We have seen a defensive turn in capital flows overnight with gold, CHF and JPY gaining while stock markets around the world for the most part have been retreating. Part of this may be due to the deteriorating political situation in Ukraine, but also ahead of a number of key announcements. US Fed Chair Yellen resumes her congressional testimony today. Considering that this speech had been postponed due to a big storm, she is widely expected to repeat what she said to the house earlier this month. FOMC members have been blaming bad weather on recent soft US numbers and have been indicating the central bank remains likely to stay the course on tapering. One area that can’t be blamed for concerns as much now is China and emerging markets. Reports surfaced last night suggesting that recent CNH weakness was driven by PBOC intervention in forex markets to prepare traders for an potential widening of the trading band, shake out speculators and getting everyone more used to the idea the currency could move in two directions. The central bank also removed another CNY 60B in emergency liquidity, a positive sign. In addition, Brazil GDP beat the street, indicating some emerging markets are coming along just fine thank you. In commodities today, the main action once again is in natural gas which has fallen below $5.50 ahead of storage as traders look beyond the current cold toward shoulder season. There has been a big divergence in currency trading today between NZD which has rallied on a stronger than expected trade surplus, and AUD, which has been falling along with Australian stocks in the wake of a big drop in personal capital spending. Later this evening, focus turns to Japan with its main basket of monthly indicators due including PMI, employment, retail sales, industrial production and more. Tomorrow brings GDP reports for the US and Canada to set the stage for next week’s big announcements. Corporate News Tesla Motors to proceed with building rumoured gigafactory for batteries expected to produce enough batteries to power 500K cars per year by 2020, and reduce the cost per pack by 30%. Plant expected to cost $5B through 2020 including partners share with Tesla paying $2 billion funded mainly from a $1.6B convertible note issue. JC Penney $0.11 vs street ($0.86) ex items ($0.68) vs street ($0.86), guides single digit same store sales growth and a big improvement in gross margin, SEC investigation into recent liquidity and share offering closed with no action taken Best Buy $1.24 vs street $1.01, guides same store sales slightly negative for first half of new year TD Bank $1.06 vs street $1.04, raises dividend by 9.3% CIBC $2.88 vs street $2.60, raised dividend by 2% Economic News Economic reports released overnight and this morning include: NZ trade balance 306M vs street 230M Australia capital expenditure (5.2%) vs street (1.3%) Spain GDP (0.2%) vs street (0.1%) Germany unemployment change (14K) vs street (10K) Germany unemployment rate 6.8% as expected Germany consumer prices 1.2% svs street 1.3% Brazil interest rate 0.25% increase to 10.75% as expected Brazil GDP 1.9% vs street 1.5% US jobless claims 348K vs street 335K US durable goods orders (1.0%) vs street (1.6%) US durables ex transport 1.1% vs street (0.3%) Economic reports due later today include: 10:00 am EST FOMC chair Yellen Senate testimony 10:30 am EST US natural gas storage street (103BCF) vs previous (250B)

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