Stocks are struggling with familiar problems this morning:
1) The Yen has rallied against the dollar and other currencies, again reviving concerns about the yen carry trade unwinding; European equities are lower.
2) More disappointing commentary from banks. Bank of America missed big time ($0.82 reported vs. $1.06 expected, missed on revenues as well). They reported higher loan provisions for their consumer and small business sector. Provision for credit losses was $2.03 b, up from $1.81 b in Q2.
Also, thrift giant Washington Mutual missed on the bottom line, but earnings were down 72% and the company increased its loss loss provisions for mortgage as well as credit cards to reflect further weakness in the housing market. Atlanta banking giant Suntrust missed earnings expectations. They too had large writedowns for loan losses.
3) Chinese stocks notably weaker after rallying yesterday--Beijing denied that it was studying a plan to allow swaps of shares of companies listed in Hong Kong and mainland China
4) Four German economic institutes lowered their 2008 GDP forecasts for Germany to 2.2% from 2.4% in April, citing higher oil and taxes, a stronger euro, and the crises in the financial markets. But the report was reasonably optimistic, saying "the upswing has not yet ended but is just interrupted."
Hershey’s sounded a lot like Domino’s Pizza . Hershey’s earnings were below expectations and lowered earnings guidance for the full year. Profits are impacted by higher dairy cost and increased business investment. In other words, margins are getting squeezed, just like Domino’s.
These earnings aren't blowing me away either: Briggs and Stratton reported earnings today (a loss), and complained that sales of portable generators were down 47% due to a lack of hurricanes.
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