Trader Talk

Published: Monday, 8 Jun 2009 | 9:47 AM ET

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If last week is any indication, the market focus will be less on stocks and more on bonds and the dollar; while the dollar staged a late-week rally, the Treasury auction this week and continued weakness in long-dated Treasuries continues to be a worry for traders.

Stock sectors in focus this week:

1) Commodity stocks are weak as the dollar is again posting modest gains.

The commodity stock rally will continue to waiver if the dollar strength continues.

2) Banks - TARP repayment begins in earnest. The first tier of TARP repayments expected to be announced today. There is talk that big banks may be allowed to repay more TARP funds than initially thought; the Washington Post said the Feds may allow up to $50 billion to be repaid, twice the estimates on the Street in the past few weeks.

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The question is who gets to repay first- Morgan Stanley this morning said they thought JP Morgan, BBT, and possibly US Bancorp would be the first. All have raised capital and debt.

Bank of America will have to raise more debt and convert preferred stock, according to Morgan Stanley.

Of the 19 financial institutions included in the stress test, 16 have raised common equity--only Citi, GMAC and MetLife have not yet done so.

Other bank news: S&P cut the sovereign credit rating on Ireland to AA from AA+ due to higher than expected cost of supporting banks there.

Bank of Ireland, Allied Irish down about 12 percent.

3) Healthcare will also come into focus as reports over the weekend indicate that the President will become more aggressive in pushing his healthcare reform policy...the question is how to pay for it, as all sorts of ideas--from a national Value Added Tax (VAT: read sales tax) to taxing healthcare benefits are flying around.

Elsewhere:

1) McDonald's comparable store sales rose 5.1 perceent in May. Europe led the growth with an increase of 7.6 percent, the U.S. contributed growth of 2.8 percent.

Mickey D's attributing gains to the introduction of McCafe espresso-based coffees and the continuing popularity of the classic menu favs.

2) Qwest Communications International down 3 percent in pre-market trading on reports it failed to find a buyer for its long-distance network. The local and long-distance carrier reportedly sought $2 billion to $3 billion for the long-distance portion of their company. Qwest began to review the sale of its network after receiving expressions of interest from potential buyers. 

MORNING MENTIONS

JPM

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BBT

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USB

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BAC

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C

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MET

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IRE

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AIB

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MCD

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Q

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