Inflation, Retail, Subprime Numbers Help Futures Rally
Here's what's going on this morning: futures rallying on economic and subprime news.
1) Economic news showed no inflation at the wholesale level and retail sales on the aggregate were a tad better than expected.
2) Two large financial companies made relatively positive comments concerning their subprime exposure this morning.
--HSBC Holdings was the latest to take a charge on losses in the U.S. mortgage market. Remember, their HSBC Finance Corp owns the Beneficial and HFC names. They reported a net loss of $1.1 billion, which includes $3.2 billion in provisions for credit losses. Still, this is better than many had feared.
--Bear Stearns CFO, speaking at an industry conference,said the firm would take a $1.2 billion write-down for CDOs, less than many had feared. More importantly, their CDO exposure was cut more than in half, from $2 b at the end of August to $884 m today. He sees opportunities for buying and trading distressed mortgages. Up 7% pre-open.
--Macy's earning beat expectations, but more importantly their guidance for the fourth quarter ($1.70-$1.80) is well within analyst's consensus expectations of $1.74.
--Och Ziff IPO at NYSE. Daniel Och, who founded the highly regarded Och Ziff Management Group in 1994, one of the largest hedege funds in the world with over $30 billion in assets, will ring the opening bell. They priced their IPO last night: 36 million shares at $32 (price talk was $30-$33). Symbol OZM.
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