Five Things to Watch: IMF Shocker and More
Criminal charges against the IMF chief, flood fears remain after a Mississippi river spillway is opened, and a rundown of retailers report earnings. Here's what we're watching…
Crisis at the IMF: There was nothing out of the ordinary when IMF chief Dominique Strauss-Kahn settled into his first class seat on a Paris-bound Air France flight Saturday at JFK. That is, until police officers boarded the plane and ushered him off, eventually charging him with criminal sexual assault, unlawful imprisonment and attempted rape. Where to begin? Strauss-Kahn, after helping shepherd the IMF through the global financial crisis, finds himself in this predicament with his deputy John Lipsky set to step down and the organization deeply involved in the European debt quagmire. In his home country of France, Strauss-Kahn was seen as a serious contender to Nicolas Sarkozy in the upcoming election. Oh, and in 2008, he found himself in controversy when he was accused of favoring a Hungarian economist with whom he was having an affair. Beyond the salacious headlines, we're watching to see what impact IMF uncertainty will have on Greek bailout restructuring, not to mention trading in the euro, which is already weaker on the news.
Bailouts All Around: Not gonna have to wait long to see the Strauss-Kahn ripple effects. European Union finance ministers are set to begin two days of meetings during which they will likely finalize details of Portugal's bailout and discuss the possibility of Greek restructuring. Increasingly, it feels like there's no end in sight for Europe's sovereign debt problems… and the bigger question of what gets swept up along the way. While DSK negotiates his legal woes in New York, the IMF's Deputy Managing Director Nemat Shafik will sit in on the meetings.
Before the Flood: The U.S. Army Corps of Engineers opened Louisiana's Morganza Spillway Saturday to relieve pressure on the swelling Mississippi River. The move, seen as the lesser of two evils, could inundate some 3,000 square miles of low-lying swamp and cropland in the Atchafalaya River basin over the coming weeks. And while the hope is that it will save the state's two major cities, that outcome is far from certain. Already, water levels in Baton Rouge and New Orleans are at extreme heights and the flood crest has yet to arrive. The potential economic ramifications are compounded by the risk posed to oil refineries that dot the river, suddenly facing flood worries and supply chain stoppages.
Retailers Report: On the earnings front, it's all about retailers. The who's who of big caps is set to report this week, from Home Depot to Wal-mart to Target. On Monday, JC Penney and Lowe's lead the way before the opening bell. The former is expected to report quarterly profits of 26 cents a share, and faces the tough comp of Macy's blowout numbers last Wednesday. The consensus estimate for home improvement chain Lowe's is $0.36 a share.
Upfront Optimism: Get ready to reset your DVR for the fall, as the networks hold their annual Upfronts events at which they unveil next year's programming schedule in a pitch to advertisers. With all of the headwinds that face the industry, ad demand is expected to be at its highest ever level, generating more than the $9.2 billion the broadcast nets brought in at the 2008 upfronts. Why? Advertisers who held back last year got burned-with "scatter market" pricing as much as 30 percent higher than upfront prices.