Spain to Reveal Bank Stress Test Results
U.S. stock futures, which were weak for much of the morning, dropped as May housing starts and permits were both weaker than expected, declining to the lowest levels since October 2009. The decline was solely in single family production; multifamily saw an increase. The Producer Price Index was also a bit hotter than expected, though hardly on fire.
1) FedEx down 4 percent pre-open, reported fourth quarter 2010 earnings of $1.33, two cents ahead of expectations; revenue growth of $9.43 billion was well ahead of the $9.01 billion consensus.
International Priority volumes were strong, up 23 percent, and domestic pricing showed improvement, up 3 percent. Key will be comments on June business during the conference call.
2011 guidance of $4.40-$5.00 is a bit conservative (consensus is at $5.06), but that is not a surprise, as they are expected to be conservative. Several headwinds (aircraft maintenance, pension, healthcare, compensation) were noted.
2) Nokia drops 6 percent after lowering its Q2 sales and margin guidance. Citing greater competition, particularly of high end products, the handset maker blames lower prices and disappointing volumes for the downwards revision. Facing steep competition from Apple's iPhone and Research in Motion's BlackBerry, Nokia says it also expects its market share to be "slightly lower" in 2010.
It has been a dismal 3 months for shares the Finnish handset maker, which at the open will have plunged 43 percent since April when it missed earnings estimates and slashed its margin outlook for the year.
3) Freddie Mac and Fannie Mae will be delisting their stock from the NYSE because of a directive from the Federal Housing Finance Agency. The shares will now be listed on the OTC Bulletin Board, the over-the-counter market. They appear to be blaming listing requirements: Fannie Mae says it received a notice on June 15th of NYSE noncompliance (the stock had been trading below an average closing price of $1 for the last 30 days).
4) Coca-Cola Enterprises raised its full-year guidance after a solid start in the first half of the year. Earnings are now expected to grow 10 percent to 12 percent in 2010, compared to its prior estimate of 10 percent growth.
The company's CEO John Brock says that performance in North America has been inline with expectations as the outlook in Europe has been "modestly improving." However, currency fluctuations are expected to have a negative earnings impact of $0.10 in 2010.
The bottler's pending deal with Coca-Cola also still remains on track.
5) BP falls 4 percent pre-open after the U.S. government raised its estimate of the daily flow of oil leaking into the Gulf. The government now believes 35,000 to 65,000 barrels of oil are gushing into the Gulf each day, up from an upwards revision of 20,000 to 40,000 barrels.
6) Spain's benchmark IBEX falls 1.7 percent today (underperforming the rest of Europe) as the Bank of Spain announced it would reveal to the public the results of the stress tests conducted on the country's banks. Bank Governor Miguel Angel Fernandez Ordonez said the information will allow the markets to "perfectly asses the situation of Spain's banking system."
Spain's Banco Santander is down 3.5 percent pre-open on the news.
7) Finally, a rebound in mortgages. The Mortgage Bankers Association said purchases rose 7.3 percent last week, and refi's were up 21 percent, the highest since May 2009. Mortgages are cheap!
8) Bearishness remains high on the Street. The weekly Institutional Investor survey of financial newsletter writers showed bears at 32.6 percent (31.9 percent last week), bulls down to 37 percent (38.5 percent last week), both at levels last seen in July 2009.
9) The French are going to work longer...a little. France unveiled a plan to raise the retiremement age...from 60...to 62...beginning in 2018. Expect opposition. A lot. Germany is also planning to raise the retirement age...to 67! In Italy and the UK, it is 65.
Bookmark CNBC Data Pages:
Questions? Comments? firstname.lastname@example.org