank raised target to $32 from $31 after the company reported solid first-quarter results and gave secondquarter outlook in line with the estimates.

THE DAY AHEAD

For April 24, 2013

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

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

Aflac Assurant Inc Akamai Technologies Allegheny Technologies Avery Dennison Boeing Crown Castle Internation Cliffs Natural Resources Cabot Oil & Gas Citrix Systems Dr Pepper Snapple Group Equifax EMC Ford Motor F5 Networks Flowserve General Dynamics Corning Inc Hess Corp Eli Lilly Lorillard Lam Research LSI Motorola Solutions NASDAQ OMX Group Northrop Grumman O`Reilly Automotive Procter & Gamble Prologis Praxair Qualcomm Rockwell Automation Sprint Nextel Southern Company Stericycle Stryker TE Connectivity Teradyne Thermo Fisher Scientific T. Rowe Price Group Varian Medical Systems Western Digital Whirlpool WellPoint Waste Management Wyndham Worldwide Xilinx

Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q2 Q1 Q1 Q1 Q1 Q1 Q1 Q3 Q1 Q1 Q1 Q1 Q1 Q3 Q1 Q1 Q2 Q2 Q1 Q1 Q1 Q1 Q2 Q1 Q1 Q1 Q2 Q3 Q1 Q1 Q1 Q1 Q4

$1.62 $1.59 $0.46 $0.09 $0.58 $1.47 $0.03 $0.32 $0.24 $0.63 $0.46 $0.85 $0.4 $0.37 $1.07 $1.94 $1.5 $0.24 $1.57 $1.05 $0.64 $0.37 $0.12 $0.66 $0.62 $1.74 $1.35 $0.96 $0.02 $1.38 $1.17 $1.29 $-0.34 $0.49 $0.88 $1.01 $0.71 $0.03 $1.29 $0.89 $1.02 $1.77 $1.93 $2.38 $0.41 $0.67 $0.45

$1.74 $1.76 $0.41 $0.5 $0.45 $1.22 $0.17 $0.85 $0.14 $0.59 $0.46 $0.7 $0.37 $0.39 $1.09 $1.69 $1.57 $0.3 $1.5 $0.92 $0.58 $0.5 $0.2 $0.59 $0.61 $1.96 $1.14 $0.94 $0.44 $1.38 $1.01 $1.16 $-0.29 $0.42 $0.78 $0.99 $0.68 $0.3 $1.17 $0.75 $0.94 $2.52 $1.41 $2.34 $0.38 $0.6 $0.49

$6,107 $2,105 $358 $1,159 $1,533 $18,825 $698 $1,199 $368 $677 $1,386 $569 $5,420 $33,776 $352 $1,113 $7,550 $1,958 $9,255 $5,665 $1,113 $838 $555 $2,049 $418 $5,959 $1,611 $20,731 $473 $2,889 $6,078 $1,590 $8,713 $3,779 $520 $2,203 $3,259 $275 $3,174 $817 $758 $3,610 $4,392 $18,027 $3,360 $1,126 $530

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

THE DAY AHEAD - CANADA

COMING UP
Barrick Gold is scheduled to report its first-quarter results.
The gold miner is expected to report a profit of 98 cents per share, compared to a profit of $1.09 a share in the year-ago quarter. Investor attention will be squarely focused on comment from the company regarding its embattled Pascua-Lama project, on the border between Chile and Argentina.

For April 24, 2013

Metro Inc is scheduled to report second-quarter results. The

grocer is expected to report a profit of C$1.02 per share, compared to a profit of C$1.01 a share in the year-ago quarter.

Oil sands producer MEG Energy will report first-quarter

results. The company is expected to report a loss of 11 Canadian cents a share, compared to a profit of 12 Canadian cents a share in the year-ago quarter. With global crude oil prices softening, the company is under severe pressure.

Canadian Pacific Railway is expected to post strong firstquarter results, helped by bigger shipments of key commodities and an ambitious cost-cutting program initiated by turnaround CEO Hunter Harrison. The railroad is expected to report a net profit of C$1.20 per share, compared with earnings of 82 Canadian cents a share in the same period last year.

Lundin Mining will report first-quarter results. The base

metals miner is expected to report a profit of 10 cents a share, compared to a profit of 10 cents a share, a year ago.

Cenovus Energy will report its first-quarter results and hold an

annual general meeting of shareholders. The independent oil producer is expected to report a profit of 47 Canadian cents a share, compared to a profit of 56 Canadian cents a share in the year-ago quarter.
BIG MOVERS Air Canada Celestica Sandvine Aquila Resources Romarco Minerals Centerra Gold Price 2.89 8.30 2.14 0.11 0.42 3.94 C$ 0.27 0.47 0.11 -0.01 -0.04 -0.23 % Change 10.31 6.00 5.42 -8.33 -7.69 -5.52

MARKET MONITOR
Canada's main stock index closed little changed on Tuesday as weak global economic data and some sluggish earnings reports weighed on investor sentiment. The Toronto Stock Exchange's S&P/TSX composite index was up 0.08 percent at 12,100.19. Goldcorp fell 3.00 percent. Rogers Communications declined 3.46 percent and TransAlta was down 2.56 percent. The Canadian dollar was up 0.09 percent at $1.0261.

TOP NEWS
Canadian February retail sales rise more than expected Canadian retail sales in February rose a greater-than-expected 0.8 percent from January, pushed up by higher sales at general merchandise stores and gas stations, Statistics Canada data indicated. The increase was greater than the 0.3 percent advance predicted by market operators. Statscan trimmed January's growth to 0.9 percent, from an initial 1.0 percent. Separately, Outgoing Bank of Canada Governor Mark Carney repeated the central bank's warning that it expects its next move to be an interest rate increase, even after recently cutting growth forecasts. Teck plays down M&A moves as profit hit by coal price Teck Resources reported a sharp fall in quarterly adjusted profit as sagging prices for coal and copper hurt the diversified miner, whose CEO played down any major takeover moves. On an adjusted basis, Teck's earnings fell to C$328 million, or 56 Canadian cents a share, from C$544 million, or 93 Canadian cents a share, a year earlier. Analysts had expected earnings of 37 Canadian cents a share. Revenue fell about 9 percent to C$2.33 billion from $2.55 billion in the first quarter of 2012. TransAlta posts loss on pension funding Power generation company TransAlta reported a first-quarter loss, hurt in part by a one-time charge related to pension funding obligations. The company posted a loss of C$11 million, or 4 Canadian cents per share, in the first quarter, compared with a profit of C$88 million, or 39 Canadian cents per share, a year earlier. Revenue fell 16 percent to C$540 million. Comparable earnings fell to 12 Canadian cents per share from 20 Canadian cents per share a year earlier. Funds from operations rose 2 percent to C$192 million. Click on the chart for full-size image

Celestica expects revenue to improve in current quarter The contract electronics manufacturer Celestica forecast stronger revenue for the current quarter as new contracts help to make up for the loss of former No.1 customer BlackBerry. Celestica said it expects revenue to rise to $1.38-$1.48 billion in the current quarter from $1.37 billion in the first quarter. The company had revenue of $1.74 billion in the second quarter of 2012. Analysts on average expect revenue of $1.43 billion. Celestica said it expects to earn 13 to 19 cents on an adjusted basis in the current quarter, compared with 16 cents in the first quarter. Analysts on average expect 17 cents per share. Celestica's firstquarter net income fell to $10.5 million, or 6 cents per share, from $43.2 million, or 20 cents per share, a year earlier.

THE DAY AHEAD

For April 24, 2013

ANALYSIS AND INSIGHT

FED FOCUS No deflation scare at Fed despite commodity price fall By Alister Bull Falling commodity prices and softer growth have fanned concern U.S. inflation could slow further, killing chances of the Federal Reserve tapering its $85 billion a month of bond purchases any time soon. But officials do not yet share market worries over deflation. Several Fed policymakers last week cited a readiness to increase the pace of bond buying to defend their goal for 2 percent inflation, including arch-hawk Jeffrey Lacker, president of the Richmond Fed. They just don't expect inflation to continue to fall happen. U.S. consumer prices, as measured by the Fed's preferred gauge, were up only 1.3 percent over the 12 months through February, well below the central bank's 2 percent target. "If I thought it were going to persist this low or even fall further, I, of course, would be giving serious thought to providing monetary stimulus to get the inflation rate back to 2 (percent)," Lacker said on Thursday. "I dont see a material risk now of the rate of inflation falling substantially further." However, Fed officials are clearly signaling the decline in inflation has gotten their attention, even if it is not yet flagging a rerun of the much clearer deflation scare that pushed the Fed to deliver a second round of so-called quantitative easing, or QE2, back in 2010. Policy centrist James Bullard, head of the St. Louis Fed and a voter this year, said on Wednesday he would be willing to increase the pace of purchases if inflation continued to fall. Minneapolis Fed chief Narayana Kocherlakota also made a similar point last week. Inflation has been helped lower by sliding commodity markets, led by gold, which has nosedived in recent weeks. Oil prices are off 16 percent from the year's high for Brent crude, while broader commodity price indexes have also slipped over 7 percent this month, according to the Standard and Poor's Goldman Sachs Commodity Index. GOLD GLOOM The decline, particularly of gold, has spurred market speculation of a looming deflationary threat amid scepticism that major central banks will be able to revive global growth. Fed officials are not terribly worried by the swing in the gold price, and point out it responds to many different themes in financial markets, including price pressures. But they readily agree that inflation is also not heading higher, a point Fed Chairman Ben Bernanke repeated to colleagues at the G20 meeting in Washington late last week That view will aid doves at the Fed's upcoming meeting on April 30-May 1 in their argument that it needs to keep buying bonds at an $85 billion monthly pace until well into the fall. Minutes of the meeting last month revealed many policymakers thought stronger growth might warrant buying being reduced over coming months. But a weak March jobs report and other signs of a so-called 'spring swoon' in U.S. growth have pushed back expectations of imminent tapering. However, Fed officials say lower commodity prices should be treated in the same way by policymakers as rising prices in the past, when the Fed showed patience in the face of spikes in energy and food costs that temporarily buoyed inflation, at least until they translate much clearer warnings of deflation. "I don't think anyone is forecasting this thing going down much further," said Chris Waller, head of research at the St. Louis Fed. "But our target is 2.0 percent, not 1.3 percent ... and in that sense we'd like to get inflation up to target." Yet, with expectations for future inflation still hovering comfortably above 2 percent, the Fed would need to see clear downward pressure from the real economy pushing in the other direction to grow seriously alarmed. "If we kept seeing payroll numbers of 88,000 for the next 4 or 5 months, then I think we would have concerns about both inflation and the economy heading on the downside," said Waller. March payrolls showed a disappointing 88,000 jobs added in the month, breaking a run of stronger-than-expected jobs numbers and putting markets on edge the recovery may stumble again, as it has in each of the last 3 years. TIPS SPREAD NARROWS One way the Fed keeps tabs on inflation expectations is via the break-even spread between yields on Treasury Inflation Protected Securities, or TIPS, and normal treasury bonds. TIPS prices fell sharply on Thursday after a disappointing auction that reflected diminished concerns over inflation, with the 10 -year TIPS break-even rate suffering its sharpest one-day decline in seven months. But even after ending 12 basis points narrower on the week, the 10-year TIPS break-even spread still closed at 2.32 percent. Back in 2010, when the Fed's preferred inflation gauge averaged 1.0 percent in the third quarter and 0.8 percent in the fourth quarter, the break-even spread on the 10-year TIPS touched a low of 1.56 percent on the eve of the annual central banking symposium at Jackson Hole, Wyoming, in late August. Bernanke hinted at QE2 during the conference, and within a few weeks the break-even spread was back above 2 percent. The Federal Reserve Bank of Atlanta runs a deflation probability calculator on its website. This currently shows the probability of a lasting deflation is zero, based on readings from the TIPS market. True, TIPS are not a foolproof way to measure future inflation expectations. But alternative sources of evidence give similar indications. "We have a lot of reason to believe, from a variety of other indicators, that the probability of a deflation is very low," aid Mike Bryan, a senior economist at the Atlanta Fed. "When we talk to businesses, the outlook, positive or negative for inflation, seems pretty sanguine. Caterpillar cries 'uncle' on mining; investors cry 'buy' By James B. Kelleher An odd thing happened on Monday when Caterpillar Inc, the world's largest maker of earth-moving equipment, posted disappointing profits and cut its full-year forecast, blaming weakness in the mining industry it bet on so heavily in recent years. Its shares rallied. When other big U.S. companies, including General Electric, International Business Machines Corp and Textron Inc, have warned of slowing profit growth in recent days, the news has unnerved investors and sent their stock prices lower. So what was different about Caterpillar? Part of the answer, analysts said, was that its announcement was not a surprise. The company has warned repeatedly in recent months that demand from mining customers was deteriorating. Another factor was Caterpillar's upbeat assessment of the outlook for the construction industry, especially in the United States and China. And a share buyback always helps - this one to the tune of $1 billion in stock this year and as much as $3.8 billion by the end of 2015. But analysts said the overly bleak assessment Caterpillar provided on Monday for its sales to the global mining industry also, ironically, helped the shares. In a nutshell, no one believes it's really going to be quite as bad as it says, even given the recent slide in gold and copper prices on concerns about weak global

THE DAY AHEAD

For April 24, 2013

ANALYSIS AND INSIGHT (continued)

growth. Rob Wertheimer, an analyst at Vertical Research partners, said the new outlook for mining implies a downturn that would put the mining industry demand back near 2009 levels, where it bottomed out in the last downturn. "We obviously didnt expect that level of collapse in an otherwise mostly recovering global economy," Wertheimer said. Neither does Caterpillar. The company is, after all, predicting the world economy is going to grow modestly enough to fuel demand for industrial commodities that miners wrest from the ground using Caterpillar's yellow machines. "It's not a great economic climate, but it is good enough to keep commodity production going," said Mike DeWalt, Caterpillar's corporate controller. In fact, Doug Oberhelman, Caterpillar's chief executive and chairman, said on Monday the current drop-off in mining orders was as much a function of the changing focus of its mining customers as it was a function of concerns about global growth. There has been quite a bit of management change with some of our big customers and...the new management is much more focused on operating costs, short-term cash flow, sweating their assets a bit, Oberhelman said during a conference call with analysts. Caterpillar's sales to the mining industry are more profitable than sales to construction and industrial customers. The fatter margins were one of the reasons it made mining equipment a focus of its M&A activity in recent years, buying Bucyrus, a U.S. maker of giant excavators and shovels, for $7.6 billion in 2010 and - more notoriously - ERA Mining, a Chinese mining equipment company, for $654 million. In January, Caterpillar said it was writing off three-quarters of the money it paid for ERA after uncovering "deliberate, multi-year, coordinated accounting misconduct" at a subsidiary of the Chinese firm. The ERA debacle was, in the minds of many analysts, a symbol of a rash rush to double down on the notoriously cyclical business. But even before ERA blew up, the company's exposure to the resource industry was being questioned as many of its key mining customers, facing investor backlash over unpopular takeovers, budget overruns and falling metal prices, slashed capital spending, slowed development on some projects, shelved others entirely and postponed -- or canceled new equipment orders. Caterpillar, however, continued to hold out hope that mining orders, which began to fall during the second half of 2012, would improve as 2013 unfolded. The market was skeptical - and sent Caterpillar's shares down as much as 30 percent from the 52week high of $108.79 they touched last spring - as it waited to see if the trickle of bad news on the mining front became a torrent. On Monday, Caterpillar essentially gave up on mining for 2013, saying it now expects sales of traditional mining machines large trucks, large loaders, large bulldozers and the like -- to be down 50 percent from 2012, and the excavators and shovels made by its Bucyrus unit to be down 15 percent. And that was just what the market was waiting for, analysts said. "The cat's out of the bag," said Larry De Maria at William Blair & Co. "With Monday's report and conference call, Caterpillar confirmed what bears have been warning about: mining will drag down EPS." Adam Fleck, an analyst at Morningstar agreed. Fleck said Caterpillar decision to throw in the towel on mining sales for 2013 gave investors confidence the company was no longer in denial. "Investors knew it would be bad, but wanted some quantification from the company," he said. And it was that capitulation, ironically, that made Caterpillar one of the S&P's biggest gainers on the day.

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.