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Macro View

The Apple (AAPL - Analyst Report) announcement notwithstanding, today’s relatively light economic calendar will result in a quiet trading session. But the rest of this week’s economic docket is heavy with housing related reports, starting with today’s measure of homebuilder sentiment through the Housing Market Index. Given the continued homebuilder stock price gains in recent days, the index is expected to have improved from February’s level.
 
This week’s data will give us a better appreciation of housing ‘green shoots.’ The key data points in that respect will be Tuesday’s Housing Starts and Friday’s New Home Sales numbers. We will also get the Existing Home Sales report on Wednesday and the FHFA Home Price Index on Thursday. We will likely see an only modest increase in February Housing Starts, the third straight month of little change, following the sharp gains in November.
 
But the very warm weather during the month has the potential to produce a positive surprise on the Starts front. The expectations for New and Existing Home Sales are for gains in February. Housing aside, we will get the Conference Board’s Leading Economic Indicators and weekly Jobless Claims data this week as well.
 
The overall trend line in economic data has decidedly turned positive in recent days, prompting investors to lower their expectations for further quantitative easing from the Fed. This development, which became very pronounced following the latest Fed meeting, has caused an uptrend in treasury bond yields in recent days. While it may be premature to announce an end to the bull run in bonds, many brokerage houses have started ratcheting up their expectations for benchmark treasury yields going forward. All of this combined is a net positive for stocks.   
 
In corporate news, Apple, Inc. held a conference call with investors this morning and announced a $2.65 per share dividend, to be executed sometime in the fourth quarter of this year. In addition, Apple's board of directors have announced a $10 billion share buyback program to begin in 2013 and be parsed out over 3 years. These major actions on behalf of shareholders finally give concrete answers to what Apple would do with $45 billion of its nearly $100 billion in cash holdings.
 
Apple's moves follow other tech giants such as Microsoft (MSFT - Analyst Report), Cisco (CSCO - Analyst Report) and Oracle (ORCL - Analyst Report) who eventually instituted a shareholder cash payout following a long period of growth. The difference in Apple’s case will be that the company is still expected to be in a growth phase for quite a while.
 
In other corporate news, United Parcel Service (UPS - Analyst Report) announced the acquisition of its Dutch rival TNT Express for $6.8 billion, helping cement the company’s position in Europe.

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