Will Fed's QE2 'Stop a Little Bit Short'?
How much does QE2 (quantitative easing) keep the stock and commodity market primed? We don't know, but traders certainly believed the $2 billion to $12 billion the Fed has been pumping in every day for months has made some kind of difference. That's why the comment from St. Louis Fed President James Bullard over the weekend got passed around a lot over the weekend.
He said, "The economy is looking pretty good. It is still reasonable to review QE2 in the coming meetings, especially this April meeting, and see if we want to decide to finish the program or to stop a little bit short."
True, he is a non-voting member of the Fed, but stop a little short? Hm. That gets traders talking.
By the way, the Fed will be buying back $4-$6 billion in Treasurys. Today. Usually between 10:15-11am ET.
1) With precious metals down about 1 percent (palladium down 5 percent), precious metal stocks are down 1 to 4 percent.
2) Freeport McMoRan upgraded to overweight at Morgan Stanley, calling it "oversold" (oversold? At $55 or so, it's only $8 from an historic high). True, it has lagged, but there are genuine concerns about how far Chinese authorities will go to slow their growth.
3) The TV wars? It's getting really brutal. Prices are dropping fast, putting pressure on producers and retailers. Philips Electronics warned of losses at its TV division for the first quarter and the full year. Q1 EBITDA losses are expected to swell between 100 million to 120 million Euros (vs. 67 million Euros last quarter). The problems for the TV maker: prices have fallen 15 percent sequentially from the prior quarter and inventories are still elevated above ideal levels.
4) Remember that big selloff in tower stocks last week after the AT&T -T-Mobile deal was announced? Morgan Stanley said it was overdone, and upgrades American Tower and SBA Communications to overweight. Saying "Consolidation Now Priced In," MS also notes that there is a higher probability that buybacks will be ramped up, given what they call few options for large-scale M&A.
5) With more volume than any other stock, Alcatel-Lucent rises 5 percent after being upgraded to buy at Goldman Sachs. Raising its 2012 & 2013 revenue and earnings estimates, the broker is optimistic for rising profits at some of the telecom equipments growth businesses and sees a "46 percent upside potential" in shares.
6) Eastman Kodak jumps 14 percent after the U.S. International Trade Commission said it would review a patent case. The camera/photo company is seeking to prevent companies including Research in Motion and Apple from importing wireless devices with digital cameras. A settlement could give Eastman Kodak several hundreds of millions of dollars in royalties, as it did when Kodak settled similar cases against Samsung and LG over the past couple of years.
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