China stimulus trumps U.S. stimulus. Although the dollar is comparatively flat, we continue to have a global commodity rally--oil, copper, aluminum and other commodities are at or near their highs for the year.
Again, the story is from China, which has said property sales have been improving. Traders are continuing to believe in the China stimulus, which is arguably having a greater influence on world stock markets than the U.S. stimulus.
1) Citi is finalizing its public exchange, which would exchange about $58 billion of its publicly held convertible and non-convertible preferred shares into common ($33 billion of preferred shares, and another $25 billion of preferred held by the U.S. government). Bottom line: the government will own about 34 percent of Citi.
2) Home Depot trades up 4 percent in pre-market trading after raising its 2009 guidance. The home improvement retailer now projects earnings of $1.32-$1.42 compared to its previously forecasted drop of $1.42 and Street estimates of $1.40.
But don't be fooled - challenging conditions and pressures on its top-line remain. Despite the earnings outlook boost, the Dow component is only reaffirming its sales and margin guidance, with same-store sales still falling in the high single digits in 2009.
Competitor Lowe's, which raised its own full-year guidance last month, is up 2 percent pre-open.
3) Even though commodity prices are rising, demand is still weak. Brazilian miner Vale struck an agreement with Japanese and South Korean steelmakers to cut iron ore prices up to 48 percent this year. This comes as miners have been forced to slash prices due to drastically reduced global demand.
4) Real estate companies continue to raise money: this morning CB Richard Ellis Group , the world's largest commercial real estate company (and through its subsidiary, Trammel Crow, is a huge manager of commercial real estate), said they planned to sell $400 million in 10-year notes and $150 million in stock to repay debt.
Hedge-fund operator Paulson & Co. will buy $100 million of that $150 million in stock. This is the same Paulson that made all that money betting against the U.S. housing and mortgage market? Hmm.
Separately, the company gave guidance roughly in line with expectations while noting the "uncertain market environment."
5) Yesterday, many financial stock traders lightened up on the 10 banks that had been approved to repay TARP. The theory: the focus is now on earnings and credit quality, which are likely to show deterioration.
Today, JPMorgan raised its price target on Goldman Sachs and Morgan Stanley . The argument: fixed income profits would be a big driver of profits this year and next. Here are the advantages of firms with big, diversified trading desks.
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