The Year Gets Off to a Strong Start
Stocks are starting off 2012 strong...the euro has been rallying this morning, most European bourses are trading up (except France and Spain), led by commodity stocks like , Rio Tinto, and Aluminum Corp. of China. Chinese and Japanese markets are closed again today.
Merkel and Sarkozy will indeed meet Jan. 9, as was widely disseminated last week, to discuss European Union issues ahead of the summit on Jan. 30. Top of the agenda: How to keep up the momentum for the multilateral treaty to enforce budgetary discipline.
Speaking of the European Union...the European Financial Stability Facility (EFSF) is wasting no time in the new year. It announced a 3 billion euro ($3.9 billion), three-year bond will be sold to fund the Portugese and Irish bailout. Credit Suisse, Deutsche Bank, and SG CIB will be the book runners. Could price as soon as Wednesday.
Watch the pricing. This is the first three-year offer, after having sold five-year, 10-year, and three-month offers last year. Looming over the sale is the possibility that Standard and Poor's might downgrade European sovereign debt . S&P said in December that if they downgrade countries that guarantee the EFSF debt, the EFSF would also be downgraded, which would increase borrowing costs. The 10-year EFSF bond sold in November was yielding 3.15 percent, down from 4 percent.
I know that everyone is talking about recession in Europe, but...German unemployment ticked down, euro zone manufacturing ticked up today.
As for the U.S...we outperformed most global indices last year because our economic data were better...we'll see if that continues. Today we have ISM data for December: consensus is for 53.4 (expansion).
The big number for the week will be Friday's December nonfarm payrolls, with consensus at 155,000. If data continue to be slightly above consensus, expect to see strategists raise their first-quarter gross domestic product forecast.
1) Rambus up 10 percent pre-open, revised its revenue guidance for fourth-quarter 2011 upward to $83 million, from $66 million to $71 million.
2) Cisco Systems up 2 percent pre-open on JPMorgan upgrade: "Cisco represents a relatively safe haven for communications equipment investors."
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