CPI, Subprime Helping Markets, JC Penny Disappoints
Good and bad news this morning.
The good news:
--CPI in line with expectations.
--More relief on the subprime front. UBS said they do not expect a major write-down of subprime-related exposures.
Barclays said they would take a roughly $2.6 b write-down for losses on subprime; sounds big, but it is FAR BELOW the rumors of $10 b in losses that were circulating a week ago. Barclays up 2% pre-open.
The comments from UBS and Barclays follow on similar positive comments from Goldman ,Bank of America , JP Morgan, and others, which has caused anxiety levels to drop, and shorts to cover.
And the bad news:
--JC Penney's fourth quarter guidance was awful: $1.65 to $1.80 a share, vs. expectations of $2.03 from analysts, who had been taking down numbers. Penney is one of the best managed of the retailers. This is a disappointment, particularly after Wal-Mart and Macy's did not lower guidance. Down 4% pre-open.
How big is the indexing business? Very big for Morgan Stanley. MSCI, a spinoff of Morgan Stanley's index products and analytics business, priced its IPO at the very high end of the expected range, 14 million shares at $18 (original price talk was $14 to $16, then raised to $16 to $18). Trading today at the NYSE under ticker "MXB." Morgan Stanley is the lead manager on the deal (duh!).
Carmax up as Warren Buffett reported holding 14 million shares (6.5%).
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